Phmsa Comment Final
Phmsa Comment Final
Phmsa Comment Final
Tristan Brown
Acting Administrator
Pipeline and Hazardous Materials Safety Administration
1200 New Jersey Ave., S.E.
Washington, D.C. 20590
Via regulations.gov:
The undersigned Attorneys General, as the chief legal officers of our States,
write to express our concerns with the Biden Administration’s proposed rule,
published Nov. 8, 2021, (the “Proposed Rule”) to suspend authorization to transport
liquefied natural gas (“LNG”) by rail tank cars pursuant to a final rule, which had
become final August 24, 2020, (the “2020 Rule”).1 The Pipeline and Hazardous
Materials Safety Administration’s (“PHMSA”) decision to reverse course on this
amendment to the Hazardous Materials Regulations (“HMR”) creates regulatory
uncertainty, chilling potential capital investment in the DOT–113C120W9
specification tank car, a tank car specifically designed to transport LNG.2 Moreover,
the general concern that transporting LNG by rail might result in an increase in
production of natural gas which might result in an increase in greenhouse gases
(“GHG”) is an attenuated and speculative concern untethered to the scope of
PHMSA’s regulatory purpose. Finally, PHMSA’s reasoning does not adequately
2022), https://www.railwayage.com/regulatory/lng-by-rail-temporary-reg-rollback-under-review/.
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explain or justify the suspension of a rule that was subject to extensive notice and
comment and thorough review of alternatives by the agency. Current geopolitical
events involving Russia’s unprovoked attack on Ukraine show with painful clarity
the need for the United States to maintain its energy independence through multiple
distribution points throughout our country. The agency should not move forward with
suspension of a rule that serves that important objective.
Natural gas is the primary energy source for electricity generation in the
United States.3 Presently, 41% of the country’s electricity is generated from natural
gas.4 Meanwhile, U.S. Greenhouse Gas (“GHG”) emissions have decreased by 11.65
percent and GHG emissions from electricity generation have decreased by 33.08
percent within same timeframe.5 The growth in U.S. gas production is a geopolitical
and economic asset, contributing to our national and global energy security.6 And as
of 2020, it appeared that PHMSA agreed, stating, ‘[t]he United States leverages
domestic technology improvements to transform American life through increased
natural gas production and energy independence.”7
For certain areas of the country, however, access to supply is limited.8 To
address the problem of getting supply to demand, American private industry stepped
in with a solution. The Association of American Railroads (“AAR”) petitioned PHMSA
for rulemaking to expand nationwide access to natural gas using rail. AAR’s position
is that “[f]or more than 80 years, freight railroads have safely transported cryogenic
liquids similar to LNG.”9 PHMSA acknowledged that there was significant interest
in transporting LNG by rail. Specifically, in the 2020 Rule, PHMSA states “[t]he
recent expansion in U.S. natural gas production has increased interest in a
programmatic approach to using appropriately the nation’s rail infrastructure to
facilitate efficient transportation of LNG.”10
3 U.S. Energy Information Administration, Electricity Data Browser: Net Generation, United States,
All Sectors, Monthly (last visited, Feb. 18, 2022), Electricity data browser - Net generation for all
sectors (eia.gov).
4 Id., (Natural Gas: 172,743 thousand megawatthours [Aug. 2021] ÷ All Fuels: 413,949 thousand
https://www.wsj.com/articles/america-oil-and-gas-russia-lng-exports-natural-gas-producer-rising-
price-ukraine-uae-saudi-arabia-europe-energy-crisis-11644872477.
7 Hazardous Materials: Liquefied Natural Gas by Rail, 85 Fed. Reg. 44,994, 44,995 (July 24, 2020).
8 Hazardous Materials: Liquefied Natural Gas by Rail, 85 Fed. Reg. 44,994, 44,995 (July 24, 2020).
9 Press Release, Association of American Railroads, AAR Backs Legislation to Preserve LNG by Rail
18 Pub. Citizen v. Steed, 733 F.2d 93, 102 (D.C. Cir. 1984).
19 556 U.S. at 515.
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explanations. Providing more time for notice and comment is not an adequate basis
to suspend a final rule..
I. PHMSA’S CLAIM THAT ECONOMIC UNCERTAINTY IN THE LNG INDUSTRY
WARRANTS SUSPENSION IS FLAWED.
PHMSA states that:
Uncertainties in the underlying economic dynamics
driving the potential benefits and public safety and
environmental risks considered in the LNG by Rail final
rule have increased (e.g., the quantity of LNG that will be
moved by rail, the routes involved, and whether new
transportation capacity would induce more natural gas
extraction). PHMSA believes these increased uncertainties
cast doubt on the continued validity of the balance between
potential benefits and public safety and environmental
risks underpinning the LNG by Rail final rule.20
PHMSA vaguely identifies unsubstantiated and generalized concerns about
safety and environmental risks as the reason for economic uncertainty, but this was
the subject of prior notice and comment. Its rationale further indicates the driving
factor is the change in policy views regarding use of fossil fuels and a hypothetical
fear of “induc[ing] more natural gas extraction.”21 Setting aside the question whether
it is within the proper scope of PHMSA’s authority to regulate national demand for
natural gas, the proposed rule itself is the cause of the regulatory uncertainty of
which it complains. By unilaterally suspending a rule that has undergone
considerable evaluation and keeping industry operators in a special permitting
regime, it discourages companies from making any capital investment in LNG by rail,
specifically, the DOT–113C120W9 specification tank cars that the 2020 Rule
authorized. Moreover, concerns about the safety of the tank car appear overblown.
The DOT-113C120W tank car was authorized by special permit prior to the 2020
Rule, which suggests that PHMSA’s newly-discovered concern about the same tank
car’s safety is pretextual.22
PHMSA’s true concern, fear of causing “more natural gas extraction,”
undercuts its narrative about concern for “public safety and environmental risks due
to transport of LNG by rail”23 Both are overstated and illustrate an irrational reversal
in PHSMA’s position in just over one-year’s time.
24 Paul W. Parfomak & John Frittelli, Rail Transportation of Liquified Natural Gas: Safety and
Regulation, Congressional Research Service R46414, at 11 (July 28, 2020).
25 Railway Supply Institute, Comment Letter on Notice of Proposed Rulemaking “Hazardous
about-lng-safety.
27 Railway Supply Institute, Comment Letter on Notice of Proposed Rulemaking “Hazardous
Natural Gas by Rail, 86 Fed. Reg. 61,731, 61,734 (Nov. 8, 2021), (citing 85 Fed. Reg. 44,995).
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and regulations.”31 Thus PHMSA would continue to have that responsibility and the
capacity to act should new facts actually justify a change. Ultimately, when
reconciling PHMSA’s complete reversal on transportation of LNG by rail, the facts
about safety are the same.
III. PREVENTING LNG BY RAIL HARMS THE U.S. ECONOMY AND IS
ENVIRONMENTALLY COUNTER-PRODUCTIVE.
In addition, the proposed rule ignores findings that transporting LNG by rail
can have positive effects on the environment. According to National Gas Intelligence,
the 2020 Rule “would allow the bulk transport of liquefied natural gas (LNG) in
31 National Academies of Sciences, Engineering, and Medicine 2021, Preparing for LNG by Rail Tank
Car: A Review of a U.S. DOT Safety Research, Testing, and Analysis Initiative. WASHINGTON, DC:
THE NATIONAL ACADEMIES PRESS 8 (2021), https://doi.org/10.17226/26221.
32 John Kartch, Joe Biden: “We Are Going To Get Rid of Fossil Fuels”, Americans for Tax Reform
specialized rail tank cars in what could prove a boon for small-scale projects across
the United States.”39 The same source also indicates that “[m]oving the fuel by rail
could also help projects in certain parts of the country like those in the Permian
Basin, where producers have flared off natural gas at record rates in recent years.”40
Thus, not suspending the 2020 Rule would allow for efficient distribution of natural
gas through multiple means and can offset otherwise flared natural gas that leads to
increased GHGs and wasting the resource entirely.
The PHMSA, while exhibiting concern about climate change, does not address
the continuing need to supply the energy needs of this country, especially during
winter months when demand is high. Rather, as a means of regulating production or
consumption, the proposed rule appears to adopt a less efficient approach that
discourages investment in newer tank cars (special permitting) in place of a
considered transportation rule.
Notably, since President Biden took office LNG spot prices have increased
61%.41 According to the Energy Information Administration (EIA), in January 2022,
colder weather led to increased demand for natural gas used for space heating and
power generation, thus causing upward pressure on prices.42 Ultimately, “the average
American household paid about $1,000 in higher energy costs in 2021 compared to
2020,” and “households that use natural gas spent an extra $300.”43
Suspending the 2020 Rule only constricts the means by which demand can be
satisfied – which may be the actual point of this proposed rule – but it does not change
the need for fuel to heat American homes in winter. Rather, it burdens hard-working
Americans with higher costs to do so, even putting people in danger when they cannot
afford to pay their increasingly expensive bill. That problem appears to be getting
worse not better due to Russia’s unprecedented incursion into Ukraine. Indeed
Russia’s invasion of Ukraine is expected to have far-reaching implications for energy
39 Jamison Cocklin, U.S. Issues Final Rule Authorizing Widespread Transport of LNG by Rail, NGI
(June 19, 2020), https://www.naturalgasintel.com/u-s-issues-final-rule-authorizing-widespread-
transport-of-lng-by-rail/.
40 Id.
41 41 U.S. Energy Information Administration, Natural Gas, Data, Henry Hub Natural Gas Spot Price
(last visited, Feb. 18, 2022), https://www.eia.gov/dnav/ng/hist/rngwhhdm.htm, ($2.71 per Million Btu
[Jan. 21, 2021] to $4.38 per Million Btu [Feb. 3, 2022] equals increase of 61.62 %.).
42 U.S. ENERGY INFORMATION ADMINISTRATION, SHORT-TERM ENERGY OUTLOOK 2–3 (Feb. 2022),
https://www.eia.gov/outlooks/steo/pdf/steo_full.pdf.
43 Linnea Lueken & James Taylor, Biden Energy Policies Cost U.S. Households More than $1,000 in
markets given Moscow’s role as the world’s second-largest producer of natural gas
and one of the world’s largest oil-producing nations.44
44 Sam Meredith, Joanna Tan, Abigail Ng, Oil surges above $100 for the first time since 2014, before
paring gains, CNBC (Feb. 23, 2022), https://www.cnbc.com/2022/02/24/oil-prices-jump-as-russia-
launches-attack-on-ukraine.html (last accessed Feb. 25, 2022).
45 International Energy Agency, The Role of Critical Minerals in Clean Energy Transitions, Share of
Top Three Producing Countries in Extraction of Selected Minerals and Fossil Fuels, 2019 (2021),
https://www.iea.org/reports/the-role-of-critical-minerals-in-clean-energy-transitions/the-state-of-play.
46 David McHugh, Explainer: What’s Russia’s Nord Stream 2 Pipeline to Europe?, AP NEWS (Feb. 8.
2022), https://apnews.com/article/russia-ukraine-nord-stream-2-oil-pipeline-
779970ee17f6fa9d0fa2996e45cbeab9.
47 Drew Johnson, Why Is Russian Gas in Boston Harbor?, WSJ (Mar. 12, 2018),
https://www.wsj.com/articles/why-is-russian-gas-in-boston-harbor-1520897637.
48 Hazardous Materials: Suspension of HMR Amendments Authorizing Transportation of Liquefied
III. CONCLUSION
For the foregoing reasons, the undersigned Attorney Generals submit that
PHMSA should not proceed with a final rule to suspend or withdraw the 2020 Rule,
which established an efficient and safe mechanism for transporting LNG by rail. .
Sincerely,
Jeff Landry
Louisiana Attorney General
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