Prospects for moving natural gas by rail in doubt
OMAHA, Neb. (AP) — Federal regulators have proposed suspending a Trump administration rule that would have allowed railroads to haul liquefied natural gas while they take a closer look at the potential safety risks.
The rule, which was backed by both the natural gas and freight rail industries, had already been on hold because several environmental groups and 14 states filed lawsuits challenging it.
The federal Pipelines and Hazardous Materials Safety Administration said the uncertainty about the rule also kept companies from investing in the specialized rail tank cars that were required, so railroads haven’t actually handled any shipments of the flammable and odorless liquid known as LNG since the rule was issued last summer.
The rule would have required enhancements — including a thicker outer tank made of steel with a greater puncture resistance — to the approved tank car design that, for decades, has been approved for shipments of other flammable cryogenic materials, such as liquid ethylene and liquid ethane.
But in their lawsuit, environmental groups argued that those new railcars, which have yet to be built, were untested and might not withstand high-speed impacts, increasing the threat of an explosive train derailment along rail lines that cross directly through the heart of most cities.
“We don’t believe that LNG by rail should have ever been authorized in the first place, so we look forward to the authorization being suspended,” said Bradley Marshall, who is a senior attorney with Earthjustice which filed the lawsuit on behalf of the environmental groups.
A spokesman for California Attorney General Rob Bonta also praised the Biden administration’s decision to suspend the rule. Bonta’s office said he would continue the challenge to the rule started by his predecessor because he believes “this rule is unlawful” and regulators didn’t properly evaluate all the environmental risks.
Besides California, the other states that challenged the rule included Delaware, Illinois, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, Vermont and Washington. Washington D.C. was also part of the lawsuit.
The lawsuits have all been put on hold while federal regulators review the rule, which could take until the summer of 2024.
Before this rule was issued last summer, federal hazardous materials regulations allowed shipments of LNG by truck, but not by rail, except with a special permit.
The move to abandon the rule allowing LNG shipments by rail comes as natural gas prices and exports are surging in the United States. And ongoing court and regulatory battles have slowed development of pipelines that would help deliver the nation’s world-leading gas production to markets.
The long-term growth in LNG exports has continued to set records, according to the latest federal figures. U.S. LNG exports averaged 9.6 billion cubic feet per day during the first six months of this year as the economy continued to recover from the coronavirus pandemic.
A spokeswoman for the Association of American Railroads trade group defended the rail industry’s safety track record and said railroads would be able to handle LNG shipments if given the opportunity.
“Railroads continue to be the safest way to move hazardous materials over land with 99.99% of all hazmat shipment arriving at their destination without incident,” said Jessica Kahanek with the railroad group. “The rail industry remains confident that DOT’s ongoing research will affirm that with the right precautions rail is a responsible transportation solution for moving LNG if their customers request it.”
One of the industrial backers of the idea of shipping LNG by rail included a proposed project from a subsidiary of New Fortress Energy that wanted to use rail to haul LNG from northern Pennsylvania’s Marcellus Shale natural gas fields to a yet-to-be-built storage terminal at a former explosives plant in New Jersey, along the Delaware River near Philadelphia.
The Trump administration had issued a special permit to that project in 2019. If it were built, most of that LNG was expected to be exported to foreign markets for electricity production.