The Trump Administration is moving forward to allow railroads to ship liquefied natural gas (LNG) in tank cars through a plan that was immediately rejected by Congressional Democrats.
In a proposed rulemaking announced on October 18, the Pipeline and Hazardous Materials Safety Administration (PHMSA) and the Federal Railroad Administration (FRA) – agencies within the U.S. Department of Transportation – said the plan is a result of President Trump’s April 19 Executive Order that recognizes the growing role of the United States as a producer of LNG in both domestic and international markets. That stature prompted government officials to give LNG the nickname “molecules of U.S. freedom” earlier this year.
“This major rule will establish a safe, reliable and durable mode of transportation for LNG, while substantially increasing economic benefits and our nation’s energy competitiveness in the global market,” said PHMSA Administrator Skip Elliott in announcing the rulemaking.
The announcement was promptly criticized by the Chairman of the U.S. House Transportation & Infrastructure Committee.
“I’d like to say I’m surprised by this announcement from the Trump Administration, but, alas, implementing reckless plans for special interests without regard for those who may be affected is pretty standard for this Administration,” said committee chairman Peter DeFazio (D-Oregon). “Authorizing hazardous materials for transportation by rail should be a careful and deliberative process, supported by science and evidence, with adequate protections in place for the communities where this stuff is travelling. It is not something to be done with the stroke of a pen. The results of his order could be catastrophic.”
In anticipation of the proposal, which will undergo a 60-day public comment period once it’s officially published, DeFazio had attempted to first require extensive reviews on the safety implications of using tank cars to carry LNG. When not moving via pipeline in gas form, federal regulations currently allow natural gas in liquid form to move only in tank trucks or in portable containers that can move either by truck or on rail flat cars.
In June, the House attempted to block the U.S. Secretary of Transportation from issuing a special permit to Energy Transport Solutions LLC (ETS), a subsidiary of New Fortress Energy [NASDAQ: NFE], to move multiple sets of 100-car unit trains of LNG in rail tank cars.
ETS, which stands to benefit from the rulemaking, stated in its permit application that the company anticipated using up to six sets of 100-car unit trains of loaded or unloaded rail cars at a given time. Moving LNG quantities of that size help justify approving the special permit through anticipated fuel efficiency savings and environmental benefits, according to an assessment issued by PHMSA earlier this year.
“Issuance of the proposed special permit…would result in less fuel use and less emissions. Moving one ton of freight by train would result in approximately 70% less fuel than moving the same freight by truck. Therefore, this [assessment] preliminarily finds that rail transportation would reduce the environmental impact of transporting LNG,” the agency stated.
It is also conceivable, according to PHMSA, that approving the permit could result in more business opportunities as a result of efficiencies from moving LNG by rail compared to truck, thereby incentivizing more domestic production.
According to PHMSA, the number of LNG facilities in the U.S. increased 29% between 2010 and 2018, with total storage capacity increasing by 21%.
“The hazards of transporting LNG are no different than that of flammable cryogenic liquids already authorized for bulk rail transport” in accordance with hazardous materials regulations, PHMSA stated in its proposal. “Nonetheless, in this [proposed rule], PHMSA and FRA must consider requirements for both the packaging (i.e., the rail tank car) and operational controls for a train consisting of tank cars loaded with LNG.”