The debate on whether the U.S. federal government should allow the movement of liquefied natural gas by rail could come to a head this summer, with the Pipeline and Hazardous Materials Safety Administration (PHMSA) poised to make some big decisions.
By June 30, PHMSA and the Federal Railroad Administration are expected to issue their decision on whether they should temporarily suspend a 2020 rule allowing for the transport of LNG by rail via specialized tank cars while they review the impact on safety, the environment and on Native American tribes. That 2020 rule was enacted under former President Donald Trump.
But there are other pending matters before federal regulators pertaining to LNG by rail. PHMSA is also considering a final rulemaking to modify regulations governing LNG by rail to incorporate ongoing research efforts. That decision is due by June 30, 2024.
Meanwhile, Energy Transport Solutions (ETS) is seeking to renew a permit granting it permission to ship LNG by rail. Trump had granted ETS the permit in 2020 so that the company could export LNG via a terminal in New Jersey. PHMSA’s decision on that permit renewal is pending.
To add more complexity to the issue, six environmental groups and 14 states plus the District of Columbia and a Native American tribe have filed a lawsuit against the U.S. Department of Transportation over the 2020 rule.
Environmental groups call for ban of LNG by rail
PHMSA has noted that even though companies could still transport refrigerated liquid methane, also known as LNG, by rail via specialized tank cars, such transportation has not occurred. However, current federal regulations do authorize LNG by rail using UN portable tanks with prior approval from the Federal Railroad Administration. Both Florida East Coast Railway (FECR) and Alaska Railroad have approvals to do this, but only FECR is actively transporting LNG in UN portable tanks.
UN tanks are smaller intermodal packages that hold approximately 10,000 gallons of product, while tank cars hold about 30,000 gallons, PHMSA told FreightWaves.
In fact, environmental groups want a ban on LNG by rail altogether. The groups last month called for U.S. Transportation Secretary Pete Buttigieg to ban the transport of LNG by rail, citing climate and health threats.
The environmental groups launched the campaign, Ban LNG by Rail, with a video, a social media campaign and a petition. They contend that LNG is a highly unstable and explosive liquid, which if unleashed through a spill, could result in rapidly expanding clouds of vapor that could flash-freeze human flesh.
“We think it’s far too dangerous to move this flammable, hazardous and potentially explosive cargo by rail through communities. These freight rail tracks go right next to — in some cases just feet away — from people’s homes and target our most vulnerable communities and cities,” said Tracy Carluccio, deputy director of Delaware Riverkeeper Network, in a recent interview with FreightWaves.
Environmental groups also are against fracking, which is the process used to capture methane from the Earth. They contend that releasing the natural gas, liquefying and transporting it and then re-gasifying it releases significant amounts of emissions.
“Allowing LNG to be transported by rail would unleash more fracking, present a catastrophic risk to countless communities and delay the critical transition to clean energy,” Thomas Meyer, national organizing manager at Food & Water Watch, said in a late-May release. “The Trump administration’s outrageous LNG rail rule must be overturned. If Secretary Buttigieg is serious about prioritizing climate action and fulfilling his department’s mission of ensuring a safe and equitable transportation system, he must take action to ban LNG by rail once and for all.”
Carluccio also said the U.S. should not be swayed by Europe’s demand for LNG imports amid the Ukraine-Russia conflict. Europe has historically relied upon Russia to supply the continent with LNG, although it is seeking to wean itself from LNG and bolster energy consumption from renewable sources.
“We’re afraid that that pledge from the Biden administration will be eroded by this immediate crisis in the Ukraine and the demand for gas by Europe,” Carluccio told FreightWaves, explaining that the White House entered into an agreement with the European Union to increase the export of LNG by 15 billion of cubic meters per year.
This agreement could encourage domestic production of LNG, she said.
Indeed, U.S. exports of LNG to Europe grew for the first four months of 2022, according to a June 7 note from the U.S. Energy Information Administration (EIA). In this time frame, the U.S. exported 74% of its LNG to Europe, compared with an annual average of 34% last year. Asia was the main destination for U.S. LNG exports in 2020 and 2021.
U.S. LNG exports averaged 11.5 billion cubic feet per day during the first four months of 2022, up 18% from the same period in 2021, according to EIA.
Freight rail association says LNG rail transport is safe
Meanwhile, the Association of American Railroads contends that rail transportation of hazardous goods is significantly safer than over-the-road transportation of hazardous materials, with more than 99.99% of rail hazmat shipments reaching their destination without a release caused by a train accident, according to AAR’s website.
The 2020 rule accounts for studies conducted on LNG by rail, and the rule outlines stringent measures, AAR said. These measures include specialized tank cars known as DOT-113s, which have thicker outer shells; a joint initiative between the Class I railroads and the government that analyzes the safest and most secure routes for transporting LNG; and equipping trains carrying hazmat with specialized equipment to further minimize potential damage to railcars.
PHMSA told FreightWaves that the agency is currently in the process of reviewing more than 9,000 comments submitted to November 2021’s proposed rulemaking on whether to suspend the rule temporarily. The agency said that while PHMSA’s 2020 rule remains in effect, no transportation of LNG has occurred under the rulemaking, and the agency is unaware of any demand for the construction of tanks cars that are required to be used under the existing authorization.
PHMSA also said that it does not comment on ongoing litigation, including the lawsuit before the D.C. Circuit Court from 14 states and environmental groups.