LNG by rail could help protect U.S. maritime law

Photo Credit: Terry D/flickr

President Donald Trump’s executive order allowing liquefied natural gas (LNG) to move by rail could be used to head off attempts to open up domestic vessel shipments to foreign competition, a maritime executive has told FreightWaves.

Signed by President Trump on April 10 while he campaigned in Texas, the order instructs the U.S. Secretary of Transportation to propose a rule within 100 days treating LNG the same as other cryogenic liquids and allowing it to be transported in rail tank cars, which the U.S. Department of Transportation currently does not allow.

The order also instructs the Transportation and Energy departments to assess, within 180 days, the economic effects of the inability to move sufficient quantities of LNG to states in New England and other regions. It would also make it easier for LNG export terminals to receive the necessary federal approvals that can typically take years.

A second order signed the same day is aimed at streamlining the permitting process for infrastructure projects at U.S. border crossings, including rail and bridge connections. Both orders were hailed by the Association of American Railroads (AAR), the freight rails’ Washington, D.C.-based lobbying arm.

“Our sector, which plays a fundamental role in moving not only energy products but many of the inputs to the energy development process, particularly welcomes the sections in the Executive Orders that allow companies to get products to market quicker,” said AAR President and CEO Ian Jefferies in a statement. “This includes the potential to safely move liquefied natural gas by rail and efforts to modernize the project planning and permitting process, which has sometimes been used as a tool to slow and block critical infrastructure projects.”

William Doyle, a former commissioner at the Federal Maritime Commission and now CEO and executive director of the Dredging Contractors of America, said that allowing LNG to move by rail – particularly to New England – could also help protect the Jones Act, a maritime law that requires all shipments moving between U.S. seaports be in vessels built, flagged and crewed in the United States.

“If we’re going to allow rail to deliver natural gas into the New England market, it’s another reason why not to allow a Jones Act waiver for natural gas,” Doyle said, which would open up the U.S. coastal sea trades to foreign-flagged vessel competition. “We should be using all available transportation and delivery modes before even considering a Jones Act waiver.”

Doyle added that decisions made at the state level have constrained gas pipeline capacity into New England, therefore, “adding rail makes all the sense in the world. Let’s go with rail.”

The Governor of Puerto Rico requested just such a waiver – spanning 10 years – to allow LNG imports to the island from the U.S. mainland, a move that the Jones Act currently restricts to U.S.-flagged and built ships.

The request, which the Trump administration is still reviewing, sparked the latest round of debates between supporters and critics of the maritime law at hearings on Capitol Hill and at policy venues around Washington, D.C. There are also renewed legislative proposals requiring certain percentages of LNG exports from the U.S. be carried on U.S.-flagged vessels.

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John Gallagher, Washington Correspondent

Based in Washington, D.C., John specializes in regulation and legislation affecting all sectors of freight transportation. He has covered rail, trucking and maritime issues since 1993 for a variety of publications based in the U.S. and the U.K. John began business reporting in 1993 at Broadcasting & Cable Magazine. He graduated from Florida State University majoring in English and business.

One Comment

  1. What’s a pipeline – a tube that brings stuff from one point to the other. It costs a lot to build it and its super inflexible as once its built, it goes where it goes. It does not care about market changes or requirements. Rail cars can do this much more flexibly. Just imagine a flotilla of rail cars converging on points where cold spots are predicted, giving this region the quick boost it needs when it needs it. And when there is need somewhere else, they just reroute. I predict that rail transport of LNG will one day be cheaper than pipeline transport. Oh, such a rail car is also quite a nice storage container. The whole notion of linepack gets a new meaning.

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