Feds Must Take LNG Rail Transport Rule Off The Tracks, DC Circ. Judges Told

A panel of D.C. Circuit judges were urged Friday to wipe out a Trump-era U.S. Department of Transportation safety rule for transporting liquefied natural gas by rail, even as the Biden administration mulls a potential replacement.

Environmental groups, 14 states and the District of Columbia and the Puyallup Tribe of Indians want the appeals court to vacate the rule authorizing LNG rail transport. Among their arguments is that the rule, originally crafted in 2020 by the DOT's Pipeline and Hazardous Materials Safety Administration, unlawfully fails to grapple with the heightened safety and environmental risks of potential derailments and other accidents, and that PHMSA approved a rail tank car design without getting sufficient public feedback.

The Biden administration suspended implementation of the rule in 2023 with aims on revising or replacing it, and the suspension is scheduled to end in June 2025. But during oral arguments on Friday, New York Assistant Attorney General Brian Lusignan told the D.C. Circuit judicial panel that they can't risk the rule's reinstitution, and that PHMSA needs to start over on a “blank slate.”

“Transporting LNG in these tank cars, 50 to 100 together, poses a significant risk,” said Lusignan, arguing on behalf of the states and Washington, D.C. “PHMSA itself has acknowledged many times the many dangers of transporting LNG by rail.”

Lusignan said that starts with issuing a more stringent environmental impact statement, as opposed to the environmental assessment PHMSA did for the current rule, which doesn't cut it as taking a “hard look” at environmental impacts as required by the National Environmental Policy Act.

“What is a 'hard look?'” U.S. Circuit Judge A. Raymond Randolph asked Lusignan.

“It's more than a quick glance,” Lusignan replied. “It's looking at the problem and explaining why the problem is significant or it's not significant.”

The risks of rail transport of LNG seemed significant to U.S. Circuit Judge Florence Y. Pan, and she pressed U.S. Department of Justice attorney Rebecca Jaffe over whether PHMSA's review was sufficient.

“It just seems this is an unprecedented amount of hazardous materials with exceptionally inflammatory properties,” Judge Pan said. “The doomsday scenarios are quite dire … and there's no limit on the number of rail cars you can string together filled with LNG.”

Jaffe said PHMSA's rule rests upon a “robust set” of existing regulations for hazardous materials, and that the agency has never limited the quantity of hazardous materials that can be transported by rail.

Judge Pan said the risks posed by LNG rail transport appear to be “unprecedented,” and that train derailments are not “remote or speculative.”

“Why is this something that does not require an [environmental impact statement]?” the judge asked Jaffe.

“The agency did require a number of measures to minimize risk,” Jaffe replied. “Some uncertainty doesn't mean an EIS is required.”

Meanwhile, Earthjustice attorney Bradley Marshall, arguing on behalf of the environmental groups, said PHMSA violated the Administrative Procedure Act by approving a brand-new rail tank car design without getting sufficient public comment on whether it could safely transport LNG.

But U.S. Circuit Judge Patricia A. Millett questioned that assertion, saying that the approved tank car design features a thicker hull that was broached during the rulemaking's notice-and-comment period and suggested the approved design was a “logical outgrowth” of the agency's rail tank car regulations

“There are lots of comments in there about increasing hull thickness,” Judge Millett told Marshall.

“We couldn't have predicted they would come up with a new tank car design,” Marshall replied.

As for a potential replacement rule, the D.C. Circuit judges appeared skeptical that PHMSA would be able to promulgate one before the suspension of the current rule is lifted in June 2025. Jaffe acknowledged that it was “unlikely,” but said the agency could also decide to extend the suspension.

“It hasn't made a final decision,” Jaffe told the panel.

U.S. Circuit Judges Patricia A. Millett, Florence Y. Pan and A. Raymond Randolph sat on the panel for the D.C. Circuit.

The environmental groups were represented at oral arguments by Bradley Marshall of Earthjustice.

The petitioning states were represented at oral arguments by Brian Lusignan of the Office of the Attorney General of the State of New York.

The Puyallup Tribe of Indians was represented at oral arguments by Aaron Riensche of Ogden Murphy Wallace PLLC.

The federal government was represented at oral arguments by Rebecca Jaffe of the U.S. Department of Justice's Environment and Natural Resources Division.

The case is Sierra Club et al. v. U.S. Department of Transportation et al., case number 20-1317, in the U.S. Court of Appeals for the District of Columbia Circuit.

—Editing by Dave Trumbore.