81_FR_54092 81 FR 53935 - Hazardous Materials: FAST Act Requirements for Flammable Liquids and Rail Tank Cars

81 FR 53935 - Hazardous Materials: FAST Act Requirements for Flammable Liquids and Rail Tank Cars

DEPARTMENT OF TRANSPORTATION
Pipeline and Hazardous Materials Safety Administration

Federal Register Volume 81, Issue 157 (August 15, 2016)

Page Range53935-53957
FR Document2016-19406

The Pipeline and Hazardous Materials Safety Administration is issuing this final rule to codify in the Hazardous Materials Regulations certain mandates and minimum requirements of the FAST Act. Specifically, the FAST Act mandates a revised phase-out schedule for all DOT Specification 111 tank cars used to transport unrefined petroleum products (e.g., petroleum crude oil), ethanol, and other Class 3 flammable liquids. The FAST Act also requires that each tank car built to meet the DOT Specification 117 and each non-jacketed tank car retrofitted to meet the DOT Specification 117R be equipped with a thermal protection blanket that is at least \1/2\-inch thick and meets existing thermal protection standards. Further, the FAST Act mandates minimum top fittings protection requirements for tank cars retrofitted to meet the DOT Specification 117R.

Federal Register, Volume 81 Issue 157 (Monday, August 15, 2016)
[Federal Register Volume 81, Number 157 (Monday, August 15, 2016)]
[Rules and Regulations]
[Pages 53935-53957]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-19406]


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DEPARTMENT OF TRANSPORTATION

Pipeline and Hazardous Materials Safety Administration

49 CFR Parts 173 and 179

[Docket No. PHMSA-2016-0011 (HM-251C)]
RIN 2137-AF17


Hazardous Materials: FAST Act Requirements for Flammable Liquids 
and Rail Tank Cars

AGENCY: Pipeline and Hazardous Materials Safety Administration (PHMSA), 
DOT.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Pipeline and Hazardous Materials Safety Administration is 
issuing this final rule to codify in the Hazardous Materials 
Regulations certain mandates and minimum requirements of the FAST Act. 
Specifically, the FAST Act mandates a revised phase-out schedule for 
all DOT Specification 111 tank cars used to transport unrefined 
petroleum products (e.g., petroleum crude oil), ethanol, and other 
Class 3 flammable liquids. The FAST Act also requires that each tank 
car built to meet the DOT Specification 117 and each non-jacketed tank 
car retrofitted to meet the DOT Specification 117R be equipped with a 
thermal protection blanket that is at least \1/2\-inch thick and meets 
existing thermal protection standards. Further, the FAST Act mandates 
minimum top fittings protection requirements for tank cars retrofitted 
to meet the DOT Specification 117R.

DATES: Effective: August 15, 2016.

ADDRESSES: Docket: You may view the public docket online at http://www.regulations.gov or in person at Dockets Operations, M-30, Ground 
Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590-
0001 between 9 a.m. and 5 p.m. Monday through Friday, except Federal 
holidays.

FOR FURTHER INFORMATION CONTACT: Michael Ciccarone, (202) 366-8553, 
Standards and Rulemaking Division, Pipeline and Hazardous Materials 
Safety Administration, U.S. Department of Transportation, 1200 New 
Jersey Avenue SE., Washington, DC 20590-0001.

SUPPLEMENTARY INFORMATION: The FAST Act instructs the Secretary of 
Transportation to issue conforming regulatory amendments immediately or 
soon after the FAST Act's date of enactment (December 4, 2015). Because 
the actions taken in this final rule simply codify these non-
discretionary statutory mandates, PHMSA finds that timely execution of 
agency functions would be impeded by the procedures of public notice 
that are normally required by the Administrative Procedure Act. 
Further, PHMSA sees no reason to delay regulatory action, as we are 
simply implementing the non-discretionary provisions contained in 
Sections 7304, 7305, and 7306 of the FAST Act. PHMSA finds that public 
notice is impracticable and is implementing these changes under the 
``good cause'' exemption of the Administrative Procedure Act, 5 U.S.C. 
553(b)(3)(B), thus amending the regulations without advance notice and 
opportunity for public comment.

Abbreviations and Terms

AAR Association of American Railroads
APA Administrative Procedure Act
CFR Code of Federal Regulations
CPC Casualty Prevention Circular
DOT Department of Transportation
EA Environmental Assessment
FAST Act Fixing America's Surface Transportation Act of 2015
FR Federal Register
FRA Federal Railroad Administration
HHFT High-Hazard Flammable Train
HMR Hazardous Materials Regulations
HMT Hazardous Materials Table

[[Page 53936]]

NEPA National Environmental Policy Act
NPRM Notice of Proposed Rulemaking
NPV Net Present Value
NTSB National Transportation Safety Board
OMB Office of Management and Budget
PG Packing Group
PHMSA Pipeline and Hazardous Materials Safety Administration
RFA Regulatory Flexibility Act
RIA Regulatory Impact Analysis
RIN Regulation Identifier Number
RSI Railway Supply Institute
TDG Transportation of Dangerous Goods
U.S.C. United States Code

Table of Contents

I. Background
II. Good Cause Justification
III. Section-by-Section Review
IV. Regulatory Analyses and Notices
    A. Statutory/Legal Authority for This Rulemaking
    B. Executive Order 12866, Executive Order 13563, and DOT 
Regulatory Policies and Procedures
    C. Executive Order 13132
    D. Executive Order 13175
    E. Regulatory Flexibility Act, Executive Order 13272, and DOT 
Procedures and Policies
    F. Unfunded Mandates Reform Act of 1995
    G. Paperwork Reduction Act
    H. Regulation Identifier Number (RIN)
    I. Environmental Assessment
    J. Privacy Act
    K. Executive Order 13609 and International Trade Analysis
    L. Executive Order 13211

I. Background

    On May 8, 2015, PHMSA (also ``we'' or ``us''), in consultation with 
the Federal Railroad Administration (FRA), published the final rule 
``Hazardous Materials: Enhanced Tank Car Standards and Operational 
Controls for High-Hazard Flammable Trains'' (hereafter ``HM-251 final 
rule''). The HM-251 final rule was an integral part of the Department's 
comprehensive approach to ensure the safe transportation of energy 
products. Specifically, the HM-251 final rule amended the Hazardous 
Materials Regulations (HMR; 49 CFR parts 171-180) by defining certain 
trains transporting large volumes of Class 3 flammable liquids as 
``high-hazard flammable trains'' (HHFT) and imposing certain 
operational restrictions, such as speed restrictions, braking systems, 
and routing.\1\ The HM-251 final rule also adopted requirements into 
the HMR for sampling and testing programs to ensure the proper 
classification of unrefined petroleum-based products transported under 
the HMR. Furthermore, the rule codified new tank car design standards--
namely the DOT Specification 117 (DOT-117), DOT Specification 117P 
(DOT-117P), and DOT Specification 117R (DOT-117R)--and established a 
phase-out schedule for existing DOT Specification 111 (DOT-111) tank 
cars by requiring use of either a DOT-117, DOT-117P, or DOT-117R tank 
car by certain dates for the transport of Class 3 flammable liquids in 
an HHFT.\2\ For more information on the HM-251 final rule, please refer 
to its publication in the Federal Register [80 FR 26643; May 8, 2015], 
as well as the information under Docket No. PHMSA-2012-0082 at the 
Federal eRulemaking Portal, www.regulations.gov.
---------------------------------------------------------------------------

    \1\ The HM-251 final rule defined an HHFT as a train comprised 
of 20 or more loaded tank cars of a Class 3 flammable liquid in a 
continuous block or 35 or more loaded tank cars of a Class 3 
flammable liquid across the entire train.
    \2\ ``DOT-117P'' tank cars are newly manufactured tank cars or 
tank cars retrofitted to meet the performance criteria in Sec.  
179.202-12. ``DOT-117R'' tank cars are tank cars retrofitted to meet 
the retrofit standard in Sec.  179.202-13.
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    On December 4, 2015, President Barack Obama signed legislation 
entitled ``Fixing America's Surface Transportation Act of 2015,'' or 
the ``FAST Act.'' See Public Law 114-94. The FAST Act includes the 
``Hazardous Materials Transportation Safety Improvement Act of 2015'' 
(see Sections 7001 through 7311) and instructs the Secretary of 
Transportation (hereafter ``Secretary'') to make specific regulatory 
amendments to the tank car design standards and phase-out schedule 
codified in the HM-251 final rule.

A. Retrofit Schedule (FAST Act Section 7304)

    Section 7304 of the FAST Act mandates a commodity-specific phase-
out of all DOT-111 tank cars used to transport Class 3 flammable 
liquids. Specifically, paragraph (a) mandates the phase-out regardless 
of train composition and requires that, by the dates specified in 
paragraph (b), all tank cars used to transport Class 3 flammable 
liquids meet the DOT-117, DOT-117P, or DOT-117R requirements. Paragraph 
(b) of Section 7304 mandates a commodity-specific phase-out schedule 
for DOT-111 tank cars used to transport unrefined petroleum products 
and ethanol--irrespective of the Packing Group (PG) \3\ assigned--as 
well as other Class 3 flammable liquids based on their PGs.
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    \3\ Packing Group (as defined in 49 CFR 171.8) is a grouping 
according to the degree of danger presented by hazardous materials. 
Packing Group I indicates great danger; Packing Group II, medium 
danger; Packing Group III, minor danger.
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    The phase-out schedule mandated in paragraph (b) outlines various 
compliance end-dates, on or after which the DOT-111 tank car (including 
DOT-111 tank cars built to the Association of American Railroads' (AAR) 
Casualty Prevention Circular 1232 standard (CPC-1232)) is no longer 
authorized to transport Class 3 flammable liquids. Please refer to 
Section III, ``Section-by-Section Review,'' in this rule for more 
information on the applicable end-dates of the new phase-out schedule. 
See Table 1 below for a comparison of the retrofit schedule of the HM-
251 final rule with the schedule imposed by the FAST Act:
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    \4\ Applies only to tank cars in an HHFT configuration.
    \5\ Applies to a single tank car containing the denoted 
commodity.
    \6\ If these cars are not retrofitted by January 1, 2017 the 
owners must file a report with the Department on the number of tank 
cars that they own that have been retrofitted and the number that 
have not yet been retrofitted.
    \7\ The FAST Act is applicable to ``unrefined petroleum products 
in Class 3 flammable service, including crude oil.'' For the 
purposes of this phase out table, we use ``Crude'' for these 
materials.

 Table 1--Comparison of HM-251 Tank Car Phase-out Schedule vs. FAST Act
                           Phase-out Schedule
             [Tank cars in Class 3 flammable liquid service]
------------------------------------------------------------------------
                                   HM-251 phase-out   FAST Act phase-out
      Tank car type/service          deadline \4\        deadline \5\
------------------------------------------------------------------------
Non-jacketed DOT-111s...........  PG I--January 1,    Crude \7\--January
                                   2018 \6\.           1, 2018
                                  PG II--May 1, 2023  Ethanol--May 1,
                                                       2023
                                  PG III--May 1,      Flammable PG I--
                                   2025.               May 1, 2025 **
                                                      Flammable PG II/
                                                       III--May 1, 2029
                                                       *
Jacketed DOT-111s...............  PG I--March 1,      Crude--March 1,
                                   2018.               2018
                                  PG II--May 1, 2023  Ethanol--May 1,
                                                       2023
                                  PG III--May 1,      Flammable PG I--
                                   2025.               May 1, 2025 **
                                                      Flammable PG II/
                                                       III--May 1, 2029
                                                       *
Non-jacketed CPC-1232s..........  PG I--April 1,      Crude--April 1,
                                   2020.               2020

[[Page 53937]]

 
                                  PG II--July 1,      Ethanol--July 1,
                                   2023.               2023
                                  PG III--May 1,      Flammable PG I--
                                   2025.               May 1, 2025 **
                                                      Flammable PG II/
                                                       III--May 1, 2029
                                                       *
Jacketed CPC-1232s..............  May 1, 2025.......  Crude oil--May 1,
                                                       2025
                                                      Ethanol--May 1,
                                                       2025
                                                      Flammable PG I--
                                                       May 1, 2025 **
                                                      Flammable PG II/
                                                       III--May 1, 2029
                                                       *
------------------------------------------------------------------------
** Extendable up to May 1, 2027, if the Secretary finds that
  insufficient retrofitting shop capacity will prevent the phase-out of
  tank cars not meeting the DOT-117, DOT-117P, or DOT-117R by the
  deadline.
* Extendable up to May 1, 2031, if the Secretary finds that insufficient
  retrofitting shop capacity will prevent the phase-out of tank cars not
  meeting the DOT-117, DOT-117P, or DOT-117R by the deadline.

    The requirements of Section 7304 of the FAST Act differ from the 
HM-251 final rule in two ways. First, the HM-251 final rule required 
Class 3 flammable liquids to be transported in DOT-117, DOT-117P, or 
DOT-117R tank cars only if these tank cars are used in an HHFT, whereas 
the FAST Act removed the linkage between tank car specification and 
train composition, instead mandating that any Class 3 flammable liquid 
be transported in a DOT-117, DOT-117P, or DOT-117R tank car by the 
dates specified. (The FAST Act does not change the HM-251 final rule's 
definition of HHFT as it applies to the operational controls specified 
in the rule.) Second, the phase-out schedule in the HM-251 final rule 
was based on the PG of the Class 3 flammable liquid, among other 
factors, whereas the phase-out schedule imposed by the FAST Act is 
commodity-specific for unrefined petroleum products (including crude 
oil) and ethanol and based on a commodity's PG only for other Class 3 
flammable liquids.
    Paragraph (d)(1)(A) of Section 7304 requires the Secretary to take 
immediate action to revise the date-specific deadlines in the HMR to 
align with those in the FAST Act. This rule responds to that mandate.

B. Thermal Protection Blanket (FAST Act Section 7305)

    Section 7305 of the FAST Act requires tank cars built to meet the 
DOT-117 specification and each non-jacketed tank car retrofitted to 
meet the DOT-117R specification be equipped with an ``insulating 
blanket'' at least half inch thick and approved by the Secretary in 
accordance with 49 CFR 179.18(c). Paragraph (a) of Sec.  179.18 
requires tank cars required to be equipped with thermal protection to 
be equipped with a thermal protection system meeting a certain 
performance standard (i.e., a pool fire for 100 minutes; and a torch 
fire for 30 minutes) and paragraph (b) contains the technical 
requirements for conducting a thermal analysis to verify a system's 
compliance with paragraph (a)'s performance standard. As paragraph (c) 
of Sec.  179.18 indicates, the Department maintains a list of thermal 
protection systems already verified to meet the performance standard 
and for which completion of a thermal analysis is not required. PHMSA 
maintains the list and for a thermal protection system to be added to 
the list, a manufacturer must first conduct the qualification tests in 
Appendix B to Part 179 of the HMR. The manufacturer must then provide 
the test procedures and results to PHMSA, which in consultation with 
FRA reviews the submitted test procedures and results. If the agencies 
find that the tests and results demonstrate that the system meets the 
performance standard of paragraph (a), the thermal protection system is 
added to the referenced list of tank car thermal protection systems 
that do not require test verification.
    PHMSA notes, that while the FAST Act refers to the blanket as an 
``insulating blanket,'' for the purposes of clarity within the HMR, 
PHMSA is using the term ``thermal protection blanket.'' The FAST Act 
intends for the blanket to be designed and approved to withstand fire 
conditions as opposed to being ``insulating material'' that is designed 
solely to maintain the temperature of the lading during transportation 
and neither designed nor approved to withstand fire conditions.
    The HM-251 final rule did not specifically require that these tank 
car specifications include a thermal protection blanket as part of the 
thermal protection system; rather, it required that the specification 
tank cars meet the performance standard specified in Sec.  179.18 of 
the HMR, which requires that a tank car have sufficient thermal 
resistance so that there will be no release of tank car lading, except 
through the pressure relief device, when subjected to a pool fire for 
100 minutes and a torch fire for 30 minutes. Section 179.18 does not 
require the use of a thermal protection blanket for a tank car that is 
required to be equipped with thermal protection, nor does it prohibit 
their usage, provided the thermal protection blanket meets the 
section's performance requirement. In drafting the HM-251 final rule, 
PHMSA and FRA projected that a thermal protection blanket would be the 
likely option chosen for a DOT-117 tank car to comply with the thermal 
protection requirement, and the use of thermal protection blankets is 
consistent with the HM-251 Regulatory Impact Analysis (RIA), which 
assumed the thermal blanket would be the method used to achieve the 
thermal protection requirements in 179.18.\8\ Although PHMSA and FRA 
acknowledged that new alternate technologies to thermal protection 
blankets may become available for meeting the performance requirement 
of that rule, the analysis projected that thermal protection blankets 
would be the technology of choice and included their cost, along with 
the removal and replacement of jackets (for jacketed DOT-111 cars), in 
the retrofit costs.
---------------------------------------------------------------------------

    \8\ See HM-251 Final Rule RIA, p. 172-173.
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    The FAST Act takes a slightly different approach and instructs the 
Secretary to require a thermal protection blanket of at least \1/2\-
inch-thick material on both cars built to meet the DOT-117 standard and 
non-jacketed DOT-117R cars. This constitutes a prescriptive standard 
for a thermal protection blanket that meets the performance standard 
specified in Sec.  179.18. This rule implements this statutory 
requirement in conformance with the FAST Act; therefore, a thermal 
protection blanket meeting Sec.  179.18(c) is now a

[[Page 53938]]

requirement for the DOT-117, as well as for the DOT-117R if the tank 
car undergoing retrofitting is non-jacketed.
    Paragraph (a) of Section 7305 requires the Secretary to amend the 
HMR to reflect these thermal protection requirements within 180 days of 
the FAST Act's enactment. This rule responds to that mandate.

C. Top Fittings Protection (FAST Act Section 7306)

    Section 7306(a) of the FAST Act specifies minimum requirements for 
top fittings protection on tank cars built to meet the DOT-117R. The 
HM-251 final rule did not require top fittings protection as part of 
the DOT-117R retrofit requirement because the costs involved appeared 
to be greater than the expected safety benefits.\9\ PHMSA noted in the 
preamble to the HM-251 final rule that a task force of the AAR Tank Car 
Committee was evaluating potential advancements in existing top 
fittings protections that could prove cost effective and, along with 
the FRA, urged industry to consider enhancements that would apply to 
both new and retrofitted tank cars.
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    \9\ See HM-251 Final Rule, 80 FR at 26676.
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    The FAST Act outlines self-executing performance standards for 
protective housings and pressure relief valves and does not mandate a 
rulemaking for these requirements. However, the statutory language 
mandates minimum requirements for top fittings protections for the DOT-
117R tank car not currently in the HMR. Codifying these statutorily-
mandated minimum requirements in the HMR provides greater clarity for 
the regulated community and ensures that the HMR is consistent with the 
FAST Act.

D. International Harmonization

    As a result of the FAST Act, the U.S. retrofit schedule for DOT-111 
tank cars is more closely aligned with the schedule that Transport 
Canada has set.\10\ Prior to the FAST Act, certain differences existed 
between the tank car provisions of the HMR and Transport Canada's 
corresponding Transportation of Dangerous Goods (TDG) Regulations. 
Specifically, in the HM-251 final rule, the U.S. retrofit schedule was 
based on several factors, including the Class 3 flammable liquid's PG 
assignment and tank car construction (e.g., whether the tank car is 
jacketed or non-jacketed). However, the HM-251 final rule was not 
commodity-specific; the applicable phase-out date for DOT-111 tank cars 
transporting crude oil or ethanol in an HHFT could vary significantly 
depending on the material's PG assignment. For example, under the HM-
251 final rule, tank cars transporting PG I crude oil in an HHFT would 
need to be retrofitted or newly manufactured DOT-117R, DOT-117P, or 
DOT-117 tank cars at an earlier date than tank cars in an HHFT 
transporting crude oil assigned to PG II or PG III. Moreover, per the 
HM-251 final rule, a train transporting crude oil or ethanol but not 
meeting the definition of an HHFT is not required to utilize 
retrofitted or newly manufactured tank cars conforming to the DOT-117R, 
DOT-117P, or DOT-117.
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    \10\ Transport Canada is the Canadian equivalent of DOT, with 
broad oversight authority for all modes of transportation, including 
the rail transportation of hazardous materials.
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    Conversely, Transport Canada implemented a phase-out schedule that 
was commodity-specific (in addition to consideration of tank car design 
factors). The TDG Regulations mandate that flammable liquid commodities 
identified as crude oil or ethanol cannot be transported in a TC/DOT-
111 in accordance with Canada's phase-out schedule, irrespective of PG 
assignment. For example, in order to be used to transport crude oil, 
TDG Regulations require retrofit of a non-jacketed TC/DOT-111 tank car 
by Canada's first compliance date (May 1, 2017), regardless of the 
crude oil's PG assignment. Furthermore, under the TDG Regulations, the 
TC/DOT-117 applies to a single tank car. Transport Canada's TDG 
Regulations do not include a definition for an HHFT.
    As mandated by the FAST Act, in this final rule, PHMSA is 
implementing a commodity-specific phase-out schedule for the transport 
of unrefined petroleum products and ethanol in DOT-111 tanks cars, 
irrespective of the PG assigned. Moreover, the FAST Act mandates the 
complete phase out of DOT-111 cars for flammable liquids, as opposed to 
just tank cars transported in HHFTs. Therefore, with respect to being 
commodity-specific and the applicability of the new standards to a 
single tank car, this final rule amends the HMR to further align with 
Transport Canada's corresponding TDG Regulations. There are, however, 
still some differences between the HMR and TDG Regulations related to 
tank car standards and the retrofit schedule. For additional discussion 
of international harmonization issues, please refer to Subsection K, 
``Executive Order 13609 and International Trade Analysis.''

II. Good Cause Justification

    PHMSA is issuing this final rule without an opportunity for public 
notice and comment as is normally provided under the Administrative 
Procedure Act (APA), 5 U.S.C. 553. The APA authorizes agencies to 
dispense with certain notice and comment procedures if the agency finds 
good cause that they are impracticable, unnecessary, or contrary to the 
public interest. See 5 U.S.C. 553(b)(3)(B). In this instance, PHMSA 
finds that there is good cause to dispense with notice and comment 
because it would be impracticable and unnecessary.
    ``Good cause'' exists in impracticable situations when notice 
unavoidably prevents due and required execution of agency functions or 
when an agency finds that due and timely execution of its functions 
would be impeded by the notice otherwise required by the APA. The FAST 
Act requirements covered in this rulemaking are all non-discretionary, 
and two of the three FAST Act sections addressed in this rulemaking are 
self-executing (see Sections 7304 and 7306). PHMSA's actions in this 
final rule merely codify in the HMR these FAST Act requirements based 
on the authority of the Secretary to implement the statute.\11\ This 
final rule addresses congressional mandates that lay out specific 
requirements or instruct the Secretary to issue conforming regulatory 
amendments immediately or soon after the FAST Act's date of enactment. 
Given the statute's timeline for issuing conforming regulations, PHMSA 
finds that due and timely execution of agency functions would be 
impeded by the process of public notice and comment. As such, notice 
and comment procedures are ``impracticable'' within the meaning of the 
APA, 5 U.S.C. 553(b)(3)(B). Furthermore, in making these ministerial 
and technical amendments PHMSA is not exercising discretion in a way 
that could be informed by public comment. The FAST Act does not provide 
PHMSA the flexibility to withdraw, change or revise this rule in 
response to adverse public comment. As such, notice and comment 
procedures are ``unnecessary'' within the meaning of the APA, 5 U.S.C. 
553(b)(3)(B).
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    \11\ The Secretary has delegated this authority to PHMSA. See 49 
CFR 1.97.
---------------------------------------------------------------------------

    This final rule is effective on the day of publication in the 
Federal Register. The APA requires agencies to delay the effective date 
of regulations for 30 days after publication, unless the agency finds 
good cause to make the regulations effective sooner. See 5 U.S.C. 
553(d). In addition to the previously discussed good cause to publish 
this rulemaking without advance notice and opportunity for public 
comment to implement the specific and non-discretionary mandates

[[Page 53939]]

of the FAST Act, PHMSA finds good cause to make the regulations 
effective prior to 30 days.
    The DOT Regulatory Policies and Procedures [44 FR 11034; February 
26, 1979] provide that, to the maximum extent possible, DOT operating 
administrations should provide an opportunity for public comment on 
regulations issued without prior notice. Per the criteria specified in 
this policy, PHMSA finds that providing an opportunity for public 
comment cannot reasonably be anticipated to result in the receipt of 
useful information. This rule simply implements certain non-
discretionary measures of the FAST Act; therefore, PHMSA is unable to 
adjust the text of the rule to account for any public comment. Section 
7304 (expanding the tank car requirements to all flammable liquids) and 
Section 7306 (requiring top fittings protection) are self-executing and 
do not technically require regulatory action; Section 7304 (adjusting 
the retrofit timeline) is non-discretionary and required immediately; 
and Section 7305 (requiring \1/2\ inch thermal protection) is non-
discretionary and required no later than 180 days from the FAST Act's 
enactment. Further, due to the non-discretionary nature of Sections 
7304, 7305, and 7306 of the FAST Act, PHMSA is without authority to 
withdraw, change or revise this rule in response to adverse public 
comment. For these reasons, PHMSA is not providing an opportunity for 
public comment.

III. Section-by-Section Review

Part 173

Section 173.241
    Section 173.241 provides the bulk packaging requirements for 
certain low hazard (i.e., PG III) liquid and solid materials. 
Specifically, paragraph (a) provides the specifications of rail tank 
cars that may be used to transport hazardous materials when directed to 
this section by Column (8C) of the Sec.  172.101 Hazardous Materials 
Table (HMT). To execute the mandate in Section 7304 of the FAST Act, in 
this final rule we are revising paragraph (a) to prohibit the use of 
DOT-111 tank cars (including CPC-1232 tank cars) for Class 3 (flammable 
liquid) material in PG III, regardless of whether the cars are in HHFT 
service, unless they meet the DOT-117P performance standard or the DOT-
117R retrofit standard. The phase-out must occur by the date in Table 
2:

                 Table 2--Phase-Out Schedule for DOT-111 Tank Cars in Class 3, PG III Service *
----------------------------------------------------------------------------------------------------------------
                                                                      DOT-111 (including cars built to the CPC-
                Material                  Jacketed or non-jacketed    1232 standard) not authorized on or after
                                                  tank car
----------------------------------------------------------------------------------------------------------------
Class 3, PG III (flammable liquid)       Jacketed and Non-jacketed.  May 1, 2029.
 material.
----------------------------------------------------------------------------------------------------------------
* Note: For unrefined petroleum products and ethanol, see Tables 3 and 4 below, as applicable.

Section 173.242

    Section 173.242 provides the bulk packaging requirements for 
certain medium hazard (i.e., PG II and III) liquid and solid materials. 
Specifically, paragraph (a) provides which specifications of rail tank 
cars may be used to transport hazardous materials when directed to this 
section by Column (8C) of the Sec.  172.101 HMT. Consistent with the 
mandate in Section 7304 of the FAST Act, in this final rule we are 
revising paragraph (a) to prohibit the use of DOT-111 tank cars for 
Class 3 (flammable liquids) in PG II and III, regardless of whether the 
cars are in HHFT service, unless they meet the DOT-117P performance 
standard or the DOT-117R retrofit standard. The phase-out must occur by 
the dates in Table 3 according to material type and tank car design 
factors:

                                   Table 3--Phase-Out Schedule for DOT-111 Tank Cars in Class 3, PG II and III Service
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                         Jacketed or non-jacketed                                                    DOT-111 Built to  CPC-1232 not
               Material                          tank car              DOT-111 Not authorized on or after                authorized on or after
--------------------------------------------------------------------------------------------------------------------------------------------------------
Unrefined petroleum products (e.g.,     Non-jacketed.............  January 1, 2018...........................  April 1, 2020.
 crude oil) \12\.
                                        Jacketed.................  March 1, 2018.............................  May 1, 2025.
Ethanol...............................  Non-jacketed.............  May 1, 2023...............................  July 1, 2023.
                                        Jacketed.................  May 1, 2023...............................  May 1, 2025.
Other Class 3, PG II and III            Jacketed and Non-jacketed  May 1, 2029...............................  May 1, 2029.
 (flammable liquid) material (other
 than unrefined petroleum products or
 ethanol).
--------------------------------------------------------------------------------------------------------------------------------------------------------

Section 173.243

    Section 173.243 provides the bulk packaging requirements for 
certain high hazard (i.e., PG I) liquids and dual hazard materials. 
Specifically, paragraph (a) provides which specifications of rail tank 
cars may be used to transport hazardous materials when directed to this 
section by Column (8C) of the Sec.  172.101 HMT. Consistent with the 
mandate in Section 7304 of the FAST Act, in this final rule we are 
revising paragraph (a) to prohibit the use of DOT-111 tank cars for 
Class 3 (flammable liquids) in PG I, regardless of whether the cars are 
in HHFT service, unless they meet the DOT-117P performance standard or 
the DOT-117R retrofit standard. The phase-out must occur by the dates 
in Table 4 according to material type and tank car design factors:
---------------------------------------------------------------------------

    \12\ Unrefined petroleum products refers to hazardous 
hydrocarbons that are extracted from the earth and have not yet been 
processed to such an extent that the properties of the product are 
known and consistent.

[[Page 53940]]



                                       Table 4--Phase-out Schedule for DOT-111 Tank Cars in Class 3, PG I Service
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                         Jacketed or non-jacketed                                                    DOT-111 Built to  CPC-1232 not
               Material                          tank car              DOT-111 Not authorized on or after                authorized on or after
--------------------------------------------------------------------------------------------------------------------------------------------------------
Unrefined petroleum products (e.g.,     Non-jacketed.............  January 1, 2018...........................  April 1, 2020.
 crude oil).
                                        Jacketed.................  March 1, 2018.............................  May 1, 2025.
Class 3, PG I (flammable liquid)        Jacketed and Non-jacketed  May 1, 2025...............................  May 1, 2025.
 (other than unrefined petroleum
 products).
--------------------------------------------------------------------------------------------------------------------------------------------------------

Part 179

Section 179.202-6

    Section 179.202-6 requires a tank car built to meet the DOT-117 to 
have a thermal protection system. Consistent with the mandate in 
Section 7305 of the FAST Act, in this final rule we are revising this 
section to require that the thermal protection system include a thermal 
protection blanket with at least a \1/2\-inch-thick material that meets 
Sec.  179.18(c).

Section 179.202-11

    Section 179.202-11 provides a table of specification requirements 
for the DOT-117 tank car. Consistent with the mandate in Section 7305 
of the FAST Act, in this final rule we are revising the table to make 
clear that a thermal protection blanket (in accordance with Sec.  
179.202-6) is a requirement of the DOT-117 tank car.

Section 179.202-12

    Section 179.202-12 provides the performance standards for a DOT-
117P tank car. For greater understanding by the regulated community, in 
this final rule we are revising the heading of Sec.  179.202-12 to more 
clearly indicate that the performance standard requirements apply to 
the DOT-117P tank car.

Section 179.202-13

    Section 179.202-13 provides performance standards for retrofit of 
DOT-111 tank cars (i.e., standards for a DOT-117R tank car). Consistent 
with the mandate in Section 7306 of the FAST Act, in this final rule we 
are revising the top fittings protection requirements in paragraph (h) 
to include minimum standards for the protection of pressure relief 
devices, valves, or fittings.

IV. Regulatory Analyses and Notices

A. Statutory/Legal Authority for This Rulemaking

    This final rule is published under the authority of Federal 
Hazardous Materials Transportation Law (49 U.S.C. 5101 et seq.). 
Section 5103(b) of Federal Hazmat Law authorizes the Secretary to 
prescribe regulations for the safe transportation, including security, 
of hazardous material in intrastate, interstate, and foreign commerce.

B. Executive Order 12866, Executive Order 13563, and DOT Regulatory 
Policies and Procedures

1. Background
    As previously discussed, the HM-251 final rule amended the HMR by 
defining certain trains transporting large volumes of Class 3 flammable 
liquids as HHFTs and setting forth regulations (i.e., speed 
restrictions, braking systems, and routing) for their operation. The 
HM-251 final rule also adopted into the HMR requirements for sampling 
and testing programs to ensure the proper classification of unrefined 
petroleum-based products. Furthermore, it codified new tank car design 
standards and established a phase-out schedule of legacy tank cars 
(e.g., DOT-111 tank cars) by requiring use of either a DOT-117, DOT-
117P, or DOT-117R specification tank car by certain dates for the 
transport of Class 3 flammable liquids in HHFTs.
    The FAST Act instructs the Secretary to make specific regulatory 
amendments to the aforementioned tank car design standards and phase-
out schedule codified in the HM-251 final rule. The FAST Act 
requirements addressed in this final rule are non-discretionary. This 
final rule revises the newly adopted regulations in the HM-251 final 
rule to align with the FAST Act. The specific amendments in this final 
rule are identified in Table 5 below and discussed briefly in the text 
that follows. Table 5 summarizes the affected population, costs, and 
benefits:

      Table 5--Summary of Affected Population, Costs, and Benefits
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Need and Basis for the Rule............  Congressional Mandate: FAST Act
                                          provisions.
Applicability..........................  Rail tank car manufacturers;
                                          tank car owners and lessors;
                                          railroad operators; shippers,
                                          offerors, and rail carriers.
Affected Population....................  19,757 Flammable Liquid Tank
                                          Cars.
                                         73,374 Crude and Ethanol Tank
                                          Cars.
Total Costs (7% Discount)..............  $520 million.
Annualized Costs (7% Discount).........  $49 million.
Costs (Qualitative)....................  Out-of-Service Time.
Benefits (Qualitative).................  Improved puncture resistance.
                                         Increased thermal
                                          survivability.
                                         Enhanced protection of top
                                          fittings.
------------------------------------------------------------------------

Retrofit Schedule

    The FAST Act instructs the Secretary to make specific regulatory 
amendments to the tank car design standards and phase-out schedule 
established by the HM-251 final rule. Section 7304 of the FAST Act 
mandates a phase-out of all DOT-111 tank cars used to transport 
flammable liquids, thereby requiring that these tank cars meet the DOT-
117, DOT-117P, or DOT-117R in part 179 of title 49, regardless of train 
composition. This differs from the HM-251 final rule, which required 
flammable liquids previously transported in a DOT-111 tank car to be 
transported in a DOT-117, DOT-117P, or DOT-117R tank car only when 
these tank cars were configured as part of an HHFT.

[[Page 53941]]

Thermal Protection Blankets

    Section 7305 of the FAST Act mandates that each tank car built to 
meet the DOT-117 and each non-jacketed tank car retrofitted to meet the 
DOT-117R be equipped with a thermal protection blanket of at least \1/
2\-inch-thick material that meets Sec.  179.18(c) of the HMR.\13\ Under 
the HM-251 final rule, a thermal protection blanket was not required, 
but it was an authorized means of providing the required thermal 
protection for a DOT-117 tank car and in the regulatory impact analysis 
it was assumed to be the means of compliance that likely would be used 
by manufacturers.
---------------------------------------------------------------------------

    \13\ The HM-251 final rule did not require that these tank car 
specifications include a thermal protection blanket as part of the 
thermal protection system, but rather required that the 
specification tank cars meet the performance standard specified in 
Sec.  179.18.
---------------------------------------------------------------------------

Top Fittings Protections

    Section 7306 of the FAST Act specifies minimum requirements for top 
fittings protection on tank cars built to meet the DOT-117R--including 
a protective housing for the top fittings and the pressure relief 
device--and allows for an alternative protection system. The FAST Act 
outlines self-executing performance standards for top fittings 
protection requirements. Codifying these minimum requirements in the 
HMR provides clarity for the regulated community on the statutory 
requirements for top fittings.

Executive Orders

    Executive Orders 12866 (``Regulatory Planning and Review'') and 
13563 (``Improving Regulation and Regulatory Review'') require agencies 
to regulate in the ``most cost-effective manner,'' to make a ``reasoned 
determination that the benefits of the intended regulation justify its 
costs,'' and to develop regulations that ``impose the least burden on 
society.'' This final rule was mandated by congressional action, and 
the provisions in this action are non-discretionary.
    Executive Order 13610 (``Identifying and Reducing Regulatory 
Burden''), issued May 10, 2012, urges agencies to conduct retrospective 
analyses of existing rules to examine whether they remain justified and 
whether they should be modified or streamlined in light of changed 
circumstances, including the rise of new technologies. DOT believes 
that streamlined and clear regulations are important to ensure 
compliance with important safety regulations. As such, DOT has 
developed a plan detailing how such reviews are conducted.\14\
---------------------------------------------------------------------------

    \14\ Department of Transportation's plan for retrospective 
regulatory reviews is available online at: http://www.dot.gov/regulations/dot-retrospective-reviews-rules.
---------------------------------------------------------------------------

    This final rule is designated as economically significant, and was 
reviewed by the Office of Management and Budget (OMB). The final rule 
is considered a significant regulatory action under the Regulatory 
Policies and Procedures order issued by the DOT [44 FR 11034; February 
26, 1979]. In this section, PHMSA addresses the economic impact of this 
final rule.
2. Need for Rule
    The FAST Act instructed the Secretary to make specific regulatory 
amendments to the aforementioned tank car design standards and phase-
out schedule established by the HM-251 final rule. The FAST Act changes 
adopted in this final rule are non-discretionary. Regardless, the need 
for the changes adopted in this final rule remains consistent with that 
in the HM-251 final rule and the HM-251 RIA. Specifically, both the HM-
251 final rule and this final rule are designed to lessen the 
consequences of train accidents involving the unintentional release of 
flammable liquids. The purpose of the regulations for enhanced tank car 
standards is to prevent spills by keeping flammable liquids, including 
crude oil and ethanol, in rail tank cars and to mitigate the severity 
of incidents should they occur.
    Finally, as previously explained, the requirements of Sections 
7304, 7305, and 7306 of the FAST Act are non-discretionary and, in some 
cases, statutorily self-executing, thus superseding the recently 
published HM-251 final rule. It is good practice to adjust the HMR to 
align with the current statutory mandates. PHMSA seeks to reduce 
confusion within the regulated industries and other members of the 
public by eliminating inconsistency between the statutory mandates and 
existing regulatory mandates.
3. Baseline/Affected Entities
    When examining the cost and budgetary impacts of the provisions in 
the FAST Act that revise the HM-251 final rule, PHMSA specifically 
focuses on the cost these changes will impose related to the baseline 
safety level set by the HM-251 final rule. In other words, the costs 
considered are only those that are new and add to the previous costs 
considered in the HM-251 RIA.
    Both the HM-251 final rule and this final rule would impact PHMSA 
stakeholders, including rail tank car manufacturers; tank car owners 
and lessors; railroad operators; shippers, offerors, and rail carriers; 
companies that manufacture, transport, or use flammable liquids; and 
emergency responders. More specifically, owners and lessors of 
flammable liquid tank cars, shippers of flammable liquids, and 
railroads that transport flammable liquids would be affected by this 
rulemaking. Below is a summary of the affected entities for the 
specific actions adopted in this final rule. Specifically, for this 
analysis we look at the number of tank cars to gauge impact. We discuss 
the affected entities separately below because the number varies for 
each requirement.
Retrofit Schedule
    Table 6 is derived from the HM-251 RIA (Table TC2). It represents 
PHMSA's estimate of the number of DOT-111 and CPC-1232 tank cars that 
would need to be retrofitted for crude and ethanol service in 
HHFTs.\15\
---------------------------------------------------------------------------

    \15\ This only includes crude and ethanol tank cars and assumes 
a 28 percent retirement rate.

  Table 6--Estimated Quantity of DOT-111 Tank Cars in Need of Retrofit
------------------------------------------------------------------------
                  Tank car type/service                     Fleet size
------------------------------------------------------------------------
Non-Jacketed DOT-111 tank cars in PG I service..........          11,637
Non-Jacketed DOT-111 tank cars in PG II service.........          18,493
Jacketed DOT-111 tank cars in PG I and PG II service....           2,356
Non-Jacketed CPC-1232 tank cars in PG I and PG II                 15,895
 service................................................
Jacketed CPC-1232 tank cars in PG I, PG II service, and           24,933
 all remaining tank cars carrying PG III materials in an
 HHFT (pressure relief valve and valve handles).........
                                                         ---------------
    Total...............................................          73,314
------------------------------------------------------------------------

    The FAST Act modifies the retrofit schedule, accelerating deadlines 
for unrefined petroleum products in PGII and relaxing the schedule for 
retrofitting DOT-111 tank cars transporting Class 3 flammable liquids 
other than unrefined petroleum or ethanol. These modifications to the 
schedule would neither affect the number of cars retrofitted nor the 
per unit cost of retrofits, instead only affecting the timing of the 
retrofits. As a result, the cost differential of this adjustment is a 
matter of the difference in the value of discounting a year or two for 
a subset of cars, which is negligible. For this analysis, we assume the 
same

[[Page 53942]]

distribution of crude and ethanol tank cars as in Table 6 even though 
it could be argued that given the current economic conditions these 
numbers overestimate the needed tank car fleet.\16\ Specifically, the 
number of tank cars in crude oil or ethanol service that need to be 
retrofit is likely an overestimate due to lower oil prices, expected 
future additions to the fleet, reduced tank car demand, an existing 
tank car surplus, decreased fleet utilization rates, and decreased 
leasing rates. The Progressive Railroading article cited above notes 
recent changes in the market for tank cars, driven primarily by a 
substantial drop in crude oil prices, including that tank car 
utilization has gone from near 100 percent utilization in June of 2014 
to 77 percent utilization in 2015, has resulted in a surplus of 80,000 
tank cars. Orders for new tank cars have dropped significantly and the 
current tank car surplus indicates that unless energy prices rebound, 
tank car utilization will be well below 100 percent, meaning that fewer 
cars will be needed to haul crude oil than the industry predicted in 
2014. In addition, the AAR weekly rail traffic report from May 7, 2016, 
noted U.S. Class I railroads originated 63,261 carloads of crude oil in 
the first quarter of 2016, down 21,664 carloads or 25.5 percent from 
the fourth quarter of 2015 and down 49,828 carloads or 44.1 percent 
from the first quarter of 2015.\17\
---------------------------------------------------------------------------

    \16\ Progressive Railroading Article: http://www.progressiverailroading.com/rail_industry_trends/article/Outlook-2016-Rail-car-forecast-by-Richard-Kloster-46701.
    \17\ https://www.aar.org/newsandevents/Press-Releases/Pages/2016-05-11-railtraffic.aspx.
---------------------------------------------------------------------------

    In addition to modifying the retrofit schedule for crude and 
ethanol tank cars covered in the HM-251 final rule, the FAST Act 
requires all DOT-111 flammable liquid tank cars to meet the DOT-117/
117R tank car specification based on a retrofit timeline. In comments 
and appeals to the HM-251 final rule, interested parties estimated that 
approximately 40,000 additional tank cars would need retrofitting if 
the retrofit requirements were expanded to all flammable liquids. On 
September 30, 2014, the Railway Supply Institute (RSI) provided a fleet 
projection for the end of 2015 in their comments to the HM-251 NPRM 
docket. Table 7 summarizes the RSI projections:

                  Table 7--RSI Projected Flammable Liquids Tank Car Fleet as of the end of 2015
----------------------------------------------------------------------------------------------------------------
                                                                                                       Other
                            Sub-fleet                                Crude oil       Ethanol *       flammable
                                                                                                     liquids *
----------------------------------------------------------------------------------------------------------------
Non-jacketed DOT-111s...........................................          23,090          27,037          24,790
Jacketed DOT-111s...............................................           7,016              88           9,413
Non-jacketed CPC-1232s..........................................          21,993             751           2,944
Jacketed CPC-1232s..............................................          35,408              23           1,975
                                                                 -----------------------------------------------
    Totals......................................................          87,507          27,899          39,122
----------------------------------------------------------------------------------------------------------------
* Note: Ethanol and Other Flammable Liquids car counts are based on AAR counts of cars that shipped at least one
  carload of the commodity in question over the period from January 1, 2013 through April 30, 2014. If an
  individual car switched services during this period, that car will be counted as part of more than one fleet.

    In the HM-251 Final Rule RIA, PHMSA assumed that all legacy tank 
cars would be either retrofit or retired. Retired cars were assumed to 
be scrapped rather than transferred to other service. The Agency also 
assumed that any new car built for crude and ethanol service would be a 
DOT-117 regardless of whether the car was to be used in manifest 
service or unit train service. The Agency did not assume that CPC-1232 
cars would continue to be built for manifest crude and ethanol service. 
The Agency's reasoning was that any crude or ethanol car would probably 
end up in HHFT service at some point even if some portion of those 
commodities would be hauled by manifest trains. The figures in the 
Crude and Ethanol columns of Table 7 therefore represent the estimated 
size of the total crude and ethanol fleets, not just the portion of 
those fleets destined for HHFT service.
    PHMSA will continue to evaluate the market conditions that drive 
industry decisions regarding the tank car fleet. Most recently, the 
tank car market has seen a growing tank car surplus, along with 
decreasing fleet utilization rates and decreased leasing 
rates.18 19 Furthermore, as stated in the note to Table 7, 
for ``Other Flammable Liquids'' \20\ (OFL) the car counts are based on 
AAR counts of cars that shipped at least one carload of the commodity 
in question over the period from January 1, 2013 through April 30, 
2014. This is the same approach to counting tank cars that was utilized 
in the HM-251 RIA. The concern is that if an individual car switched 
services (e.g., from ethanol to another flammable liquid) during this 
period, that car would be counted as part of more than one fleet. In a 
February 29, 2016, letter to PHMSA, RSI reiterated the difficulty in 
formulating accurate tank car fleet estimates, particularly when tank 
cars are likely being shifted between different types of service.\21\ 
As such, we believe that counting tank cars in this manner double 
counts an individual car if that car switched services during the 
period. Such double counting may be temporary, however. If the shipping 
demand increases for crude oil, switching between services may become 
much less prevalent.
---------------------------------------------------------------------------

    \18\ See http://www.progressiverailroading.com/virtualmag/pr1215/files/14.html.
    \19\ See http://www.wsj.com/articles/demand-for-key-types-of-railway-cars-falls-amid-declining-output-1429908476.
    \20\ ``Other Flammable Liquids'' means any material meeting the 
definition of a flammable liquid as defined in Sec. Sec.  172.120 
and 173.121 excluding those classified under proper shipping names 
related to crude and ethanol.
    \21\ See [insert RSI letter into the docket].
---------------------------------------------------------------------------

    Based on this discussion, PHMSA will continue to use the crude and 
ethanol fleet size estimated in the HM-251 RIA acknowledging that those 
tank car numbers may now be an over-estimation. Regarding the 
additional flammable liquid tank cars that are included in the scope of 
this rule based on the FAST Act requirements, we are using the RSI 
estimate as a basis for determining the fleet size but are modifying it 
based on the factors discussed above (i.e., potential double counting 
inflating the fleet estimate and falling demand for cars in crude oil 
service). We estimate the total OFL fleet size is between 20,000 to 
30,000 tank cars. We arrived at this estimate by making two 
adjustments: Remove the Canadian fleet, which was estimated to account 
for 25.7 percent of cars in the HM-251 final rule RIA (see page 80); 
and, reduce the remaining U.S. fleet by 10 percent to adjust for double 
counting due to switching service (as referenced

[[Page 53943]]

in the note to Table 7 above).\22\ This reduction puts the affected OFL 
fleet estimate in the middle of the 20,000-30,000 range (26,161 in 
table below). The estimates in Table 8 below were obtained by 
multiplying the figures in Table 7 by 0.743 (1 - 0.257 = 0.743) and 
0.90 (1 - 0.10 = 0.90), sequentially. For the purposes of this 
analysis, we define the flammable liquid tank car population affected 
by these provisions as follows in Table 8.
---------------------------------------------------------------------------

    \22\ Starting with the RSI data in Table 7, we sequentially take 
out 25.7% to remove the Canadian fleet and then take out 10% of the 
remainder to adjust for double counting due to switching service.

 Table 8--PHMSA Projected Flammable Liquids Tank Car Fleet used for FAST
                         Act Cost Determination
------------------------------------------------------------------------
                                                         Other flammable
                       Sub-fleet                             liquids
------------------------------------------------------------------------
Non-jacketed DOT-111s.................................            16,577
Jacketed DOT-111s.....................................             6,294
Non-jacketed CPC-1232s................................             1,969
Jacketed CPC-1232s....................................             1,321
                                                       -----------------
    Total.............................................            26,161
------------------------------------------------------------------------

    PHMSA uses the fleet estimates for OFL in Table 8 as the basis for 
the cost estimates related to OFL in this rule. While the HM-251 final 
rule requirements captured OFL that were transported in an HHFT 
configuration, PHMSA did not expect OFL to be transported in HHFT 
service therefore no costs or benefits were assigned to those materials 
in the HM-251 RIA. The key difference between the HM-251 final rule and 
the FAST Act requirements that are being adopted in this action is that 
the latter covers all flammable liquid cars regardless of train 
composition. Therefore, these tank cars are considered in this analysis 
and will require full retrofits--including not just top fittings 
protection and thermal protection blankets, but also full height head 
shields, full jackets, improved bottom outlet valve handles, and high 
capacity pressure relief valves--to meet the FAST Act requirement that 
all flammable liquid cars meet the DOT-117R.
Thermal Protection Blankets
    The FAST Act requires that each tank car built to meet the DOT-117 
and each non-jacketed tank car retrofitted to meet the DOT-117R be 
equipped with an ``insulating blanket,'' which as clarified above, we 
have defined here to mean a thermal protection blanket. This 
requirement is consistent with the assumptions made for meeting the 
DOT-117R in the HM-251 RIA. Although PHMSA acknowledged that new 
alternate technologies to existing thermal protection blankets may 
become available for meeting the performance requirement of that rule, 
we assumed that the jacketed CPC-1232 cars were equipped with a thermal 
protection system meeting Sec.  179.18 and there was no associated 
retrofit cost. Thus, for crude and ethanol cars, thermal protection 
blanket costs are already accounted for; hence, this FAST Act 
requirement does not add additional costs for these cars. Neither the 
FAST Act nor these complying regulations require jacketed cars to be 
retrofitted with thermal protection, so associated costs would not be 
borne regardless of the assumptions made in the HM-251 rulemaking 
analysis.
    Section 7305(b) of the FAST act provides a savings clause that 
states ``[n]othing in this section shall prohibit the Secretary from 
approving new or alternative technologies or materials as they become 
available that provide a level of safety at least equivalent to the 
level of safety provided for under subsection (a).'' As the regulatory 
text is written, the prescriptive standards for thermal protection 
blankets are applied for new DOT-117 and DOT-117Rs. The section related 
to DOT-117Ps is not revised thus if an entity were able to provide a 
design that exceeded the prescriptive standard for a thermal protection 
blanket in the FAST act and FRA were to approve that design as a 
DOT117P they could innovate.
    The thermal protection blanketing provision will only affect those 
non-jacketed flammable liquid cars in need of retrofit. Specifically, 
we estimate 18,546 tank cars (comprised of the non-jacketed legacy DOT-
111 and non-jacketed CPC-1232 tank cars in OFL service listed in Table 
8) will be affected.
Top Fittings Protection
    The HM-251 final rule did not require modification or addition of 
top fittings protections to meet the DOT-117R. The FAST Act requires 
enhanced top fittings protections for all retrofit cars. Tank cars 
built to the CPC-1232 industry standard are already equipped with top 
fittings protections; therefore, this new cost only applies to legacy 
DOT-111 tank cars transporting crude oil and ethanol, as well as those 
transporting OFL that are now included in our scope per the FAST Act. 
In total, we estimate 55,357 tank cars (13,905 crude tank cars, 18,581 
ethanol tank cars, and 22,871 OFL tank cars) will be affected (see 
Tables 6 and 8, above).
4. Summary of Costs
    PHMSA applies the same retrofit costs that were applied in the HM-
251 RIA to all cars being retrofitted (all CPC-1232 tank cars and the 
DOT-111 tank cars that are not retired). The unit retrofit costs used 
in the HM-251 RIA are applied to OFL tank cars, along with the 
estimated cost of installing top fittings protection. The unit costs, 
including out-of-service time, were estimated at $38,923 for a non-
jacketed DOT-111 tank car.\23\ The addition of top fittings protection 
raises this cost to $43,508. For a jacketed DOT-111 tank car, the unit 
cost of retrofitting in the HM-251 RIA was $28,123. With top fittings 
protection, this cost rises to $32,708 per car. PHMSA assumes these 
cars will be retrofitted in the final 5 years of the allowed timeframe 
(i.e., between 2025 and 2029). Table 10 describes the cost and 
modifications needed by fleet and tank car type. PHMSA estimates that 
76 percent of the total costs of the FAST Act tank car retrofit 
requirements accrue to the non-jacketed DOT-111 tank cars. In addition, 
we apply a $4,585 per car cost to account for the cost of enhancing top 
fittings protection on the legacy DOT-111 tank cars (both jacketed and 
non-jacketed).\24\ The per unit cost for

[[Page 53944]]

each tank car type is listed below in Table 10 below.
---------------------------------------------------------------------------

    \23\ Given the decrease demand for DOT-111 tank cars since the 
publication of HM-251 final rule, costs associated with out-of-
service time may be lower than originally estimated due to 
underutilization of the fleet.
    \24\ See RSI letter to PHMSA [add link to docket].
---------------------------------------------------------------------------

Retirements
    As noted above, we assume that 28 percent of OFL tank cars would be 
retired rather than retrofit. For the HM-251 RIA virtually all 
retirements were forced early retirements because the retrofit timeline 
was aggressive, especially for legacy DOT 111 tank cars. The FAST Act 
deadline is substantially more lenient, and as a result, the Agency 
believes it appropriate to consider natural retirements as well as 
forced early retirements. We use the fleet age profile used in the 2015 
HM-251 RIA to estimate retirement costs to identify the number of cars 
in each year from 2016 to 2028 that would reach the end of their useful 
life. We then assume that the remainders of the 28 percent of retired 
cars are forced to retire in 2029. Given the longer time horizon for 
FAST Act compliance the Agency believes this treatment is appropriate. 
Natural retirements will occur over the nearly decade and a half, and 
tank car lessors and operators will have more time to plan for moving 
some of the fleet that is not worth retrofitting into other service 
rather than scrapping the cars.
    We conduct this analysis by assuming, absent FAST Act requirements, 
that a retired non-jacketed DOT-111 tank car would be replaced with a 
non-jacketed CPC-1232 and a retired jacketed DOT-111 tank car would 
have been replaced with a jacketed CPC-1232 tank car. In addition, we 
assume that industry would have built improved CPC-1232 tank cars for 
OFL service--with pressure relief valves (PRVs) and bottom outlet valve 
(BOV) handles that would meet DOT-117 requirements. The non-jacketed 
cars would (obviously) not have jackets, but would have a 1/2 inch 
shells and half height head shields. The jacketed cars would have 7/16 
inch shells and jackets with thermal protection and top fittings 
protection. The only difference between these cars and a DOT-117 tank 
car is an eighth of an inch of shell thickness, which PHMSA estimates 
to be a $3,000 higher cost for the DOT-117 tank car compared to a 
jacketed CPC-1232 tank car in the HM-251 Final Rule RIA.\25\
---------------------------------------------------------------------------

    \25\ We assume that these cars would have been built with HM-251 
conforming pressure relief valves (PRV) and bottom outlet valve 
handles (BOV) and FAST Act conforming top fittings protection. We 
assume that adding better PRV and BOV handle would not add 
appreciably to the cost of a car when done at the manufacturing 
stage. As noted above, all CPC-1232 tank cars are built with 
conforming top fittings protection so that assumption carries 
through here.
---------------------------------------------------------------------------

    As we found in the development of the HM-251 final rule analysis, 
tank car purchase prices are difficult to obtain. One way to 
approximate them is to use modified retrofit costs for upgrading a car 
from one type to another. As noted, the cost difference between a DOT-
117 and a jacketed CPC-1232 is approximately $3,000, because the only 
difference between the two cars is the thickness of the tank shell. The 
differential for a non-jacketed CPC-1232 is more complicated because it 
lacks several components found on the jacketed car. However, the 
unjacketed CPC-1232 has a thicker shell (1/2 inch rather than 7/16 
inches) than the unjacketed CPC-1232 and would therefore only need 
sixteenth of an inch of shell thickness ($1,500). The non-jacketed CPC-
1232 also has half height head shields. To be fully upgraded to the 
DOT-117 standard, the required additions would be a jacket with full 
height head shields (rather than half height), thermal protection, and 
a sixteenth of an inch of shell thickness. The retrofit costs for a 
non-jacketed CPC-1232 are presented below as a starting point for a new 
car differential. PHMSA modifies these by:

     Eliminating costs of the BOV and PRV, under the 
assumption that when done at the manufacturing stage swapping out 
one part for another would have minimal cost;
     Subtracting $1,000 from the cost of a jacket and head 
shields to account for repurposing the steel that would have been 
used for the non-jacketed CPC-1232 half height head shield into half 
of a full height head shield;
     Adding $1,500 to increase the shell thickness by a 
sixteenth of an inch (half the cost of increasing the shell 
thickness of a CPC-1232 by an eighth of an inch); and,
     Increasing the learning curve efficiency to 15 percent 
because manufacturing efficiencies for new builds should be greater 
than for retrofits.\26\

    \26\ Because components can be added in the most logical and 
time efficient sequence during the manufacturing process. With the 
retrofit process certain components may have to be removed to apply 
thermal protection and a jacket and then reattached.

 Table 9--Retrofit Costs for the Non-Jacketed, DOT CPC-1232NJ (Option 3
               Tank Car) and New Car Differential Estimate
------------------------------------------------------------------------
                                                              New car
             Retrofit option               Retrofit cost   differential
                                            from HM-251        cost
------------------------------------------------------------------------
Bottom outlet valve handle retrofit cost          $1,200              NA
Pressure relief valve retrofit cost.....          $1,500              NA
Thermal protection retrofit cost........          $4,000          $4,000
Full jacket retrofit cost with half              $23,400         $22,400
 height head shields....................
Extra shell thickness...................              NA          $1,500
                                         -------------------------------
    Unadjusted Total....................         $30,100         $27,900
Learning curve cost reduction...........             10%             15%
                                         -------------------------------
    Adjusted Total......................         $27,090         $23,715
------------------------------------------------------------------------

    This yields a car cost differential of $23,715 between a non-
jacketed CPC-1232 tank car and a DOT-117 tank car. We apply this cost 
to natural retirements to reflect the differential cost between 
purchasing a non-Jacketed CPC-1232 and a DOT-117. For jacketed DOT-111s 
that age out of the fleet, we use the cost differential between a 
jacketed CPC-1232 and a DOT-117 ($3,000). For early retirements, we use 
the car cost differential plus the cost of having to buy a new DOT-117 
earlier than planned--$20,649 for a non-jacketed early retirement and 
$16,716 for a jacketed car.
    We also reassessed the cost of early retirements, which is 
dependent on the average remaining service life for the cars retired 
early. For the HM-251 rule this average was 1.9 years for non-jacketed 
DOT-111s and 1.3 years for jacketed DOT-111s. Due to the overall DOT-
111 age distribution, the cars

[[Page 53945]]

retired for OFL service have a higher average remaining life. For non-
jacketed DOT-111s the average is 2.87 years of remaining life, and for 
jacketed DOT-111s the average is 2.28 remaining years of life.\27\ This 
raises the early retirement cost for both car types to those presented 
in Table 10 below. A summary of all OFL cost parameters are presented 
below.
---------------------------------------------------------------------------

    \27\ Years of remaining service life were calculated in the same 
manner as the HM-251 RIA (See pages 162-163). Due to the differing 
age distributions of the OFL fleet compared to the crude and ethanol 
fleets the average remaining life is higher for OFL.

                  Table 10--Unit Costs for FAST Act Requirements, Other Flammable Liquids Fleet
----------------------------------------------------------------------------------------------------------------
                                                                               Top fittings
                          Sub-fleet                               HM-251        protection      Total cost  per
                                                               retrofit cost       cost               car
----------------------------------------------------------------------------------------------------------------
Non-jacketed DOT-111........................................         $38,923          $4,585             $43,508
----------------------------------------------------------------------------------------------------------------
Jacketed DOT-111............................................          28,123           4,585              32,708
----------------------------------------------------------------------------------------------------------------
Non-jacketed CPC-1232.......................................          28,034               0              28,034
----------------------------------------------------------------------------------------------------------------
Jacketed CPC-1232...........................................           3,374               0               3,374
----------------------------------------------------------------------------------------------------------------
Non-jacketed DOT-111 Scheduled Retirement...................                                              23,715
-------------------------------------------------------------                                -------------------
Jacketed DOT-111 Scheduled Retirement.......................                                               3,000
-------------------------------------------------------------                                -------------------
Non-jacketed DOT-111 Early Retirement.......................                                              44,364
                                                                                               (23,715 + 20,649)
-------------------------------------------------------------                                -------------------
Jacketed DOT-111 Early Retirement...........................                                              19,716
                                                                                                (16,716 + 3,000)
----------------------------------------------------------------------------------------------------------------

    These unit costs are applied to the fleet figures presented in the 
Table 11 below. For retirements, the cost of natural retirements is 
applied to the figures in the columns showing retirements for years 
2016-2028. Early retirement costs are applied to the 2029 figures in 
the columns showing retirements. Retrofit costs are estimated by 
applying the retrofit unit costs above to the corresponding car-type 
retrofit column in the table below.

                              Table 11--Type of Flammable Liquid Retrofit and Retirements Based on FAST Act Requirements *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          Retrofit  non-     Retrofit     Retrofit  non-     Retrofit                         Retire
                                                           jacketed  DOT  jacketed  DOT-   jacketed  CPC   jacketed  CPC   Retire  non-   jacketed  DOT-
                                                                111             111            1232           1232 J       jacketed  111        111
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline................................................          16,577           6,294           1,969           1,321          26,161  ..............
Baseline adjusted for retirements **....................          11,935           4,532           1,969           1,321           4,642           1,762
2016....................................................  ..............  ..............  ..............  ..............             384             146
2017....................................................  ..............  ..............  ..............  ..............             261              99
2018....................................................  ..............  ..............  ..............  ..............             202              77
2019....................................................  ..............  ..............  ..............  ..............             101              38
2020....................................................  ..............  ..............  ..............  ..............             129              49
2021....................................................  ..............  ..............  ..............  ..............             156              59
2022....................................................  ..............  ..............  ..............  ..............              93              35
2023....................................................  ..............  ..............  ..............  ..............             156              59
2024....................................................  ..............  ..............  ..............  ..............             318             121
2025....................................................           2,387             906             394             264             374             142
2026....................................................           2,387             906             394             264             291             110
2027....................................................           2,387             906             394             264             220              84
2028....................................................           2,387             906             394             264             202              77
2029....................................................           2,387             906             394             264           1,755             666
--------------------------------------------------------------------------------------------------------------------------------------------------------
* FAST Act other flammable liquid retrofit requirements start in 2025 and end in 2029.
** Total of years for each type.

    Total cost estimates are presented in Table 12 below. These costs 
are obtained by applying the unit costs in Table 10 to the fleet 
figures in Table 11.

                       Table 12--Analysis of Costs for Other Flammable Liquid Retrofit and Retirements For FAST Act Requirements *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                           Retrofit CPC      Retrofit      Retire  non-       Retire
                  Year                    Retrofit  non-     Retrofit      non-jacketed   jacketed  CPC-  jacketed  DOT-   jacketed DOT-    Total cost
                                           jacketed  111   jacketed  111       1232            1232             111             111
--------------------------------------------------------------------------------------------------------------------------------------------------------
2016....................................              $0              $0              $0              $0      $9,106,560        $438,000      $9,544,560

[[Page 53946]]

 
2017....................................               0               0               0               0       6,189,615         297,000       6,486,615
2018....................................               0               0               0               0       4,790,430         231,000       5,021,430
2019....................................               0               0               0               0       2,395,215         114,000       2,509,215
2020....................................               0               0               0               0       3,059,235         147,000       3,206,235
2021....................................               0               0               0               0       3,699,540         177,000       3,876,540
2022....................................               0               0               0               0       2,205,495         105,000       2,310,495
2023....................................               0               0               0               0       3,699,540         177,000       3,876,540
2024....................................               0               0               0               0       7,541,370         363,000       7,904,370
2025....................................     103,853,596      29,633,448      11,045,396         890,736       8,869,410         426,000     154,718,586
2026....................................     103,853,596      29,633,448      11,045,396         890,736       6,901,065         330,000     152,654,241
2027....................................     103,853,596      29,633,448      11,045,396         890,736       5,217,300         252,000     150,892,476
2028....................................     103,853,596      29,633,448      11,045,396         890,736       4,790,430         231,000     150,444,606
2029....................................     103,853,596      29,633,448      11,045,396         890,736      77,858,820      13,130,856     236,412,852
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                               Non-discounted Total          889,858,761
                                                                                                         -----------------------------------------------
                                               NPV 7% Discount Rate          405,750,881
                                                                                                         -----------------------------------------------
                                               NPV 3% Discount Rate          629,195,653
--------------------------------------------------------------------------------------------------------------------------------------------------------
* FAST Act other flammable liquid retrofit requirements start in 2025 and end in 2029.

    For the cars already accounted for in the HM-251 RIA, the only 
additional cost is to modify top fittings protection for the DOT-111 
tank cars. As previously stated, PHMSA assumed in the HM-251 RIA that 
thermal protection blankets would be used to satisfy the thermal 
protection requirements in the HM-251 final rule and acknowledges that 
tank cars built to the CPC-1232 standard are equipped with top fittings 
protection meeting the requirements of the FAST Act. As mentioned 
above, we assume a unit cost of $4,585 per car for this modification. 
Table 13 presents the costs of further modifying these cars. Again, 
discounted NPV is calculated by setting 2016 as year 1.

                  Table 13--Cost for Crude and Ethanol Retrofit Based on FAST Act Requirements
----------------------------------------------------------------------------------------------------------------
                                                                   Non-jacketed   Jacketed  DOT-
                              Year                                    DOT-111           111            Total
----------------------------------------------------------------------------------------------------------------
2016............................................................     $20,233,605              $0     $20,233,605
2017............................................................      33,122,040       3,287,445      36,409,485
2018............................................................               0       7,225,960       7,225,960
2019............................................................               0               0               0
2020............................................................      22,938,755               0      22,938,755
2021............................................................      40,068,315               0      40,068,315
2022............................................................      23,273,460         288,855      23,562,315
2023............................................................          90,554               0          90,554
Non-discounted Total............................................     139,726,729      10,802,260     150,528,989
NPV 7%..........................................................     105,440,453       8,949,802     114,390,255
NPV 3%..........................................................     123,203,667       9,946,375     133,150,042
----------------------------------------------------------------------------------------------------------------

    As summarized in Table 14, total discounted costs for all 
provisions are about $520 million over 20 years at a 7 percent discount 
rate and $762 million at a 3 percent discount rate. The potential 
benefits of these changes are discussed further below.

 Table 14--Total Costs of FAST Act Requirements (20 Year and Annualized)
------------------------------------------------------------------------
              Cost category                   NPV 3%          NPV 7%
------------------------------------------------------------------------
Cost for Crude and Ethanol Retrofit (20     $133,150,042    $114,390,255
 Year)..................................
Cost for Flammable Liquid Retrofit and       629,195,653     405,750,881
 Retirement (20 Year)...................
                                         -------------------------------
    Total (20 Year).....................     762,345,695     520,141,136
Annualized Cost.........................      51,241,605      49,097,644
------------------------------------------------------------------------

    PHMSA has made a number of assumptions regarding the cost of these 
requirements, including the following:

     Tanks cars built to the CPC-1232 industry standard are 
equipped with top fittings protection that conforms to the FAST Act 
requirement, and therefore would not need top fittings-related 
retrofits due to the FAST Act requirement.
     Adding new top fittings protection that conforms to the 
FAST Act would not add

[[Page 53947]]

significant weight to cars, and hence PHMSA does not estimate any 
additional track maintenance and fuel consumption costs for cars on 
which top fittings are modified.
     The analysis does not account for the fuel and track 
maintenance costs for the OFL tank car retrofits. These retrofits 
occur near the end of the 20-year analysis period; hence, any fuel 
and maintenance costs would only accrue for a few years and would be 
heavily discounted.
     The analysis assumes the same 28 percent retirement 
rate for OFL tank cars as was assumed for the crude and ethanol cars 
in the HM-251 RIA but considers both natural and forced early 
retirements.
     Adding top fittings protection would not affect the 
retirement decision (i.e., adding top fittings protection to crude, 
ethanol, or OFL tank cars would not result in retirement of a higher 
proportion of these cars).
     The size of the crude oil fleet remains unchanged 
despite the recent drop in crude oil production and shipments by 
rail, which is expected to persist at least in the near term.
     OFL service cars would be replaced with a CPC-1232 in 
the absence of this regulation (and the Fast Act), since the rail 
industry supported plans to build jacketed CPC-1232 cars and began 
to build them for crude and ethanol service prior to the 
promulgation of the HM-251 final rule.\28\ As a sensitivity analysis 
below, we assess costs assuming OFL service cars would be built to 
the higher DOT-117 standards promulgated in the HM-251 final rule in 
absence of this rule.
---------------------------------------------------------------------------

    \28\ Jacketed CPC-1232 tank cars have been built for OFL 
service. PHMSA estimates that approximately 2,000 of these tank cars 
are currently used in this service on a quarterly basis. See also 
American Chemistry Council (ACC) comments from 2014 at https://www.regulations.gov/document?D=PHMSA-2012-0082-0219. ACC stated 
``that the chemical industry has been purchasing tank cars built to 
the CPC 1232 standard for several years and they support provisions 
that would require all new DOT 111 tank cars to meet the CPC 1232 
standard with the exception of thermal protection. ACC noted that 
thermal protection should be considered a commodity specific 
addition that is not appropriate in all cases''.

    The estimated retrofit costs of the rule, by provision, are 
presented in Table 15 below. The costs in this table exclude retirement 
costs.

                            Table 15--Estimated Non-Discounted Cost Breakdown of the FAST Act Tank Car Retrofit Requirements
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                            Discounted
                                                                                             Tank cars     Cost per tank    \30\ total      % of total
             Service type                    Tank car type         Modification needed     impacted \29\        car            cost            costs
                                                                                                                            (thousands)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Crude and Ethanol....................  Non-jacketed DOT-111....  Thermal Blanket \31\...          30,475          $4,585    $105,440,453              25
                                                                 Top Fittings
                                                                  Protection..
                                       Jacketed DOT-111........  Top Fittings Protection           2,356           4,585       8,949,802               2
                                       Non-jacketed CPC-1232...  Thermal Blanket........          15,895              NA               0               0
                                       Jacketed CPC-1232.......  .......................          24,993              NA               0               0
Flammable Liquid \32\................  Non-jacketed DOT-111      Tank Retrofit..........          11,425          43,508     231,618,001              52
                                        \33\.                    Thermal Blanket........
                                                                 Top Fittings
                                                                  Protection..
                                       Jacketed DOT-111 \34\...  Tank Retrofit..........           4,335          32,708      66,089,575              15
                                                                 Top Fittings
                                                                  Protection..
                                       Non-jacketed CPC-1232...  Tank Retrofit..........           1,885          28,034      24,633,837               6
                                                                 Thermal Blanket........
                                       Jacketed CPC-1232.......  Tank Retrofit..........           1,265           3,374       1,986,551             0.4
--------------------------------------------------------------------------------------------------------------------------------------------------------

5. Sensitivity Analysis of Costs
---------------------------------------------------------------------------

    \29\ Numbers are derived from Table 25 for crude and ethanol and 
Table 47 for flammable liquids from the RIA.
    \30\ These costs are NPV discounted at 7%.
    \31\ PHMSA assumed that to meet the performance standard 
specified in Sec.  179.18 each tank car built to meet the DOT-117 
specification and each non-jacketed tank car retrofitted to meet the 
DOT-117R specification would do so using a thermal protection 
blanket; thus no cost for thermal protection blankets is added for 
the fleet included in the HM-251 scope.
    \32\ Costs associated with retiring older OFL tank cars are not 
incorporated into this table, but are incorporated in the figures 
presented elsewhere in this section (see Table 11).
    \33\ Includes retirement costs.
    \34\ Includes retirement costs.
---------------------------------------------------------------------------

    In the above analysis, the cost applied to early retirements is 
based on the industry continuing to build CPC-1232 cars (both jacketed 
and unjacketed) for OFL service. Industry could also build to the 
higher DOT-117 standards when replacing retired OFL service cars. We 
consider an alternative cost analysis that assumes industry voluntarily 
replaces retired legacy cars with DOT-117s based on the following:

     The industry was already ordering DOT-117 tanks cars 
for crude and ethanol service prior to publication of the final 
rule.\35\
---------------------------------------------------------------------------

    \35\ See http://www.railwayage.com/index.php/mechanical/freight-cars/tank-car-of-the-future-among-greenbrier-railcar-contracts.html.
---------------------------------------------------------------------------

     Replacing retired cars with a DOT-117 tank car would 
enable tank car owners and leasers to switch cars between crude, 
ethanol, and OFL service, thereby ensuring fuller utilization in 
periods where demand wanes in one segment of the industry and demand 
in another service is high.

    This sensitivity analysis assumes that natural retirements are 
replaced with DOT-117s at no additional cost and costs applied to early 
retirements are the costs associated with buying a car earlier than 
planned. The unit costs associated with this sensitivity analysis are 
presented in Table 16 below.

    Table 16--Unit Costs Used in Sensitivity Analysis of FAST Act Requirements, Other Flammable Liquids Fleet
----------------------------------------------------------------------------------------------------------------
                                                                                   Top fittings
                            Sub-fleet                                 HM-251        protection    Total cost per
                                                                   retrofit cost       cost             car
----------------------------------------------------------------------------------------------------------------
Non-jacketed DOT-111............................................         $38,923          $4,585         $43,508
----------------------------------------------------------------------------------------------------------------
Jacketed DOT-111................................................          28,123           4,585          32,708
----------------------------------------------------------------------------------------------------------------
Non-jacketed CPC-1232...........................................          28,034               0          28,034
----------------------------------------------------------------------------------------------------------------

[[Page 53948]]

 
Jacketed CPC-1232...............................................           3,374               0           3,374
----------------------------------------------------------------------------------------------------------------
Non-Jacketed DOT-111 Scheduled Retirement.......................                                               0
-----------------------------------------------------------------                                ---------------
Jacketed DOT-111 Scheduled Retirement...........................                                               0
-----------------------------------------------------------------                                ---------------
Non-jacketed DOT-111 Early Retirement...........................                                          20,649
-----------------------------------------------------------------                                ---------------
Jacketed DOT-111 Early Retirement...............................                                          16,716
----------------------------------------------------------------------------------------------------------------

    We applied these costs to the OFL fleet retrofit and retirement 
schedule presented above. Table 17 summarizes costs for the OFL fleet 
using the alternative baseline as a sensitivity analysis. Table 18 
summarizes the total cost of the rule using the alternative baseline 
and includes costs associated with retrofitting the crude and ethanol 
fleet with top fittings protection. This sensitivity analysis found the 
cost of the rule to be about 12 percent less if industry were to build 
DOT-117 tank cars rather than CPC-1232 tank cars in absence of the FAST 
Act.

                  Table 17--Sensitivity Analysis of Costs for Flammable Liquid Retrofit and Retirements Based on FAST Act Requirements
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                           Retrofit CPC      Retrofit      Retire  non-       Retire
                  Year                    Retrofit  non-     Retrofit      non-jacketed   jacketed  CPC-  jacketed  DOT-   jacketed DOT-    Total cost
                                           jacketed  111   jacketed  111       1232            1232             111             111
--------------------------------------------------------------------------------------------------------------------------------------------------------
2016....................................              $0              $0              $0              $0              $0              $0              $0
2017....................................               0               0               0               0               0               0               0
2018....................................               0               0               0               0               0               0               0
2019....................................               0               0               0               0               0               0               0
2020....................................               0               0               0               0               0               0               0
2021....................................               0               0               0               0               0               0               0
2022....................................               0               0               0               0               0               0               0
2023....................................               0               0               0               0               0               0               0
2024....................................               0               0               0               0               0               0               0
2025....................................     103,853,596      29,633,448      11,045,396         890,736               0               0     145,423,176
2026....................................     103,853,596      29,633,448      11,045,396         890,736               0               0     145,423,176
2027....................................     103,853,596      29,633,448      11,045,396         890,736               0               0     145,423,176
2028....................................     103,853,596      29,633,448      11,045,396         890,736               0               0     145,423,176
2029....................................     103,853,596      29,633,448      11,045,396         890,736      36,238,995      11,132,856     192,795,027
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                               Non-discounted Total          774,487,731
                                               NPV 7% Discount Rate          342,699,585
                                               NPV 3% Discount Rate          541,748,518
--------------------------------------------------------------------------------------------------------------------------------------------------------


  Table 18--Sensitivity Analysis of Costs for FAST Act Requirements (20
                          Year and Annualized)
------------------------------------------------------------------------
              Cost category                   NPV 3%          NPV 7%
------------------------------------------------------------------------
Cost for Crude and Ethanol Retrofits (20    $133,150,042    $114,390,255
 Year)..................................
Cost for Other Flammable Liquid Retrofit     541,748,518     342,699,585
 and Retirement (20 Year)...............
                                         -------------------------------
Total Discount Cost (20-Year)...........     674,898,561     457,089,840
Annualized Cost.........................      45,363,784      43,146,047
------------------------------------------------------------------------

6. Summary of Benefits
    The implementation of this final rule ensures that all Class 3 
flammable liquids are packaged in tank cars meeting improved 
specifications, thus reducing the likelihood that a train transporting 
any volume of flammable liquids will release such liquids should it 
derail. This final rule also reduces the consequences of an incident 
should one occur by diminishing the number of tank cars likely to be 
punctured and the subsequent release of flammable liquids in a 
derailment. The goals of this rule are thus consistent with those of 
the HM-251 final rule. Specifically, both the HM-251 final rule and 
this final rule are designed to lessen the consequences of train 
accidents involving the unintentional release of flammable liquids. The 
main difference is that this rule is simply intended to align the HMR 
with the non-discretionary mandates of the FAST Act. The purpose of the 
regulations for enhanced tank car standards is to prevent spills by 
keeping flammable liquids, including crude oil and ethanol, in rail 
tank cars and to mitigate the severity of incidents should they occur. 
Below we qualitatively discuss the benefits of each requirement 
addressed in this rule individually and provide a final discussion of 
the combined benefits of the provisions.

[[Page 53949]]

Retrofit Schedule
    The FAST Act mandates a new phase-out schedule for DOT-111 tank 
cars--including DOT-111 tank cars constructed to the CPC-1232 industry 
standard--used to transport unrefined petroleum products (e.g., 
petroleum crude oil), ethanol, and other Class 3 flammable liquids, 
irrespective of train composition. We estimate that the FAST Act's 
phase-out schedule impacts approximately 25,000 tank cars. With regard 
to benefits, these 25,000 tank cars will realize improved puncture 
resistance, enhanced thermal survivability, and increased top fittings 
protection. While these 25,000 tank cars would not travel in large 
blocks of cars like HHFTs, they would see benefits in potentially 
avoiding releases.
Thermal Protection Blankets
    The FAST Act mandates that each tank car built to meet the DOT-117 
standard and each non-jacketed tank car retrofitted to meet the DOT-
117R standard be equipped with a thermal protection blanket with at 
least \1/2\-inch-thick material that meets Sec.  179.18(c). In the HM-
251 final rule, PHMSA required all cars in HHFT service be equipped 
with an 11-gauge jacket but did not require a particular thermal 
protection material or thickness, instead requiring that a thermal 
protection system (which includes a pressure relief device) meet the 
performance standard of Sec.  179.18. Although PHMSA acknowledged that 
alternative technologies to thermal protection blankets exist (e.g., 
intumescent paint) and that others may become available for meeting the 
performance requirement of that rule, PHMSA assumed that thermal 
protection blankets would be the technology of choice and proactively 
included their cost in the retrofit costs. Thus, for crude and ethanol 
cars, thermal protection blanket benefits are already accounted for; 
hence, this FAST Act requirement does not add additional retrofit 
benefits for these cars. The FAST Act does add thermal protection 
blankets to other tank cars used for OFL. Consequently the entire 
flammable liquid fleet will now realize benefits from this requirement.
    A thermal protection blanket provides benefits in the form of 
thermal protection, which prevents the temperature of the tank car from 
reaching 800[emsp14][deg]F, the temperature at which the shell becomes 
malleable and its mechanical properties degrade. At temperatures above 
800[emsp14][deg]F, the shell will thin as a result of the hoop stress 
caused by the increasing pressure in the tank. After a period of time 
with excessive pressure, the thinning wall will fracture and result in 
a failure of the tank.
    As established in Sec.  179.18 of the HMR, a thermal protection 
system serves to prolong the survivability of a tank exposed to a pool 
or torch fire by limiting the heat flux into the tank material and its 
lading, thereby delaying the increase of pressure in the tank. The 
National Transportation Safety Board (NTSB) has acknowledged that the 
absence of adequate thermal protection could lead to a higher 
likelihood of release and thermal tearing of tank cars.\36\ Conversely, 
the presence of adequate thermal protection (i.e., a thermal protection 
blanket) should lead to a lower likelihood of these events.
---------------------------------------------------------------------------

    \36\ http://www.ntsb.gov/safety/safety-recs/recletters/R-15-014-017.pdf.
---------------------------------------------------------------------------

Top Fittings Protection
    The HM-251 final rule did not require top fittings protections to 
meet DOT-117R. The FAST Act requires enhanced top fittings protection 
for all retrofitted cars. The top fittings protection consists of a 
structure of specific design requirements intended to minimize damage 
to the service equipment. Top fittings protection will minimize the 
shearing off of and damage to valves and fittings on the top of the 
tank car when involved in a derailment scenario. The NTSB has 
acknowledged that the absence of top fittings could lead to a higher 
likelihood of release.\37\ The benefits of top fittings protection will 
now be realized by the entire flammable liquid fleet.
---------------------------------------------------------------------------

    \37\ http://www.ntsb.gov/safety/safety-recs/recletters/R-12-005-008.pdf.
---------------------------------------------------------------------------

Combined and Quantified Benefits
    The FAST Act mandates a new phase-out schedule for DOT-111 tank 
cars--including DOT-111 tank cars constructed to the CPC-1232 industry 
standard--used to transport unrefined petroleum products (e.g., 
petroleum crude oil), ethanol, and other Class 3 flammable liquids, 
irrespective of train composition. In addition, the FAST Act mandates 
that each tank car built to meet the DOT-117 and each non-jacketed tank 
car retrofitted to meet the DOT-117R be equipped with a thermal 
protection material having a minimum \1/2\-inch thickness that meets 
Sec.  179.18(c). Furthermore, the FAST Act specifies minimum top 
fittings protection requirements for tank cars retrofit to meet the 
DOT-117R.
    As previously mentioned, the HM-251 final rule required Class 3 
flammable liquids to be transported in a DOT-117, DOT-117P, or DOT-117R 
tank car only if these tank cars were configured as part of an HHFT. 
The FAST Act instructed the Secretary to require that all Class 3 
flammable liquids be transported in either a DOT-117, DOT-117P, or DOT-
117R tank car, whether or not the flammable liquid is transported as 
part of an HHFT. Applying these requirements to individual tank cars 
expands the scope of the impacted tank cars, which will reduce the 
overall probability and quantity of a Class 3 hazardous liquid material 
release and will minimize the consequences of an incident should one 
occur, including deaths and injuries.
    In the HM-251 RIA, PHMSA addressed the risks posed by unit trains 
or trains with large blocks of tank cars containing flammable liquids. 
The FAST Act modifies the retrofit schedule, accelerating deadlines for 
unrefined petroleum products in PGII and relaxing the schedule for 
retrofitting DOT-111 tank cars transporting Class 3 flammable liquids 
other than unrefined petroleum or ethanol. Consistent with the FAST 
Act, this rule requires that all tank cars used to transport Class 3 
flammable liquids meet either the DOT-117, DOT-117P, or DOT-117R in 
part 179 of the HMR, irrespective of train composition.
    Enhancing crude and ethanol tank cars with better top fittings 
protection, and all flammable liquid tank cars on manifest trains with 
top fittings protection, jackets, thermal protection systems, full 
height head shields, and better outlet valves, will reduce the 
likelihood of release in the event of a derailment. As a result, fewer 
car punctures and fewer releases of material will occur, thereby 
mitigating the associated damages. This rule is therefore expected to 
reduce the damages to society associated with release of Class 3 
flammable liquids in rail transportation.
    The benefits of applying these requirements to trains carrying 
large quantities of crude and ethanol (i.e., HHFTs) were estimated in 
the HM-251 final rule RIA, though those estimated benefits do not 
include the benefit of improved top fittings protection for tank cars 
that are retrofit. As noted in that document, the estimated 
effectiveness rates do not include any benefits from additional top 
fittings protection, because those benefits are relatively small and 
uncertain and would apply only to new construction (HM-251 RIA page 
184). As a result, we did not estimate benefits of top fittings 
protection for the cars and fleet covered in this final rule based on 
the prior HM-251 analysis. PHMSA focusses the following benefits 
discussion and estimation for this final rule on

[[Page 53950]]

requirements for tank cars carrying flammable liquids on manifest 
trains only to comply with the 117, 117P, or 117R specification.
    PHMSA assumes the upgrades to the OFL cars produce identical 
effectiveness to those estimated in the HM-251 analysis for a 
comparable car upgrade--i.e. upgrading or replacing a non-jacketed DOT-
111 would reduce the probability of release by an equivalent amount 
whether the car is hauling crude, ethanol, or some OFL. Given the 
variation of the properties of materials within this packing group this 
assumption may or may not be valid. Some materials may have different 
flash points or other properties that enhance or reduce risk, when 
compared to crude or ethanol. In addition, some of these products, such 
as acrylonitrile stabilized, if ignited, produce fumes or smoke while 
burning that is far more toxic than those produced by crude and 
ethanol. Thus, for some packing group 3 materials, a fire resulting 
from a release that is ignited may pose much higher risks of injury to 
nearby populations than a crude or ethanol fire would pose. OFL 
products, such as paint, may pose lower risk of injury to nearby 
populations than a crude or ethanol fire would pose.
Challenges and Data Limitations
    The wide variety of materials within Packing Group 3 poses a 
challenge to monetizing benefits for OFL. There are over 500 Class 3 
materials, and the properties of these materials vary widely. Although 
the flammable properties of these materials may be similar to crude and 
ethanol, the type and extent of contamination of the natural or human 
environment that results from accidental release may be completely 
different, depending on the commodity involved. In addition, even if 
the flammable properties of the liquids were identical, the average 
spill size of the incidents affected by this rule is substantially 
smaller than the average spill size of incidents involving HHFTs (7,027 
gallons compared to 84,000 gallons). Given uncertainties about fixed 
and variable costs of spills, PHMSA may not be able to produce valid 
per gallon cost estimates for a roughly 7,000 gallon spill based on the 
HHFT rule estimates. We do not believe it is meaningful to use the per 
gallon spill cost estimates developed in the HM-251 analysis to 
monetize damages and costs of the releases affected by this rule since 
those estimates were based on research and data involving crude and 
ethanol spill damages. As a result, we do not monetize benefits for 
this final rule. We instead present a break-even analysis that 
identifies how large the per gallon cost or damage of a spill would 
need to be for this rule's benefits to equal its costs. We do this by 
estimating the likely number of events that may occur over the analysis 
period, the likely average size of these events, and by assuming that 
the mitigation of the size of events that will result if all OFL tank 
cars are upgraded to the DOT-117R standard or replaced with new DOT-117 
cars is the same as the mitigation levels estimated in the HMR-251 
final rule's regulatory impact analysis for tank cars used on HHFTs.
Incident History
    PHMSA identified train derailments that involved OFL products over 
the last decade for which data is complete (2006-2015), and presents 
this data in the table below (ordered by date). This table presents the 
average release and damages reported in incident report forms. We found 
54 events over the past ten years resulting in a total quantity 
released of 379,464 gallons. Based on this dataset, the average spill 
size is 7,027 gallons. This is much smaller than the average crude/
ethanol spill, which was estimated at 83,602 gallons.

   Table 18--Summary of Class 3 Hazardous Material Derailments With Release Involving Other Flammable Liquids,
                                         Excluding Crude Oil and Ethanol
                                                   [2006-2015]
----------------------------------------------------------------------------------------------------------------
                                                                                    Average of
                                                   Total number    Total gallons     quantity         Sum of
                      Year                         of incidents      released        released        reported
                                                                                     (gallons)     damages ($) *
----------------------------------------------------------------------------------------------------------------
2006............................................               3             124              41         $99,565
2007............................................              11         117,300          10,664       6,465,335
2008............................................               3           6,132           2,044         187,350
2009............................................               6          17,350           2,892       1,416,713
2010............................................               5          56,390          11,279       2,844,842
2011............................................               4          28,339           7,086       1,575,490
2012............................................               8         105,400          13,175       6,959,474
2013............................................               8          13,703           1,713      10,842,912
2014............................................               4          14,726           3,681       2,558,530
2015............................................               2          20,000          10,000         263,476
                                                 ---------------------------------------------------------------
    Total.......................................              54         379,464        ** 7,027      33,213,687
----------------------------------------------------------------------------------------------------------------
* Damages as reported on the DOT form 5800.1. It should be noted PHMSA did not have a record of any fatalities
  in this time period. These may not include all actual damages, such as costs to the environment and valuations
  for injuries.
** This average is calculated by totaling all release data and dividing by total number of incidents in the last
  10 years (it is not the average of averages).

Forecasting Future Events
    A valid way to predict the number of future derailment events would 
be to look at the rate of events per volume shipped, potentially also 
controlling for other factors, over a number of years and project that 
rate forward based on a forecast of future volume shipped. This was how 
PHMSA projected future derailments in the HM-251 RIA. However, PHMSA 
was not able to develop such a forecast for OFL due to resource and 
data limitations. We would need to map each commodity, in the table of 
derailments above, to the corresponding Waybill Sample Standard 
Transportation Commodity Code (STCC Code) in order to obtain the volume 
of Class 3 flammable liquids shipped by rail per year. In addition, 
while production forecasts for energy products are available, no such 
forecast is available for the vast majority of OFL products. Thus, even 
if PHMSA did estimate a volume-based incident rate, there is no future 
volume forecast to

[[Page 53951]]

which this rate can be applied to obtain a forecasted number of events.
    As a result, PHMSA uses a basic model to project future events: we 
calculate the number of events over 10 past years and project that 
``rate'' forward for the 20-year analysis period. Specifically, we note 
that 54 events occurred over ten years. The 20-year analysis period is 
twice as long as the 10-year historic period evaluated, so PHMSA simply 
multiplies the 54 events by two to obtain an estimate of 108 future 
release events over 20 years. We spread these events equally over the 
20-year analysis period at 5.4 releases per year.
Event Size and Total Annual Release Estimate
    The 54 events analyzed produced a total quantity spilled of 379,464 
gallons of product released, resulting in an average of 7,027 gallons 
of product released per incident. Combining this figure with the 
forecasted number of events above (5.4 releases per year) provides an 
estimated average annual volume of 37,946 gallons released per year 
(5.4 releases per year multiplied by 7,027 gallons per release). We 
note that one OFL incident involved a large number of injuries--56 
requiring hospitalization and another 139 requiring treatment but no 
hospitalization--and this incident involved a release from a DOT-105 
tank car. This incident was not included in the incident table above 
because the OFL product was not shipped in a DOT-111. A second event 
involving the same material, acrylonitrile stabilized, this time in a 
DOT-111, resulted in 4 non-hospitalized injuries. Such events are 
evidence of the wide variety of materials being shipped and the 
different risks they pose to human health and the environment. This 
particular substance is toxic in addition to being flammable, and hence 
produces toxic fumes when burned. As a result, medical attention is 
necessary to treat anyone exposed to the fumes released by fires 
involving this product. Although the typical release involving OFL is 
small, for some substances in this hazard class, the impacts on people 
and the environment may be substantially more severe than for crude and 
ethanol. For other products the impacts may be fairly benign.
Estimated Reduction in Quantity of OFLs Released
    In order to estimate the reduction in product released as a result 
of upgrading OFL tank cars to the DOT-117R/117 standard, PHMSA followed 
the same procedure and used the same effectiveness rates used in the 
HM-251 analysis. We calculated the ratio of each car type upgraded by a 
given year as a percentage of the total OFL fleet. The table of these 
calculations is presented below.

                                            Table 19--Other Flammable Liquid Fleet Upgrade Share by Car Type
--------------------------------------------------------------------------------------------------------------------------------------------------------
                    Year                       111NJ to 117R %   111J to 117R %   1232NJ to 117R %   1232J to 117R %   111NJ to 117 %     111J to 117 %
--------------------------------------------------------------------------------------------------------------------------------------------------------
2016........................................              0.00              0.00              0.00              0.00              1.47              0.56
2017........................................              0.00              0.00              0.00              0.00              2.47              0.94
2018........................................              0.00              0.00              0.00              0.00              3.24              1.23
2019........................................              0.00              0.00              0.00              0.00              3.62              1.38
2020........................................              0.00              0.00              0.00              0.00              4.12              1.56
2021........................................              0.00              0.00              0.00              0.00              4.71              1.79
2022........................................              0.00              0.00              0.00              0.00              5.07              1.92
2023........................................              0.00              0.00              0.00              0.00              5.66              2.15
2024........................................              0.00              0.00              0.00              0.00              6.88              2.61
2025........................................              9.12              3.46              1.51              1.01              8.31              3.15
2026........................................             18.25              6.93              3.01              2.02              9.42              3.57
2027........................................             27.37             10.39              4.52              3.03             10.26              3.90
2028........................................             36.50             13.85              6.02              4.04             11.04              4.19
2029........................................             45.62             17.32              7.53              5.05             17.74              6.74
2030........................................             45.62             17.32              7.53              5.05             17.74              6.74
2031........................................             45.62             17.32              7.53              5.05             17.74              6.74
2032........................................             45.62             17.32              7.53              5.05             17.74              6.74
2033........................................             45.62             17.32              7.53              5.05             17.74              6.74
2034........................................             45.62             17.32              7.53              5.05             17.74              6.74
2035........................................             45.62             17.32              7.53              5.05             17.74              6.74
--------------------------------------------------------------------------------------------------------------------------------------------------------

    These figures are multiplied by the corresponding effectiveness 
rate as pulled from the HM-251 analysis, reproduced below.

                   Table 20--HM-251 Effectiveness Rates
------------------------------------------------------------------------
                                                             Percent
------------------------------------------------------------------------
               Effectiveness Rates, Enhanced Jacketed CPC
------------------------------------------------------------------------
111 non-jacketed to 1232 w jacket.....................              45.9
CPC non-jacketed to jacketed..........................              31.0
111 jacketed to CPC jacketed..........................              37.6
CPC jacketed to CPC jacketed..........................               1.0
------------------------------------------------------------------------
                    Effectiveness Rates, New DOT-117
------------------------------------------------------------------------
111 non-jacketed to AAR 2014..........................              50.4
CPC non-jacketed to AAR 2014..........................              36.8
111 jacketed to AAR 2014..............................              42.8

[[Page 53952]]

 
jacketed 1232 to AAR 2014.............................              16.2
------------------------------------------------------------------------

    As a reminder, a retrofit tank car cannot be equipped with a 
thicker shell, so the DOT 117R standard is the equivalent of a jacketed 
CPC-1232 with some modest improvements--specifically an improved high 
capacity pressure relief valve and a bottom outlet valve design that 
reduces the probability of damage during derailment. Therefore, legacy 
DOT-111 tank cars that are retrofit improve by the factor represented 
by the ``Effectiveness Rates, Enhanced Jacketed CPC'' rows in the table 
above. These effectiveness rates can be interpreted as reductions in 
the probability that a tank car will release in a derailment, or the 
reductions in the expected amount of release product in a derailment. 
For cars that are retired and replaced with a new tank car, the 
effectiveness rates includes all the retrofit components--jacket, 
thermal protection, full height head shields, etc., but also an 
increase in shell thickness to 9/16'', which further reduces the 
probability of release. A retired and replaced tank car therefore 
experiences the higher effectiveness rate presented in the 
``Effectiveness Rates, New DOT-117'' rows in the table above. The 
products of the upgrade shares by type and the effectiveness rates are 
summed across rows to obtain an effectiveness rate for the OFL fleet 
upgrades. The individual effectiveness products and total effectiveness 
rate are produced in the table below.

                                                              Table 21--Total Effectiveness Rates by Car Type and Type of Upgrade *
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                         1232NJ to 117R                                                               Total
                               Year                                 111NJ to 117R  %   111J to 117R  %          %         1232J to 117R  %   111NJ to 117  %   111J to 117  %   effectiveness  %
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1.................................................................              0.00              0.00              0.00              0.00              0.74              0.24              0.98
2.................................................................              0.00              0.00              0.00              0.00              1.24              0.40              1.64
3.................................................................              0.00              0.00              0.00              0.00              1.63              0.53              2.16
4.................................................................              0.00              0.00              0.00              0.00              1.83              0.59              2.42
5.................................................................              0.00              0.00              0.00              0.00              2.07              0.67              2.74
6.................................................................              0.00              0.00              0.00              0.00              2.38              0.77              3.14
7.................................................................              0.00              0.00              0.00              0.00              2.55              0.82              3.38
8.................................................................              0.00              0.00              0.00              0.00              2.86              0.92              3.77
9.................................................................              0.00              0.00              0.00              0.00              3.47              1.12              4.59
10................................................................              4.19              1.30              0.47              0.01              4.19              1.35             11.51
11................................................................              8.38              2.60              0.93              0.02              4.75              1.53             18.21
12................................................................             12.56              3.91              1.40              0.03              5.17              1.67             24.74
13................................................................             16.75              5.21              1.87              0.04              5.56              1.79             31.22
14................................................................             20.94              6.51              2.33              0.05              8.94              2.88             41.66
15................................................................             20.94              6.51              2.33              0.05              8.94              2.88             41.66
16................................................................             20.94              6.51              2.33              0.05              8.94              2.88             41.66
17................................................................             20.94              6.51              2.33              0.05              8.94              2.88             41.66
18................................................................             20.94              6.51              2.33              0.05              8.94              2.88             41.66
19................................................................             20.94              6.51              2.33              0.05              8.94              2.88             41.66
20................................................................             20.94              6.51              2.33              0.05              8.94              2.88             41.66
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* Some values may not total due to rounding.

    The overall effectiveness rate for upgrading the OFL fleet is 
higher than that estimated for the crude and ethanol fleet. CPC-1232s 
make up a smaller portion of the OFL fleet than the crude and ethanol 
fleet and upgrading legacy DOT-111s produces a greater estimated 
reduction in the quantity of product released than the more marginal 
improvements to CPC-1232 cars. However, the retrofit schedule for the 
OFL fleet is less aggressive than the schedule for the crude and 
ethanol fleet, and the quantity of product released in these incidents 
is likely to be much smaller than is typical of crude and ethanol 
incidents. In the table below, the overall effectiveness rate for 
upgrading the OFL fleet is multiplied by the expected release quantity 
per year to obtain a yearly reduction in OFL material released.

                                  Table 22--Predicted Prevented Spill Volume *
----------------------------------------------------------------------------------------------------------------
                                                                                                  Reduction in
                  Year                        Number of          Gallons        Effectiveness        gallons
                                               events           released                           released **
----------------------------------------------------------------------------------------------------------------
1.......................................               5.4            37,946              0.98               371
2.......................................               5.4            37,946              1.64               624
3.......................................               5.4            37,946              2.16               819
4.......................................               5.4            37,946              2.42               917
5.......................................               5.4            37,946              2.74             1,041
6.......................................               5.4            37,946              3.14             1,192
7.......................................               5.4            37,946              3.38             1,282

[[Page 53953]]

 
8.......................................               5.4            37,946              3.77             1,432
9.......................................               5.4            37,946              4.59             1,740
10......................................               5.4            37,946             11.51             4,366
11......................................               5.4            37,946             18.21             6,911
12......................................               5.4            37,946             24.74             9,388
13......................................               5.4            37,946             31.22            11,848
14......................................               5.4            37,946             41.66            15,809
15......................................               5.4            37,946             41.66            15,809
16......................................               5.4            37,946             41.66            15,809
17......................................               5.4            37,946             41.66            15,809
18......................................               5.4            37,946             41.66            15,809
19......................................               5.4            37,946             41.66            15,809
20......................................               5.4            37,946             41.66            15,809
----------------------------------------------------------------------------------------------------------------
    Total...............................  ................  ................  ................           152,592
----------------------------------------------------------------------------------------------------------------
* Some values may not total due to rounding.
** These non-monetized estimates are not discounted. OMB and EPA guidelines discuss options for discounting non-
  monetized effects such as environmental damages to convey effects felt farther in the future are worth less in
  today's term than those occurred earlier in time (OMB Circular A-4, 2003, Page 36; and, EPA Guidelines for
  Preparing Economic Analyses, 2000, pages 52-54). The discounted 20-year total would be 56,317 gallons using a
  7 discount rate.

    The effectiveness rates for this rule are expected values, and the 
effect of the rule on any one release may vary widely from the average 
expected effect. Dividing the total 20-year reduction in gallons 
released into the total cost of the rule yields a ``break-even'' cost 
or damage per gallon figure of $3,409 (using total 20-year costs 
discounted at 7 or $520,141,136), meaning on average the monetized 
value of avoided damages from the reduction in gallons released from 
this rule would need to be about $3,409 per gallon in order for 
benefits to equal costs.\38\ For some incidents, the tank car 
enhancements may eliminate release of the entire contents of the car. 
Also, we note that at least some of the substances affected by these 
upgrades pose a much higher immediate risk to human health compared to 
crude and ethanol. Reducing the likelihood of release of these 
materials would enhance public safety.
---------------------------------------------------------------------------

    \38\ If we use the discounted total 20-year reduction in gallons 
released for this calculation (56,317 gallons using a 7 discount 
rate), then the rule yields a break-even cost per gallon figure of 
about $9,236, meaning that the monetized value of avoided damages 
from the reduction in gallons released from this rule would need to 
be about $9,236 per gallon in order for benefits to equal costs.
---------------------------------------------------------------------------

7. Conclusion
    The FAST Act instructs the Secretary to make specific regulatory 
amendments to the aforementioned tank car design standards and phase-
out schedule codified in the HM-251 final rule. Since the publication 
of the FAST Act on December 4, 2015, the text of the HMR differs with 
the explicit terms of the statute with respect to phase-out schedules, 
thermal protection blankets, and top fittings protections. The 
estimated net present value cost of these tank car upgrades is $520 
million over 20 years discounted at 7 percent. The implementation of 
this final rule ensures that all Class 3 flammable liquids are packaged 
in tank cars meeting improved specifications, thus reducing the 
likelihood that a train transporting any volume of flammable liquids 
will release such liquids should it derail. This final rule also 
minimizes the consequences of an incident should one occur by 
diminishing the number of tank cars likely to be punctured and the 
subsequent release of flammable liquids in a derailment. It is 
necessary and in the public interest to clarify the requirements by 
rectifying the differences as soon as possible. PHMSA believes that APA 
notice and comment is unnecessary as it would provide no benefit to the 
public. Further, PHMSA has no discretion in interpreting the statute; 
thus public comment would have no impact on the rulemaking. Finally, 
with regard to Sections 7304 and 7305, the FAST Act instructs the 
Secretary to act quickly to codify the FAST Act language. Section 7306 
has no regulatory mandate, but both PHMSA and FRA are committed to 
ensuring that the governing regulations align with the FAST Act 
requirements.

C. Executive Order 13132

    This final rule has been analyzed in accordance with the principles 
and criteria in Executive Order 13132 (``Federalism''). This final rule 
does not impose any regulation that has substantial direct effects on 
States, the relationship between the national government and the 
States, or the distribution of power and responsibilities among the 
various levels of government. While the final rule could act to preempt 
State, local, and Indian tribe requirements by operation of law, PHMSA 
is not aware of any such requirements that are substantively different 
than what is required by the final rule. Therefore, the consultation 
and funding requirements of Executive Order 13132 do not apply.
    The Federal Hazardous Materials Transportation Law, 49 U.S.C. 5101-
5128, contains express preemption provisions (49 U.S.C. 5125) that 
preempt inconsistent State, local, and Indian tribe requirements, 
including requirements on the following subjects:
    (1) The designation, description, and classification of hazardous 
materials;
    (2) The packing, repacking, handling, labeling, marking, and 
placarding of hazardous materials;
    (3) The preparation, execution, and use of shipping documents 
related to hazardous materials and requirements related to the number, 
contents, and placement of those documents;
    (4) The written notification, recording, and reporting of the 
unintentional release in transportation of hazardous material; or
    (5) The design, manufacture, fabrication, marking, maintenance, 
recondition, repair, or testing of a packaging or container 
represented, marked, certified, or sold as qualified for use in 
transporting hazardous material.
    This rule addresses items (2) and (5) described above and, 
accordingly, State, local, and Indian tribe requirements on

[[Page 53954]]

these subjects that do not meet the ``substantively the same'' standard 
will be preempted.\39\
---------------------------------------------------------------------------

    \39\ Federal preemption also may exist pursuant to Sec.  20106 
of the former Federal Railroad Safety Act of 1970, repealed, 
revised, reenacted, and codified at 49 U.S.C. 20106, which provides 
that States may not adopt or continue in effect any law, regulation, 
or order related to railroad safety or security that covers the 
subject matter of a regulation prescribed or order issued by the 
Secretary of Transportation (with respect to railroad safety 
matters) or the Secretary of Homeland Security (with respect to 
railroad security matters), except when the State law, regulation, 
or order qualifies under the section's ``essentially local safety or 
security hazard.''
---------------------------------------------------------------------------

    Federal Hazardous Materials Transportation Law provides at Sec.  
5125(b)(2) that, if DOT issues a regulation concerning any of the 
covered subjects, DOT must determine and publish in the Federal 
Register the effective date of Federal preemption. The effective date 
may not be earlier than the 90th day following the date of issuance of 
a final rule and not later than two years after the date of issuance. 
The effective date of Federal preemption is November 14, 2016. This 
effective date for preemptive effect should not conflict with the 
overall effective date for this final rule because the regulation of 
hazardous materials transport in commerce generally preempts State and 
local requirements. Historically, the States and localities are aware 
of this preemptive effect and do not regulate in conflict with Federal 
requirements in these situations.

D. Executive Order 13175

    This final rule has been analyzed in accordance with the principles 
and criteria in Executive Order 13175 (``Consultation and Coordination 
with Indian Tribal Governments''). Executive Order 13175 requires 
agencies to assure meaningful and timely input from Indian tribal 
government representatives in the development of rules that have tribal 
implications. Because this final rule does not have tribal 
implications, the funding and consultation requirements of Executive 
Order 13175 do not apply.
    PHMSA is committed to tribal outreach and engaging tribal 
governments in dialogue. Among other outreach efforts, PHMSA 
representatives attended the National Joint Tribal Emergency Management 
Conference on August 11-14, 2015. In the spirit of Executive Order 
13175 and consistent with DOT Order 5301.1, PHMSA will be continuing 
outreach to tribal officials independent of our assessment of the 
direct tribal implications.

E. Regulatory Flexibility Act, Executive Order 13272, and DOT 
Procedures and Policies

    Section 603 of the Regulatory Flexibility Act (RFA) requires an 
agency to prepare an initial regulatory flexibility analysis describing 
impacts on small entities whenever an agency is required by 5 U.S.C. 
553 to publish a general notice of proposed rulemaking for any proposed 
rule. Similarly, Section 604 of the RFA requires an agency to prepare a 
final regulatory flexibility analysis when an agency issues a final 
rule under 5 U.S.C. 553 after being required to publish a general 
notice of proposed rulemaking. Because the actions taken in this final 
rule address congressional mandates that instruct the Secretary to 
issue conforming regulatory amendments immediately or soon after the 
FAST Act's date of enactment, PHMSA finds that due and timely execution 
of agency functions would be impeded by the procedures of public notice 
that are normally required by the APA. Therefore, PHMSA finds that 
public notice and comment would be contrary to the public interest and 
that good cause exists to amend the regulations without such 
procedures. As prior notice and comment under 5 U.S.C. 553 are not 
required to be provided in this situation, the analyses in 5 U.S.C. 603 
and 604 are also not required.

F. Unfunded Mandates Reform Act of 1995

    This rule does not impose unfunded mandates under the Unfunded 
Mandates Reform Act of 1995. It does not result in costs of $155 
million or more, adjusted for inflation, to either State, local, or 
tribal governments, in the aggregate, or to the private sector in any 
one year.

G. Paperwork Reduction Act

    There are no new information collection requirements in this final 
rule.

H. Regulation Identifier Number (RIN)

    A regulation identifier number (RIN) is assigned to each regulatory 
action listed in the Unified Agenda of Federal Regulations. The 
Regulatory Information Service Center publishes the Unified Agenda in 
April and October of each year. The RIN number contained in the heading 
of this document may be used to cross-reference this action with the 
Unified Agenda.

I. Environmental Assessment

    The National Environmental Policy Act of 1969 (NEPA), as amended 
(42 U.S.C. 4321-4347), requires Federal agencies to consider the 
environmental impacts of proposed actions in their decisionmaking. On 
May 8, 2015, PHMSA published a final Environmental Assessment (EA) and 
Finding of No Significant Impact (FONSI) as part of the HM-251 final 
rule (see Section X, Part G). This EA described the following: (1) The 
need for the action, (2) the alternatives considered, (3) the 
environmental impacts of the alternatives and selected action, and (4) 
the agencies consulted. Given that the revisions adopted in the FAST 
Act on December 4, 2015 are an expansion of the existing requirements, 
PHMSA is incorporating that EA by reference consistent with 40 CFR 
1502.21, and updating the alternatives and impacts to discuss the FAST 
Act changes.
1. Need for the Action
    As described in detail above, the FAST Act includes the ``Hazardous 
Materials Transportation Safety Improvement Act of 2015'' at Sections 
7001 through 7311, which instructed the Secretary to make specific 
regulatory amendments to existing Federal regulations related to tank 
car design standards and the DOT-111 phase-out schedule codified in the 
HM-251 final rule. The mandated amendments are non-discretionary, and 
this action is a response to those mandates.
    The need for the requirements in this rulemaking is consistent with 
that in the HM-251 final rule EA. Specifically, both the HM-251 final 
rule and this final rule are designed to lessen the consequences of 
train accidents involving the unintentional release of flammable 
liquids. The purpose of the regulations for enhanced tank car standards 
and operational controls is to prevent releases by keeping flammable 
liquids, including crude oil and ethanol, in rail tank cars and to 
mitigate the severity of incidents should they occur.
2. Alternatives Considered
    As described in section I.A-D above, PHMSA is updating its EA to 
include discussion of FAST Act mandated changes as described in section 
I.A through I.D above.
3. Environmental Impacts of Action
    As described in the HM-251 final rule EA, the phasing-out of DOT-
111 tank cars in flammable liquid service will reduce risk of release 
because of the improved integrity and safety features of the DOT-117. 
The changes in the FAST Act will increase the number of tank cars 
needing to be retrofitted (HHFT vs. flammable liquid tank cars), 
require thermal protection blanketing on certain

[[Page 53955]]

tank cars, and require top fittings and pressure release protections. 
The increased number of tank cars needing to be retrofitted will 
further reduce risk of release because the improved integrity and 
safety features of the DOT-117R will be applied to a wider universe.
    In determining our cost calculations in the HM-251 RIA, PHMSA 
assumed that in order to meet the performance standard specified in 
Sec.  179.18, each tank car built to meet the DOT-117 and each non-
jacketed tank car retrofitted to meet the DOT-117R would do so using a 
thermal protection blanket.\40\ Based on this assumption, only the tank 
cars transporting flammable liquids that were outside the scope of the 
HHFT definition, which are now subject to the requirements of the FAST 
Act, will be impacted by this change. Lastly, all new construction and 
retrofitted tank cars will now benefit from top fittings and pressure 
relief valve protection. These additional cars will realize the 
benefits of improved integrity and safety features. With the addition 
of more tank cars to be retrofitted and with enhanced safety features, 
this action will further reduce risk of release, and thereby reduce the 
potential for adverse environmental effects, beyond the HM-251 final 
rule because of the improved integrity and safety features of the DOT-
117.
---------------------------------------------------------------------------

    \40\ See HM-251 Final Rule RIA, p. 172-173.
---------------------------------------------------------------------------

    It should be noted that the FAST Act provisions will result in the 
manufacturing of some new tank cars to replace retirements. The FAST 
Act will also increase the number of tank cars subject to this retrofit 
requirement. Increased manufacture of replacement rail tank cars and 
the retrofitting of an increased amount of tank cars could nevertheless 
result in greater short-term release of greenhouse gases and use of 
resources needed to make the new tank cars or retrofit existing tank 
cars.\41\ PHMSA, however, concluded that the possibility of increased 
(yet temporary) greenhouse gases and resource use is far outweighed by 
the benefits of increased safety and integrity of each railcar and each 
train, as well as the decreased risk of release of crude oil and 
ethanol to the environment.
---------------------------------------------------------------------------

    \41\ Greenhouse gas emissions from industry primarily come from 
burning fossil fuels for energy as well as greenhouse gas emissions 
from certain chemical reactions necessary to produce goods from raw 
materials. Thus increased tank car manufacturing and replacement 
could result in increased greenhouse gases. See https://www3.epa.gov/climatechange/ghgemissions/sources/industry.html.
---------------------------------------------------------------------------

    PHMSA also recognizes that increased weight of a larger population 
of affected tank cars due to the requirements in the FAST Act may 
result in somewhat greater use of fuel and in turn greater release of 
air pollutants, including carbon dioxide.\42\ However, PHMSA notes that 
the improved integrity of the tank cars being designed to reduce the 
risk of release of flammable liquids to the environment positively 
outweighs a relatively small increase in air pollution due to fuel 
emissions.
---------------------------------------------------------------------------

    \42\ Greenhouse gas emissions from transportation primarily come 
from burning fossil fuel for our cars, trucks, ships, trains, and 
planes. See https://www3.epa.gov/climatechange/ghgemissions/sources/transportation.html.
---------------------------------------------------------------------------

4. Agencies Consulted
    PHMSA published the HM-251 final rule in consultation with FRA.
5. Conclusion Finding of No Significant Impact
    Given that the revisions adopted by the FAST Act on December 4, 
2015 are an expansion of the existing requirements, PHMSA specifically 
focuses on the impacts these changes will have related to the baseline 
safety level set by the HM-251 final rule. In the HM-251 final rule EA, 
PHMSA concluded:

    The provisions of this rule build on current regulatory 
requirements to enhance the transportation safety and security of 
shipments of hazardous materials transported by rail, thereby 
reducing the risks of release of crude oil and ethanol and 
consequent environmental damage. PHMSA has calculated that this 
rulemaking will decrease current risk of release of crude oil and 
ethanol to the environment. Therefore, PHMSA finds that there are no 
significant environmental impacts associated with this final 
rule.\43\
---------------------------------------------------------------------------

    \43\ See HM-251 Final Rule, 80 FR at 26743.

    PHMSA finds that this same conclusion applies to this action and 
that there are no significant environmental impacts associated with 
this final rule.

J. Privacy Act

    Anyone may search the electronic form of any written communications 
and comments received into any of our dockets by the name of the 
individual submitting the document (or signing the document, if 
submitted on behalf of an association, business, labor union, etc.). 
DOT posts these comments, without edit, including any personal 
information the commenter provides, to www.regulations.gov, as 
described in the system of records notice (DOT/ALL-14 FDMS), which can 
be reviewed at www.dot.gov/privacy.

K. Executive Order 13609 and International Trade Analysis

    Under Executive Order 13609 (``Promoting International Regulatory 
Cooperation''), agencies must consider whether the impacts associated 
with significant variations between domestic and international 
regulatory approaches are unnecessary or may impair the ability of 
American businesses to export and compete internationally. In meeting 
shared challenges involving health, safety, labor, security, 
environmental, and other issues, regulatory approaches developed 
through international cooperation can provide equivalent protection to 
standards developed independently while also minimizing unnecessary 
differences.
    Similarly, the Trade Agreements Act of 1979 (Pub. L. 96-39), as 
amended by the Uruguay Round Agreements Act (Pub. L. 103-465), 
prohibits Federal agencies from establishing any standards or engaging 
in related activities that create unnecessary obstacles to the foreign 
commerce of the United States. For purposes of these requirements, 
Federal agencies may participate in the establishment of international 
standards, so long as the standards have a legitimate domestic 
objective, such as providing for safety, and do not operate to exclude 
imports that meet this objective. The statute also requires 
consideration of international standards and, where appropriate, that 
they be the basis for U.S. standards.
    PHMSA participates in the establishment of international standards 
to protect the safety of the American public, and we have assessed the 
effects of the proposed rule to ensure that it does not cause 
unnecessary obstacles to foreign trade. Accordingly, this rulemaking is 
consistent with Executive Order 13609 and PHMSA's obligations under the 
Trade Agreement Act, as amended. In addition, the FAST Act revises the 
U.S. retrofit schedule to further align with tank car requirements that 
Transport Canada has already implemented. This final rule would amend 
the HMR to further align with Transport Canada's corresponding 
Transportation of Dangerous Goods Regulations. (See 49 U.S.C. 5120(b).)

L. Executive Order 13211

    Executive Order 13211 requires Federal agencies to prepare a 
Statement of Energy Effects for any ``significant energy action'' [66 
FR 28355; May 22, 2001]. Under the Executive Order, a ``significant 
energy action'' is defined as any action by an agency (normally 
published in the Federal Register) that promulgates, or is expected to 
lead to

[[Page 53956]]

the promulgation of, a final rule or regulation (including a notice of 
inquiry, advance NPRM, and NPRM) that: (1)(i) Is a significant 
regulatory action under Executive Order 12866 or any successor order 
and (ii) is likely to have a significant adverse effect on the supply, 
distribution, or use of energy; or (2) is designated by the 
Administrator of the Office of Information and Regulatory Affairs as a 
significant energy action.
    Although this is a significant regulatory action under Executive 
Order 12866, PHMSA has evaluated this action in accordance with 
Executive Order 13211 and has determined this action will not have a 
significant adverse effect on the supply, distribution, or use of 
energy. Consequently, PHMSA has determined this regulatory action is 
not a ``significant energy action'' within the meaning of Executive 
Order 13211.

List of Subjects

49 CFR Part 173

    Hazardous materials transportation, Packaging and containers, 
Radioactive materials, Reporting and recordkeeping requirements, 
Uranium.

49 CFR Part 179

    Hazardous materials transportation, Incorporation by reference, 
Railroad safety, Reporting and recordkeeping requirements.

    In consideration of the foregoing, we amend 49 CFR chapter I as 
follows:

PART 173--SHIPPERS--GENERAL REQUIREMENTS FOR SHIPMENTS AND 
PACKAGINGS

0
1. The authority citation for part 173 continues to read as follows:

    Authority: 49 U.S.C. 5101-5128, 44701; 49 CFR 1.81, 1.96 and 
1.97.

0
2. In Sec.  173.241, revise paragraph (a) introductory text and 
paragraph (a)(1) to read as follows:


Sec.  173.241   Bulk packagings for certain low hazard liquid and solid 
materials.

* * * * *
    (a) Rail cars: Class DOT 103, 104, 105, 109, 111, 112, 114, 115, 
117, or 120 tank car tanks; Class 106 or 110 multi-unit tank car tanks; 
and AAR Class 203W, 206W, and 211W tank car tanks. Additional 
operational requirements apply to high-hazard flammable trains (see 
Sec.  171.8 of this subchapter) as prescribed in Sec.  174.310 of this 
subchapter. Except as otherwise provided in this section, DOT 
Specification 111 tank cars and DOT Specification 111 tank cars built 
to the CPC-1232 industry standard are no longer authorized to transport 
Class 3 (flammable) liquids in Packing Group III, unless retrofitted to 
the DOT Specification 117R retrofit standards or the DOT Specification 
117P performance standards provided in part 179, subpart D of this 
subchapter.
    (1) DOT Specification 111 tank cars and DOT Specification 111 tank 
cars built to the CPC-1232 industry standard are no longer authorized 
to transport Class 3 (flammable liquids) unless retrofitted prior to 
the date in the following table:

----------------------------------------------------------------------------------------------------------------
                                                                                          DOT-111  built to the
               Material                   Jacketed or  non-     DOT-111  not authorized        CPC-1232 not
                                          jacketed  tank car           on or after        authorized on or after
----------------------------------------------------------------------------------------------------------------
Class 3, PG III (flammable liquid)     Non-jacketed...........  May 1, 2029............  May 1, 2029.
 material.
                                       Jacketed...............  May 1, 2029............  May 1, 2029.
----------------------------------------------------------------------------------------------------------------
Note: For unrefined petroleum products (Sec.   173.41) and ethanol, see Sec.  Sec.   173.242 and 173.243 as
  appropriate.

* * * * *

0
3. In Sec.  173.242, revise paragraph (a) introductory text and 
paragraph (a)(1) to read as follows:


Sec.  173.242   Bulk packagings for certain medium hazard liquids and 
solids, including solids with dual hazards.

* * * * *
    (a) Rail cars: Class DOT 103, 104, 105, 109, 111, 112, 114, 115, 
117, or 120 tank car tanks; Class 106 or 110 multi-unit tank car tanks 
and AAR Class 206W tank car tanks. Additional operational requirements 
apply to high-hazard flammable trains (see Sec.  171.8 of this 
subchapter) as prescribed in Sec.  174.310 of this subchapter. Except 
as otherwise provided in this section, DOT Specification 111 tank cars 
and DOT Specification 111 tank cars built to the CPC-1232 industry 
standard are no longer authorized to transport unrefined petroleum 
products, ethanol, and other Class 3 (flammable) liquids in Packing 
Group II or III, unless retrofitted to the DOT Specification 117R 
retrofit standards, or the DOT Specification 117P performance standards 
provided in part 179, subpart D of this subchapter.
    (1) DOT Specification 111 tank cars and DOT Specification 111 tank 
cars built to the CPC-1232 industry standard are no longer authorized 
for transport of Class 3 flammable liquids unless retrofitted prior to 
the dates corresponding to the specific material in the following 
table:

----------------------------------------------------------------------------------------------------------------
                                                                                          DOT-111  built to the
               Material                   Jacketed or  non-     DOT-111  not authorized        CPC-1232 not
                                          jacketed  tank car           on or after        authorized on or after
----------------------------------------------------------------------------------------------------------------
Unrefined petroleum product..........  Non-jacketed...........  January 1, 2018........  April 1, 2020.
                                       Jacketed...............  March 1, 2018..........  May 1, 2025.
Ethanol..............................  Non-jacketed...........  May 1, 2023............  July 1, 2023.
                                       Jacketed...............  May 1, 2023............  May 1, 2025.
Class 3, PG II or III (flammable       Non-jacketed...........  May 1, 2029............  May 1, 2029.
 liquid) material other than
 unrefined petroleum products and
 ethanol.
                                       Jacketed...............  May 1, 2029............  May 1, 2029.
----------------------------------------------------------------------------------------------------------------


[[Page 53957]]

* * * * *

0
4. In Sec.  173.243, revise paragraph (a) introductory text and 
paragraph (a)(1) to read as follows:


Sec.  173.243   Bulk packaging for certain high hazard liquids and 
dual-hazard materials which pose a moderate hazard.

* * * * *
    (a) Rail cars: Class DOT 103, 104, 105, 109, 111, 112, 114, 115, 
117, or 120 fusion-welded tank car tanks; and Class 106 or 110 multi-
unit tank car tanks. Additional operational requirements apply to high-
hazard flammable trains (see Sec.  171.8 of this subchapter) as 
prescribed in Sec.  174.310 of this subchapter. Except as otherwise 
provided in this section, DOT Specification 111 tank cars and DOT 
Specification 111 tank cars built to the CPC-1232 industry standard are 
no longer authorized to transport Class 3 (flammable liquids) in 
Packing Group I, unless retrofitted to the DOT Specification 117R 
retrofit standards or the DOT Specification 117P performance standards 
provided in part 179, subpart D of this subchapter.
    (1) DOT Specification 111 tank cars and DOT Specification 111 tank 
cars built to the CPC-1232 industry standard are no longer authorized 
for transport of Class 3 (flammable liquids) unless retrofitted prior 
to the dates corresponding to the specific material in the following 
table:

----------------------------------------------------------------------------------------------------------------
                                                                                          DOT-111  built to the
               Material                   Jacketed or  non-     DOT-111  not authorized        CPC-1232 not
                                          jacketed  tank car           on or after        authorized on or after
----------------------------------------------------------------------------------------------------------------
Unrefined petroleum products.........  Non-jacketed...........  January 1, 2018........  April 1, 2020.
                                       Jacketed...............  March 1, 2018..........  May 1, 2025.
Class 3, PG I (flammable liquid)       Non-jacketed...........  May 1, 2025............  May 1, 2025.
 other than unrefined petroleum
 products.
                                       Jacketed...............  May 1, 2025............  May 1, 2025.
----------------------------------------------------------------------------------------------------------------

* * * * *

PART 179--SPECIFICATIONS FOR TANK CARS

0
5. The authority citation for part 179 continues to read as follows:

    Authority: 49 U.S.C. 5101-5128; 49 CFR 1.81 and 1.97.

0
6. Revise Sec.  179.202-6 to read as follows:


Sec.  179.202-6   Thermal protection system.

    The DOT Specification 117 tank car must have a thermal protection 
system. The thermal protection system must:
    (a) Conform to Sec.  179.18 of this part;
    (b) Be equipped with a thermal protection blanket with at least \1/
2\-inch-thick material that meets Sec.  179.18(c) of this part; and
    (c) Include a reclosing pressure relief device in accordance with 
Sec.  173.31 of this subchapter.

0
7. In Sec.  179.202-12, revise the section heading to read:


Sec.  179.202-12   Performance standard requirements (DOT-117P).

* * * * *

0
8. In Sec.  179.202-13, revise paragraphs (e) and (h) to read as 
follows:


Sec.  179.202-13  Retrofit standard requirements (DOT-117R).

* * * * *
    (e) Thermal protection system. (1) The DOT Specification 117R tank 
car must have a thermal protection system. The thermal protection 
system must conform to Sec.  179.18 of this part and include a 
reclosing pressure relief device in accordance with Sec.  173.31 of 
this subchapter.
    (2) A non-jacketed tank car modified to the DOT Specification 117R 
must be equipped with a thermal protection blanket with at least \1/2\-
inch-thick material that meets Sec.  179.18(c) of this part.
* * * * *
    (h) Top fittings protection--(1) Protective housing. Except as 
provided in Sec. Sec.  179.202-13(h)(2) and (3) of this paragraph, top 
fittings on DOT Specification 117R tank cars must be located inside a 
protective housing not less than 12-inch in thickness and constructed 
of a material having a tensile strength not less than 65 kpsi and must 
conform to all of the following conditions:
    (i) The protective housing must have a height exceeding the tallest 
valve or fitting which requires protection and the height of a valve or 
fitting within the protective housing must be kept to the minimum size 
compatible to allow for proper operation.
    (ii) The protective housing or cover may not reduce the flow 
capacity of a pressure relief device below the minimum required.
    (iii) The protective housing must provide a means of drainage with 
a minimum flow area equivalent to six (6) 1-inch diameter weep holes.
    (iv) When connected to the nozzle or fitting cover plate, and 
subject to a horizontal force applied perpendicular to and uniformly 
over the projected plane of the protective housing, the tensile 
connection strength of the protective housing must be designed to be--
    (A) no greater than 70 percent of the nozzle to tank tensile 
connection strength;
    (B) no greater than 70 percent of the cover plate to nozzle 
connection strength; and
    (C) no less than either 40 percent of the nozzle to tank tensile 
connection strength or the shear strength of twenty (20) 12-inch bolts.
    (2) Pressure relief devices. (i) The pressure relief device(s) must 
be located inside the protective housing, unless space does not allow 
for placement within a housing. If multiple pressure relief devices are 
installed, no more than one (1) may be located outside of a protective 
housing.
    (ii) The height of a pressure relief device located outside of a 
protective housing in accordance with paragraph (h)(2)(i) of this 
section may not exceed the tank car jacket by more than 12 inches.
    (iii) The highest point of a closure of any unused pressure relief 
device nozzle may not exceed the tank car jacket by more than six (6) 
inches.
    (3) Alternative. As an alternative to the protective housing 
requirements in paragraph (h)(1) of this section, the tank car may be 
equipped with a system that prevents the release of contents from any 
top fitting under accident conditions where any top fitting may be 
sheared off.

    Issued in Washington, DC, on August 10, 2016, under authority 
delegated in 49 CFR part 1.97.
Marie Therese Dominguez,
Administrator, Pipeline and Hazardous Materials Safety Administration.
[FR Doc. 2016-19406 Filed 8-12-16; 8:45 am]
 BILLING CODE 4910-60-P



                                                                     Federal Register / Vol. 81, No. 157 / Monday, August 15, 2016 / Rules and Regulations                                                                      53935

                                              ■ 3. In § 180.930, add alphabetically the                            § 180.930 Inert ingredients applied to
                                              inert ingredients to the table to read as                            animals; exemptions from the requirement
                                                                                                                   of a tolerance.
                                              follows:
                                                                                                                   *        *        *        *         *

                                                                                              Inert ingredients                                                                 Limits                             Uses


                                                        *                  *                 *                              *                                                       *                          *            *
                                              n-Butyl-3-hydroxybutyrate (CAS Reg. No. 53605–94–0) .............................................                          ........................   Solvent.

                                                        *                   *                 *                           *                                                         *                          *            *
                                              Isopropyl-3-hydroxybutyrate (CAS Reg. No. 54074–94–1) .........................................                            ........................   Solvent.

                                                           *                             *                             *                            *                              *                           *            *



                                              ■ 4. In § 180.940(a), add alphabetically                             § 180.940 Tolerance exemptions for active                                    (a) * * *
                                              the inert ingredients to the table in                                and inert ingredients for use in
                                              paragraph (a) to read as follows:                                    antimicrobial formulations (Food-contact
                                                                                                                   surface sanitizing solutions).
                                                                                                                   *        *        *        *         *

                                                                                             Pesticide chemical                                                          CAS Reg. No.                              Limits


                                                        *                     *                                 *                                 *                            *                               *            *
                                              n-Butyl-3-hydroxybutyrate .............................................................................................       53605–94–0              Solvent.

                                                        *                   *                                 *                                 *                              *                               *            *
                                              Isopropyl-3-hydroxybutyrate .........................................................................................         54074–94–1              Solvent.

                                                           *                             *                             *                            *                              *                           *            *



                                              *       *        *        *        *                                 requires that each tank car built to meet                                enactment (December 4, 2015). Because
                                              [FR Doc. 2016–19115 Filed 8–12–16; 8:45 am]                          the DOT Specification 117 and each                                       the actions taken in this final rule
                                              BILLING CODE 6560–50–P                                               non-jacketed tank car retrofitted to meet                                simply codify these non-discretionary
                                                                                                                   the DOT Specification 117R be                                            statutory mandates, PHMSA finds that
                                                                                                                   equipped with a thermal protection                                       timely execution of agency functions
                                              DEPARTMENT OF TRANSPORTATION                                         blanket that is at least 1⁄2-inch thick and                              would be impeded by the procedures of
                                                                                                                   meets existing thermal protection                                        public notice that are normally required
                                              Pipeline and Hazardous Materials                                     standards. Further, the FAST Act                                         by the Administrative Procedure Act.
                                              Safety Administration                                                mandates minimum top fittings                                            Further, PHMSA sees no reason to delay
                                                                                                                   protection requirements for tank cars                                    regulatory action, as we are simply
                                              49 CFR Parts 173 and 179                                             retrofitted to meet the DOT                                              implementing the non-discretionary
                                              [Docket No. PHMSA–2016–0011 (HM–251C)]                               Specification 117R.                                                      provisions contained in Sections 7304,
                                                                                                                   DATES: Effective: August 15, 2016.                                       7305, and 7306 of the FAST Act.
                                              RIN 2137–AF17                                                                                                                                 PHMSA finds that public notice is
                                                                                                                   ADDRESSES: Docket: You may view the
                                                                                                                   public docket online at http://                                          impracticable and is implementing
                                              Hazardous Materials: FAST Act                                                                                                                 these changes under the ‘‘good cause’’
                                              Requirements for Flammable Liquids                                   www.regulations.gov or in person at
                                                                                                                   Dockets Operations, M–30, Ground                                         exemption of the Administrative
                                              and Rail Tank Cars                                                                                                                            Procedure Act, 5 U.S.C. 553(b)(3)(B),
                                                                                                                   Floor, Room W12–140, 1200 New Jersey
                                              AGENCY:  Pipeline and Hazardous                                      Avenue SE., Washington, DC 20590–                                        thus amending the regulations without
                                              Materials Safety Administration                                      0001 between 9 a.m. and 5 p.m. Monday                                    advance notice and opportunity for
                                              (PHMSA), DOT.                                                        through Friday, except Federal holidays.                                 public comment.
                                              ACTION: Final rule.                                                  FOR FURTHER INFORMATION CONTACT:                                         Abbreviations and Terms
                                              SUMMARY:   The Pipeline and Hazardous                                Michael Ciccarone, (202) 366–8553,                                       AAR Association of American Railroads
                                              Materials Safety Administration is                                   Standards and Rulemaking Division,                                       APA Administrative Procedure Act
                                              issuing this final rule to codify in the                             Pipeline and Hazardous Materials Safety                                  CFR Code of Federal Regulations
                                              Hazardous Materials Regulations certain                              Administration, U.S. Department of                                       CPC Casualty Prevention Circular
                                              mandates and minimum requirements                                    Transportation, 1200 New Jersey                                          DOT Department of Transportation
sradovich on DSK3GMQ082PROD with RULES




                                              of the FAST Act. Specifically, the FAST                              Avenue SE., Washington, DC 20590–                                        EA Environmental Assessment
                                                                                                                   0001.                                                                    FAST Act Fixing America’s Surface
                                              Act mandates a revised phase-out                                                                                                                Transportation Act of 2015
                                              schedule for all DOT Specification 111                               SUPPLEMENTARY INFORMATION:     The FAST                                  FR Federal Register
                                              tank cars used to transport unrefined                                Act instructs the Secretary of                                           FRA Federal Railroad Administration
                                              petroleum products (e.g., petroleum                                  Transportation to issue conforming                                       HHFT High-Hazard Flammable Train
                                              crude oil), ethanol, and other Class 3                               regulatory amendments immediately or                                     HMR Hazardous Materials Regulations
                                              flammable liquids. The FAST Act also                                 soon after the FAST Act’s date of                                        HMT Hazardous Materials Table



                                         VerDate Sep<11>2014       17:35 Aug 12, 2016        Jkt 238001     PO 00000       Frm 00029     Fmt 4700       Sfmt 4700       E:\FR\FM\15AUR1.SGM           15AUR1


                                              53936              Federal Register / Vol. 81, No. 157 / Monday, August 15, 2016 / Rules and Regulations

                                              NEPA National Environmental Policy Act                     of the Department’s comprehensive                          Secretary of Transportation (hereafter
                                              NPRM Notice of Proposed Rulemaking                         approach to ensure the safe                                ‘‘Secretary’’) to make specific regulatory
                                              NPV Net Present Value                                      transportation of energy products.                         amendments to the tank car design
                                              NTSB National Transportation Safety Board
                                                                                                         Specifically, the HM–251 final rule                        standards and phase-out schedule
                                              OMB Office of Management and Budget
                                              PG Packing Group                                           amended the Hazardous Materials                            codified in the HM–251 final rule.
                                              PHMSA Pipeline and Hazardous Materials                     Regulations (HMR; 49 CFR parts 171–
                                                Safety Administration                                    180) by defining certain trains                            A. Retrofit Schedule (FAST Act Section
                                              RFA Regulatory Flexibility Act                             transporting large volumes of Class 3                      7304)
                                              RIA Regulatory Impact Analysis                             flammable liquids as ‘‘high-hazard
                                              RIN Regulation Identifier Number                                                                                         Section 7304 of the FAST Act
                                                                                                         flammable trains’’ (HHFT) and imposing                     mandates a commodity-specific phase-
                                              RSI Railway Supply Institute                               certain operational restrictions, such as
                                              TDG Transportation of Dangerous Goods                                                                                 out of all DOT–111 tank cars used to
                                                                                                         speed restrictions, braking systems, and
                                              U.S.C. United States Code                                                                                             transport Class 3 flammable liquids.
                                                                                                         routing.1 The HM–251 final rule also
                                                                                                                                                                    Specifically, paragraph (a) mandates the
                                              Table of Contents                                          adopted requirements into the HMR for
                                                                                                                                                                    phase-out regardless of train
                                              I. Background                                              sampling and testing programs to ensure
                                                                                                         the proper classification of unrefined                     composition and requires that, by the
                                              II. Good Cause Justification                                                                                          dates specified in paragraph (b), all tank
                                              III. Section-by-Section Review                             petroleum-based products transported
                                                                                                         under the HMR. Furthermore, the rule                       cars used to transport Class 3 flammable
                                              IV. Regulatory Analyses and Notices
                                                 A. Statutory/Legal Authority for This                   codified new tank car design                               liquids meet the DOT–117, DOT–117P,
                                                    Rulemaking                                           standards—namely the DOT                                   or DOT–117R requirements. Paragraph
                                                 B. Executive Order 12866, Executive Order               Specification 117 (DOT–117), DOT                           (b) of Section 7304 mandates a
                                                    13563, and DOT Regulatory Policies and               Specification 117P (DOT–117P), and                         commodity-specific phase-out schedule
                                                    Procedures
                                                                                                         DOT Specification 117R (DOT–117R)—                         for DOT–111 tank cars used to transport
                                                 C. Executive Order 13132                                                                                           unrefined petroleum products and
                                                 D. Executive Order 13175                                and established a phase-out schedule for
                                                                                                         existing DOT Specification 111 (DOT–                       ethanol—irrespective of the Packing
                                                 E. Regulatory Flexibility Act, Executive                                                                           Group (PG) 3 assigned—as well as other
                                                    Order 13272, and DOT Procedures and                  111) tank cars by requiring use of either
                                                    Policies                                             a DOT–117, DOT–117P, or DOT–117R                           Class 3 flammable liquids based on their
                                                 F. Unfunded Mandates Reform Act of 1995                 tank car by certain dates for the                          PGs.
                                                 G. Paperwork Reduction Act                              transport of Class 3 flammable liquids in                     The phase-out schedule mandated in
                                                 H. Regulation Identifier Number (RIN)                   an HHFT.2 For more information on the                      paragraph (b) outlines various
                                                 I. Environmental Assessment                                                                                        compliance end-dates, on or after which
                                                 J. Privacy Act
                                                                                                         HM–251 final rule, please refer to its
                                                 K. Executive Order 13609 and International              publication in the Federal Register [80                    the DOT–111 tank car (including DOT–
                                                    Trade Analysis                                       FR 26643; May 8, 2015], as well as the                     111 tank cars built to the Association of
                                                 L. Executive Order 13211                                information under Docket No. PHMSA–                        American Railroads’ (AAR) Casualty
                                                                                                         2012–0082 at the Federal eRulemaking                       Prevention Circular 1232 standard
                                              I. Background                                              Portal, www.regulations.gov.                               (CPC–1232)) is no longer authorized to
                                                 On May 8, 2015, PHMSA (also ‘‘we’’                         On December 4, 2015, President                          transport Class 3 flammable liquids.
                                              or ‘‘us’’), in consultation with the                       Barack Obama signed legislation                            Please refer to Section III, ‘‘Section-by-
                                              Federal Railroad Administration (FRA),                     entitled ‘‘Fixing America’s Surface                        Section Review,’’ in this rule for more
                                              published the final rule ‘‘Hazardous                       Transportation Act of 2015,’’ or the                       information on the applicable end-dates
                                              Materials: Enhanced Tank Car                               ‘‘FAST Act.’’ See Public Law 114–94.                       of the new phase-out schedule. See
                                              Standards and Operational Controls for                     The FAST Act includes the ‘‘Hazardous                      Table 1 below for a comparison of the
                                              High-Hazard Flammable Trains’’                             Materials Transportation Safety                            retrofit schedule of the HM–251 final
                                              (hereafter ‘‘HM–251 final rule’’). The                     Improvement Act of 2015’’ (see Sections                    rule with the schedule imposed by the
                                              HM–251 final rule was an integral part                     7001 through 7311) and instructs the                       FAST Act:

                                                      TABLE 1—COMPARISON OF HM–251 TANK CAR PHASE-OUT SCHEDULE VS. FAST ACT PHASE-OUT SCHEDULE
                                                                                                         [Tank cars in Class 3 flammable liquid service]

                                                         Tank car type/service                           HM–251 phase-out deadline 4                                 FAST Act phase-out deadline 5

                                              Non-jacketed DOT–111s ........................      PG I—January 1, 2018 6 .......................       Crude 7—January 1, 2018
                                                                                                  PG II—May 1, 2023 ...............................    Ethanol—May 1, 2023
                                                                                                  PG III—May 1, 2025 ..............................    Flammable PG I—May 1, 2025 **
                                                                                                                                                       Flammable PG II/III—May 1, 2029 *
                                              Jacketed DOT–111s ...............................   PG I—March 1, 2018 ............................      Crude—March 1, 2018
                                                                                                  PG II—May 1, 2023 ...............................    Ethanol—May 1, 2023
                                                                                                  PG III—May 1, 2025 ..............................    Flammable PG I—May 1, 2025 **
                                                                                                                                                       Flammable PG II/III—May 1, 2029 *
                                              Non-jacketed CPC–1232s ......................       PG I—April 1, 2020 ...............................   Crude—April 1, 2020

                                                 1 The HM–251 final rule defined an HHFT as a              3 Packing Group (as defined in 49 CFR 171.8) is            6 If these cars are not retrofitted by January 1,
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                                              train comprised of 20 or more loaded tank cars of          a grouping according to the degree of danger               2017 the owners must file a report with the
                                              a Class 3 flammable liquid in a continuous block           presented by hazardous materials. Packing Group I          Department on the number of tank cars that they
                                              or 35 or more loaded tank cars of a Class 3                indicates great danger; Packing Group II, medium           own that have been retrofitted and the number that
                                              flammable liquid across the entire train.
                                                 2 ‘‘DOT–117P’’ tank cars are newly manufactured
                                                                                                         danger; Packing Group III, minor danger.                   have not yet been retrofitted.
                                                                                                           4 Applies only to tank cars in an HHFT                     7 The FAST Act is applicable to ‘‘unrefined
                                              tank cars or tank cars retrofitted to meet the
                                              performance criteria in § 179.202–12. ‘‘DOT–117R’’         configuration.                                             petroleum products in Class 3 flammable service,
                                              tank cars are tank cars retrofitted to meet the retrofit     5 Applies to a single tank car containing the            including crude oil.’’ For the purposes of this phase
                                              standard in § 179.202–13.                                  denoted commodity.                                         out table, we use ‘‘Crude’’ for these materials.



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                                                                 Federal Register / Vol. 81, No. 157 / Monday, August 15, 2016 / Rules and Regulations                                                             53937

                                                    TABLE 1—COMPARISON OF HM–251 TANK CAR PHASE-OUT SCHEDULE VS. FAST ACT PHASE-OUT SCHEDULE—
                                                                                            Continued
                                                                                                          [Tank cars in Class 3 flammable liquid service]

                                                         Tank car type/service                           HM–251 phase-out deadline 4                                      FAST Act phase-out deadline 5

                                                                                                  PG II—July 1, 2023 ...............................        Ethanol—July 1, 2023
                                                                                                  PG III—May 1, 2025 ..............................         Flammable PG I—May 1, 2025 **
                                                                                                                                                            Flammable PG II/III—May 1, 2029 *
                                              Jacketed CPC–1232s .............................    May 1, 2025 ...........................................   Crude oil—May 1, 2025
                                                                                                                                                            Ethanol—May 1, 2025
                                                                                                                                                            Flammable PG I—May 1, 2025 **
                                                                                                                                                            Flammable PG II/III—May 1, 2029 *
                                               ** Extendable up to May 1, 2027, if the Secretary finds that insufficient retrofitting shop capacity will prevent the phase-out of tank cars not
                                              meeting the DOT–117, DOT–117P, or DOT–117R by the deadline.
                                               * Extendable up to May 1, 2031, if the Secretary finds that insufficient retrofitting shop capacity will prevent the phase-out of tank cars not
                                              meeting the DOT–117, DOT–117P, or DOT–117R by the deadline.


                                                 The requirements of Section 7304 of                      pool fire for 100 minutes; and a torch                         release of tank car lading, except
                                              the FAST Act differ from the HM–251                         fire for 30 minutes) and paragraph (b)                         through the pressure relief device, when
                                              final rule in two ways. First, the HM–                      contains the technical requirements for                        subjected to a pool fire for 100 minutes
                                              251 final rule required Class 3                             conducting a thermal analysis to verify                        and a torch fire for 30 minutes. Section
                                              flammable liquids to be transported in                      a system’s compliance with paragraph                           179.18 does not require the use of a
                                              DOT–117, DOT–117P, or DOT–117R                              (a)’s performance standard. As                                 thermal protection blanket for a tank car
                                              tank cars only if these tank cars are used                  paragraph (c) of § 179.18 indicates, the                       that is required to be equipped with
                                              in an HHFT, whereas the FAST Act                            Department maintains a list of thermal                         thermal protection, nor does it prohibit
                                              removed the linkage between tank car                        protection systems already verified to                         their usage, provided the thermal
                                              specification and train composition,                        meet the performance standard and for                          protection blanket meets the section’s
                                              instead mandating that any Class 3                          which completion of a thermal analysis                         performance requirement. In drafting
                                              flammable liquid be transported in a                        is not required. PHMSA maintains the                           the HM–251 final rule, PHMSA and
                                              DOT–117, DOT–117P, or DOT–117R                              list and for a thermal protection system                       FRA projected that a thermal protection
                                              tank car by the dates specified. (The                       to be added to the list, a manufacturer                        blanket would be the likely option
                                              FAST Act does not change the HM–251                         must first conduct the qualification tests                     chosen for a DOT–117 tank car to
                                              final rule’s definition of HHFT as it                       in Appendix B to Part 179 of the HMR.                          comply with the thermal protection
                                              applies to the operational controls                         The manufacturer must then provide the                         requirement, and the use of thermal
                                              specified in the rule.) Second, the                         test procedures and results to PHMSA,                          protection blankets is consistent with
                                              phase-out schedule in the HM–251 final                      which in consultation with FRA reviews                         the HM–251 Regulatory Impact Analysis
                                              rule was based on the PG of the Class                       the submitted test procedures and                              (RIA), which assumed the thermal
                                              3 flammable liquid, among other factors,                    results. If the agencies find that the tests                   blanket would be the method used to
                                              whereas the phase-out schedule                              and results demonstrate that the system                        achieve the thermal protection
                                              imposed by the FAST Act is                                  meets the performance standard of                              requirements in 179.18.8 Although
                                              commodity-specific for unrefined                            paragraph (a), the thermal protection                          PHMSA and FRA acknowledged that
                                              petroleum products (including crude                         system is added to the referenced list of                      new alternate technologies to thermal
                                              oil) and ethanol and based on a                             tank car thermal protection systems that                       protection blankets may become
                                              commodity’s PG only for other Class 3                       do not require test verification.                              available for meeting the performance
                                              flammable liquids.                                             PHMSA notes, that while the FAST                            requirement of that rule, the analysis
                                                 Paragraph (d)(1)(A) of Section 7304                      Act refers to the blanket as an                                projected that thermal protection
                                              requires the Secretary to take immediate                    ‘‘insulating blanket,’’ for the purposes of                    blankets would be the technology of
                                              action to revise the date-specific                          clarity within the HMR, PHMSA is                               choice and included their cost, along
                                              deadlines in the HMR to align with                          using the term ‘‘thermal protection                            with the removal and replacement of
                                              those in the FAST Act. This rule                            blanket.’’ The FAST Act intends for the                        jackets (for jacketed DOT–111 cars), in
                                              responds to that mandate.                                   blanket to be designed and approved to                         the retrofit costs.
                                                                                                          withstand fire conditions as opposed to                          The FAST Act takes a slightly
                                              B. Thermal Protection Blanket (FAST                         being ‘‘insulating material’’ that is                          different approach and instructs the
                                              Act Section 7305)                                           designed solely to maintain the                                Secretary to require a thermal protection
                                                 Section 7305 of the FAST Act requires                    temperature of the lading during                               blanket of at least 1⁄2-inch-thick material
                                              tank cars built to meet the DOT–117                         transportation and neither designed nor                        on both cars built to meet the DOT–117
                                              specification and each non-jacketed                         approved to withstand fire conditions.                         standard and non-jacketed DOT–117R
                                              tank car retrofitted to meet the DOT–                          The HM–251 final rule did not                               cars. This constitutes a prescriptive
                                              117R specification be equipped with an                      specifically require that these tank car                       standard for a thermal protection
                                              ‘‘insulating blanket’’ at least half inch                   specifications include a thermal                               blanket that meets the performance
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                                              thick and approved by the Secretary in                      protection blanket as part of the thermal                      standard specified in § 179.18. This rule
                                              accordance with 49 CFR 179.18(c).                           protection system; rather, it required                         implements this statutory requirement
                                              Paragraph (a) of § 179.18 requires tank                     that the specification tank cars meet the                      in conformance with the FAST Act;
                                              cars required to be equipped with                           performance standard specified in                              therefore, a thermal protection blanket
                                              thermal protection to be equipped with                      § 179.18 of the HMR, which requires                            meeting § 179.18(c) is now a
                                              a thermal protection system meeting a                       that a tank car have sufficient thermal
                                              certain performance standard (i.e., a                       resistance so that there will be no                              8 See   HM–251 Final Rule RIA, p. 172–173.



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                                              53938             Federal Register / Vol. 81, No. 157 / Monday, August 15, 2016 / Rules and Regulations

                                              requirement for the DOT–117, as well as                 transporting crude oil or ethanol in an               (APA), 5 U.S.C. 553. The APA
                                              for the DOT–117R if the tank car                        HHFT could vary significantly                         authorizes agencies to dispense with
                                              undergoing retrofitting is non-jacketed.                depending on the material’s PG                        certain notice and comment procedures
                                                Paragraph (a) of Section 7305 requires                assignment. For example, under the                    if the agency finds good cause that they
                                              the Secretary to amend the HMR to                       HM–251 final rule, tank cars                          are impracticable, unnecessary, or
                                              reflect these thermal protection                        transporting PG I crude oil in an HHFT                contrary to the public interest. See 5
                                              requirements within 180 days of the                     would need to be retrofitted or newly                 U.S.C. 553(b)(3)(B). In this instance,
                                              FAST Act’s enactment. This rule                         manufactured DOT–117R, DOT–117P,                      PHMSA finds that there is good cause
                                              responds to that mandate.                               or DOT–117 tank cars at an earlier date               to dispense with notice and comment
                                              C. Top Fittings Protection (FAST Act                    than tank cars in an HHFT transporting                because it would be impracticable and
                                              Section 7306)                                           crude oil assigned to PG II or PG III.                unnecessary.
                                                                                                      Moreover, per the HM–251 final rule, a                   ‘‘Good cause’’ exists in impracticable
                                                 Section 7306(a) of the FAST Act                      train transporting crude oil or ethanol               situations when notice unavoidably
                                              specifies minimum requirements for top                  but not meeting the definition of an                  prevents due and required execution of
                                              fittings protection on tank cars built to               HHFT is not required to utilize                       agency functions or when an agency
                                              meet the DOT–117R. The HM–251 final                     retrofitted or newly manufactured tank                finds that due and timely execution of
                                              rule did not require top fittings                       cars conforming to the DOT–117R,                      its functions would be impeded by the
                                              protection as part of the DOT–117R                      DOT–117P, or DOT–117.                                 notice otherwise required by the APA.
                                              retrofit requirement because the costs                     Conversely, Transport Canada                       The FAST Act requirements covered in
                                              involved appeared to be greater than the                implemented a phase-out schedule that                 this rulemaking are all non-
                                              expected safety benefits.9 PHMSA noted                  was commodity-specific (in addition to                discretionary, and two of the three
                                              in the preamble to the HM–251 final                     consideration of tank car design factors).            FAST Act sections addressed in this
                                              rule that a task force of the AAR Tank                  The TDG Regulations mandate that                      rulemaking are self-executing (see
                                              Car Committee was evaluating potential                  flammable liquid commodities                          Sections 7304 and 7306). PHMSA’s
                                              advancements in existing top fittings                   identified as crude oil or ethanol cannot             actions in this final rule merely codify
                                              protections that could prove cost                       be transported in a TC/DOT–111 in                     in the HMR these FAST Act
                                              effective and, along with the FRA, urged                accordance with Canada’s phase-out                    requirements based on the authority of
                                              industry to consider enhancements that                  schedule, irrespective of PG assignment.              the Secretary to implement the statute.11
                                              would apply to both new and retrofitted                 For example, in order to be used to                   This final rule addresses congressional
                                              tank cars.                                              transport crude oil, TDG Regulations                  mandates that lay out specific
                                                 The FAST Act outlines self-executing                 require retrofit of a non-jacketed TC/                requirements or instruct the Secretary to
                                              performance standards for protective                    DOT–111 tank car by Canada’s first                    issue conforming regulatory
                                              housings and pressure relief valves and                 compliance date (May 1, 2017),                        amendments immediately or soon after
                                              does not mandate a rulemaking for these                 regardless of the crude oil’s PG                      the FAST Act’s date of enactment.
                                              requirements. However, the statutory                    assignment. Furthermore, under the                    Given the statute’s timeline for issuing
                                              language mandates minimum                               TDG Regulations, the TC/DOT–117                       conforming regulations, PHMSA finds
                                              requirements for top fittings protections               applies to a single tank car. Transport               that due and timely execution of agency
                                              for the DOT–117R tank car not currently                 Canada’s TDG Regulations do not                       functions would be impeded by the
                                              in the HMR. Codifying these statutorily-                include a definition for an HHFT.                     process of public notice and comment.
                                              mandated minimum requirements in the                       As mandated by the FAST Act, in this               As such, notice and comment
                                              HMR provides greater clarity for the                    final rule, PHMSA is implementing a                   procedures are ‘‘impracticable’’ within
                                              regulated community and ensures that                    commodity-specific phase-out schedule                 the meaning of the APA, 5 U.S.C.
                                              the HMR is consistent with the FAST                     for the transport of unrefined petroleum              553(b)(3)(B). Furthermore, in making
                                              Act.                                                    products and ethanol in DOT–111 tanks                 these ministerial and technical
                                              D. International Harmonization                          cars, irrespective of the PG assigned.                amendments PHMSA is not exercising
                                                                                                      Moreover, the FAST Act mandates the                   discretion in a way that could be
                                                 As a result of the FAST Act, the U.S.                complete phase out of DOT–111 cars for                informed by public comment. The FAST
                                              retrofit schedule for DOT–111 tank cars                 flammable liquids, as opposed to just                 Act does not provide PHMSA the
                                              is more closely aligned with the                        tank cars transported in HHFTs.                       flexibility to withdraw, change or revise
                                              schedule that Transport Canada has                      Therefore, with respect to being                      this rule in response to adverse public
                                              set.10 Prior to the FAST Act, certain                   commodity-specific and the                            comment. As such, notice and comment
                                              differences existed between the tank car                applicability of the new standards to a               procedures are ‘‘unnecessary’’ within
                                              provisions of the HMR and Transport                     single tank car, this final rule amends               the meaning of the APA, 5 U.S.C.
                                              Canada’s corresponding Transportation                   the HMR to further align with Transport               553(b)(3)(B).
                                              of Dangerous Goods (TDG) Regulations.                   Canada’s corresponding TDG                               This final rule is effective on the day
                                              Specifically, in the HM–251 final rule,                 Regulations. There are, however, still                of publication in the Federal Register.
                                              the U.S. retrofit schedule was based on                 some differences between the HMR and                  The APA requires agencies to delay the
                                              several factors, including the Class 3                  TDG Regulations related to tank car                   effective date of regulations for 30 days
                                              flammable liquid’s PG assignment and                    standards and the retrofit schedule. For              after publication, unless the agency
                                              tank car construction (e.g., whether the                additional discussion of international                finds good cause to make the regulations
                                              tank car is jacketed or non-jacketed).                  harmonization issues, please refer to                 effective sooner. See 5 U.S.C. 553(d). In
                                              However, the HM–251 final rule was not                  Subsection K, ‘‘Executive Order 13609                 addition to the previously discussed
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                                              commodity-specific; the applicable                      and International Trade Analysis.’’                   good cause to publish this rulemaking
                                              phase-out date for DOT–111 tank cars
                                                                                                      II. Good Cause Justification                          without advance notice and opportunity
                                                9 See HM–251 Final Rule, 80 FR at 26676.
                                                                                                                                                            for public comment to implement the
                                                10 Transport Canada is the Canadian equivalent of
                                                                                                         PHMSA is issuing this final rule                   specific and non-discretionary mandates
                                              DOT, with broad oversight authority for all modes
                                                                                                      without an opportunity for public notice
                                              of transportation, including the rail transportation    and comment as is normally provided                     11 The Secretary has delegated this authority to

                                              of hazardous materials.                                 under the Administrative Procedure Act                PHMSA. See 49 CFR 1.97.



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                                                                      Federal Register / Vol. 81, No. 157 / Monday, August 15, 2016 / Rules and Regulations                                                                           53939

                                              of the FAST Act, PHMSA finds good                                         self-executing and do not technically                              hazard (i.e., PG III) liquid and solid
                                              cause to make the regulations effective                                   require regulatory action; Section 7304                            materials. Specifically, paragraph (a)
                                              prior to 30 days.                                                         (adjusting the retrofit timeline) is non-                          provides the specifications of rail tank
                                                 The DOT Regulatory Policies and                                        discretionary and required immediately;                            cars that may be used to transport
                                              Procedures [44 FR 11034; February 26,                                     and Section 7305 (requiring 1⁄2 inch                               hazardous materials when directed to
                                              1979] provide that, to the maximum                                        thermal protection) is non-discretionary                           this section by Column (8C) of the
                                              extent possible, DOT operating                                            and required no later than 180 days                                § 172.101 Hazardous Materials Table
                                              administrations should provide an                                         from the FAST Act’s enactment.                                     (HMT). To execute the mandate in
                                              opportunity for public comment on                                         Further, due to the non-discretionary                              Section 7304 of the FAST Act, in this
                                              regulations issued without prior notice.                                  nature of Sections 7304, 7305, and 7306                            final rule we are revising paragraph (a)
                                              Per the criteria specified in this policy,                                of the FAST Act, PHMSA is without
                                              PHMSA finds that providing an                                                                                                                to prohibit the use of DOT–111 tank cars
                                                                                                                        authority to withdraw, change or revise                            (including CPC–1232 tank cars) for
                                              opportunity for public comment cannot                                     this rule in response to adverse public
                                              reasonably be anticipated to result in                                                                                                       Class 3 (flammable liquid) material in
                                                                                                                        comment. For these reasons, PHMSA is
                                              the receipt of useful information. This                                                                                                      PG III, regardless of whether the cars are
                                                                                                                        not providing an opportunity for public
                                              rule simply implements certain non-                                       comment.                                                           in HHFT service, unless they meet the
                                              discretionary measures of the FAST Act;                                                                                                      DOT–117P performance standard or the
                                              therefore, PHMSA is unable to adjust                                      III. Section-by-Section Review                                     DOT–117R retrofit standard. The phase-
                                              the text of the rule to account for any                                   Part 173                                                           out must occur by the date in Table 2:
                                              public comment. Section 7304
                                              (expanding the tank car requirements to                                   Section 173.241
                                              all flammable liquids) and Section 7306                                     Section 173.241 provides the bulk
                                              (requiring top fittings protection) are                                   packaging requirements for certain low

                                                                         TABLE 2—PHASE-OUT SCHEDULE FOR DOT–111 TANK CARS IN CLASS 3, PG III SERVICE *
                                                                                                                                                                                                                     DOT–111 (including cars
                                                                                                                                                                                                                      built to the CPC–1232
                                                                                                 Material                                                          Jacketed or non-jacketed tank car                 standard) not authorized
                                                                                                                                                                                                                             on or after

                                              Class 3, PG III (flammable liquid) material ......................................................                 Jacketed and Non-jacketed ...............          May 1, 2029.
                                                 * Note: For unrefined petroleum products and ethanol, see Tables 3 and 4 below, as applicable.


                                              Section 173.242                            used to transport hazardous materials                                                             regardless of whether the cars are in
                                                                                         when directed to this section by Column                                                           HHFT service, unless they meet the
                                                Section 173.242 provides the bulk        (8C) of the § 172.101 HMT. Consistent                                                             DOT–117P performance standard or the
                                              packaging requirements for certain         with the mandate in Section 7304 of the                                                           DOT–117R retrofit standard. The phase-
                                              medium hazard (i.e., PG II and III) liquid FAST Act, in this final rule we are                                                               out must occur by the dates in Table 3
                                              and solid materials. Specifically,         revising paragraph (a) to prohibit the                                                            according to material type and tank car
                                              paragraph (a) provides which               use of DOT–111 tank cars for Class 3                                                              design factors:
                                              specifications of rail tank cars may be    (flammable liquids) in PG II and III,
                                                                    TABLE 3—PHASE-OUT SCHEDULE FOR DOT–111 TANK CARS IN CLASS 3, PG II AND III SERVICE
                                                                                                                                                                                                                        DOT–111 Built to
                                                                                                                                        Jacketed or non-jacketed                 DOT–111 Not authorized
                                                                                  Material                                                                                                                               CPC–1232 not
                                                                                                                                                tank car                              on or after                     authorized on or after

                                              Unrefined petroleum products (e.g., crude oil) 12 .............                          Non-jacketed ......................      January 1, 2018 ...............     April 1, 2020.
                                                                                                                                       Jacketed .............................   March 1, 2018 ..................    May 1, 2025.
                                              Ethanol ..............................................................................   Non-jacketed ......................      May 1, 2023 .....................   July 1, 2023.
                                                                                                                                       Jacketed .............................   May 1, 2023 .....................   May 1, 2025.
                                              Other Class 3, PG II and III (flammable liquid) material                                 Jacketed and Non-jacketed                May 1, 2029 .....................   May 1, 2029.
                                                (other than unrefined petroleum products or ethanol).



                                              Section 173.243                                                           used to transport hazardous materials                              of whether the cars are in HHFT service,
                                                                                                                        when directed to this section by Column                            unless they meet the DOT–117P
                                                Section 173.243provides the bulk                                        (8C) of the § 172.101 HMT. Consistent                              performance standard or the DOT–117R
                                              packaging requirements for certain high                                   with the mandate in Section 7304 of the                            retrofit standard. The phase-out must
                                              hazard (i.e., PG I) liquids and dual                                      FAST Act, in this final rule we are                                occur by the dates in Table 4 according
                                              hazard materials. Specifically,                                           revising paragraph (a) to prohibit the                             to material type and tank car design
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                                              paragraph (a) provides which                                              use of DOT–111 tank cars for Class 3                               factors:
                                              specifications of rail tank cars may be                                   (flammable liquids) in PG I, regardless



                                                12 Unrefined petroleum products refers to                               earth and have not yet been processed to such an                   extent that the properties of the product are known
                                              hazardous hydrocarbons that are extracted from the                                                                                           and consistent.



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                                              53940                   Federal Register / Vol. 81, No. 157 / Monday, August 15, 2016 / Rules and Regulations

                                                                            TABLE 4—PHASE-OUT SCHEDULE FOR DOT–111 TANK CARS IN CLASS 3, PG I SERVICE
                                                                                                                                                                                                                        DOT–111 Built to
                                                                                                                                         Jacketed or non-jacketed                DOT–111 Not authorized
                                                                                   Material                                                                                                                              CPC–1232 not
                                                                                                                                                 tank car                             on or after                     authorized on or after

                                              Unrefined petroleum products (e.g., crude oil) ................                          Non-jacketed ......................      January 1, 2018 ...............     April 1, 2020.
                                                                                                                                       Jacketed .............................   March 1, 2018 ..................    May 1, 2025.
                                              Class 3, PG I (flammable liquid) (other than unrefined                                   Jacketed and Non-jacketed                May 1, 2025 .....................   May 1, 2025.
                                                petroleum products).



                                              Part 179                                                                  Section 179.202–13                                                 of Class 3 flammable liquids as HHFTs
                                              Section 179.202–6                                                            Section 179.202–13 provides                                     and setting forth regulations (i.e., speed
                                                                                                                        performance standards for retrofit of                              restrictions, braking systems, and
                                                 Section 179.202–6 requires a tank car                                                                                                     routing) for their operation. The HM–
                                              built to meet the DOT–117 to have a                                       DOT–111 tank cars (i.e., standards for a
                                                                                                                        DOT–117R tank car). Consistent with                                251 final rule also adopted into the
                                              thermal protection system. Consistent
                                                                                                                        the mandate in Section 7306 of the                                 HMR requirements for sampling and
                                              with the mandate in Section 7305 of the
                                              FAST Act, in this final rule we are                                       FAST Act, in this final rule we are                                testing programs to ensure the proper
                                              revising this section to require that the                                 revising the top fittings protection                               classification of unrefined petroleum-
                                              thermal protection system include a                                       requirements in paragraph (h) to include                           based products. Furthermore, it codified
                                              thermal protection blanket with at least                                  minimum standards for the protection                               new tank car design standards and
                                              a 1⁄2-inch-thick material that meets                                      of pressure relief devices, valves, or                             established a phase-out schedule of
                                              § 179.18(c).                                                              fittings.                                                          legacy tank cars (e.g., DOT–111 tank
                                                                                                                        IV. Regulatory Analyses and Notices                                cars) by requiring use of either a DOT–
                                              Section 179.202–11                                                                                                                           117, DOT–117P, or DOT–117R
                                                Section 179.202–11 provides a table                                     A. Statutory/Legal Authority for This                              specification tank car by certain dates
                                              of specification requirements for the                                     Rulemaking                                                         for the transport of Class 3 flammable
                                              DOT–117 tank car. Consistent with the                                        This final rule is published under the                          liquids in HHFTs.
                                              mandate in Section 7305 of the FAST                                       authority of Federal Hazardous
                                              Act, in this final rule we are revising the                                                                                                     The FAST Act instructs the Secretary
                                                                                                                        Materials Transportation Law (49 U.S.C.                            to make specific regulatory amendments
                                              table to make clear that a thermal                                        5101 et seq.). Section 5103(b) of Federal
                                              protection blanket (in accordance with                                                                                                       to the aforementioned tank car design
                                                                                                                        Hazmat Law authorizes the Secretary to                             standards and phase-out schedule
                                              § 179.202–6) is a requirement of the                                      prescribe regulations for the safe
                                              DOT–117 tank car.                                                                                                                            codified in the HM–251 final rule. The
                                                                                                                        transportation, including security, of                             FAST Act requirements addressed in
                                              Section 179.202–12                                                        hazardous material in intrastate,
                                                                                                                                                                                           this final rule are non-discretionary.
                                                Section 179.202–12 provides the                                         interstate, and foreign commerce.
                                                                                                                                                                                           This final rule revises the newly
                                              performance standards for a DOT–117P                                      B. Executive Order 12866, Executive                                adopted regulations in the HM–251 final
                                              tank car. For greater understanding by                                    Order 13563, and DOT Regulatory                                    rule to align with the FAST Act. The
                                              the regulated community, in this final                                    Policies and Procedures                                            specific amendments in this final rule
                                              rule we are revising the heading of                                                                                                          are identified in Table 5 below and
                                              § 179.202–12 to more clearly indicate                                     1. Background
                                                                                                                                                                                           discussed briefly in the text that
                                              that the performance standard                                                As previously discussed, the HM–251                             follows. Table 5 summarizes the
                                              requirements apply to the DOT–117P                                        final rule amended the HMR by defining                             affected population, costs, and benefits:
                                              tank car.                                                                 certain trains transporting large volumes

                                                                                           TABLE 5—SUMMARY OF AFFECTED POPULATION, COSTS, AND BENEFITS
                                              Need and Basis for the Rule ....................................................................                Congressional Mandate: FAST Act provisions.
                                              Applicability ...............................................................................................   Rail tank car manufacturers; tank car owners and lessors; railroad op-
                                                                                                                                                                erators; shippers, offerors, and rail carriers.
                                              Affected Population ..................................................................................          19,757 Flammable Liquid Tank Cars.
                                                                                                                                                              73,374 Crude and Ethanol Tank Cars.
                                              Total Costs (7% Discount) .......................................................................               $520 million.
                                              Annualized Costs (7% Discount) ..............................................................                   $49 million.
                                              Costs (Qualitative) ....................................................................................        Out-of-Service Time.
                                              Benefits (Qualitative) ................................................................................         Improved puncture resistance.
                                                                                                                                                              Increased thermal survivability.
                                                                                                                                                              Enhanced protection of top fittings.



                                              Retrofit Schedule                                                         DOT–111 tank cars used to transport                                previously transported in a DOT–111
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                                                                                                                        flammable liquids, thereby requiring                               tank car to be transported in a DOT–117,
                                                The FAST Act instructs the Secretary                                    that these tank cars meet the DOT–117,                             DOT–117P, or DOT–117R tank car only
                                              to make specific regulatory amendments                                    DOT–117P, or DOT–117R in part 179 of                               when these tank cars were configured as
                                              to the tank car design standards and
                                                                                                                        title 49, regardless of train composition.                         part of an HHFT.
                                              phase-out schedule established by the
                                                                                                                        This differs from the HM–251 final rule,
                                              HM–251 final rule. Section 7304 of the
                                                                                                                        which required flammable liquids
                                              FAST Act mandates a phase-out of all


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                                                                Federal Register / Vol. 81, No. 157 / Monday, August 15, 2016 / Rules and Regulations                                                         53941

                                              Thermal Protection Blankets                             developed a plan detailing how such                    manufacturers; tank car owners and
                                                                                                      reviews are conducted.14                               lessors; railroad operators; shippers,
                                                Section 7305 of the FAST Act                            This final rule is designated as                     offerors, and rail carriers; companies
                                              mandates that each tank car built to                    economically significant, and was                      that manufacture, transport, or use
                                              meet the DOT–117 and each non-                          reviewed by the Office of Management                   flammable liquids; and emergency
                                              jacketed tank car retrofitted to meet the               and Budget (OMB). The final rule is                    responders. More specifically, owners
                                              DOT–117R be equipped with a thermal                     considered a significant regulatory                    and lessors of flammable liquid tank
                                              protection blanket of at least 1⁄2-inch-                action under the Regulatory Policies and               cars, shippers of flammable liquids, and
                                              thick material that meets § 179.18(c) of                Procedures order issued by the DOT [44                 railroads that transport flammable
                                              the HMR.13 Under the HM–251 final                       FR 11034; February 26, 1979]. In this                  liquids would be affected by this
                                              rule, a thermal protection blanket was                  section, PHMSA addresses the                           rulemaking. Below is a summary of the
                                              not required, but it was an authorized                  economic impact of this final rule.                    affected entities for the specific actions
                                              means of providing the required thermal                                                                        adopted in this final rule. Specifically,
                                              protection for a DOT–117 tank car and                   2. Need for Rule
                                                                                                                                                             for this analysis we look at the number
                                              in the regulatory impact analysis it was                   The FAST Act instructed the                         of tank cars to gauge impact. We discuss
                                              assumed to be the means of compliance                   Secretary to make specific regulatory                  the affected entities separately below
                                              that likely would be used by                            amendments to the aforementioned tank                  because the number varies for each
                                              manufacturers.                                          car design standards and phase-out                     requirement.
                                                                                                      schedule established by the HM–251
                                              Top Fittings Protections                                final rule. The FAST Act changes                       Retrofit Schedule
                                                 Section 7306 of the FAST Act                         adopted in this final rule are non-                      Table 6 is derived from the HM–251
                                              specifies minimum requirements for top                  discretionary. Regardless, the need for                RIA (Table TC2). It represents PHMSA’s
                                              fittings protection on tank cars built to               the changes adopted in this final rule                 estimate of the number of DOT–111 and
                                              meet the DOT–117R—including a                           remains consistent with that in the HM–                CPC–1232 tank cars that would need to
                                              protective housing for the top fittings                 251 final rule and the HM–251 RIA.                     be retrofitted for crude and ethanol
                                              and the pressure relief device—and                      Specifically, both the HM–251 final rule               service in HHFTs.15
                                              allows for an alternative protection                    and this final rule are designed to lessen
                                              system. The FAST Act outlines self-                     the consequences of train accidents                       TABLE 6—ESTIMATED QUANTITY OF
                                              executing performance standards for top                 involving the unintentional release of                    DOT–111 TANK CARS IN NEED OF
                                              fittings protection requirements.                       flammable liquids. The purpose of the                     RETROFIT
                                              Codifying these minimum requirements                    regulations for enhanced tank car
                                              in the HMR provides clarity for the                     standards is to prevent spills by keeping                   Tank car type/service                    Fleet size
                                              regulated community on the statutory                    flammable liquids, including crude oil
                                              requirements for top fittings.                          and ethanol, in rail tank cars and to                  Non-Jacketed DOT–111 tank
                                                                                                      mitigate the severity of incidents should                cars in PG I service ..........                  11,637
                                              Executive Orders                                        they occur.                                            Non-Jacketed DOT–111 tank
                                                                                                         Finally, as previously explained, the                 cars in PG II service .........                  18,493
                                                 Executive Orders 12866 (‘‘Regulatory                 requirements of Sections 7304, 7305,                   Jacketed DOT–111 tank cars
                                              Planning and Review’’) and 13563                        and 7306 of the FAST Act are non-
                                                                                                                                                               in PG I and PG II service                         2,356
                                              (‘‘Improving Regulation and Regulatory                                                                         Non-Jacketed CPC–1232
                                                                                                      discretionary and, in some cases,                        tank cars in PG I and PG
                                              Review’’) require agencies to regulate in               statutorily self-executing, thus
                                              the ‘‘most cost-effective manner,’’ to                                                                           II service ............................          15,895
                                                                                                      superseding the recently published                     Jacketed CPC–1232 tank
                                              make a ‘‘reasoned determination that                    HM–251 final rule. It is good practice to                cars in PG I, PG II service,
                                              the benefits of the intended regulation                 adjust the HMR to align with the current                 and all remaining tank cars
                                              justify its costs,’’ and to develop                     statutory mandates. PHMSA seeks to                       carrying PG III materials in
                                              regulations that ‘‘impose the least                     reduce confusion within the regulated                    an HHFT (pressure relief
                                              burden on society.’’ This final rule was                industries and other members of the                      valve and valve handles).                        24,933
                                              mandated by congressional action, and                   public by eliminating inconsistency
                                              the provisions in this action are non-                                                                               Total ...............................        73,314
                                                                                                      between the statutory mandates and
                                              discretionary.                                          existing regulatory mandates.                             The FAST Act modifies the retrofit
                                                 Executive Order 13610 (‘‘Identifying                                                                        schedule, accelerating deadlines for
                                              and Reducing Regulatory Burden’’),                      3. Baseline/Affected Entities
                                                                                                                                                             unrefined petroleum products in PGII
                                              issued May 10, 2012, urges agencies to                     When examining the cost and                         and relaxing the schedule for retrofitting
                                              conduct retrospective analyses of                       budgetary impacts of the provisions in                 DOT–111 tank cars transporting Class 3
                                              existing rules to examine whether they                  the FAST Act that revise the HM–251                    flammable liquids other than unrefined
                                              remain justified and whether they                       final rule, PHMSA specifically focuses                 petroleum or ethanol. These
                                              should be modified or streamlined in                    on the cost these changes will impose                  modifications to the schedule would
                                              light of changed circumstances,                         related to the baseline safety level set by
                                                                                                                                                             neither affect the number of cars
                                              including the rise of new technologies.                 the HM–251 final rule. In other words,
                                                                                                                                                             retrofitted nor the per unit cost of
                                              DOT believes that streamlined and clear                 the costs considered are only those that
                                                                                                                                                             retrofits, instead only affecting the
                                              regulations are important to ensure                     are new and add to the previous costs
                                                                                                                                                             timing of the retrofits. As a result, the
                                              compliance with important safety                        considered in the HM–251 RIA.
                                                                                                                                                             cost differential of this adjustment is a
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                                              regulations. As such, DOT has                              Both the HM–251 final rule and this
                                                                                                      final rule would impact PHMSA                          matter of the difference in the value of
                                                                                                      stakeholders, including rail tank car                  discounting a year or two for a subset
                                                13 The HM–251 final rule did not require that
                                                                                                                                                             of cars, which is negligible. For this
                                              these tank car specifications include a thermal
                                              protection blanket as part of the thermal protection       14 Department of Transportation’s plan for          analysis, we assume the same
                                              system, but rather required that the specification      retrospective regulatory reviews is available online
                                              tank cars meet the performance standard specified       at: http://www.dot.gov/regulations/dot-                  15 This only includes crude and ethanol tank cars

                                              in § 179.18.                                            retrospective-reviews-rules.                           and assumes a 28 percent retirement rate.



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                                              53942                   Federal Register / Vol. 81, No. 157 / Monday, August 15, 2016 / Rules and Regulations

                                              distribution of crude and ethanol tank                                     100 percent utilization in June of 2014                                     In addition to modifying the retrofit
                                              cars as in Table 6 even though it could                                    to 77 percent utilization in 2015, has                                   schedule for crude and ethanol tank cars
                                              be argued that given the current                                           resulted in a surplus of 80,000 tank cars.                               covered in the HM–251 final rule, the
                                              economic conditions these numbers                                          Orders for new tank cars have dropped                                    FAST Act requires all DOT–111
                                              overestimate the needed tank car fleet.16                                  significantly and the current tank car                                   flammable liquid tank cars to meet the
                                              Specifically, the number of tank cars in                                   surplus indicates that unless energy                                     DOT–117/117R tank car specification
                                              crude oil or ethanol service that need to                                  prices rebound, tank car utilization will                                based on a retrofit timeline. In
                                              be retrofit is likely an overestimate due                                  be well below 100 percent, meaning that                                  comments and appeals to the HM–251
                                              to lower oil prices, expected future                                       fewer cars will be needed to haul crude                                  final rule, interested parties estimated
                                              additions to the fleet, reduced tank car                                   oil than the industry predicted in 2014.                                 that approximately 40,000 additional
                                              demand, an existing tank car surplus,                                      In addition, the AAR weekly rail traffic                                 tank cars would need retrofitting if the
                                              decreased fleet utilization rates, and                                     report from May 7, 2016, noted U.S.                                      retrofit requirements were expanded to
                                              decreased leasing rates. The Progressive                                   Class I railroads originated 63,261                                      all flammable liquids. On September 30,
                                              Railroading article cited above notes                                      carloads of crude oil in the first quarter                               2014, the Railway Supply Institute (RSI)
                                              recent changes in the market for tank                                      of 2016, down 21,664 carloads or 25.5                                    provided a fleet projection for the end
                                              cars, driven primarily by a substantial                                    percent from the fourth quarter of 2015                                  of 2015 in their comments to the HM–
                                              drop in crude oil prices, including that                                   and down 49,828 carloads or 44.1                                         251 NPRM docket. Table 7 summarizes
                                              tank car utilization has gone from near                                    percent from the first quarter of 2015.17                                the RSI projections:

                                                                         TABLE 7—RSI PROJECTED FLAMMABLE LIQUIDS TANK CAR FLEET AS OF THE END OF 2015
                                                                                                                                                                                                                                           Other
                                                                                                              Sub-fleet                                                                           Crude oil          Ethanol *         flammable
                                                                                                                                                                                                                                         liquids *

                                              Non-jacketed DOT–111s .............................................................................................................                      23,090             27,037             24,790
                                              Jacketed DOT–111s ....................................................................................................................                    7,016                 88              9,413
                                              Non-jacketed CPC–1232s ...........................................................................................................                       21,993                751              2,944
                                              Jacketed CPC–1232s ..................................................................................................................                    35,408                 23              1,975

                                                    Totals ....................................................................................................................................        87,507             27,899             39,122
                                                 * Note: Ethanol and Other Flammable Liquids car counts are based on AAR counts of cars that shipped at least one carload of the commodity
                                              in question over the period from January 1, 2013 through April 30, 2014. If an individual car switched services during this period, that car will be
                                              counted as part of more than one fleet.


                                                 In the HM–251 Final Rule RIA,                                           with decreasing fleet utilization rates                                  switching between services may become
                                              PHMSA assumed that all legacy tank                                         and decreased leasing rates.18 19                                        much less prevalent.
                                              cars would be either retrofit or retired.                                  Furthermore, as stated in the note to                                       Based on this discussion, PHMSA
                                              Retired cars were assumed to be                                            Table 7, for ‘‘Other Flammable                                           will continue to use the crude and
                                              scrapped rather than transferred to other                                  Liquids’’ 20 (OFL) the car counts are                                    ethanol fleet size estimated in the HM–
                                              service. The Agency also assumed that                                      based on AAR counts of cars that
                                                                                                                                                                                                  251 RIA acknowledging that those tank
                                              any new car built for crude and ethanol                                    shipped at least one carload of the
                                                                                                                                                                                                  car numbers may now be an over-
                                              service would be a DOT–117 regardless                                      commodity in question over the period
                                                                                                                         from January 1, 2013 through April 30,                                   estimation. Regarding the additional
                                              of whether the car was to be used in
                                                                                                                         2014. This is the same approach to                                       flammable liquid tank cars that are
                                              manifest service or unit train service.
                                              The Agency did not assume that CPC–                                        counting tank cars that was utilized in                                  included in the scope of this rule based
                                              1232 cars would continue to be built for                                   the HM–251 RIA. The concern is that if                                   on the FAST Act requirements, we are
                                              manifest crude and ethanol service. The                                    an individual car switched services                                      using the RSI estimate as a basis for
                                              Agency’s reasoning was that any crude                                      (e.g., from ethanol to another flammable                                 determining the fleet size but are
                                              or ethanol car would probably end up                                       liquid) during this period, that car                                     modifying it based on the factors
                                              in HHFT service at some point even if                                      would be counted as part of more than                                    discussed above (i.e., potential double
                                              some portion of those commodities                                          one fleet. In a February 29, 2016, letter                                counting inflating the fleet estimate and
                                              would be hauled by manifest trains. The                                    to PHMSA, RSI reiterated the difficulty                                  falling demand for cars in crude oil
                                              figures in the Crude and Ethanol                                           in formulating accurate tank car fleet                                   service). We estimate the total OFL fleet
                                              columns of Table 7 therefore represent                                     estimates, particularly when tank cars                                   size is between 20,000 to 30,000 tank
                                              the estimated size of the total crude and                                  are likely being shifted between                                         cars. We arrived at this estimate by
                                              ethanol fleets, not just the portion of                                    different types of service.21 As such, we                                making two adjustments: Remove the
                                              those fleets destined for HHFT service.                                    believe that counting tank cars in this                                  Canadian fleet, which was estimated to
                                                 PHMSA will continue to evaluate the                                     manner double counts an individual car                                   account for 25.7 percent of cars in the
                                              market conditions that drive industry                                      if that car switched services during the                                 HM–251 final rule RIA (see page 80);
                                              decisions regarding the tank car fleet.                                    period. Such double counting may be                                      and, reduce the remaining U.S. fleet by
                                              Most recently, the tank car market has                                     temporary, however. If the shipping                                      10 percent to adjust for double counting
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                                              seen a growing tank car surplus, along                                     demand increases for crude oil,                                          due to switching service (as referenced
                                                 16 Progressive Railroading Article: http://                               18 See http://www.progressiverailroading.com/                             20 ‘‘Other Flammable Liquids’’ means any

                                              www.progressiverailroading.com/rail_industry_                              virtualmag/pr1215/files/14.html.                                         material meeting the definition of a flammable
                                              trends/article/Outlook-2016-Rail-car-forecast-by-                            19 See http://www.wsj.com/articles/demand-for-                         liquid as defined in §§ 172.120 and 173.121
                                              Richard-Kloster-46701.                                                     key-types-of-railway-cars-falls-amid-declining-                          excluding those classified under proper shipping
                                                 17 https://www.aar.org/newsandevents/Press-                                                                                                      names related to crude and ethanol.
                                                                                                                         output-1429908476.
                                              Releases/Pages/2016-05-11-railtraffic.aspx.                                                                                                            21 See [insert RSI letter into the docket].




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                                                                      Federal Register / Vol. 81, No. 157 / Monday, August 15, 2016 / Rules and Regulations                                                                                                   53943

                                              in the note to Table 7 above).22 This                                       The estimates in Table 8 below were                                            the purposes of this analysis, we define
                                              reduction puts the affected OFL fleet                                       obtained by multiplying the figures in                                         the flammable liquid tank car
                                              estimate in the middle of the 20,000–                                       Table 7 by 0.743 (1 ¥ 0.257 = 0.743) and                                       population affected by these provisions
                                              30,000 range (26,161 in table below).                                       0.90 (1 ¥ 0.10 = 0.90), sequentially. For                                      as follows in Table 8.

                                                   TABLE 8—PHMSA PROJECTED FLAMMABLE LIQUIDS TANK CAR FLEET USED FOR FAST ACT COST DETERMINATION
                                                                                                                                                                                                                                                       Other flammable
                                                                                                                                         Sub-fleet                                                                                                         liquids

                                              Non-jacketed DOT–111s .................................................................................................................................................................                           16,577
                                              Jacketed DOT–111s ........................................................................................................................................................................                         6,294
                                              Non-jacketed CPC–1232s ...............................................................................................................................................................                             1,969
                                              Jacketed CPC–1232s ......................................................................................................................................................................                          1,321

                                                    Total ..........................................................................................................................................................................................            26,161



                                                 PHMSA uses the fleet estimates for                                       no associated retrofit cost. Thus, for                                         protections for all retrofit cars. Tank
                                              OFL in Table 8 as the basis for the cost                                    crude and ethanol cars, thermal                                                cars built to the CPC–1232 industry
                                              estimates related to OFL in this rule.                                      protection blanket costs are already                                           standard are already equipped with top
                                              While the HM–251 final rule                                                 accounted for; hence, this FAST Act                                            fittings protections; therefore, this new
                                              requirements captured OFL that were                                         requirement does not add additional                                            cost only applies to legacy DOT–111
                                              transported in an HHFT configuration,                                       costs for these cars. Neither the FAST                                         tank cars transporting crude oil and
                                              PHMSA did not expect OFL to be                                              Act nor these complying regulations                                            ethanol, as well as those transporting
                                              transported in HHFT service therefore                                       require jacketed cars to be retrofitted                                        OFL that are now included in our scope
                                              no costs or benefits were assigned to                                       with thermal protection, so associated                                         per the FAST Act. In total, we estimate
                                              those materials in the HM–251 RIA. The                                      costs would not be borne regardless of                                         55,357 tank cars (13,905 crude tank cars,
                                              key difference between the HM–251                                           the assumptions made in the HM–251                                             18,581 ethanol tank cars, and 22,871
                                              final rule and the FAST Act                                                 rulemaking analysis.                                                           OFL tank cars) will be affected (see
                                              requirements that are being adopted in                                         Section 7305(b) of the FAST act                                             Tables 6 and 8, above).
                                              this action is that the latter covers all                                   provides a savings clause that states                                          4. Summary of Costs
                                              flammable liquid cars regardless of train                                   ‘‘[n]othing in this section shall prohibit
                                              composition. Therefore, these tank cars                                     the Secretary from approving new or                                               PHMSA applies the same retrofit costs
                                              are considered in this analysis and will                                    alternative technologies or materials as                                       that were applied in the HM–251 RIA to
                                              require full retrofits—including not just                                   they become available that provide a                                           all cars being retrofitted (all CPC–1232
                                              top fittings protection and thermal                                         level of safety at least equivalent to the                                     tank cars and the DOT–111 tank cars
                                              protection blankets, but also full height                                   level of safety provided for under                                             that are not retired). The unit retrofit
                                              head shields, full jackets, improved                                        subsection (a).’’ As the regulatory text is                                    costs used in the HM–251 RIA are
                                              bottom outlet valve handles, and high                                       written, the prescriptive standards for                                        applied to OFL tank cars, along with the
                                              capacity pressure relief valves—to meet                                     thermal protection blankets are applied                                        estimated cost of installing top fittings
                                              the FAST Act requirement that all                                           for new DOT–117 and DOT–117Rs. The                                             protection. The unit costs, including
                                              flammable liquid cars meet the DOT–                                         section related to DOT–117Ps is not                                            out-of-service time, were estimated at
                                              117R.                                                                       revised thus if an entity were able to                                         $38,923 for a non-jacketed DOT–111
                                              Thermal Protection Blankets                                                 provide a design that exceeded the                                             tank car.23 The addition of top fittings
                                                                                                                          prescriptive standard for a thermal                                            protection raises this cost to $43,508.
                                                 The FAST Act requires that each tank                                     protection blanket in the FAST act and                                         For a jacketed DOT–111 tank car, the
                                              car built to meet the DOT–117 and each                                      FRA were to approve that design as a                                           unit cost of retrofitting in the HM–251
                                              non-jacketed tank car retrofitted to meet                                   DOT117P they could innovate.                                                   RIA was $28,123. With top fittings
                                              the DOT–117R be equipped with an                                               The thermal protection blanketing                                           protection, this cost rises to $32,708 per
                                              ‘‘insulating blanket,’’ which as clarified                                  provision will only affect those non-                                          car. PHMSA assumes these cars will be
                                              above, we have defined here to mean a                                       jacketed flammable liquid cars in need                                         retrofitted in the final 5 years of the
                                              thermal protection blanket. This                                            of retrofit. Specifically, we estimate                                         allowed timeframe (i.e., between 2025
                                              requirement is consistent with the                                          18,546 tank cars (comprised of the non-                                        and 2029). Table 10 describes the cost
                                              assumptions made for meeting the                                            jacketed legacy DOT–111 and non-                                               and modifications needed by fleet and
                                              DOT–117R in the HM–251 RIA.                                                 jacketed CPC–1232 tank cars in OFL                                             tank car type. PHMSA estimates that 76
                                              Although PHMSA acknowledged that                                            service listed in Table 8) will be                                             percent of the total costs of the FAST
                                              new alternate technologies to existing                                      affected.                                                                      Act tank car retrofit requirements accrue
                                              thermal protection blankets may become                                                                                                                     to the non-jacketed DOT–111 tank cars.
                                                                                                                          Top Fittings Protection
                                              available for meeting the performance                                                                                                                      In addition, we apply a $4,585 per car
                                              requirement of that rule, we assumed                                          The HM–251 final rule did not require                                        cost to account for the cost of enhancing
                                              that the jacketed CPC–1232 cars were                                        modification or addition of top fittings                                       top fittings protection on the legacy
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                                              equipped with a thermal protection                                          protections to meet the DOT–117R. The                                          DOT–111 tank cars (both jacketed and
                                              system meeting § 179.18 and there was                                       FAST Act requires enhanced top fittings                                        non-jacketed).24 The per unit cost for
                                                 22 Starting with the RSI data in Table 7, we                               23 Given the decrease demand for DOT–111 tank                                   24 See   RSI letter to PHMSA [add link to docket].
                                              sequentially take out 25.7% to remove the Canadian                          cars since the publication of HM–251 final rule,
                                              fleet and then take out 10% of the remainder to                             costs associated with out-of-service time may be
                                              adjust for double counting due to switching service.                        lower than originally estimated due to
                                                                                                                          underutilization of the fleet.



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                                              53944                   Federal Register / Vol. 81, No. 157 / Monday, August 15, 2016 / Rules and Regulations

                                              each tank car type is listed below in                                     with a non-jacketed CPC–1232 and a                                         several components found on the
                                              Table 10 below.                                                           retired jacketed DOT–111 tank car                                          jacketed car. However, the unjacketed
                                                                                                                        would have been replaced with a                                            CPC–1232 has a thicker shell (1/2 inch
                                              Retirements
                                                                                                                        jacketed CPC–1232 tank car. In addition,                                   rather than 7/16 inches) than the
                                                 As noted above, we assume that 28                                      we assume that industry would have                                         unjacketed CPC–1232 and would
                                              percent of OFL tank cars would be                                         built improved CPC–1232 tank cars for                                      therefore only need sixteenth of an inch
                                              retired rather than retrofit. For the HM–                                 OFL service—with pressure relief valves                                    of shell thickness ($1,500). The non-
                                              251 RIA virtually all retirements were                                    (PRVs) and bottom outlet valve (BOV)                                       jacketed CPC–1232 also has half height
                                              forced early retirements because the                                      handles that would meet DOT–117                                            head shields. To be fully upgraded to
                                              retrofit timeline was aggressive,                                         requirements. The non-jacketed cars                                        the DOT–117 standard, the required
                                              especially for legacy DOT 111 tank cars.                                  would (obviously) not have jackets, but                                    additions would be a jacket with full
                                              The FAST Act deadline is substantially                                    would have a 1/2 inch shells and half                                      height head shields (rather than half
                                              more lenient, and as a result, the                                        height head shields. The jacketed cars                                     height), thermal protection, and a
                                              Agency believes it appropriate to                                         would have 7/16 inch shells and jackets                                    sixteenth of an inch of shell thickness.
                                              consider natural retirements as well as                                   with thermal protection and top fittings                                   The retrofit costs for a non-jacketed
                                              forced early retirements. We use the                                                                                                                 CPC–1232 are presented below as a
                                                                                                                        protection. The only difference between
                                              fleet age profile used in the 2015 HM–                                                                                                               starting point for a new car differential.
                                                                                                                        these cars and a DOT–117 tank car is an
                                              251 RIA to estimate retirement costs to                                                                                                              PHMSA modifies these by:
                                                                                                                        eighth of an inch of shell thickness,
                                              identify the number of cars in each year
                                                                                                                        which PHMSA estimates to be a $3,000                                          • Eliminating costs of the BOV and PRV,
                                              from 2016 to 2028 that would reach the
                                                                                                                        higher cost for the DOT–117 tank car                                       under the assumption that when done at the
                                              end of their useful life. We then assume
                                              that the remainders of the 28 percent of                                  compared to a jacketed CPC–1232 tank                                       manufacturing stage swapping out one part
                                              retired cars are forced to retire in 2029.                                car in the HM–251 Final Rule RIA.25                                        for another would have minimal cost;
                                                                                                                           As we found in the development of                                          • Subtracting $1,000 from the cost of a
                                              Given the longer time horizon for FAST
                                                                                                                                                                                                   jacket and head shields to account for
                                              Act compliance the Agency believes this                                   the HM–251 final rule analysis, tank car
                                                                                                                                                                                                   repurposing the steel that would have been
                                              treatment is appropriate. Natural                                         purchase prices are difficult to obtain.
                                                                                                                                                                                                   used for the non-jacketed CPC–1232 half
                                              retirements will occur over the nearly                                    One way to approximate them is to use                                      height head shield into half of a full height
                                              decade and a half, and tank car lessors                                   modified retrofit costs for upgrading a                                    head shield;
                                              and operators will have more time to                                      car from one type to another. As noted,                                       • Adding $1,500 to increase the shell
                                              plan for moving some of the fleet that                                    the cost difference between a DOT–117                                      thickness by a sixteenth of an inch (half the
                                              is not worth retrofitting into other                                      and a jacketed CPC–1232 is                                                 cost of increasing the shell thickness of a
                                              service rather than scrapping the cars.                                   approximately $3,000, because the only                                     CPC–1232 by an eighth of an inch); and,
                                                 We conduct this analysis by                                            difference between the two cars is the                                        • Increasing the learning curve efficiency
                                              assuming, absent FAST Act                                                 thickness of the tank shell. The                                           to 15 percent because manufacturing
                                              requirements, that a retired non-jacketed                                 differential for a non-jacketed CPC–1232                                   efficiencies for new builds should be greater
                                              DOT–111 tank car would be replaced                                        is more complicated because it lacks                                       than for retrofits.26

                                                      TABLE 9—RETROFIT COSTS FOR THE NON-JACKETED, DOT CPC–1232NJ (OPTION 3 TANK CAR) AND NEW CAR
                                                                                          DIFFERENTIAL ESTIMATE
                                                                                                                                                                                                                                           New car
                                                                                                                                                                                                                          Retrofit cost
                                                                                                                      Retrofit option                                                                                                     differential
                                                                                                                                                                                                                         from HM–251          cost

                                              Bottom outlet valve handle retrofit cost ...................................................................................................................                      $1,200              NA
                                              Pressure relief valve retrofit cost .............................................................................................................................                 $1,500              NA
                                              Thermal protection retrofit cost ................................................................................................................................                 $4,000          $4,000
                                              Full jacket retrofit cost with half height head shields ..............................................................................................                           $23,400         $22,400
                                              Extra shell thickness ................................................................................................................................................                NA          $1,500

                                                  Unadjusted Total ..............................................................................................................................................              $30,100         $27,900
                                              Learning curve cost reduction .................................................................................................................................                     10%             15%

                                                    Adjusted Total ...................................................................................................................................................         $27,090         $23,715



                                                This yields a car cost differential of                                  use the cost differential between a                                          We also reassessed the cost of early
                                              $23,715 between a non-jacketed CPC–                                       jacketed CPC–1232 and a DOT–117                                            retirements, which is dependent on the
                                              1232 tank car and a DOT–117 tank car.                                     ($3,000). For early retirements, we use                                    average remaining service life for the
                                              We apply this cost to natural                                             the car cost differential plus the cost of                                 cars retired early. For the HM–251 rule
                                              retirements to reflect the differential                                   having to buy a new DOT–117 earlier                                        this average was 1.9 years for non-
                                              cost between purchasing a non-Jacketed                                    than planned—$20,649 for a non-                                            jacketed DOT–111s and 1.3 years for
                                              CPC–1232 and a DOT–117. For jacketed                                      jacketed early retirement and $16,716                                      jacketed DOT–111s. Due to the overall
sradovich on DSK3GMQ082PROD with RULES




                                              DOT–111s that age out of the fleet, we                                    for a jacketed car.                                                        DOT–111 age distribution, the cars
                                                25 We assume that these cars would have been                            done at the manufacturing stage. As noted above,                             26 Because components can be added in the most

                                              built with HM–251 conforming pressure relief                              all CPC–1232 tank cars are built with conforming                           logical and time efficient sequence during the
                                              valves (PRV) and bottom outlet valve handles (BOV)                        top fittings protection so that assumption carries                         manufacturing process. With the retrofit process
                                              and FAST Act conforming top fittings protection.                          through here.                                                              certain components may have to be removed to
                                              We assume that adding better PRV and BOV handle                                                                                                      apply thermal protection and a jacket and then
                                              would not add appreciably to the cost of a car when                                                                                                  reattached.



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                                                                      Federal Register / Vol. 81, No. 157 / Monday, August 15, 2016 / Rules and Regulations                                                                                                53945

                                              retired for OFL service have a higher                                    111s the average is 2.28 remaining years                                       summary of all OFL cost parameters are
                                              average remaining life. For non-jacketed                                 of life.27 This raises the early retirement                                    presented below.
                                              DOT–111s the average is 2.87 years of                                    cost for both car types to those
                                              remaining life, and for jacketed DOT–                                    presented in Table 10 below. A

                                                                        TABLE 10—UNIT COSTS FOR FAST ACT REQUIREMENTS, OTHER FLAMMABLE LIQUIDS FLEET
                                                                                                                                                                                             HM–251                     Top fittings             Total cost
                                                                                                         Sub-fleet                                                                          retrofit cost             protection cost             per car

                                              Non-jacketed DOT–111 .......................................................................................................                          $38,923                      $4,585                     $43,508

                                              Jacketed DOT–111 ..............................................................................................................                          28,123                      4,585                      32,708

                                              Non-jacketed CPC–1232 .....................................................................................................                             28,034                           0                      28,034

                                              Jacketed CPC–1232 ............................................................................................................                            3,374                          0                       3,374

                                              Non-jacketed DOT–111 Scheduled Retirement ..................................................................                                                                                                    23,715

                                              Jacketed DOT–111 Scheduled Retirement .........................................................................                                                                                                  3,000

                                              Non-jacketed DOT–111 Early Retirement ...........................................................................                                                                                           44,364
                                                                                                                                                                                                                                               (23,715 + 20,649)

                                              Jacketed DOT–111 Early Retirement ..................................................................................                                                                                       19,716
                                                                                                                                                                                                                                                (16,716 + 3,000)



                                                 These unit costs are applied to the                                   figures in the columns showing                                                 retirements. Retrofit costs are estimated
                                              fleet figures presented in the Table 11                                  retirements for years 2016–2028. Early                                         by applying the retrofit unit costs above
                                              below. For retirements, the cost of                                      retirement costs are applied to the 2029                                       to the corresponding car-type retrofit
                                              natural retirements is applied to the                                    figures in the columns showing                                                 column in the table below.

                                                        TABLE 11—TYPE OF FLAMMABLE LIQUID RETROFIT AND RETIREMENTS BASED ON FAST ACT REQUIREMENTS *
                                                                                                                  Retrofit                     Retrofit                  Retrofit                     Retrofit                    Retire               Retire
                                                                                                                non-jacketed                  jacketed                 non-jacketed                  jacketed                  non-jacketed          jacketed
                                                                                                                 DOT 111                      DOT–111                   CPC 1232                    CPC 1232 J                     111               DOT–111

                                              Baseline ...................................................                  16,577                       6,294                       1,969                       1,321                26,161     ........................
                                              Baseline adjusted for retirements ** .........                                11,935                       4,532                       1,969                       1,321                 4,642                    1,762
                                              2016 .........................................................   ........................   ........................    ........................    ........................               384                       146
                                              2017 .........................................................   ........................   ........................    ........................    ........................               261                         99
                                              2018 .........................................................   ........................   ........................    ........................    ........................               202                         77
                                              2019 .........................................................   ........................   ........................    ........................    ........................               101                         38
                                              2020 .........................................................   ........................   ........................    ........................    ........................               129                         49
                                              2021 .........................................................   ........................   ........................    ........................    ........................               156                         59
                                              2022 .........................................................   ........................   ........................    ........................    ........................                93                         35
                                              2023 .........................................................   ........................   ........................    ........................    ........................               156                         59
                                              2024 .........................................................   ........................   ........................    ........................    ........................               318                       121
                                              2025 .........................................................                  2,387                         906                         394                         264                  374                       142
                                              2026 .........................................................                  2,387                         906                         394                         264                  291                       110
                                              2027 .........................................................                  2,387                         906                         394                         264                  220                         84
                                              2028 .........................................................                  2,387                         906                         394                         264                  202                         77
                                              2029 .........................................................                  2,387                         906                         394                         264                1,755                       666
                                                 * FAST Act other flammable liquid retrofit requirements start in 2025 and end in 2029.
                                                 ** Total of years for each type.


                                                Total cost estimates are presented in                                  obtained by applying the unit costs in
                                              Table 12 below. These costs are                                          Table 10 to the fleet figures in Table 11.

                                                       TABLE 12—ANALYSIS OF COSTS FOR OTHER FLAMMABLE LIQUID RETROFIT AND RETIREMENTS FOR FAST ACT
                                                                                             REQUIREMENTS *
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                                                                               Retrofit                     Retrofit                 Retrofit CPC                      Retrofit                     Retire                   Retire jacketed
                                                       Year                  non-jacketed                  jacketed                  non-jacketed                     jacketed                   non-jacketed                                       Total cost
                                                                                                                                                                                                                               DOT–111
                                                                                 111                         111                        1232                         CPC–1232                     DOT–111

                                              2016 ..................                         $0                          $0                           $0                           $0              $9,106,560                     $438,000           $9,544,560

                                                27 Years of remaining service life were calculated                     162–163). Due to the differing age distributions of                            the OFL fleet compared to the crude and ethanol
                                              in the same manner as the HM–251 RIA (See pages                                                                                                         fleets the average remaining life is higher for OFL.



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                                              53946                    Federal Register / Vol. 81, No. 157 / Monday, August 15, 2016 / Rules and Regulations

                                                        TABLE 12—ANALYSIS OF COSTS FOR OTHER FLAMMABLE LIQUID RETROFIT AND RETIREMENTS FOR FAST ACT
                                                                                         REQUIREMENTS *—Continued
                                                                                Retrofit                       Retrofit                Retrofit CPC                     Retrofit                      Retire            Retire jacketed
                                                       Year                   non-jacketed                    jacketed                 non-jacketed                    jacketed                    non-jacketed                           Total cost
                                                                                                                                                                                                                          DOT–111
                                                                                  111                           111                       1232                        CPC–1232                      DOT–111

                                              2017    ..................                   0                             0                            0                             0                  6,189,615               297,000       6,486,615
                                              2018    ..................                   0                             0                            0                             0                  4,790,430               231,000       5,021,430
                                              2019    ..................                   0                             0                            0                             0                  2,395,215               114,000       2,509,215
                                              2020    ..................                   0                             0                            0                             0                  3,059,235               147,000       3,206,235
                                              2021    ..................                   0                             0                            0                             0                  3,699,540               177,000       3,876,540
                                              2022    ..................                   0                             0                            0                             0                  2,205,495               105,000       2,310,495
                                              2023    ..................                   0                             0                            0                             0                  3,699,540               177,000       3,876,540
                                              2024    ..................                   0                             0                            0                             0                  7,541,370               363,000       7,904,370
                                              2025    ..................         103,853,596                    29,633,448                   11,045,396                       890,736                  8,869,410               426,000     154,718,586
                                              2026    ..................         103,853,596                    29,633,448                   11,045,396                       890,736                  6,901,065               330,000     152,654,241
                                              2027    ..................         103,853,596                    29,633,448                   11,045,396                       890,736                  5,217,300               252,000     150,892,476
                                              2028    ..................         103,853,596                    29,633,448                   11,045,396                       890,736                  4,790,430               231,000     150,444,606
                                              2029    ..................         103,853,596                    29,633,448                   11,045,396                       890,736                 77,858,820            13,130,856     236,412,852

                                                                                                                                                                                                       Non-discounted Total                889,858,761

                                                                                                                                                                                                      NPV 7% Discount Rate                 405,750,881

                                                                                                                                                                                                      NPV 3% Discount Rate                 629,195,653
                                                 * FAST Act other flammable liquid retrofit requirements start in 2025 and end in 2029.


                                                For the cars already accounted for in                                     blankets would be used to satisfy the                                        the FAST Act. As mentioned above, we
                                              the HM–251 RIA, the only additional                                         thermal protection requirements in the                                       assume a unit cost of $4,585 per car for
                                              cost is to modify top fittings protection                                   HM–251 final rule and acknowledges                                           this modification. Table 13 presents the
                                              for the DOT–111 tank cars. As                                               that tank cars built to the CPC–1232                                         costs of further modifying these cars.
                                              previously stated, PHMSA assumed in                                         standard are equipped with top fittings                                      Again, discounted NPV is calculated by
                                              the HM–251 RIA that thermal protection                                      protection meeting the requirements of                                       setting 2016 as year 1.

                                                                        TABLE 13—COST FOR CRUDE AND ETHANOL RETROFIT BASED ON FAST ACT REQUIREMENTS
                                                                                                                                                                                                     Non-jacketed           Jacketed
                                                                                                                   Year                                                                                                                      Total
                                                                                                                                                                                                      DOT–111               DOT–111

                                              2016 .............................................................................................................................................      $20,233,605                    $0    $20,233,605
                                              2017 .............................................................................................................................................       33,122,040             3,287,445     36,409,485
                                              2018 .............................................................................................................................................                0             7,225,960      7,225,960
                                              2019 .............................................................................................................................................                0                     0              0
                                              2020 .............................................................................................................................................       22,938,755                     0     22,938,755
                                              2021 .............................................................................................................................................       40,068,315                     0     40,068,315
                                              2022 .............................................................................................................................................       23,273,460               288,855     23,562,315
                                              2023 .............................................................................................................................................           90,554                     0         90,554
                                              Non-discounted Total ...................................................................................................................                139,726,729            10,802,260    150,528,989
                                              NPV 7% .......................................................................................................................................          105,440,453             8,949,802    114,390,255
                                              NPV 3% .......................................................................................................................................          123,203,667             9,946,375    133,150,042



                                                As summarized in Table 14, total                                          percent discount rate and $762 million                                       potential benefits of these changes are
                                              discounted costs for all provisions are                                     at a 3 percent discount rate. The                                            discussed further below.
                                              about $520 million over 20 years at a 7

                                                                               TABLE 14—TOTAL COSTS OF FAST ACT REQUIREMENTS (20 YEAR AND ANNUALIZED)
                                                                                                                         Cost category                                                                                      NPV 3%         NPV 7%

                                              Cost for Crude and Ethanol Retrofit (20 Year) .......................................................................................................                       $133,150,042    $114,390,255
                                              Cost for Flammable Liquid Retrofit and Retirement (20 Year) ...............................................................................                                  629,195,653     405,750,881

                                                 Total (20 Year) .................................................................................................................................................          762,345,695    520,141,136
sradovich on DSK3GMQ082PROD with RULES




                                              Annualized Cost .......................................................................................................................................................        51,241,605     49,097,644



                                                PHMSA has made a number of                                                   • Tanks cars built to the CPC–1232                                        need top fittings-related retrofits due to the
                                              assumptions regarding the cost of these                                     industry standard are equipped with top                                      FAST Act requirement.
                                              requirements, including the following:                                      fittings protection that conforms to the FAST                                  • Adding new top fittings protection that
                                                                                                                          Act requirement, and therefore would not                                     conforms to the FAST Act would not add



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                                                                     Federal Register / Vol. 81, No. 157 / Monday, August 15, 2016 / Rules and Regulations                                                                           53947

                                              significant weight to cars, and hence PHMSA                            in the HM–251 RIA but considers both                                 (and the Fast Act), since the rail industry
                                              does not estimate any additional track                                 natural and forced early retirements.                                supported plans to build jacketed CPC–1232
                                              maintenance and fuel consumption costs for                                • Adding top fittings protection would not                        cars and began to build them for crude and
                                              cars on which top fittings are modified.                               affect the retirement decision (i.e., adding top                     ethanol service prior to the promulgation of
                                                • The analysis does not account for the                              fittings protection to crude, ethanol, or OFL                        the HM–251 final rule.28 As a sensitivity
                                              fuel and track maintenance costs for the OFL                           tank cars would not result in retirement of a                        analysis below, we assess costs assuming
                                              tank car retrofits. These retrofits occur near                         higher proportion of these cars).                                    OFL service cars would be built to the higher
                                              the end of the 20-year analysis period; hence,                            • The size of the crude oil fleet remains                         DOT–117 standards promulgated in the HM–
                                              any fuel and maintenance costs would only                              unchanged despite the recent drop in crude                           251 final rule in absence of this rule.
                                              accrue for a few years and would be heavily                            oil production and shipments by rail, which
                                              discounted.                                                            is expected to persist at least in the near                            The estimated retrofit costs of the
                                                • The analysis assumes the same 28                                   term.                                                                rule, by provision, are presented in
                                              percent retirement rate for OFL tank cars as                              • OFL service cars would be replaced with                         Table 15 below. The costs in this table
                                              was assumed for the crude and ethanol cars                             a CPC–1232 in the absence of this regulation                         exclude retirement costs.

                                                TABLE 15—ESTIMATED NON-DISCOUNTED COST BREAKDOWN OF THE FAST ACT TANK CAR RETROFIT REQUIREMENTS
                                                                                                                                                                                                           Discounted 30
                                                                                                                                                                  Tank cars             Cost per tank                            % of total
                                                      Service type                         Tank car type                    Modification needed                                                               total cost
                                                                                                                                                                 impacted 29                 car            (thousands)           costs

                                              Crude and Ethanol .......             Non-jacketed DOT–111                 Thermal Blanket 31 ......                         30,475               $4,585      $105,440,453                      25
                                                                                                                         Top Fittings Protection.
                                                                                    Jacketed DOT–111 .....               Top Fittings Protection                            2,356                4,585          8,949,802                       2
                                                                                    Non-jacketed CPC–                    Thermal Blanket ..........                        15,895                   NA                  0                       0
                                                                                      1232.
                                                                                    Jacketed CPC–1232 ...                .....................................             24,993                  NA                  0                       0
                                              Flammable Liquid 32 .....             Non-jacketed DOT–                    Tank Retrofit ...............                     11,425               43,508       231,618,001                      52
                                                                                      111 33.                            Thermal Blanket.
                                                                                                                         Top Fittings Protection.
                                                                                    Jacketed DOT–111 34                  Tank Retrofit ...............                      4,335               32,708        66,089,575                      15
                                                                                                                         Top Fittings Protection.
                                                                                    Non-jacketed CPC–                    Tank Retrofit ................                     1,885               28,034        24,633,837                        6
                                                                                      1232.                              Thermal Blanket.
                                                                                    Jacketed CPC–1232 ...                Tank Retrofit ...............                      1,265                3,374          1,986,551                  0.4



                                              5. Sensitivity Analysis of Costs                                       retired legacy cars with DOT–117s                                    in one segment of the industry and demand
                                                                                                                     based on the following:                                              in another service is high.
                                                 In the above analysis, the cost applied
                                              to early retirements is based on the                                     • The industry was already ordering DOT–                             This sensitivity analysis assumes that
                                              industry continuing to build CPC–1232                                  117 tanks cars for crude and ethanol service                         natural retirements are replaced with
                                              cars (both jacketed and unjacketed) for                                prior to publication of the final rule.35                            DOT–117s at no additional cost and
                                              OFL service. Industry could also build                                   • Replacing retired cars with a DOT–117                            costs applied to early retirements are the
                                              to the higher DOT–117 standards when                                   tank car would enable tank car owners and                            costs associated with buying a car
                                              replacing retired OFL service cars. We                                 leasers to switch cars between crude, ethanol,                       earlier than planned. The unit costs
                                              consider an alternative cost analysis that                             and OFL service, thereby ensuring fuller                             associated with this sensitivity analysis
                                              assumes industry voluntarily replaces                                  utilization in periods where demand wanes                            are presented in Table 16 below.

                                                  TABLE 16—UNIT COSTS USED IN SENSITIVITY ANALYSIS OF FAST ACT REQUIREMENTS, OTHER FLAMMABLE LIQUIDS
                                                                                                 FLEET
                                                                                                                                                                                          HM–251             Top fittings     Total cost per
                                                                                                           Sub-fleet                                                                     retrofit cost     protection cost          car

                                              Non-jacketed DOT–111 ...............................................................................................................            $38,923              $4,585            $43,508

                                              Jacketed DOT–111 ......................................................................................................................           28,123               4,585             32,708

                                              Non-jacketed CPC–1232 .............................................................................................................               28,034                   0             28,034



                                                 28 Jacketed CPC–1232 tank cars have been built                      protection. ACC noted that thermal protection                        protection blanket; thus no cost for thermal
                                              for OFL service. PHMSA estimates that                                  should be considered a commodity specific                            protection blankets is added for the fleet included
                                              approximately 2,000 of these tank cars are currently                   addition that is not appropriate in all cases’’.                     in the HM–251 scope.
                                              used in this service on a quarterly basis. See also                       29 Numbers are derived from Table 25 for crude                      32 Costs associated with retiring older OFL tank
sradovich on DSK3GMQ082PROD with RULES




                                              American Chemistry Council (ACC) comments from                         and ethanol and Table 47 for flammable liquids                       cars are not incorporated into this table, but are
                                              2014 at https://www.regulations.gov/                                   from the RIA.                                                        incorporated in the figures presented elsewhere in
                                              document?D=PHMSA-2012-0082-0219. ACC stated                               30 These costs are NPV discounted at 7%.                          this section (see Table 11).
                                                                                                                                                                                            33 Includes retirement costs.
                                              ‘‘that the chemical industry has been purchasing                          31 PHMSA assumed that to meet the performance

                                              tank cars built to the CPC 1232 standard for several                   standard specified in § 179.18 each tank car built                     34 Includes retirement costs.

                                              years and they support provisions that would                           to meet the DOT–117 specification and each non-                        35 See http://www.railwayage.com/index.php/

                                              require all new DOT 111 tank cars to meet the CPC                      jacketed tank car retrofitted to meet the DOT–117R                   mechanical/freight-cars/tank-car-of-the-future-
                                              1232 standard with the exception of thermal                            specification would do so using a thermal                            among-greenbrier-railcar-contracts.html.



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                                              53948                    Federal Register / Vol. 81, No. 157 / Monday, August 15, 2016 / Rules and Regulations

                                                   TABLE 16—UNIT COSTS USED IN SENSITIVITY ANALYSIS OF FAST ACT REQUIREMENTS, OTHER FLAMMABLE LIQUIDS
                                                                                            FLEET—Continued
                                                                                                                                                                                                  HM–251                  Top fittings    Total cost per
                                                                                                             Sub-fleet                                                                           retrofit cost          protection cost         car

                                              Jacketed CPC–1232 ....................................................................................................................                        3,374                    0            3,374

                                              Non-Jacketed DOT–111 Scheduled Retirement .........................................................................                                                                                        0

                                              Jacketed DOT–111 Scheduled Retirement .................................................................................                                                                                    0

                                              Non-jacketed DOT–111 Early Retirement ...................................................................................                                                                          20,649

                                              Jacketed DOT–111 Early Retirement ..........................................................................................                                                                       16,716



                                                 We applied these costs to the OFL                                      analysis. Table 18 summarizes the total                                   sensitivity analysis found the cost of the
                                              fleet retrofit and retirement schedule                                    cost of the rule using the alternative                                    rule to be about 12 percent less if
                                              presented above. Table 17 summarizes                                      baseline and includes costs associated                                    industry were to build DOT–117 tank
                                              costs for the OFL fleet using the                                         with retrofitting the crude and ethanol                                   cars rather than CPC–1232 tank cars in
                                              alternative baseline as a sensitivity                                     fleet with top fittings protection. This                                  absence of the FAST Act.

                                               TABLE 17—SENSITIVITY ANALYSIS OF COSTS FOR FLAMMABLE LIQUID RETROFIT AND RETIREMENTS BASED ON FAST ACT
                                                                                            REQUIREMENTS
                                                                                         Retrofit                     Retrofit             Retrofit CPC                  Retrofit                  Retire               Retire jacketed
                                                            Year                       non-jacketed                  jacketed              non-jacketed                 jacketed                non-jacketed                                Total cost
                                                                                                                                                                                                                          DOT–111
                                                                                           111                         111                    1232                     CPC–1232                  DOT–111

                                              2016     .............................              $0                         $0                        $0                          $0                       $0                     $0                $0
                                              2017     .............................               0                          0                         0                           0                        0                      0                 0
                                              2018     .............................               0                          0                         0                           0                        0                      0                 0
                                              2019     .............................               0                          0                         0                           0                        0                      0                 0
                                              2020     .............................               0                          0                         0                           0                        0                      0                 0
                                              2021     .............................               0                          0                         0                           0                        0                      0                 0
                                              2022     .............................               0                          0                         0                           0                        0                      0                 0
                                              2023     .............................               0                          0                         0                           0                        0                      0                 0
                                              2024     .............................               0                          0                         0                           0                        0                      0                 0
                                              2025     .............................     103,853,596                 29,633,448                11,045,396                     890,736                        0                      0       145,423,176
                                              2026     .............................     103,853,596                 29,633,448                11,045,396                     890,736                        0                      0       145,423,176
                                              2027     .............................     103,853,596                 29,633,448                11,045,396                     890,736                        0                      0       145,423,176
                                              2028     .............................     103,853,596                 29,633,448                11,045,396                     890,736                        0                      0       145,423,176
                                              2029     .............................     103,853,596                 29,633,448                11,045,396                     890,736               36,238,995             11,132,856       192,795,027

                                                                                                                                                                                                      Non-discounted Total                  774,487,731
                                                                                                                                                                                                     NPV 7% Discount Rate                   342,699,585
                                                                                                                                                                                                     NPV 3% Discount Rate                   541,748,518


                                                            TABLE 18—SENSITIVITY ANALYSIS OF COSTS FOR FAST ACT REQUIREMENTS (20 YEAR AND ANNUALIZED)
                                                                                                                      Cost category                                                                                        NPV 3%           NPV 7%

                                              Cost for Crude and Ethanol Retrofits (20 Year) ......................................................................................................                      $133,150,042     $114,390,255
                                              Cost for Other Flammable Liquid Retrofit and Retirement (20 Year) .....................................................................                                     541,748,518      342,699,585

                                              Total Discount Cost (20-Year) .................................................................................................................................             674,898,561       457,089,840
                                              Annualized Cost .......................................................................................................................................................      45,363,784        43,146,047



                                              6. Summary of Benefits                                                    tank cars likely to be punctured and the                                  mandates of the FAST Act. The purpose
                                                                                                                        subsequent release of flammable liquids                                   of the regulations for enhanced tank car
                                                 The implementation of this final rule                                  in a derailment. The goals of this rule                                   standards is to prevent spills by keeping
                                              ensures that all Class 3 flammable                                        are thus consistent with those of the                                     flammable liquids, including crude oil
                                              liquids are packaged in tank cars                                         HM–251 final rule. Specifically, both                                     and ethanol, in rail tank cars and to
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                                              meeting improved specifications, thus                                     the HM–251 final rule and this final rule                                 mitigate the severity of incidents should
                                              reducing the likelihood that a train                                      are designed to lessen the consequences                                   they occur. Below we qualitatively
                                              transporting any volume of flammable                                      of train accidents involving the                                          discuss the benefits of each requirement
                                              liquids will release such liquids should                                  unintentional release of flammable                                        addressed in this rule individually and
                                              it derail. This final rule also reduces the                               liquids. The main difference is that this
                                                                                                                                                                                                  provide a final discussion of the
                                              consequences of an incident should one                                    rule is simply intended to align the
                                                                                                                                                                                                  combined benefits of the provisions.
                                              occur by diminishing the number of                                        HMR with the non-discretionary


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                                                                Federal Register / Vol. 81, No. 157 / Monday, August 15, 2016 / Rules and Regulations                                         53949

                                              Retrofit Schedule                                       excessive pressure, the thinning wall                 tank car only if these tank cars were
                                                 The FAST Act mandates a new phase-                   will fracture and result in a failure of              configured as part of an HHFT. The
                                              out schedule for DOT–111 tank cars—                     the tank.                                             FAST Act instructed the Secretary to
                                              including DOT–111 tank cars                               As established in § 179.18 of the                   require that all Class 3 flammable
                                              constructed to the CPC–1232 industry                    HMR, a thermal protection system                      liquids be transported in either a DOT–
                                              standard—used to transport unrefined                    serves to prolong the survivability of a              117, DOT–117P, or DOT–117R tank car,
                                              petroleum products (e.g., petroleum                     tank exposed to a pool or torch fire by               whether or not the flammable liquid is
                                              crude oil), ethanol, and other Class 3                  limiting the heat flux into the tank                  transported as part of an HHFT.
                                              flammable liquids, irrespective of train                material and its lading, thereby delaying             Applying these requirements to
                                                                                                      the increase of pressure in the tank. The             individual tank cars expands the scope
                                              composition. We estimate that the FAST
                                                                                                      National Transportation Safety Board                  of the impacted tank cars, which will
                                              Act’s phase-out schedule impacts
                                                                                                      (NTSB) has acknowledged that the                      reduce the overall probability and
                                              approximately 25,000 tank cars. With
                                                                                                      absence of adequate thermal protection                quantity of a Class 3 hazardous liquid
                                              regard to benefits, these 25,000 tank cars
                                                                                                      could lead to a higher likelihood of                  material release and will minimize the
                                              will realize improved puncture
                                                                                                      release and thermal tearing of tank                   consequences of an incident should one
                                              resistance, enhanced thermal
                                                                                                      cars.36 Conversely, the presence of                   occur, including deaths and injuries.
                                              survivability, and increased top fittings                                                                        In the HM–251 RIA, PHMSA
                                              protection. While these 25,000 tank cars                adequate thermal protection (i.e., a
                                                                                                      thermal protection blanket) should lead               addressed the risks posed by unit trains
                                              would not travel in large blocks of cars                                                                      or trains with large blocks of tank cars
                                              like HHFTs, they would see benefits in                  to a lower likelihood of these events.
                                                                                                                                                            containing flammable liquids. The
                                              potentially avoiding releases.                          Top Fittings Protection                               FAST Act modifies the retrofit schedule,
                                              Thermal Protection Blankets                                The HM–251 final rule did not require              accelerating deadlines for unrefined
                                                                                                      top fittings protections to meet DOT–                 petroleum products in PGII and relaxing
                                                 The FAST Act mandates that each
                                                                                                      117R. The FAST Act requires enhanced                  the schedule for retrofitting DOT–111
                                              tank car built to meet the DOT–117
                                                                                                      top fittings protection for all retrofitted           tank cars transporting Class 3 flammable
                                              standard and each non-jacketed tank car
                                                                                                      cars. The top fittings protection consists            liquids other than unrefined petroleum
                                              retrofitted to meet the DOT–117R                                                                              or ethanol. Consistent with the FAST
                                              standard be equipped with a thermal                     of a structure of specific design
                                                                                                      requirements intended to minimize                     Act, this rule requires that all tank cars
                                              protection blanket with at least 1⁄2-inch-                                                                    used to transport Class 3 flammable
                                              thick material that meets § 179.18(c). In               damage to the service equipment. Top
                                                                                                      fittings protection will minimize the                 liquids meet either the DOT–117, DOT–
                                              the HM–251 final rule, PHMSA required                                                                         117P, or DOT–117R in part 179 of the
                                              all cars in HHFT service be equipped                    shearing off of and damage to valves and
                                                                                                      fittings on the top of the tank car when              HMR, irrespective of train composition.
                                              with an 11-gauge jacket but did not                                                                              Enhancing crude and ethanol tank
                                              require a particular thermal protection                 involved in a derailment scenario. The
                                                                                                      NTSB has acknowledged that the                        cars with better top fittings protection,
                                              material or thickness, instead requiring                                                                      and all flammable liquid tank cars on
                                              that a thermal protection system (which                 absence of top fittings could lead to a
                                                                                                      higher likelihood of release.37 The                   manifest trains with top fittings
                                              includes a pressure relief device) meet                                                                       protection, jackets, thermal protection
                                              the performance standard of § 179.18.                   benefits of top fittings protection will
                                                                                                      now be realized by the entire flammable               systems, full height head shields, and
                                              Although PHMSA acknowledged that                                                                              better outlet valves, will reduce the
                                              alternative technologies to thermal                     liquid fleet.
                                                                                                                                                            likelihood of release in the event of a
                                              protection blankets exist (e.g.,                        Combined and Quantified Benefits                      derailment. As a result, fewer car
                                              intumescent paint) and that others may                                                                        punctures and fewer releases of material
                                              become available for meeting the                           The FAST Act mandates a new phase-
                                                                                                      out schedule for DOT–111 tank cars—                   will occur, thereby mitigating the
                                              performance requirement of that rule,                                                                         associated damages. This rule is
                                              PHMSA assumed that thermal                              including DOT–111 tank cars
                                                                                                      constructed to the CPC–1232 industry                  therefore expected to reduce the
                                              protection blankets would be the                                                                              damages to society associated with
                                              technology of choice and proactively                    standard—used to transport unrefined
                                                                                                      petroleum products (e.g., petroleum                   release of Class 3 flammable liquids in
                                              included their cost in the retrofit costs.                                                                    rail transportation.
                                              Thus, for crude and ethanol cars,                       crude oil), ethanol, and other Class 3
                                                                                                                                                               The benefits of applying these
                                              thermal protection blanket benefits are                 flammable liquids, irrespective of train
                                                                                                                                                            requirements to trains carrying large
                                              already accounted for; hence, this FAST                 composition. In addition, the FAST Act
                                                                                                                                                            quantities of crude and ethanol (i.e.,
                                              Act requirement does not add additional                 mandates that each tank car built to
                                                                                                                                                            HHFTs) were estimated in the HM–251
                                              retrofit benefits for these cars. The FAST              meet the DOT–117 and each non-
                                                                                                                                                            final rule RIA, though those estimated
                                              Act does add thermal protection                         jacketed tank car retrofitted to meet the
                                                                                                                                                            benefits do not include the benefit of
                                              blankets to other tank cars used for OFL.               DOT–117R be equipped with a thermal                   improved top fittings protection for tank
                                              Consequently the entire flammable                       protection material having a minimum                  cars that are retrofit. As noted in that
                                                                                                      1⁄2-inch thickness that meets § 179.18(c).
                                              liquid fleet will now realize benefits                                                                        document, the estimated effectiveness
                                              from this requirement.                                  Furthermore, the FAST Act specifies                   rates do not include any benefits from
                                                 A thermal protection blanket provides                minimum top fittings protection                       additional top fittings protection,
                                              benefits in the form of thermal                         requirements for tank cars retrofit to                because those benefits are relatively
                                              protection, which prevents the                          meet the DOT–117R.                                    small and uncertain and would apply
                                              temperature of the tank car from                           As previously mentioned, the HM–                   only to new construction (HM–251 RIA
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                                              reaching 800 °F, the temperature at                     251 final rule required Class 3                       page 184). As a result, we did not
                                              which the shell becomes malleable and                   flammable liquids to be transported in                estimate benefits of top fittings
                                              its mechanical properties degrade. At                   a DOT–117, DOT–117P, or DOT–117R                      protection for the cars and fleet covered
                                              temperatures above 800 °F, the shell                      36 http://www.ntsb.gov/safety/safety-recs/
                                                                                                                                                            in this final rule based on the prior HM–
                                              will thin as a result of the hoop stress                recletters/R-15-014-017.pdf.                          251 analysis. PHMSA focusses the
                                              caused by the increasing pressure in the                  37 http://www.ntsb.gov/safety/safety-recs/          following benefits discussion and
                                              tank. After a period of time with                       recletters/R-12-005-008.pdf.                          estimation for this final rule on


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                                              53950                  Federal Register / Vol. 81, No. 157 / Monday, August 15, 2016 / Rules and Regulations

                                              requirements for tank cars carrying                                         Challenges and Data Limitations                                   monetize benefits for this final rule. We
                                              flammable liquids on manifest trains                                           The wide variety of materials within                           instead present a break-even analysis
                                              only to comply with the 117, 117P, or                                       Packing Group 3 poses a challenge to                              that identifies how large the per gallon
                                              117R specification.                                                         monetizing benefits for OFL. There are                            cost or damage of a spill would need to
                                                 PHMSA assumes the upgrades to the                                        over 500 Class 3 materials, and the                               be for this rule’s benefits to equal its
                                              OFL cars produce identical effectiveness                                    properties of these materials vary                                costs. We do this by estimating the
                                              to those estimated in the HM–251                                            widely. Although the flammable                                    likely number of events that may occur
                                              analysis for a comparable car upgrade—                                      properties of these materials may be                              over the analysis period, the likely
                                              i.e. upgrading or replacing a non-                                          similar to crude and ethanol, the type                            average size of these events, and by
                                              jacketed DOT–111 would reduce the                                           and extent of contamination of the                                assuming that the mitigation of the size
                                              probability of release by an equivalent                                     natural or human environment that                                 of events that will result if all OFL tank
                                              amount whether the car is hauling                                           results from accidental release may be                            cars are upgraded to the DOT–117R
                                              crude, ethanol, or some OFL. Given the                                      completely different, depending on the                            standard or replaced with new DOT–
                                              variation of the properties of materials                                    commodity involved. In addition, even                             117 cars is the same as the mitigation
                                              within this packing group this                                              if the flammable properties of the                                levels estimated in the HMR–251 final
                                              assumption may or may not be valid.                                         liquids were identical, the average spill                         rule’s regulatory impact analysis for
                                              Some materials may have different flash                                     size of the incidents affected by this rule                       tank cars used on HHFTs.
                                              points or other properties that enhance                                     is substantially smaller than the average                         Incident History
                                              or reduce risk, when compared to crude                                      spill size of incidents involving HHFTs
                                              or ethanol. In addition, some of these                                      (7,027 gallons compared to 84,000                                   PHMSA identified train derailments
                                              products, such as acrylonitrile                                             gallons). Given uncertainties about fixed                         that involved OFL products over the last
                                              stabilized, if ignited, produce fumes or                                    and variable costs of spills, PHMSA may                           decade for which data is complete
                                              smoke while burning that is far more                                        not be able to produce valid per gallon                           (2006–2015), and presents this data in
                                              toxic than those produced by crude and                                      cost estimates for a roughly 7,000 gallon                         the table below (ordered by date). This
                                              ethanol. Thus, for some packing group                                       spill based on the HHFT rule estimates.                           table presents the average release and
                                              3 materials, a fire resulting from a                                        We do not believe it is meaningful to                             damages reported in incident report
                                              release that is ignited may pose much                                       use the per gallon spill cost estimates                           forms. We found 54 events over the past
                                              higher risks of injury to nearby                                            developed in the HM–251 analysis to                               ten years resulting in a total quantity
                                              populations than a crude or ethanol fire                                    monetize damages and costs of the                                 released of 379,464 gallons. Based on
                                              would pose. OFL products, such as                                           releases affected by this rule since those                        this dataset, the average spill size is
                                              paint, may pose lower risk of injury to                                     estimates were based on research and                              7,027 gallons. This is much smaller than
                                              nearby populations than a crude or                                          data involving crude and ethanol spill                            the average crude/ethanol spill, which
                                              ethanol fire would pose.                                                    damages. As a result, we do not                                   was estimated at 83,602 gallons.

                                                TABLE 18—SUMMARY OF CLASS 3 HAZARDOUS MATERIAL DERAILMENTS WITH RELEASE INVOLVING OTHER FLAMMABLE
                                                                             LIQUIDS, EXCLUDING CRUDE OIL AND ETHANOL
                                                                                                                                                      [2006–2015]

                                                                                                                                                                                                              Average of      Sum of
                                                                                                                                                                         Total number     Total gallons         quantity     reported
                                                                                                    Year                                                                  of incidents      released           released      damages
                                                                                                                                                                                                               (gallons)       ($) *

                                              2006   .................................................................................................................                3             124                41       $99,565
                                              2007   .................................................................................................................               11         117,300            10,664     6,465,335
                                              2008   .................................................................................................................                3           6,132             2,044       187,350
                                              2009   .................................................................................................................                6          17,350             2,892     1,416,713
                                              2010   .................................................................................................................                5          56,390            11,279     2,844,842
                                              2011   .................................................................................................................                4          28,339             7,086     1,575,490
                                              2012   .................................................................................................................                8         105,400            13,175     6,959,474
                                              2013   .................................................................................................................                8          13,703             1,713    10,842,912
                                              2014   .................................................................................................................                4          14,726             3,681     2,558,530
                                              2015   .................................................................................................................                2          20,000            10,000       263,476

                                                   Total ..........................................................................................................                  54         379,464           ** 7,027   33,213,687
                                                * Damages as reported on the DOT form 5800.1. It should be noted PHMSA did not have a record of any fatalities in this time period. These
                                              may not include all actual damages, such as costs to the environment and valuations for injuries.
                                                ** This average is calculated by totaling all release data and dividing by total number of incidents in the last 10 years (it is not the average of
                                              averages).


                                              Forecasting Future Events                                                   derailments in the HM–251 RIA.                                    Class 3 flammable liquids shipped by
                                                 A valid way to predict the number of                                     However, PHMSA was not able to                                    rail per year. In addition, while
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                                              future derailment events would be to                                        develop such a forecast for OFL due to                            production forecasts for energy products
                                              look at the rate of events per volume                                       resource and data limitations. We would                           are available, no such forecast is
                                              shipped, potentially also controlling for                                   need to map each commodity, in the                                available for the vast majority of OFL
                                              other factors, over a number of years                                       table of derailments above, to the                                products. Thus, even if PHMSA did
                                              and project that rate forward based on                                      corresponding Waybill Sample Standard                             estimate a volume-based incident rate,
                                              a forecast of future volume shipped.                                        Transportation Commodity Code (STCC                               there is no future volume forecast to
                                              This was how PHMSA projected future                                         Code) in order to obtain the volume of


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                                                                      Federal Register / Vol. 81, No. 157 / Monday, August 15, 2016 / Rules and Regulations                                                                                  53951

                                              which this rate can be applied to obtain                               figure with the forecasted number of                                    toxic fumes when burned. As a result,
                                              a forecasted number of events.                                         events above (5.4 releases per year)                                    medical attention is necessary to treat
                                                 As a result, PHMSA uses a basic                                     provides an estimated average annual                                    anyone exposed to the fumes released
                                              model to project future events: we                                     volume of 37,946 gallons released per                                   by fires involving this product.
                                              calculate the number of events over 10                                 year (5.4 releases per year multiplied by                               Although the typical release involving
                                              past years and project that ‘‘rate’’                                   7,027 gallons per release). We note that                                OFL is small, for some substances in
                                              forward for the 20-year analysis period.                               one OFL incident involved a large                                       this hazard class, the impacts on people
                                              Specifically, we note that 54 events                                   number of injuries—56 requiring                                         and the environment may be
                                              occurred over ten years. The 20-year                                   hospitalization and another 139                                         substantially more severe than for crude
                                              analysis period is twice as long as the                                requiring treatment but no                                              and ethanol. For other products the
                                              10-year historic period evaluated, so                                  hospitalization—and this incident                                       impacts may be fairly benign.
                                              PHMSA simply multiplies the 54 events                                  involved a release from a DOT–105 tank
                                                                                                                                                                                             Estimated Reduction in Quantity of
                                              by two to obtain an estimate of 108                                    car. This incident was not included in
                                                                                                                                                                                             OFLs Released
                                              future release events over 20 years. We                                the incident table above because the
                                              spread these events equally over the 20-                               OFL product was not shipped in a                                           In order to estimate the reduction in
                                              year analysis period at 5.4 releases per                               DOT–111. A second event involving the                                   product released as a result of upgrading
                                              year.                                                                  same material, acrylonitrile stabilized,                                OFL tank cars to the DOT–117R/117
                                                                                                                     this time in a DOT–111, resulted in 4                                   standard, PHMSA followed the same
                                              Event Size and Total Annual Release                                    non-hospitalized injuries. Such events                                  procedure and used the same
                                              Estimate                                                               are evidence of the wide variety of                                     effectiveness rates used in the HM–251
                                                The 54 events analyzed produced a                                    materials being shipped and the                                         analysis. We calculated the ratio of each
                                              total quantity spilled of 379,464 gallons                              different risks they pose to human                                      car type upgraded by a given year as a
                                              of product released, resulting in an                                   health and the environment. This                                        percentage of the total OFL fleet. The
                                              average of 7,027 gallons of product                                    particular substance is toxic in addition                               table of these calculations is presented
                                              released per incident. Combining this                                  to being flammable, and hence produces                                  below.

                                                                                      TABLE 19—OTHER FLAMMABLE LIQUID FLEET UPGRADE SHARE BY CAR TYPE
                                                                                          111NJ to 117R                111J to 117R               1232NJ to 117R                1232J to 117R                 111NJ to 117              111J to 117
                                                             Year                              %                            %                           %                            %                            %                         %

                                              2016    .................................                   0.00                         0.00                         0.00                         0.00                        1.47                  0.56
                                              2017    .................................                   0.00                         0.00                         0.00                         0.00                        2.47                  0.94
                                              2018    .................................                   0.00                         0.00                         0.00                         0.00                        3.24                  1.23
                                              2019    .................................                   0.00                         0.00                         0.00                         0.00                        3.62                  1.38
                                              2020    .................................                   0.00                         0.00                         0.00                         0.00                        4.12                  1.56
                                              2021    .................................                   0.00                         0.00                         0.00                         0.00                        4.71                  1.79
                                              2022    .................................                   0.00                         0.00                         0.00                         0.00                        5.07                  1.92
                                              2023    .................................                   0.00                         0.00                         0.00                         0.00                        5.66                  2.15
                                              2024    .................................                   0.00                         0.00                         0.00                         0.00                        6.88                  2.61
                                              2025    .................................                   9.12                         3.46                         1.51                         1.01                        8.31                  3.15
                                              2026    .................................                  18.25                         6.93                         3.01                         2.02                        9.42                  3.57
                                              2027    .................................                  27.37                        10.39                         4.52                         3.03                       10.26                  3.90
                                              2028    .................................                  36.50                        13.85                         6.02                         4.04                       11.04                  4.19
                                              2029    .................................                  45.62                        17.32                         7.53                         5.05                       17.74                  6.74
                                              2030    .................................                  45.62                        17.32                         7.53                         5.05                       17.74                  6.74
                                              2031    .................................                  45.62                        17.32                         7.53                         5.05                       17.74                  6.74
                                              2032    .................................                  45.62                        17.32                         7.53                         5.05                       17.74                  6.74
                                              2033    .................................                  45.62                        17.32                         7.53                         5.05                       17.74                  6.74
                                              2034    .................................                  45.62                        17.32                         7.53                         5.05                       17.74                  6.74
                                              2035    .................................                  45.62                        17.32                         7.53                         5.05                       17.74                  6.74



                                                These figures are multiplied by the                                  pulled from the HM–251 analysis,
                                              corresponding effectiveness rate as                                    reproduced below.

                                                                                                                   TABLE 20—HM–251 EFFECTIVENESS RATES
                                                                                                                                                                                                                                         Percent

                                                                                                                    Effectiveness Rates, Enhanced Jacketed CPC

                                              111 non-jacketed to 1232 w jacket .................................................................................................................................................                  45.9
                                              CPC non-jacketed to jacketed .........................................................................................................................................................               31.0
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                                              111 jacketed to CPC jacketed .........................................................................................................................................................               37.6
                                              CPC jacketed to CPC jacketed .......................................................................................................................................................                  1.0

                                                                                                                            Effectiveness Rates, New DOT–117

                                              111 non-jacketed to AAR 2014 .......................................................................................................................................................                 50.4
                                              CPC non-jacketed to AAR 2014 ......................................................................................................................................................                  36.8
                                              111 jacketed to AAR 2014 ..............................................................................................................................................................              42.8



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                                              53952                     Federal Register / Vol. 81, No. 157 / Monday, August 15, 2016 / Rules and Regulations

                                                                                                                          TABLE 20—HM–251 EFFECTIVENESS RATES
                                                                                                                                                                                                                                         Percent

                                              jacketed 1232 to AAR 2014 ............................................................................................................................................................               16.2



                                                As a reminder, a retrofit tank car                                           table above. These effectiveness rates                         replaced tank car therefore experiences
                                              cannot be equipped with a thicker shell,                                       can be interpreted as reductions in the                        the higher effectiveness rate presented
                                              so the DOT 117R standard is the                                                probability that a tank car will release                       in the ‘‘Effectiveness Rates, New DOT–
                                              equivalent of a jacketed CPC–1232 with                                         in a derailment, or the reductions in the                      117’’ rows in the table above. The
                                              some modest improvements—                                                      expected amount of release product in                          products of the upgrade shares by type
                                              specifically an improved high capacity                                         a derailment. For cars that are retired                        and the effectiveness rates are summed
                                              pressure relief valve and a bottom outlet                                      and replaced with a new tank car, the                          across rows to obtain an effectiveness
                                              valve design that reduces the probability                                      effectiveness rates includes all the                           rate for the OFL fleet upgrades. The
                                              of damage during derailment. Therefore,                                        retrofit components—jacket, thermal                            individual effectiveness products and
                                              legacy DOT–111 tank cars that are                                              protection, full height head shields, etc.,
                                                                                                                                                                                            total effectiveness rate are produced in
                                              retrofit improve by the factor                                                 but also an increase in shell thickness
                                                                                                                                                                                            the table below.
                                              represented by the ‘‘Effectiveness Rates,                                      to 9/16’’, which further reduces the
                                              Enhanced Jacketed CPC’’ rows in the                                            probability of release. A retired and

                                                                                    TABLE 21—TOTAL EFFECTIVENESS RATES BY CAR TYPE AND TYPE OF UPGRADE *
                                                                                                                                                                                                                                           Total
                                                              111NJ to 117R                     111J to 117R                 1232NJ to 117R                 1232J to 117R          111NJ to 117               111J to 117
                                               Year                                                                                                                                                                                    effectiveness
                                                                   %                                 %                             %                             %                     %                          %                          %

                                              1 .......                          0.00                             0.00                            0.00                  0.00                     0.74                        0.24                0.98
                                              2 .......                          0.00                             0.00                            0.00                  0.00                     1.24                        0.40                1.64
                                              3 .......                          0.00                             0.00                            0.00                  0.00                     1.63                        0.53                2.16
                                              4 .......                          0.00                             0.00                            0.00                  0.00                     1.83                        0.59                2.42
                                              5 .......                          0.00                             0.00                            0.00                  0.00                     2.07                        0.67                2.74
                                              6 .......                          0.00                             0.00                            0.00                  0.00                     2.38                        0.77                3.14
                                              7 .......                          0.00                             0.00                            0.00                  0.00                     2.55                        0.82                3.38
                                              8 .......                          0.00                             0.00                            0.00                  0.00                     2.86                        0.92                3.77
                                              9 .......                          0.00                             0.00                            0.00                  0.00                     3.47                        1.12                4.59
                                              10 .....                           4.19                             1.30                            0.47                  0.01                     4.19                        1.35               11.51
                                              11 .....                           8.38                             2.60                            0.93                  0.02                     4.75                        1.53               18.21
                                              12 .....                          12.56                             3.91                            1.40                  0.03                     5.17                        1.67               24.74
                                              13 .....                          16.75                             5.21                            1.87                  0.04                     5.56                        1.79               31.22
                                              14 .....                          20.94                             6.51                            2.33                  0.05                     8.94                        2.88               41.66
                                              15 .....                          20.94                             6.51                            2.33                  0.05                     8.94                        2.88               41.66
                                              16 .....                          20.94                             6.51                            2.33                  0.05                     8.94                        2.88               41.66
                                              17 .....                          20.94                             6.51                            2.33                  0.05                     8.94                        2.88               41.66
                                              18 .....                          20.94                             6.51                            2.33                  0.05                     8.94                        2.88               41.66
                                              19 .....                          20.94                             6.51                            2.33                  0.05                     8.94                        2.88               41.66
                                              20 .....                          20.94                             6.51                            2.33                  0.05                     8.94                        2.88               41.66
                                                  * Some values may not total due to rounding.


                                                 The overall effectiveness rate for                                          released than the more marginal                                ethanol incidents. In the table below,
                                              upgrading the OFL fleet is higher than                                         improvements to CPC–1232 cars.                                 the overall effectiveness rate for
                                              that estimated for the crude and ethanol                                       However, the retrofit schedule for the                         upgrading the OFL fleet is multiplied by
                                              fleet. CPC–1232s make up a smaller                                             OFL fleet is less aggressive than the                          the expected release quantity per year to
                                              portion of the OFL fleet than the crude                                        schedule for the crude and ethanol fleet,                      obtain a yearly reduction in OFL
                                              and ethanol fleet and upgrading legacy                                         and the quantity of product released in                        material released.
                                              DOT–111s produces a greater estimated                                          these incidents is likely to be much
                                              reduction in the quantity of product                                           smaller than is typical of crude and

                                                                                                                 TABLE 22—PREDICTED PREVENTED SPILL VOLUME *
                                                                                                                                                                                                                                       Reduction in
                                                                                                                                                             Number of                Gallons
                                                                                               Year                                                                                                          Effectiveness                gallons
                                                                                                                                                              events                 released                                           released **
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                                              1   .......................................................................................................                    5.4             37,946                          0.98                 371
                                              2   .......................................................................................................                    5.4             37,946                          1.64                 624
                                              3   .......................................................................................................                    5.4             37,946                          2.16                 819
                                              4   .......................................................................................................                    5.4             37,946                          2.42                 917
                                              5   .......................................................................................................                    5.4             37,946                          2.74               1,041
                                              6   .......................................................................................................                    5.4             37,946                          3.14               1,192
                                              7   .......................................................................................................                    5.4             37,946                          3.38               1,282



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                                                                       Federal Register / Vol. 81, No. 157 / Monday, August 15, 2016 / Rules and Regulations                                                                                                  53953

                                                                                                   TABLE 22—PREDICTED PREVENTED SPILL VOLUME *—Continued
                                                                                                                                                                                                                                                        Reduction in
                                                                                                                                                               Number of                        Gallons
                                                                                              Year                                                                                                                          Effectiveness                  gallons
                                                                                                                                                                events                         released                                                  released **

                                              8 .......................................................................................................                          5.4                     37,946                              3.77               1,432
                                              9 .......................................................................................................                          5.4                     37,946                              4.59               1,740
                                              10 .....................................................................................................                           5.4                     37,946                             11.51               4,366
                                              11 .....................................................................................................                           5.4                     37,946                             18.21               6,911
                                              12 .....................................................................................................                           5.4                     37,946                             24.74               9,388
                                              13 .....................................................................................................                           5.4                     37,946                             31.22              11,848
                                              14 .....................................................................................................                           5.4                     37,946                             41.66              15,809
                                              15 .....................................................................................................                           5.4                     37,946                             41.66              15,809
                                              16 .....................................................................................................                           5.4                     37,946                             41.66              15,809
                                              17 .....................................................................................................                           5.4                     37,946                             41.66              15,809
                                              18 .....................................................................................................                           5.4                     37,946                             41.66              15,809
                                              19 .....................................................................................................                           5.4                     37,946                             41.66              15,809
                                              20 .....................................................................................................                           5.4                     37,946                             41.66              15,809

                                                     Total ..........................................................................................     ............................   ............................    ............................         152,592
                                                * Some values may not total due to rounding.
                                                ** These non-monetized estimates are not discounted. OMB and EPA guidelines discuss options for discounting non-monetized effects such as
                                              environmental damages to convey effects felt farther in the future are worth less in today’s term than those occurred earlier in time (OMB Cir-
                                              cular A–4, 2003, Page 36; and, EPA Guidelines for Preparing Economic Analyses, 2000, pages 52–54). The discounted 20-year total would be
                                              56,317 gallons using a 7 discount rate.


                                                 The effectiveness rates for this rule                                      and top fittings protections. The                                            government and the States, or the
                                              are expected values, and the effect of the                                    estimated net present value cost of these                                    distribution of power and
                                              rule on any one release may vary widely                                       tank car upgrades is $520 million over                                       responsibilities among the various
                                              from the average expected effect.                                             20 years discounted at 7 percent. The                                        levels of government. While the final
                                              Dividing the total 20-year reduction in                                       implementation of this final rule                                            rule could act to preempt State, local,
                                              gallons released into the total cost of the                                   ensures that all Class 3 flammable                                           and Indian tribe requirements by
                                              rule yields a ‘‘break-even’’ cost or                                          liquids are packaged in tank cars                                            operation of law, PHMSA is not aware
                                              damage per gallon figure of $3,409                                            meeting improved specifications, thus                                        of any such requirements that are
                                              (using total 20-year costs discounted at                                      reducing the likelihood that a train                                         substantively different than what is
                                              7 or $520,141,136), meaning on average                                        transporting any volume of flammable                                         required by the final rule. Therefore, the
                                              the monetized value of avoided damages                                        liquids will release such liquids should                                     consultation and funding requirements
                                              from the reduction in gallons released                                        it derail. This final rule also minimizes                                    of Executive Order 13132 do not apply.
                                              from this rule would need to be about                                         the consequences of an incident should                                         The Federal Hazardous Materials
                                              $3,409 per gallon in order for benefits to                                    one occur by diminishing the number of                                       Transportation Law, 49 U.S.C. 5101–
                                              equal costs.38 For some incidents, the                                        tank cars likely to be punctured and the                                     5128, contains express preemption
                                              tank car enhancements may eliminate                                           subsequent release of flammable liquids                                      provisions (49 U.S.C. 5125) that
                                              release of the entire contents of the car.                                    in a derailment. It is necessary and in                                      preempt inconsistent State, local, and
                                              Also, we note that at least some of the                                       the public interest to clarify the                                           Indian tribe requirements, including
                                              substances affected by these upgrades                                         requirements by rectifying the                                               requirements on the following subjects:
                                              pose a much higher immediate risk to                                          differences as soon as possible. PHMSA                                         (1) The designation, description, and
                                              human health compared to crude and                                            believes that APA notice and comment                                         classification of hazardous materials;
                                              ethanol. Reducing the likelihood of                                           is unnecessary as it would provide no                                          (2) The packing, repacking, handling,
                                              release of these materials would                                              benefit to the public. Further, PHMSA                                        labeling, marking, and placarding of
                                              enhance public safety.                                                        has no discretion in interpreting the                                        hazardous materials;
                                              7. Conclusion                                                                 statute; thus public comment would                                             (3) The preparation, execution, and
                                                                                                                            have no impact on the rulemaking.                                            use of shipping documents related to
                                                 The FAST Act instructs the Secretary                                       Finally, with regard to Sections 7304                                        hazardous materials and requirements
                                              to make specific regulatory amendments                                        and 7305, the FAST Act instructs the                                         related to the number, contents, and
                                              to the aforementioned tank car design                                         Secretary to act quickly to codify the                                       placement of those documents;
                                              standards and phase-out schedule                                                                                                                             (4) The written notification,
                                                                                                                            FAST Act language. Section 7306 has no
                                              codified in the HM–251 final rule. Since                                                                                                                   recording, and reporting of the
                                                                                                                            regulatory mandate, but both PHMSA
                                              the publication of the FAST Act on                                                                                                                         unintentional release in transportation
                                                                                                                            and FRA are committed to ensuring that
                                              December 4, 2015, the text of the HMR                                                                                                                      of hazardous material; or
                                                                                                                            the governing regulations align with the
                                              differs with the explicit terms of the                                                                                                                       (5) The design, manufacture,
                                                                                                                            FAST Act requirements.
                                              statute with respect to phase-out                                                                                                                          fabrication, marking, maintenance,
                                              schedules, thermal protection blankets,                                       C. Executive Order 13132                                                     recondition, repair, or testing of a
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                                                 38 If we use the discounted total 20-year reduction
                                                                                                                               This final rule has been analyzed in                                      packaging or container represented,
                                              in gallons released for this calculation (56,317                              accordance with the principles and                                           marked, certified, or sold as qualified
                                              gallons using a 7 discount rate), then the rule yields                        criteria in Executive Order 13132                                            for use in transporting hazardous
                                              a break-even cost per gallon figure of about $9,236,                          (‘‘Federalism’’). This final rule does not                                   material.
                                              meaning that the monetized value of avoided
                                              damages from the reduction in gallons released
                                                                                                                            impose any regulation that has                                                 This rule addresses items (2) and (5)
                                              from this rule would need to be about $9,236 per                              substantial direct effects on States, the                                    described above and, accordingly, State,
                                              gallon in order for benefits to equal costs.                                  relationship between the national                                            local, and Indian tribe requirements on


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                                              53954             Federal Register / Vol. 81, No. 157 / Monday, August 15, 2016 / Rules and Regulations

                                              these subjects that do not meet the                     E. Regulatory Flexibility Act, Executive              agencies to consider the environmental
                                              ‘‘substantively the same’’ standard will                Order 13272, and DOT Procedures and                   impacts of proposed actions in their
                                              be preempted.39                                         Policies                                              decisionmaking. On May 8, 2015,
                                                 Federal Hazardous Materials                             Section 603 of the Regulatory                      PHMSA published a final
                                              Transportation Law provides at                          Flexibility Act (RFA) requires an agency              Environmental Assessment (EA) and
                                                                                                      to prepare an initial regulatory                      Finding of No Significant Impact
                                              § 5125(b)(2) that, if DOT issues a
                                                                                                      flexibility analysis describing impacts               (FONSI) as part of the HM–251 final
                                              regulation concerning any of the
                                                                                                      on small entities whenever an agency is               rule (see Section X, Part G). This EA
                                              covered subjects, DOT must determine
                                                                                                      required by 5 U.S.C. 553 to publish a                 described the following: (1) The need
                                              and publish in the Federal Register the                                                                       for the action, (2) the alternatives
                                              effective date of Federal preemption.                   general notice of proposed rulemaking
                                                                                                      for any proposed rule. Similarly,                     considered, (3) the environmental
                                              The effective date may not be earlier                                                                         impacts of the alternatives and selected
                                              than the 90th day following the date of                 Section 604 of the RFA requires an
                                                                                                      agency to prepare a final regulatory                  action, and (4) the agencies consulted.
                                              issuance of a final rule and not later                                                                        Given that the revisions adopted in the
                                              than two years after the date of issuance.              flexibility analysis when an agency
                                                                                                      issues a final rule under 5 U.S.C. 553                FAST Act on December 4, 2015 are an
                                              The effective date of Federal preemption                                                                      expansion of the existing requirements,
                                              is November 14, 2016. This effective                    after being required to publish a general
                                                                                                      notice of proposed rulemaking. Because                PHMSA is incorporating that EA by
                                              date for preemptive effect should not                                                                         reference consistent with 40 CFR
                                                                                                      the actions taken in this final rule
                                              conflict with the overall effective date                                                                      1502.21, and updating the alternatives
                                                                                                      address congressional mandates that
                                              for this final rule because the regulation                                                                    and impacts to discuss the FAST Act
                                                                                                      instruct the Secretary to issue
                                              of hazardous materials transport in                     conforming regulatory amendments                      changes.
                                              commerce generally preempts State and                   immediately or soon after the FAST
                                              local requirements. Historically, the                                                                         1. Need for the Action
                                                                                                      Act’s date of enactment, PHMSA finds
                                              States and localities are aware of this                 that due and timely execution of agency                  As described in detail above, the
                                              preemptive effect and do not regulate in                functions would be impeded by the                     FAST Act includes the ‘‘Hazardous
                                              conflict with Federal requirements in                   procedures of public notice that are                  Materials Transportation Safety
                                              these situations.                                       normally required by the APA.                         Improvement Act of 2015’’ at Sections
                                                                                                      Therefore, PHMSA finds that public                    7001 through 7311, which instructed
                                              D. Executive Order 13175                                                                                      the Secretary to make specific regulatory
                                                                                                      notice and comment would be contrary
                                                 This final rule has been analyzed in                 to the public interest and that good                  amendments to existing Federal
                                              accordance with the principles and                      cause exists to amend the regulations                 regulations related to tank car design
                                                                                                      without such procedures. As prior                     standards and the DOT–111 phase-out
                                              criteria in Executive Order 13175
                                                                                                      notice and comment under 5 U.S.C. 553                 schedule codified in the HM–251 final
                                              (‘‘Consultation and Coordination with
                                                                                                      are not required to be provided in this               rule. The mandated amendments are
                                              Indian Tribal Governments’’). Executive
                                                                                                      situation, the analyses in 5 U.S.C. 603               non-discretionary, and this action is a
                                              Order 13175 requires agencies to assure
                                                                                                      and 604 are also not required.                        response to those mandates.
                                              meaningful and timely input from                                                                                 The need for the requirements in this
                                              Indian tribal government representatives                F. Unfunded Mandates Reform Act of                    rulemaking is consistent with that in the
                                              in the development of rules that have                   1995                                                  HM–251 final rule EA. Specifically,
                                              tribal implications. Because this final                                                                       both the HM–251 final rule and this
                                              rule does not have tribal implications,                   This rule does not impose unfunded
                                                                                                      mandates under the Unfunded                           final rule are designed to lessen the
                                              the funding and consultation                                                                                  consequences of train accidents
                                                                                                      Mandates Reform Act of 1995. It does
                                              requirements of Executive Order 13175                                                                         involving the unintentional release of
                                                                                                      not result in costs of $155 million or
                                              do not apply.                                                                                                 flammable liquids. The purpose of the
                                                                                                      more, adjusted for inflation, to either
                                                 PHMSA is committed to tribal                         State, local, or tribal governments, in the           regulations for enhanced tank car
                                              outreach and engaging tribal                            aggregate, or to the private sector in any            standards and operational controls is to
                                              governments in dialogue. Among other                    one year.                                             prevent releases by keeping flammable
                                              outreach efforts, PHMSA representatives                                                                       liquids, including crude oil and ethanol,
                                              attended the National Joint Tribal                      G. Paperwork Reduction Act                            in rail tank cars and to mitigate the
                                              Emergency Management Conference on                        There are no new information                        severity of incidents should they occur.
                                              August 11–14, 2015. In the spirit of                    collection requirements in this final
                                                                                                                                                            2. Alternatives Considered
                                              Executive Order 13175 and consistent                    rule.
                                              with DOT Order 5301.1, PHMSA will be                                                                             As described in section I.A–D above,
                                                                                                      H. Regulation Identifier Number (RIN)                 PHMSA is updating its EA to include
                                              continuing outreach to tribal officials
                                              independent of our assessment of the                       A regulation identifier number (RIN)               discussion of FAST Act mandated
                                              direct tribal implications.                             is assigned to each regulatory action                 changes as described in section I.A
                                                                                                      listed in the Unified Agenda of Federal               through I.D above.
                                                                                                      Regulations. The Regulatory Information
                                                 39 Federal preemption also may exist pursuant to
                                                                                                                                                            3. Environmental Impacts of Action
                                              § 20106 of the former Federal Railroad Safety Act       Service Center publishes the Unified
                                              of 1970, repealed, revised, reenacted, and codified     Agenda in April and October of each                      As described in the HM–251 final rule
                                              at 49 U.S.C. 20106, which provides that States may      year. The RIN number contained in the                 EA, the phasing-out of DOT–111 tank
                                              not adopt or continue in effect any law, regulation,                                                          cars in flammable liquid service will
                                                                                                      heading of this document may be used
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                                              or order related to railroad safety or security that
                                              covers the subject matter of a regulation prescribed    to cross-reference this action with the               reduce risk of release because of the
                                              or order issued by the Secretary of Transportation      Unified Agenda.                                       improved integrity and safety features of
                                              (with respect to railroad safety matters) or the                                                              the DOT–117. The changes in the FAST
                                              Secretary of Homeland Security (with respect to         I. Environmental Assessment                           Act will increase the number of tank
                                              railroad security matters), except when the State
                                              law, regulation, or order qualifies under the
                                                                                                         The National Environmental Policy                  cars needing to be retrofitted (HHFT vs.
                                              section’s ‘‘essentially local safety or security        Act of 1969 (NEPA), as amended (42                    flammable liquid tank cars), require
                                              hazard.’’                                               U.S.C. 4321–4347), requires Federal                   thermal protection blanketing on certain


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                                                                Federal Register / Vol. 81, No. 157 / Monday, August 15, 2016 / Rules and Regulations                                            53955

                                              tank cars, and require top fittings and                 tank cars due to the requirements in the                K. Executive Order 13609 and
                                              pressure release protections. The                       FAST Act may result in somewhat                         International Trade Analysis
                                              increased number of tank cars needing                   greater use of fuel and in turn greater                    Under Executive Order 13609
                                              to be retrofitted will further reduce risk              release of air pollutants, including                    (‘‘Promoting International Regulatory
                                              of release because the improved                         carbon dioxide.42 However, PHMSA                        Cooperation’’), agencies must consider
                                              integrity and safety features of the DOT–               notes that the improved integrity of the                whether the impacts associated with
                                              117R will be applied to a wider                         tank cars being designed to reduce the                  significant variations between domestic
                                              universe.                                               risk of release of flammable liquids to                 and international regulatory approaches
                                                 In determining our cost calculations                 the environment positively outweighs a                  are unnecessary or may impair the
                                              in the HM–251 RIA, PHMSA assumed                        relatively small increase in air pollution              ability of American businesses to export
                                              that in order to meet the performance                   due to fuel emissions.                                  and compete internationally. In meeting
                                              standard specified in § 179.18, each tank                                                                       shared challenges involving health,
                                                                                                      4. Agencies Consulted
                                              car built to meet the DOT–117 and each                                                                          safety, labor, security, environmental,
                                              non-jacketed tank car retrofitted to meet                 PHMSA published the HM–251 final                      and other issues, regulatory approaches
                                              the DOT–117R would do so using a                        rule in consultation with FRA.                          developed through international
                                              thermal protection blanket.40 Based on                                                                          cooperation can provide equivalent
                                              this assumption, only the tank cars                     5. Conclusion Finding of No Significant
                                                                                                      Impact                                                  protection to standards developed
                                              transporting flammable liquids that                                                                             independently while also minimizing
                                              were outside the scope of the HHFT                                                                              unnecessary differences.
                                                                                                        Given that the revisions adopted by
                                              definition, which are now subject to the                                                                           Similarly, the Trade Agreements Act
                                                                                                      the FAST Act on December 4, 2015 are
                                              requirements of the FAST Act, will be                                                                           of 1979 (Pub. L. 96–39), as amended by
                                                                                                      an expansion of the existing
                                              impacted by this change. Lastly, all new                                                                        the Uruguay Round Agreements Act
                                                                                                      requirements, PHMSA specifically
                                              construction and retrofitted tank cars                                                                          (Pub. L. 103–465), prohibits Federal
                                                                                                      focuses on the impacts these changes
                                              will now benefit from top fittings and                                                                          agencies from establishing any
                                                                                                      will have related to the baseline safety
                                              pressure relief valve protection. These                                                                         standards or engaging in related
                                                                                                      level set by the HM–251 final rule. In
                                              additional cars will realize the benefits                                                                       activities that create unnecessary
                                                                                                      the HM–251 final rule EA, PHMSA
                                              of improved integrity and safety                                                                                obstacles to the foreign commerce of the
                                                                                                      concluded:
                                              features. With the addition of more tank                                                                        United States. For purposes of these
                                              cars to be retrofitted and with enhanced                   The provisions of this rule build on current
                                                                                                                                                              requirements, Federal agencies may
                                              safety features, this action will further               regulatory requirements to enhance the
                                                                                                      transportation safety and security of                   participate in the establishment of
                                              reduce risk of release, and thereby                                                                             international standards, so long as the
                                              reduce the potential for adverse                        shipments of hazardous materials transported
                                                                                                      by rail, thereby reducing the risks of release          standards have a legitimate domestic
                                              environmental effects, beyond the HM–                                                                           objective, such as providing for safety,
                                                                                                      of crude oil and ethanol and consequent
                                              251 final rule because of the improved                                                                          and do not operate to exclude imports
                                                                                                      environmental damage. PHMSA has
                                              integrity and safety features of the DOT–               calculated that this rulemaking will decrease           that meet this objective. The statute also
                                              117.                                                    current risk of release of crude oil and                requires consideration of international
                                                 It should be noted that the FAST Act                 ethanol to the environment. Therefore,                  standards and, where appropriate, that
                                              provisions will result in the                           PHMSA finds that there are no significant               they be the basis for U.S. standards.
                                              manufacturing of some new tank cars to                  environmental impacts associated with this                 PHMSA participates in the
                                              replace retirements. The FAST Act will                  final rule.43                                           establishment of international standards
                                              also increase the number of tank cars                                                                           to protect the safety of the American
                                              subject to this retrofit requirement.                     PHMSA finds that this same
                                                                                                      conclusion applies to this action and                   public, and we have assessed the effects
                                              Increased manufacture of replacement                                                                            of the proposed rule to ensure that it
                                              rail tank cars and the retrofitting of an               that there are no significant
                                                                                                      environmental impacts associated with                   does not cause unnecessary obstacles to
                                              increased amount of tank cars could                                                                             foreign trade. Accordingly, this
                                              nevertheless result in greater short-term               this final rule.
                                                                                                                                                              rulemaking is consistent with Executive
                                              release of greenhouse gases and use of                  J. Privacy Act                                          Order 13609 and PHMSA’s obligations
                                              resources needed to make the new tank                                                                           under the Trade Agreement Act, as
                                              cars or retrofit existing tank cars.41                    Anyone may search the electronic                      amended. In addition, the FAST Act
                                              PHMSA, however, concluded that the                      form of any written communications                      revises the U.S. retrofit schedule to
                                              possibility of increased (yet temporary)                and comments received into any of our                   further align with tank car requirements
                                              greenhouse gases and resource use is far                dockets by the name of the individual                   that Transport Canada has already
                                              outweighed by the benefits of increased                 submitting the document (or signing the                 implemented. This final rule would
                                              safety and integrity of each railcar and                document, if submitted on behalf of an                  amend the HMR to further align with
                                              each train, as well as the decreased risk               association, business, labor union, etc.).              Transport Canada’s corresponding
                                              of release of crude oil and ethanol to the              DOT posts these comments, without                       Transportation of Dangerous Goods
                                              environment.                                            edit, including any personal information                Regulations. (See 49 U.S.C. 5120(b).)
                                                 PHMSA also recognizes that increased                 the commenter provides, to
                                              weight of a larger population of affected               www.regulations.gov, as described in                    L. Executive Order 13211
                                                                                                      the system of records notice (DOT/ALL–                     Executive Order 13211 requires
                                                40 See HM–251 Final Rule RIA, p. 172–173.             14 FDMS), which can be reviewed at                      Federal agencies to prepare a Statement
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                                                41 Greenhouse gas emissions from industry
                                                                                                      www.dot.gov/privacy.                                    of Energy Effects for any ‘‘significant
                                              primarily come from burning fossil fuels for energy
                                              as well as greenhouse gas emissions from certain                                                                energy action’’ [66 FR 28355; May 22,
                                              chemical reactions necessary to produce goods from        42 Greenhouse gas emissions from transportation
                                                                                                                                                              2001]. Under the Executive Order, a
                                              raw materials. Thus increased tank car                  primarily come from burning fossil fuel for our cars,   ‘‘significant energy action’’ is defined as
                                              manufacturing and replacement could result in           trucks, ships, trains, and planes. See https://
                                              increased greenhouse gases. See https://                www3.epa.gov/climatechange/ghgemissions/                any action by an agency (normally
                                              www3.epa.gov/climatechange/ghgemissions/                sources/transportation.html.                            published in the Federal Register) that
                                              sources/industry.html.                                    43 See HM–251 Final Rule, 80 FR at 26743.             promulgates, or is expected to lead to


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                                              53956                   Federal Register / Vol. 81, No. 157 / Monday, August 15, 2016 / Rules and Regulations

                                              the promulgation of, a final rule or                                      materials, Reporting and recordkeeping                            car tanks; Class 106 or 110 multi-unit
                                              regulation (including a notice of                                         requirements, Uranium.                                            tank car tanks; and AAR Class 203W,
                                              inquiry, advance NPRM, and NPRM)                                                                                                            206W, and 211W tank car tanks.
                                                                                                                        49 CFR Part 179
                                              that: (1)(i) Is a significant regulatory                                                                                                    Additional operational requirements
                                              action under Executive Order 12866 or                                       Hazardous materials transportation,                             apply to high-hazard flammable trains
                                              any successor order and (ii) is likely to                                 Incorporation by reference, Railroad                              (see § 171.8 of this subchapter) as
                                              have a significant adverse effect on the                                  safety, Reporting and recordkeeping                               prescribed in § 174.310 of this
                                              supply, distribution, or use of energy; or                                requirements.                                                     subchapter. Except as otherwise
                                              (2) is designated by the Administrator of                                   In consideration of the foregoing, we                           provided in this section, DOT
                                              the Office of Information and Regulatory                                  amend 49 CFR chapter I as follows:                                Specification 111 tank cars and DOT
                                              Affairs as a significant energy action.
                                                 Although this is a significant                                                                                                           Specification 111 tank cars built to the
                                                                                                                        PART 173—SHIPPERS—GENERAL                                         CPC–1232 industry standard are no
                                              regulatory action under Executive Order                                   REQUIREMENTS FOR SHIPMENTS
                                              12866, PHMSA has evaluated this                                                                                                             longer authorized to transport Class 3
                                                                                                                        AND PACKAGINGS                                                    (flammable) liquids in Packing Group
                                              action in accordance with Executive
                                              Order 13211 and has determined this                                       ■ 1. The authority citation for part 173                          III, unless retrofitted to the DOT
                                              action will not have a significant                                        continues to read as follows:                                     Specification 117R retrofit standards or
                                              adverse effect on the supply,                                                                                                               the DOT Specification 117P
                                                                                                                          Authority: 49 U.S.C. 5101–5128, 44701; 49
                                              distribution, or use of energy.                                           CFR 1.81, 1.96 and 1.97.
                                                                                                                                                                                          performance standards provided in part
                                              Consequently, PHMSA has determined                                                                                                          179, subpart D of this subchapter.
                                              this regulatory action is not a                                           ■ 2. In § 173.241, revise paragraph (a)
                                                                                                                        introductory text and paragraph (a)(1) to                            (1) DOT Specification 111 tank cars
                                              ‘‘significant energy action’’ within the                                                                                                    and DOT Specification 111 tank cars
                                              meaning of Executive Order 13211.                                         read as follows:
                                                                                                                                                                                          built to the CPC–1232 industry standard
                                              List of Subjects                                                          § 173.241 Bulk packagings for certain low                         are no longer authorized to transport
                                                                                                                        hazard liquid and solid materials.                                Class 3 (flammable liquids) unless
                                              49 CFR Part 173                                                           *     *     *     *     *                                         retrofitted prior to the date in the
                                                Hazardous materials transportation,                                       (a) Rail cars: Class DOT 103, 104, 105,                         following table:
                                              Packaging and containers, Radioactive                                     109, 111, 112, 114, 115, 117, or 120 tank

                                                                                                                                                                                                                           DOT–111
                                                                                                                                               Jacketed or                              DOT–111                            built to the
                                                                                  Material                                                     non-jacketed                           not authorized                     CPC–1232 not
                                                                                                                                                 tank car                               on or after                   authorized on or after

                                              Class 3, PG III (flammable liquid) material .....................                       Non-jacketed .....................      May 1, 2029 ......................   May 1, 2029.
                                                                                                                                      Jacketed ............................   May 1, 2029 ......................   May 1, 2029.
                                                  Note: For unrefined petroleum products (§ 173.41) and ethanol, see §§ 173.242 and 173.243 as appropriate.


                                              *     *     *     *     *                                                 tank car tanks. Additional operational                            DOT Specification 117R retrofit
                                              ■ 3. In § 173.242, revise paragraph (a)                                   requirements apply to high-hazard                                 standards, or the DOT Specification
                                              introductory text and paragraph (a)(1) to                                 flammable trains (see § 171.8 of this                             117P performance standards provided
                                              read as follows:                                                          subchapter) as prescribed in § 174.310                            in part 179, subpart D of this
                                                                                                                        of this subchapter. Except as otherwise                           subchapter.
                                              § 173.242 Bulk packagings for certain                                     provided in this section, DOT                                       (1) DOT Specification 111 tank cars
                                              medium hazard liquids and solids,                                         Specification 111 tank cars and DOT                               and DOT Specification 111 tank cars
                                              including solids with dual hazards.                                       Specification 111 tank cars built to the                          built to the CPC–1232 industry standard
                                              *     *     *     *     *                                                 CPC–1232 industry standard are no                                 are no longer authorized for transport of
                                                (a) Rail cars: Class DOT 103, 104, 105,                                 longer authorized to transport unrefined                          Class 3 flammable liquids unless
                                              109, 111, 112, 114, 115, 117, or 120 tank                                 petroleum products, ethanol, and other                            retrofitted prior to the dates
                                              car tanks; Class 106 or 110 multi-unit                                    Class 3 (flammable) liquids in Packing                            corresponding to the specific material in
                                              tank car tanks and AAR Class 206W                                         Group II or III, unless retrofitted to the                        the following table:

                                                                                                                                                                                                                           DOT–111
                                                                                                                                               Jacketed or                              DOT–111                            built to the
                                                                                  Material                                                     non-jacketed                           not authorized                     CPC–1232 not
                                                                                                                                                 tank car                               on or after                   authorized on or after

                                              Unrefined petroleum product ...........................................                 Non-jacketed .....................      January 1, 2018 ................     April 1, 2020.
                                                                                                                                      Jacketed ............................   March 1, 2018 ...................    May 1, 2025.
                                              Ethanol .............................................................................   Non-jacketed .....................      May 1, 2023 ......................   July 1, 2023.
                                                                                                                                      Jacketed ............................   May 1, 2023 ......................   May 1, 2025.
                                              Class 3, PG II or III (flammable liquid) material other                                 Non-jacketed .....................      May 1, 2029 ......................   May 1, 2029.
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                                                than unrefined petroleum products and ethanol.
                                                                                                                                      Jacketed ............................   May 1, 2029 ......................   May 1, 2029.




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                                                                  Federal Register / Vol. 81, No. 157 / Monday, August 15, 2016 / Rules and Regulations                                                                53957

                                              *     *     *     *     *                                    Additional operational requirements                             Specification 117R retrofit standards or
                                              ■ 4. In § 173.243, revise paragraph (a)                      apply to high-hazard flammable trains                           the DOT Specification 117P
                                              introductory text and paragraph (a)(1) to                    (see § 171.8 of this subchapter) as                             performance standards provided in part
                                              read as follows:                                             prescribed in § 174.310 of this                                 179, subpart D of this subchapter.
                                                                                                           subchapter. Except as otherwise                                   (1) DOT Specification 111 tank cars
                                              § 173.243 Bulk packaging for certain high
                                              hazard liquids and dual-hazard materials                     provided in this section, DOT                                   and DOT Specification 111 tank cars
                                              which pose a moderate hazard.                                Specification 111 tank cars and DOT                             built to the CPC–1232 industry standard
                                              *     *     *     *     *                                    Specification 111 tank cars built to the                        are no longer authorized for transport of
                                                (a) Rail cars: Class DOT 103, 104, 105,                    CPC–1232 industry standard are no                               Class 3 (flammable liquids) unless
                                              109, 111, 112, 114, 115, 117, or 120                         longer authorized to transport Class 3                          retrofitted prior to the dates
                                              fusion-welded tank car tanks; and Class                      (flammable liquids) in Packing Group I,                         corresponding to the specific material in
                                              106 or 110 multi-unit tank car tanks.                        unless retrofitted to the DOT                                   the following table:

                                                                                                                                                                                                            DOT–111
                                                                                                                                Jacketed or                              DOT–111                            built to the
                                                                            Material                                            non-jacketed                           not authorized                     CPC–1232 not
                                                                                                                                  tank car                               on or after                   authorized on or after

                                              Unrefined petroleum products .........................................   Non-jacketed .....................      January 1, 2018 ................     April 1, 2020.
                                                                                                                       Jacketed ............................   March 1, 2018 ...................    May 1, 2025.
                                              Class 3, PG I (flammable liquid) other than unrefined                    Non-jacketed .....................      May 1, 2025 ......................   May 1, 2025.
                                                petroleum products.
                                                                                                                       Jacketed ............................   May 1, 2025 ......................   May 1, 2025.



                                              *      *       *       *       *                                (2) A non-jacketed tank car modified                            (B) no greater than 70 percent of the
                                                                                                           to the DOT Specification 117R must be                           cover plate to nozzle connection
                                              PART 179—SPECIFICATIONS FOR                                  equipped with a thermal protection                              strength; and
                                              TANK CARS                                                    blanket with at least 1⁄2-inch-thick                               (C) no less than either 40 percent of
                                                                                                           material that meets § 179.18(c) of this                         the nozzle to tank tensile connection
                                              ■ 5. The authority citation for part 179                     part.
                                              continues to read as follows:                                                                                                strength or the shear strength of twenty
                                                                                                           *       *    *    *     *                                       (20) 12-inch bolts.
                                                Authority: 49 U.S.C. 5101–5128; 49 CFR                        (h) Top fittings protection—(1)
                                              1.81 and 1.97.                                               Protective housing. Except as provided                             (2) Pressure relief devices. (i) The
                                              ■ 6. Revise § 179.202–6 to read as                           in §§ 179.202–13(h)(2) and (3) of this                          pressure relief device(s) must be located
                                              follows:                                                     paragraph, top fittings on DOT                                  inside the protective housing, unless
                                                                                                           Specification 117R tank cars must be                            space does not allow for placement
                                              § 179.202–6        Thermal protection system.
                                                                                                           located inside a protective housing not                         within a housing. If multiple pressure
                                                The DOT Specification 117 tank car                         less than 12-inch in thickness and                              relief devices are installed, no more
                                              must have a thermal protection system.                       constructed of a material having a                              than one (1) may be located outside of
                                              The thermal protection system must:                          tensile strength not less than 65 kpsi                          a protective housing.
                                                (a) Conform to § 179.18 of this part;                      and must conform to all of the following                           (ii) The height of a pressure relief
                                                (b) Be equipped with a thermal                             conditions:                                                     device located outside of a protective
                                              protection blanket with at least 1⁄2-inch-                      (i) The protective housing must have                         housing in accordance with paragraph
                                              thick material that meets § 179.18(c) of                     a height exceeding the tallest valve or                         (h)(2)(i) of this section may not exceed
                                              this part; and                                               fitting which requires protection and the                       the tank car jacket by more than 12
                                                (c) Include a reclosing pressure relief                    height of a valve or fitting within the                         inches.
                                              device in accordance with § 173.31 of                        protective housing must be kept to the                             (iii) The highest point of a closure of
                                              this subchapter.                                             minimum size compatible to allow for                            any unused pressure relief device
                                              ■ 7. In § 179.202–12, revise the section                     proper operation.                                               nozzle may not exceed the tank car
                                              heading to read:                                                (ii) The protective housing or cover
                                                                                                                                                                           jacket by more than six (6) inches.
                                                                                                           may not reduce the flow capacity of a
                                              § 179.202–12 Performance standard                            pressure relief device below the                                   (3) Alternative. As an alternative to
                                              requirements (DOT–117P).                                     minimum required.                                               the protective housing requirements in
                                              *     *     *     *     *                                       (iii) The protective housing must                            paragraph (h)(1) of this section, the tank
                                              ■ 8. In § 179.202–13, revise paragraphs                      provide a means of drainage with a                              car may be equipped with a system that
                                              (e) and (h) to read as follows:                              minimum flow area equivalent to six (6)                         prevents the release of contents from
                                                                                                           1-inch diameter weep holes.                                     any top fitting under accident
                                              § 179.202–13 Retrofit standard                                  (iv) When connected to the nozzle or                         conditions where any top fitting may be
                                              requirements (DOT–117R).                                     fitting cover plate, and subject to a                           sheared off.
                                              *     *    *      *     *                                    horizontal force applied perpendicular                            Issued in Washington, DC, on August 10,
                                                (e) Thermal protection system. (1) The                     to and uniformly over the projected                             2016, under authority delegated in 49 CFR
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                                              DOT Specification 117R tank car must                         plane of the protective housing, the                            part 1.97.
                                              have a thermal protection system. The                        tensile connection strength of the
                                              thermal protection system must conform                                                                                       Marie Therese Dominguez,
                                                                                                           protective housing must be designed to
                                              to § 179.18 of this part and include a                       be—                                                             Administrator, Pipeline and Hazardous
                                              reclosing pressure relief device in                             (A) no greater than 70 percent of the                        Materials Safety Administration.
                                              accordance with § 173.31 of this                             nozzle to tank tensile connection                               [FR Doc. 2016–19406 Filed 8–12–16; 8:45 am]
                                              subchapter.                                                  strength;                                                       BILLING CODE 4910–60–P




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Document Created: 2016-08-13 02:22:23
Document Modified: 2016-08-13 02:22:23
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionRules and Regulations
ActionFinal rule.
DatesEffective: August 15, 2016.
ContactMichael Ciccarone, (202) 366-8553, Standards and Rulemaking Division, Pipeline and Hazardous Materials Safety Administration, U.S. Department of Transportation, 1200 New Jersey Avenue SE., Washington, DC 20590-0001.
FR Citation81 FR 53935 
RIN Number2137-AF17
CFR Citation49 CFR 173
49 CFR 179
CFR AssociatedHazardous Materials Transportation; Packaging and Containers; Radioactive Materials; Reporting and Recordkeeping Requirements; Uranium; Incorporation by Reference and Railroad Safety

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