PHMSA’s 2015 Tank Car Rule: Should It Stay or Should It Go?

WASHINGTON, DC—In March 2017, President Trump issued an executive order to reduce the regulatory burden on the energy sector. In a new report, PHMSA’s 2015 Tank Car Rule: Should It Stay or Should It Go?, released by Resources for the Future (RFF), RFF researchers look at the Pipeline and Hazardous Materials Safety Administration’s (PHMSA’s) 2015 rule to enhance the safety of tank cars transporting crude oil and ethanol in order to prevent costly derailments. The review of this rule is part of a series examining the potential costs and benefits of repealing rules that affect the oil and gas sector (see below).

Depending on how damages from derailments are factored into the analysis, the researchers, RFF Senior Fellow Alan Krupnick, Research Assistant Justine Huetteman, and Visiting Fellow Arthur Fraas, find that repealing this rule could yield net benefits to society of $1.5 billion or could yield net costs to society of $859 million. The latter number factors in extreme events like a major derailment that occurred in 2013 at Lac-Mégantic, Quebec, which resulted in 47 deaths and the evacuation of more than 2,000 residents. The damages from this incident were estimated to be more than $1 billion. The promulgation of this rule was motivated in part by this incident, so the authors believe it is prudent to factor in the potential avoided damages from such major derailments when reaching a conclusion about the cost effectiveness of repealing this rule.

This rule has been targeted for partial repeal by the Trump administration, as PHMSA found that the costs of one provision outweigh the benefits, which was the opposite conclusion reached by the agency under the Obama administration. The Trump administration’s finding differs significantly from the Obama administration’s partly because the Trump administration used a much lower estimate of the benefits from avoided derailments. The authors’ findings suggest that the provision should not be repealed, as the provision could actually generate net benefits when using the estimate of derailment damages used by the Obama administration and even when using the Trump administration’s damage estimate, once other necessary adjustments to the regulatory impact analysis are made.

The report is part of the series The Costs and Benefits of Eliminating or Modifying US Oil and Gas Regulations. The goal of this series is to estimate the potential impacts on industry and the public if the regulations are eliminated, modified, or delayed.

Read the new full report: PHMSA’S 2015 Tank Car Rule: Should It Stay or Should It Go?

Read the new blog post: Transparency Needed in Trump’s Plan to Partially Repeal PHMSA’s Tank Car Rule.

Read previous reports and blogs from this series:

Read the full report: EPA’s 2016 Methane Rule: Should It Stay or Should It Go?

Read the blog post: Assessing Changes to EPA’s 2016 Rule to Limit Methane Emissions.

Read the full report: The 2016 Blowout Preventer Systems and Well Control Rule: Should It Stay or Should It Go?

Read the full report: The 2016 BLM Methane Waste Prevention Rule: Should It Stay or Should It Go?

Other reports coming up in this series:

• BSEE and the Bureau of Ocean Energy Management’s “Oil and Gas and Sulphur Operations on the Outer Continental Shelf—Requirements for Exploratory Drilling on the Arctic Outer Continental Shelf” rule
• PHMSA’s “Pipeline Safety: Integrity Management Program for Gas Distribution Pipelines” rule