Hazardous Materials: The State of Washington Crude Oil by Rail Volatility Requirements, 29511-29528 [2020-10381]

Download as PDF Federal Register / Vol. 85, No. 95 / Friday, May 15, 2020 / Notices regarding its use of the fee revenue appears to show that FDNY is spending the revenue on purposes permitted by the law. Therefore, we are reversing decision with respect to the ‘‘used for’’ test. Nevertheless, as discussed above, we are affirming our finding that the fee is not fair. D. Prior Administrative Proceedings jbell on DSKJLSW7X2PROD with NOTICES FDNY argues that in a prior ruling, the agency already indicated that FDNY’s inspection and permit requirements were not preempted. That is patently erroneous. In PD–37 we extensively discussed these proceedings. Furthermore, we explained that these prior proceedings did not involve a direct challenge to FDNY’s program, or attempt to answer any of the arguments that ATA presented in this proceeding. For example, whether the City’s inspection and permitting program requirements, and related fees, should be preempted because the program causes unnecessary delay and unreasonable cost; whether its fees are fair; and whether FDNY is using the revenue generated from the fees for authorized purposes. For these reasons, we do not believe further discussion on our related prior administrative proceedings is necessary. IV. Final Agency Action In accordance with 49 CFR 107.211(d), this decision constitutes the final agency action by PHMSA on ATA’s application for a determination of preemption as to the FDNY’s requirement that those wishing to transport hazardous materials by motor vehicle must, in certain circumstances, obtain a permit. This decision becomes final on the date of publication in the Federal Register. A petition for judicial review of a final preemption determination must be filed in the United States Court of Appeals for the District of Columbia or in the Court of Appeals for the United States for the circuit in which the petitioner resides or has its principal place of business, within 60 days after the determination becomes final. 49 U.S.C. 5127(a). Issued in Washington, DC, on May 12, 2020. Paul J. Roberti, Chief Counsel. [FR Doc. 2020–10489 Filed 5–14–20; 8:45 am] BILLING CODE 4910–60–P DEPARTMENT OF TRANSPORTATION Pipeline and Hazardous Materials Safety Administration III. Ruling [Docket No. PHMSA–2019–0149; PD–40(R)] For the reasons set forth above, FDNY’s petition for reconsideration is granted in part, and denied in part, as follows: PHMSA affirms its determination that the HMTA preempts FDNY’s permit and inspection requirements, FC 2707.4 and 105.6, with respect to vehicles based outside the inspecting jurisdiction, and its determination that the HMTA does not preempt these requirements with respect to vehicles that are based within the inspecting jurisdiction. PHMSA’s determination is based on its conclusion that FDNY’s permit and inspection requirements create an obstacle to accomplishing and carrying out the HMR’s prohibition against unnecessary delays in the transportation of hazardous material on vehicles based outside the inspecting jurisdiction. Permit Fee—Based on new information supplied by FDNY, PHMSA reverses its determination that FDNY is not using the revenue it collects from its permit fee for authorized purposes. However, PHMSA affirms its determination that the permit fee is not ‘‘fair,’’ as required by 49 U.S.C. 5125(f)(1), and therefore affirms its determination that the permit fee is preempted. Hazardous Materials: The State of Washington Crude Oil by Rail Volatility Requirements VerDate Sep<11>2014 17:09 May 14, 2020 Jkt 250001 Pipeline and Hazardous Materials Safety Administration (PHMSA), DOT. ACTION: Notice of Administrative Determination of Preemption. AGENCY: Applicants: The State of North Dakota and the State of Montana (Applicants). Local Law Affected: Revised Code of Washington (RCW), Title 90, Chapter 90.56, Section 90.56.565 (2015), as amended; Section 90.56.580 (2019). Applicable Federal Requirements: Federal Hazardous Material Transportation Law (HMTA), 49 U.S.C. 5101 et seq., and the Hazardous Materials Regulations (HMR), 49 CFR parts 171–180. Mode Affected: Rail. SUMMARY: PHMSA finds that the HMTA preempts Washington State’s vapor pressure limit for crude oil loaded or unloaded from rail tank cars, for three reasons. First, the vapor pressure requirement constitutes a scheme for classifying a hazardous material that is not substantively the same as the HMR. Second, the vapor pressure requirement imposes requirements on the handling PO 00000 Frm 00120 Fmt 4703 Sfmt 4703 29511 of a hazardous material that are not substantively the same as the requirements of the HMR. Third, PHMSA has determined that the vapor pressure requirement is an obstacle to accomplishing and carrying out the HMTA. In addition, PHMSA finds that the administrative record regarding Washington State’s Advance Notice of Transfer (ANT) requirement is insufficient to make a determination whether the requirement is preempted under the HMTA. FOR FURTHER INFORMATION CONTACT: Vincent Lopez, Office of Chief Counsel, Pipeline and Hazardous Materials Safety Administration, U.S. Department of Transportation, 1200 New Jersey Avenue SE, Washington, DC 20590; Telephone No. 202–366–4400; Facsimile No. 202–366–7041. SUPPLEMENTARY INFORMATION: I. Application The Applicants have applied to PHMSA for a determination as to whether the HMTA, 49 U.S.C. 5101 et seq., preempts the State of Washington’s requirements for crude oil vapor pressure and advance notice of transfer for facilities that receive crude oil from a railroad car (hereinafter referred to as Washington’s vapor pressure law or VPL). Specifically, the Applicants allege the law, which purports to regulate the volatility of crude oil loaded or unloaded from rail cars in Washington State, amounts to a de facto ban on Bakken 1 crude. The Applicants present several arguments for why they believe Washington’s law should be preempted. First, the Applicants contend that the law’s prohibition on the loading or unloading of crude oil registering a vapor pressure greater than 9 pounds per square inch (psi) poses obstacles to the HMTA because compliance with the law can only be accomplished by (1) pretreating the crude oil prior to loading the tank car; (2) selecting an alternate mode of transportation; or (3) redirecting the crude oil to facilities outside of Washington State. Accordingly, North Dakota and Montana say these avenues for complying with the law impose obstacles to accomplishing the purposes of the HMTA. Similarly, they contend that the law’s advance notice of transfer requirement is an additional obstacle. 1 According to the Applicants, North Dakota and Montana are home to the Bakken Shale Formation, a subsurface formation within the Williston Basin. It is one of the top oil-producing regions in the country and one of the largest oil producers in the world. E:\FR\FM\15MYN1.SGM 15MYN1 29512 Federal Register / Vol. 85, No. 95 / Friday, May 15, 2020 / Notices Lastly, North Dakota and Montana contend that Washington State’s law is preempted because aspects of the law are not substantively the same as the Federal requirements for the classification and handling of this type of hazardous material. In summary, the Applicants contend the State of Washington’s vapor pressure law should be preempted because: • It is an obstacle to the Federal hazardous material transportation legal and regulatory regime; and • It is not substantively the same as the Federal regulations governing the classification and handling of crude oil in transportation. PHMSA published notice of the application in the Federal Register on July 24, 2019. 84 FR 35707. Interested parties were invited to comment on the application. We granted a request by the State of Washington to extend the original 30-day comment period. The initial comment period closed on September 23, 2019, followed by a rebuttal comment period that remained open until October 23, 2019. PHMSA received 4,118 comments during the initial comment period, and another 279 comments were submitted during the rebuttal comment period. Generally, the comments fall into six categories representing a broad array of stakeholders, including refineries and oil producers, industry groups, governmental entities, environmental groups, Members of Congress, and other interested members of the public. The comments are summarized in Part V below. II. Preemption Under Federal Hazardous Material Transportation Law jbell on DSKJLSW7X2PROD with NOTICES Preemption Standards The HMTA has strong preemption provisions that allow the Secretary of Transportation (Secretary), upon request, to make a preemption determination as to a non-Federal requirement. 49 U.S.C. 5125 contains express preemption provisions relevant to Washington State’s vapor pressure law. Subsection (a) provides that a requirement of a State, political subdivision of a State, or Indian tribe is preempted—unless the non-Federal requirement is authorized by another Federal law or the Department of Transportation (Department or DOT) grants a waiver of preemption under 5125(e)—if: (1) Complying with a requirement of the State, political subdivision, or tribe and a requirement of this chapter, a regulation prescribed under this chapter, or a hazardous VerDate Sep<11>2014 17:09 May 14, 2020 Jkt 250001 materials transportation security regulation or directive issued by the Secretary of Homeland Security is not possible; or (2) the requirement of the State, political subdivision, or tribe, as applied or enforced, is an obstacle to accomplishing and carrying out this chapter, a regulation prescribed under this chapter, or a hazardous materials transportation security regulation or directive issued by the Secretary of Homeland Security.2 Subsection (b)(1) of 49 U.S.C. 5125 provides that a non-Federal requirement concerning any of the following subjects is preempted—unless authorized by another Federal law or DOT grants a waiver of preemption—when the nonFederal requirement is not ‘‘substantively the same’’ as a provision of Federal hazardous material transportation law, a regulation prescribed under that law, or a hazardous materials security regulation or directive issued by the Department of Homeland Security: (A) The designation, description, and classification of hazardous material. (B) the packing, repacking, handling, labeling, marking, and placarding of hazardous material. (C) the preparation, execution, and use of shipping documents related to hazardous material and requirements related to the number, contents, and placement of those documents. (D) the written notification, recording, and reporting of the unintentional release in transportation of hazardous material and other written hazardous materials transportation incident reporting involving State or local emergency responders in the initial response to the incident. (E) the designing, manufacturing, fabricating, inspecting, marking, maintaining, reconditioning, repairing, or testing a package, container, or packaging component that is represented, marked, certified, or sold as qualified for use in transporting hazardous material in commerce.3 The preemption provisions in 49 U.S.C. 5125 reflect Congress’s longstanding view that a single body of uniform Federal regulations promotes safety (including security) in the transportation of hazardous materials. Some forty years ago, when considering 2 These two paragraphs set forth the ‘‘dual compliance’’ and ‘‘obstacle’’ criteria that are based on U.S. Supreme Court decisions on preemption. Hines v. Davidowitz, 312 U.S. 52 (1941); Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132 (1963); Ray v. Atlantic Richfield, Inc., 435 U.S. 151 (1978). PHMSA’s predecessor agency, the Research and Special Programs Administration, applied these criteria in issuing inconsistency rulings under the original preemption provisions in Section 112(a) of the Hazardous Materials Transportation Act, Public Law 93–633, 88 Stat. 2161 (Jan. 3, 1975). 3 To be ‘‘substantively the same,’’ the non-Federal requirement must conform ‘‘in every significant respect to the Federal requirement. Editorial and other similar de minimis changes are permitted.’’ 49 CFR 107.202(d). PO 00000 Frm 00121 Fmt 4703 Sfmt 4703 the Hazardous Materials Transportation Act, the Senate Commerce Committee ‘‘endorse[d] the principle of preemption in order to preclude a multiplicity of State and local regulations and the potential for varying as well as conflicting regulations in the area of hazardous materials transportation.’’ S. Rep. No. 1192, 93rd Cong. 2nd Sess. 37 (1974). A United States Court of Appeals has found uniformity was the ‘‘linchpin’’ in the design of the Federal laws governing the transportation of hazardous materials.4 Administrative Determination of Preemption Under 49 U.S.C. 5125(d)(1), any person (including a State, political subdivision of a State, or Indian tribe) directly affected by a requirement of a State, political subdivision or Indian tribe may apply to the Secretary of Transportation for a determination whether the requirement is preempted. The Secretary of Transportation has delegated authority to PHMSA to make determinations of preemption.5 Alternatively, a person may seek a decision on preemption from a court of competent jurisdiction instead of applying to PHMSA. However, once an application is filed with the agency, an applicant may not seek judicial relief with respect to the same, or substantially the same issue, until the agency has taken final action on the application or 180 days after filing the application.6 Section 5125(d)(1) requires notice of an application for a preemption determination to be published in the Federal Register. Following the receipt and consideration of written comments, PHMSA publishes its determination in the Federal Register.7 A short period of time is allowed for filing of petitions for reconsideration.8 A petition for judicial review of a final preemption determination must be filed in the United States Court of Appeals for the District of Columbia or in the Court of Appeals for the United States for the circuit in which the petitioner resides or has its principal place of business, within 60 days after the determination becomes final.9 Preemption determinations do not address issues of preemption arising under the Commerce Clause, the Fifth Amendment or other provisions of the Constitution, or statutes other than the 4 Colorado Pub. Util. Comm’n v. Harmon, 951 F.2d 1571, 1575 (10th Cir. 1991). 5 49 CFR 1.97(b). 6 49 U.S.C. 5125(d); 49 CFR 107.203(d). 7 49 CFR 107.209(c). 8 49 CFR 107.211. 9 49 U.S.C. 5127(a). E:\FR\FM\15MYN1.SGM 15MYN1 Federal Register / Vol. 85, No. 95 / Friday, May 15, 2020 / Notices Federal hazardous material transportation law, unless it is necessary to do so in order to determine whether a requirement is authorized by another Federal law, or whether a fee is ‘‘fair’’ within the meaning of 49 U.S.C. 5125(f)(1). A State, local or Indian tribal requirement is not authorized by another Federal law merely because it is not preempted by another Federal statute.10 In addition, PHMSA does not generally consider issues regarding the proper application or interpretation of a non-Federal regulation, but rather how such requirements are actually ‘‘applied or enforced.’’ Thus, ‘‘isolated instances of improper enforcement (e.g., misinterpretation of regulations) do not render such provisions inconsistent’’ with the Federal hazardous material transportation law, but are more appropriately addressed in the appropriate State or local forum.11 III. The Washington State Requirements For our purposes here, the relevant language of the law includes a new section added to RCW, Chapter 90.56 to read: jbell on DSKJLSW7X2PROD with NOTICES (1)(a) A facility constructed or permitted after January 1, 2019, may not load or unload crude oil into or from a rail tank car unless the oil has a vapor pressure of less than nine pounds per square inch. (b) A facility may not load or unload crude oil into or from a rail tank car unless the oil has a vapor pressure of less than nine pounds per square inch beginning two years after the volume of crude oil transported by rail to the facility for a calendar year as reported under RCW 90.56.565 has increased more than ten percent above the volume reported for calendar year 2018. (2) The director may impose a penalty of up to twenty-five hundred dollars per day per rail tank car or the equivalent volume of oil for violations of this section. Any penalty recovered pursuant to this section must be credited to the coastal protection fund created in RCW 90.48.390. (3) This section does not: (a) Prohibit a railroad car carrying crude oil from entering Washington; (b) require a railroad car carrying crude oil to stop before entering Washington; or (c) require a railroad car carrying crude oil to be checked for vapor pressure before entering Washington. 10 Colorado Pub. Util. Comm’n v. Harmon, above, 951 F.2d at 1581 n.10. 11 Preemption Determination (PD)–14(R), Houston, Texas, Fire Code Requirements on the Storage, Transportation, and Handling of Hazardous Materials, 63 FR 67506, 67510 n.4 (Dec. 7, 1998), decision on petition for reconsideration, 64 FR 33949 (June 24, 1999), quoting from IR–31, Louisiana Statutes and Regulations on Hazardous Materials Transportation, 55 FR 25572, 25584 (June 21, 1990), appeal dismissed as moot, 57 FR 41165 (Sept. 9, 1992), and PD–4(R), California Requirements Applicable to Cargo Tanks Transporting Flammable and Combustible Liquids, 58 FR 48940 (Sept. 20, 1993), decision on reconsideration, 60 FR 8800 (Feb. 15, 1995). VerDate Sep<11>2014 17:09 May 14, 2020 Jkt 250001 RCW 90.56.580 (as amended). In addition, RCW 90.56.565 was amended to read, in part: (1)(a) A facility that receives crude oil from a railroad car must provide advance notice to the department that the facility will receive crude oil from a railroad car, as provided in this section. The advance notice must include the route taken to the facility within the state, if known, and the scheduled time, location, volume, region per bill of lading, type, vapor pressure, and gravity as measured by standards developed by the American petroleum institute, of crude oil received. Each week, a facility that provides advance notice under this section must provide the required information regarding the scheduled arrival of railroad cars carrying crude oil to be received by the facility in the succeeding seven-day period. A facility is not required to provide advance notice when there is no receipt of crude oil from a railroad car scheduled for a seven-day period. * * * * * (4) To further strengthen rail safety and the transportation of crude oil, the department must provide to the utilities and transportation commission data reported by facilities on the characteristics, volatility, vapor pressure, and volume of crude oil transported by rail, as required under subsection (1)(a) of this section. . . . RCW 90.56.565 (as amended) (emphasis added). IV. Background Information A. Vapor Pressure No Federal Vapor Pressure Standard The HMR requirements for the classification of unrefined petroleumbased products include the proper classification, determination of an appropriate packing group, and selection of a proper shipping name and description of the material. The HMR contain detailed rules that guide an offeror through each of these steps in the classification process. See generally, 49 CFR 172.101 (The Hazardous Materials Table), 173.2–173.41; 173.120, 173.121, 173.150, 173.242, 173. 243, and Part 174 (Railroads). However, as explained further below, there is not a Federal vapor pressure standard for the classification process for unrefined petroleum-based products, such as crude oil. North Dakota Industrial Commission Order In December 2014, the North Dakota Industrial Commission adopted new conditioning standards for the transport of Bakken crude oil, stating safety as its rationale. The NDIC Order (Order) sets forth operating standards guiding the use of conditioning equipment to separate production fluids into gas and liquid components. The new standard requires North Dakota operators to PO 00000 Frm 00122 Fmt 4703 Sfmt 4703 29513 condition Bakken crude oil to a vapor pressure of no more than 13.7 psi. The Order requires the operators to separate light hydrocarbons from all Bakken crude oil to be transported and prohibits the blending of light hydrocarbons back into oil supplies prior to shipment. The NDIC, in setting the State of North Dakota’s vapor pressure limit at 13.7 psi, noted that standards-setting organizations set crude oil stability at a vapor pressure of 14.7 psi.12 DOT’s High-Hazard Flammable Train Rule On May 8, 2015, PHMSA, in coordination with FRA, published the HHFT final rule to codify requirements to reduce the consequences and probability of accidents involving trains transporting large quantities of Class 3 flammable liquids.13 PHMSA, in the Notice of Proposed Rulemaking (NPRM), indicated that the properties of unrefined petroleum-based products, including crude oil, are variable based on time, method, and location of extraction. As such, organic materials from oil and gas production represent a unique challenge regarding classification. At that time, the agency also sought public comments on the role of vapor pressure in classifying flammable liquids and selecting packaging, and asked whether vapor pressure thresholds should be established.14 In the final rule, PHMSA took a system-wide comprehensive approach to rail safety commensurate with the risks associated with HHFTs. For example, the final rule adopted several operational requirements relating to speed restrictions, braking systems, and routing. It also adopted safety improvements in tank car design standards and notification requirements. And, to ensure the proper classification of unrefined petroleum products, a new regulatory requirement for a sampling and testing program was added to the HMR. Under the HMR, it is the responsibility of the offeror to ensure hazardous materials are properly 12 Commenters have suggested that since we are addressing the State of Washington’s ability to set its own vapor pressure limit, we must also address the State of North Dakota’s vapor pressure limit. However, the NDIC conditioning standard is not the vapor pressure requirement that is the subject of this preemption matter. Therefore, it is beyond the scope of this proceeding. 13 Hazardous Materials: Enhanced Tank Car Standards and Operational Controls for HighHazard Flammable Trains, 80 FR 26643 (May 8, 2015). 14 Hazardous Materials: Enhanced Tank Car Standards and Operational Controls for HighHazard Flammable Trains, 79 FR 45015 (August 1, 2014). E:\FR\FM\15MYN1.SGM 15MYN1 29514 Federal Register / Vol. 85, No. 95 / Friday, May 15, 2020 / Notices classified.15 PHMSA, in the HHFT final rule, stressed the offeror’s responsibility to classify and describe properly a hazardous material when the agency decided to impose a regulation requiring a sampling and testing program for unrefined petroleum-based products.16 However, PHMSA did not adopt any other changes related to vapor pressure. For example, the agency did not mandate specific sampling and testing for measuring vapor pressure; it chose not to set a Federal vapor pressure standard; and lastly, it decided against requiring pre-treatment or conditioning of crude oil to meet a vapor pressure standard before the material is offered for transportation. Notwithstanding the fact that PHMSA did not adopt any specific requirements related to vapor pressure, the agency indicated its willingness to continue examining the role of vapor pressure in the proper classification of crude oils and other flammable liquids, but cautioned that any specific regulatory changes related to vapor pressure would be informed by current and future research, as well as rulemaking procedures to the extent regulatory action is deemed necessary. jbell on DSKJLSW7X2PROD with NOTICES New York State Office of the Attorney General Petition and ANPRM Subsequent to the publication of the HHFT final rule, and despite the operational and safety improvements codified in the rule, the New York State Office of the Attorney General (NYSOAG) petitioned PHMSA to establish a Federal vapor pressure limit for crude oil transported by rail. According to NYSOAG, the rule did not address the primary cause of the large explosions and uncontrollable fires from a series of train accidents involving Bakken crude oil—the volatility of crude oil itself—due to the abundance of combustible gases within the petroleum products. PHMSA received NYSOAG’s petition on December 1, 2015. The rulemaking petition requested that PHMSA establish a vapor pressure limit of less than 9 psi for crude oil transported by rail. The petition was based on the premise that limiting the material’s vapor pressure would reduce the risk of death or damage from fire or explosion in the event of an accident. On January 18, 2017, PHMSA issued an ANPRM 17 to help the agency assess the merits of prescribing vapor pressure limits for crude oil. PHMSA, in the ANPRM, asked a series of questions 15 49 CFR 173.22. 16 49 CFR 173.41. 17 Hazardous Materials: Volatility of Unrefined Petroleum Products and Class 3 Materials, 82 FR 5499 (January 18, 2017). VerDate Sep<11>2014 17:09 May 14, 2020 Jkt 250001 seeking input as to whether there should be national vapor pressure thresholds for petroleum products. The comment period for the ANPRM closed on May 19, 2017. Crude Oil Characteristics Research (Sandia Study) In 2014, the Department, the U.S. Department of Energy (DOE), and Transport Canada (TC) commissioned a review of the chemical and physical properties of tight 18 crude oils in order to understand whether these properties could contribute to an increased potential for accidental combustion. Vapor pressure was one of the specific properties the two Federal agencies targeted for research and analysis. Sandia National Laboratories (Sandia) was commissioned to conduct an extensive review and analysis, focusing specifically on crude oil’s potential for ignition, combustion, and explosion. The review encompassed a wideranging examination of domestic crude oil samples varying by type, location, sampling method, and analytical method. DOT, DOE, and TC authorized additional research and undertook a multi-phase deliberative approach for examining the characteristics of various crude oils from around the country. The final plan was authorized and provided for a four-phase study entitled, the Sampling, Analysis, and Experiment (SAE) plan. The SAE plan consisted of a set of tasks intended to further evaluate sampling methods; identify and evaluate crude oil chemical and physical properties; and engage in data collection and analysis. Tasks 1, 2, and 3 of the plan have been completed: Task 1 consisted of a review and evaluation of new and emerging crude oil characterization data; Task 2 entailed an evaluation of oil sampling methods; Task 3 included combustion experiments and modeling to assess combustion hazards associated with tight and conventional crude oils. Sandia published its report of the results of Task 3 on August 24, 2019.19 The report described the pool fire and fireball experiments Sandia conducted on three different North American crude oil samples (including a sample from the Bakken region) to study the 18 Tight oil is oil produced from petroleumbearing formations with low permeability such as the Eagle Ford, the Bakken, and other formations that must be hydraulically fractured to produce oil at commercial rates. Shale is a subset of tight oil. U.S. Energy Information Administration, https:// www.eia.gov/tools/glossary/?id=t (last visited February 11, 2020). 19 https://www.osti.gov/biblio/1557808-pool-firefireball-experiments-support-us-doe-dot-tc-crudeoil-characterization-research-study. PO 00000 Frm 00123 Fmt 4703 Sfmt 4703 physical, chemical, and combustion characteristics of the samples, and how these characteristics associate with thermal hazard distances that may be realized in the event of a transportation accident involving a crude oil fire. In short, the primary conclusion reached from the study was as follows: The similarity of pool fire and fireball burn characteristics pertinent to thermal hazard outcomes of the three oils studied indicate that vapor pressure is not a statistically significant factor in affecting these outcomes. Thus, the results from this work do not support creating a distinction for crude oils based on vapor pressure with regards to these combustion events. In light of this conclusion, the Department, DOE, and TC agreed that additional data collection, the key focus of Task 4 of the SAE Plan, would not be necessary since the Task 3 results provided a scientific and evidentiary basis for evaluating the effects of vapor pressure as it relates to the safe transportation of crude oil by rail. As such, the sponsoring agencies officially deemed the publication of the Task 3 Report as the final stage of the SAE plan, thereby completing the Sandia Study. DOE submitted a Report to Congress in April 2020.20 ANPRM Withdrawal PHMSA, after closely examining the results and conclusions of the Sandia Study, and in consideration of the public comments to the ANPRM from industry, stakeholders, and other interested parties, determined that issuing any regulation setting a vapor pressure limit for unrefined petroleumbased products is not justified, reasoning that such a regulation would not lessen risks associated with transporting crude oil by rail. Furthermore, the agency determined that establishing a vapor pressure limit would unnecessarily impede transportation without providing justifiable benefits. Therefore, on May 11, 2020, the agency withdrew the January 18, 2017 ANPRM because it determined that the current classification provisions of the HMR adequately address the known hazards of Class 3 flammable liquids, including unrefined petroleum-based products, such as crude oil. Furthermore, the agency found that a regulation setting a national vapor pressure limit for these materials is neither necessary nor appropriate.21 20 www.energy.gov/fe/report-congress-crude-oilcharacterization-research-study. 21 PHMSA has submitted a Notice of the ANPRM Withdrawal to the Office of the Federal Register for official publication. However, there may be a delay in the publication of the Notice in the Federal E:\FR\FM\15MYN1.SGM 15MYN1 Federal Register / Vol. 85, No. 95 / Friday, May 15, 2020 / Notices In light of the above summary of the regulatory and research activities concerning vapor pressure, PHMSA, with its withdrawal of the ANPRM, has now concluded that there is no scientific or evidentiary basis for regulating the vapor pressure of unrefined petroleum-based products, including crude oil. And although many of the commenters in this proceeding have referred to the State of North Dakota’s vapor pressure standard as the ‘‘de facto national’’ standard, this characterization is entirely misplaced given that NDIC’s vapor pressure regulation is a State-adopted standard that could also be subject to a preemption challenge. jbell on DSKJLSW7X2PROD with NOTICES B. Advanced Notification of Transportation The HMTA and HMR prescribe the information and documentation requirements for the safe transportation of hazardous materials. This includes the preparation, execution, and use of shipping documents. Under the HMR, offerors of a hazardous material for transportation are required to prepare a shipping paper (to accompany the material while it is in transportation) with information describing the material, including the proper shipping name, hazard class or division number, and packing group, as determined by the regulations. Emergency response information is also required. Historically, in general, with the exception of radioactive materials, the Federal rules do not require additional information, documentation, or advance notification for the transportation of hazardous materials. On May 7, 2014, the Department issued an Emergency Order requiring that each railroad carrier provide the State Emergency Response Commission (SERC) for each State in which it operates trains transporting one million gallons or more of Bakken crude oil, including information regarding the expected movement of such trains through the counties in the State. The Register. Therefore, PHMSA has issued the Notice on the PHMSA website and posted it to the docket on the Regulations.gov website (https:// www.regulations.gov/docket?D=PHMSA-20160077). Although PHMSA has taken steps to ensure the accuracy of the version of the Notice posted on the PHMSA website and in the docket, it is not the official version. Please refer to the official version in a forthcoming Federal Register publication, which will appear on the websites of each of the Federal Register (https://www.federalregister.gov/) and the Government Printing Office (www.govinfo.gov). After publication in the Federal Register, the unofficial Notice will be removed from PHMSA’s website and replaced with a link to the official version published in the Federal Register. PHMSA will also post the official version in docket no. PHMSA–2016–0077. VerDate Sep<11>2014 17:09 May 14, 2020 Jkt 250001 notification must provide information regarding the estimated volumes and frequencies of train traffic. The notification must also provide a reasonable estimate of the number of trains that are expected to travel, per week, through each county, and the expected transportation routes; a description of the petroleum crude oil and all emergency response information, each in accordance with the requirements in the HMR; and contact information for at least one point of contact at the railroad. The railroad must update the notifications when there is a material change (any increase or decrease of twenty-five percent or more) in the volume of those trains. PHMSA, in the NPRM for the HHFT rulemaking, proposed to codify and clarify the requirements in the Emergency Order. However, based on the comments received on the proposed notification requirement, the agency did not codify the notification requirements from the Emergency Order. Rather, it elected to amend the existing planning requirements for transportation by rail to include HHFT trains. The agency reasoned that relying on the existing route analysis and consultation requirements of section 172.820 would provide for consistency of notification requirements for rail carriers transporting crude oil by seamlessly integrating HHFT trains within the existing hazardous materials regulatory scheme. Thereafter, Congress enacted the FAST Act 22 which included a mandate for the Department to promulgate regulations requiring advance notification consistent with the notification requirements of the May 7, 2014, Emergency Order. As such, PHMSA proposed, and ultimately codified those requirements in the Oil Spill Response Plan (OSPR) rulemaking.23 The new provision, Section 174.312, specifies that HHFT information sharing notification must include: (1) A reasonable estimate of the number of HHFTs that the railroad expects to operate each week, through each county within the State or through each tribal jurisdiction; the routes over which the HHFTs will operate; (2) a description of the hazardous material being transported and all applicable emergency response information required by subparts C and G of part 22 Public Law 114–94, 129 Stat. 1312, (December 4, 2015) Effective Date: October 1, 2015. 23 Hazardous Materials: Oil Spill Response Plans and Information Sharing for High-Hazard Flammable Trains (FAST Act), HM–251B, NPRM 81 FR 50068 (July 29, 2016); FR 84 FR 6910 (February 28, 2019). PO 00000 Frm 00124 Fmt 4703 Sfmt 4703 29515 172; (3) at least one point of contact at the railroad with knowledge of the railroad’s transportation of affected trains; and (4) if the route is subject to oil spill response plan requirements, the notification must include a description of the response zones and contact information for the qualified individual and alternate. Railroads are required to update the notifications for changes in volume greater than twenty-five percent. In the final rule, the agency stated that adding these new HHFT information sharing requirements build upon the information sharing framework for HHFTs that were initiated at the same time as the HHFT rulemaking amendments. The agency noted that together, these requirements will enable the railroads to work with State officials to ensure that safety and security planning is occurring. The notification requirements adopted in the HHFT and OSRP final rules are important components of the Department’s overall comprehensive approach to ensuring the safe transportation of energy products. V. Summary and Discussion of the Public Comments PHMSA received 4,118 comments during the initial comment period, and another 279 comments were submitted during the rebuttal comment period. Generally, there are six categories of commenters representing a broad array of stakeholders, including refineries and oil producers, industry groups, governmental entities, environmental groups, Members of Congress, and other interested members of the public. Of the substantive comments received, the majority came from industry groups.24 Several refineries and oil producers also submitted comments.25 State and local governments also submitted comments, both in favor of and against preemption of the Washington State law. The North Dakota Department of Agriculture and the Governor of North Dakota each 24 11 industry groups submitted individual comments, including: American Chemistry Council; American Fuel & Petrochemical Manufacturers; American Petroleum Institute; the Chlorine Institute; Dangerous Goods Advisory Council; International Liquid Terminals Association; North Dakota Petroleum Council; Railway Supply Institute; Western Independent Refiners Association; and Western States Petroleum Association. In addition, the Association of American Railroads, the American Short Line & Regional Railroad Association, and BNSF Railway Company submitted a joint comment. 25 Of the five refineries located in Washington State, four of the refinery operators submitted comments: BP America; Hess Corporation; Marathon Petroleum Corporation; and Phillips 66 Company. Also, two oil producers submitted comments: Continental Resources and Crestwood Midstream Partners LP. E:\FR\FM\15MYN1.SGM 15MYN1 29516 Federal Register / Vol. 85, No. 95 / Friday, May 15, 2020 / Notices submitted a comment in favor of preemption. Also, the Attorneys General of Oklahoma, Arkansas, Indiana, Louisiana, Nebraska, Ohio, South Dakota, Utah, West Virginia, and Wyoming (AG Alliance for Preemption) wrote a joint comment in favor of preemption.26 The Attorney General (AG) of Washington and the Spokane City Council each submitted a comment arguing against preemption. A joint comment was submitted by eight environmental and public interest groups, led by Earthjustice.27 There were many comments submitted by individuals; the vast majority of which were variations of the same form letter.28 In addition, 32 Members of Congress wrote to the Secretary and the PHMSA Administrator urging preemption. Five substantive rebuttal comments were submitted during the rebuttal comment period. The AG of Washington submitted a rebuttal comment against a finding of preemption. A joint rebuttal comment was also submitted against preemption from the Attorneys General of New York, California, Maryland, and New Jersey (AG Alliance against Preemption). Three rebuttal comments were in favor of preemption. The API and the AFPM each submitted a rebuttal comment. The Applicants also submitted rebuttal comments. The substantive comments are organized by topic and discussed in the following sections. A. Comments Supporting Preemption jbell on DSKJLSW7X2PROD with NOTICES Goal and Purpose of the HMTA Many of the commenters express concern about the precedent Washington State’s law could set by undermining the HMTA’s national scheme of uniform regulation. For example, Hess Corporation (Hess) points out that the original intent of the HMTA 26 On December 16, 2019, The AG of Texas sent a letter to PHMSA’s Chief Counsel endorsing the views expressed in the comments previously filed in the proceeding by the Attorneys General of Oklahoma, Arkansas, Indiana, Louisiana, Nebraska, Ohio, South Dakota, Utah, West Virginia, and Wyoming. The letter, and PHMSA’s response, have been uploaded to the proceeding’s docket. 27 The environmental and public interest groups, included Earthjustice, the Washington Environmental Council, Columbia Riverkeeper, Friends of the Earth, the Lands Council, Friends of the San Juans, Friends of the Columbia Gorge, and Oregon Physicians for Social Responsibility. 28 During the initial comment period, there were 3,737 form letters from 2,963 discrete commenters. There were also 59 comments from private citizens that were not form letters. During the rebuttal comment period, there were 268 form letters from 264 discrete commenters, as well as one comment from a private citizen that was not a form letter. After the rebuttal period closed, another 6 form letters were submitted from 5 discrete commenters. VerDate Sep<11>2014 17:09 May 14, 2020 Jkt 250001 was to preclude a multiplicity of State and local regulations, and the potential for varying as well as conflicting regulations. Hess argues that while some States might believe their particular rules would be safer than those set forth by the HMTA or the HMR, Congress specifically rejected a State-by-State regulatory scheme in light of its determination that national uniformity ensures better safety than a patchwork of State and local laws of varying scope and degree. Many of the commenters agree that uniformity is the cornerstone of Federal hazardous materials policy, rules, and regulation, because it fosters stability and ensures hazardous materials are transported efficiently and without unnecessary delay. The commenters on this topic all agree that the State of Washington’s law violates the nation’s scheme of uniform regulation for the transportation of hazardous materials. Furthermore, most of the commenters agree that a piecemeal, or patchwork of State-by-State regulations is untenable. Crestwood Midstream Partners LP (Crestwood) envisions a system of regulatory arbitrage where without uniform standards, hazmat (hazardous materials) carriers will be forced to choose routes that avoid jurisdictions with expensive or burdensome compliance requirements. The Railway Supply Institute’s Committee on Tank Cars (RSI–CTC) imagines a scenario where all fifty States require different equipment for transporting hazardous materials to and from their States, or imposing different classification restrictions on crude oil, ethanol, and other critical commodities. Thus, the commenters overwhelmingly express concern that the law, if allowed to stand, would encourage other States to impose their own restrictions and requirements, creating a patchwork of requirements applicable to crude oil transport and handling, an outcome that undermines the uniform, comprehensive Federal regulatory framework that Congress sought to advance under the HMTA. Marathon Petroleum Corporation (Marathon) asserts that the law undermines the validity of the unified Federal regime governing hazmat transportation, and upends the justified reliance on this regime by companies, like itself, that have invested heavily in their operations to ensure a stable, diverse, safe, and high-quality supply of crude oil with which to serve the Pacific Northwest. Marathon notes that the interstate rail system is particularly vulnerable in the affected Northwest region because it and every shipper that utilizes the nation’s rail system depends PO 00000 Frm 00125 Fmt 4703 Sfmt 4703 on a single national standard to govern rail transportation. The Oklahoma AG, the North Dakota Department of Agriculture, Montana Petroleum Association, and the North Dakota Petroleum Council (NDPC), express concern that this type of law permits States with port cities, or points of access to particular transportation routes or hubs, to dictate national and foreign energy policy by imposing similar restrictions that ultimately impede another State’s ability to move its natural resources to available markets. The Oklahoma AG notes the threat to landlocked States was of heightened concern since other States that may decide to employ the same rationale to deter the shipment of other fuels, such as natural gas from Oklahoma, or ethanol from Nebraska, would cause similar or greater injury than Washington State’s vapor pressure law. De Facto Ban Several commenters assert that the Washington State law amounts to a de facto ban on Bakken crude oil shipments because crude oil from the Bakken region typically has a vapor pressure in excess of 9 psi. To bolster this claim, other commenters point out that the law’s legislative history clearly shows the legislature’s intent to target Bakken crude by its frequent references to ‘‘Bakken’’ crude—and not any other types of crude—in its findings and justifications in earlier drafts of the law. Crestwood says the law is a blatant effort by the legislature to cripple the crude-by-rail trade between the Bakken region and oil refineries located in Washington State under the guise of improving safety. Furthermore, commenters assert that Washington State, in setting a vapor pressure limit of 9 psi, has created a separate regulatory regime that distinguishes between crude oil with a vapor pressure at or below 9 psi, and that with a vapor pressure above 9 psi, which essentially reclassifies crude oil with a vapor pressure above 9 psi as a material ‘‘forbidden’’ from transportation under the HMR. The Western States Petroleum Association (WSPA) agrees with this assessment of the law and adds that a separate regulatory regime will likely foster confusion and frustrate Congress’s goal of developing a uniform, national scheme of regulation. Moreover, the Association of American Railroads, the American Short Line and Regional Railroad Association, and BNSF Railway Co. (collectively AAR) and WSPA indicate that nothing can be done post-delivery to comply E:\FR\FM\15MYN1.SGM 15MYN1 Federal Register / Vol. 85, No. 95 / Friday, May 15, 2020 / Notices jbell on DSKJLSW7X2PROD with NOTICES with the vapor pressure requirement. Therefore, the Washington State law effectively bans any transportation of high vapor pressure crude oil by rail within the State of Washington, as there would be no lawful means under the State law for unloading the material upon its arrival at Washington State refineries. AFPM believes the law is not designed to reduce the number of combustion events within the State and increase safety, as Washington State claims, but is instead a backdoor attempt to prohibit Bakken crude from being refined within the State. According to AFPM, prohibiting the unloading of crude oil with a vapor pressure above 9 psi will not prevent derailments of crude oil trains or mitigate the damage that such derailments cause. Serious large-scale impacts related to the transportation of hazmat by rail typically does not occur during the loading or unloading phases of the material’s journey. Since the law only regulates unloading and technically exempts transportation of high-vapor pressure crude through its jurisdiction, AFPM suggests the true motivation of this law is to prohibit the delivery of Bakken crude to Washington State refineries. AFPM further hypothesizes that vapor pressure is a red herring here because Washington State is singling out Bakken crude while at the same time ignoring other Class 3 liquids with lower vapor pressures (ethanol, certain isomers of pentane, iso-octane, benzene, toluene, and the xylene isomers), which according to AFPM, have similar ignition risks because as flammable liquids, they can also burn under comparable circumstances. AAR declares that even if the transportation risks to Washington State’s citizens were legitimate, the State cannot export those risks to other States by limiting transportation of a disfavored product into its own State at the expense of forcing the transport presumably through another State. The Description, Classification, and Handling of Hazardous Materials Hess, AFPM, AAR, and other commenters assert that the Washington State law attempts to regulate the packaging, handling, and documentation of crude oil with rules that plainly differ from existing Federal regulations. The commenters note that these areas are covered subjects under the HMTA; and therefore, remark that any non-Federal requirement concerning these subjects must be substantively the same as the Federal requirements, or otherwise they must be VerDate Sep<11>2014 17:09 May 14, 2020 Jkt 250001 preempted. According to the commenters, preemption is appropriate because Washington State’s law conflicts with the comprehensive and technical classifications in the HMR and intrudes on the exclusive Federal role in classifying hazardous materials. Description The Dangerous Goods Advisory Council (DGAC) asserts that the definition of a flammable liquid imposed by Washington State is not substantively the same as the definition of the material under the HMR. Specifically, DGAC notes that the HMR does not impose a vapor pressure limit on flammable liquids. Classification NDPC and Continental Resources, Inc. (CLR) express their support for national uniformity and believe that allowing State specific laws to deviate from the HMTA’s requirements directly undercuts its purpose of assuring a nationally uniform set of regulations applicable to the transportation of hazardous materials in commerce. Further, they note the HMR are not minimum requirements that other jurisdictions may exceed if local conditions warrant. Rather, the HMR are national standards and must be uniformly applied across jurisdictional lines. Here, they contend the Washington State law differs in material respects from the Federal requirements by classifying and regulating the handling of crude oil based on an arbitrary and unscientifically determined vapor pressure limit of no greater than 9 psi. The Western Independent Refineries Association (WIRA), the AG of Oklahoma, WSPA, RSI–CTC, AFPM, AAR, and API seemingly agree with this assessment of the law, as they all assert that Washington State’s vapor pressure requirement designates a new class of crude oil based on vapor pressure. The commenters reason that the law divides the single classification for crude oil, as defined in the HMR, into two groups: Crude oil with vapor pressure below 9 psi; and crude oil with vapor pressure equal to or exceeding 9 psi. According to the commenters, the law effectively reclassifies crude oil with a vapor pressure greater than 9 psi, which they argue essentially designates the material as ‘‘forbidden’’ for transportation because it imposes new classification and handling requirements whereas the Federal law does not. Others characterize the law as an outright ban of Bakken crude oil transport by rail. PO 00000 Frm 00126 Fmt 4703 Sfmt 4703 29517 Handling WIRA, API, and others believe the law’s handling provisions that restrict the loading and unloading of crude oil from rail cars based on vapor pressure limits are not substantively the same as the Federal requirements. Moreover, although the commenters acknowledge that the HMTA does not preempt nonFederal requirements that purport to only regulate loading and unloading operations at facilities after the material is no longer in transportation, they insist the Washington State law’s scope is much broader because it regulates all loading and unloading at Washington State facilities, regardless of who performs the operations. API says it is clear that the law regulates the handling of a hazardous material in a manner that is not substantively the same as the HMTA. Specifically, API says the law prohibits or limits (via caps on volume) the loading and unloading of crude oil from rail cars based on vapor pressure, whereas the HMR does not. The Three Avenues of Compliance Generally, the commenters on this topic agree with the Applicants’ notion that there are only three ways to comply with Washington State’s vapor pressure limit for crude-by-rail. As outlined in their application, North Dakota and Montana identified the three avenues of compliance as (1) pretreating the crude oil prior to loading the tank car; (2) selecting an alternate mode of transportation; or (3) redirecting the crude oil to facilities outside Washington State. RSI–CTC, WSPA, Crestwood, API, and others agree that requiring compliance with the law through pretreating, alternate modes of transportation, or rerouting outside Washington State would pose significant obstacles to the safety and national uniformity goals of the HMTA. For instance, RSI–CTC states that each of these methods would likely increase the risk of incident or exposure by unnecessarily extending the distance and time in transit. Crestwood points out that hazardous materials are inherently dangerous and thus must be transported without unnecessary delay. And API contends there are no commercially and logistically practical means to adapt to the limitations imposed by the law. Also, API says it can confirm that the Applicants’ description concerning the unavailability, undesirability, and impracticality of the potential alternatives, is correct. E:\FR\FM\15MYN1.SGM 15MYN1 29518 Federal Register / Vol. 85, No. 95 / Friday, May 15, 2020 / Notices Pretreating jbell on DSKJLSW7X2PROD with NOTICES According to the commenters, the primary issue with pretreating the crude oil to meet Washington State’s 9 psi vapor pressure limit is the lack of the necessary infrastructure and equipment needed to pretreat the crude adequately. NDPC and CLR allege the North Dakota oil and gas industry does not have adequate infrastructure in place to pretreat crude oil produced in the Williston Basin 29 to the specifications required by the Washington State law. NDPC estimates multiple stages of costly separation equipment and tankage would need to be installed. API further explains that currently, oil conditioning is done at the wellsite to comply with the North Dakota Industrial Commission’s order,30 but the wellsite equipment cannot be used to reduce consistently the vapor pressure of Bakken crude to meet Washington State’s 9 psi limit. Therefore, API asserts this would require the processing of the oil in a ‘‘fractionator,’’ equipment that it says is not economical to install at every wellsite. Instead, producers would have to redirect the crude oil to newly constructed facilities for processing. According to API, these facilities would essentially be small scale refineries that would need to be located at several points throughout the producing basin. This of course, as noted by the commenters here, will also result in increased handling, and additional transit time and miles traveled, collectively amounting to increased safety risks. In light of the infrastructure, equipment, and other logistical issues, the commenters have concluded that pretreating is economically infeasible or unrealistic. According to the Governor of North Dakota, the infrastructure necessary to comply with the vapor pressure law would add hundreds of millions of dollars to the cost of conditioning and transporting. CLR, Crestwood, Hess, AFPM, API, and others all agree the various costs that producers would likely incur in order to comply with the Washington State 29 The Williston Basin is a large ‘‘intracratonic sedimentary basin’’ in eastern Montana, western North Dakota, South Dakota, and southern Saskatchewan, that is known for its rich deposits of petroleum and potash. The geological basin underlies the oil producing region known as the Bakken. 30 The North Dakota Industrial Commission Order sets forth operating standards guiding the use of conditioning equipment to separate production fluids into gas and liquid components. The standard requires North Dakota operators to condition Bakken crude oil to a vapor pressure of no more than 13.7 psi. The Order is discussed in more detail in Section VI. VerDate Sep<11>2014 17:09 May 14, 2020 Jkt 250001 vapor pressure limit make pretreating cost-prohibitive and simply not feasible. Another significant issue the commenters raise is the fact that pretreating will result in a surplus of light-end materials separated during the pretreatment process. These higher vapor pressure hazardous materials, such as butane, ethane, and other natural gases, are deemed essential and valuable components of Bakken crude, or as standalone commodities. As such, the commenters explain that these components will likely still need to be transported to Washington State via rail or other available modes. For example, Crestwood predicts an unintended consequence of the law whereby trains departing North Dakota for Washington State will likely include more tank cars filled with a greater variety of hazardous materials due to pretreating. API echoes this sentiment, adding that more shipments will increase the total time in transit and quantity of miles traveled, all of which translates to an increased risk of a transportation incident. Ultimately, the commenters agree that the additional pretreating requirements would create vast complexities and additional operational requirements that would greatly increase costs, lower efficiency, harm the environment, increase transportation, and reduce safety. Alternate Modes of Transportation; Rerouting WIRA, NDPC, and AFPM claim that alternatives to transporting North Dakota crude-by-rail, including transportation via pipeline, truck, or waterway, are simply not feasible. CLR states that utilizing alternate modes, or rerouting and potentially avoiding Washington State altogether, will run afoul of the purpose and thrust of the HMTA. WIRA also notes that using other modes or rerouting 31 will likely impact neighboring jurisdictions. Several commenters point out that all modes of transporting crude oil are not equal. API commented that the oil industry chose rail transport, and developed the infrastructure to support it, because it is the most efficient and cost effective means to transport Bakken crude oil safely from North Dakota and Montana to refineries in Washington State. Other modes are commercially infeasible and would increase complexity and safety concerns. For example, API and RSI-CTC estimate that 31 Commenters discussing the ‘‘rerouting’’ compliance option indicate it has many of the same issues already identified with respect to the alternate mode option, e.g., increased handling, additional miles traveled, longer transit times, and unnecessary delays. PO 00000 Frm 00127 Fmt 4703 Sfmt 4703 diverting rail shipments to highway would result in a staggering number of trucks having to replace the current capacity of crude oil transported via rail. According to RSI-CTC, it would take three motor vehicle cargo tanks to transport the same amount of product from one rail tank car. In turn, this will necessarily increase the amount of hazmat shipments on the highway and create a greater potential for harm to persons, property, and the environment. According to API, switching to marine vessel is even worse, necessitating a circuitous trip through the Panama Canal and adding thousands of miles to the transportation journey. These commenters are all in agreement on this point—whether by increasing the distance transported, the number of hazardous materials that will need to be transported, the number of loading and unloading events, the environmental impact of the underlying operations, or by causing unnecessary delays—the law presents increased risks and is an obstacle to accomplishing and carrying out the Federal hazmat law. Sandia Study and Conclusions Commenters contend the Washington State law is misguided because its purported safety justification for mandating a vapor pressure limit for Bakken crude is not supported by science. The commenters point to the Sandia Study 32 and its recently reported findings and conclusions. DGAC, WIRA, NDPC, Marathon, Hess, AFPM, and others, contend that the results of the Sandia Study are conclusive, finding that vapor pressure is not a statistically significant factor in affecting pool fire and fireball characteristics. Crestwood interprets the findings to mean that Bakken crude with higher vapor pressure is not more unstable than crudes with lower vapor pressures. Hess notes the Sandia Study ultimately concluded that all the oil samples studied have comparable thermal hazard distances and none of the oils studied indicate outlier behavior. These commenters collectively assert that the advancement of rail safety is simply not furthered by requiring the alteration of a material’s vapor pressure. Moreover, the commenters claim the Sandia Study does not support creating a distinction for crude oils based on vapor pressure with regard to 32 DOT and the U.S. Department of Energy commissioned Sandia Laboratories to conduct an extensive review and analysis of crude oil, focusing on its chemical and physical properties, and its potential for ignition, combustion, and explosion. The Sandia Study is discussed in more detail in Section VI. E:\FR\FM\15MYN1.SGM 15MYN1 Federal Register / Vol. 85, No. 95 / Friday, May 15, 2020 / Notices combustion events. According to WIRA, the recently completed study shows that regulating according to vapor pressure distinctions results in no measurable benefits in terms of transportation safety as compared to what is already covered under the existing Federal regulations, which are designed to ensure safe national transportation standards. NDPC believes that once packaged properly, vapor pressure levels have no additional impact on the safety effectiveness during the shipment of Bakken crude oil by rail tank car. AFPM also avers that vapor pressure of petroleum crude oil in transportation has no impact on the frequency of derailments. Furthermore, although API recognizes the existence of genuine concerns generated by recent high profile rail incidents, it states that the science, lessons learned, and investigations of those incidents have failed to reveal any casual connection between the vapor pressure of the product and the outcomes of the incidents. RSI-CTC acknowledges that to date, PHMSA has not determined that it is appropriate to establish a vapor pressure standard for crude oil. Furthermore, Hess suggests there are other recent studies that support the Sandia Study’s finding that characteristics of Bakken crude oil are similar to other crude oils. Accordingly, Hess recommends that PHMSA defer to those studies for accurate analytic information regarding the safety characteristics of Bakken crude oil. NDPC suggests the Sandia Study settles any lingering uncertainties—that is, vapor pressure does not need to be regulated, whether through a rulemaking by PHMSA or legislation from the State of Washington, in order to secure the safe transportation of the subject commodity via the nation’s rail network. B. Comments Opposing Preemption The Description, Classification, and Handling of Hazardous Materials The AG of Washington and Earthjustice commented on the Applicants’ arguments regarding classification and handling. Their comments on these topics were essentially the same. jbell on DSKJLSW7X2PROD with NOTICES Classification The commenters attempt to refute the Applicants’ argument that the law effectively reclassifies petroleum crude oil with a vapor pressure greater than 9 psi. This assertion is simply not true according to the AG of Washington. He asserts that the law has no impact on the Federal crude oil classification VerDate Sep<11>2014 17:09 May 14, 2020 Jkt 250001 requirements. Furthermore, the AG of Washington contends that under the Washington State law’s requirements, crude oil shipped to Washington State facilities will continue to be classified as a Class 3 hazardous material in accordance with the HMR. In addition, he argues that all other requirements (packaging, marking, labeling, and shipping papers) will remain unchanged. Handling The commenters opposing preemption contend that the vapor pressure limit is not ‘‘handling’’ subject to preemption because it only impacts unloading activities at facilities after transportation had ended. According to the AG of Washington, the Washington State Department of Ecology (WADOE) is purportedly familiar with the facilities’ unloading protocols. He describes a practice whereby facility personnel unload crude-by-rail shipments after the rail carrier delivers the tank cars and departs. After the facility unloads the crude oil, the rail carrier returns and retrieves the empty tank cars. Earthjustice’s description of the unloading practices at Washington State facilities is the same. Here, the descriptions provided by the commenters are noteworthy because they purport to depict unloading operations that appear to be outside the scope of the HMTA. The Three Avenues of Compliance The AG of Washington and Earthjustice challenge the Applicants’ arguments regarding the three purported avenues of compliance. Regarding pretreatment, the AG of Washington accuses the Applicants of overgeneralizing and impermissibly speculating when they suggest that all Washington State-bound crude oil will need to undergo cost-prohibitive offsite pretreatment. According to the AG of Washington, and supported by Earthjustice’s comments, the average vapor pressure of Bakken crude is 11.81 psi. Moreover, he references a research study that suggests some Bakken wellheads will produce crude oil that already satisfies the 9 psi limit. Meaning, compliance can likely be achieved by conditioning the oil, which is relatively cheap. Earthjustice adds that oil producers are already performing some oil conditioning. Earthjustice also notes that at least one North Dakota pipeline operator will not accept crude oil with a vapor pressure greater than 9 psi for transportation. PO 00000 Frm 00128 Fmt 4703 Sfmt 4703 29519 Pretreating The AG of Washington claims the Applicants’ pretreatment argument rests on a double standard, considering the fact that North Dakota has already established its own vapor pressure limit through the North Dakota Industrial Commission (NDIC) order. He asks, if North Dakota can impose a vapor pressure limit, then why can’t the State of Washington do the same? If North Dakota’s limit is consistent with the HMTA, then why does Washington State’s limit pose an obstacle? Alternate Modes of Transportation The AG of Washington and Earthjustice assert that the Applicants, beyond mere speculation, have not provided any evidence to support their position that a shift in the mode of transportation would have implications for crude oil transit time, distance traveled, number of transloading events, accident rates, and other factors that impact the safe transportation of hazardous materials. On this point, the commenters insist that a vague allusion to implications is not sufficient evidence. Rerouting The AG of Washington and Earthjustice dismiss the Applicants’ argument that rerouting will create unnecessary delay in the transportation of hazardous materials. The AG of Washington contends that this argument fails because Washington State’s law will have no impact on transit time because it addresses loading and unloading at Washington State facilities; it does not regulate the movement of crude oil in any other way. Regulates Facilities, not Transportation Generally, it is the position of commenters opposing preemption that the Washington State law only regulates activities performed at in-state facilities. According to the AG of Washington and Earthjustice, the law does not impose any requirements on rail carriers and it will have no direct impact on the Applicants. Specifically, regarding the vapor pressure requirement, Earthjustice claims it will have no direct impact on rail carriers and that it expressly does not prohibit a railroad car carrying crude oil from entering the State; nor does it require the trains to stop or be checked for vapor pressure before entering the State. Similarly, as with the vapor pressure limit, the commenters contend that the ANT requirement’s compliance burden falls entirely on Washington State facilities. Thus, shippers and carriers do not submit ANT data and the Applicants, or any E:\FR\FM\15MYN1.SGM 15MYN1 29520 Federal Register / Vol. 85, No. 95 / Friday, May 15, 2020 / Notices jbell on DSKJLSW7X2PROD with NOTICES other States, do not have new duties under the law. Moreover, the AG of Washington indicated that a version of the ANT requirement has already been in effect in the State since 2015, and points out that neither North Dakota nor Montana challenged the law when it was originally enacted. The commenters contend that the Applicants’ claim that the vapor pressure limit’s explicit purpose is to regulate the handling of hazardous materials during transportation by imposing volatility limits, is false. The AG of Washington and Earthjustice assert that the vapor pressure limit is not ‘‘handling’’ subject to preemption because it only impacts unloading activities at facilities after transportation had ended. As they explain it, the unloading practices at Washington State refineries exhibit something along the following: Facility personnel unload crude-by-rail shipments after the rail carrier delivers the tank car and departs. After the facility unloads the crude oil, the rail carrier returns and retrieves the empty tank cars. Regulatory Gap The AG of Washington, Earthjustice, and individual commenters defend the law by claiming its vapor pressure limit addresses a regulatory gap in the Federal law and regulations governing the transportation of crude-by-rail. Earthjustice states that despite a number of well-documented oil train crashes and derailments, there is no Federal regulations limiting the volatility of crude oil shipped in railroad tank cars. Individual commenters agree, and characterize the perceived regulatory gap as PHMSA’s failure to protect communities. The AG of Washington alleges the Federal government has undertaken no serious effort to regulate vapor pressure. Furthermore, Earthjustice contends that PHMSA has failed to set a nationwide volatility standard, even though it has received a petition for rulemaking requesting that it set one. The AG of Washington and Earthjustice explain that the State of North Dakota stepped in to address the regulatory gap in 2015, with the NDIC Order setting a vapor pressure limit of 13.7 psi to allegedly improve the safety of Bakken crude oil for transport. But according to the AG of Washington, the State of North Dakota’s vapor pressure limit is insufficient to protect public safety because the threshold is too high and enforcement is lenient. Notwithstanding, the AG of Washington asserts that his State is under no obligation to honor the State of North Dakota’s standard. And, since there is VerDate Sep<11>2014 17:09 May 14, 2020 Jkt 250001 no national standard, the commenters reason that Washington State is free to establish its own vapor pressure limit to fill a regulatory vacuum. ANT Requirement The AG of Washington asserts the ANT requirement improves local emergency preparedness and therefore poses no obstacle to the HMTA. According to the AG of Washington, the law applies only to Washington State facilities that unload crude-by-rail shipments, and as such, rail carriers do not have duties under the law. Also, the AG of Washington states that the law does not conflict with the High-Hazard Flammable Train (HHFT) notification rules,33 nor will it cause confusion among Washington State’s emergency responders because responders will still rely on the material’s emergency response information contained in the shipping papers. Finally, the AG of Washington argues the law does not regulate a pre-transportation function as alleged by the Applicants because it does not apply to shippers or carriers. Earthjustice also attempts to refute the Applicants’ case for preemption of the Washington State law. Earthjustice contends the law only applies to Washington State facilities, not railroads. Earthjustice argues that since there is no corresponding Federal ANT requirement, and Washington State’s law does not apply to shippers or carriers, it cannot possibly pose an obstacle. As for the Applicants’ objection to the ANT requirement based on the theory it will be confusing to first responders, Earthjustice counters with the supposition that emergency responders should have the best and most complete information. C. Rebuttal Comments Opposing Preemption The AG of Washington filed rebuttal comments. Also, the Attorneys General of New York, California, Maryland, and New Jersey (AG Alliance against 33 The HHFT notification rules specify that HHFT information sharing notification must include: (1) A reasonable estimate of the number of HHFTs that the railroad expects to operate each week, through each county within the State or through each tribal jurisdiction; the routes over which the HHFTs will operate; (2) a description of the hazardous material being transported and all applicable emergency response information required by subparts C and G of part 172; (3) at least one point of contact at the railroad with knowledge of the railroad’s transportation of affected trains; and (4) if the route is subject to oil spill response plan requirements, the notification must include a description of the response zones and contact information for the qualified individual and alternate. Railroads are required to update the notifications for changes in volume greater than twenty-five percent. See 49 CFR 174.312. PO 00000 Frm 00129 Fmt 4703 Sfmt 4703 Preemption) jointly filed their rebuttal comments. The AG of Washington asserts that the Applicants lack authority to seek a preemption determination because they are not ‘‘directly affected’’ by the challenged laws. According to the AG of Washington, the question of standing is a threshold issue and he points out that none of the commenters supporting preemption, nor the Applicants, have adequately demonstrated that North Dakota and Montana satisfy this requirement. Furthermore, he cautions PHMSA that the agency has no discretion to disregard the standing question and that it risks judicial review if it proceeds despite the Applicants’ lack of standing. Here, the AG of Washington reiterates his initial comment on this issue, e.g., that the Applicants are not directly affected because (1) the vapor pressure limit has not yet taken effect; (2) the potential impact to the Applicants’ tax revenue is unduly speculative; and (3) a tax revenue impact is a classic indirect impact. For these reasons, the AG of Washington continues to assert that Washington State’s vapor pressure limit has no direct impact on any opposing State’s sovereign interests. The AG of Washington also argues that PHMSA must separately determine that the Applicants have standing to challenge the law’s ANT requirement, claiming the Applicants made no connection between their respective sovereign interests and the ANT requirement. The AG of Washington submits that should PHMSA find the ANT requirement—alleged to be an entirely local safety measure—directly affects another State’s sovereign interests, the agency will have rendered the standing requirement toothless. Notwithstanding the above standing question, it is the AG of Washington’s position that the vapor pressure and ANT requirements are legitimate exercises of State authority that will improve public safety given the extreme risks of crude-by-rail transportation. The AG of Washington further asserts the vapor pressure law is not an obstacle under the HMTA because it does not regulate the transportation of crude oil and is therefore not subject to preemption under the HMTA. Moreover, the AG of Washington argues that the law cannot be preempted under the HMTA’s ‘‘substantively the same’’ test with respect to handling (loading and unloading) or classification, because the vapor pressure law regulates loading and unloading functions at facilities, after the crude oil has been delivered and transportation has ended. Regarding classification, the E:\FR\FM\15MYN1.SGM 15MYN1 jbell on DSKJLSW7X2PROD with NOTICES Federal Register / Vol. 85, No. 95 / Friday, May 15, 2020 / Notices AG of Washington points out—contrary to the claims made by commenters in support of preemption that the law creates a new classification of crude oil based on vapor pressure—the law has no impact on the Federal classification requirements for crude oil. Crude oil shipped to Washington State refineries will still be classified as a Class 3 hazardous material in accordance with the HMR. The AG of Washington also highlights the willingness of certain commenters to challenge Washington’s vapor pressure law, while apparently not objecting to the State of North Dakota’s vapor pressure limit. The AG of Washington believes both laws are valid exercises of State authority given the absence of Federal action on the subject. Furthermore, he suggests that a decision by PHMSA preempting Washington State’s law would not only suppress innovation that would result from efforts to comply with Washington State’s law, but also reward the State of North Dakota for winning a regulatory ‘‘race to the bottom’’ with its comparatively weak vapor pressure limit that seems to be regarded as the de facto national standard. Also, the AG of Washington attempts to refute commenters’ arguments that the Sandia Study disproved a link between vapor pressure and rail safety by noting the Sandia Study’s pool fire and fireball experiments did not adequately consider ignition potential, which the AG of Washington says his State’s vapor pressure limit is intended to address. Finally, the AG of Washington contends the State’s ANT requirement is not preempted because it is a local emergency preparedness measure that applies only to Washington State facilities. Furthermore, the AG of Washington dismisses claims that the requirement will create confusion for shippers and carriers, or that the ANT measures will result in additional requirements for hazmat shipping papers. According to the AG of Washington, local facilities have already been providing advance notice of crude oil shipments since 2015, without any major technical difficulties or confusion; and the new requirement will have no impact on shipping papers nor impose any additional compliance obligations on shippers and carriers. The AG Alliance against Preemption filed its joint comments to respond primarily to the comments filed by the AG Alliance for Preemption, led by Oklahoma. The AG Alliance against Preemption supports the Washington State law and believes that in the face of PHMSA’s failure to adopt a Federal VerDate Sep<11>2014 17:09 May 14, 2020 Jkt 250001 vapor pressure standard, it is entirely appropriate for States to take reasonable and necessary measures to protect communities, first responders, businesses, and natural resources within their respective borders. The AG Alliance against Preemption, with regard to vapor pressure, indicates that despite Federal mandates, a petition for rulemaking, and PHMSA’s publication of an Advanced Notice of Proposed Rulemaking on the petition, the agency has failed to close an ‘‘existing regulatory loophole’’ by either finalizing a vapor pressure rule or establishing an interim protective vapor pressure standard. In fact, the AG Alliance against Preemption asserts that rather than close the regulatory loophole, the Federal government’s efforts have either lagged or actively moved to roll back critical safety protections for high-hazard flammable unit trains that transport crude oil across the country. For example, the AG Alliance against Preemption notes the Sandia Study is more than two years behind schedule; and it criticizes the August 2019 report as a ‘‘limited experiment’’ that does not inspire confidence in the project’s planning, sampling, or analytical methods, or the report’s conclusions. Moreover, the AG Alliance against Preemption asserts that the Department’s recent regulatory reform actions will increase the likelihood, and dangerous consequences, of oil train accidents and derailments. Here, the AG Alliance against Preemption points to the recent withdrawal by the Federal Railroad Administration (FRA) of the 2-person crew ANPRM, and PHMSA’s and FRA’s decision not to include an electronically controlled pneumatic brakes requirement in the HHFT final rule. According to the AG Alliance against Preemption, these regulatory failures coupled with known market failures in the rail sector that prevent or discourage actions to improve the safety of transporting crude oil by rail, has created the situation today where States are filling this regulatory void by adopting their own protective vapor pressure standards. Supporting Preemption The Applicants submitted their rebuttal to comments filed in opposition to their petition. In addition, API and AFRM each filed rebuttal comments. The Applicants assert they have standing to bring this petition and characterize the AG of Washington’s interpretation of the requirement as overly narrow and also contradictory of the agency’s long-standing precedent of interpreting the standing requirement PO 00000 Frm 00130 Fmt 4703 Sfmt 4703 29521 broadly. The Applicants claim that they will suffer several direct effects, including specific reductions in oil and gas severance tax revenue, and reductions in royalties received from producers, as the rightful landowners underlying oil and gas leases. In addition, they say both States will confront real and decidedly nonspeculative safety, environmental, and economic effects associated with the additional pre-treatment requirements for Bakken crude oil or with the need to identify alternative modes and routes of transportation in order to comply with the law. According to the Applicants, the State of North Dakota imposes an oil and gas severance tax. The State of North Dakota relies upon the resulting tax revenue to support its education system, its drinking water infrastructure development, and more. The Applicants contend that pretreatment of oil will devalue the product and alternative markets will yield lower returns and therefore generate lower tax revenues. Moreover, the Applicants state they are land grant States, meaning each State itself is the landowner for several oil and gas leases throughout the Bakken region, generating direct royalties from oil and gas extraction operations occurring on State-owned land. As such, they contend the Washington State law will directly affect their royalty revenue.34 Also, the Applicants say they will face multiple consequences associated with the construction of new infrastructure to meet Washington State requirements (pretreatment facilities and access roads), including environmental and safety consequences associated with the additional handling and movement of hazmat related to pretreatment. Regarding the Applicants’ standing for the notification requirement, they both argue that it is not appropriate for PHMSA to sever the ANT and vapor pressure requirements for the requisite preemption analysis—as suggested by the AG of Washington—because the ANT requirement enables the State to enforce its vapor pressure limit and accordingly, it must be examined in the context of the prescribed the limit. 34 North Dakota estimates that it will lose an average of approximately $32,000 per day from July 1, 2019–June 30, 2020 (i.e., through the end of the current fiscal year) and an average of approximately $36,000 per day thereafter through July 1, 2031, in lost oil and gas severance tax revenue as a result of the Washington Law (based on the market rate for Bakken crude oil in July 2019). See Docket No.: PHMSA–2019–0149; Document No.: 4397; at https://www.regulations.gov/document?D=PHMSA2019-0149-4397. E:\FR\FM\15MYN1.SGM 15MYN1 jbell on DSKJLSW7X2PROD with NOTICES 29522 Federal Register / Vol. 85, No. 95 / Friday, May 15, 2020 / Notices API suggests the facts presented by the Applicants convincingly support a finding that the States of North Dakota and Montana are directly affected by the Washington State law. For example, API argues that certain changes required to pretreat Bakken crude oil to satisfy Washington State’s vapor pressure limit will naturally impact the Applicants’ energy economy and underlying infrastructure, and further, that it will increase handling and transportation of hazardous materials resulting in increased safety risks within both States. API also notes that the inability to treat Bakken crude oil to comply with State of Washington’s vapor pressure limit will inevitably result in lower commodity values or lost sales, corresponding to lost tax and royalty revenue for the Applicants. Moreover, API contends that additional facts showing the Applicants are directly affected include the comments submitted in this proceeding by Washington State refineries that attempt to refute the AG of Washington’s claims that the law has no immediate or substantial effects or impacts on North Dakota and Montana companies that develop, produce, condition, and transport Bakken crude. AFPM states the AG of Washington’s argument that the Applicants’ tax and revenue will not be reduced because Washington State refineries will simply turn to other sources of crude oil demonstrates a fundamental misunderstanding of the global petroleum market. According to AFPM, the options for Bakken crude oil producers and suppliers to market their crude oil are reduced as a result of the Washington State law. AFPM explains that due to the shortage of pipeline infrastructure, the majority of Bakken crude oil is transported by rail. AFPM suggests that should Washington State refineries stop receiving Bakken crude oil, it would likely still move by rail, but potentially at longer distances and at higher costs. This would reduce the value of the crude oil and therefore directly reduce the Applicants’ State tax and royalty revenue. AFPM asserts that this outcome will have an immediate and harmful effect on the Applicants’ interests, which stands in direct contradiction of the AG of Washington’s assertion that the law will have no realworld effect. AFPM informs PHMSA that as the leading trade association representing the refinery industry, it has standing to seek a preemption determination since its members are directly affected by Washington State’s law. In fact, several AFPM members have filed comments in this proceeding explaining how they are VerDate Sep<11>2014 17:09 May 14, 2020 Jkt 250001 directly affected. Therefore, in the event the agency has concerns with the Applicants’ standing, AFPM requests that the agency treat its comments in this proceeding as a separate application for a preemption determination on the Washington State law. The Applicants attempt to refute the AG of Washington’s contention that they have failed to provide sufficient evidence to support their petition. They argue the HMTA does not limit PHMSA’s preemption consideration to the information presented in the original petition and that the administrative record is sufficient based on the contents of their application and the other relevant information received from other commenters’ submissions. Moreover, the Applicants note that commenters opposing preemption claim the law only regulates unloading of crude oil at facilities as opposed to handling of crude oil—and thus, is beyond the scope of the Federal law and regulations. However, the Applicants state that the vapor pressure limit is equally applicable to loading facilities in North Dakota and Montana, which is inherently a regulated function under the HMR. Furthermore, the Applicants point out that ‘‘unloading incident to movement’’ is an activity regulated by the HMR when performed by carrier personnel or in the presence of carrier personnel. As such, the Applicants assert that the Washington State law involves transportation regardless of whether a carrier is present and therefore, the challenged law seeks to regulate activities that include ‘‘loading incident to movement,’’ a regulated function falling within the scope of the HMR. API asserts that the AG of Washington misstates the purpose and nature of its vapor pressure law by stating that it applies only to unloading activities at facilities located in Washington State, even though elsewhere in its comments the AG of Washington admits that the law was enacted to address the threats posed by crude-by-rail transportation. API notes that other commenters have conceded that the law targets the transportation of Bakken crude-by-rail and not the unloading of the material at facilities. API opines that the law’s vapor pressure limit and prohibitions on unloading at facilities will severely curtail or eliminate rail transport of untreated Bakken crude into the State of Washington. As such, API states that PHMSA should reject Washington State’s insincere and pretextual focus on ‘‘unloading’’ and preempt the law because, by its nature and purpose, it seeks to regulate transportation in a manner that is not substantively the PO 00000 Frm 00131 Fmt 4703 Sfmt 4703 same as, and that poses obstacles to the accomplishment of, the HMTA. API claims the AG of Washington falsely asserts that the law has not taken effect and that its penalties do not affect rail transportation. According to API, the law’s volume restriction for existing facilities currently applies to 2019 volumes. As such, facilities cannot ignore this cap simply because, once triggered, the total ban on further shipments and potential associated penalties do not take effect for two years. For example, API notes that at least one refinery has commented that it has already drastically reduced scheduled shipments to avoid exceeding the law’s volume cap. The Applicants argue the Washington State law fails the obstacle test because the State’s self-styled three avenues of compliance actually increase the risk of an incident during transportation; cause unwarranted delay; and increase transit times. Here, the Applicants reiterate a primary argument they raised in their petition; that is, that there are only three avenues for compliance: Pretreatment; seek alternative modes of transportation; or redirect the crude oil to facilities located outside of Washington State. Regarding pretreatment, the Applicants note that multiple commenters have reinforced their arguments that pretreatment is cost prohibitive and existing conditioning infrastructure is insufficient to achieve Washington State’s 9 psi vapor pressure limit. Furthermore, the Applicants state that pretreatment increases the inherent risk of an incident in transportation because the law ultimately requires additional handling and movement. The AG of Washington argues that the Applicants have failed to provide evidence of the anticipated increase in miles traveled due to pretreatment, re-routing, or modal shift. But the Applicants insist that the administrative record contains ample evidence that these activities will result in an increase of total miles traveled for hazardous materials. The Applicants and AFPM attempt to refute the AG of Washington’s argument that under Washington State’s law, crude oil will still be classified as a ‘‘Class 3 Flammable liquid,’’ just as it is classified under the HMR. According to the Applicants and AFPM, the Washington State law creates two classes of crude oil, one with vapor pressure below 9 psi and one with vapor pressure above 9 psi. The Applicants and AFPM contend this new classification essentially forbids the transportation of crude oil by rail because of the law’s handling (loading and unloading) restrictions. E:\FR\FM\15MYN1.SGM 15MYN1 jbell on DSKJLSW7X2PROD with NOTICES Federal Register / Vol. 85, No. 95 / Friday, May 15, 2020 / Notices AFPM states that any argument asserting the Washington State law is beyond the scope of the Federal hazmat law because it only regulates unloading at facilities after transportation has ended, mischaracterizes the purposes of the Washington State law. AFPM notes that commenters, in defense of the Washington State law, have conceded its intent is to regulate and address potential safety issues associated with the transport of Bakken crude by rail, not the unloading of the petroleum products at the facilities to which they are shipped. AFPM points out the Washington State law does not address areas typically reserved to local police powers, such as worker safety, public health, and environmental safety. As such, AFPM contends that the law impacts transportation and is not just confined to unloading operations. Thus, AFPM has concluded the Washington State law starts regulating from the time Bakken crude, destined for Washington State facilities, is loaded onto rail cars in North Dakota and Montana. Notwithstanding, AFPM also notes that the Federal hazmat law and regulations include pre-transportation and transportation-related functions, including unloading operations. The Applicants assert that the Washington State law is an obstacle to carrying out the purpose of the HMTA and does not enhance safety or fill a regulatory gap. The Applicants further contend that the Sandia Study Report underscores the conclusion that Washington’s law is preempted and does not enhance safety. The Applicants believe the Sandia study is important for the following reasons: (1) It was commissioned by Federal agencies and conducted by a respected national laboratory; (2) it demonstrates in practical terms that a vapor pressure limit is within the province of a national inquiry and should therefore be left to determinations at the Federal level; and (3) it debunks the Washington State law’s purported purpose of imposing a vapor pressure limit to improve public safety in the event of a crude-by-rail derailment. Simply stated, the Applicants conclude that the science does not support the assumption that regulating vapor pressure will mitigate the consequences of a derailment. The Applicants note that commenters supportive of the law rely on the findings from a 2014 DOT enforcement effort, rather than the latest comprehensive and scientific research study undertaken by Sandia National Laboratories. The Applicants highlight the fact that the report concluded that vapor pressure is not a statistically VerDate Sep<11>2014 17:09 May 14, 2020 Jkt 250001 significant factor in affecting pool fire and fireball burn characteristics. The applicants contend that the results of the study do not support a basis for creating a distinction among crude oils based on vapor pressure. AFPM alleges that the AG of Washington’s safety rationale for the Washington State law is not supported by science as evidenced by the Sandia Study and the recently completed Task 3 report. AFPM notes the commenters against preemption have failed to rebut the extensive scientific research that is included in this proceeding’s administrative record. AFPM rejects the AG of Washington’s argument that the Sandia Study is irrelevant because it allegedly does not examine the relationship between higher vapor pressure and ignition. AFPM points out that the Sandia Study concluded that ignition potential cannot be identified by a single index, and that vapor pressure is not a statistically significant factor in affecting the degree of thermal hazardous outcomes incident to a derailment scenario; and accordingly, there is no scientific basis for making regulatory distinctions based on vapor pressure levels. To the contrary, AFPM states that derailments typically produce ignition sources such as sparks from metal-on-metal stresses. The vapor pressure of a flammable liquid has no bearing on the likelihood of ignition or the frequency of derailment in these circumstances. Therefore, it is AFPM’s position that Washington State and its supporters’ heightened concerns about high vapor pressure ignition potential in a derailment scenario is entirely misplaced. AFPM dismisses the notion that any further research on Bakken crude oil vapor pressure is necessary given the comprehensive research and results contained in the Sandia Study. AFPM notes that Earthjustice relies on data from the Department’s initial examination of the crude-by-rail transportation system to support the proposition that Bakken crude oil is uniquely dangerous. However, AFPM points out that DOT’s earlier approach was driven by a lack of understanding, research and analysis, and that these limitations are now overcome by virtue of the Sandia Study, representing the most comprehensive and definitive scientific research on this issue. AFPM reiterates its contention that there is no regulatory gap here as alleged by the AG of Washington and other commenters. Rather, AFPM believes the Department has taken a measured and thorough approach in considering whether to regulate vapor pressure and as such, the Sandia Study effectively completes Federal research on this topic, and PO 00000 Frm 00132 Fmt 4703 Sfmt 4703 29523 accordingly, the agency can now conclude that no additional regulation on vapor pressure limits is warranted. VI. Discussion A. The Applicants’ Standing To Apply for a Preemption Determination The AG of Washington and other commenters opposing the application assert the Applicants lack standing to challenge Washington State’s vapor pressure requirements. The AG of Washington, Earthjustice, and other commenters believe the Applicants have not shown they are directly affected by the challenged law, as required by the HMTA. According to the AG of Washington, the Applicants do not have standing because the vapor pressure limit has not yet taken effect; the potential impact to the Applicants’ tax revenue is unduly speculative; and a decrease in tax revenue is a classic ‘‘indirect’’ impact. Furthermore, the AG of Washington argues that irrespective of the Applicants’ standing with respect to the requirement to set a vapor pressure limit, the agency must make a separate determination regarding the Applicants’ eligibility to bring a challenge against the ANT requirement, and he claims the Applicants make no connection between their sovereign interests and that requirement. The Applicants assert they have standing to bring this petition and characterize the AG of Washington’s interpretation of the HMTA’s standing requirement as overly narrow, stating that this view contradicts the agency’s long-standing precedent of interpreting the standing requirement broadly. Furthermore, the Applicants, as landowners, contend they will suffer several direct effects including specific reductions in oil and gas severance tax revenue, and reductions in royalties received from oil producers. The Applicants explain that North Dakota and Montana are land grant States, meaning the States themselves are the landowners for several oil and gas leases throughout the Bakken region. Accordingly, they say each State receives direct royalties from oil and gas extractions occurring on State-owned land. In addition, the Applicants assert that both States will confront real and ‘‘decidedly’’ non-speculative safety, environmental, and economic effects due to the State of Washington’s requirements. American Petroleum Institute (API) and the American Fuel & Petrochemical Manufacturers (AFPM) agree that the Applicants have standing. They contend that the Applicants’ E:\FR\FM\15MYN1.SGM 15MYN1 29524 Federal Register / Vol. 85, No. 95 / Friday, May 15, 2020 / Notices jbell on DSKJLSW7X2PROD with NOTICES submissions, as well as other comments filed in this proceeding, sufficiently demonstrate how the Applicants are directly affected.35 API also notes the HMTA’s preemption provision expressly grants States their own right to seek a preemption determination by its explicit reference to a ‘‘State’’ in the language authorizing who is eligible to apply. Section 5125(d) authorizes ‘‘[a] person (including a State, political subdivision of a State, or Indian tribe) directly affected by a requirement of a State . . .’’ to apply for a determination of preemption. 49 U.S.C. 5125(d) (emphasis added). Under the ‘‘directly affected test,’’ it must be determined whether the applicant will benefit by having the issues in its petition resolved. See Illinois Environmental Protection Agency’s Uniform Hazardous Waste Manifest, 58 FR 11176, 11181 (Feb. 23, 1993). The agency has a longstanding practice of liberally construing this threshold requirement. Generally, the agency interprets the requirement broadly to advance the notion that important preemption issues (such as national uniformity of hazardous materials transportation regulation) are raised under the HMTA, and all parties engaged in hazmat transportation will be served by the agency addressing preemption issues. See PD–32(R), Maine Department of Environmental Protection Requirements on Transportation of Cathode Ray Tubes, 74 FR 46644, 46648 (Sept. 10, 2009), quoting from PD–2(R) at 11181. PHMSA has considered petitions from applicants who are affected by nonFederal requirements in a variety of ways. We have said, for example, that if a ‘‘requirement applies to the applicant,’’ the applicant need not show that it ‘‘is ‘adversely affected,’ ‘aggrieved,’ or has suffered ‘injury’ or ‘actual harm.’ ’’ PD–12(R), New York Department of Environmental Conservation; Requirements on the Transfer and Storage of Hazardous Wastes Incidental to Transportation, 60 FR 62527, 62532 (Dec. 6, 1995), decision 35 AFPM notes in its rebuttal comments that it is a leading trade association representing the refinery industry and has associational standing consistent with long-standing agency precedent. Therefore, AFPM writes that in the event PHMSA has concerns with the Applicants’ standing, AFPM has requested that the agency treat its comments in the proceeding as a separate application for a preemption determination on the Washington State law. See Docket No.: PHMSA–2019–0149; Document No.: 4395; at https:// www.regulations.gov/document?D=PHMSA-20190149-4395. PHMSA agrees. AFPM represents refineries that are regulated by Washington’s law. Even if the Applicants were not directly affected, AFPM would be, and PHMSA could make a determination on that basis. VerDate Sep<11>2014 17:09 May 14, 2020 Jkt 250001 on reconsideration, 62 FR 15970 (April 3, 1997). We have also held that a group of hazardous waste shippers could seek a determination with respect to a State law mandating that hazardous waste generators create a certain type of manifest. PD–2(R), 58 FR at 11182. And while enforcement issues, and how the non-Federal requirement is actually applied, are relevant to our preemption analysis under the obstacle test, these issues do not factor into whether an applicant is within the scope of those persons entitled to use the statute’s administrative procedure for requesting a preemption determination. Id. The plain language of the statute presupposes a State as a potential applicant. 49 U.S.C. 5125(d). Since a State will rarely if ever actually be subject to another State’s law, the inclusion of States as applicants confirms that Congress used ‘‘directly affected’’ broadly. In this case, the only issue is whether the Applicants have made a sufficient showing that they are ‘‘directly affected’’ by the Washington State law. The Applicants have indicated they are land grant States, and as such, are landowners for several oil and gas leases throughout the Bakken region. According to the Applicants, North Dakota and Montana each receives direct royalties from oil and gas extractions occurring on State-owned land. In addition, the Applicants assert that both States will confront real and ‘‘decidedly’’ non-speculative safety, environmental, and economic effects due to the Washington State requirements. Based on information in the administrative record for this proceeding, it has been established that a majority of all the crude oil that leaves the Applicants’ borders is destined for refineries in Washington State. And, since the law purports to regulate the volatility of crude oil transported into Washington State for loading and unloading, it likely applies to crude oil shipments originating from the Applicants’ holdings in the Bakken region. As such, the Applicants’ quasisovereign interests over their natural resources are tangible interests that are directly affected by the State of Washington’s law. Contrary to Washington’s arguments, these effects are not too indirect or speculative under PHMSA’s broad interpretation of ‘‘directly affected.’’ PHMSA rejects Washington’s contention that the Applicants are not directly affected because the vapor pressure limit has not yet gone into effect. This argument would deny standing to any applicant at this time, and would require the Applicants to file a new application at PO 00000 Frm 00133 Fmt 4703 Sfmt 4703 some point in the future; we do not believe that the Federal hazardous materials transportation law requires PHMSA to delay making a determination. Moreover, regarding the ANT requirement, we do not accept the AG of Washington’s bifurcated interpretation of the standing requirement, which would require us to make a separate determination of the Applicants’ eligibility to challenge this section of the Washington State law. Here, the ANT requirement is an integral part of the overall statutory scheme providing for the State’s new requirements addressing alleged safety concerns related to the transportation of crude oil by rail within the State. As such, the Applicants are directly affected by the entire legislative scheme, including the ANT requirement, and thus, have demonstrated substantial interests in the outcome of this proceeding to justify access to the administrative process. In light of the above, the Applicants have provided sufficient information and an adequate factual basis to establish they are directly affected by Washington State’s vapor pressure and ANT requirements and, accordingly, are entitled to submit an application to PHMSA. B. Vapor Pressure PHMSA finds that Washington State’s vapor pressure limit is preempted. The requirement concerns both the ‘‘classification’’ and ‘‘handling’’ of hazardous materials and is not ‘‘substantively the same’’ as the Federal regulations, and is therefore preempted by 49 U.S.C. 5125(b)(1)(A). The requirement, moreover, is an obstacle to accomplishing and carrying out the HMTA and the HMR, and is therefore preempted by 49 U.S.C. 5125(a)(2). Covered Subject Preemption— Classification The Applicants contend that Washington State’s vapor pressure requirement designates a new class of crude oil based on its vapor pressure and that the State’s requirement is not substantively the same as the HMR requirements for crude oil. PHMSA agrees. Federal hazardous material transportation law preempts a nonFederal requirement on the ‘‘designation, description, and classification’’ of hazardous material that is not ‘‘substantively the same’’ as the Federal rules. 49 U.S.C. 5125(b)(1)(A). The current HMR requirements for the classification of unrefined petroleum E:\FR\FM\15MYN1.SGM 15MYN1 Federal Register / Vol. 85, No. 95 / Friday, May 15, 2020 / Notices based products include proper classification, determination of an appropriate packing group, and selection of a proper shipping name and description of the material. The HMR contain detailed rules that guide an offeror through each of these steps in the classification process. See generally, 49 CFR 172.101 (The Hazardous Materials Table), 173.2–173.41; 173.120, 173.121, 173.150, 173.242, 173. 243, and part 174 (Railroads). However, there is not a Federal vapor pressure standard for the classification of unrefined petroleum-based products, such as crude oil. The Washington State law has set a State-wide vapor pressure standard of 9 psi for unrefined petroleum-based products, such as crude oil. Washington State’s attempt to set a vapor pressure limit for crude oil constitutes a scheme for classifying hazardous materials that is not substantively the same as the HMR. Indeed, as noted further below, the Washington law is also squarely at odds with the agency’s recent declaration that regulation of vapor pressure is neither necessary nor appropriate. The reasoning for this conclusion is more fully elaborated below. The Washington AG and other commenters contend that Washington’s vapor pressure limit does not concern ‘‘classification’’ because it does not change the Federal classifications of crude oil. But the question under 49 U.S.C. 5125(b)(1)(A) is not whether a State law changes the Federal classifications of hazardous materials, but whether a State law imposes additional, different classifications. Washington’s vapor pressure limit does just that, by creating a new class of crude oil that is subject to special requirements. The vapor pressure limit is therefore preempted under 49 U.S.C. 5125(b)(1)(A). jbell on DSKJLSW7X2PROD with NOTICES Covered Subject Preemption—Handling The Applicants also contend that by prohibiting facilities from loading or unloading crude oil into or from a rail tank car unless the oil has a vapor pressure of less than 9 psi, Washington has imposed a handling requirement that is not substantively the same as the HMR handling requirements for crude oil, and therefore is preempted. PHMSA agrees. Loading and unloading fall within the scope of ‘‘handling,’’ which is a covered subject for purposes of the HMTA preemption analysis. 49 U.S.C. 5125(b)(1)(B). Under the ‘‘substantively the same’’ test, a non-Federal requirement concerning a covered subject (i.e., handling), is preempted when it is not substantively the same as VerDate Sep<11>2014 17:09 May 14, 2020 Jkt 250001 a requirement in the Federal hazmat law or regulation. 49 U.S.C. 5125(b)(1). The Department has extensive regulations governing the handling of Class 3 flammable liquids, including loading and unloading, during transportation. See generally, 49 CFR 173.2–173.41, and part 174 (Railroads). However, there is no specific Federal prohibition on the handling of crude oil with a vapor pressure greater than 9 psi. Washington State’s crude oil by rail vapor pressure law imposes a vapor pressure requirement on the loading and unloading of crude oil where the Federal law does not. The AG of Washington asserts that the State’s vapor pressure requirement is not a handling regulation because it only regulates unloading functions at Washington State facilities after the crude oil has been delivered, transportation has ended, and the carrier has departed. He argues that because such post-delivery unloading is generally not regulated by the HMTA or HMR, the Washington law is not subject to preemption. As explained further below, PHMSA disagrees, as the AG of Washington does not accurately describe the Washington law, and ignores the law’s significant upstream effects. PHMSA, in prior preemption determinations, has confirmed that Federal hazardous material transportation law and the HMR apply to hazardous materials that are in transportation in commerce, including loading, unloading and storage that is incidental to that transportation. See PD–9(R), California and Los Angeles County Requirements Applicable to the Onsite Handling and Transportation of Hazardous Materials, 60 FR 8774 (February 15, 1995), Decision on Petitions for Reconsideration, 80 FR 70874 (November 16, 2015) (a timerestriction for unloading tank cars was preempted because unloading activities are ‘‘handling,’’ a covered subject); see also PD–12(R), New York Department of Environmental Conservation; Requirements on the Transfer and Storage of Hazardous Wastes Incidental to Transportation, 60 FR 62527 (December 6, 1995), Decision on Petition for Reconsideration, 62 FR 15970 (April 3, 1997) (secondary containment requirement for the transfer or storage of hazardous wastes at transfer facilities preempted because it created confusion as to the requirements in the HMR and increased the likelihood of non-compliance with the HMR). Furthermore, the agency has determined that non-Federal requirements that purport to regulate ‘‘facilities’’ are subject to preemption PO 00000 Frm 00134 Fmt 4703 Sfmt 4703 29525 when those requirements affect transportation-related activities such as loading, unloading, and storage of hazmat. Id. Since those decisions, PHMSA, through rulemaking, has clarified the applicability of the HMR to specific functions and activities, including hazardous materials loading and unloading operations. PHMSA, in a rulemaking, defined ‘‘pre-transportation function’’ to mean a function performed by any person that is required to ensure the safe transportation of a hazardous material in commerce. See ‘‘Applicability of the Hazardous Materials Regulations to Loading, Unloading, and Storage,’’ HM–223, 68 FR 61906 (October 30, 2003); Response to Appeals, 70 FR 20018 (April 15, 2005). Thus, loading functions fall within the scope of Federal regulations when performed by any person, e.g., shipper or carrier, transporting a hazardous material. Id. In addition, because carrier possession of a hazardous material is a key aspect of the definition of ‘‘transportation’’ under the HMR, loading functions that are performed by carrier personnel or by shipper personnel in the presence of the carrier are still considered ‘‘loading incidental to movement’’ and consequentially, are transportation functions. Id. Regarding unloading, if carrier personnel are present during the unloading of packaged hazardous materials from a transport vehicle or the unloading of a bulk package, such as a cargo tank or a rail tank car, into a storage tank or manufacturing process, then the operation is considered ‘‘unloading incidental to movement’’ of the hazardous material, and accordingly, is subject to regulation under the HMR. Id. The State of Washington relies on the ‘‘carrier possession’’ distinction for determining the applicability of the HMR in defense of its vapor pressure law. It argues that ‘‘as a practical matter’’ the law only affects unloading activities at Washington facilities, that the ‘‘practice’’ at Washington facilities is to unload oil only after carrier personnel have departed, and that the law therefore only regulates activities not subject to the HMR. PHMSA disagrees, for two reasons. First, regardless of what Washington characterizes as standard ‘‘practice,’’ the Washington law on its face does not apply only to unloading after a carrier departs. The law also applies to loading within the State, and to unloading in the presence of carrier personnel; as noted above, these activities are unquestionably covered by the HMTA and HMR. E:\FR\FM\15MYN1.SGM 15MYN1 jbell on DSKJLSW7X2PROD with NOTICES 29526 Federal Register / Vol. 85, No. 95 / Friday, May 15, 2020 / Notices Second, even though the law is written to only regulate loading and unloading at facilities in Washington, its practical effect is to regulate pretransportation activities outside of Washington, as well as transportation itself. The administrative record and the facts contained therein as presented by numerous commenters, belies Washington State’s claim that the scope of the vapor pressure requirement is either narrow or local. For example, the Washington law does not specify how a facility is to determine whether the oil it is loading or unloading has a vapor pressure of less than 9 psi. As such, it is likely that the vapor pressure of crude oil received by the facilities will have to be provided by the shipper. This essentially means that the crude oil would have to be sampled, tested, and treated at the source of production before it is loaded onto rail cars, even though there is no Federal requirement for either measuring vapor pressure or pre-treatment. Moreover, there is no Federal requirement for shippers of crude oil to communicate the material’s vapor pressure to carriers or consignees when it is offered for transportation. Any conditioning of Bakken crude oil to a vapor pressure of less than 9 psi is not a post-production process since the oil must be pretreated or conditioned at the point of production and before loading, which clearly is a pre-transportation function. Of greater significance is the fact that the oil cannot be conditioned at Washington State facilities before it is unloaded from the railcars. In light of these facts, it is evident that upstream impacts are inevitable at the point of origin in the transportation network—and not downstream at the point of destination as the State of Washington contends. The reach of the State’s legislative activity inevitably traces all the way back to the production activities to North Dakota and Montana. As such, we must find that the law imposes a requirement on shippers that was purposefully omitted from the current text of the HMR. Washington’s law affects the handling and transportation of crude oil because the oil producers cannot load crude-by-rail destined for Washington State refineries unless it has a vapor pressure of not greater than 9 psi, and that requirement can only be satisfied at the point of production before the material is placed into the transportation network. It is also noteworthy that there currently is no Federal requirement for shippers of crude oil to communicate a Class 3 material’s vapor pressure to carriers or consignees downstream when it is offered for transportation. VerDate Sep<11>2014 17:09 May 14, 2020 Jkt 250001 Simply stated, before Washington State enacted this law, there were no special restrictions on the transportation of crude oil with a vapor pressure greater than 9 psi. However, after the law, handling, including loading and unloading, of crude-by-rail is directly affected, and potentially banned altogether unless it meets Washington State’s vapor pressure requirement. Therefore, Washington State’s vapor pressure limit is a transportation handling requirement that is not substantively the same as the Federal requirements covering the same subject. Moreover, in light of the agency’s withdrawal of the ANPRM, the Department has taken specific action to not require vapor pressure limits. Accordingly, the Washington law cannot stand and is therefore preempted under 49 U.S.C. 5125(b)(1)(B). Obstacle Preemption The Applicants contend that Washington’s vapor pressure requirement is an obstacle to accomplishing and carrying out the HMTA and the HMR, and is therefore preempted under 49 U.S.C. 5125(a)(2). PHMSA agrees. When Congress enacted the HMTA, it made several findings that emphasized the importance of uniform regulations governing the transportation of hazardous materials. For example, Congress noted that many States and localities had enacted laws and regulations which varied from Federal law and regulations pertaining to the transportation of hazardous materials, which created the potential for transferring unreasonable hazards to other jurisdictions and created confusion for shippers and carriers attempting to comply with multiple and conflicting requirements. Due to the potential risks to life, property, and the environment posed by unintentional releases of hazardous materials, Congress determined that consistency in laws and regulations governing the transportation of hazmat was necessary and desirable, and that PHMSA’s efforts to achieve greater uniformity are necessary to promote the public health, welfare, and safety at all levels. Thus, the Congress found it desirable that only Federal standards regulate the transportation of hazardous materials in intrastate, interstate, and foreign commerce. See Colorado Pub. Util. Comm’n v. Harmon, 951 F.2d 1571, 1580 (10th Cir. 1991). In light of these Congressional findings, it is widely understood that a primary purpose of the HMTA is regulatory uniformity that will be achieved through the HMTA’s PO 00000 Frm 00135 Fmt 4703 Sfmt 4703 preemption provisions. Id. Regulatory uniformity is frustrated when State and local governments adopt requirements like those at issue in this proceeding. Several principles of regulatory uniformity have been developed through agency interpretations and case law. First, State and local requirements that impede hazardous materials transportation that is being conducted in accordance with the Federal requirements constitute inconsistent restraints on such transportation. Second, transportation carried out within the Federal framework of the HMTA and HMR is presumptively safe and additional State or local requirements concerning matters covered by Federal law or regulation are neither necessary nor appropriate. Finally, where the Department has examined an area otherwise within its authority to adopt regulations and has declined to regulate, State and local requirements in that area may be preempted where they have adverse impacts on the Federal regulatory scheme and the transportation that occurs thereunder. See generally, PD– 6(R), Michigan Marking Requirements for Vehicles Transporting Hazardous and Liquid Industrial Wastes, 59 FR 6186 (Feb. 9, 1994); Inconsistency Ruling (IR)–8, State of Michigan Rules and Regulations Affecting Radioactive Materials Transportation, 49 FR 46637 (Nov. 27, 1984), decision on appeal, 52 FR 13000 (April 20, 1987); IR–15(A), Vermont Rules for Transportation of Irradiated Reactor Fuel and Nuclear Waste, 49 FR 46660 (Nov. 27, 1984), decision on appeal 52 FR 13062, 13063 (April 20, 1987); quoted and followed, IR–19; IR–19, Nevada Public Service Commission Regulations Governing Transportation of Hazardous Materials, 52 FR 24404, 24407 (June 30, 1987), decision on appeal, 53 FR 11600 (April 7, 1988), affirmed in IR–19(A) and Southern Pac. Transp. Co. v. Public Serv. Comm’n of Nevada, 909 F.2d 352 (9th Cir. 1990), reversing No. CV–N–86– 444–BRT (D. Nev. 1988). In light of its jurisdictional responsibilities and consistent with court precedents, the Department has taken a system-wide approach to achieving safety of the Nation’s transportation systems that includes regulatory and non-regulatory actions to ensure the safe and secure transportation of crude oil by rail. As previously discussed, these actions resulted in the addition of new sampling and testing requirements to the HMR; an assessment of the merits of setting a Federal vapor pressure limit; and the commissioning of the Sandia Study. The volatility and vapor pressure E:\FR\FM\15MYN1.SGM 15MYN1 jbell on DSKJLSW7X2PROD with NOTICES Federal Register / Vol. 85, No. 95 / Friday, May 15, 2020 / Notices of crude oil have been important characteristics studied by the agency throughout this entire process. PHMSA, after closely examining the results and conclusions of the Sandia Study (as discussed earlier in Section VI.A), and in consideration of the public comments to the ANPRM from industry, stakeholders, and other interested parties, withdrew the ANPRM. PHMSA determined that issuance of any regulation setting a vapor pressure limit for unrefined petroleum-based products was not justified because such a regulation would not lessen risks associated with the transport of crude oil by rail. The agency’s withdrawal of the ANPRM is the most definitive statement to the regulated community and the public that there is no need for a Federal regulation that sets a vapor pressure limit for unrefined petroleumbased products within the HMR.36 In summary, the Department and PHMSA have pursued a comprehensive approach to address volatility of crudeby-rail, and have determined that existing Federal requirements are adequate to ensure the safe transportation of crude oil, particularly in light of the compelling conclusions of recent research activities discussed above. Therefore, State and local provisions that fundamentally alter the requirements for the same hazardous material are clearly obstacles to the accomplishment and execution of the objectives of the HMTA and HMR. Having considered all of the implications of Washington State’s unilateral regulatory action setting a vapor pressure limit for crude oil, the agency must conclude that the State’s action epitomizes the type of patchwork State regulation that Congress sought to avoid when it enacted the HMTA and established a framework of uniform national regulations for regulating the transportation of hazardous materials. The Washington State vapor pressure requirement, if allowed to persist, would set an alarming precedent. Other State and local jurisdictions would be encouraged to enact their own vapor pressure limits for crude oil. The resultant multiple and conflicting requirements will undermine the uniform Federal regulatory scheme. Moreover, a multitude of differing regulations in this area would surely create uncertainty and confusion for offerors. And the likelihood of copycat regulation of crude oil vapor pressure is not merely speculative as evidenced by the administrative record for this proceeding. PHMSA is aware of one State legislature that has introduced a 36 See Supra note 21. VerDate Sep<11>2014 17:09 May 14, 2020 Jkt 250001 similar bill regulating vapor pressure for oil or gas, and at least six States that have advocated for a vapor pressure limit.37 Furthermore, a patchwork of varying and conflicting State and local regulations would likely increase risk by exporting potentially unreasonable hazards to other jurisdictions as offerors employ various avenues of compliance either through rerouting shipments; seeking alternate markets or modes of transportation; or avoidance of a jurisdiction altogether. This last option is particularly troubling as it resembles a de facto ban on transportation. Proponents of the law insist Washington State has a legitimate public interest to protect its citizens from oil train fires and explosions, but in the context of the transportation of crude oil by rail, a State cannot use safety as a pretext for inhibiting market growth or instituting a de facto ban on crude oil by rail within its borders. Notwithstanding the State of Washington’s interest in the welfare and safety of its citizens, any State laws supporting those interests that implicate the transportation of hazardous materials, must not conflict with the objectives of the HMTA. Here, we find that the vapor pressure requirement is an obstacle to carrying out the HMTA and HMR—it not only hinders the movement of hazardous materials but also creates unnecessary delays in direct conflict with HMTA. Accordingly, the law is preempted. C. ANT Requirement One remaining question before the agency is whether Washington State’s ANT requirement regulates the same subject covered by the Federal requirements for the requisite shipping paper’s material description and emergency response information, and if so, whether the State’s requirement is substantively the same as the HMR requirements for crude oil. Alternatively, we must consider whether Washington’s ANT requirement is inconsistent with the HMR rule governing HHFT information sharing notification for emergency response planning, or is otherwise an obstacle to 37 See House Bill 4105, 80th Oregon Legislative Assembly—2020 Regular Session (February 3, 2020), https://olis.leg.state.or.us/liz/2020R1/ Downloads/MeasureDocument/HB4105/Introduced (last visited February 12, 2020). In this proceeding, the Attorneys General of New York, California, Maryland, and New Jersey submitted comments against preemption. In addition, the Attorneys General of California, Illinois, Maine, and Maryland filed joint comments with the Attorneys General of New York and Washington, supporting a national vapor pressure standard in the ANPRM proceeding. PO 00000 Frm 00136 Fmt 4703 Sfmt 4703 29527 accomplishing and carrying out the HMTA. Federal hazardous material transportation law preempts a nonFederal requirement for the ‘‘preparation, execution, and use of shipping documents’’ and ‘‘requirements related to the number, content, and placement’’ of those documents, that are not ‘‘substantively the same’’ as the Federal rules. 49 U.S.C. 5125(b)(1)(C). The HMTA and HMR prescribe the information and documentation requirements for the safe transportation of hazardous materials. See generally, 49 CFR part 172, subparts C and G; part 174 (railroads). This includes the preparation, execution, and use of shipping documents. Under the HMR, offerors of a hazardous material for transportation are required to prepare a shipping paper to accompany the material while it is in transportation with information describing the material and emergency response information. In general, the Federal rules do not require additional information, documentation, or advance notification for the transportation of hazardous materials. PHMSA recently adopted new HHFT information sharing requirements in order to ensure that safety and security planning is occurring for crude-by-rail shipments. 49 CFR 173.41. The information sharing requirements include a weekly estimate of the number of trains expected to operate through the local jurisdiction, a description of the hazardous material and all applicable emergency response information (consistent with the HMR requirements), and a railroad point of contact. Updates are only required when volume changes more than twenty-five percent. Id. We note that Washington State amended the ANT requirement to add new data elements, ‘‘type’’ and ‘‘vapor pressure’’ to the ANT database. Before this amendment, the data elements that were being reported generally consisted of the same data that is required under the HHFT notification requirements. For example, route, product description, and quantity. It is noteworthy, that this information is either necessary or optional information under the HMR, or otherwise ascertained from the shipping paper that is required to accompany a shipment of crude oil—except vapor pressure. Similarly, with the addition of these new data elements and the different reporting threshold, the ANT requirement is different from the HHFT notification requirements, albeit not to the extent that commenters have described it. E:\FR\FM\15MYN1.SGM 15MYN1 29528 Federal Register / Vol. 85, No. 95 / Friday, May 15, 2020 / Notices The State of Washington asserts that the ANT requirement is a local emergency preparedness measure that applies only to in-state facilities that unload crude-by-rail shipments, with no attendant reporting duties for shippers or carriers. Yet, it is unclear from where, and whom, the facilities will get the crude oil’s ‘‘type’’ and ‘‘vapor pressure’’ data in order to comply with the amended ANT requirement. A reasonable inference could be made that this information must be provided by the shipper or carrier. Notwithstanding, we cannot ignore the fact that none of the refineries that submitted comments in this proceeding provided any meaningful information regarding how they have been complying with the current iteration of the requirement, or how they intend to comply with the amended law. Without more information, it is unclear whether there is a sufficient nexus to the ANT requirement and the Federal requirements that fully implicates HMTA preemption. Therefore, on balance, PHMSA finds that the administrative record regarding the ANT requirement is insufficient to make a determination whether the requirement is preempted under the HMTA. jbell on DSKJLSW7X2PROD with NOTICES VII. Ruling PHMSA finds that Washington State’s vapor pressure requirement setting a vapor pressure limit of 9 psi for crude oil, has created a scheme for classifying a hazardous material that is not substantively the same as the Federal hazardous materials regulations. PHMSA also finds that the vapor pressure requirement is a handling requirement that is not substantively the same as existing Federal requirements. Furthermore, PHMSA has determined that the vapor pressure requirement is an obstacle to accomplishing and carrying out the HMTA and HMR, and is, therefore preempted. In addition, PHMSA finds that the administrative record regarding the ANT requirement is insufficient to make a determination whether the requirement is preempted under the HMTA. VIII. Petition for Reconsideration/ Judicial Review In accordance with 49 CFR 107.211(a), any person aggrieved by this determination may file a petition for reconsideration within 20 days of publication of this determination in the Federal Register. If a petition for reconsideration is filed within 20 days of publication in the Federal Register, the decision by PHMSA’s Chief Counsel VerDate Sep<11>2014 17:09 May 14, 2020 Jkt 250001 on the petition for reconsideration becomes PHMSA’s final agency action with respect to the person requesting reconsideration. See 49 CFR 107.211(d). If a person does not request reconsideration in a timely fashion, then this determination is PHMSA’s final agency action as to that person, as of the date of publication in the Federal Register. Any person who wishes to seek judicial review of a preemption determination must do so by filing a petition for review in the United States Court of Appeals for the District of Columbia Circuit, or in the United States Court of Appeals for the circuit in which the petitioner resides or has its principal place of business, within 60 days after the determination becomes final with respect to the filing party. See 49 U.S.C. 5127(a). The filing of a petition for reconsideration is not a prerequisite to seeking judicial review of this decision under 49 U.S.C. 5127(a). Issued in Washington, DC, on May 11, 2020. Paul J. Roberti, Chief Counsel. [FR Doc. 2020–10381 Filed 5–14–20; 8:45 am] BILLING CODE 4910–60–P DEPARTMENT OF THE TREASURY Internal Revenue Service Proposed Extension of Information Collection Request Submitted for Public Comment; Comment Request on Disclosure of Returns and Return Information by Other Agencies Internal Revenue Service (IRS), Treasury. ACTION: Notice and request for comments. AGENCY: The Internal Revenue Service, as part of its continuing effort to reduce paperwork and respondent burden, invites the public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995. Currently, the IRS is soliciting comments concerning the guidance on the disclosure of returns and return information by other Agencies. SUMMARY: Written comments should be received on or before July 14, 2020 to be assured of consideration. ADDRESSES: Direct all written comments to Kinna Brewington, Internal Revenue Service, Room 6529, 1111 Constitution DATES: PO 00000 Frm 00137 Fmt 4703 Sfmt 4703 Avenue NW, Washington, DC 20224. Requests for additional information or copies of the regulations should be directed to Ronald J. Durbala, at Internal Revenue Service, Room 6129, 1111 Constitution Avenue NW, Washington, DC 20224, or through the internet, at RJoseph.Durbala@irs.gov. SUPPLEMENTARY INFORMATION: Title: Disclosure of Returns and Return Information by Other Agencies. OMB Number: 1545–1757. Regulation Project Number: TD 9036. Abstract: In general, under the regulations, the IRS is permitted to authorize agencies with access to returns and return information under section 6103 of the Internal Revenue Code to re-disclose returns and return information based on a written request and the Commissioner’s approval, to any authorized recipient set forth in Code section 6103, subject to the same conditions and restrictions, and for the same purposes, as if the recipient had received the information from the IRS directly. Current Actions: There is no change to the burden previously approved by OMB. This request is being submitted for renewal purposes only. Type of Review: Extension of a currently approved collection. Affected Public: Federal Government, State, Local, or Tribal Gov’t. Estimated Number of Respondents: 11. Estimated Time per Respondent: 1 hour. Estimated Total Annual Burden Hours: 11. The following paragraph applies to all the collections of information covered by this notice: An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number. Books or records relating to a collection of information must be retained if their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103. Desired Focus of Comments: The Internal Revenue Service (IRS) is particularly interested in comments that: • Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; • Evaluate the accuracy of the agency’s estimate of the burden of the E:\FR\FM\15MYN1.SGM 15MYN1

Agencies

[Federal Register Volume 85, Number 95 (Friday, May 15, 2020)]
[Notices]
[Pages 29511-29528]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-10381]

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DEPARTMENT OF TRANSPORTATION

Pipeline and Hazardous Materials Safety Administration

[Docket No. PHMSA-2019-0149; PD-40(R)]

Hazardous Materials: The State of Washington Crude Oil by Rail
Volatility Requirements

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

ACTION: Notice of Administrative Determination of Preemption.

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Applicants: The State of North Dakota and the State of Montana
(Applicants).
Local Law Affected: Revised Code of Washington (RCW), Title 90,
Chapter 90.56, Section 90.56.565 (2015), as amended; Section 90.56.580
(2019).
Applicable Federal Requirements: Federal Hazardous Material
Transportation Law (HMTA), 49 U.S.C. 5101 et seq., and the Hazardous
Materials Regulations (HMR), 49 CFR parts 171-180.
Mode Affected: Rail.
SUMMARY: PHMSA finds that the HMTA preempts Washington State's vapor
pressure limit for crude oil loaded or unloaded from rail tank cars,
for three reasons. First, the vapor pressure requirement constitutes a
scheme for classifying a hazardous material that is not substantively
the same as the HMR. Second, the vapor pressure requirement imposes
requirements on the handling of a hazardous material that are not
substantively the same as the requirements of the HMR. Third, PHMSA has
determined that the vapor pressure requirement is an obstacle to
accomplishing and carrying out the HMTA.
In addition, PHMSA finds that the administrative record regarding
Washington State's Advance Notice of Transfer (ANT) requirement is
insufficient to make a determination whether the requirement is
preempted under the HMTA.

FOR FURTHER INFORMATION CONTACT: Vincent Lopez, Office of Chief
Counsel, Pipeline and Hazardous Materials Safety Administration, U.S.
Department of Transportation, 1200 New Jersey Avenue SE, Washington, DC
20590; Telephone No. 202-366-4400; Facsimile No. 202-366-7041.

SUPPLEMENTARY INFORMATION:

I. Application

The Applicants have applied to PHMSA for a determination as to
whether the HMTA, 49 U.S.C. 5101 et seq., preempts the State of
Washington's requirements for crude oil vapor pressure and advance
notice of transfer for facilities that receive crude oil from a
railroad car (hereinafter referred to as Washington's vapor pressure
law or VPL). Specifically, the Applicants allege the law, which
purports to regulate the volatility of crude oil loaded or unloaded
from rail cars in Washington State, amounts to a de facto ban on Bakken
\1\ crude.
---------------------------------------------------------------------------

\1\ According to the Applicants, North Dakota and Montana are
home to the Bakken Shale Formation, a subsurface formation within
the Williston Basin. It is one of the top oil-producing regions in
the country and one of the largest oil producers in the world.
---------------------------------------------------------------------------

The Applicants present several arguments for why they believe
Washington's law should be preempted. First, the Applicants contend
that the law's prohibition on the loading or unloading of crude oil
registering a vapor pressure greater than 9 pounds per square inch
(psi) poses obstacles to the HMTA because compliance with the law can
only be accomplished by (1) pretreating the crude oil prior to loading
the tank car; (2) selecting an alternate mode of transportation; or (3)
redirecting the crude oil to facilities outside of Washington State.
Accordingly, North Dakota and Montana say these avenues for complying
with the law impose obstacles to accomplishing the purposes of the
HMTA. Similarly, they contend that the law's advance notice of transfer
requirement is an additional obstacle.

[[Page 29512]]

Lastly, North Dakota and Montana contend that Washington State's law is
preempted because aspects of the law are not substantively the same as
the Federal requirements for the classification and handling of this
type of hazardous material.
In summary, the Applicants contend the State of Washington's vapor
pressure law should be preempted because:
It is an obstacle to the Federal hazardous material
transportation legal and regulatory regime; and
It is not substantively the same as the Federal
regulations governing the classification and handling of crude oil in
transportation.
PHMSA published notice of the application in the Federal Register
on July 24, 2019. 84 FR 35707. Interested parties were invited to
comment on the application. We granted a request by the State of
Washington to extend the original 30-day comment period. The initial
comment period closed on September 23, 2019, followed by a rebuttal
comment period that remained open until October 23, 2019. PHMSA
received 4,118 comments during the initial comment period, and another
279 comments were submitted during the rebuttal comment period.
Generally, the comments fall into six categories representing a broad
array of stakeholders, including refineries and oil producers, industry
groups, governmental entities, environmental groups, Members of
Congress, and other interested members of the public. The comments are
summarized in Part V below.

II. Preemption Under Federal Hazardous Material Transportation Law

Preemption Standards

The HMTA has strong preemption provisions that allow the Secretary
of Transportation (Secretary), upon request, to make a preemption
determination as to a non-Federal requirement. 49 U.S.C. 5125 contains
express preemption provisions relevant to Washington State's vapor
pressure law. Subsection (a) provides that a requirement of a State,
political subdivision of a State, or Indian tribe is preempted--unless
the non-Federal requirement is authorized by another Federal law or the
Department of Transportation (Department or DOT) grants a waiver of
preemption under 5125(e)--if:

(1) Complying with a requirement of the State, political
subdivision, or tribe and a requirement of this chapter, a
regulation prescribed under this chapter, or a hazardous materials
transportation security regulation or directive issued by the
Secretary of Homeland Security is not possible; or
(2) the requirement of the State, political subdivision, or
tribe, as applied or enforced, is an obstacle to accomplishing and
carrying out this chapter, a regulation prescribed under this
chapter, or a hazardous materials transportation security regulation
or directive issued by the Secretary of Homeland Security.\2\
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\2\ These two paragraphs set forth the ``dual compliance'' and
``obstacle'' criteria that are based on U.S. Supreme Court decisions
on preemption. Hines v. Davidowitz, 312 U.S. 52 (1941); Florida Lime
& Avocado Growers, Inc. v. Paul, 373 U.S. 132 (1963); Ray v.
Atlantic Richfield, Inc., 435 U.S. 151 (1978). PHMSA's predecessor
agency, the Research and Special Programs Administration, applied
these criteria in issuing inconsistency rulings under the original
preemption provisions in Section 112(a) of the Hazardous Materials
Transportation Act, Public Law 93-633, 88 Stat. 2161 (Jan. 3, 1975).

Subsection (b)(1) of 49 U.S.C. 5125 provides that a non-Federal
requirement concerning any of the following subjects is preempted--
unless authorized by another Federal law or DOT grants a waiver of
preemption--when the non-Federal requirement is not ``substantively the
same'' as a provision of Federal hazardous material transportation law,
a regulation prescribed under that law, or a hazardous materials
security regulation or directive issued by the Department of Homeland
---------------------------------------------------------------------------
Security:

(A) The designation, description, and classification of
hazardous material.
(B) the packing, repacking, handling, labeling, marking, and
placarding of hazardous material.
(C) the preparation, execution, and use of shipping documents
related to hazardous material and requirements related to the
number, contents, and placement of those documents.
(D) the written notification, recording, and reporting of the
unintentional release in transportation of hazardous material and
other written hazardous materials transportation incident reporting
involving State or local emergency responders in the initial
response to the incident.
(E) the designing, manufacturing, fabricating, inspecting,
marking, maintaining, reconditioning, repairing, or testing a
package, container, or packaging component that is represented,
marked, certified, or sold as qualified for use in transporting
hazardous material in commerce.\3\
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\3\ To be ``substantively the same,'' the non-Federal
requirement must conform ``in every significant respect to the
Federal requirement. Editorial and other similar de minimis changes
are permitted.'' 49 CFR 107.202(d).

The preemption provisions in 49 U.S.C. 5125 reflect Congress's
long-standing view that a single body of uniform Federal regulations
promotes safety (including security) in the transportation of hazardous
materials. Some forty years ago, when considering the Hazardous
Materials Transportation Act, the Senate Commerce Committee
``endorse[d] the principle of preemption in order to preclude a
multiplicity of State and local regulations and the potential for
varying as well as conflicting regulations in the area of hazardous
materials transportation.'' S. Rep. No. 1192, 93rd Cong. 2nd Sess. 37
(1974). A United States Court of Appeals has found uniformity was the
``linchpin'' in the design of the Federal laws governing the
transportation of hazardous materials.\4\
---------------------------------------------------------------------------

\4\ Colorado Pub. Util. Comm'n v. Harmon, 951 F.2d 1571, 1575
(10th Cir. 1991).
---------------------------------------------------------------------------

Administrative Determination of Preemption

Under 49 U.S.C. 5125(d)(1), any person (including a State,
political subdivision of a State, or Indian tribe) directly affected by
a requirement of a State, political subdivision or Indian tribe may
apply to the Secretary of Transportation for a determination whether
the requirement is preempted. The Secretary of Transportation has
delegated authority to PHMSA to make determinations of preemption.\5\
Alternatively, a person may seek a decision on preemption from a court
of competent jurisdiction instead of applying to PHMSA. However, once
an application is filed with the agency, an applicant may not seek
judicial relief with respect to the same, or substantially the same
issue, until the agency has taken final action on the application or
180 days after filing the application.\6\
---------------------------------------------------------------------------

\5\ 49 CFR 1.97(b).
\6\ 49 U.S.C. 5125(d); 49 CFR 107.203(d).
---------------------------------------------------------------------------

Section 5125(d)(1) requires notice of an application for a
preemption determination to be published in the Federal Register.
Following the receipt and consideration of written comments, PHMSA
publishes its determination in the Federal Register.\7\ A short period
of time is allowed for filing of petitions for reconsideration.\8\ A
petition for judicial review of a final preemption determination must
be filed in the United States Court of Appeals for the District of
Columbia or in the Court of Appeals for the United States for the
circuit in which the petitioner resides or has its principal place of
business, within 60 days after the determination becomes final.\9\
---------------------------------------------------------------------------

\7\ 49 CFR 107.209(c).
\8\ 49 CFR 107.211.
\9\ 49 U.S.C. 5127(a).
---------------------------------------------------------------------------

Preemption determinations do not address issues of preemption
arising under the Commerce Clause, the Fifth Amendment or other
provisions of the Constitution, or statutes other than the

[[Page 29513]]

Federal hazardous material transportation law, unless it is necessary
to do so in order to determine whether a requirement is authorized by
another Federal law, or whether a fee is ``fair'' within the meaning of
49 U.S.C. 5125(f)(1). A State, local or Indian tribal requirement is
not authorized by another Federal law merely because it is not
preempted by another Federal statute.\10\ In addition, PHMSA does not
generally consider issues regarding the proper application or
interpretation of a non-Federal regulation, but rather how such
requirements are actually ``applied or enforced.'' Thus, ``isolated
instances of improper enforcement (e.g., misinterpretation of
regulations) do not render such provisions inconsistent'' with the
Federal hazardous material transportation law, but are more
appropriately addressed in the appropriate State or local forum.\11\
---------------------------------------------------------------------------

\10\ Colorado Pub. Util. Comm'n v. Harmon, above, 951 F.2d at
1581 n.10.
\11\ Preemption Determination (PD)-14(R), Houston, Texas, Fire
Code Requirements on the Storage, Transportation, and Handling of
Hazardous Materials, 63 FR 67506, 67510 n.4 (Dec. 7, 1998), decision
on petition for reconsideration, 64 FR 33949 (June 24, 1999),
quoting from IR-31, Louisiana Statutes and Regulations on Hazardous
Materials Transportation, 55 FR 25572, 25584 (June 21, 1990), appeal
dismissed as moot, 57 FR 41165 (Sept. 9, 1992), and PD-4(R),
California Requirements Applicable to Cargo Tanks Transporting
Flammable and Combustible Liquids, 58 FR 48940 (Sept. 20, 1993),
decision on reconsideration, 60 FR 8800 (Feb. 15, 1995).
---------------------------------------------------------------------------

III. The Washington State Requirements

For our purposes here, the relevant language of the law includes a
new section added to RCW, Chapter 90.56 to read:

(1)(a) A facility constructed or permitted after January 1,
2019, may not load or unload crude oil into or from a rail tank car
unless the oil has a vapor pressure of less than nine pounds per
square inch.
(b) A facility may not load or unload crude oil into or from a
rail tank car unless the oil has a vapor pressure of less than nine
pounds per square inch beginning two years after the volume of crude
oil transported by rail to the facility for a calendar year as
reported under RCW 90.56.565 has increased more than ten percent
above the volume reported for calendar year 2018.
(2) The director may impose a penalty of up to twenty-five
hundred dollars per day per rail tank car or the equivalent volume
of oil for violations of this section. Any penalty recovered
pursuant to this section must be credited to the coastal protection
fund created in RCW 90.48.390.
(3) This section does not: (a) Prohibit a railroad car carrying
crude oil from entering Washington; (b) require a railroad car
carrying crude oil to stop before entering Washington; or (c)
require a railroad car carrying crude oil to be checked for vapor
pressure before entering Washington.

RCW 90.56.580 (as amended).
In addition, RCW 90.56.565 was amended to read, in part:

(1)(a) A facility that receives crude oil from a railroad car
must provide advance notice to the department that the facility will
receive crude oil from a railroad car, as provided in this section.
The advance notice must include the route taken to the facility
within the state, if known, and the scheduled time, location,
volume, region per bill of lading, type, vapor pressure, and gravity
as measured by standards developed by the American petroleum
institute, of crude oil received. Each week, a facility that
provides advance notice under this section must provide the required
information regarding the scheduled arrival of railroad cars
carrying crude oil to be received by the facility in the succeeding
seven-day period. A facility is not required to provide advance
notice when there is no receipt of crude oil from a railroad car
scheduled for a seven-day period.
* * * * *
(4) To further strengthen rail safety and the transportation of
crude oil, the department must provide to the utilities and
transportation commission data reported by facilities on the
characteristics, volatility, vapor pressure, and volume of crude oil
transported by rail, as required under subsection (1)(a) of this
section. . . .

RCW 90.56.565 (as amended) (emphasis added).

IV. Background Information

A. Vapor Pressure

No Federal Vapor Pressure Standard
The HMR requirements for the classification of unrefined petroleum-
based products include the proper classification, determination of an
appropriate packing group, and selection of a proper shipping name and
description of the material. The HMR contain detailed rules that guide
an offeror through each of these steps in the classification process.
See generally, 49 CFR 172.101 (The Hazardous Materials Table), 173.2-
173.41; 173.120, 173.121, 173.150, 173.242, 173. 243, and Part 174
(Railroads). However, as explained further below, there is not a
Federal vapor pressure standard for the classification process for
unrefined petroleum-based products, such as crude oil.
North Dakota Industrial Commission Order
In December 2014, the North Dakota Industrial Commission adopted
new conditioning standards for the transport of Bakken crude oil,
stating safety as its rationale. The NDIC Order (Order) sets forth
operating standards guiding the use of conditioning equipment to
separate production fluids into gas and liquid components. The new
standard requires North Dakota operators to condition Bakken crude oil
to a vapor pressure of no more than 13.7 psi. The Order requires the
operators to separate light hydrocarbons from all Bakken crude oil to
be transported and prohibits the blending of light hydrocarbons back
into oil supplies prior to shipment. The NDIC, in setting the State of
North Dakota's vapor pressure limit at 13.7 psi, noted that standards-
setting organizations set crude oil stability at a vapor pressure of
14.7 psi.\12\
---------------------------------------------------------------------------

\12\ Commenters have suggested that since we are addressing the
State of Washington's ability to set its own vapor pressure limit,
we must also address the State of North Dakota's vapor pressure
limit. However, the NDIC conditioning standard is not the vapor
pressure requirement that is the subject of this preemption matter.
Therefore, it is beyond the scope of this proceeding.
---------------------------------------------------------------------------

DOT's High-Hazard Flammable Train Rule
On May 8, 2015, PHMSA, in coordination with FRA, published the HHFT
final rule to codify requirements to reduce the consequences and
probability of accidents involving trains transporting large quantities
of Class 3 flammable liquids.\13\ PHMSA, in the Notice of Proposed
Rulemaking (NPRM), indicated that the properties of unrefined
petroleum-based products, including crude oil, are variable based on
time, method, and location of extraction. As such, organic materials
from oil and gas production represent a unique challenge regarding
classification. At that time, the agency also sought public comments on
the role of vapor pressure in classifying flammable liquids and
selecting packaging, and asked whether vapor pressure thresholds should
be established.\14\ In the final rule, PHMSA took a system-wide
comprehensive approach to rail safety commensurate with the risks
associated with HHFTs. For example, the final rule adopted several
operational requirements relating to speed restrictions, braking
systems, and routing. It also adopted safety improvements in tank car
design standards and notification requirements. And, to ensure the
proper classification of unrefined petroleum products, a new regulatory
requirement for a sampling and testing program was added to the HMR.
---------------------------------------------------------------------------

\13\ Hazardous Materials: Enhanced Tank Car Standards and
Operational Controls for High-Hazard Flammable Trains, 80 FR 26643
(May 8, 2015).
\14\ Hazardous Materials: Enhanced Tank Car Standards and
Operational Controls for High-Hazard Flammable Trains, 79 FR 45015
(August 1, 2014).
---------------------------------------------------------------------------

Under the HMR, it is the responsibility of the offeror to ensure
hazardous materials are properly

[[Page 29514]]

classified.\15\ PHMSA, in the HHFT final rule, stressed the offeror's
responsibility to classify and describe properly a hazardous material
when the agency decided to impose a regulation requiring a sampling and
testing program for unrefined petroleum-based products.\16\ However,
PHMSA did not adopt any other changes related to vapor pressure. For
example, the agency did not mandate specific sampling and testing for
measuring vapor pressure; it chose not to set a Federal vapor pressure
standard; and lastly, it decided against requiring pre-treatment or
conditioning of crude oil to meet a vapor pressure standard before the
material is offered for transportation. Notwithstanding the fact that
PHMSA did not adopt any specific requirements related to vapor
pressure, the agency indicated its willingness to continue examining
the role of vapor pressure in the proper classification of crude oils
and other flammable liquids, but cautioned that any specific regulatory
changes related to vapor pressure would be informed by current and
future research, as well as rulemaking procedures to the extent
regulatory action is deemed necessary.
---------------------------------------------------------------------------

\15\ 49 CFR 173.22.
\16\ 49 CFR 173.41.
---------------------------------------------------------------------------

New York State Office of the Attorney General Petition and ANPRM
Subsequent to the publication of the HHFT final rule, and despite
the operational and safety improvements codified in the rule, the New
York State Office of the Attorney General (NYSOAG) petitioned PHMSA to
establish a Federal vapor pressure limit for crude oil transported by
rail. According to NYSOAG, the rule did not address the primary cause
of the large explosions and uncontrollable fires from a series of train
accidents involving Bakken crude oil--the volatility of crude oil
itself--due to the abundance of combustible gases within the petroleum
products. PHMSA received NYSOAG's petition on December 1, 2015. The
rulemaking petition requested that PHMSA establish a vapor pressure
limit of less than 9 psi for crude oil transported by rail. The
petition was based on the premise that limiting the material's vapor
pressure would reduce the risk of death or damage from fire or
explosion in the event of an accident.
On January 18, 2017, PHMSA issued an ANPRM \17\ to help the agency
assess the merits of prescribing vapor pressure limits for crude oil.
PHMSA, in the ANPRM, asked a series of questions seeking input as to
whether there should be national vapor pressure thresholds for
petroleum products. The comment period for the ANPRM closed on May 19,
2017.
---------------------------------------------------------------------------

\17\ Hazardous Materials: Volatility of Unrefined Petroleum
Products and Class 3 Materials, 82 FR 5499 (January 18, 2017).
---------------------------------------------------------------------------

Crude Oil Characteristics Research (Sandia Study)
In 2014, the Department, the U.S. Department of Energy (DOE), and
Transport Canada (TC) commissioned a review of the chemical and
physical properties of tight \18\ crude oils in order to understand
whether these properties could contribute to an increased potential for
accidental combustion. Vapor pressure was one of the specific
properties the two Federal agencies targeted for research and analysis.
Sandia National Laboratories (Sandia) was commissioned to conduct an
extensive review and analysis, focusing specifically on crude oil's
potential for ignition, combustion, and explosion. The review
encompassed a wide-ranging examination of domestic crude oil samples
varying by type, location, sampling method, and analytical method. DOT,
DOE, and TC authorized additional research and undertook a multi-phase
deliberative approach for examining the characteristics of various
crude oils from around the country. The final plan was authorized and
provided for a four-phase study entitled, the Sampling, Analysis, and
Experiment (SAE) plan.
---------------------------------------------------------------------------

\18\ Tight oil is oil produced from petroleum-bearing formations
with low permeability such as the Eagle Ford, the Bakken, and other
formations that must be hydraulically fractured to produce oil at
commercial rates. Shale is a subset of tight oil. U.S. Energy
Information Administration, https://www.eia.gov/tools/glossary/?id=t
(last visited February 11, 2020).
---------------------------------------------------------------------------

The SAE plan consisted of a set of tasks intended to further
evaluate sampling methods; identify and evaluate crude oil chemical and
physical properties; and engage in data collection and analysis. Tasks
1, 2, and 3 of the plan have been completed: Task 1 consisted of a
review and evaluation of new and emerging crude oil characterization
data; Task 2 entailed an evaluation of oil sampling methods; Task 3
included combustion experiments and modeling to assess combustion
hazards associated with tight and conventional crude oils.
Sandia published its report of the results of Task 3 on August 24,
2019.\19\ The report described the pool fire and fireball experiments
Sandia conducted on three different North American crude oil samples
(including a sample from the Bakken region) to study the physical,
chemical, and combustion characteristics of the samples, and how these
characteristics associate with thermal hazard distances that may be
realized in the event of a transportation accident involving a crude
oil fire. In short, the primary conclusion reached from the study was
as follows:
---------------------------------------------------------------------------

\19\ https://www.osti.gov/biblio/1557808-pool-fire-fireball-experiments-support-us-doe-dot-tc-crude-oil-characterization-research-study.

The similarity of pool fire and fireball burn characteristics
pertinent to thermal hazard outcomes of the three oils studied
indicate that vapor pressure is not a statistically significant
factor in affecting these outcomes. Thus, the results from this work
do not support creating a distinction for crude oils based on vapor
---------------------------------------------------------------------------
pressure with regards to these combustion events.

In light of this conclusion, the Department, DOE, and TC agreed
that additional data collection, the key focus of Task 4 of the SAE
Plan, would not be necessary since the Task 3 results provided a
scientific and evidentiary basis for evaluating the effects of vapor
pressure as it relates to the safe transportation of crude oil by rail.
As such, the sponsoring agencies officially deemed the publication of
the Task 3 Report as the final stage of the SAE plan, thereby
completing the Sandia Study. DOE submitted a Report to Congress in
April 2020.\20\
---------------------------------------------------------------------------

\20\ www.energy.gov/fe/report-congress-crude-oil-characterization-research-study.
---------------------------------------------------------------------------

ANPRM Withdrawal
PHMSA, after closely examining the results and conclusions of the
Sandia Study, and in consideration of the public comments to the ANPRM
from industry, stakeholders, and other interested parties, determined
that issuing any regulation setting a vapor pressure limit for
unrefined petroleum-based products is not justified, reasoning that
such a regulation would not lessen risks associated with transporting
crude oil by rail.
Furthermore, the agency determined that establishing a vapor
pressure limit would unnecessarily impede transportation without
providing justifiable benefits. Therefore, on May 11, 2020, the agency
withdrew the January 18, 2017 ANPRM because it determined that the
current classification provisions of the HMR adequately address the
known hazards of Class 3 flammable liquids, including unrefined
petroleum-based products, such as crude oil. Furthermore, the agency
found that a regulation setting a national vapor pressure limit for
these materials is neither necessary nor appropriate.\21\
---------------------------------------------------------------------------

\21\ PHMSA has submitted a Notice of the ANPRM Withdrawal to the
Office of the Federal Register for official publication. However,
there may be a delay in the publication of the Notice in the Federal
Register. Therefore, PHMSA has issued the Notice on the PHMSA
website and posted it to the docket on the Regulations.gov website
(https://www.regulations.gov/docket?D=PHMSA-2016-0077). Although
PHMSA has taken steps to ensure the accuracy of the version of the
Notice posted on the PHMSA website and in the docket, it is not the
official version. Please refer to the official version in a
forthcoming Federal Register publication, which will appear on the
websites of each of the Federal Register (https://www.federalregister.gov/) and the Government Printing Office
(www.govinfo.gov). After publication in the Federal Register, the
unofficial Notice will be removed from PHMSA's website and replaced
with a link to the official version published in the Federal
Register. PHMSA will also post the official version in docket no.
PHMSA-2016-0077.

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

[[Page 29515]]

In light of the above summary of the regulatory and research
activities concerning vapor pressure, PHMSA, with its withdrawal of the
ANPRM, has now concluded that there is no scientific or evidentiary
basis for regulating the vapor pressure of unrefined petroleum-based
products, including crude oil. And although many of the commenters in
this proceeding have referred to the State of North Dakota's vapor
pressure standard as the ``de facto national'' standard, this
characterization is entirely misplaced given that NDIC's vapor pressure
regulation is a State-adopted standard that could also be subject to a
preemption challenge.

B. Advanced Notification of Transportation

The HMTA and HMR prescribe the information and documentation
requirements for the safe transportation of hazardous materials. This
includes the preparation, execution, and use of shipping documents.
Under the HMR, offerors of a hazardous material for transportation are
required to prepare a shipping paper (to accompany the material while
it is in transportation) with information describing the material,
including the proper shipping name, hazard class or division number,
and packing group, as determined by the regulations. Emergency response
information is also required. Historically, in general, with the
exception of radioactive materials, the Federal rules do not require
additional information, documentation, or advance notification for the
transportation of hazardous materials.
On May 7, 2014, the Department issued an Emergency Order requiring
that each railroad carrier provide the State Emergency Response
Commission (SERC) for each State in which it operates trains
transporting one million gallons or more of Bakken crude oil, including
information regarding the expected movement of such trains through the
counties in the State. The notification must provide information
regarding the estimated volumes and frequencies of train traffic. The
notification must also provide a reasonable estimate of the number of
trains that are expected to travel, per week, through each county, and
the expected transportation routes; a description of the petroleum
crude oil and all emergency response information, each in accordance
with the requirements in the HMR; and contact information for at least
one point of contact at the railroad. The railroad must update the
notifications when there is a material change (any increase or decrease
of twenty-five percent or more) in the volume of those trains.
PHMSA, in the NPRM for the HHFT rulemaking, proposed to codify and
clarify the requirements in the Emergency Order. However, based on the
comments received on the proposed notification requirement, the agency
did not codify the notification requirements from the Emergency Order.
Rather, it elected to amend the existing planning requirements for
transportation by rail to include HHFT trains. The agency reasoned that
relying on the existing route analysis and consultation requirements of
section 172.820 would provide for consistency of notification
requirements for rail carriers transporting crude oil by seamlessly
integrating HHFT trains within the existing hazardous materials
regulatory scheme.
Thereafter, Congress enacted the FAST Act \22\ which included a
mandate for the Department to promulgate regulations requiring advance
notification consistent with the notification requirements of the May
7, 2014, Emergency Order. As such, PHMSA proposed, and ultimately
codified those requirements in the Oil Spill Response Plan (OSPR)
rulemaking.\23\ The new provision, Section 174.312, specifies that HHFT
information sharing notification must include: (1) A reasonable
estimate of the number of HHFTs that the railroad expects to operate
each week, through each county within the State or through each tribal
jurisdiction; the routes over which the HHFTs will operate; (2) a
description of the hazardous material being transported and all
applicable emergency response information required by subparts C and G
of part 172; (3) at least one point of contact at the railroad with
knowledge of the railroad's transportation of affected trains; and (4)
if the route is subject to oil spill response plan requirements, the
notification must include a description of the response zones and
contact information for the qualified individual and alternate.
Railroads are required to update the notifications for changes in
volume greater than twenty-five percent.
---------------------------------------------------------------------------

\22\ Public Law 114-94, 129 Stat. 1312, (December 4, 2015)
Effective Date: October 1, 2015.
\23\ Hazardous Materials: Oil Spill Response Plans and
Information Sharing for High-Hazard Flammable Trains (FAST Act), HM-
251B, NPRM 81 FR 50068 (July 29, 2016); FR 84 FR 6910 (February 28,
2019).
---------------------------------------------------------------------------

In the final rule, the agency stated that adding these new HHFT
information sharing requirements build upon the information sharing
framework for HHFTs that were initiated at the same time as the HHFT
rulemaking amendments. The agency noted that together, these
requirements will enable the railroads to work with State officials to
ensure that safety and security planning is occurring. The notification
requirements adopted in the HHFT and OSRP final rules are important
components of the Department's overall comprehensive approach to
ensuring the safe transportation of energy products.

V. Summary and Discussion of the Public Comments

PHMSA received 4,118 comments during the initial comment period,
and another 279 comments were submitted during the rebuttal comment
period. Generally, there are six categories of commenters representing
a broad array of stakeholders, including refineries and oil producers,
industry groups, governmental entities, environmental groups, Members
of Congress, and other interested members of the public. Of the
substantive comments received, the majority came from industry
groups.\24\ Several refineries and oil producers also submitted
comments.\25\
---------------------------------------------------------------------------

\24\ 11 industry groups submitted individual comments,
including: American Chemistry Council; American Fuel & Petrochemical
Manufacturers; American Petroleum Institute; the Chlorine Institute;
Dangerous Goods Advisory Council; International Liquid Terminals
Association; North Dakota Petroleum Council; Railway Supply
Institute; Western Independent Refiners Association; and Western
States Petroleum Association. In addition, the Association of
American Railroads, the American Short Line & Regional Railroad
Association, and BNSF Railway Company submitted a joint comment.
\25\ Of the five refineries located in Washington State, four of
the refinery operators submitted comments: BP America; Hess
Corporation; Marathon Petroleum Corporation; and Phillips 66
Company. Also, two oil producers submitted comments: Continental
Resources and Crestwood Midstream Partners LP.
---------------------------------------------------------------------------

State and local governments also submitted comments, both in favor
of and against preemption of the Washington State law. The North Dakota
Department of Agriculture and the Governor of North Dakota each

[[Page 29516]]

submitted a comment in favor of preemption. Also, the Attorneys General
of Oklahoma, Arkansas, Indiana, Louisiana, Nebraska, Ohio, South
Dakota, Utah, West Virginia, and Wyoming (AG Alliance for Preemption)
wrote a joint comment in favor of preemption.\26\ The Attorney General
(AG) of Washington and the Spokane City Council each submitted a
comment arguing against preemption.
---------------------------------------------------------------------------

\26\ On December 16, 2019, The AG of Texas sent a letter to
PHMSA's Chief Counsel endorsing the views expressed in the comments
previously filed in the proceeding by the Attorneys General of
Oklahoma, Arkansas, Indiana, Louisiana, Nebraska, Ohio, South
Dakota, Utah, West Virginia, and Wyoming. The letter, and PHMSA's
response, have been uploaded to the proceeding's docket.
---------------------------------------------------------------------------

A joint comment was submitted by eight environmental and public
interest groups, led by Earthjustice.\27\ There were many comments
submitted by individuals; the vast majority of which were variations of
the same form letter.\28\ In addition, 32 Members of Congress wrote to
the Secretary and the PHMSA Administrator urging preemption.
---------------------------------------------------------------------------

\27\ The environmental and public interest groups, included
Earthjustice, the Washington Environmental Council, Columbia
Riverkeeper, Friends of the Earth, the Lands Council, Friends of the
San Juans, Friends of the Columbia Gorge, and Oregon Physicians for
Social Responsibility.
\28\ During the initial comment period, there were 3,737 form
letters from 2,963 discrete commenters. There were also 59 comments
from private citizens that were not form letters. During the
rebuttal comment period, there were 268 form letters from 264
discrete commenters, as well as one comment from a private citizen
that was not a form letter. After the rebuttal period closed,
another 6 form letters were submitted from 5 discrete commenters.
---------------------------------------------------------------------------

Five substantive rebuttal comments were submitted during the
rebuttal comment period. The AG of Washington submitted a rebuttal
comment against a finding of preemption. A joint rebuttal comment was
also submitted against preemption from the Attorneys General of New
York, California, Maryland, and New Jersey (AG Alliance against
Preemption).
Three rebuttal comments were in favor of preemption. The API and
the AFPM each submitted a rebuttal comment. The Applicants also
submitted rebuttal comments.
The substantive comments are organized by topic and discussed in
the following sections.

A. Comments Supporting Preemption

Goal and Purpose of the HMTA
Many of the commenters express concern about the precedent
Washington State's law could set by undermining the HMTA's national
scheme of uniform regulation. For example, Hess Corporation (Hess)
points out that the original intent of the HMTA was to preclude a
multiplicity of State and local regulations, and the potential for
varying as well as conflicting regulations. Hess argues that while some
States might believe their particular rules would be safer than those
set forth by the HMTA or the HMR, Congress specifically rejected a
State-by-State regulatory scheme in light of its determination that
national uniformity ensures better safety than a patchwork of State and
local laws of varying scope and degree.
Many of the commenters agree that uniformity is the cornerstone of
Federal hazardous materials policy, rules, and regulation, because it
fosters stability and ensures hazardous materials are transported
efficiently and without unnecessary delay. The commenters on this topic
all agree that the State of Washington's law violates the nation's
scheme of uniform regulation for the transportation of hazardous
materials.
Furthermore, most of the commenters agree that a piecemeal, or
patchwork of State-by-State regulations is untenable. Crestwood
Midstream Partners LP (Crestwood) envisions a system of regulatory
arbitrage where without uniform standards, hazmat (hazardous materials)
carriers will be forced to choose routes that avoid jurisdictions with
expensive or burdensome compliance requirements. The Railway Supply
Institute's Committee on Tank Cars (RSI-CTC) imagines a scenario where
all fifty States require different equipment for transporting hazardous
materials to and from their States, or imposing different
classification restrictions on crude oil, ethanol, and other critical
commodities.
Thus, the commenters overwhelmingly express concern that the law,
if allowed to stand, would encourage other States to impose their own
restrictions and requirements, creating a patchwork of requirements
applicable to crude oil transport and handling, an outcome that
undermines the uniform, comprehensive Federal regulatory framework that
Congress sought to advance under the HMTA.
Marathon Petroleum Corporation (Marathon) asserts that the law
undermines the validity of the unified Federal regime governing hazmat
transportation, and upends the justified reliance on this regime by
companies, like itself, that have invested heavily in their operations
to ensure a stable, diverse, safe, and high-quality supply of crude oil
with which to serve the Pacific Northwest. Marathon notes that the
interstate rail system is particularly vulnerable in the affected
Northwest region because it and every shipper that utilizes the
nation's rail system depends on a single national standard to govern
rail transportation.
The Oklahoma AG, the North Dakota Department of Agriculture,
Montana Petroleum Association, and the North Dakota Petroleum Council
(NDPC), express concern that this type of law permits States with port
cities, or points of access to particular transportation routes or
hubs, to dictate national and foreign energy policy by imposing similar
restrictions that ultimately impede another State's ability to move its
natural resources to available markets. The Oklahoma AG notes the
threat to landlocked States was of heightened concern since other
States that may decide to employ the same rationale to deter the
shipment of other fuels, such as natural gas from Oklahoma, or ethanol
from Nebraska, would cause similar or greater injury than Washington
State's vapor pressure law.
De Facto Ban
Several commenters assert that the Washington State law amounts to
a de facto ban on Bakken crude oil shipments because crude oil from the
Bakken region typically has a vapor pressure in excess of 9 psi. To
bolster this claim, other commenters point out that the law's
legislative history clearly shows the legislature's intent to target
Bakken crude by its frequent references to ``Bakken'' crude--and not
any other types of crude--in its findings and justifications in earlier
drafts of the law. Crestwood says the law is a blatant effort by the
legislature to cripple the crude-by-rail trade between the Bakken
region and oil refineries located in Washington State under the guise
of improving safety.
Furthermore, commenters assert that Washington State, in setting a
vapor pressure limit of 9 psi, has created a separate regulatory regime
that distinguishes between crude oil with a vapor pressure at or below
9 psi, and that with a vapor pressure above 9 psi, which essentially
reclassifies crude oil with a vapor pressure above 9 psi as a material
``forbidden'' from transportation under the HMR. The Western States
Petroleum Association (WSPA) agrees with this assessment of the law and
adds that a separate regulatory regime will likely foster confusion and
frustrate Congress's goal of developing a uniform, national scheme of
regulation.
Moreover, the Association of American Railroads, the American Short
Line and Regional Railroad Association, and BNSF Railway Co.
(collectively AAR) and WSPA indicate that nothing can be done post-
delivery to comply

[[Page 29517]]

with the vapor pressure requirement. Therefore, the Washington State
law effectively bans any transportation of high vapor pressure crude
oil by rail within the State of Washington, as there would be no lawful
means under the State law for unloading the material upon its arrival
at Washington State refineries.
AFPM believes the law is not designed to reduce the number of
combustion events within the State and increase safety, as Washington
State claims, but is instead a backdoor attempt to prohibit Bakken
crude from being refined within the State. According to AFPM,
prohibiting the unloading of crude oil with a vapor pressure above 9
psi will not prevent derailments of crude oil trains or mitigate the
damage that such derailments cause. Serious large-scale impacts related
to the transportation of hazmat by rail typically does not occur during
the loading or unloading phases of the material's journey. Since the
law only regulates unloading and technically exempts transportation of
high-vapor pressure crude through its jurisdiction, AFPM suggests the
true motivation of this law is to prohibit the delivery of Bakken crude
to Washington State refineries.
AFPM further hypothesizes that vapor pressure is a red herring here
because Washington State is singling out Bakken crude while at the same
time ignoring other Class 3 liquids with lower vapor pressures
(ethanol, certain isomers of pentane, iso-octane, benzene, toluene, and
the xylene isomers), which according to AFPM, have similar ignition
risks because as flammable liquids, they can also burn under comparable
circumstances.
AAR declares that even if the transportation risks to Washington
State's citizens were legitimate, the State cannot export those risks
to other States by limiting transportation of a disfavored product into
its own State at the expense of forcing the transport presumably
through another State.
The Description, Classification, and Handling of Hazardous Materials
Hess, AFPM, AAR, and other commenters assert that the Washington
State law attempts to regulate the packaging, handling, and
documentation of crude oil with rules that plainly differ from existing
Federal regulations. The commenters note that these areas are covered
subjects under the HMTA; and therefore, remark that any non-Federal
requirement concerning these subjects must be substantively the same as
the Federal requirements, or otherwise they must be preempted.
According to the commenters, preemption is appropriate because
Washington State's law conflicts with the comprehensive and technical
classifications in the HMR and intrudes on the exclusive Federal role
in classifying hazardous materials.
Description
The Dangerous Goods Advisory Council (DGAC) asserts that the
definition of a flammable liquid imposed by Washington State is not
substantively the same as the definition of the material under the HMR.
Specifically, DGAC notes that the HMR does not impose a vapor pressure
limit on flammable liquids.
Classification
NDPC and Continental Resources, Inc. (CLR) express their support
for national uniformity and believe that allowing State specific laws
to deviate from the HMTA's requirements directly undercuts its purpose
of assuring a nationally uniform set of regulations applicable to the
transportation of hazardous materials in commerce. Further, they note
the HMR are not minimum requirements that other jurisdictions may
exceed if local conditions warrant. Rather, the HMR are national
standards and must be uniformly applied across jurisdictional lines.
Here, they contend the Washington State law differs in material
respects from the Federal requirements by classifying and regulating
the handling of crude oil based on an arbitrary and unscientifically
determined vapor pressure limit of no greater than 9 psi.
The Western Independent Refineries Association (WIRA), the AG of
Oklahoma, WSPA, RSI-CTC, AFPM, AAR, and API seemingly agree with this
assessment of the law, as they all assert that Washington State's vapor
pressure requirement designates a new class of crude oil based on vapor
pressure. The commenters reason that the law divides the single
classification for crude oil, as defined in the HMR, into two groups:
Crude oil with vapor pressure below 9 psi; and crude oil with vapor
pressure equal to or exceeding 9 psi. According to the commenters, the
law effectively reclassifies crude oil with a vapor pressure greater
than 9 psi, which they argue essentially designates the material as
``forbidden'' for transportation because it imposes new classification
and handling requirements whereas the Federal law does not. Others
characterize the law as an outright ban of Bakken crude oil transport
by rail.
Handling
WIRA, API, and others believe the law's handling provisions that
restrict the loading and unloading of crude oil from rail cars based on
vapor pressure limits are not substantively the same as the Federal
requirements. Moreover, although the commenters acknowledge that the
HMTA does not preempt non-Federal requirements that purport to only
regulate loading and unloading operations at facilities after the
material is no longer in transportation, they insist the Washington
State law's scope is much broader because it regulates all loading and
unloading at Washington State facilities, regardless of who performs
the operations.
API says it is clear that the law regulates the handling of a
hazardous material in a manner that is not substantively the same as
the HMTA. Specifically, API says the law prohibits or limits (via caps
on volume) the loading and unloading of crude oil from rail cars based
on vapor pressure, whereas the HMR does not.
The Three Avenues of Compliance
Generally, the commenters on this topic agree with the Applicants'
notion that there are only three ways to comply with Washington State's
vapor pressure limit for crude-by-rail. As outlined in their
application, North Dakota and Montana identified the three avenues of
compliance as (1) pretreating the crude oil prior to loading the tank
car; (2) selecting an alternate mode of transportation; or (3)
redirecting the crude oil to facilities outside Washington State. RSI-
CTC, WSPA, Crestwood, API, and others agree that requiring compliance
with the law through pretreating, alternate modes of transportation, or
rerouting outside Washington State would pose significant obstacles to
the safety and national uniformity goals of the HMTA. For instance,
RSI-CTC states that each of these methods would likely increase the
risk of incident or exposure by unnecessarily extending the distance
and time in transit. Crestwood points out that hazardous materials are
inherently dangerous and thus must be transported without unnecessary
delay. And API contends there are no commercially and logistically
practical means to adapt to the limitations imposed by the law. Also,
API says it can confirm that the Applicants' description concerning the
unavailability, undesirability, and impracticality of the potential
alternatives, is correct.

[[Page 29518]]

Pretreating
According to the commenters, the primary issue with pretreating the
crude oil to meet Washington State's 9 psi vapor pressure limit is the
lack of the necessary infrastructure and equipment needed to pretreat
the crude adequately. NDPC and CLR allege the North Dakota oil and gas
industry does not have adequate infrastructure in place to pretreat
crude oil produced in the Williston Basin \29\ to the specifications
required by the Washington State law. NDPC estimates multiple stages of
costly separation equipment and tankage would need to be installed. API
further explains that currently, oil conditioning is done at the
wellsite to comply with the North Dakota Industrial Commission's
order,\30\ but the wellsite equipment cannot be used to reduce
consistently the vapor pressure of Bakken crude to meet Washington
State's 9 psi limit. Therefore, API asserts this would require the
processing of the oil in a ``fractionator,'' equipment that it says is
not economical to install at every wellsite. Instead, producers would
have to redirect the crude oil to newly constructed facilities for
processing. According to API, these facilities would essentially be
small scale refineries that would need to be located at several points
throughout the producing basin. This of course, as noted by the
commenters here, will also result in increased handling, and additional
transit time and miles traveled, collectively amounting to increased
safety risks.
---------------------------------------------------------------------------

\29\ The Williston Basin is a large ``intracratonic sedimentary
basin'' in eastern Montana, western North Dakota, South Dakota, and
southern Saskatchewan, that is known for its rich deposits of
petroleum and potash. The geological basin underlies the oil
producing region known as the Bakken.
\30\ The North Dakota Industrial Commission Order sets forth
operating standards guiding the use of conditioning equipment to
separate production fluids into gas and liquid components. The
standard requires North Dakota operators to condition Bakken crude
oil to a vapor pressure of no more than 13.7 psi. The Order is
discussed in more detail in Section VI.
---------------------------------------------------------------------------

In light of the infrastructure, equipment, and other logistical
issues, the commenters have concluded that pretreating is economically
infeasible or unrealistic. According to the Governor of North Dakota,
the infrastructure necessary to comply with the vapor pressure law
would add hundreds of millions of dollars to the cost of conditioning
and transporting. CLR, Crestwood, Hess, AFPM, API, and others all agree
the various costs that producers would likely incur in order to comply
with the Washington State vapor pressure limit make pretreating cost-
prohibitive and simply not feasible.
Another significant issue the commenters raise is the fact that
pretreating will result in a surplus of light-end materials separated
during the pretreatment process. These higher vapor pressure hazardous
materials, such as butane, ethane, and other natural gases, are deemed
essential and valuable components of Bakken crude, or as standalone
commodities. As such, the commenters explain that these components will
likely still need to be transported to Washington State via rail or
other available modes. For example, Crestwood predicts an unintended
consequence of the law whereby trains departing North Dakota for
Washington State will likely include more tank cars filled with a
greater variety of hazardous materials due to pretreating. API echoes
this sentiment, adding that more shipments will increase the total time
in transit and quantity of miles traveled, all of which translates to
an increased risk of a transportation incident.
Ultimately, the commenters agree that the additional pretreating
requirements would create vast complexities and additional operational
requirements that would greatly increase costs, lower efficiency, harm
the environment, increase transportation, and reduce safety.
Alternate Modes of Transportation; Rerouting
WIRA, NDPC, and AFPM claim that alternatives to transporting North
Dakota crude-by-rail, including transportation via pipeline, truck, or
waterway, are simply not feasible. CLR states that utilizing alternate
modes, or rerouting and potentially avoiding Washington State
altogether, will run afoul of the purpose and thrust of the HMTA. WIRA
also notes that using other modes or rerouting \31\ will likely impact
neighboring jurisdictions.
---------------------------------------------------------------------------

\31\ Commenters discussing the ``rerouting'' compliance option
indicate it has many of the same issues already identified with
respect to the alternate mode option, e.g., increased handling,
additional miles traveled, longer transit times, and unnecessary
delays.
---------------------------------------------------------------------------

Several commenters point out that all modes of transporting crude
oil are not equal. API commented that the oil industry chose rail
transport, and developed the infrastructure to support it, because it
is the most efficient and cost effective means to transport Bakken
crude oil safely from North Dakota and Montana to refineries in
Washington State. Other modes are commercially infeasible and would
increase complexity and safety concerns. For example, API and RSI-CTC
estimate that diverting rail shipments to highway would result in a
staggering number of trucks having to replace the current capacity of
crude oil transported via rail. According to RSI-CTC, it would take
three motor vehicle cargo tanks to transport the same amount of product
from one rail tank car. In turn, this will necessarily increase the
amount of hazmat shipments on the highway and create a greater
potential for harm to persons, property, and the environment. According
to API, switching to marine vessel is even worse, necessitating a
circuitous trip through the Panama Canal and adding thousands of miles
to the transportation journey.
These commenters are all in agreement on this point--whether by
increasing the distance transported, the number of hazardous materials
that will need to be transported, the number of loading and unloading
events, the environmental impact of the underlying operations, or by
causing unnecessary delays--the law presents increased risks and is an
obstacle to accomplishing and carrying out the Federal hazmat law.
Sandia Study and Conclusions
Commenters contend the Washington State law is misguided because
its purported safety justification for mandating a vapor pressure limit
for Bakken crude is not supported by science. The commenters point to
the Sandia Study \32\ and its recently reported findings and
conclusions. DGAC, WIRA, NDPC, Marathon, Hess, AFPM, and others,
contend that the results of the Sandia Study are conclusive, finding
that vapor pressure is not a statistically significant factor in
affecting pool fire and fireball characteristics. Crestwood interprets
the findings to mean that Bakken crude with higher vapor pressure is
not more unstable than crudes with lower vapor pressures. Hess notes
the Sandia Study ultimately concluded that all the oil samples studied
have comparable thermal hazard distances and none of the oils studied
indicate outlier behavior. These commenters collectively assert that
the advancement of rail safety is simply not furthered by requiring the
alteration of a material's vapor pressure.
---------------------------------------------------------------------------

\32\ DOT and the U.S. Department of Energy commissioned Sandia
Laboratories to conduct an extensive review and analysis of crude
oil, focusing on its chemical and physical properties, and its
potential for ignition, combustion, and explosion. The Sandia Study
is discussed in more detail in Section VI.
---------------------------------------------------------------------------

Moreover, the commenters claim the Sandia Study does not support
creating a distinction for crude oils based on vapor pressure with
regard to

[[Page 29519]]

combustion events. According to WIRA, the recently completed study
shows that regulating according to vapor pressure distinctions results
in no measurable benefits in terms of transportation safety as compared
to what is already covered under the existing Federal regulations,
which are designed to ensure safe national transportation standards.
NDPC believes that once packaged properly, vapor pressure levels have
no additional impact on the safety effectiveness during the shipment of
Bakken crude oil by rail tank car.
AFPM also avers that vapor pressure of petroleum crude oil in
transportation has no impact on the frequency of derailments.
Furthermore, although API recognizes the existence of genuine concerns
generated by recent high profile rail incidents, it states that the
science, lessons learned, and investigations of those incidents have
failed to reveal any casual connection between the vapor pressure of
the product and the outcomes of the incidents.
RSI-CTC acknowledges that to date, PHMSA has not determined that it
is appropriate to establish a vapor pressure standard for crude oil.
Furthermore, Hess suggests there are other recent studies that support
the Sandia Study's finding that characteristics of Bakken crude oil are
similar to other crude oils. Accordingly, Hess recommends that PHMSA
defer to those studies for accurate analytic information regarding the
safety characteristics of Bakken crude oil. NDPC suggests the Sandia
Study settles any lingering uncertainties--that is, vapor pressure does
not need to be regulated, whether through a rulemaking by PHMSA or
legislation from the State of Washington, in order to secure the safe
transportation of the subject commodity via the nation's rail network.

B. Comments Opposing Preemption

The Description, Classification, and Handling of Hazardous Materials
The AG of Washington and Earthjustice commented on the Applicants'
arguments regarding classification and handling. Their comments on
these topics were essentially the same.
Classification
The commenters attempt to refute the Applicants' argument that the
law effectively reclassifies petroleum crude oil with a vapor pressure
greater than 9 psi. This assertion is simply not true according to the
AG of Washington. He asserts that the law has no impact on the Federal
crude oil classification requirements. Furthermore, the AG of
Washington contends that under the Washington State law's requirements,
crude oil shipped to Washington State facilities will continue to be
classified as a Class 3 hazardous material in accordance with the HMR.
In addition, he argues that all other requirements (packaging, marking,
labeling, and shipping papers) will remain unchanged.
Handling
The commenters opposing preemption contend that the vapor pressure
limit is not ``handling'' subject to preemption because it only impacts
unloading activities at facilities after transportation had ended.
According to the AG of Washington, the Washington State Department of
Ecology (WADOE) is purportedly familiar with the facilities' unloading
protocols. He describes a practice whereby facility personnel unload
crude-by-rail shipments after the rail carrier delivers the tank cars
and departs. After the facility unloads the crude oil, the rail carrier
returns and retrieves the empty tank cars. Earthjustice's description
of the unloading practices at Washington State facilities is the same.
Here, the descriptions provided by the commenters are noteworthy
because they purport to depict unloading operations that appear to be
outside the scope of the HMTA.
The Three Avenues of Compliance
The AG of Washington and Earthjustice challenge the Applicants'
arguments regarding the three purported avenues of compliance.
Regarding pretreatment, the AG of Washington accuses the Applicants of
overgeneralizing and impermissibly speculating when they suggest that
all Washington State-bound crude oil will need to undergo cost-
prohibitive offsite pretreatment. According to the AG of Washington,
and supported by Earthjustice's comments, the average vapor pressure of
Bakken crude is 11.81 psi. Moreover, he references a research study
that suggests some Bakken wellheads will produce crude oil that already
satisfies the 9 psi limit. Meaning, compliance can likely be achieved
by conditioning the oil, which is relatively cheap. Earthjustice adds
that oil producers are already performing some oil conditioning.
Earthjustice also notes that at least one North Dakota pipeline
operator will not accept crude oil with a vapor pressure greater than 9
psi for transportation.
Pretreating
The AG of Washington claims the Applicants' pretreatment argument
rests on a double standard, considering the fact that North Dakota has
already established its own vapor pressure limit through the North
Dakota Industrial Commission (NDIC) order. He asks, if North Dakota can
impose a vapor pressure limit, then why can't the State of Washington
do the same? If North Dakota's limit is consistent with the HMTA, then
why does Washington State's limit pose an obstacle?
Alternate Modes of Transportation
The AG of Washington and Earthjustice assert that the Applicants,
beyond mere speculation, have not provided any evidence to support
their position that a shift in the mode of transportation would have
implications for crude oil transit time, distance traveled, number of
transloading events, accident rates, and other factors that impact the
safe transportation of hazardous materials. On this point, the
commenters insist that a vague allusion to implications is not
sufficient evidence.
Rerouting
The AG of Washington and Earthjustice dismiss the Applicants'
argument that rerouting will create unnecessary delay in the
transportation of hazardous materials. The AG of Washington contends
that this argument fails because Washington State's law will have no
impact on transit time because it addresses loading and unloading at
Washington State facilities; it does not regulate the movement of crude
oil in any other way.
Regulates Facilities, not Transportation
Generally, it is the position of commenters opposing preemption
that the Washington State law only regulates activities performed at
in-state facilities. According to the AG of Washington and
Earthjustice, the law does not impose any requirements on rail carriers
and it will have no direct impact on the Applicants. Specifically,
regarding the vapor pressure requirement, Earthjustice claims it will
have no direct impact on rail carriers and that it expressly does not
prohibit a railroad car carrying crude oil from entering the State; nor
does it require the trains to stop or be checked for vapor pressure
before entering the State. Similarly, as with the vapor pressure limit,
the commenters contend that the ANT requirement's compliance burden
falls entirely on Washington State facilities. Thus, shippers and
carriers do not submit ANT data and the Applicants, or any

[[Page 29520]]

other States, do not have new duties under the law. Moreover, the AG of
Washington indicated that a version of the ANT requirement has already
been in effect in the State since 2015, and points out that neither
North Dakota nor Montana challenged the law when it was originally
enacted.
The commenters contend that the Applicants' claim that the vapor
pressure limit's explicit purpose is to regulate the handling of
hazardous materials during transportation by imposing volatility
limits, is false. The AG of Washington and Earthjustice assert that the
vapor pressure limit is not ``handling'' subject to preemption because
it only impacts unloading activities at facilities after transportation
had ended. As they explain it, the unloading practices at Washington
State refineries exhibit something along the following: Facility
personnel unload crude-by-rail shipments after the rail carrier
delivers the tank car and departs. After the facility unloads the crude
oil, the rail carrier returns and retrieves the empty tank cars.
Regulatory Gap
The AG of Washington, Earthjustice, and individual commenters
defend the law by claiming its vapor pressure limit addresses a
regulatory gap in the Federal law and regulations governing the
transportation of crude-by-rail. Earthjustice states that despite a
number of well-documented oil train crashes and derailments, there is
no Federal regulations limiting the volatility of crude oil shipped in
railroad tank cars. Individual commenters agree, and characterize the
perceived regulatory gap as PHMSA's failure to protect communities.
The AG of Washington alleges the Federal government has undertaken
no serious effort to regulate vapor pressure. Furthermore, Earthjustice
contends that PHMSA has failed to set a nationwide volatility standard,
even though it has received a petition for rulemaking requesting that
it set one.
The AG of Washington and Earthjustice explain that the State of
North Dakota stepped in to address the regulatory gap in 2015, with the
NDIC Order setting a vapor pressure limit of 13.7 psi to allegedly
improve the safety of Bakken crude oil for transport. But according to
the AG of Washington, the State of North Dakota's vapor pressure limit
is insufficient to protect public safety because the threshold is too
high and enforcement is lenient. Notwithstanding, the AG of Washington
asserts that his State is under no obligation to honor the State of
North Dakota's standard. And, since there is no national standard, the
commenters reason that Washington State is free to establish its own
vapor pressure limit to fill a regulatory vacuum.
ANT Requirement
The AG of Washington asserts the ANT requirement improves local
emergency preparedness and therefore poses no obstacle to the HMTA.
According to the AG of Washington, the law applies only to Washington
State facilities that unload crude-by-rail shipments, and as such, rail
carriers do not have duties under the law. Also, the AG of Washington
states that the law does not conflict with the High-Hazard Flammable
Train (HHFT) notification rules,\33\ nor will it cause confusion among
Washington State's emergency responders because responders will still
rely on the material's emergency response information contained in the
shipping papers. Finally, the AG of Washington argues the law does not
regulate a pre-transportation function as alleged by the Applicants
because it does not apply to shippers or carriers.
---------------------------------------------------------------------------

\33\ The HHFT notification rules specify that HHFT information
sharing notification must include: (1) A reasonable estimate of the
number of HHFTs that the railroad expects to operate each week,
through each county within the State or through each tribal
jurisdiction; the routes over which the HHFTs will operate; (2) a
description of the hazardous material being transported and all
applicable emergency response information required by subparts C and
G of part 172; (3) at least one point of contact at the railroad
with knowledge of the railroad's transportation of affected trains;
and (4) if the route is subject to oil spill response plan
requirements, the notification must include a description of the
response zones and contact information for the qualified individual
and alternate. Railroads are required to update the notifications
for changes in volume greater than twenty-five percent. See 49 CFR
174.312.
---------------------------------------------------------------------------

Earthjustice also attempts to refute the Applicants' case for
preemption of the Washington State law. Earthjustice contends the law
only applies to Washington State facilities, not railroads.
Earthjustice argues that since there is no corresponding Federal ANT
requirement, and Washington State's law does not apply to shippers or
carriers, it cannot possibly pose an obstacle. As for the Applicants'
objection to the ANT requirement based on the theory it will be
confusing to first responders, Earthjustice counters with the
supposition that emergency responders should have the best and most
complete information.

C. Rebuttal Comments

Opposing Preemption
The AG of Washington filed rebuttal comments. Also, the Attorneys
General of New York, California, Maryland, and New Jersey (AG Alliance
against Preemption) jointly filed their rebuttal comments.
The AG of Washington asserts that the Applicants lack authority to
seek a preemption determination because they are not ``directly
affected'' by the challenged laws. According to the AG of Washington,
the question of standing is a threshold issue and he points out that
none of the commenters supporting preemption, nor the Applicants, have
adequately demonstrated that North Dakota and Montana satisfy this
requirement. Furthermore, he cautions PHMSA that the agency has no
discretion to disregard the standing question and that it risks
judicial review if it proceeds despite the Applicants' lack of
standing. Here, the AG of Washington reiterates his initial comment on
this issue, e.g., that the Applicants are not directly affected because
(1) the vapor pressure limit has not yet taken effect; (2) the
potential impact to the Applicants' tax revenue is unduly speculative;
and (3) a tax revenue impact is a classic indirect impact. For these
reasons, the AG of Washington continues to assert that Washington
State's vapor pressure limit has no direct impact on any opposing
State's sovereign interests.
The AG of Washington also argues that PHMSA must separately
determine that the Applicants have standing to challenge the law's ANT
requirement, claiming the Applicants made no connection between their
respective sovereign interests and the ANT requirement. The AG of
Washington submits that should PHMSA find the ANT requirement--alleged
to be an entirely local safety measure--directly affects another
State's sovereign interests, the agency will have rendered the standing
requirement toothless. Notwithstanding the above standing question, it
is the AG of Washington's position that the vapor pressure and ANT
requirements are legitimate exercises of State authority that will
improve public safety given the extreme risks of crude-by-rail
transportation.
The AG of Washington further asserts the vapor pressure law is not
an obstacle under the HMTA because it does not regulate the
transportation of crude oil and is therefore not subject to preemption
under the HMTA. Moreover, the AG of Washington argues that the law
cannot be preempted under the HMTA's ``substantively the same'' test
with respect to handling (loading and unloading) or classification,
because the vapor pressure law regulates loading and unloading
functions at facilities, after the crude oil has been delivered and
transportation has ended. Regarding classification, the

[[Page 29521]]

AG of Washington points out--contrary to the claims made by commenters
in support of preemption that the law creates a new classification of
crude oil based on vapor pressure--the law has no impact on the Federal
classification requirements for crude oil. Crude oil shipped to
Washington State refineries will still be classified as a Class 3
hazardous material in accordance with the HMR.
The AG of Washington also highlights the willingness of certain
commenters to challenge Washington's vapor pressure law, while
apparently not objecting to the State of North Dakota's vapor pressure
limit. The AG of Washington believes both laws are valid exercises of
State authority given the absence of Federal action on the subject.
Furthermore, he suggests that a decision by PHMSA preempting Washington
State's law would not only suppress innovation that would result from
efforts to comply with Washington State's law, but also reward the
State of North Dakota for winning a regulatory ``race to the bottom''
with its comparatively weak vapor pressure limit that seems to be
regarded as the de facto national standard.
Also, the AG of Washington attempts to refute commenters' arguments
that the Sandia Study disproved a link between vapor pressure and rail
safety by noting the Sandia Study's pool fire and fireball experiments
did not adequately consider ignition potential, which the AG of
Washington says his State's vapor pressure limit is intended to
address.
Finally, the AG of Washington contends the State's ANT requirement
is not preempted because it is a local emergency preparedness measure
that applies only to Washington State facilities. Furthermore, the AG
of Washington dismisses claims that the requirement will create
confusion for shippers and carriers, or that the ANT measures will
result in additional requirements for hazmat shipping papers. According
to the AG of Washington, local facilities have already been providing
advance notice of crude oil shipments since 2015, without any major
technical difficulties or confusion; and the new requirement will have
no impact on shipping papers nor impose any additional compliance
obligations on shippers and carriers.
The AG Alliance against Preemption filed its joint comments to
respond primarily to the comments filed by the AG Alliance for
Preemption, led by Oklahoma. The AG Alliance against Preemption
supports the Washington State law and believes that in the face of
PHMSA's failure to adopt a Federal vapor pressure standard, it is
entirely appropriate for States to take reasonable and necessary
measures to protect communities, first responders, businesses, and
natural resources within their respective borders.
The AG Alliance against Preemption, with regard to vapor pressure,
indicates that despite Federal mandates, a petition for rulemaking, and
PHMSA's publication of an Advanced Notice of Proposed Rulemaking on the
petition, the agency has failed to close an ``existing regulatory
loophole'' by either finalizing a vapor pressure rule or establishing
an interim protective vapor pressure standard. In fact, the AG Alliance
against Preemption asserts that rather than close the regulatory
loophole, the Federal government's efforts have either lagged or
actively moved to roll back critical safety protections for high-hazard
flammable unit trains that transport crude oil across the country. For
example, the AG Alliance against Preemption notes the Sandia Study is
more than two years behind schedule; and it criticizes the August 2019
report as a ``limited experiment'' that does not inspire confidence in
the project's planning, sampling, or analytical methods, or the
report's conclusions. Moreover, the AG Alliance against Preemption
asserts that the Department's recent regulatory reform actions will
increase the likelihood, and dangerous consequences, of oil train
accidents and derailments. Here, the AG Alliance against Preemption
points to the recent withdrawal by the Federal Railroad Administration
(FRA) of the 2-person crew ANPRM, and PHMSA's and FRA's decision not to
include an electronically controlled pneumatic brakes requirement in
the HHFT final rule.
According to the AG Alliance against Preemption, these regulatory
failures coupled with known market failures in the rail sector that
prevent or discourage actions to improve the safety of transporting
crude oil by rail, has created the situation today where States are
filling this regulatory void by adopting their own protective vapor
pressure standards.
Supporting Preemption
The Applicants submitted their rebuttal to comments filed in
opposition to their petition. In addition, API and AFRM each filed
rebuttal comments.
The Applicants assert they have standing to bring this petition and
characterize the AG of Washington's interpretation of the requirement
as overly narrow and also contradictory of the agency's long-standing
precedent of interpreting the standing requirement broadly. The
Applicants claim that they will suffer several direct effects,
including specific reductions in oil and gas severance tax revenue, and
reductions in royalties received from producers, as the rightful
landowners underlying oil and gas leases. In addition, they say both
States will confront real and decidedly non-speculative safety,
environmental, and economic effects associated with the additional pre-
treatment requirements for Bakken crude oil or with the need to
identify alternative modes and routes of transportation in order to
comply with the law.
According to the Applicants, the State of North Dakota imposes an
oil and gas severance tax. The State of North Dakota relies upon the
resulting tax revenue to support its education system, its drinking
water infrastructure development, and more. The Applicants contend that
pretreatment of oil will devalue the product and alternative markets
will yield lower returns and therefore generate lower tax revenues.
Moreover, the Applicants state they are land grant States, meaning each
State itself is the landowner for several oil and gas leases throughout
the Bakken region, generating direct royalties from oil and gas
extraction operations occurring on State-owned land. As such, they
contend the Washington State law will directly affect their royalty
revenue.\34\
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\34\ North Dakota estimates that it will lose an average of
approximately $32,000 per day from July 1, 2019-June 30, 2020 (i.e.,
through the end of the current fiscal year) and an average of
approximately $36,000 per day thereafter through July 1, 2031, in
lost oil and gas severance tax revenue as a result of the Washington
Law (based on the market rate for Bakken crude oil in July 2019).
See Docket No.: PHMSA-2019-0149; Document No.: 4397; at https://www.regulations.gov/document?D=PHMSA-2019-0149-4397.
---------------------------------------------------------------------------

Also, the Applicants say they will face multiple consequences
associated with the construction of new infrastructure to meet
Washington State requirements (pretreatment facilities and access
roads), including environmental and safety consequences associated with
the additional handling and movement of hazmat related to pretreatment.
Regarding the Applicants' standing for the notification
requirement, they both argue that it is not appropriate for PHMSA to
sever the ANT and vapor pressure requirements for the requisite
preemption analysis--as suggested by the AG of Washington--because the
ANT requirement enables the State to enforce its vapor pressure limit
and accordingly, it must be examined in the context of the prescribed
the limit.

[[Page 29522]]

API suggests the facts presented by the Applicants convincingly
support a finding that the States of North Dakota and Montana are
directly affected by the Washington State law. For example, API argues
that certain changes required to pretreat Bakken crude oil to satisfy
Washington State's vapor pressure limit will naturally impact the
Applicants' energy economy and underlying infrastructure, and further,
that it will increase handling and transportation of hazardous
materials resulting in increased safety risks within both States. API
also notes that the inability to treat Bakken crude oil to comply with
State of Washington's vapor pressure limit will inevitably result in
lower commodity values or lost sales, corresponding to lost tax and
royalty revenue for the Applicants. Moreover, API contends that
additional facts showing the Applicants are directly affected include
the comments submitted in this proceeding by Washington State
refineries that attempt to refute the AG of Washington's claims that
the law has no immediate or substantial effects or impacts on North
Dakota and Montana companies that develop, produce, condition, and
transport Bakken crude.
AFPM states the AG of Washington's argument that the Applicants'
tax and revenue will not be reduced because Washington State refineries
will simply turn to other sources of crude oil demonstrates a
fundamental misunderstanding of the global petroleum market. According
to AFPM, the options for Bakken crude oil producers and suppliers to
market their crude oil are reduced as a result of the Washington State
law. AFPM explains that due to the shortage of pipeline infrastructure,
the majority of Bakken crude oil is transported by rail. AFPM suggests
that should Washington State refineries stop receiving Bakken crude
oil, it would likely still move by rail, but potentially at longer
distances and at higher costs. This would reduce the value of the crude
oil and therefore directly reduce the Applicants' State tax and royalty
revenue. AFPM asserts that this outcome will have an immediate and
harmful effect on the Applicants' interests, which stands in direct
contradiction of the AG of Washington's assertion that the law will
have no real-world effect.
AFPM informs PHMSA that as the leading trade association
representing the refinery industry, it has standing to seek a
preemption determination since its members are directly affected by
Washington State's law. In fact, several AFPM members have filed
comments in this proceeding explaining how they are directly affected.
Therefore, in the event the agency has concerns with the Applicants'
standing, AFPM requests that the agency treat its comments in this
proceeding as a separate application for a preemption determination on
the Washington State law.
The Applicants attempt to refute the AG of Washington's contention
that they have failed to provide sufficient evidence to support their
petition. They argue the HMTA does not limit PHMSA's preemption
consideration to the information presented in the original petition and
that the administrative record is sufficient based on the contents of
their application and the other relevant information received from
other commenters' submissions.
Moreover, the Applicants note that commenters opposing preemption
claim the law only regulates unloading of crude oil at facilities as
opposed to handling of crude oil--and thus, is beyond the scope of the
Federal law and regulations. However, the Applicants state that the
vapor pressure limit is equally applicable to loading facilities in
North Dakota and Montana, which is inherently a regulated function
under the HMR. Furthermore, the Applicants point out that ``unloading
incident to movement'' is an activity regulated by the HMR when
performed by carrier personnel or in the presence of carrier personnel.
As such, the Applicants assert that the Washington State law involves
transportation regardless of whether a carrier is present and
therefore, the challenged law seeks to regulate activities that include
``loading incident to movement,'' a regulated function falling within
the scope of the HMR.
API asserts that the AG of Washington misstates the purpose and
nature of its vapor pressure law by stating that it applies only to
unloading activities at facilities located in Washington State, even
though elsewhere in its comments the AG of Washington admits that the
law was enacted to address the threats posed by crude-by-rail
transportation. API notes that other commenters have conceded that the
law targets the transportation of Bakken crude-by-rail and not the
unloading of the material at facilities. API opines that the law's
vapor pressure limit and prohibitions on unloading at facilities will
severely curtail or eliminate rail transport of untreated Bakken crude
into the State of Washington. As such, API states that PHMSA should
reject Washington State's insincere and pretextual focus on
``unloading'' and preempt the law because, by its nature and purpose,
it seeks to regulate transportation in a manner that is not
substantively the same as, and that poses obstacles to the
accomplishment of, the HMTA.
API claims the AG of Washington falsely asserts that the law has
not taken effect and that its penalties do not affect rail
transportation. According to API, the law's volume restriction for
existing facilities currently applies to 2019 volumes. As such,
facilities cannot ignore this cap simply because, once triggered, the
total ban on further shipments and potential associated penalties do
not take effect for two years. For example, API notes that at least one
refinery has commented that it has already drastically reduced
scheduled shipments to avoid exceeding the law's volume cap.
The Applicants argue the Washington State law fails the obstacle
test because the State's self-styled three avenues of compliance
actually increase the risk of an incident during transportation; cause
unwarranted delay; and increase transit times. Here, the Applicants
reiterate a primary argument they raised in their petition; that is,
that there are only three avenues for compliance: Pretreatment; seek
alternative modes of transportation; or redirect the crude oil to
facilities located outside of Washington State. Regarding pretreatment,
the Applicants note that multiple commenters have reinforced their
arguments that pretreatment is cost prohibitive and existing
conditioning infrastructure is insufficient to achieve Washington
State's 9 psi vapor pressure limit. Furthermore, the Applicants state
that pretreatment increases the inherent risk of an incident in
transportation because the law ultimately requires additional handling
and movement. The AG of Washington argues that the Applicants have
failed to provide evidence of the anticipated increase in miles
traveled due to pretreatment, re-routing, or modal shift. But the
Applicants insist that the administrative record contains ample
evidence that these activities will result in an increase of total
miles traveled for hazardous materials.
The Applicants and AFPM attempt to refute the AG of Washington's
argument that under Washington State's law, crude oil will still be
classified as a ``Class 3 Flammable liquid,'' just as it is classified
under the HMR. According to the Applicants and AFPM, the Washington
State law creates two classes of crude oil, one with vapor pressure
below 9 psi and one with vapor pressure above 9 psi. The Applicants and
AFPM contend this new classification essentially forbids the
transportation of crude oil by rail because of the law's handling
(loading and unloading) restrictions.

[[Page 29523]]

AFPM states that any argument asserting the Washington State law is
beyond the scope of the Federal hazmat law because it only regulates
unloading at facilities after transportation has ended,
mischaracterizes the purposes of the Washington State law. AFPM notes
that commenters, in defense of the Washington State law, have conceded
its intent is to regulate and address potential safety issues
associated with the transport of Bakken crude by rail, not the
unloading of the petroleum products at the facilities to which they are
shipped. AFPM points out the Washington State law does not address
areas typically reserved to local police powers, such as worker safety,
public health, and environmental safety. As such, AFPM contends that
the law impacts transportation and is not just confined to unloading
operations. Thus, AFPM has concluded the Washington State law starts
regulating from the time Bakken crude, destined for Washington State
facilities, is loaded onto rail cars in North Dakota and Montana.
Notwithstanding, AFPM also notes that the Federal hazmat law and
regulations include pre-transportation and transportation-related
functions, including unloading operations.
The Applicants assert that the Washington State law is an obstacle
to carrying out the purpose of the HMTA and does not enhance safety or
fill a regulatory gap. The Applicants further contend that the Sandia
Study Report underscores the conclusion that Washington's law is
preempted and does not enhance safety. The Applicants believe the
Sandia study is important for the following reasons: (1) It was
commissioned by Federal agencies and conducted by a respected national
laboratory; (2) it demonstrates in practical terms that a vapor
pressure limit is within the province of a national inquiry and should
therefore be left to determinations at the Federal level; and (3) it
debunks the Washington State law's purported purpose of imposing a
vapor pressure limit to improve public safety in the event of a crude-
by-rail derailment. Simply stated, the Applicants conclude that the
science does not support the assumption that regulating vapor pressure
will mitigate the consequences of a derailment. The Applicants note
that commenters supportive of the law rely on the findings from a 2014
DOT enforcement effort, rather than the latest comprehensive and
scientific research study undertaken by Sandia National Laboratories.
The Applicants highlight the fact that the report concluded that vapor
pressure is not a statistically significant factor in affecting pool
fire and fireball burn characteristics. The applicants contend that the
results of the study do not support a basis for creating a distinction
among crude oils based on vapor pressure.
AFPM alleges that the AG of Washington's safety rationale for the
Washington State law is not supported by science as evidenced by the
Sandia Study and the recently completed Task 3 report. AFPM notes the
commenters against preemption have failed to rebut the extensive
scientific research that is included in this proceeding's
administrative record. AFPM rejects the AG of Washington's argument
that the Sandia Study is irrelevant because it allegedly does not
examine the relationship between higher vapor pressure and ignition.
AFPM points out that the Sandia Study concluded that ignition potential
cannot be identified by a single index, and that vapor pressure is not
a statistically significant factor in affecting the degree of thermal
hazardous outcomes incident to a derailment scenario; and accordingly,
there is no scientific basis for making regulatory distinctions based
on vapor pressure levels. To the contrary, AFPM states that derailments
typically produce ignition sources such as sparks from metal-on-metal
stresses. The vapor pressure of a flammable liquid has no bearing on
the likelihood of ignition or the frequency of derailment in these
circumstances. Therefore, it is AFPM's position that Washington State
and its supporters' heightened concerns about high vapor pressure
ignition potential in a derailment scenario is entirely misplaced. AFPM
dismisses the notion that any further research on Bakken crude oil
vapor pressure is necessary given the comprehensive research and
results contained in the Sandia Study.
AFPM notes that Earthjustice relies on data from the Department's
initial examination of the crude-by-rail transportation system to
support the proposition that Bakken crude oil is uniquely dangerous.
However, AFPM points out that DOT's earlier approach was driven by a
lack of understanding, research and analysis, and that these
limitations are now overcome by virtue of the Sandia Study,
representing the most comprehensive and definitive scientific research
on this issue. AFPM reiterates its contention that there is no
regulatory gap here as alleged by the AG of Washington and other
commenters. Rather, AFPM believes the Department has taken a measured
and thorough approach in considering whether to regulate vapor pressure
and as such, the Sandia Study effectively completes Federal research on
this topic, and accordingly, the agency can now conclude that no
additional regulation on vapor pressure limits is warranted.

VI. Discussion

A. The Applicants' Standing To Apply for a Preemption Determination

The AG of Washington and other commenters opposing the application
assert the Applicants lack standing to challenge Washington State's
vapor pressure requirements. The AG of Washington, Earthjustice, and
other commenters believe the Applicants have not shown they are
directly affected by the challenged law, as required by the HMTA.
According to the AG of Washington, the Applicants do not have
standing because the vapor pressure limit has not yet taken effect; the
potential impact to the Applicants' tax revenue is unduly speculative;
and a decrease in tax revenue is a classic ``indirect'' impact.
Furthermore, the AG of Washington argues that irrespective of the
Applicants' standing with respect to the requirement to set a vapor
pressure limit, the agency must make a separate determination regarding
the Applicants' eligibility to bring a challenge against the ANT
requirement, and he claims the Applicants make no connection between
their sovereign interests and that requirement.
The Applicants assert they have standing to bring this petition and
characterize the AG of Washington's interpretation of the HMTA's
standing requirement as overly narrow, stating that this view
contradicts the agency's long-standing precedent of interpreting the
standing requirement broadly. Furthermore, the Applicants, as
landowners, contend they will suffer several direct effects including
specific reductions in oil and gas severance tax revenue, and
reductions in royalties received from oil producers. The Applicants
explain that North Dakota and Montana are land grant States, meaning
the States themselves are the landowners for several oil and gas leases
throughout the Bakken region. Accordingly, they say each State receives
direct royalties from oil and gas extractions occurring on State-owned
land.
In addition, the Applicants assert that both States will confront
real and ``decidedly'' non-speculative safety, environmental, and
economic effects due to the State of Washington's requirements.
American Petroleum Institute (API) and the American Fuel &
Petrochemical Manufacturers (AFPM) agree that the Applicants have
standing. They contend that the Applicants'

[[Page 29524]]

submissions, as well as other comments filed in this proceeding,
sufficiently demonstrate how the Applicants are directly affected.\35\
API also notes the HMTA's preemption provision expressly grants States
their own right to seek a preemption determination by its explicit
reference to a ``State'' in the language authorizing who is eligible to
apply.
---------------------------------------------------------------------------

\35\ AFPM notes in its rebuttal comments that it is a leading
trade association representing the refinery industry and has
associational standing consistent with long-standing agency
precedent. Therefore, AFPM writes that in the event PHMSA has
concerns with the Applicants' standing, AFPM has requested that the
agency treat its comments in the proceeding as a separate
application for a preemption determination on the Washington State
law. See Docket No.: PHMSA-2019-0149; Document No.: 4395; at https://www.regulations.gov/document?D=PHMSA-2019-0149-4395. PHMSA agrees.
AFPM represents refineries that are regulated by Washington's law.
Even if the Applicants were not directly affected, AFPM would be,
and PHMSA could make a determination on that basis.
---------------------------------------------------------------------------

Section 5125(d) authorizes ``[a] person (including a State,
political subdivision of a State, or Indian tribe) directly affected by
a requirement of a State . . .'' to apply for a determination of
preemption. 49 U.S.C. 5125(d) (emphasis added). Under the ``directly
affected test,'' it must be determined whether the applicant will
benefit by having the issues in its petition resolved. See Illinois
Environmental Protection Agency's Uniform Hazardous Waste Manifest, 58
FR 11176, 11181 (Feb. 23, 1993). The agency has a long-standing
practice of liberally construing this threshold requirement. Generally,
the agency interprets the requirement broadly to advance the notion
that important preemption issues (such as national uniformity of
hazardous materials transportation regulation) are raised under the
HMTA, and all parties engaged in hazmat transportation will be served
by the agency addressing preemption issues. See PD-32(R), Maine
Department of Environmental Protection Requirements on Transportation
of Cathode Ray Tubes, 74 FR 46644, 46648 (Sept. 10, 2009), quoting from
PD-2(R) at 11181.
PHMSA has considered petitions from applicants who are affected by
non-Federal requirements in a variety of ways. We have said, for
example, that if a ``requirement applies to the applicant,'' the
applicant need not show that it ``is `adversely affected,' `aggrieved,'
or has suffered `injury' or `actual harm.' '' PD-12(R), New York
Department of Environmental Conservation; Requirements on the Transfer
and Storage of Hazardous Wastes Incidental to Transportation, 60 FR
62527, 62532 (Dec. 6, 1995), decision on reconsideration, 62 FR 15970
(April 3, 1997). We have also held that a group of hazardous waste
shippers could seek a determination with respect to a State law
mandating that hazardous waste generators create a certain type of
manifest. PD-2(R), 58 FR at 11182. And while enforcement issues, and
how the non-Federal requirement is actually applied, are relevant to
our preemption analysis under the obstacle test, these issues do not
factor into whether an applicant is within the scope of those persons
entitled to use the statute's administrative procedure for requesting a
preemption determination. Id.
The plain language of the statute presupposes a State as a
potential applicant. 49 U.S.C. 5125(d). Since a State will rarely if
ever actually be subject to another State's law, the inclusion of
States as applicants confirms that Congress used ``directly affected''
broadly. In this case, the only issue is whether the Applicants have
made a sufficient showing that they are ``directly affected'' by the
Washington State law. The Applicants have indicated they are land grant
States, and as such, are landowners for several oil and gas leases
throughout the Bakken region. According to the Applicants, North Dakota
and Montana each receives direct royalties from oil and gas extractions
occurring on State-owned land. In addition, the Applicants assert that
both States will confront real and ``decidedly'' non-speculative
safety, environmental, and economic effects due to the Washington State
requirements.
Based on information in the administrative record for this
proceeding, it has been established that a majority of all the crude
oil that leaves the Applicants' borders is destined for refineries in
Washington State. And, since the law purports to regulate the
volatility of crude oil transported into Washington State for loading
and unloading, it likely applies to crude oil shipments originating
from the Applicants' holdings in the Bakken region. As such, the
Applicants' quasi-sovereign interests over their natural resources are
tangible interests that are directly affected by the State of
Washington's law. Contrary to Washington's arguments, these effects are
not too indirect or speculative under PHMSA's broad interpretation of
``directly affected.'' PHMSA rejects Washington's contention that the
Applicants are not directly affected because the vapor pressure limit
has not yet gone into effect. This argument would deny standing to any
applicant at this time, and would require the Applicants to file a new
application at some point in the future; we do not believe that the
Federal hazardous materials transportation law requires PHMSA to delay
making a determination.
Moreover, regarding the ANT requirement, we do not accept the AG of
Washington's bifurcated interpretation of the standing requirement,
which would require us to make a separate determination of the
Applicants' eligibility to challenge this section of the Washington
State law. Here, the ANT requirement is an integral part of the overall
statutory scheme providing for the State's new requirements addressing
alleged safety concerns related to the transportation of crude oil by
rail within the State. As such, the Applicants are directly affected by
the entire legislative scheme, including the ANT requirement, and thus,
have demonstrated substantial interests in the outcome of this
proceeding to justify access to the administrative process.
In light of the above, the Applicants have provided sufficient
information and an adequate factual basis to establish they are
directly affected by Washington State's vapor pressure and ANT
requirements and, accordingly, are entitled to submit an application to
PHMSA.

B. Vapor Pressure

PHMSA finds that Washington State's vapor pressure limit is
preempted. The requirement concerns both the ``classification'' and
``handling'' of hazardous materials and is not ``substantively the
same'' as the Federal regulations, and is therefore preempted by 49
U.S.C. 5125(b)(1)(A). The requirement, moreover, is an obstacle to
accomplishing and carrying out the HMTA and the HMR, and is therefore
preempted by 49 U.S.C. 5125(a)(2).
Covered Subject Preemption--Classification
The Applicants contend that Washington State's vapor pressure
requirement designates a new class of crude oil based on its vapor
pressure and that the State's requirement is not substantively the same
as the HMR requirements for crude oil. PHMSA agrees.
Federal hazardous material transportation law preempts a non-
Federal requirement on the ``designation, description, and
classification'' of hazardous material that is not ``substantively the
same'' as the Federal rules. 49 U.S.C. 5125(b)(1)(A).
The current HMR requirements for the classification of unrefined
petroleum

[[Page 29525]]

based products include proper classification, determination of an
appropriate packing group, and selection of a proper shipping name and
description of the material. The HMR contain detailed rules that guide
an offeror through each of these steps in the classification process.
See generally, 49 CFR 172.101 (The Hazardous Materials Table), 173.2-
173.41; 173.120, 173.121, 173.150, 173.242, 173. 243, and part 174
(Railroads). However, there is not a Federal vapor pressure standard
for the classification of unrefined petroleum-based products, such as
crude oil. The Washington State law has set a State-wide vapor pressure
standard of 9 psi for unrefined petroleum-based products, such as crude
oil.
Washington State's attempt to set a vapor pressure limit for crude
oil constitutes a scheme for classifying hazardous materials that is
not substantively the same as the HMR. Indeed, as noted further below,
the Washington law is also squarely at odds with the agency's recent
declaration that regulation of vapor pressure is neither necessary nor
appropriate. The reasoning for this conclusion is more fully elaborated
below. The Washington AG and other commenters contend that Washington's
vapor pressure limit does not concern ``classification'' because it
does not change the Federal classifications of crude oil. But the
question under 49 U.S.C. 5125(b)(1)(A) is not whether a State law
changes the Federal classifications of hazardous materials, but whether
a State law imposes additional, different classifications. Washington's
vapor pressure limit does just that, by creating a new class of crude
oil that is subject to special requirements. The vapor pressure limit
is therefore preempted under 49 U.S.C. 5125(b)(1)(A).
Covered Subject Preemption--Handling
The Applicants also contend that by prohibiting facilities from
loading or unloading crude oil into or from a rail tank car unless the
oil has a vapor pressure of less than 9 psi, Washington has imposed a
handling requirement that is not substantively the same as the HMR
handling requirements for crude oil, and therefore is preempted. PHMSA
agrees.
Loading and unloading fall within the scope of ``handling,'' which
is a covered subject for purposes of the HMTA preemption analysis. 49
U.S.C. 5125(b)(1)(B). Under the ``substantively the same'' test, a non-
Federal requirement concerning a covered subject (i.e., handling), is
preempted when it is not substantively the same as a requirement in the
Federal hazmat law or regulation. 49 U.S.C. 5125(b)(1).
The Department has extensive regulations governing the handling of
Class 3 flammable liquids, including loading and unloading, during
transportation. See generally, 49 CFR 173.2-173.41, and part 174
(Railroads). However, there is no specific Federal prohibition on the
handling of crude oil with a vapor pressure greater than 9 psi.
Washington State's crude oil by rail vapor pressure law imposes a vapor
pressure requirement on the loading and unloading of crude oil where
the Federal law does not.
The AG of Washington asserts that the State's vapor pressure
requirement is not a handling regulation because it only regulates
unloading functions at Washington State facilities after the crude oil
has been delivered, transportation has ended, and the carrier has
departed. He argues that because such post-delivery unloading is
generally not regulated by the HMTA or HMR, the Washington law is not
subject to preemption. As explained further below, PHMSA disagrees, as
the AG of Washington does not accurately describe the Washington law,
and ignores the law's significant upstream effects.
PHMSA, in prior preemption determinations, has confirmed that
Federal hazardous material transportation law and the HMR apply to
hazardous materials that are in transportation in commerce, including
loading, unloading and storage that is incidental to that
transportation. See PD-9(R), California and Los Angeles County
Requirements Applicable to the Onsite Handling and Transportation of
Hazardous Materials, 60 FR 8774 (February 15, 1995), Decision on
Petitions for Reconsideration, 80 FR 70874 (November 16, 2015) (a time-
restriction for unloading tank cars was preempted because unloading
activities are ``handling,'' a covered subject); see also PD-12(R), New
York Department of Environmental Conservation; Requirements on the
Transfer and Storage of Hazardous Wastes Incidental to Transportation,
60 FR 62527 (December 6, 1995), Decision on Petition for
Reconsideration, 62 FR 15970 (April 3, 1997) (secondary containment
requirement for the transfer or storage of hazardous wastes at transfer
facilities preempted because it created confusion as to the
requirements in the HMR and increased the likelihood of non-compliance
with the HMR). Furthermore, the agency has determined that non-Federal
requirements that purport to regulate ``facilities'' are subject to
preemption when those requirements affect transportation-related
activities such as loading, unloading, and storage of hazmat. Id.
Since those decisions, PHMSA, through rulemaking, has clarified the
applicability of the HMR to specific functions and activities,
including hazardous materials loading and unloading operations. PHMSA,
in a rulemaking, defined ``pre-transportation function'' to mean a
function performed by any person that is required to ensure the safe
transportation of a hazardous material in commerce. See ``Applicability
of the Hazardous Materials Regulations to Loading, Unloading, and
Storage,'' HM-223, 68 FR 61906 (October 30, 2003); Response to Appeals,
70 FR 20018 (April 15, 2005).
Thus, loading functions fall within the scope of Federal
regulations when performed by any person, e.g., shipper or carrier,
transporting a hazardous material. Id. In addition, because carrier
possession of a hazardous material is a key aspect of the definition of
``transportation'' under the HMR, loading functions that are performed
by carrier personnel or by shipper personnel in the presence of the
carrier are still considered ``loading incidental to movement'' and
consequentially, are transportation functions. Id.
Regarding unloading, if carrier personnel are present during the
unloading of packaged hazardous materials from a transport vehicle or
the unloading of a bulk package, such as a cargo tank or a rail tank
car, into a storage tank or manufacturing process, then the operation
is considered ``unloading incidental to movement'' of the hazardous
material, and accordingly, is subject to regulation under the HMR. Id.
The State of Washington relies on the ``carrier possession''
distinction for determining the applicability of the HMR in defense of
its vapor pressure law. It argues that ``as a practical matter'' the
law only affects unloading activities at Washington facilities, that
the ``practice'' at Washington facilities is to unload oil only after
carrier personnel have departed, and that the law therefore only
regulates activities not subject to the HMR. PHMSA disagrees, for two
reasons. First, regardless of what Washington characterizes as standard
``practice,'' the Washington law on its face does not apply only to
unloading after a carrier departs. The law also applies to loading
within the State, and to unloading in the presence of carrier
personnel; as noted above, these activities are unquestionably covered
by the HMTA and HMR.

[[Page 29526]]

Second, even though the law is written to only regulate loading and
unloading at facilities in Washington, its practical effect is to
regulate pre-transportation activities outside of Washington, as well
as transportation itself. The administrative record and the facts
contained therein as presented by numerous commenters, belies
Washington State's claim that the scope of the vapor pressure
requirement is either narrow or local. For example, the Washington law
does not specify how a facility is to determine whether the oil it is
loading or unloading has a vapor pressure of less than 9 psi. As such,
it is likely that the vapor pressure of crude oil received by the
facilities will have to be provided by the shipper. This essentially
means that the crude oil would have to be sampled, tested, and treated
at the source of production before it is loaded onto rail cars, even
though there is no Federal requirement for either measuring vapor
pressure or pre-treatment. Moreover, there is no Federal requirement
for shippers of crude oil to communicate the material's vapor pressure
to carriers or consignees when it is offered for transportation. Any
conditioning of Bakken crude oil to a vapor pressure of less than 9 psi
is not a post-production process since the oil must be pretreated or
conditioned at the point of production and before loading, which
clearly is a pre-transportation function. Of greater significance is
the fact that the oil cannot be conditioned at Washington State
facilities before it is unloaded from the railcars.
In light of these facts, it is evident that upstream impacts are
inevitable at the point of origin in the transportation network--and
not downstream at the point of destination as the State of Washington
contends. The reach of the State's legislative activity inevitably
traces all the way back to the production activities to North Dakota
and Montana. As such, we must find that the law imposes a requirement
on shippers that was purposefully omitted from the current text of the
HMR. Washington's law affects the handling and transportation of crude
oil because the oil producers cannot load crude-by-rail destined for
Washington State refineries unless it has a vapor pressure of not
greater than 9 psi, and that requirement can only be satisfied at the
point of production before the material is placed into the
transportation network. It is also noteworthy that there currently is
no Federal requirement for shippers of crude oil to communicate a Class
3 material's vapor pressure to carriers or consignees downstream when
it is offered for transportation.
Simply stated, before Washington State enacted this law, there were
no special restrictions on the transportation of crude oil with a vapor
pressure greater than 9 psi. However, after the law, handling,
including loading and unloading, of crude-by-rail is directly affected,
and potentially banned altogether unless it meets Washington State's
vapor pressure requirement. Therefore, Washington State's vapor
pressure limit is a transportation handling requirement that is not
substantively the same as the Federal requirements covering the same
subject. Moreover, in light of the agency's withdrawal of the ANPRM,
the Department has taken specific action to not require vapor pressure
limits. Accordingly, the Washington law cannot stand and is therefore
preempted under 49 U.S.C. 5125(b)(1)(B).
Obstacle Preemption
The Applicants contend that Washington's vapor pressure requirement
is an obstacle to accomplishing and carrying out the HMTA and the HMR,
and is therefore preempted under 49 U.S.C. 5125(a)(2). PHMSA agrees.
When Congress enacted the HMTA, it made several findings that
emphasized the importance of uniform regulations governing the
transportation of hazardous materials. For example, Congress noted that
many States and localities had enacted laws and regulations which
varied from Federal law and regulations pertaining to the
transportation of hazardous materials, which created the potential for
transferring unreasonable hazards to other jurisdictions and created
confusion for shippers and carriers attempting to comply with multiple
and conflicting requirements. Due to the potential risks to life,
property, and the environment posed by unintentional releases of
hazardous materials, Congress determined that consistency in laws and
regulations governing the transportation of hazmat was necessary and
desirable, and that PHMSA's efforts to achieve greater uniformity are
necessary to promote the public health, welfare, and safety at all
levels. Thus, the Congress found it desirable that only Federal
standards regulate the transportation of hazardous materials in
intrastate, interstate, and foreign commerce. See Colorado Pub. Util.
Comm'n v. Harmon, 951 F.2d 1571, 1580 (10th Cir. 1991).
In light of these Congressional findings, it is widely understood
that a primary purpose of the HMTA is regulatory uniformity that will
be achieved through the HMTA's preemption provisions. Id. Regulatory
uniformity is frustrated when State and local governments adopt
requirements like those at issue in this proceeding.
Several principles of regulatory uniformity have been developed
through agency interpretations and case law. First, State and local
requirements that impede hazardous materials transportation that is
being conducted in accordance with the Federal requirements constitute
inconsistent restraints on such transportation. Second, transportation
carried out within the Federal framework of the HMTA and HMR is
presumptively safe and additional State or local requirements
concerning matters covered by Federal law or regulation are neither
necessary nor appropriate. Finally, where the Department has examined
an area otherwise within its authority to adopt regulations and has
declined to regulate, State and local requirements in that area may be
preempted where they have adverse impacts on the Federal regulatory
scheme and the transportation that occurs thereunder. See generally,
PD-6(R), Michigan Marking Requirements for Vehicles Transporting
Hazardous and Liquid Industrial Wastes, 59 FR 6186 (Feb. 9, 1994);
Inconsistency Ruling (IR)-8, State of Michigan Rules and Regulations
Affecting Radioactive Materials Transportation, 49 FR 46637 (Nov. 27,
1984), decision on appeal, 52 FR 13000 (April 20, 1987); IR-15(A),
Vermont Rules for Transportation of Irradiated Reactor Fuel and Nuclear
Waste, 49 FR 46660 (Nov. 27, 1984), decision on appeal 52 FR 13062,
13063 (April 20, 1987); quoted and followed, IR-19; IR-19, Nevada
Public Service Commission Regulations Governing Transportation of
Hazardous Materials, 52 FR 24404, 24407 (June 30, 1987), decision on
appeal, 53 FR 11600 (April 7, 1988), affirmed in IR-19(A) and Southern
Pac. Transp. Co. v. Public Serv. Comm'n of Nevada, 909 F.2d 352 (9th
Cir. 1990), reversing No. CV-N-86-444-BRT (D. Nev. 1988).
In light of its jurisdictional responsibilities and consistent with
court precedents, the Department has taken a system-wide approach to
achieving safety of the Nation's transportation systems that includes
regulatory and non-regulatory actions to ensure the safe and secure
transportation of crude oil by rail. As previously discussed, these
actions resulted in the addition of new sampling and testing
requirements to the HMR; an assessment of the merits of setting a
Federal vapor pressure limit; and the commissioning of the Sandia
Study. The volatility and vapor pressure

[[Page 29527]]

of crude oil have been important characteristics studied by the agency
throughout this entire process.
PHMSA, after closely examining the results and conclusions of the
Sandia Study (as discussed earlier in Section VI.A), and in
consideration of the public comments to the ANPRM from industry,
stakeholders, and other interested parties, withdrew the ANPRM. PHMSA
determined that issuance of any regulation setting a vapor pressure
limit for unrefined petroleum-based products was not justified because
such a regulation would not lessen risks associated with the transport
of crude oil by rail. The agency's withdrawal of the ANPRM is the most
definitive statement to the regulated community and the public that
there is no need for a Federal regulation that sets a vapor pressure
limit for unrefined petroleum-based products within the HMR.\36\
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\36\ See Supra note 21.
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In summary, the Department and PHMSA have pursued a comprehensive
approach to address volatility of crude-by-rail, and have determined
that existing Federal requirements are adequate to ensure the safe
transportation of crude oil, particularly in light of the compelling
conclusions of recent research activities discussed above. Therefore,
State and local provisions that fundamentally alter the requirements
for the same hazardous material are clearly obstacles to the
accomplishment and execution of the objectives of the HMTA and HMR.
Having considered all of the implications of Washington State's
unilateral regulatory action setting a vapor pressure limit for crude
oil, the agency must conclude that the State's action epitomizes the
type of patchwork State regulation that Congress sought to avoid when
it enacted the HMTA and established a framework of uniform national
regulations for regulating the transportation of hazardous materials.
The Washington State vapor pressure requirement, if allowed to persist,
would set an alarming precedent. Other State and local jurisdictions
would be encouraged to enact their own vapor pressure limits for crude
oil. The resultant multiple and conflicting requirements will undermine
the uniform Federal regulatory scheme. Moreover, a multitude of
differing regulations in this area would surely create uncertainty and
confusion for offerors. And the likelihood of copycat regulation of
crude oil vapor pressure is not merely speculative as evidenced by the
administrative record for this proceeding. PHMSA is aware of one State
legislature that has introduced a similar bill regulating vapor
pressure for oil or gas, and at least six States that have advocated
for a vapor pressure limit.\37\
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\37\ See House Bill 4105, 80th Oregon Legislative Assembly--2020
Regular Session (February 3, 2020), https://olis.leg.state.or.us/liz/2020R1/Downloads/MeasureDocument/HB4105/Introduced (last visited
February 12, 2020). In this proceeding, the Attorneys General of New
York, California, Maryland, and New Jersey submitted comments
against preemption. In addition, the Attorneys General of
California, Illinois, Maine, and Maryland filed joint comments with
the Attorneys General of New York and Washington, supporting a
national vapor pressure standard in the ANPRM proceeding.
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Furthermore, a patchwork of varying and conflicting State and local
regulations would likely increase risk by exporting potentially
unreasonable hazards to other jurisdictions as offerors employ various
avenues of compliance either through rerouting shipments; seeking
alternate markets or modes of transportation; or avoidance of a
jurisdiction altogether. This last option is particularly troubling as
it resembles a de facto ban on transportation.
Proponents of the law insist Washington State has a legitimate
public interest to protect its citizens from oil train fires and
explosions, but in the context of the transportation of crude oil by
rail, a State cannot use safety as a pretext for inhibiting market
growth or instituting a de facto ban on crude oil by rail within its
borders.
Notwithstanding the State of Washington's interest in the welfare
and safety of its citizens, any State laws supporting those interests
that implicate the transportation of hazardous materials, must not
conflict with the objectives of the HMTA. Here, we find that the vapor
pressure requirement is an obstacle to carrying out the HMTA and HMR--
it not only hinders the movement of hazardous materials but also
creates unnecessary delays in direct conflict with HMTA. Accordingly,
the law is preempted.

C. ANT Requirement

One remaining question before the agency is whether Washington
State's ANT requirement regulates the same subject covered by the
Federal requirements for the requisite shipping paper's material
description and emergency response information, and if so, whether the
State's requirement is substantively the same as the HMR requirements
for crude oil. Alternatively, we must consider whether Washington's ANT
requirement is inconsistent with the HMR rule governing HHFT
information sharing notification for emergency response planning, or is
otherwise an obstacle to accomplishing and carrying out the HMTA.
Federal hazardous material transportation law preempts a non-
Federal requirement for the ``preparation, execution, and use of
shipping documents'' and ``requirements related to the number, content,
and placement'' of those documents, that are not ``substantively the
same'' as the Federal rules. 49 U.S.C. 5125(b)(1)(C).
The HMTA and HMR prescribe the information and documentation
requirements for the safe transportation of hazardous materials. See
generally, 49 CFR part 172, subparts C and G; part 174 (railroads).
This includes the preparation, execution, and use of shipping
documents. Under the HMR, offerors of a hazardous material for
transportation are required to prepare a shipping paper to accompany
the material while it is in transportation with information describing
the material and emergency response information. In general, the
Federal rules do not require additional information, documentation, or
advance notification for the transportation of hazardous materials.
PHMSA recently adopted new HHFT information sharing requirements in
order to ensure that safety and security planning is occurring for
crude-by-rail shipments. 49 CFR 173.41. The information sharing
requirements include a weekly estimate of the number of trains expected
to operate through the local jurisdiction, a description of the
hazardous material and all applicable emergency response information
(consistent with the HMR requirements), and a railroad point of
contact. Updates are only required when volume changes more than
twenty-five percent. Id.
We note that Washington State amended the ANT requirement to add
new data elements, ``type'' and ``vapor pressure'' to the ANT database.
Before this amendment, the data elements that were being reported
generally consisted of the same data that is required under the HHFT
notification requirements. For example, route, product description, and
quantity. It is noteworthy, that this information is either necessary
or optional information under the HMR, or otherwise ascertained from
the shipping paper that is required to accompany a shipment of crude
oil--except vapor pressure. Similarly, with the addition of these new
data elements and the different reporting threshold, the ANT
requirement is different from the HHFT notification requirements,
albeit not to the extent that commenters have described it.

[[Page 29528]]

The State of Washington asserts that the ANT requirement is a local
emergency preparedness measure that applies only to in-state facilities
that unload crude-by-rail shipments, with no attendant reporting duties
for shippers or carriers. Yet, it is unclear from where, and whom, the
facilities will get the crude oil's ``type'' and ``vapor pressure''
data in order to comply with the amended ANT requirement. A reasonable
inference could be made that this information must be provided by the
shipper or carrier. Notwithstanding, we cannot ignore the fact that
none of the refineries that submitted comments in this proceeding
provided any meaningful information regarding how they have been
complying with the current iteration of the requirement, or how they
intend to comply with the amended law. Without more information, it is
unclear whether there is a sufficient nexus to the ANT requirement and
the Federal requirements that fully implicates HMTA preemption.
Therefore, on balance, PHMSA finds that the administrative record
regarding the ANT requirement is insufficient to make a determination
whether the requirement is preempted under the HMTA.

VII. Ruling

PHMSA finds that Washington State's vapor pressure requirement
setting a vapor pressure limit of 9 psi for crude oil, has created a
scheme for classifying a hazardous material that is not substantively
the same as the Federal hazardous materials regulations. PHMSA also
finds that the vapor pressure requirement is a handling requirement
that is not substantively the same as existing Federal requirements.
Furthermore, PHMSA has determined that the vapor pressure requirement
is an obstacle to accomplishing and carrying out the HMTA and HMR, and
is, therefore preempted.
In addition, PHMSA finds that the administrative record regarding
the ANT requirement is insufficient to make a determination whether the
requirement is preempted under the HMTA.

VIII. Petition for Reconsideration/Judicial Review

In accordance with 49 CFR 107.211(a), any person aggrieved by this
determination may file a petition for reconsideration within 20 days of
publication of this determination in the Federal Register. If a
petition for reconsideration is filed within 20 days of publication in
the Federal Register, the decision by PHMSA's Chief Counsel on the
petition for reconsideration becomes PHMSA's final agency action with
respect to the person requesting reconsideration. See 49 CFR
107.211(d).
If a person does not request reconsideration in a timely fashion,
then this determination is PHMSA's final agency action as to that
person, as of the date of publication in the Federal Register.
Any person who wishes to seek judicial review of a preemption
determination must do so by filing a petition for review in the United
States Court of Appeals for the District of Columbia Circuit, or in the
United States Court of Appeals for the circuit in which the petitioner
resides or has its principal place of business, within 60 days after
the determination becomes final with respect to the filing party. See
49 U.S.C. 5127(a).
The filing of a petition for reconsideration is not a prerequisite
to seeking judicial review of this decision under 49 U.S.C. 5127(a).

Issued in Washington, DC, on May 11, 2020.
Paul J. Roberti,
Chief Counsel.
[FR Doc. 2020-10381 Filed 5-14-20; 8:45 am]
BILLING CODE 4910-60-P

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