OIL AND GAS 

TRANSPORTATION

Department of 

Transportation Is 

Taking Actions to 

Address Rail Safety, 

but Additional Actions

Are Needed to 

Improve Pipeline

Safety

Report to Congressional Requesters

August 2014

GAO-14-667

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-14-667, a report to 

congressional requesters

August 2014

OIL AND GAS TRANSPORTATION

Department of Transportation Is Taking Actions to Address 

Rail Safety, but Additional Actions Are Needed to Improve

Pipeline Safety

Why GAO Did This Study

Technology advancements such as 

horizontal drilling and hydraulic 

fracturing (pumping water, sand, and 

chemicals into wells to fracture 

underground rock formations and allow 

oil or gas to flow) have allowed 

companies to extract oil and gas from 

shale and other tight geological 

formations. As a result, oil and gas 

production has increased more than 

fivefold from 2007 through 2012. DOT

oversees the safety of the U.S. 

transportation system.

GAO was asked to review oil and gas 

transportation infrastructure issues. 

This report examines (1) overall 

challenges that increased oil and gas 

production may pose for transportation 

infrastructure, (2) specific pipeline 

safety risks and how DOT is 

addressing them, and (3) specific rail 

safety risks and how DOT is 

addressing them. GAO analyzed 

federal transportation infrastructure 

and safety data generally from 2008 to 

2012 or 2013 (as available), reviewed

documents, and interviewed agency, 

industry, and safety stakeholders, as 

well as state and industry officials in 

states with large-scale shale oil and 

gas development.

What GAO Recommends

DOT should move forward with a

proposed rulemaking to address safety 

risks—including emergency response

planning—from newer gathering 

pipelines. DOT generally concurred 

with the recommendation and stated 

that it is developing a rulemaking to 

revise its pipeline safety regulations.

What GAO Found

Increased oil and gas production presents challenges for transportation 

infrastructure because some of this increase is in areas with limited 

transportation linkages. For example, insufficient pipeline capacity to transport 

crude oil has resulted in the increased use of rail, truck, and barge to move oil to 

refineries, according to government and industry studies and publications GAO 

reviewed. These transportation limitations and related effects could pose 

environmental risks and have economic implications. For instance, natural gas 

produced as a byproduct of oil is burned—a process called flaring—by operators 

due, in part, to insufficient pipelines in production areas. In a 2012 report, GAO 

found that flaring poses a risk to air quality as it emits carbon dioxide, a 

greenhouse gas linked to climate change, and other air pollutants. In addition, 

flaring results in the loss of a valuable resource and royalty revenue. 

Due to the increased oil and gas production, construction of larger, higherpressure gathering pipelines (pipelines that transport products to processing 

facilities and other long-distance pipelines) has increased. However, these

pipelines, if located in rural areas, are generally not subject to U.S. Department 

of Transportation (DOT) safety regulations that apply to other pipelines, including 

emergency response requirements. Historically, gathering pipelines were smaller 

and operated at lower pressure and thus posed less risk than long-distance 

pipelines. But the recent increase in their size and pressure raises safety 

concerns because they could affect a greater area in the event of an incident. In 

2011, DOT began a regulatory proceeding to address the safety risks of 

gathering pipelines, but it has not proposed new regulations. Although states 

may regulate gathering pipelines, an association of state pipeline regulators’ 

report on state pipeline oversight shows that most states do not currently 

regulate gathering pipelines in rural areas. 

Crude oil carloads moved by rail in 2012 increased by 24 times over that moved 

in 2008. Such an increase raises specific concerns about testing and packaging 

of crude oil, use of unit trains (trains of about 80 to 120 crude oil cars), and 

emergency response preparedness. Crude oil shippers are required to identify

their product’s hazardous properties, including flammability, before packaging the 

oil in an authorized tank car. DOT has issued safety alerts on the importance of 

proper testing and packaging of crude oil. However, industry stakeholders said 

that DOT’s guidance on this issue is vague and that clarity about the type and 

frequency of testing is needed. In July 2014, DOT proposed new regulations for 

crude oil shippers to develop a product-testing program subject to DOT’s review. 

Additionally, unit trains, which can carry 3 million or more gallons of crude oil and 

travel to various locations through the country, are not covered under DOT’s 

comprehensive emergency response planning requirements for transporting 

crude oil by rail because the requirements currently only apply to individual tank 

cars and not unit trains. This raises concerns about the adequacy of emergency

response preparedness, especially in rural areas where there may be fewer 

resources to respond to a serious incident. Also in July 2014, DOT sought public 

comment on potential options for addressing this gap in emergency response 

planning requirements for transporting crude oil by rail.

View GAO-14-667. For more information, 

contact Susan Fleming at (202) 512-2834 or 

flemings@gao.gov or Frank Rusco at (202) 

512-3841 or ruscof@gao.gov.
Page i GAO-14-667 Oil and Gas Transportation

Letter 1 

Background 4

Increased Oil and Gas Production Presents Challenges for 

Transportation Infrastructure That Could Pose Environmental 

and Safety Risks and Have Economic Implications 12

DOT Has Not Fully Addressed Safety Risks from Expansion of 

Federally Unregulated Gathering Pipelines 22

DOT Is Working to Address Risks Related to the Increase in 

Transportation of Oil by Rail 30

Conclusions 47

Recommendation 48

Agency Comments and Our Evaluation 48

Appendix I Objectives, Scope, and Methodology 50

Appendix II Impacts of Shale Oil and Gas Development on Highways in 

Selected States 56

Appendix III Comments from Department of Transportation 58

Appendix IV GAO Contacts and Staff Acknowledgments 60

Tables

Table 1: Characteristics of U.S. Gathering and Transmission 

Pipelines 9

Table 2: National-Level Industry and Safety Stakeholders GAO 

Interviewed 53

Table 3: State-Level Stakeholders GAO Interviewed 54

Figures

Figure 1: Shale Plays and Basins in the Contiguous 48 States 5

Figure 2: Increased Domestic Oil and Gas Production from Shale 

and Tight Sandstone Formations from 2007 to 2012 6

Contents
Page ii GAO-14-667 Oil and Gas Transportation

Figure 3: Oil and Gas Transportation from Production to Users 8

Figure 4: Crude Oil Refinery Receipts by Pipeline, Rail, Truck, and 

Barge from 2008 to 2012 (Millions of Barrels) 15

Figure 5: Estimated Number of Crude Oil Rail Carloads in the 

United States, 2008 to 2012 31

Figure 6: Crude Oil Unit Train 32

Figure 7: North American Originations and Destinations of Crude 

Oil Carloads Hauled by Rail, 2012 33

Figure 8: Proposed Upgrades to Crude Oil Rail Tank Cars 42

Abbreviations

AAR Association of American Railroads

DOT Department of Transportation

EIA Energy Information Administration

FRA Federal Railroad Administration

INGAA Interstate Natural Gas Association of America

LNG liquefied natural gas

Mcf thousand cubic feet

MMBtu million British thermal units

NOx nitrogen oxides

NTSB National Transportation Safety Board

PHMSA Pipeline and Hazardous Materials Safety Administration

PSI pounds per square inch

STB Surface Transportation Board

Tcf trillion cubic feet

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

copyrighted images or other material, permission from the copyright holder may be 

necessary if you wish to reproduce this material separately.
Page 1 GAO-14-667 Oil and Gas Transportation

441 G St. N.W.

Washington, DC 20548

August 21, 2014

The Honorable John D. Rockefeller, IV

Chairman

The Honorable John Thune

Ranking Member

Committee on Commerce, Science, and Transportation

United States Senate

The Honorable Ron Wyden

United States Senate

U.S. production of oil and gas resources has increased in recent years, 

driven in part by improvements in technologies. Oil and gas resources 

contained in underground shale formations were previously considered to 

be inaccessible because traditional techniques did not yield sufficient 

amounts for economically viable production. The application of horizontal 

drilling techniques and hydraulic fracturing—a process that injects a 

combination of water, sand, and chemical additives under high pressure 

to create and maintain fractures in underground rock formations that allow 

oil and natural gas to flow—have increased U.S. crude oil and natural gas 

production dramatically.

This rapid expansion of domestic oil and gas production has also 

changed dynamics for transporting these products to the market and has 

raised questions about safety. While pipelines transport the majority of oil 

and gas in the United States, recent development of crude oil in parts of 

the country underserved by pipeline has led shippers to use other modes, 

with rail seeing the largest percentage increase. Although pipeline 

operators and railroads have generally good safety records, the increased 

transportation of these flammable hazardous materials creates the 

potential for serious incidents. The explosion and fire caused by the July 

2013 derailment of a crude oil train in Lac-Mégantic, Quebec killed 47 

people and extensively damaged the city’s downtown area, highlighting 

the consequences that may result from such incidents. The U.S. 

Department of Transportation (DOT) is responsible for ensuring the safety 

of the U.S. transportation system, including protecting people and the 

environment from the risks of transporting hazardous materials by 

pipeline, rail, and other modes. In particular, DOT’s Pipeline and 

Hazardous Materials Safety Administration (PHMSA) has responsibility 

for pipeline safety oversight as well as hazardous materials transportation 

safety oversight for other transportation modes, including rail.
 

Page 2 GAO-14-667 Oil and Gas Transportation

You requested that we examine the impact of shale oil and gas 

development on transportation infrastructure and safety. We are providing 

a broad overview of transportation infrastructure impacts and a closer 

look at the infrastructure changes and associated safety issues with 

pipeline and rail.1 Specifically, this report addresses:

(1) challenges, if any, that increased domestic oil and gas production 

poses for U.S. transportation infrastructure and examples of associated 

risks and implications;

(2) how pipeline infrastructure has changed as a result of increased oil 

and gas production, the key related safety risks, and to what extent DOT 

has addressed these risks; and

(3) how rail infrastructure has changed as a result of increased oil 

production, the key related safety risks, and to what extent DOT has 

addressed these risks.

To identify challenges increased domestic oil and gas production poses 

for U.S. transportation infrastructure and the associated implications, we 

reviewed and synthesized information from studies and other publications 

from federal, state, and tribal government agencies; industry; academics; 

and other organizations. We identified these studies and publications by 

conducting a search of web-based databases and other resources

containing general academic articles, government resources, and “gray 

literature.”

2 We believe the studies and publications identified through our 

literature search provide key examples of transportation infrastructure 

limitations and associated implications. In addition, we analyzed data 

from the U.S. Department of Energy’s Energy Information Administration 

(EIA) on oil and gas produced from 2007 to 2012. To assess the reliability 

of these data, we examined EIA’s published methodology for collecting 

 

1

We focused our work on pipeline and rail because pipeline is the most used mode for 

transporting oil and gas products and rail has seen the largest percentage increase in use 

in recent years. 

2

“Gray literature” publications may include, but are not limited to, the following types of 

materials: reports (pre-prints, preliminary progress and advanced reports, technical 

reports, statistical reports, memorandums, state-of-the art reports, market research 

reports, etc.); theses; conference proceedings; technical specifications and standards; 

non-commercial translations; bibliographies; technical and commercial documentation; 

and official documents not published commercially (primarily government reports and 

documents).
 

Page 3 GAO-14-667 Oil and Gas Transportation

this information and found the data sufficiently reliable for the purposes of 

this report.

To determine how pipeline infrastructure has changed as a result of 

increased oil and gas production, we analyzed PHMSA data on pipeline 

construction from January 1, 2010 through December 31, 2012 and 

interviewed DOT officials and industry representatives, including pipeline 

operators. To determine how rail infrastructure has changed, we analyzed 

the Surface Transportation Board’s (STB) data for calendar years 2008 

through 2012 on crude oil shipments by rail and interviewed DOT officials 

and industry representatives, including railroads. To identify the key 

safety risks related to changes in pipeline and rail infrastructure, we 

analyzed PHMSA data from January 1, 2008 through December 31, 2013 

on pipeline and rail incidents, reviewed documents submitted as part of 

DOT’s rulemaking on rail safety, and interviewed DOT officials and 

representatives from safety organizations, emergency responder 

associations, and industry. We assessed the reliability of PHMSA’s data 

on pipeline construction and pipeline and rail incidents and STB’s data on 

crude oil shipments by rail by reviewing documentation about the data 

sources, interviewing agency officials about how the data were collected, 

and reviewing related internal controls. We also reviewed some of the 

data for potential inconsistencies through testing and comparing the data

to publicly available sources of similar information. We concluded that 

these data were sufficiently reliable for the purposes used in our report. 

Additionally, to examine infrastructure impacts and safety risks closely 

associated with transporting shale oil and gas, we interviewed officials 

and reviewed related documents from state oil and gas safety regulatory 

agencies, transportation departments, industry associations and oil and 

gas transportation companies (such as pipeline operators, railroads, and 

operators of rail loading terminals) in four states: North Dakota, 

Pennsylvania, Texas, and West Virginia. We selected these states 

because of their significant shale oil and gas development and varying 

geographic locations. To evaluate to what extent DOT has addressed 

safety risks, we reviewed federal laws and regulations and DOT 

emergency orders and guidance, interviewed DOT officials, and 

compared DOT’s actions against risk-based management principles. See 

appendix I for a more detailed description of our objectives, scope, and

methodology.

We conducted this performance audit from August 2013 to August 2014 

in accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 
 

Page 4 GAO-14-667 Oil and Gas Transportation

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

Oil and natural gas are found in a variety of geologic formations 

distributed across the country, such as shale and tight sandstone.3 Shale 

plays—sets of discovered or undiscovered oil and natural gas 

accumulations or prospects that exhibit similar geological 

characteristics—are located within basins, which are large-scale 

geological depressions, often hundreds of miles across, that also may 

contain other oil and gas resources. Figure 1 shows the location of shale 

plays and basins in the contiguous 48 states.

 

3

Shale is a sedimentary rock that is predominantly composed of consolidated clay-sized 

particles. 

Background

Location of Oil and Gas 

Development in the United 

States
 

Page 5 GAO-14-667 Oil and Gas Transportation

Figure 1: Shale Plays and Basins in the Contiguous 48 States

Note: Tight sandstone basins are found in some of the same basins as shale plays.

Shale plays can contain oil, natural gas, or both. In addition, a shale gas 

play may contain “dry” or “wet” natural gas. Dry natural gas is a mixture of 

hydrocarbon compounds that exists as a gas both underground in the 

reservoir and during production under standard temperature and pressure 

conditions. Wet natural gas contains natural gas liquids, or the portion of 

the hydrocarbon resource that exists as a gas when in natural 

underground reservoir conditions but that is liquid at surface conditions. 

The natural gas liquids are typically propane, butane, and ethane and are 

separated from the produced natural gas at the surface. Operators may 

then sell the natural gas liquids, which may give wet shale gas plays an 

economic advantage over dry gas plays. According to a 2014 EIA 

publication, operators moved away from the development of shale plays 
 

Page 6 GAO-14-667 Oil and Gas Transportation

that are primarily dry gas in favor of developing plays with higher 

concentrations of crude oil and natural gas liquids such as the Eagle Ford 

in Texas, because given natural gas prices at that time, crude oil and 

natural gas liquids were more valuable products.4 Another advantage of 

liquid petroleum and natural gas liquids is that they can be transported 

more easily through different modes of transportation than dry natural 

gas, which is transported almost entirely by pipelines to markets and 

consumers.

In recent years, domestic onshore production of oil and gas has been 

steadily rising. For example, from 2007 through 2012, annual production 

from shale and tight sandstone formations increased more than sixfold for 

oil and approximately fivefold for gas (see fig. 2). Horizontal drilling and 

hydraulic fracturing have advanced significantly over the last decade and 

are largely credited with spurring the boom in oil and gas production in 

the United States.

Figure 2: Increased Domestic Oil and Gas Production from Shale and Tight 

Sandstone Formations from 2007 to 2012

Oil: Average domestic crude oil production from shale and tight 

sandstone formations in 2012 has increased more than sixfold compared 

with average production in 2007, from 0.34 million barrels per day in 2007 

to 2.25 million barrels per day in 2012. To put this into context, according 

to EIA data, the United States consumed an average of more than 18 

 

4

EIA, “High value of liquids drives U.S. producers to target wet natural gas resources,” 

Today In Energy (May 8, 2014). 

Oil and Gas Production
 

Page 7 GAO-14-667 Oil and Gas Transportation

million barrels of petroleum products per day in 2012.5 According to EIA 

officials, oil from shale and tight sandstone formations accounts for 31 

percent of total U.S. production. According to EIA, increased production in 

2012 and 2013 was the largest annual increase since the beginning of 

U.S. commercial crude oil production in 1859. Much of the increase in 

crude oil production has been from shale formations, such as the Bakken 

in North Dakota, the Eagle Ford in Texas, and the Niobrara in Colorado. 

According to EIA officials, U.S. production of crude oil is expected to 

continue to increase—by 48 percent from 2012 to 2019—and will remain 

above the 2012 level through 2040.

Natural Gas: Domestic natural gas production in 2012 has increased 

about fivefold compared with production in 2007, from less than 2 trillion 

cubic feet in 2007 to more than 10 trillion cubic feet in 2012.6 To put this 

into context, annual domestic consumption of natural gas was just over 

25 trillion cubic feet in 2012, according to EIA data. In September 2012, 

we found that, assuming current consumption levels without consideration 

of a specific market price for future gas supplies, the amount of domestic 

technically recoverable shale gas could provide enough natural gas to 

supply the nation for the next 14 to 100 years.7 Much of the increase in 

natural gas has been from shale formations, such as the Barnett, 

Fayetteville, Haynesville, and Marcellus formations.

 

5

Petroleum includes crude oil and petroleum products. Petroleum products include 

gasoline, diesel fuel, heating oil, jet fuel, chemical feedstocks, asphalt, biofuels, and other 

products. 

6

Natural gas is generally priced and sold in thousand cubic feet (abbreviated Mcf, using 

the Roman numeral for 1,000). Units of a trillion cubic feet (Tcf) are often used to measure 

large quantities, as in resources or reserves in the ground, or annual national energy 

consumption. One Tcf is enough natural gas to heat 15 million homes for 1 year or fuel 12

million natural-gas-fired vehicles for 1 year. 

7

Technically recoverable gas resources are a subset of in-place resources that are 

producible given available technology. Technically recoverable resources include those 

that are economically producible and those that are not. Estimates of technically 

recoverable resources are dynamic, changing to reflect the potential of extraction 

technology and knowledge about the geology and composition of geologic formations. For 

additional information on shale oil and gas estimates and methodology to develop the 

estimates, see GAO, Oil and Gas: Information on Shale Resources, Development, and 

Environmental and Public Health Risks, GAO-12-732 (Washington, D.C.: Sept. 5, 2012). 
 

Page 8 GAO-14-667 Oil and Gas Transportation

Multiple modes of transportation, including pipeline, rail, highways, and 

waterways, connect oil and gas production infrastructure (such as wells 

and processing plants) in shale areas to customers, which include 

refineries, industrial users, and individual consumers. Additionally, when 

products switch modes of transportation, oil-loading terminals, sometimes 

referred to as “transload” terminals, transfer the product from one mode to 

another, such as when crude oil is transferred from a truck or gathering 

pipeline to a train. Responsibility for maintaining these modes vary: 

pipelines and rail are generally privately owned, while highways and 

waterways are generally public. Figure 3 illustrates how various 

transportation modes work together to bring oil and gas from production 

areas to users.

Figure 3: Oil and Gas Transportation from Production to Users

Note: This figure illustrates concepts presented in this report. It does not include all modes of 

transportation for oil and gas products nor does it depict all types of potential end users.

Approximately 2.5 million miles of pipelines transport roughly two-thirds of 

domestic energy supplies throughout the United States. These pipelines 

carry natural gas and hazardous liquids, including crude oil and natural 

Transportation Modes
 

Page 9 GAO-14-667 Oil and Gas Transportation

gas liquids from production areas to end users, such as residences and 

businesses. Gathering pipelines collect produced oil and gas from their 

source and transport these products to processing facilities and 

transmission pipelines. Transmission pipelines then transport these 

products longer distances to users such as residences and businesses.8

Distribution pipelines transport natural gas to consumers for use and are 

not within the scope of this report. Characteristics of gathering and 

transmission pipelines are described in table 1.

Table 1: Characteristics of U.S. Gathering and Transmission Pipelines

Gathering pipelines Transmission pipelines

Estimated number of miles At least 230,000 More than 400,000

Function Collect gas or hazardous liquids from 

production areas and then typically transport 

these products to processing facilities where 

they are refined.

Carry gas or hazardous liquid to communities and 

large-volume users (e.g., factories).

Description Traditionally, range in diameter from 2 to 12 

inches and operate at pressures ranging from 

5 to 800 pounds per square inch (psi).

Traditionally over hundreds of miles long, range in 

diameter from 12 to 42 inches, and operate at 

pressures ranging from 400 to 1440 psi.

Source: GAO analysis of information from Pipeline and Hazardous Materials Safety Administration. GAO-14-667

The U.S. rail network consists of about 200,000 miles of track, which runs 

mostly through rural areas. The railroad industry is dominated by the 

seven largest railroads, known as Class I railroads, which collectively 

accounted for more than 90 percent of annual railroad-freight revenues in 

2012. Smaller regional and short-line railroads transport freight shorter 

distances and can help connect customers in areas not served by the 

larger railroads. The railroads’ national association, the Association of 

American Railroads (AAR), represents the interests of the industry and 

works with railroads and other stakeholders to develop industry 

standards. Crude oil travels by rail in tank cars, commonly DOT-111 tank 

cars, which are generally owned by shippers or third parties. The DOT111 is a DOT-specification tank car, meaning it must be built to conform 

to standards specified in DOT regulation.9 It is a non-pressurized car that 

is used to transport a variety of liquid products, including hazardous, 

 

8

We use the term transmission pipeline to refer to both hazardous liquids and natural gas 

pipelines carrying product over long distances to users.

9

See 49 C.F.R. §179.200. In addition to DOT specification tank cars, there are also tank 

cars built to specifications set by AAR.
 

Page 10 GAO-14-667 Oil and Gas Transportation

flammable materials like crude oil. Terminals, referred to as transload 

facilities, transfer crude oil from other transportation modes (typically 

trucks or gathering pipelines) to tank cars for transport by train.

In addition to pipeline and rail, other modes, including barge and truck 

may transport oil and gas products. For example, barges may transport 

oil over longer distances on major waterways, such as the Mississippi 

River, while trucks typically transport oil over short distances to transload

facilities. While this report provides a closer look at transportation 

infrastructure and safety impacts of shale oil and natural gas development 

on pipeline and rail nationwide, we also discuss highway infrastructure 

and safety impacts in the four selected states we examined (see app. II 

for a summary of highway-related impacts).

DOT is responsible for ensuring the safe transportation of people and 

goods through regulations, oversight, inspections, and other efforts, 

sometimes in partnership with states. Within DOT, PHMSA’s Office of 

Pipeline Safety oversees the safety of pipelines through regulation and an 

inspection program, which includes over 100 PHMSA inspectors, and 

also collects information about the location of pipelines. PHMSA also has 

arrangements with states, which collectively have over 300 inspectors, to 

assist with overseeing interstate pipelines, intrastate pipelines, or both.

10

PHMSA’s current pipeline regulations cover all hazardous liquid (including 

crude oil) and natural gas transmission pipelines. In addition to minimum 

safety standards that all transmission pipeline operators must meet, 

PHMSA employs a risk-based approach to transmission pipeline 

regulation and requires operators to systematically identify and mitigate 

risks in “high-consequence areas,” which include populated and 

environmentally sensitive areas.11 PHMSA also applies this risk-based 

approach to gathering pipelines and regulates gathering pipelines in non-

 

10These arrangements, in which states act as “agents” for PHMSA, can cover hazardous 

liquid pipelines only, gas pipelines only, or both (49 U.S.C. § 60105). States’ pipeline 

safety offices are allowed to issue regulations supplementing or extending federal 

regulations for intrastate pipelines, but these state regulations must be at least as 

stringent as the minimum federal regulations (49 U.S.C. § 60104(c)). If a state wants to 

issue regulations that apply to pipelines that PHMSA does not regulate, such as federally 

unregulated gathering pipelines, there are no minimum federal standards that need to be 

adhered to, and the state is free to regulate as it sees fit.

1149 C.F.R. 192, Subpart O.

Department of 

Transportation
 

Page 11 GAO-14-667 Oil and Gas Transportation

rural areas, resulting in regulation of approximately 10 percent of the 

nation’s gathering pipelines.12 Generally, PHMSA retains full responsibility 

for inspecting interstate pipelines for compliance with its regulations and 

taking enforcement actions when needed. However, states may be 

authorized to conduct inspections of interstate pipelines, as well as 

inspections and associated enforcement for intrastate pipelines. States 

can also promulgate regulations for intrastate pipelines, including 

gathering pipelines, even if these pipelines are not covered by PHMSA’s 

federal safety requirements.13

PHMSA, through its Office of Hazardous Materials Safety, also regulates 

shippers and railroads transporting hazardous materials like crude oil by 

rail and other modes.14 A memorandum of agreement details how 

PHMSA works with the other DOT modal agencies to address hazardousmaterial transportation safety. DOT’s other modal administrations have 

responsibility for safety of their respective modes, such as the Federal 

Railroad Administration (FRA), which oversees rail safety. FRA enforces 

its own and PHMSA’s safety regulations through inspections by FRA 

officials and state partners in some states.15 PHMSA also has hazardous 

materials inspectors who enforce requirements for hazardous material 

packaging for transportation. Additionally, PHMSA’s regulations include 

emergency response planning requirements for pipelines and the 

transportation of crude oil by rail. Specifically, regulations require 

operators of transmission pipelines and urban gathering pipelines to 

prepare emergency response plans and coordinate them with emergency 

responders.16 Railroads that transport crude oil in tanks larger than 

42,000 gallons are required to develop comprehensive oil-spill response 

plans with additional requirements for contingency planning, ensuring 

response resources by contract or other means, and training. Railroads 

 

1249 C.F.R. Part 192.5 and 49 C.F.R. § §195.1(a)((4) and 195.11(a)(2). 

13For pipelines, there are 48 states, the District of Columbia, and Puerto Rico in PHMSA’s 

natural gas pipeline program and 17 states in its hazardous liquid pipeline program (49 

U.S.C. § 60104(c)). 

1449 C.F.R. Parts 171-179.

15FRA has 30 state partners for rail safety.

1649 C.F.R. § § 192.615 (a)(8) and 195.402 (c)(12). Operators of hazardous liquid 

pipelines must also establish a response-training program and maintain firefighting 

equipment for their personnel who will execute the spill response plan, including 

firefighting equipment, techniques, and use of protective clothing. 
 

Page 12 GAO-14-667 Oil and Gas Transportation

are required to submit comprehensive plans to FRA for review. 

Otherwise, railroads are required to develop basic response plans, for 

which there are fewer requirements.17 Because PHMSA applies a riskbased approach to its transportation oversight, we believe it is appropriate 

to apply principles of risk-based management to assessing the agency’s 

efforts in this area. Risk-based management has several key 

characteristics that help to ensure safety, including (1) using information 

to identify and assess risks; (2) prioritizing risks so that resources may be

allocated to address higher risks first; and (3) promoting the use of 

regulations, policies, and procedures to provide consistency in decision 

making.18

Increased oil and gas production presents challenges for transportation 

infrastructure because some of the growth in production has been in 

areas with limited transportation linkages to processing facilities. 

According to studies and publications we reviewed, infrastructure 

limitations and related effects could pose environmental and safety risks

and have economic implications, including lost revenue and hindered oil 

and gas production.

 

1749 C.F.R. § 130.31.

18We applied these principles to PHMSA’s efforts in our previous report on pipeline safety, 

see GAO, Gas Pipeline Safety: Guidance and More Information Needed before Using 

Risk-Based Reassessment Intervals, GAO-13-577 (Washington, D.C.: June 27, 2013). A 

fourth principle, monitoring performance, was also discussed in that report.

Increased Oil and 

Gas Production 

Presents Challenges 

for Transportation 

Infrastructure That 

Could Pose 

Environmental and 

Safety Risks and 

Have Economic 

Implications
 

Page 13 GAO-14-667 Oil and Gas Transportation

Though capital investments in U.S. infrastructure for oil and gas 

transportation, processing, and storage have increased significantly in 

recent years—by 60 percent from 2008 to 2012, according to a December 

2013 industry report—expansions in infrastructure have not kept pace 

with increased domestic oil and gas production.19 In the United States, 

most oil and nearly all natural gas are transported by pipeline.20 According 

to EIA data, U.S. refinery receipts of domestic crude oil by pipeline 

increased almost 25 percent from 2008 to 2012, from 1.6 billion barrels to 

nearly 2 billion barrels.21 However, according to a number of studies and 

publications we reviewed, including a 2013 report from the Fraser 

Institute, oil and natural gas production in the United States is outpacing 

the capacity to transport the resources through existing pipeline 

infrastructure.22 In February 2013, EIA reported that pipeline capacity to 

deliver crude oil to a key hub increased by about 815,000 barrels per day 

from 2010 through 2013; however, the increase has been inadequate to 

transport crude oil from production sites to refineries. In March 2014, we 

found that most of the system of crude oil pipelines in the United States 

was constructed in the 1950s, 1960s, and 1970s to accommodate the 

needs of the refining sector and demand centers at that time. We also 

found that, according to Department of Energy officials, this infrastructure 

was designed primarily to move crude oil from the South to the North, but 

emerging crude oil production centers in Western Canada, Texas, and 

 

19IHS Global Inc., Oil and Natural Gas Transportation & Storage Infrastructure: Status, 

Trends, & Economic Benefits, prepared for the American Petroleum Institute (Washington, 

D.C.: December 2013). 

20In February 2013, we found that both the interstate and intrastate natural gas pipeline 

permitting processes are complex and can involve multiple federal, state, and local 

agencies, as well as public interest groups and citizens, and include multiple steps. 

According to some industry representatives we spoke with at that time, the interstate 

permitting process can be time-consuming, depending on the size and complexity of a 

project. GAO, Pipeline Permitting: Interstate and Intrastate Natural Gas Permitting 

Processes Include Multiple Steps, and Time Frames Vary, GAO-13-221 (Washington, 

D.C.: Feb. 15, 2013). 

21According to EIA, a refinery is an installation that manufactures finished petroleum 

products from crude oil, unfinished oils, natural gas liquids, other hydrocarbons, and 

oxygenates. Oxygenates are additives, such as ethanol that increase the oxygen content 

of the fuel. 

22For example, Fraser Institute, Intermodal Safety in the Transport of Oil, Studies in 

Energy Transportation (October 2013). The Fraser Institute is a public policy research and 

educational organization. For another example, see John R. Aures and John Mayes, 

“North American Production Boom Pushes Crude Blending,” Oil and Gas Journal (May 6, 

2013). 

Increased Domestic Oil 

and Gas Production 

Presents Challenges for 

Transportation 

Infrastructure
 

Page 14 GAO-14-667 Oil and Gas Transportation

North Dakota have strained the existing pipeline infrastructure.23 For 

example, according to a 2013 industry publication, oil production 

exceeded pipeline capacity in North Dakota by about 300,000 barrels of 

oil per day in the state.24

The limited pipeline capacity to transport crude oil has resulted in the 

increased use of other transportation options, in particular rail, truck, and 

barge (see fig. 4).

 

23GAO, Petroleum Refining: Industry’s Outlook Depends on Market Changes and Key 

Environmental Regulations, GAO-14-249 (Washington, D.C.: Mar. 14, 2014). 

24Kevin Smith, “Risk and Reward from the U.S. Fracking Boom,” International Railway 

Journal (Sept. 11, 2013).
 

Page 15 GAO-14-667 Oil and Gas Transportation

Figure 4: Crude Oil Refinery Receipts by Pipeline, Rail, Truck, and Barge from 2008 

to 2012 (Millions of Barrels)

Note: Oil shipments may involve multiple modes. This figure indicates only the mode used for the last 

leg of the shipment.

• Rail: According to a 2014 EIA report, U.S. refinery receipts of 

domestic crude oil by rail increased more than sevenfold from 2008 to 

2012, from 4 million barrels to 30 million barrels.25 The increased use 

of rail for transporting crude oil is due to the increases in crude oil 

production in North Dakota, Texas, and other states, which have

exceeded the capacity of existing pipelines to move oil from 

 

25EIA, Annual Refinery Report, Form EIA-820 (June 25, 2014). 
 

Page 16 GAO-14-667 Oil and Gas Transportation

production areas to refineries, according to a number of studies and 

publications we reviewed.26

• Truck: According to a 2014 EIA report, U.S. refinery receipts of 

domestic crude oil by truck increased almost 90 percent from 2008 to 

2012, from 69 million barrels to 131 million barrels.27 In addition, 

according to a North Dakota Pipeline Authority publication, some 

natural gas liquids are transported to market by truck.28

• Barge: According to a 2014 EIA report, U.S. refinery receipts of 

domestic crude oil by barge increased more than 200 percent from 

2008 to 2012, from 48 million barrels to 151 million barrels.29

According to the EIA report, the increase in barge shipments may be 

partially explained by crude oil being transferred to barges from rail 

cars for the final leg of some journeys to refineries, particularly on the 

East Coast and along the Mississippi River. 

According to a number of studies and publications that we reviewed, in 

addition to pipeline capacity limitations, rail, barges, and processing 

facilities and storage facilities also face limitations. For example, a 2013 

industry publication identified a backlog for tank cars, needed to transport 

oil by rail, in the United States at nearly 60,000—representing over 20 

percent of the existing U.S. tank car fleet.30 In addition, a 2014 

 

26For example, see Fraser Institute, Intermodal Safety in the Transport of Oil, Studies in 

Energy Transportation (October 2013); Paula Dittrick, “US shale production boosts 

midstream growth,” Oil and Gas Journal (Nov. 25, 2013); and Statement of Adam 

Sieminski, Administrator, Energy Information Administrations, U.S. Department of Energy, 

before the Subcommittee on Energy and Power, Committee on Energy and Commerce, 

U.S. House of Representatives, 113th Cong., 2nd sess., March 6, 2014. 

27EIA, Annual Refinery Report (2014). 

28In addition to transporting oil to refineries, in 2012 we found that oil and gas 

development can require a few hundred to more than a thousand truck loads to transport 

the water, chemicals, sand, and other equipment needed for drilling and hydraulic 

fracturing. Further, some of the fracturing fluid that was injected into the well will return to 

the surface (commonly referred to as “flowback”) along with water that occurs naturally in 

the oil- or gas-bearing formation, collectively referred to as produced water (GAO-12-732). 

The produced water may also be transported by truck from the well site to an injection well 

or a wastewater treatment plant. 

29EIA, Annual Refinery Report (2014). 

30IHS Global Inc., Oil and Natural Gas Transportation and Storage Infrastructure: Status, 

Trends, and Economic Benefits (December 2013). 
 

Page 17 GAO-14-667 Oil and Gas Transportation

Congressional Research Service report states that significant 

development of loading and unloading facilities could be required if rail is 

to continue substituting for pipeline capacity.31 Further, a number of 

studies and publications identified that oil and gas production in some 

areas can exceed the capacity to process and store the resources.32 For 

example, state officials in North Dakota reported in 2013 that maintaining 

sufficient natural gas processing capacity is a challenge of increased 

production.

A number of studies and publications we reviewed identified 

environmental and safety risks or economic implications from 

transportation infrastructure limitations. For example:

Risks to air quality: These risks can be the result of intentional flaring—a 

process of burning the gas developed along with oil—of associated 

natural gas that results from limited pipeline infrastructure and of engine 

exhaust from increased truck and rail traffic.

Oil and natural gas are often found together in the same reservoir. The 

natural gas produced from oil wells is generally classified as “associateddissolved,” meaning that it is associated with or dissolved in crude oil. In 

areas where the primary purpose of drilling is to produce oil, operators 

may flare associated natural gas because no local market exists for the 

gas and transporting to a market may not be economically feasible. In 

September 2012, we found that flaring poses a risk to air quality because 

it emits carbon dioxide—a greenhouse gas linked to climate change—and 

other air pollutants that can increase ground-level ozone levels and 

contribute to regional haze.33 In January 2014, the North Dakota Industrial 

Commission reported that nearly 30 percent of all natural gas produced in 

the state is flared. According to a 2013 report from Ceres, flaring in North 

 

31Congressional Research Service, U.S. Rail Transportation of Crude Oil: Background 

and Issues for Congress, R43390 (Washington, D.C.: Feb. 6, 2014). 

32For example, Nick Snow, “Massive investment needed for oil, gas facilities, experts say,” 

Oil and Gas Journal (May 28, 2012) and Ceres, Flaring Up: North Dakota Natural Gas 

Flaring More Than Doubles in Two Years (July 2013). Ceres is a nonprofit organization.

33GAO-12-732. 

Transportation 

Infrastructure Limitations 

and Related Effects Could 

Pose Environmental and 

Safety Risks and Have 

Economic Implications
 

Page 18 GAO-14-667 Oil and Gas Transportation

Dakota in 2012 resulted in greenhouse gas emissions equivalent to 

adding 1 million cars to the road.34

Increased truck and rail traffic associated with the movement of oil from 

well sites also creates a risk to air quality as engine exhaust, containing 

air pollutants such as nitrogen oxides and particulate matter that affect 

public health and the environment is released into the atmosphere.35

Specifically, the Department of State reported in 2014 that increasing the 

number of unit trains transporting crude oil could increase greenhouse 

gases emitted directly from the combustion of diesel fuel in trains36 and in 

2011 we found that trucking freight produces more air pollution than other 

transportation modes.37 Air quality may also be degraded as fleets of 

trucks traveling on newly graded or unpaved roads increase the amount 

of dust released into the air—which can contribute to the formation of 

regional haze.38

Inherent safety risks: Transporting oil and gas by any means—through 

pipelines, rail, truck, or barge—poses inherent safety risks. However, in 

January 2013, we found that pipelines are relatively safe when compared 

with other modes, such as rail and truck, for transporting hazardous 

goods because pipelines are mostly underground.39 For example, we 

 

34Ceres, Flaring Up: North Dakota Natural Gas Flaring More Than Doubles in Two Years

(July 2013).

35Nitrogen oxides are regulated pollutants commonly known as NOx that, among other 

things, contribute to the formation of ozone and have been linked to respiratory illness, 

decreased lung function, and premature death. Particulate matter is a ubiquitous form of 

air pollution commonly referred to as soot. GAO, Diesel Pollution: Fragmented Federal 

Programs That Reduce Mobile Source Emissions Could Be Improved, GAO-12-261 

(Washington, D.C.: Feb. 7, 2012). 

36According to the Department of State’s Final Environmental Impact Statement for the 

Keystone XL Pipeline, the use of liquefied natural gas (LNG) as a fuel source for trains is 

being developed and tested. The use of LNG could reduce greenhouse gas emissions 

compared to the use of diesel fuel. 

37GAO, Surface Freight Transportation: A Comparison of the Costs of Road, Rail, and 

Waterways Freight Shipments That Are Not Passed on to Consumers, GAO-11-134 

(Washington, D.C.: Jan. 26, 2011). 

38T. Colborn, C. Kwiatkowski, K. Schultz, and M. Bachran, “Natural Gas Operations From 

a Public Health Perspective,” International Journal of Human & Ecological Risk 

Assessment 17, no. 5 (2011). 

39GAO, Pipeline Safety: Better Data and Guidance Needed to Improve Pipeline Operator 

Incident Response, GAO-13-168 (Washington, D.C.: Jan. 23, 2013).
 

Page 19 GAO-14-667 Oil and Gas Transportation

found that large trucks and rail cars transporting hazardous materials, 

including crude oil and natural gas liquids, resulted in far more fatalities 

and incidents than pipelines. Specifically, we found that from 2007 to 

2011, fatalities averaged about 14 per year for all pipeline incidents 

reported to PHMSA, including an average of about 2 fatalities per year 

resulting from incidents on hazardous liquid and natural gas transmission 

pipelines.40 In comparison, in 2010, 3,675 fatalities resulted from incidents 

involving large trucks and 730 additional fatalities resulted from railroad 

incidents. Therefore, increased transport of oil and gas by rail, truck, or 

barge could increase safety risks.

According to state officials and several publications we reviewed, 

increased truck traffic resulting from increased oil and gas production can 

present hazardous driving conditions—particularly on roads not designed 

to handle heavy truck traffic.41 Our analysis of data from PHMSA found 

that in recent years, the number of reported incidents involving the 

transport of crude oil by truck in both Texas and North Dakota has 

increased. Specifically, such incidents increased in Texas from 17 

incidents in 2008 to 70 incidents in 2013, and in North Dakota they 

increased from 1 incident in 2008 to 16 incidents in 2013.

Barge accidents also pose safety risks and can have associated 

environmental and economic effects. For example, according to the U.S. 

Coast Guard Polluting Incident Compendium, in 2011, a barge struck a 

bridge on the Lower Mississippi River causing damage to the barge and a 

discharge of just over 11,000 gallons of oil.42 In February 2014, a barge 

crash resulted in the spilling of about 31,500 gallons of crude oil into the 

Mississippi River, temporarily shutting down transportation along the river. 

According to a 2012 Congressional Research Service report, an oil spill 

from a barge can cause significant harm to marine ecosystems and 

 

40More recently, we analyzed PHMSA’s pipeline incident data for 2008 through 2013 and 

found that there was an average of about 3 fatalities per year from incidents involving 

natural gas pipelines and hazardous liquid pipelines that carry crude oil. Of the 17 

reported fatalities during that time, 8 were attributed to a natural gas pipeline incident in 

2010.

41For example, testimony of Dana “Sam” Buckles Tribal Executive Board Member 

Assiniboine and Sioux Tribes of the Fort Peck Reservation before the Senate Committee 

On Indian Affairs Oversight hearing on Tribal Transportation: Pathways to Infrastructure 

and Economic Development in Indian Country, 113th Cong., 2nd sess., March 13, 2014. 

42U.S. Coast Guard, Polluting Incident Compendium Part II (December 2012).
 

Page 20 GAO-14-667 Oil and Gas Transportation

individual aquatic organisms and negatively affect business activity near 

the spill, particularly businesses and individuals that count on the 

resources and reputation of the local environment.43 For instance, the 

local fishing and tourist industry may be affected, and in some cases, a 

well-publicized oil spill can weaken local or regional industries near the 

spill site, regardless of the actual threat to human health created by the 

spill.

Economic implications: According to a number of studies and publications 

we reviewed, infrastructure limitations and related effects could have 

economic implications, including lost revenue, higher energy prices, and 

hindered development.

• Lost revenue: In addition to the risks to air quality from flaring, we 

found in October 2010 that flaring natural gas has economic 

implications,44 and in April 2014 the Environmental Protection Agency 

reported that flaring results in the destruction of a valuable resource.45

For example, in 2010 we found that on federal oil and gas leases, 

natural gas that is flared, instead of captured for sale, represents a 

loss of about $23 million annually in royalty revenue for the federal 

government. According to a 2013 report from the North Dakota 

Pipeline Authority, in August 2013, 2.7 percent of the total economic 

value and 7.2 percent of the total energy content being produced in 

North Dakota were lost due to flaring.46 In another example, a Ceres 

report found that in May 2013 roughly $3.6 million of revenue was lost 

per day, at market rates, as a result of flaring in North Dakota.47

 

43Congressional Research Service, Oil Spills in U.S. Coastal Waters: Background and 

Governance, RL33705 (Washington, D.C.: Jan. 11, 2012). 

44GAO, Federal Oil and Gas Leases: Opportunities Exist to Capture Vented and Flared 

Natural Gas, Which Would Increase Royalty Payments and Reduce Greenhouse Gases, 

GAO-11-34 (Washington, D.C.: Oct. 29, 2010). 

45Environmental Protection Agency, Oil and Natural Gas Sector Hydraulically Fractured 

Oil Well Completions and Associated Gas During Ongoing Production, (April 2014).

46North Dakota Pipeline Authority, “North Dakota Natural Gas: A Detailed Look at Natural 

Gas Gathering,” Oct. 21, 2013. 

47Ceres, Flaring Up: North Dakota Natural Gas Flaring More Than Doubles in Two Years

(July 2013). 
 

Page 21 GAO-14-667 Oil and Gas Transportation

• Higher energy prices: Growing shale development and the resulting 

increased availability and lower prices of natural gas have contributed 

to an increasing reliance on natural gas as a source of producing 

electricity in some parts of the country. However, pipeline 

infrastructure limitations have at times contributed to price spikes. For 

example, according to a paper from ICF International, pipeline 

limitations were a contributing factor to higher natural gas prices in the 

northeast in January 2014.48 A cold weather pattern involving record 

low temperatures led to increased demand for natural gas for space 

heating and for generating electricity across parts of the country. With 

the surge in demand, several major pipeline systems became 

constrained and could not deliver sufficient natural gas to meet 

demand. According to a 2014 EIA publication, prices at the Algonquin, 

Massachusetts trading point, which normally are around $3 to $6 per 

million British thermal units (MMBtu) during unconstrained periods, 

reached up to $38/MMBtu in early January.49 These price increases 

for natural gas led electricity systems to use more oil-fueled 

generating resources during this period.

• Hindered oil and gas production: A 2013 study sponsored in part 

by the Utah Department of Transportation found that oil and gas 

production from the Uinta Basin is likely to be constrained by 

limitations in the capacity of transportation infrastructure. Specifically, 

the study found that existing pipelines in the state are already at or 

near capacity, and by 2020, demand on the infrastructure network to 

transport oil and gas will exceed capacity—resulting in a loss of 12 

percent of potential production over the next 30 years.50 Further, 

according to a 2013 industry report, infrastructure constraints such as 

pipeline limitations and bottlenecks from the Permian Basin in Texas 

to a key hub have contributed to discounted prices for some domestic 

crude oils.51 For example, we found in March 2014 that West Texas 

 

48ICF International is a consulting firm that provides information to public- and privatesector clients. 

49EIA, Northeast and Mid-Atlantic power prices react to winter freeze and natural gas 

constraints (Jan. 21, 2014). 

50Duchesne County, Uintah County, Uintah Transportation Special Service District, and 

the Utah Department of Transportation, Final Report: Uinta Basin Energy and 

Transportation Study, Project No. S-LC47 (14) (Salt Lake City, Utah: April 2013). 

51John R. Auers and John Mayes, “North American Production Boom Pushes Crude 

Blending,” Oil and Gas Journal (May 6, 2013). 
 

Page 22 GAO-14-667 Oil and Gas Transportation

Intermediate crude oil—a domestic crude oil delivered to a key hub 

that is used as a benchmark for pricing for all crude oil—was priced 

just under $18 per barrel less in 2012 than Brent, an international 

benchmark crude oil from the European North Sea that has 

historically been about the same price as West Texas Intermediate.52

These discounted prices mean resource developers have received 

lower prices for their crude oil production. According to a 2013 Energy 

Policy Research Foundation report, discounted prices may eventually 

lead to production growth constraints.53

Gathering pipeline construction has increased significantly as a result of 

increased shale oil and gas development; however, the increase in 

pipeline mileage is unknown because data on gathering pipelines are not 

systematically collected by PHMSA nor by every state. The Interstate 

Natural Gas Association of America (INGAA), a trade organization 

representing interstate natural gas transmission pipeline companies, 

estimated in March 2014 that shale oil and gas development will result in 

approximately 14,000 miles of new gas gathering pipelines and 7,800 

miles of new oil gathering pipelines added each year from 2011 through 

2035.54 State officials in Pennsylvania, North Dakota, Texas, and West 

 

52GAO, Petroleum Refining: Industry’s Outlook Depends on Market Changes and Key 

Environmental Regulations, GAO-14-249 (Washington, D.C.: Mar. 14, 2014).

53Energy Policy Research Foundation, Pipelines, Trains and Trucks: Moving Rising North 

American Oil Production to Market (Washington, D.C.: Oct. 21, 2013). The Energy Policy 

Research Foundation Inc. is a not-for-profit organization that studies energy economics 

and policy issues. 

54The INGAA Foundation Inc. North American Midstream Infrastructure through 2035: 

Capitalizing on Our Energy Abundance, An INGAA Foundation Report, Prepared by ICF 

International (Mar. 18, 2014), available at http://www.ingaa.org/File.aspx?id=21498

(accessed May 16, 2014).

DOT Has Not Fully 

Addressed Safety 

Risks from Expansion 

of Federally 

Unregulated 

Gathering Pipelines

Increases in the Number, 

Size, and Operating 

Pressure of Gathering 

Pipelines Pose Additional 

Risk, Particularly Where 

They Are Not Federally 

Regulated
 

Page 23 GAO-14-667 Oil and Gas Transportation

Virginia said that companies have invested significantly in gathering 

pipeline infrastructure. For example, according to data published by 

Texas state officials, 15,684 new miles of federally unregulated gathering 

pipelines were added in the state between 2010 and 2013.55 In response 

to the growth in gathering pipelines, Texas officials told us that their state

enacted legislation to increase state regulatory authority over gathering 

pipelines. Similarly, North Dakota passed rule changes in 2013 to 

increase state regulatory authority over gathering pipelines. Texas 

officials told us that they plan to study and determine what parts of their 

rules should apply to gathering pipelines during 2014 and then issue 

guidance in 2015. In April 2014, North Dakota implemented regulations 

requiring companies to report the location and characteristics of gathering 

pipelines carrying any products including natural gas, crude oil, natural 

gas liquids, water, and others. The National Association of Pipeline Safety 

Representatives, an association representing state pipeline safety 

officials, produced a compendium of state pipeline regulations showing 

that most states with delegated authority from PHMSA to conduct 

intrastate inspections do not have expanded regulations that cover 

increased oversight of gathering pipelines.56 As a result, companies 

building gathering pipelines in rural areas are generally not subject to 

inspection and do not have to report the location and characteristics of 

much of the gathering pipelines being installed.

Although the majority of the total gathering pipeline network that exists 

are the traditional small pipelines, state pipeline regulators, PHMSA 

officials, and pipeline operators we spoke with said that some newly built 

 

55State officials from the other three states could not provide precise numbers on 

gathering pipeline construction because most of this new construction is in rural locations 

where pipeline operators are exempt from federal reporting and oversight regulations and 

these states, unlike Texas, did not have their own reporting requirements. PHMSA 

regulations for natural gas gathering pipelines do not apply to rural areas designated as 

Class 1 which is defined as any location with 10 or fewer buildings intended for human 

occupancy within 220 yards of the centerline of the pipeline for a 1-mile segment of 

pipeline, see 49 C.F.R. § § 192.5 and 192.8 . For hazardous liquid gathering pipelines, 

PHMSA regulates only certain rural gathering pipelines within one-quarter mile of 

environmentally sensitive areas, see 49 C.F.R. §195.11. However, as discussed in the 

background of this report, PHMSA regulates non-rural pipelines. 

56Based on our analysis, we determined that expanded regulations vary by state, but the 

compendium shows that at least 6 states have some form of expanded regulation. 

National Association of Pipeline Safety Representatives, Compendium of State Pipeline 

Safety Requirements & Initiatives Providing Increased Public Safety Levels compared to 

Code of Federal Regulations, second edition (Sept. 9, 2013).
 

Page 24 GAO-14-667 Oil and Gas Transportation

gathering pipelines have larger diameters and higher operating pressures 

that more closely resemble transmission pipelines than traditional 

gathering pipelines. For example, while gathering pipelines have 

traditionally been 2 to 12 inches in diameter, one company operating in 

the Texas Eagle Ford shale region showed us plans to build 30- and 36-

inch natural gas gathering pipelines, which is near the high end of 

diameters for regulated transmission pipelines. Historically, federally 

unregulated gathering pipelines were low pressure, smaller-diameter 

pipelines and were generally in rural areas where there was less safety 

risk. Now, according to PHMSA, industry, and state pipeline safety 

officials we spoke to, gathering pipelines of larger diameter and higher 

pressure are being constructed, including in areas closer to populations. 

Such construction could increase safety risk, since an incident occurring 

on one of these larger, high-pressure unregulated gathering pipelines 

could affect a greater area and be as serious as an incident involving a 

regulated transmission pipeline of similar diameter and pressure.

Pipeline operators and industry organizations told us that new gathering 

pipelines are likely safer because new pipelines are less susceptible to 

issues like corrosion—a common reason for failure in older pipelines. 

Pipeline operators also told us that some large-diameter, high-pressure 

gathering pipelines are built to the same specifications as regulated 

transmission pipelines and that these pipelines are in very rural areas 

with little risk to people. They also expressed that safety is very important 

to the industry and that companies understand not only the potential harm 

to the network, people, and environment, but also the public perception 

following a high-profile incident and therefore manage their assets to 

avoid incidents. Nonetheless, state pipeline regulators, PHMSA officials, 

and safety organizations expressed concern with the potential safety 

threat of unregulated gathering pipelines of this size. For example, a 

citizens’ shale development awareness group in Pennsylvania has 

documented construction of several unregulated gathering pipelines in 

the state that are 24 inches in diameter. The group argues that while 

these gathering pipelines are in rural areas, they are being built 

unnecessarily close to homes. PHMSA officials told us that the large 

diameter and pressure of the pipelines increase the concern for the safety 

of the environment and people nearby.

In addition to potential increased safety risk as a result of the changing 

characteristics of the pipelines, some stakeholders shared concerns 

about the readiness of emergency responders to address potential 

incidents that could occur with unregulated gathering pipelines. PHMSA’s 

emergency response planning requirements that apply to other pipelines 
 

Page 25 GAO-14-667 Oil and Gas Transportation

do not apply to rural unregulated gathering pipelines. Consequently, 

response planning in rural areas with unregulated gathering lines may be 

inadequate to address a major incident. Transmission pipeline operators 

with pipelines similar in size to the new gathering pipelines are required to 

develop comprehensive emergency response plans and coordinate with 

local emergency responders. Emergency response officials whom we 

spoke with stated that lacking information about the location of some 

gathering pipelines, responders—particularly in rural areas—may not be 

adequately prepared to respond to an incident. A representative from the 

National Association of State Fire Marshals told us that training and 

communication with pipeline companies are key for emergency 

responders’ knowledge and awareness. Additionally, emergency 

response officials also told us that rural areas in particular lack the level of 

hazardous-materials response resources found in metropolitan areas 

where more is known about the extent of local pipeline networks. The 

National Transportation Safety Board (NTSB) has also stated that 

emergency response planning is critical for pipeline safety and has 

recommended that pipeline operators help ensure adequate emergency 

response by providing local jurisdictions and residents with key 

information on the pipelines in their areas.

As previously discussed, PHMSA applies a risk-based approach to 

regulating pipeline safety. A key principle of risk-based management is 

promoting the use of regulations, policies, and procedures to provide 

consistency in decision-making. PHMSA has acknowledged the growing 

potential risk of federally unregulated gathering pipelines as more are 

constructed and at larger diameters and higher pressures, but DOT has 

not proposed regulatory changes to address this risk. In August 2011, 

PHMSA published an Advance Notice of Proposed Rulemaking, stating 

that the existing regulatory framework for natural gas gathering pipelines 

may no longer be appropriate due to recent developments in gas 

production.57 In the notice, PHMSA asked for comment on whether it 

should consider establishing new, risk-based safety requirements for 

large-diameter, high-pressure gas gathering pipelines in rural locations, 

among other potential changes to gathering pipeline regulations.58 The 

 

57An Advance Notice of Proposed Rulemaking is an initial step in a rulemaking proceeding 

seeking comment on issues the agency may address in future proposed regulation. 

5876 Fed. Reg. 53086 (Aug. 25, 2011).

DOT Has Not Proposed 

Regulatory Changes to 

Address Risks Posed by 

Gathering Pipelines
 

Page 26 GAO-14-667 Oil and Gas Transportation

proposal also states that enforcement of current requirements has been 

hampered by the conflicting and ambiguous language of the current 

regulation that can produce multiple classifications for the same pipeline 

system, which means that parts of a single pipeline system can be 

classified as rural gathering pipelines and therefore be unregulated, while 

other parts of the same pipeline with the same characteristics are 

regulated. PHMSA officials told us they have drafted proposed 

regulations for both gas and hazardous liquid gathering pipelines but as 

of June 2014, the agency had not issued the Notice of Proposed 

Rulemaking for comment. According to DOT officials, the proposed gas 

rule is being reviewed internally and the proposed hazardous liquid rule is 

with the Office of Management and Budget for review.59 PHMSA officials 

also told us they have studied existing federal and state gathering 

pipeline regulation to help identify where gathering pipelines are currently 

regulated and remaining gaps; however, this study has been in the final 

stages of review during the course of our work and has not yet been 

published.

Given the lack of PHMSA regulation of rural gathering pipelines, the 

extent, location, and construction practices for rural gathering pipelines is 

largely unknown by federal, state, and local officials, and oversight to 

verify the construction and monitor operators’ safety practices is lacking. 

In 2012, we concluded that unregulated gathering pipelines also pose 

risks due to construction quality, maintenance practices, and limited or 

unknown information on pipeline integrity. 60 We recommended at that 

time that PHMSA collect data on unregulated gathering pipelines to 

facilitate quantitatively assessing the safety risks posed by these 

pipelines, which we said could assist in determining the sufficiency of 

 

5975 Fed. Reg. 63774 (Oct. 18, 2010).

60GAO, Pipeline Safety: Collecting Data and Sharing Information on Federally 

Unregulated Gathering Pipelines Could Help Enhance Safety, GAO-12-388 (Washington, 

D.C.: Mar. 22, 2012). For this report, we surveyed state pipeline agencies, among which 

there were 39 agencies that reported they had gathering pipelines in their state that 

PHMSA does not regulate. Eighteen of the state agencies reported that the quality of 

installation procedures and construction materials is a safety risk for unregulated 

gathering pipelines because the construction phase of pipeline installation is critical to 

ensure the long-term integrity of the pipeline. Sixteen state agencies reported that the 

extent to which pipeline operators maintain their pipelines is a moderate or high safety risk 

for unregulated gathering pipelines. According to agency officials, after a pipeline is 

installed and operational, periodic maintenance—such as inspecting and testing 

equipment—is important to prevent leaks and ruptures and could extend the operating life 

of a pipeline. 
 

Page 27 GAO-14-667 Oil and Gas Transportation

safety regulations for gathering pipelines. According to DOT officials, as 

of July 2014, PHMSA has compiled data on existing gathering pipeline 

requirements, and the resulting report is under internal review. 

Furthermore, officials said that data collection is part of the proposed 

rules also under review. In 2010, the National Association of Pipeline 

Safety Representatives recommended that PHMSA modify federal 

pipeline regulations to establish requirements for gathering pipelines in 

rural areas that are presently not regulated. The association stated that 

with the advent of new production technologies, there has been rapid 

development of gas production from shale formations such as the 

Barnett, Marcellus, and Bakken resulting in a significant amount of new 

gathering pipeline construction. Further, in these newer gas gathering 

systems, it is not uncommon to find rural gathering pipelines up to 30 

inches in diameter and operating at 1480 psi, which is the higher end of 

traditional transmission operating pressure.61 Enhanced pipeline safety for 

all types of pipeline was also on NTSB’s “Most Wanted List” in 2013 and 

2014. NTSB has prioritized overall pipeline safety because of the 

increased demand in oil and gas and the aging pipeline infrastructure.

Resources are an important consideration in evaluating how to address 

the increased risk of gathering pipelines. According to PHMSA officials, 

inspection resources are limited and would be further stretched if rural 

gathering pipelines were regulated. If PHMSA were to receive increased 

staff funding in the near future, there could be a lag in ramping up the 

inspection workforce because inspectors would have to complete 

PHMSA’s 3-year pipeline-inspection training to become fully certified.62

However, if PHMSA were to set minimum federal regulations for 

gathering pipelines, this would enable the agency to include currently 

federally unregulated rural gathering lines in decisions for prioritizing 

resources for addressing safety risks. This is in line with the principles of 

risk-based management, while also enabling data-driven, evidence-based 

decisions about the risks of rural gathering pipelines, which our previous 

 

61National Association of Pipeline Safety Representatives, Urging PHMSA to Establish 

Regulatory Requirements for Gas Gathering Lines in Class 1 Areas, Resolution 2010-2 

AC-2 (Sept. 30, 2010).

62 Some state officials also expressed concern about the capacity of PHMSA’s inspector 

training program, which all state inspectors are also required to complete. The 3-year 

program must be completed mostly in PHMSA’s Oklahoma City, Oklahoma, training 

center, which can create scheduling and budget challenges.
 

Page 28 GAO-14-667 Oil and Gas Transportation

work has shown is especially important in a time of limited resources.63

State regulators in all four states we spoke with acknowledged their 

resources could also be strained; however, the officials supported 

regulating rural gathering pipelines. State officials said that without rural 

gathering pipeline regulation, such as provisions for inspections or 

industry reporting, they have limited knowledge of the construction and 

maintenance practices of rural gathering pipeline operators, do not 

always know where new rural gathering pipelines are being constructed, 

and may not even have communication with the operators.

Gas flows from shale plays into transmission pipelines have increased, 

but construction of new transmission pipelines has not increased 

dramatically as a result of increased shale development. According to 

PHMSA data, approximately 4,500 miles of new oil and gas transmission 

pipelines were built between January 2010 and December 2012. This 

includes about 2,000 miles each of crude oil and natural gas pipelines 

and the remaining is pipeline for natural gas liquids.

Oil and gas pipeline industry representatives and transmission pipeline 

companies we spoke with stated that transmission pipeline companies 

have been able to accommodate increased demand in various ways. 

Transmission pipeline companies have repurposed existing pipelines, 

made operational changes—including increased compression and 

change in directional flow—and added additional capacity to the current 

network through smaller-scale construction projects. Companies have 

repurposed pipelines by changing them from one product to another, 

such as converting a natural gas pipeline to a natural gas liquid pipeline 

or a crude oil pipeline. Companies have also instituted operational 

changes such as adding additional compression to their line, which allows 

them to move more gas through the same lines, and changing directional 

flow of a pipeline. One pipeline operator we spoke with is reversing flow 

of its gas transmission pipeline. Prior to shale development, this pipeline 

moved natural gas from the Gulf Coast to the Northeast. By 2017, the 

volume of gas that once flowed north will flow south. The pipeline 

operator stated that changing the direction of the flow, while not as easy 

as flipping a switch, requires significantly less time and money than 

 

63We have applied these criteria to PHMSA before when reviewing its gas integrity 

management program; see GAO-13-577. 

Transmission Pipeline 

Infrastructure Has Not 

Increased Substantially as 

a Result of Shale 

Development
 

Page 29 GAO-14-667 Oil and Gas Transportation

building a new pipeline. Smaller-scale construction projects, such as short 

pipeline extensions, help meet the demands of shale areas like the 

Marcellus because the natural gas being produced is in close proximity to 

its destination market. Therefore, it is primarily a matter of connecting 

new gas production into the existing transmission pipeline network.

However, accommodating increased demand through new construction is 

a challenging proposition. To build a transmission pipeline requires a 

long-term commitment—often a contract that spans 30 to 50 years from 

producers. Major transmission pipeline projects may also face long 

timeframes. Pipeline companies we spoke with stated that once contracts 

are in place it usually takes 2 to 4 years to complete a pipeline. This is in 

part a result of the permitting process, which can include multiple federal 

and state agencies as well as obtaining rights to build on properties of 

individual land owners.64 Timelines can be longer if the pipeline 

construction project is contentious.65 The construction timeline is also 

dependent on terrain and weather. Pipeline industry representatives in 

West Virginia told us that constructing pipelines in mountainous terrains is 

much more difficult than in flat land. State officials in North Dakota said 

that long winters and short construction seasons cause construction 

projects to last over several construction seasons to complete. Other 

reasons provided by state officials and industry officials for a slower 

growth in pipeline infrastructure in North Dakota include the challenge of 

securing right-of-ways, as well as uncertainty in market demand. It is 

possible that continued shale exploration and development in other parts 

of the country could displace demand for Bakken shale products. 

Developers have proposed some future pipeline projects, and some have 

been approved in areas like North Dakota, but transmission pipeline 

mileage has not seen the same kind of rapid increase as gathering 

pipeline mileage. For example, Enbridge Energy Partners has proposed a 

transmission pipeline called Sandpiper that spans 612 miles from North 

Dakota through Minnesota to Wisconsin. The pipeline is proposed to be 

24 inches and 30 inches in different places and will carry between 

 

64GAO-13-221. 

65For example, the Keystone pipeline, which would move approximately 100,000 barrels 

of Bakken crude oil per day, applied for a Presidential Permit in 2008, which has not been 

approved. For proposed petroleum pipelines that cross international borders of the United 

States, the President, through Executive Order (EO) 13337, directs the Secretary of State 

to decide whether a project serves the national interest before granting a Presidential 

Permit. 
 

Page 30 GAO-14-667 Oil and Gas Transportation

225,000 and 375,000 barrels of oil. WBI Energy announced planning for a 

375-mile natural gas transmission line called the Dakota Pipeline in 

January 2014. The proposed route would start in North Dakota and 

continue into Minnesota.

In areas of shale development without access to an established pipeline 

network, such as the Bakken region, lengthy timelines and high costs 

associated with building transmission pipeline have led producers to seek 

alternative methods for transporting some of the production—primarily 

rail.

The use of rail to transport crude oil from development areas to refineries 

has increased dramatically. STB data show that rail moved about 236,000 

carloads of crude oil in 2012, which is 24 times more than the 

approximately 9,700 carloads moved in 2008 (see fig. 5).66 Carloads 

further increased in 2013, with AAR reporting that Class I freight railroads 

originated 407,761 carloads of crude oil that year.67

 

66Due to a lag in data reporting, 2013 STB data were not available for this report. 

67We did not independently verify the AAR data.

DOT Is Working to 

Address Risks 

Related to the 

Increase in 

Transportation of Oil 

by Rail

Crude Oil Is Transported 

Increasingly by Rail and 

Travels Long Distances in 

Large Volumes
 

Page 31 GAO-14-667 Oil and Gas Transportation

Figure 5: Estimated Number of Crude Oil Rail Carloads in the United States, 2008 to 

2012

Note: The number of crude oil carloads, which was small in 2008-2011, had for those years a 

declining margin of error that started at 19 percent in 2008 and went down to about 8 percent in 2011. 

For 2012, the margin of error for crude oil carloads was less than 5 percent.

According to railroads, the majority of this increased movement of crude 

oil by rail is done using unit trains, which are trains that carry only one 

commodity to a single destination. Crude oil unit trains may consist of 

80 to 120 tank cars, each carrying about 30,000 gallons of product, for a 

total of about 2.4 million to 3.6 million gallons of crude oil per train (see 

figure 6). This has resulted in an increase in demand for tank cars. 

According to AAR, nearly 50,000 tank cars were used to transport crude 

oil by rail as of April 2014.68

 

68Specifically, AAR stated that during the period of 2013 through April 2014, there were 

104,597 tank cars used to transport flammable liquids by rail, including 49,182 tank cars 

used for crude oil.
 

Page 32 GAO-14-667 Oil and Gas Transportation

Figure 6: Crude Oil Unit Train

There are different types of crude oil, which affects where crude is 

refined, as refineries are configured differently to handle the various 

types. This, in turn, affects where crude oil is transported for refining.69

Increasingly, crude oil produced in the United States is “light and sweet” 

(lower in density and sulfur content); in contrast, a portion of new 

Canadian production has been “heavy and sour” crude oil (higher in 

density and sulfur content).70 We have previously reported that not all 

U.S. refineries can take advantage of domestic crude oils to the same 

extent because of configuration constraints at some refineries.71

Therefore, oil may travel long distances to a refinery with the matching 

refining configuration even if there is refinery capacity nearer to the crude 

oil source. According to an oil industry association in North Dakota, much 

of the domestic refining capacity for Bakken crude oil, which is a lighter 

crude, is located along the Gulf, East, and West Coasts. According to 

 

69According to DOT officials, commodity price is also a factor in where crude oil is 

shipped.

70Crude oil is generally classified according to two parameters: density and sulfur content. 

Less dense crude oils are known as “light,” while denser crude oils are known as “heavy.” 

Crude oils with relatively low sulfur content are known as “sweet,” while crude oils with 

higher sulfur content are known as “sour.” In general, heavier and more sour crude oils 

require more complex and expensive refineries to process the crude oil into usable 

products.

71GAO-14-249. 
 

Page 33 GAO-14-667 Oil and Gas Transportation

STB data, about 69 percent of crude oil transported by rail in 2012 

originated in North Dakota, followed by Texas and all other states (see 

fig. 7). STB data show that crude oil originating in North Dakota in 2012 

traveled to 19 destination American states or Canadian provinces across 

North America. While most Bakken crude oil was shipped to destinations 

along the Gulf Coast, there was a large increase in oil shipped to East 

and West Coast destinations in 2012, signaling a shift in demand from the 

Gulf region to the other coasts.

Figure 7: North American Originations and Destinations of Crude Oil Carloads 

Hauled by Rail, 2012

a

“Other” originations include 22 other American states and Canadian provinces, among the largest of 

which are Saskatchewan, Alberta, Oklahoma, California, and Colorado. 

b

Notes: Carload numbers are rounded to the nearest hundred. The sum of carloads by destination 

does not equal the number of carloads originated in North Dakota due to rounding. The margins of 

error for estimates of carloads received by individual states or provinces are as follows: Missouri 

(57%), Quebec (55%), New Brunswick (52%), Arkansas (50%), California (40%), Delaware (40%),

Michigan (38%), New Jersey (35%), Washington (32%), Texas (27%), Illinois (26%), Oklahoma 

(25%), New York (22%), and Louisiana (9%). For example, we are 95 percent confident that the value 

“Other” destinations include 5 other American states and Canadian provinces where the estimated 

carloads received was fewer than 1,000, including oil that was shipped to final destinations within the 

state of North Dakota. Multiple destinations may exist in some states.
 

Page 34 GAO-14-667 Oil and Gas Transportation

for Missouri is within +/- 57 percent of the estimate itself. Additionally, the relative margins of error for 

estimates of origination carloads are as follows: Texas (16%), North Dakota (7%), and all other 

originations (9%).

While pipelines generally deliver commodities to a fixed customer, rail 

offers the flexibility to serve different customers, allowing shippers to shift 

product quickly in response to market needs and price opportunities. 

Despite the great increase in crude oil transported by rail, the commodity 

remains a small percentage of railroads’ business, comprising about 1.4 

percent of Class I railroads’ freight originations in 2013, according to 

AAR. As previously discussed, there are thousands of miles of track in 

the United States, providing various shipping opportunities for crude oil, 

as well as other commodities.72 Officials from Class I railroads said they 

have not extensively added new infrastructure to specifically 

accommodate the increased shipping of crude oil by rail, although officials 

from some railroads said they have added track infrastructure in specific 

areas of increased shale oil development to increase capacity.

As the movement of crude oil by rail has increased, incidents, such as 

spills and fires involving crude oil trains have also increased. PHMSA’s 

hazardous materials incident data show that rail crude oil incidents in the 

United States increased from 8 incidents in 2008 to 119 incidents in 

2013.73 These data show that the majority of the 2013 incidents were 

small; however, two incidents in 2013, in Aliceville, Alabama and 

Casselton, North Dakota resulted in large spills and greater damage. 

Significant incidents have continued to occur in 2014, including an April 

derailment and fire in Lynchburg, Virginia. During a presentation at an 

April 2014 forum on rail safety, NTSB noted that significant accidents 

involving crude oil have increased in recent years, with one incident 

occurring between 2008 and 2012 compared to eight incidents since 

2012.

DOT, primarily through PHMSA and FRA, sometimes jointly, has taken 

steps to engage the rail and oil and gas shipping industries and 

emergency responders to address the safety of transporting crude oil by 

 

72We have ongoing work examining freight congestion in railroad corridors and the impact 

on local communities.

73PHMSA’s incident database can be searched at 

https://hazmatonline.phmsa.dot.gov/IncidentReportsSearch/ (accessed June 12, 2014).

DOT Is Taking Action to 

Address Safety Risks 

Resulting from the 

Transport of Crude Oil by 

Rail
 

Page 35 GAO-14-667 Oil and Gas Transportation

rail, particularly in response to concerns stemming from the July 2013 

Lac-Mégantic, Quebec accident:

• In August 2013, February 2014, and May 2014, DOT issued 

emergency orders to compel shippers and railroads to address safety 

risks by taking steps to secure unattended trains, ensure proper 

testing and packaging of crude oil, and notify emergency responders 

about crude oil shipments.74 DOT also issued safety advisories during 

this period recommending additional actions.75

• In August 2013, PHMSA, with FRA assistance, initiated an ongoing 

special inspection program to examine whether crude oil rail 

shipments are appropriately tested and packaged. The effort consists 

of spot inspections, data collection, and testing crude oil samples 

taken from tank cars. Initial information from the program has 

identified deficiencies; DOT issued fines against three companies in 

February 2014 for not following proper crude oil packaging 

procedures. According to PHMSA officials, this effort inspects about 2 

percent of Bakken crude oil trains.

• In September 2013, PHMSA issued an Advance Notice of Proposed 

Rulemaking seeking comments from industry and other stakeholders 

on improvements to standards for crude oil rail tank cars.76 This action 

was in response to the railroad industry’s 2011 petition for improved 

standards and recommendations from NTSB.

 

74FRA’s August 2013 emergency order required railroads to take additional steps to 

secure unattended trains to prevent unintended movement; DOT’s February 2014 

emergency order, amended in March 2014, specified requirements for testing and 

classifying crude oil for transportation by rail and required shippers to package crude oil 

under the more stringent standards as allowed by regulation; DOT’s May 2014 emergency 

order required railroads shipping 1,000,000 or more gallons of crude oil in a single train 

(about 35 car loads) to notify states’ emergency response commissions about the 

movement of such trains through their states and which specific counties trains would be 

traveling through.

75DOT’s August 2013 safety advisory recommended that railroads review the 

circumstances of the Lac-Mégantic accident and consider changes to their operating 

practices related to crew staffing, human factors, and train securement. DOT’s November 

2013 safety advisory reinforced the importance of proper testing and packaging for 

flammable liquids transported by train. DOT’s May 2014 safety advisory asked companies 

to use tank cars with the highest integrity available for transporting Bakken crude oil and 

to avoid using older DOT-111 tank cars. 

7678 Fed. Reg. 54849 (Sept. 6, 2013).
 

Page 36 GAO-14-667 Oil and Gas Transportation

• In January 2014, PHMSA issued a safety alert notifying the general 

public, emergency responders, shippers, and carriers that Bakken 

crude oil may be more flammable than traditional heavy crude oil 

based on tests associated with PHMSA and FRA’s special inspection 

program. PHMSA said it planned to issue final results of the tests at a 

later date.

• In February 2014, DOT entered into a voluntary agreement with AAR

to improve the safety of moving crude oil by rail including increased 

track inspections, improved emergency braking capabilities, use of a 

risk-based routing tool to identifying the safest routes, travel at lower 

speeds, and emergency response training and planning.

• Also in February 2014, PHMSA officials met with emergency 

responders and industry groups to discuss training and awareness 

related to the transport of Bakken crude oil.

• In July 2014, DOT issued an update on PHMSA and FRA’s joint 

special inspection program that includes results to date of their crude 

oil testing efforts and related discussion of the appropriate packaging 

of oil tested.

Additionally, in July 2014, PHMSA, in coordination with FRA, proposed 

new rules that align with key areas of concern cited by stakeholders: 

crude oil classification, testing, and packaging; crude oil tank car design; 

and emergency response. Specifically, PHMSA issued a Notice of 

Proposed Rulemaking seeking comment on proposals for new regulations 

to lessen the frequency and consequences of train accidents involving 

large volumes of flammable liquids, such as crude oil. The proposal 

includes new operational requirements for certain trains transporting a 

large volume of flammable liquids; revisions to requirements for crude oil 

classification, testing, and packaging; and improvements in tank car 

standards.77 Additionally, PHMSA, also in consultation with FRA, issued 

an Advance Notice of Proposed Rulemaking seeking comments in 

response to questions about potential revisions to current regulations for 

emergency response planning for crude oil transported by rail.

78 

 

7779 Fed. Reg. 45016 (Aug. 1, 2014).

7879 Fed. Reg. 45079 (Aug. 1, 2014).
 

Page 37 GAO-14-667 Oil and Gas Transportation

PHMSA’s current regulations for transporting hazardous materials require 

that shippers classify and characterize the materials they ship to identify 

the materials’ characteristic properties and select an appropriate shipping 

package based on those properties.79 “Classification” refers to identifying 

a material’s hazard class, which could be one or more from the list of nine 

in PHMSA’s hazardous materials regulations, such as a flammable liquid 

or flammable gas. “Characterization” refers to ascertaining other 

characteristics of the product to determine its proper packing group, a 

designation based on risk that identifies acceptable packages.80

Specifically, PHMSA’s regulations classify crude oil as a flammable liquid 

and offer acceptable tank cars under three packing groups based on 

characteristics such as the oil’s flash point—lowest temperature at which 

a liquid can vaporize to form an ignitable mixture in air—and boiling 

point.81 PHMSA’s regulations provide options for the tests shippers may 

use to determine these characteristics.82 Crude oil with higher boiling and 

flash points is considered less risky, since it is less likely to form 

flammable vapor unless exposed to extreme temperatures, and more 

approved packaging choices exist for such oil than for oil with lower 

boiling and flash points that could form ignitable vapor at lower 

temperatures. Substances that are gases, rather than liquid, at ambient 

temperatures are even more flammable, and thus more stringent 

packaging requirements apply to flammable gases than to flammable 

 

7949 C.F.R. Parts 172 and 173. 

8049 C.F.R. § 172.101. Hazardous liquids, including crude oil, can be packaged under 

three sets of increasingly stringent requirements known as “packing groups,” which range 

from the least restrictive group III to the most restrictive group I. In addition to specifying 

what types of tank cars may be used under each packing group, packing groups I and II 

require the shipper to develop a security plan that includes assessment of transportation 

security risks and measures to address those risks, see 49 C.F.R. § 172.800 (a)(6). 

According to PHMSA officials, the security plan would include planning for leaving a train 

unattended, which could have been a factor in the Lac-Mégantic accident, since that train 

was unattended at the time of the accident. The crude oil in the Lac-Mégantic accident 

had been assigned to packing group III, which does not require this plan. Subsequently, 

investigators have determined that it should have been assigned to packing group II, 

which would have required a plan. Details of the Lac-Mégantic accident are incomplete 

because the Transportation Safety Board of Canada’s investigation of the accident is still 

ongoing. As of January 2014, the agency was completing its examination and analysis 

phase and planned to soon move onto its reporting phase. 

8149 C.F.R. § § 172.101(g), 173.120, 173.121, 173.242, 173.243, and 179.200.

8249 C.F.R. § § 173.120(c) and 173.121 (a)(1).

Crude Oil Classification, 

Testing, and Packaging
 

Page 38 GAO-14-667 Oil and Gas Transportation

liquids. In particular, flammable gases must be packaged in pressure tank 

cars, which provide additional safety in the event of an accident.83

According to PHMSA officials, because crude oil is a natural resource, it 

has greater characteristic variability than a hazardous material 

manufactured under strict specifications or quality guidelines. Thus, 

testing may need to be done more frequently to make sure the proper 

packaging rules are followed, since different rules may apply depending 

on the characteristics of a particular oil shipment. A review by Canadian 

transportation safety officials determined that the crude oil involved in the 

Lac-Mégantic accident was packaged under less stringent packing 

requirements than those which should have been followed, given the 

flammability characteristics of the oil involved. Although, as DOT officials 

pointed out, a different packing group would not have changed the 

package itself, since the type of tank car involved in the incident, the 

DOT-111 tank car, is allowed for crude oil transport under all three 

packing groups.84

Stakeholders we spoke to have differing views on the volatility of crude oil 

from the Bakken region, the area where the most crude oil is being 

shipped by rail. Some industry stakeholders, including the operators of 

Bakken crude oil rail terminals, characterized Bakken crude oil as being 

like any other crude oil produced in the United States, while other 

stakeholders said it has differences that may make it more volatile. In 

particular, PHMSA and AAR officials said that Bakken oil has variable 

composition and may sometimes contain higher than usual levels of 

dissolved natural gases. According to AAR officials, this can lead to 

flammable gases building up in a tank car during transport. AAR officials 

also said that the presence of natural gas makes fires more likely when 

crude oil tank cars are involved in an accident. Additionally, a May 2014 

industry study noted that Bakken crude oil may contain higher amounts of 

dissolved flammable gases; however, the report states that it is not 

enough to warrant new regulations for crude oil rail transportation.85

 

8349 C.F.R § § 172.101, 173.115(a), 173.314, and 179.100.

84Transportation Safety Board of Canada, Rail Safety Advisory Letter—12/13 (Gatineau, 

Quebec, Canada: Sept. 11, 2013).

85American Fuel & Petrochemical Manufacturers and Dangerous Goods Transport 

Consulting Inc., A Survey of Bakken Crude Oil Characteristics Assembled For the U.S. 

Department of Transportation (May 14, 2014).
 

Page 39 GAO-14-667 Oil and Gas Transportation

According to PHMSA officials, the current regulatory framework for 

classifying and packaging crude oil for transport by rail may need to be 

further examined to ascertain if it addresses all of the risks posed by 

some shale crude oils that have properties unlike other typical crudes.

PHMSA’s July 2014 Notice of Proposed Rulemaking calls for shippers of 

mined gases and liquids to be transported by rail, including crude oil, to 

develop and implement a program for sampling and testing to ensure the 

shippers’ materials are properly classified and characterized. The 

procedures must outline a frequency of sampling and testing that 

accounts for the potential variability of the material being tested, sampling 

at various points to understand the variability of the material during 

transportation, sampling methods that ensure a representative sample of 

the entire packaged mixture is collected, and testing methods used, 

among other requirements. The sampling and testing program must be 

documented in writing and retained for as long as it remains in effect and 

be made available to DOT for review upon request. 

Representatives from railroads and crude oil terminals we spoke to, as 

well as from the oil and gas industry, have indicated that clarification 

about the requirements for testing and packaging crude oil is needed. 

Specifically, two of the railroads and two crude oil rail terminal operators 

told us that PHMSA needs to clarify its crude oil testing requirements, 

including to more clearly state which tests should be done and with what 

frequency.86 One of the terminal operators told us that without clearer 

guidance, they are unsure whether they are performing the right tests and 

testing with sufficient frequency. They are also concerned they may be 

incurring unnecessary expense from over-testing. PHMSA’s July 2014 

Notice of Proposed Rulemaking does not state which tests should be 

performed or specifically how often, but does state that testing methods 

used should enable complete analysis, classification, and characterization 

of the material as required by PHMSA’s regulations and that the 

frequency of testing should account for the potential variability of the 

material. The notice also seeks comment on whether more or less 

specificity of these requirements would aid shippers and whether the 

proposed guidelines provide sufficient clarity for shippers to understand 

whether they are in compliance. PHMSA has also drafted more detailed 

 

86The other railroads did not mention the issue, and the third terminal operator said the 

current guidance is sufficient.
 

Page 40 GAO-14-667 Oil and Gas Transportation

guidance on classification and packaging crude oil, including testing 

procedures, but had not released it publicly as of June 2014.87 

Additionally, the American Petroleum Institute, an oil and gas industry 

association, formed a working group in 2014 to develop industry 

standards for testing and packaging of crude oil for transportation by rail, 

which the group hopes to implement by October 2014. PHMSA officials 

said that PHSMA scientists have been attending the group’s meetings 

and providing input. In its July 2014 Notice of Proposed Rulemaking, 

PHMSA noted that it is encouraged by the development of an industry 

standard and that once finalized, PHMSA may consider adoption of such 

a standard.

Under PHMSA’s current packaging regulations, a number of types of tank 

cars are approved for transporting crude oil.88 However, DOT-111 tank 

cars are most commonly used, according to industry and railroad 

representatives, and PHMSA’s regulations allow its use for all types of 

crude oil, regardless of packing group. 

NTSB has documented a history of safety concerns with the DOT-111 

tank car. Specifically, NTSB has raised concerns regarding the tank car’s 

puncture resistance, heat tolerance, and potential for overpressurization 

during a fire. In its report of a 2011 investigation of the derailment of a 

train hauling ethanol tank cars, NTSB noted that its 1991 safety study and 

four train-derailment investigations from 1992 to 2009 had identified 

problems with DOT-111 tank cars.89 The report further concluded that the 

car’s poor performance suggested that DOT-111 tank cars are 

inadequately designed to prevent punctures and breaches and that the 

catastrophic release of hazardous materials can be expected when 

derailments involve DOT-111 cars.90 In response to that and other rail 

incidents, in 2012, NTSB recommended that PHMSA upgrade its DOT-

 

87PHMSA provided us a draft of this guidance in March 2014; according to PHMSA 

officials, the document is still under development.

8849 C.F.R. § § 173.242(a) and 173.243(a),

89NTSB, Railroad Accident Brief, NTSB/RAB-13/02 (Washington, D.C.: Aug.14, 2013).

90According to FRA officials, tank car specifications and design requirements were based 

on forces and stresses incident to normal transportation, not crash survivability, since 

derailments are not normal transportation events. Officials said that recently crash 

survivability has been a metric for tank car specification and design.

Crude Oil Tank Car Design
 

Page 41 GAO-14-667 Oil and Gas Transportation

111 tank car standards to improve tank shielding and puncture 

resistance, a move the industry had already begun to address.

In 2011, the railroad industry petitioned PHMSA to adopt improved 

standards for DOT-111 tank cars and worked with tank car manufacturers 

and other stakeholders to develop improved industry standards that were 

implemented later that year. These standards called for a thicker shell to 

improve puncture resistance, shielding at both ends of the tank car, and 

protection for the top fittings of the tank car. More recently in November 

2013, following the Lac-Mégantic accident, the railroad industry called for 

further tank car upgrades, including a thicker shell, protection to prevent 

overheating, additional shielding, protection for outlet handles on the 

bottom of a tank, and high-capacity pressure relief valves.91 Figure 8 

shows how these various proposed upgrades may be incorporated into a 

crude oil tank car.

 

91Additionally, an AAR official speaking at an NTSB forum and officials from one railroad 

that we spoke to suggested that the type of tank cars currently used may not be 

appropriate for transporting crude oil of higher flammability and that pressure tank cars 

may be preferable. PHMSA’s hazardous materials regulations require flammable gases to 

be transported in pressure tank cars. According to FRA officials, if the vapor pressure of 

crude oil is high enough, regulations would require putting it in a pressure car. According

to PHMSA’s and FRA’s July 2014 update on its special inspection effort, the current 

classification of Bakken crude oil as a flammable liquid is accurate under the current 

classification system; however, the update also notes that Bakken crude oil tested has a 

higher gas content, higher vapor pressure, lower flash point, and lower boiling point than 

most other crude oil in the United States. Consequently, the update concluded that 

Bakken crude oil has a higher degree of volatility than other oil, which correlates to 

increased ignitability and flammability.
 

Page 42 GAO-14-667 Oil and Gas Transportation

Figure 8: Proposed Upgrades to Crude Oil Rail Tank Cars

Although tank cars are generally owned by shippers or third parties, one 

railroad told us they intend to acquire their own fleet of tank cars built to 

the railroad industry’s 2013 proposed standards. The railroad hopes to 

incentivize the cars’ use by shippers; however, railroads are obligated to 

move materials as long as they are packaged according to federal 

standards, and told us they cannot force customers to use upgraded cars 

and have to accept cargo so long as it is in an allowable package, which 

includes older model DOT-111 cars.

A wide range of stakeholders we interviewed—including those from 

PHMSA, NTSB, state transportation agencies, railroad industry, and rail 

suppliers—told us that crude oil tank car standards need to be improved. 

Most shippers, railroads, and rail suppliers providing comments in 

response to PHMSA’s September 2013 rail safety Advance Notice of 

Proposed Rulemaking also stated this opinion. However, there were 

some differences in their views on how improvements should be 

implemented. Those who commented in response to PHMSA’s notice 

supported enacting the industry’s upgraded tank car standard into 
 

Page 43 GAO-14-667 Oil and Gas Transportation

regulation and were generally supportive of proposals to strengthen tank 

cars’ puncture resistance through design features such as thicker tank 

walls, jackets, and shielding. However, stakeholders disagreed on the 

extent to which existing tank cars should—or even could—be retrofitted to 

meet higher standards. For example, shippers and rail suppliers stated 

that existing tank cars built to the current industry standards that already 

exceed the regulatory standard should be exempt from retrofitting if 

PHMSA were to adopt an even higher standard. Shippers also expressed 

concerns that retrofitting would be costly, take tank cars out of service, 

and put a burden on the already busy shops that also build new tank cars. 

Local-government and rail-industry commenters supported retrofitting 

existing cars.

In its July 2014 Notice of Proposed Rulemaking, PHMSA sought

comment on requirements for a new DOT-117 tank car standard to 

replace the current DOT-111 standard for newly manufactured tank cars 

transporting flammable liquids, which could be one of three options: 1) a 

design by PHMSA and FRA that would increase puncture resistance, 

provide thermal protection, protect top fittings and bottom outlets, and 

improve braking performance; 2) the design in the railroad industry’s

proposal from November 2013 previously discussed; and 3) the 2011 

industry-developed tank car design with some enhancements. PHMSA’s 

Notice of Proposed Rulemaking concluded that cars built to the option 3 

standard would likely be built in the absence of a new rule, based on 

commitments from industry, but that options 1 and 2 would provide 

additional safety benefits, along with additional cost. Specifically, PHMSA 

estimated that the improved braking, roll-over protection and increased 

shell thickness under option 1 would cost $5,000 more per car than option 

3. According to PHMSA, option 2 would have most of the same safety 

features as option 1 except rollover protection and the improved braking 

system, resulting in a cost of $2,000 more per car than option 3. In 

addition to the new DOT-117 standard, the proposal would create a 

performance standard for the design and construction of new tank cars 

equivalent to the DOT-117, subject to FRA approval. Under the proposal, 

existing tank cars would have to be retrofitted to comply with the 

performance standard.92 The proposal calls for phasing out use of all 

 

92PHMSA’s Notice of Proposed Rulemaking notes that retrofitting could be costly, 

potentially exceeding $30,000 per car, and would result in out-of-service time of at least 1 

month. Due to cost concerns, PHMSA’s proposal for retrofitting existing tank cars does not 

include requirements for top-fittings protections.
 

Page 44 GAO-14-667 Oil and Gas Transportation

DOT-111 tank cars for transporting flammable liquids by October 1, 2020, 

although the cars could still be used to transport other materials.93

Although this proposed rule had previously been scheduled for release in 

November 2014, PHMSA accelerated its efforts to issue a proposal, 

resulting in the July 2014 release. According to PHMSA officials, the 

agency did not issue a proposal sooner because the industry, as well as 

the public, have had different opinions on tank car specifications. Since 

2011, PHMSA has received multiple petitions seeking changes to tank 

car safety standards. In the interim, the railroad industry has moved to 

adopt higher standards, and in a May 2014 safety advisory, PHMSA and 

FRA asked companies to refrain from using older tank cars if possible. 

Transporting a large volume of flammable liquid in one train increases the 

risk of a large fire or explosion in the event of a derailment, such as in the 

Lac-Mégantic incident. DOT has noted that the transportation of crude oil 

in unit trains compounds the risk of ignition, and NTSB has reported that 

crude oil unit trains present the potential for disastrous consequences in 

the event of an accident. Associations representing emergency 

responders told us they are particularly concerned about the risk these 

trains pose to rural areas, which generally have fewer resources to 

respond to hazardous materials incidents. They also cited concerns with 

the general lack of awareness about risks and the need for industry to 

better communicate with local responders about them. Railroad officials 

told us that risks from unit trains can be managed. Further, railroad 

officials told us that transporting crude oil in trains that carry a mixture of 

freight commodities could be higher risk, due to the need to sort crude oil 

tank cars in rail yards, and that doing so would lead to reduced efficiency 

by increasing the turn-around times for crude oil trains. In August 2013, 

AAR revised its guidance on hazardous materials operating practices so 

that its restrictions would apply to crude oil unit trains; these restrictions 

include a 50 MPH speed limit, limitations on the use of track siding, and 

requirements for addressing defective bearings.94 However, associations 

 

93Specifically, PHMSA’s Notice of Proposed Rulemaking states that existing DOT-111 

tank cars may be retrofitted to DOT-117 standards, retired, repurposed, or operated under 

speed restrictions.

94AAR’s hazardous materials operating practices guidance had previously applied to 

trains carrying poison inhalation hazards, toxic inhalation hazards, spent nuclear fuel, and 

high-level radioactive waste, but was expanded to also include trains carrying 20 car loads 

or intermodal portable tank loads of any combination of hazardous material, which would 

include unit trains carrying 20 or more carloads of crude oil.

Emergency Response
 

Page 45 GAO-14-667 Oil and Gas Transportation

representing emergency responders told us that industry should do more 

to prepare responders for potential incidents, such as by providing 

information, training, and resources. These organizations also shared 

concerns about rural responders lacking resources and information to 

respond as effectively as responders in urban areas. As previously 

mentioned, stakeholders told us that rural areas may lack sufficient 

resources to respond to a major event, like an accident involving a crude 

oil unit train.

As previously discussed, PHMSA has engaged emergency responders 

on crude oil transportation safety, and the voluntary commitment DOT 

secured from railroads included emergency response planning and 

training efforts. However, PHMSA’s requirements for comprehensive 

emergency response planning do not apply to unit trains used to transport 

crude oil, raising concerns about the abilities of responders and other 

stakeholders to effectively handle potential incidents. As currently 

worded, PHMSA’s regulations require comprehensive plans for trains that 

haul any liquid petroleum or non-petroleum oil in a quantity greater than 

42,000 gallons per package—greater than the about 30,000 gallons of 

crude oil typically transported in a tank car—even though a unit train of 

100 cars could carry about 3 million gallons of crude oil.95 Instead, 

PHMSA requires railroads to have a basic plan that includes information 

about the maximum potential discharge, response plans, and 

identification of (but not coordination with) private response personnel 

and the appropriate people and agencies to contact in the event of an 

incident.96 Federal regulations require that comprehensive emergency 

response plans include a written plan outlining contingency planning, an 

identified central coordinating official during an incident, private personnel 

secured by contract or other means to respond to a worst-case incident, 

training, equipment, and response actions and be subject to review by 

FRA.97 Without a comprehensive plan, PHMSA does not have assurance 

that railroads have taken steps to plan for response needs and identified 

and coordinated with the appropriate responders. PHMSA’s July 2014 

Advance Notice of Proposed Rulemaking seeks comment on several 

 

95The House Appropriations Committee called on PHMSA to address this problem in a 

report that accompanied the committee’s Transportation-HUD appropriations bill H.R. 

4745, for fiscal year 2015. H. Rpt. 113-464, p.62.

9649 C.F.R. § 130.31(a).

9749 C.F.R. § 130.31(b).
 

Page 46 GAO-14-667 Oil and Gas Transportation

possible ways of expanding the comprehensive planning requirement to 

include crude oil unit trains by changing the threshold under which such 

plans are required.98

Although this review focuses on the packaging and movement of crude oil 

in tank cars, our prior work has found that while DOT has taken actions in 

this area, there are other safety issues that are also relevant to the 

context of the safety of transporting crude oil by rail. Specifically, in a 

December 2013 report, we found that FRA has developed a risk-based 

approach to direct its inspection efforts, but the agency had been slow to 

implement broader risk reduction planning.99 As required by the Rail 

Safety Improvement Act of 2008, FRA was tasked with overseeing 

railroads’ development of risk reduction plans.100 Specifically, FRA was 

required to issue a final rule by October 2012 directing railroads to 

develop these plans, but our report found that FRA had not yet issued the 

final rule. Our report described safety challenges that railroads face, 

some of which can contribute to derailments. Other actions have been 

taken subsequently. FRA issued a final rule in January 2014 revising 

track inspection requirements to increase the standard for track used to 

transport hazardous materials.101 And, as discussed, railroads entered 

into a voluntary agreement with DOT in February 2014 to improve the 

safety of crude oil trains.102 In their comments in response to PHMSA’s 

September 2013 Advance Notice of Proposed Rulemaking on rail safety, 

several shippers noted that recent incidents have generally been caused 

by defective track, railroad equipment or operational issues, and 

supported improvements in these areas. NTSB’s accident report for the 

aforementioned 2011 derailment of ethanol tank cars noted that although 

problems with tank cars were a contributing factor, the probable cause of 

the accident was a broken rail. PHMSA has also noted that addressing 

 

98Specifically, the notice asks whether the threshold should be set at 1) 1,000,000 gallons 

or more of crude oil per train, 2) 20 or more carloads of crude oil per train, 3) 42,000 

gallons of crude oil per train, or 4) another threshold. The notice states that comments will 

inform a potential future Notice of Proposed Rulemaking on the issue.

99GAO, Rail Safety: Improved Human Capital Planning Could Address Emerging Safety 

Oversight Challenges, GAO-14-85 (Washington, D.C.: Dec. 9, 2013).

100Pub. L. No. 110-432, § 103, 122 Stat. 4848, 4853.

10179 Fed. Reg. 4234, 4245 (Jan. 24, 2014).

102Additionally, railroads we spoke to said they have invested heavily in upgrading their 

track in recent years. 
 

Page 47 GAO-14-667 Oil and Gas Transportation

the causes of derailments, not just upgrading tank cars, is important for 

improving the safety of transporting crude oil by rail. According to PHMSA 

officials, the severity of a derailment may present a wide range of forces 

for any particular tank car to withstand, and therefore, even an enhanced 

tank car may have variable performance and may not always perform

better in a given derailment. PHMSA’s July 2014 Notice of Proposed 

Rulemaking to address safety of transporting crude oil by rail includes a 

number of other provisions in addition to those already discussed for 

trains carrying 20 or more tank carloads of flammable liquids, including a 

routing analysis, enhanced braking, and codifying the May 2014 

emergency order requiring notification to emergency responders about 

crude oil shipments. 

The advent of new oil and gas production technologies has created a new 

energy boom for the United States. However, with this increase in 

production comes the responsibility to move those flammable, hazardous 

materials safely. 

While the Department of Transportation has worked to identify and 

address risks, its regulation has not kept pace with the changing oil and 

gas transportation environment. Gathering pipeline construction has 

increased, but some of these new pipelines in rural areas fall outside the 

current safety framework, despite operating at the size and pressure (and 

therefore similar risk) as federally regulated transmission lines. DOT 

began a rulemaking to address this issue in 2011 but did not issue 

proposed rules. Subsequently, new gathering pipeline infrastructure has 

continued to grow, with industry predicting such growth will continue for 

the foreseeable future, raising concerns where such pipelines are not 

subject to safety regulations.

The growth in the use of rail to move crude oil has likewise revealed risks 

not fully addressed by the current safety framework, particularly in 

ensuring that oil is properly tested and packaged for shipping. Emergency 

responders also need to be adequately prepared in the event that 

incidents occur, both for pipeline and for rail. Recent transportation 

incidents, such as the July 2013 train accident in Lac-Mégantic, Quebec, 

have highlighted the need for risk-based federal safety oversight. Since 

the Lac-Mégantic accident, much emphasis has been placed on the need 

to upgrade standards for tank cars that carry crude oil, but attention to 

tank cars alone is not sufficient to address safety, a sentiment shared by 

some railroads and shippers, as well as DOT. Oil and gas shippers, 

railroads and pipeline operators, emergency responders, and government 

Conclusions
 

Page 48 GAO-14-667 Oil and Gas Transportation

all have a role to play. Shippers, in particular, play an important role in 

making sure that hazardous materials like crude oil are properly 

packaged for safe transport. This underscores the importance of DOT’s 

role in assessing the risk such oil poses and providing clear guidance for 

handling it safely. Without timely action to address safety risks posed by 

increased transport of oil and gas by pipeline and rail, additional 

accidents that could have been prevented or mitigated may endanger the 

public and call into question the readiness of transportation networks in 

the new oil and gas environment. DOT’s recent proposed rulemakings to 

address concerns about transporting crude oil by rail signal the 

department’s commitment to addressing these important safety issues. 

Because of the ongoing rail safety rulemakings, we are not making 

recommendations related to rail at this time. 

To address the increased risk posed by new gathering pipeline 

construction in shale development areas, we recommend that the 

Secretary of Transportation, in conjunction with the Administrator of 

PHMSA, move forward with a Notice of Proposed Rulemaking to address 

gathering pipeline safety that addresses the risks of larger-diameter, 

higher-pressure gathering pipelines, including subjecting such pipelines to 

emergency response planning requirements that currently do not apply.

We provided a draft of this report to DOT for comment. We received 

written comments from DOT’s Assistant Secretary for Administration, 

which are reproduced in appendix III. These comments stated that 

PHMSA generally concurred with our recommendation to move forward 

with a rulemaking to address risks posed by gathering pipelines. Further, 

the letter stated that PHMSA is developing a rulemaking to revise its 

pipeline safety regulations and is examining the need to adopt safety 

requirements for gas gathering pipelines that are not currently subject to 

regulations. Additionally, the letter stated that proposed regulations are 

under development to ensure the safety of natural gas and hazardous 

liquid gathering pipelines that include collecting new information about 

gathering pipelines to better understand the risk they pose. 

In the version of the draft report we sent to DOT for comment, we had 

also recommended that PHMSA develop and publish additional guidance 

on testing, classification and packaging of crude oil for transport by rail 

and that PHMSA address emergency response planning regulations for 

transporting oil by rail so that they include shipments of crude oil by unit 

trains. DOT’s written response stated that PHMSA generally concurred 

Recommendation

Agency Comments

and Our Evaluation
 

Page 49 GAO-14-667 Oil and Gas Transportation

with these recommendations and was taking steps to address them. 

Subsequently, on July 23, 2014, PHMSA, in coordination with FRA, 

issued rulemaking proposals that, if implemented, would likely address 

these concerns. Therefore, we are no longer making those 

recommendations in this report and we have added language to the 

report describing the objectives of the proposals. We also received 

technical comments from DOT, which we incorporated as appropriate.

As agreed with your offices, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies of this report to the 

appropriate congressional committees and to the Secretary of 

Transportation. In addition, the report will be available at no charge on the 

GAO website at http://www.gao.gov.

If you or your staffs have any questions about this report, please contact 

Susan Fleming at (202) 512-2834 or flemings@gao.gov or Frank Rusco 

at (202) 512-3841 or ruscof@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 

of this report. Major contributors to this report are listed in appendix IV. 

Susan Fleming

Director, Physical Infrastructure Issues

Frank Rusco

Director, Natural Resources and Environment
Appendix I: Objectives, Scope, and 

Methodology

Page 50 GAO-14-667 Oil and Gas Transportation

This report addresses (1) challenges, if any, that increased domestic oil 

and gas production poses for U.S. transportation infrastructure and 

examples of associated risks and implications; (2) how pipeline 

infrastructure has changed as a result of increased oil and gas 

production, the key related safety risks, and to what extent the U.S. 

Department of Transportation (DOT) has addressed these risks; and (3) 

how rail infrastructure has changed as a result of increased oil production, 

the key related safety risks, and to what extent DOT has addressed these 

risks. 

To identify challenges increased domestic oil and gas production poses 

for U.S. transportation infrastructure and examples of the associated risks 

and implications, we reviewed and synthesized information from 36

studies and other publications from federal, state, and tribal government 

agencies; industry; academics; and other organizations. We identified 

these studies and publications by conducting a search of web-based 

databases and resources—including Transport Research International 

Documentation, ProQuest, and FirstSearch—containing general 

academic articles, government resources, and “gray literature.”

1 Studies 

and publications were limited to those focused on domestic onshore oil 

and gas production and published in the years 2008 through 2013. In 

addition, we reviewed prior work we have conducted. We included 

examples of known transportation infrastructure limitations and 

associated effects from these studies and publications in this report. We 

believe the studies and publications identified through our literature 

search and included in our review have identified key examples of known 

transportation infrastructure limitations and associated effects. In addition, 

we analyzed data from the U.S. Department of Energy’s Energy 

Information Administration (EIA) to identify oil and gas produced from 

2007 to 2012. To assess the reliability of these data, we examined EIA’s 

published methodology for collecting this information and found the data 

sufficiently reliable for the purposes of this report.

 

1

“Gray literature” publications may include, but are not limited to, the following types of 

materials: reports (pre-prints, preliminary progress and advanced reports, technical 

reports, statistical reports, memorandums, state-of-the art reports, market research 

reports, etc.), theses, conference proceedings, technical specifications and standards, 

non-commercial translations, bibliographies, technical and commercial documentation, 

and official documents not published commercially (primarily government reports and 

documents).

Appendix I: Objectives, Scope, and 

Methodology
Appendix I: Objectives, Scope, and 

Methodology

Page 51 GAO-14-667 Oil and Gas Transportation

To determine how pipeline infrastructure has changed as a result of 

increased oil and gas production, we analyzed data from DOT’s Pipeline 

and Hazardous Materials Safety Administration (PHMSA) on pipeline 

construction from January 1, 2010 through December 31, 2012 and 

interviewed PHMSA officials and representatives of pipeline industry 

associations and operators. We assessed the reliability of the data on 

pipeline construction by reviewing documentation about the database, 

interviewing agency officials about how the data are collected, comparing 

the data to similar information from EIA on completed pipeline projects, 

and reviewing the agency’s related internal controls. We determined that 

the data were sufficiently reliable for describing new pipeline construction 

projects. We identified key pipeline safety risks by reviewing documents 

provided by and interviewing officials from PHMSA, pipeline industry 

associations and operators, and safety organizations. To examine trends 

in pipeline incidents, we analyzed PHMSA’s pipeline incident data from 

January 1, 2008 through December 31, 2013. This analysis only 

examined transmission pipeline incidents, since many gathering pipelines 

are not regulated and therefore the data may not include potential 

gathering pipeline incidents. We assessed the reliability of these data by 

reviewing documentation on the collection of these data, interviewing 

agency officials about how the data are collected and whether there are 

potential limitations for using the data as we intended, and reviewing the 

agency’s related internal controls. We determined that these data were 

sufficiently reliable for identifying trends in pipeline incidents. We also 

examined transportation infrastructure changes and safety risks specific 

to key shale development areas in four states selected because they are 

located above shale plays in different parts of the country with generally 

the highest levels of oil and gas production from 2007 through 2011, 

according to EIA data. The states and corresponding shale plays were 

Pennsylvania and West Virginia (Marcellus shale play), North Dakota 

(Bakken shale play), and Texas (Eagle Ford shale play). In these states, 

we spoke with state oil and gas regulatory and transportation agencies, 

oil and gas industry associations, oil and gas companies, railroads, and 

crude oil rail terminal operators, as well as a community advocacy 

organization in Pennsylvania. We also reviewed documents provided by 

these organizations.

To determine how rail infrastructure has changed, we analyzed Surface 

Transportation Board (STB) data on crude oil shipments by rail for 

calendar years 2008 through 2012 and interviewed DOT officials from 
Appendix I: Objectives, Scope, and 

Methodology

Page 52 GAO-14-667 Oil and Gas Transportation

PHMSA and the Federal Railroad Administration and industry 

representatives, including railroads.2 We assessed the reliability of the 

STB data by reviewing documentation about the data, interviewing 

agency officials about how the data were collected and ways they could 

be analyzed, and reviewing the agency’s related internal controls. We 

determined that the data were sufficiently reliable for describing trends in 

the movement of crude oil. To identify the key safety risks related to 

changes in rail infrastructure, we analyzed PHMSA’s data on rail 

hazardous-materials incidents from January 1, 2008 through December 

31, 2013, reviewed documents submitted to a DOT rulemaking 

proceeding on rail safety, and interviewed DOT officials and 

representatives from safety organizations and industry. We assessed the 

reliability of PHMSA’s incident data by reviewing documentation about the 

data, interviewing agencies officials about how the data were collected, 

testing the data for inconsistencies, and reviewing the agency’s related 

internal controls. We concluded that the data were sufficiently reliable for 

discussing trends in rail hazardous-materials incidents. Additionally, to 

examine infrastructure impacts and safety issues closely associated with 

shale areas, we Interviewed officials from state oil and gas regulatory and 

transportation agencies, industry associations and oil and gas 

transportation companies in the four states mentioned previously: North 

Dakota, Pennsylvania, Texas, and West Virginia. To evaluate to what 

extent DOT has addressed safety risks, we reviewed federal laws and 

regulations, DOT emergency orders and guidance, and interviewed DOT 

officials. National and state-level stakeholders we interviewed are listed in 

tables 2 and 3.3

 

2

In addition to DOT officials from PHMSA and FRA, we also interviewed officials from the 

Federal Highway Administration, Federal Motor Carriers Safety Administration, and 

Maritime Administration. Since we focused our evaluation of DOT’s efforts on pipeline and 

rail, we did not evaluate the efforts of these other DOT administrations.

3

Additionally, Kinder-Morgan, an oil pipeline operator, declined to participate, and 

Enbridge, an oil pipeline company, was not able to schedule an interview with us within 

our time frame. We also contacted five other crude oil rail terminals in North Dakota that 

either did not respond to our requests or declined to be interviewed.
Appendix I: Objectives, Scope, and 

Methodology

Page 53 GAO-14-667 Oil and Gas Transportation

Table 2: National-Level Industry and Safety Stakeholders GAO Interviewed 

Stakeholder Description

Industry stakeholders

American Petroleum Institute Oil and gas industry

American Short Line and Regional Railroad Association Railroad industry

American Trucking Associations Trucking industry

Association of American Railroads Railroad industry

Association of Oil Pipe Lines Pipeline industry

BNSF Railway Class I railroad

CN Class I railroad

Canadian Pacific Class I railroad

CSX Transportation Class I railroad

Dominion Gas pipeline operator

Interstate Natural Gas Association of America Pipeline industry

National Tank Truck Carriers Trucking industry

Norfolk Southern Class I railroad

Railway Supply Institute Tank car manufacturers

Spectra Gas pipeline operator

Williams/Transco Gas pipeline operator

Union Pacific Railroad Class I railroad

Safety stakeholders

Commercial Vehicle Safety Alliance Highway safety

International Association of Fire Chiefs Emergency responders

National Association of Regulatory Utility Commissioners State regulatory officials

National Association of State Fire Marshals Emergency responders

National Fire Protection Association Emergency responders

National Transportation Safety Board Federal incident investigation

Pipeline Safety Trust Pipeline safety advocates

Source: GAO. GAO-14-667
Appendix I: Objectives, Scope, and 

Methodology

Page 54 GAO-14-667 Oil and Gas Transportation

Table 3: State-Level Stakeholders GAO Interviewed

Stakeholder Description

North Dakota

Crestwood Colt Hub Rail crude oil terminal operator

Hess Corporation Rail crude oil terminal operator

North Dakota Department of Mineral Resources State oil and gas regulator

North Dakota Department of Transportation State highway agency

North Dakota Petroleum Council Oil and gas industry

North Dakota Pipeline Authority State pipeline agency

North Dakota Pipeline Association Pipeline industry

North Dakota Public Service Commission State oil and gas regulator

Savage Services Rail crude oil terminal operator

Pennsylvania

C.O.G.E.N.T. Community pipeline safety

MarkWest Gas company

Pennsylvania Department of Transportation State transportation agency

Pennsylvania Public Utility Commission (Gas Safety Division) State gas regulator

Wheeling & Lake Erie Railroad Regional railroad

Texas

Gardendale Railroad Short line railroad

Marathon Oil Oil and gas pipeline operator

Railroad Commission of Texas State oil and gas regulator

South Texas Energy Economics Roundtable Oil and gas industry

Southcross Gas company

Texas Department of Transportation (Rail Division) State rail agency

Texas Oil and Gas Association Oil and gas industry

Texas Pipeline Association Pipeline industry

West Virginia

Energy Partners Gas pipeline operator 

West Virginia Department of Transportation (Division of Highways) State highway agency

West Virginia Public Safety Commission State oil and gas pipeline regulator

Source: GAO. GAO-14-667

We conducted this performance audit from August 2013 to August 2014 

in accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 
Appendix I: Objectives, Scope, and 

Methodology

Page 55 GAO-14-667 Oil and Gas Transportation

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.
Appendix II: Impacts of Shale Oil and Gas 

Development on Highways in Selected States

Page 56 GAO-14-667 Oil and Gas Transportation

Pipeline and rail are used to transport shale oil and gas long distances; 

however, truck transportation via local roads and highways also plays an 

important role. Trucks transport these goods from production areas to 

pipeline and rail as well as haul most materials needed to develop oil and 

gas, such as water, sand, and equipment used during drilling and 

hydraulic fracturing. State agencies within the four states we examined 

(Pennsylvania, North Dakota, Pennsylvania, and Texas) have noted 

significant local road and highway impacts and safety concerns as a 

result of shale oil and gas development and have taken steps to address 

these impacts.

States have reported a significant increase in truck traffic as a result of 

shale oil and gas development, the effects of which are particularly acute 

in rural areas unused to this level of road congestion. State officials 

provided estimates of the number of truck-loads required to drill and 

fracture a shale gas well ranging from about 1,200 to about 3,000. 

Although the number of trucks is greatest during the initial drilling and 

fracturing phases, significant truck volume may return if a well is refractured and, in the case of oil wells, trucks can be used to remove oil if 

the wells are not connected by pipeline. State officials told us that roads 

in many of these areas prior to development were built for light local and 

farm use and were not built for the additional thousands of heavy truck 

loads associated with oil and gas development, leading to deterioration. 

North Dakota officials told us that many of the roads the oil industry is 

using were built to handle approximately 600 loads a day and now these 

roads can see thousands of heavy truck loads per day. Officials also told 

us that state-wide, truck traffic accounts for approximately 18 percent of 

all traffic, but in development areas truck traffic can account for 35 to 50 

percent. As a result, it has been much more difficult to predict where the 

biggest road deterioration is going to happen because it depends on the 

location and intensity of shale development. In Pennsylvania, officials told 

us the increased volume of trucks has shortened the roads’ normal life 

cycle, leading to accelerated deterioration and significant damage. The 

costs of shoring up and rebuilding roads to address these impacts are 

significant. The Texas Department of Transportation estimated an annual 

impact to farm-to-market roads, state highways, and local roads in the 

Eagle Ford area of about $4 billion.

Road deterioration and increased truck volumes have created safety 

concerns in these states. Reported highway incidents involving crude oil 

have increased in recent years in North Dakota and Texas, the two states 

Appendix II: Impacts of Shale Oil and Gas 

Development on Highways in Selected 

States

Infrastructure Impacts

Safety Concerns
Appendix II: Impacts of Shale Oil and Gas 

Development on Highways in Selected States

Page 57 GAO-14-667 Oil and Gas Transportation

we examined with significant shale oil development.1 In Texas, for 

example, the Texas Department of Transportation reported an increase in 

highway crashes in the Eagle Ford shale and Permian Basin areas, with 

the Permian area seeing a 13 percent increase in roadway fatalities 

between 2012 and 2013.

The following actions are examples of ways state officials said they have 

addressed highway infrastructure and safety concerns:

• Extraction taxes. Officials in North Dakota told us the state uses taxes 

on extracted mineral resources to pay for road improvements. In 

2013, the Texas state legislature voted to transfer a portion of the 

state’s oil and gas severance tax to pay for road maintenance, a 

measure that will go before Texas voters for approval in November 

2014.

• Use agreements. In Pennsylvania and West Virginia, states have 

entered into road-use agreements with energy companies making the 

companies responsible for their damage to the roads and maintaining 

them. Companies must also pay a bond as part of the agreement. 

Officials told us these agreements have helped make companies 

more responsible for their impact. For example, in Pennsylvania, 

officials told us industry had invested over $750 million in roadway 

infrastructure improvements.

• Public awareness. Texas launched a public education campaign to 

alert drivers to the need to use caution when driving through energyrelated work zones.

Although much of the impact has been on rural, nonfederal roads, the 

Federal Highway Administration has been involved in helping states to 

coordinate information sharing. For example, in 2011, the Federal 

Highway Administration hosted an information-sharing meeting between 

officials in Pennsylvania and West Virginia, who told us the session was 

beneficial.

 

1

The other two states, Pennsylvania and West Virginia, have shale formations where 

natural gas is primarily developed, which is not transported by truck.

Actions to Address 

Impacts and Safety
Appendix III: Comments from Department of 

Transportation

Page 58 GAO-14-667 Oil and Gas Transportation

Appendix III: Comments from Department of 

Transportation
Appendix III: Comments from Department of 

Transportation

Page 59 GAO-14-667 Oil and Gas Transportation
Appendix IV: GAO Contacts and Staff 

Acknowledgments

Page 60 GAO-14-667 Oil and Gas Transportation

Susan Fleming, (202) 512-2834 or flemings@gao.gov

Frank Rusco, (202) 512-3841 or ruscof@gao.gov

In addition to the individuals named above, Karla Springer (Assistant 

Director), Sara Vermillion (Assistant Director), Melissa Bodeau, Lorraine 

Ettaro, Quindi Franco, David Hooper, Andrew Huddleston, John Mingus, 

Joshua Ormond, James Russell, Holly Sasso, Jay Spaan, Jack Wang, 

Amy Ward-Meier, and Jade Winfree made key contributions to this report.

Appendix IV: GAO Contacts and Staff 

Acknowledgments

GAO Contacts

Staff 

Acknowledgments

(541112)
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