Document ID: PHMSA-2016-0011-0001
Agency: phmsa
Document Type: Rule
Title: Hazardous Materials: FAST Act Requirements for Flammable Liquids and Rail Tank Cars
Posted Date: 2016-08-15T04:00Z

[Federal Register Volume 81, Number 157 (Monday, August 15, 2016)]
[Rules and Regulations]
[Pages 53935-53957]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-19406]

=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF TRANSPORTATION

Pipeline and Hazardous Materials Safety Administration

49 CFR Parts 173 and 179

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

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

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

ACTION: Final rule.

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

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

DATES: Effective: August 15, 2016.

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

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

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

Abbreviations and Terms

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

[[Page 53936]]

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

Table of Contents

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

I. Background

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

    \1\ The HM-251 final rule defined an HHFT as a train comprised 
of 20 or more loaded tank cars of a Class 3 flammable liquid in a 
continuous block or 35 or more loaded tank cars of a Class 3 
flammable liquid across the entire train.
    \2\ ``DOT-117P'' tank cars are newly manufactured tank cars or 
tank cars retrofitted to meet the performance criteria in Sec.  
179.202-12. ``DOT-117R'' tank cars are tank cars retrofitted to meet 
the retrofit standard in Sec.  179.202-13.
---------------------------------------------------------------------------

    On December 4, 2015, President Barack Obama signed legislation 
entitled ``Fixing America's Surface Transportation Act of 2015,'' or 
the ``FAST Act.'' See Public Law 114-94. The FAST Act includes the 
``Hazardous Materials Transportation Safety Improvement Act of 2015'' 
(see Sections 7001 through 7311) and instructs the Secretary of 
Transportation (hereafter ``Secretary'') to make specific regulatory 
amendments to the tank car design standards and phase-out schedule 
codified in the HM-251 final rule.

A. Retrofit Schedule (FAST Act Section 7304)

    Section 7304 of the FAST Act mandates a commodity-specific phase-
out of all DOT-111 tank cars used to transport Class 3 flammable 
liquids. Specifically, paragraph (a) mandates the phase-out regardless 
of train composition and requires that, by the dates specified in 
paragraph (b), all tank cars used to transport Class 3 flammable 
liquids meet the DOT-117, DOT-117P, or DOT-117R requirements. Paragraph 
(b) of Section 7304 mandates a commodity-specific phase-out schedule 
for DOT-111 tank cars used to transport unrefined petroleum products 
and ethanol--irrespective of the Packing Group (PG) \3\ assigned--as 
well as other Class 3 flammable liquids based on their PGs.
---------------------------------------------------------------------------

    \3\ Packing Group (as defined in 49 CFR 171.8) is a grouping 
according to the degree of danger presented by hazardous materials. 
Packing Group I indicates great danger; Packing Group II, medium 
danger; Packing Group III, minor danger.
---------------------------------------------------------------------------

    The phase-out schedule mandated in paragraph (b) outlines various 
compliance end-dates, on or after which the DOT-111 tank car (including 
DOT-111 tank cars built to the Association of American Railroads' (AAR) 
Casualty Prevention Circular 1232 standard (CPC-1232)) is no longer 
authorized to transport Class 3 flammable liquids. Please refer to 
Section III, ``Section-by-Section Review,'' in this rule for more 
information on the applicable end-dates of the new phase-out schedule. 
See Table 1 below for a comparison of the retrofit schedule of the HM-
251 final rule with the schedule imposed by the FAST Act:
---------------------------------------------------------------------------

    \4\ Applies only to tank cars in an HHFT configuration.
    \5\ Applies to a single tank car containing the denoted 
commodity.
    \6\ If these cars are not retrofitted by January 1, 2017 the 
owners must file a report with the Department on the number of tank 
cars that they own that have been retrofitted and the number that 
have not yet been retrofitted.
    \7\ The FAST Act is applicable to ``unrefined petroleum products 
in Class 3 flammable service, including crude oil.'' For the 
purposes of this phase out table, we use ``Crude'' for these 
materials.

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

[[Page 53937]]

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

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

B. Thermal Protection Blanket (FAST Act Section 7305)

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

    \8\ See HM-251 Final Rule RIA, p. 172-173.
---------------------------------------------------------------------------

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

[[Page 53938]]

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

C. Top Fittings Protection (FAST Act Section 7306)

    Section 7306(a) of the FAST Act specifies minimum requirements for 
top fittings protection on tank cars built to meet the DOT-117R. The 
HM-251 final rule did not require top fittings protection as part of 
the DOT-117R retrofit requirement because the costs involved appeared 
to be greater than the expected safety benefits.\9\ PHMSA noted in the 
preamble to the HM-251 final rule that a task force of the AAR Tank Car 
Committee was evaluating potential advancements in existing top 
fittings protections that could prove cost effective and, along with 
the FRA, urged industry to consider enhancements that would apply to 
both new and retrofitted tank cars.
---------------------------------------------------------------------------

    \9\ See HM-251 Final Rule, 80 FR at 26676.
---------------------------------------------------------------------------

    The FAST Act outlines self-executing performance standards for 
protective housings and pressure relief valves and does not mandate a 
rulemaking for these requirements. However, the statutory language 
mandates minimum requirements for top fittings protections for the DOT-
117R tank car not currently in the HMR. Codifying these statutorily-
mandated minimum requirements in the HMR provides greater clarity for 
the regulated community and ensures that the HMR is consistent with the 
FAST Act.

D. International Harmonization

    As a result of the FAST Act, the U.S. retrofit schedule for DOT-111 
tank cars is more closely aligned with the schedule that Transport 
Canada has set.\10\ Prior to the FAST Act, certain differences existed 
between the tank car provisions of the HMR and Transport Canada's 
corresponding Transportation of Dangerous Goods (TDG) Regulations. 
Specifically, in the HM-251 final rule, the U.S. retrofit schedule was 
based on several factors, including the Class 3 flammable liquid's PG 
assignment and tank car construction (e.g., whether the tank car is 
jacketed or non-jacketed). However, the HM-251 final rule was not 
commodity-specific; the applicable phase-out date for DOT-111 tank cars 
transporting crude oil or ethanol in an HHFT could vary significantly 
depending on the material's PG assignment. For example, under the HM-
251 final rule, tank cars transporting PG I crude oil in an HHFT would 
need to be retrofitted or newly manufactured DOT-117R, DOT-117P, or 
DOT-117 tank cars at an earlier date than tank cars in an HHFT 
transporting crude oil assigned to PG II or PG III. Moreover, per the 
HM-251 final rule, a train transporting crude oil or ethanol but not 
meeting the definition of an HHFT is not required to utilize 
retrofitted or newly manufactured tank cars conforming to the DOT-117R, 
DOT-117P, or DOT-117.
---------------------------------------------------------------------------

    \10\ Transport Canada is the Canadian equivalent of DOT, with 
broad oversight authority for all modes of transportation, including 
the rail transportation of hazardous materials.
---------------------------------------------------------------------------

    Conversely, Transport Canada implemented a phase-out schedule that 
was commodity-specific (in addition to consideration of tank car design 
factors). The TDG Regulations mandate that flammable liquid commodities 
identified as crude oil or ethanol cannot be transported in a TC/DOT-
111 in accordance with Canada's phase-out schedule, irrespective of PG 
assignment. For example, in order to be used to transport crude oil, 
TDG Regulations require retrofit of a non-jacketed TC/DOT-111 tank car 
by Canada's first compliance date (May 1, 2017), regardless of the 
crude oil's PG assignment. Furthermore, under the TDG Regulations, the 
TC/DOT-117 applies to a single tank car. Transport Canada's TDG 
Regulations do not include a definition for an HHFT.
    As mandated by the FAST Act, in this final rule, PHMSA is 
implementing a commodity-specific phase-out schedule for the transport 
of unrefined petroleum products and ethanol in DOT-111 tanks cars, 
irrespective of the PG assigned. Moreover, the FAST Act mandates the 
complete phase out of DOT-111 cars for flammable liquids, as opposed to 
just tank cars transported in HHFTs. Therefore, with respect to being 
commodity-specific and the applicability of the new standards to a 
single tank car, this final rule amends the HMR to further align with 
Transport Canada's corresponding TDG Regulations. There are, however, 
still some differences between the HMR and TDG Regulations related to 
tank car standards and the retrofit schedule. For additional discussion 
of international harmonization issues, please refer to Subsection K, 
``Executive Order 13609 and International Trade Analysis.''

II. Good Cause Justification

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

    \11\ The Secretary has delegated this authority to PHMSA. See 49 
CFR 1.97.
---------------------------------------------------------------------------

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

[[Page 53939]]

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

III. Section-by-Section Review

Part 173

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

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

Section 173.242

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

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

Section 173.243

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

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

[[Page 53940]]

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

Part 179

Section 179.202-6

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

Section 179.202-11

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

Section 179.202-12

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

Section 179.202-13

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

IV. Regulatory Analyses and Notices

A. Statutory/Legal Authority for This Rulemaking

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

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

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

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

Retrofit Schedule

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

[[Page 53941]]

Thermal Protection Blankets

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

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

Top Fittings Protections

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

Executive Orders

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

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

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

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

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

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

[[Page 53942]]

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

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

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

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

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

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

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

[[Page 53943]]

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

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

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

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

[[Page 53944]]

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

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

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

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

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

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

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

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

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

[[Page 53945]]

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

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

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

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

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

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

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

[[Page 53946]]

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

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

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

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

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

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

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

[[Page 53947]]

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

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

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

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

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

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

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

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

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

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

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

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

[[Page 53948]]

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

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

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

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

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

[[Page 53949]]

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

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

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

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

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

[[Page 53950]]

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

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

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

[[Page 53951]]

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

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

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

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

[[Page 53952]]

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

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

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

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

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

[[Page 53953]]

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

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

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

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

C. Executive Order 13132

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

[[Page 53954]]

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

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

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

D. Executive Order 13175

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

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

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

F. Unfunded Mandates Reform Act of 1995

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

G. Paperwork Reduction Act

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

H. Regulation Identifier Number (RIN)

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

I. Environmental Assessment

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

[[Page 53955]]

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

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

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

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

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

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

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

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

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

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

J. Privacy Act

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

K. Executive Order 13609 and International Trade Analysis

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

L. Executive Order 13211

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

[[Page 53956]]

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

List of Subjects

49 CFR Part 173

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

49 CFR Part 179

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

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

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

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

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

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

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

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

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

* * * * *

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

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

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

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

[[Page 53957]]

* * * * *

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

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

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

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

* * * * *

PART 179--SPECIFICATIONS FOR TANK CARS

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

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

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

Sec.  179.202-6   Thermal protection system.

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

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

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

* * * * *

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

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

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

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