{"operation":"document","citation":"16-0083","title":"NGL Crude Logistics, LLC. — Hazardous Materials Safety Interpretation","source_type":"guidance","agency":"Pipeline and Hazardous Materials Safety Administration","status":"guidance","official":true,"published_on":"2016-10-05","effective_on":null,"summary":"16-0083 response to NGL Crude Logistics, LLC. concerning 171.1, 171.8, 174.304.","machine_formats":{"json":"https://regulus.evalyn.ai/document/phmsa-interpretation-16-0083.json","markdown":"https://regulus.evalyn.ai/document/phmsa-interpretation-16-0083.md"},"app_url":"https://regulus.evalyn.ai/document/phmsa-interpretation-16-0083","source_url":"https://www.phmsa.dot.gov/sites/phmsa.dot.gov/files/legacy/interpretations/Interpretation%20Files/2016/160083.pdf","body":"<<<PAGE 1>>>\n\nof Transportation\nU.S. Department\n1200 New Jersey Avenue, SE\nWashington, D.C. 20590\nMaterials Safety\nPipeline and Hazardous\nAdministration\nOCT 0 5 2016\nMr. Don Robinson\nExecutive Vice President\nNGL Crude Logistics, LLC\nBrookhollow Central II\n2900 North Loop West\nSuite 1250\nHouston, TX 77024\nReference No. 16-0083\nDear Mr. Robinson:\nThis letter is in response to your May 10, 2016, letter and email requesting clarification of the\nHazardous Materials Regulations (HMR; 49 CFR Parts 171-180) applicable to loaded tank\ncars containing crude oil and consigned to private track for temporary storage. Specifically,\nyou seek confirmation of your understanding that the provisions prescribed in § 174.304 do\nnot prohibit the rail transportation of loaded crude oil tank cars to a private track for temporary\nstorage, where the tank cars will eventually be transported via a second rail movement to the\nend-user.\nYour understanding is correct. It is the opinion of this Office that § 174.304 does not apply to\nthe temporary storage of a loaded tank car containing a Class 3 (flammable liquid) on private\ntrack (see § 171.8) for the eventual transportation to its final destination. Section 174.304\nprohibits the transportation of a rail tank car containing a Class 3 (flammable liquid) material\nunless it is originally consigned or subsequently consigned to a party meeting the conditions\nestablished in the section. Furthermore, the HMR do not apply to storage of a rail car on a\nprivate track (see § 171.1(d)(3)).\nI hope this information is helpful. Please contact us if we can be of further assistance.\nSincerely,\nTollenn\ntaster\nT. Glenn Foster\nChief, Regulatory Review and Reinvention Branch\nStandards and Rulemaking Division\n\n<<<PAGE 2>>>\n\nseven\n5|74.304\nTank Cars\nDodd, Alice (PHMSA)\n16-0083\nFrom:\nSent:\nRivera, Jordan CTR (PHMSA)\nTuesday, May 10, 2016 2:15 PM\nTo:\nHazmat Interps\nSubject:\nAttachments:\nFW: Interpretation Letter Request Regarding 49 CFR $ 174.304\nDOC051016-05102016104950.pdf\nHi Shante/Alice,\nPlease submit this as a letter of interpretation.\nPlease let me know if you have any questions.\nThanks,\nJordan\nFrom: Carl Peterson [mailto:carl.peterson@nglep.com]\nSent: Tuesday, May 10, 2016 12:18 PM\nTo: INFOCNTR (PHMSA); PHMSA HM InfoCenter\nCc: david.benz@ThompsonHine.com; Mitch Walker; Carl Peterson; Don Robinson\nSubject: Interpretation Letter Request Regarding 49 CFR § 174.304\nPlease review the attached request and, pursuant to 49 CFR § 105.20, provide us with your interpretation of 49 CFR §\n174.304 as it pertains to the rail transportation of loaded crude oil tank cars to a private track for temporary storage,\nwhere the tank cars will eventually be transported via a second rail movement to the end-user.\nNote: The original of this request has been sent to your office by FedEx.\nPlease respond as expeditiously as possible to:\nDon Robinson\nEVP\nNGL Crude Logistics, LLC\nBrookhollow Central lI\n2900 North Loop West\nSuite 1250\nHouston, TX 77024\nEmail: don.robinson@nglep.com\nThank you in advance for your time.\nCarl Peterson\nNd\nEnergy Partners LP\nNGL Crude Logistics, LLC\nCarl Peterson | VP M&S Business Development\n2900 North Loop West | Suite 1250 | Houston, TX 77092\nBrookhollow Central I|\n\n<<<PAGE 3>>>\n\nhttp://www.nglep.com/\nP: 832.925.5370 C: 203.918.1258\ncarl.peterson@nglep.com\n\n<<<PAGE 4>>>\n\nEnergy Partners LP\nVia electronic mail and U.S. Mail\nMay 10, 2016\nStandards and Rulemaking Division\nPipeline and Hazardous Materials Safety Administration\nAttn: PHH-10\nU.S. Department of Transportation\nEast Building\n1200 New Jersey Avenue, S.E.\nWashington, DC 20590-0001\ninfocntr@dot.gov\nphmsa.hm-infocenter@dot.gov\nRe:\nInterpretation Letter request regarding 49 CFR § 174.304\nDear PHMSA:\nNGL Crude Logistics, LLC (\"NGL\") hereby requests an Interpretation Letter from the Pipeline\nhas been prevented from shipping crude oil via rail because the relevant Class I railroad has\ninformed NGL that the requested transportation is prohibited by 49 CFR § 174.304. NGL\nbelieves the cited regulation does not apply, and is seeking an Interpretation Letter from\nPHMSA on the issue, which is further described below.\nAll of the affected rail movements would have consisted of tank cars containing crude oil\nmoving in a unit train and destined to a private track or a railroad track for which NGL has an\nexclusive written lease, thereby rendering the track \"private\" for PHMSA purposes.! For all of\nthe movements, the loaded tank cars would have been stored on the private track temporarily?\nThen, at some future date, NGL would have shipped the tank cars via rail transportation to\nNGL's customer at a new destination, where the customer would unload the crude oil. NGL\nwould have been the consignee for the first movement (to storage), and NGL's customer would\nhave been the consignee for the second movement.\n' 49 CFR § 171.8 (stating that \"private track\" includes railroad track which is held by a non-\nrailroad pursuant to an exclusive lease).\n\" The exact time in storage cannot be known until NGL arranges the second rail movement, but\nthe time would likely be on the order of several months. During storage, NGL would comply\nwith all applicable laws and follow safety and security practices that are standard in the\nindustry.\nNGL Crude Logistics LLC\nBrookhollow Central II, 2900 North Loop West, Suite 1250\nHouston, TX 77092\n\n<<<PAGE 5>>>\n\nPage - 2 -\nNGL was informed by the Class I railroad that the initial rail movement (to the private track for\ntemporary storage) was prohibited because 49 CFR § 174.304 requires that crude oil tank cars\nbe \"unloaded\" at the end of every rail movement. NGL has evaluated the cited regulation, and\nbelieves that no such prohibition exists. The regulation states that:\nA tank car containing a Class 3 (flammable liquid) material, other than liquid road\nasphalt or tar, may not be transported by rail unless it is originally consigned of\nubsequently reconsigned to a party having a private track on which it is to be\ndelivered and unloaded (see §171.8 of this subchapter) or to a party using railroad\nsiding facilities which are equipped for piping the liquid from the tank car to\npermanent storage tanks of sufficient capacity to receive the entire contents of the\nNGL believes the intent of the regulation is that unloading of Class 3 materials, when it occurs,\nmust be from private track or railroad siding track having sufficient piping and storage tank\nfacilities. Thus, the regulation does not prohibit rail movements to temporary storage as\ndescribed above. There are numerous reasons supporting this interpretation of the regulation.\nFirst, although the tank cars in NGL's posited scenario would not initially be consigned to a\ntrack where unloading would occur, such tank cars would eventually be reconsigned to NGL's\ncustomer via the second rail movement. Unloading would occur at the end of the second\nmovement. Due to this \"subsequent] reconsign[ment]\", the regulation does not bar the first\nrail movement.\nSecond, interpreting § 174.304 to mean that unloading must always occur at the end of rail\ntransportation leads to inconsistent results. The regulation gives two options for transportation\nby rail of tank cars containing Class 3 materials; the second option is for transportation\nconsigned (or reconsigned) to a party using \"railroad siding facilities\" meeting certain\nrequirements. The second part of the regulation says nothing about unloading being required,\nthus creating the anomalous result where storage of loaded tank cars is permitted on railroad\ntrack with certain piping facilities but not permitted on private track.\nThird, even a cursory review of other PHMSA regulations reveals no support for the alleged\nprohibition. For example, the regulation immediately prior to § 174.304 states that:\nClass 3 (flammable liquid) materials may not be loaded, transported, or stored in a\nrail car equipped with any type of lighted heater or open-flame device, or in a rail\ncar equipped with any apparatus or mechanism utilizing an internal combustion\nengine in its operation.\n49 CFR § 174.300(a). This regulation strongly suggests that Class 3 flammable liquids may be\nstored in rail cars that do not have a lighted heater, open-flame device, or internal combustion\nengine. The tank cars utilized by NGL do not have any of these features; hence, the rail\nmovement to temporary storage should not be prohibited. Another PHMSA regulation clearly\nstates that two toxic inhalation hazards (\"TIH\"), anhydrous ammonia and hydrogen chloride,\nNGL Crude Logistics, LLC\nBrookhollow Central II, 2900 North Loop West, Suite 1250\nHouston, TX 77092\n\n<<<PAGE 6>>>\n\nPage - 3 -\nmay be stored in tank cars on private track. See 49 CFR § 174.204(a)(2)(ii). There is no\napparent reason why crude oil would be barred from loaded tank car storage if certain TIH\nmaterials are approved for such storage.\nregulations to businesses in NGL's industry.\nNGL appreciates the time and attention that PHMSA will provide to this Interpretation Letter\nrequest. The question is relatively simple: does 49 CFR § 174.304 prohibit the rail\ntransportation of loaded crude oil tank cars to a private track for temporary storage, where the\ntank cars will eventually be transported via a second rail movement to the end-user? As\ndescribed herein, NGL believes that the regulation does not prohibit such rail transportation,\nbut NGL is seeking the interpretation of PHMSA to ensure that its operations are in compliance\nwith applicable law.\nAs a result of being prevented from using rail transportation to temporary storage, NGL has\nalready missed several commercial opportunities. NGL needs to know whether these\ncommercial opportunities can continue to be pursued and, therefore, NGL respectfully requests\nthat PHMSA issue the requested Interpretation Letter as expeditiously as possible\nThank you for your assistance with this matter. NGL looks forward to hearing from you at the\naddress given below.\nSincerely,\nDon Robinson\nExecutive Vice President\nNGL Crude Logistics, LLC\ndon.robinson@nglep.com\n3 See, e.g., Nicole Friedman and Bob Tita, The New Oil-Storage Space: Railcars, THE WALL\nSTREET JOURNAL (February 28, 2016); Andrew Maykuth, Storing crude oil in rail cars: Not\nwidespread, but it does occur, http://articles.philly.com/2016-03-19/business/71658104_1_rail-\ncars-oil-prices-rail-line (March 19, 2016); David Arno, Players Seek Tank-Car Storage in\nUneconomic Crude-By-Rail Environment, http://www.genscape.com/blog/players-seek-tank-\ncar-storage-uneconomic-crude-rail-environment (March 8, 2016).\nNGL. Crude Logistics, LLC\nBrookhollow Central II, 2900 North Loop West, Suite 1250\nHouston, TX 77092","truncated":false,"body_characters":10652}