Using NEPA to Solve Problems: On Re-Publicizing the Governance of Risk

In DOT's crude-by-rail rulemaking, it's proven important to keep your friends close and your enemies closer.

The U.S. Dept. of Transportation finally moved to finalize its rules on tank car safety on May 1.  {See Final Rule Federal Register Notice here.}  The Department’s summary of the enhancements:

  • Enhanced Standards for New and Existing Tank Cars for use in a[ high-hazard flammable train] (HHFTs)—New tank cars constructed after October 1, 2015, are required to meet the new DOT Specification 117 design or performance criteria. The prescribed car has a 9/16 inch tank shell, 11 gauge jacket, 1/2 inch full-height head shield, thermal protection, and improved pressure relief valves and bottom outlet valves. Existing tank cars must be retrofitted with the same key components based on a prescriptive, risk-based retrofit schedule . . . . As a result of the aggressive, risk-based approach, the final rule will require replacing the entire fleet of DOT-111 tank cars for Packing Group I, which covers most crude shipped by rail, within three years and all non-jacketed CPC-1232s [the industry’s voluntary-standard car adopted in 2011], in the same service, within approximately five years.
  • Enhanced Braking to Mitigate Damage in Derailments—The rule requires HHFTs to have in place a functioning two-way end-of-train (EOT) device or a distributed power (DP) braking system. Trains meeting the definition of a “high-hazard flammable unit train,” or HHFUT (a single train with 70 or more tank cars loaded with Class 3 flammable liquids), with at least one tank car with Packing Group I materials, must be operated with an electronically controlled pneumatic (ECP) braking system by January 1, 2021. All other HHFUTs must have ECP braking systems installed after 2023. . . .
  • Reduced Operating Speeds—The rule restricts all HHFTs to 50 mph in all areas and HHFTs containing any tank cars not meeting the enhanced tank car standards required by this rule are restricted to operating at a 40 mph speed restriction in high-threat urban areas. The 40 mph restriction for HHFTs without new or retrofitted tank cars is also currently required under FRA’s Emergency Order No. 30.
  • Rail Routing – More Robust Risk Assessment—Railroads operating HHFTs must perform a routing analysis that considers, at a minimum, 27 safety and security factors, including “track type, class, and maintenance schedule” and “track grade and curvature,” and select a route based on its findings. . . .
  • Rail Routing – Improves Information Sharing—Ensures that railroads provide State and/or regional fusion centers, and State, local and tribal officials with a railroad point of contact for information related to the routing of hazardous materials through their jurisdictions. This replaces the proposed requirement for railroads to notify State Emergency Response Commissions (SERCs) or other appropriate state-designated entities about the operation of these trains through their States.

DOT also required shippers to test their materials more carefully in determining flammability.  The announcement was made in tandem with Canada’s transportation agency, which is adopting similarly protective standards.

In two previous posts we came to the conclusion that crude- and ethanol-by-rail present novel risks and that this rulemaking, stalled at the White House for months, had tackled these risks essentially with no help from the National Environmental Policy Act (NEPA).  From its EA/FONSI’s statement of “purpose and need,” the Dept. of Transportation said the following:

This [rulemaking] is intended to address serious safety and environmental concerns revealed by various recent train accidents and incidents . . . . [and proposes] requirements designed to lessen the frequency and consequences of train accidents . . . .  The growing reliance on trains to transport large volumes of flammable liquids, particularly crude oil and ethanol, poses significant risk to life, property, and the environment.  These significant risks have been highlighted by the recent [derailments].

79 Fed. Reg. at 45073.

Since the August 2014 proposal, though, the rulemaking went below the water line, engulfed in issues like tank hull thickness, braking technology, and the mathematics of prediction.  Sorting out such technical questions takes time.  The careful estimation of costs and benefits on various options, as mandated by Executive Orders 12866 and 13563 to be reviewed by the Office of Information and Regulatory Affairs (OIRA), known as a “regulatory impact analysis” (RIA), is now standard both in the US and, increasingly so, in the EU.  Such procedures take the choices into Washington circles not accessible to ordinary folk.  The House of Representatives’ subcommittee with jurisdiction held hearings over and over wondering where the rules were.  See this story from Natural Gas Intel on the last of the hearings.

And now we have a final rule—one that seemed to disappoint all involved in some measure.  {See this report from Politico.}  Looking back, OIRA’s process concentrated agency attention on a collection of highly technical questions which are more amenable to being outsourced to well-paid contractors than they are to being deliberated over by the public.  Had a NEPA process been driving this rulemaking, things might’ve been very different, though.

NEPA on Finding Options: From “Scoping” to Alternatives, “Tiering,” and Beyond

NEPA was our first “decision procedure” statute, mandating an analysis of an action’s environmental costs and the plausible alternatives.  Indeed, NEPA’s example is what the executive orders requiring RIAs for “major” rulemakings followed.  NEPA’s decision procedure should begin with “scoping,” an exploratory analysis to help scale the alternatives analysis an agency will undertake.  Essentially, scoping is a public meeting (or hearing) where stakeholders are engaged at the outset—before a “preferred” alternative is chosen, before the predictive analysis is done, and before the parties have dug in or begun their trench works.  In a 1981 guidance document, CEQ advised that

[s]coping can lay a firm foundation for the rest of the decisionmaking process.  If the EIS can be relied upon to include all the necessary information for formulating policies and making rational choices, the agency will be better able to make a sound and prompt decision.  In addition, if it is clear that all reasonable alternatives are being seriously considered, the public will usually be more satisfied with the choice among them.  This is not to say there won’t be disappointment among those whose views don’t prevail.  But the loss would almost certainly be perceived as more legitimate.

In the DOT 111 rulemaking, for example, the impasse over tank hull thickness versus train speeds, routing through populous areas, braking, etc., seems to have stemmed from the industry segments’ rent-driven bargaining more than it has from the cause/effect relationships at issue.  (See our prior post on the structure of the industry.)  Scoping in this instance would be tricky given the agenda-setting or “strategic” behaviors to be expected from such parties.  CEQ’s 1981 Guidance has long counseled agencies around such pitfalls, though, with practical tips to help avoid the rent-seeking traps DOT fell into with this rulemaking.  NEPA’s advantages over OIRA’s RIA fall into two basic types: hazard definition and the handling of what seem to be “low probability” hazards.

Democratizing Hazard Definition

Our prior posts noted how difficult it can be to identify the “hazard” in a risk problem.  When compared to the 200+ page RIA prepared analyzing the tradeoffs, the FONSI DOT prepared was cursory.  A full EIS with the kind of public-engaging hearings mentioned, analyzing alternatives that were culled from what the whole “public” had suggested, might have drawn out the differences between various feasible solutions.  The Department might have (shrewdly) suggested an alternative in its EIS was the “preferred” alternative in order to force industry players to be more collaborative or forthcoming about their actual costs—as opposed to their inflated estimates—and how to minimize them through cooperation.

CEQ’s 1978 regulations require that even an agency preparing only an environmental assessment and finding of no significant impact (EA/FONSI) must discuss “alternatives as required by section 102(2)(E)” and  the “environmental impacts  of the proposed action and alternatives.”  40 C.F.R. § 1508.9(b).  Courts have agreed: where a “range” of alternatives is narrow (or nearly identical), the assessment hasn’t been “reasonable.”  See, e.g., Klamath-Siskiyou Wildlands Ctr. v. U.S. Forest Serv., 373 F. Supp.2d 1069, 1088-89 (E.D. Cal. 2004).

Brevity, of course, isn’t necessarily bad (or legally defective) for an EA/FONSI.  But an EA/FONSI that comprises little or no serious analysis of a proposal, its expected environmental impacts, or a “reasonable” range of alternatives thereto (along with their expected environmental impacts) is a defective EA/FONSI.  The alternatives analysis is the “heart” of NEPA §102(2)’s thrust.  Without it, there is little about NEPA’s process that makes any sense at all (beyond, perhaps, as a delay tactic).

No real alternatives analysis was prepared in this EA/FONSI, though. And it is hard to believe that choosing a less- over a more-protective standard in the case of oil-by-rail has “no” significant impact on NEPA’s “human environment.”  It simply stands to reason that mitigating risks like crude or ethanol-train derailments more or less could make a significant difference.

Low Probability Hazards are Where NEPA Can Do More to Help Us Govern

The regional circuits have long differed over how NEPA should handle so-called low probability threats like terrorism or nuclear core-melt events.  Most of them give a healthy measure of deference to the agency as long as the agency does not completely ignore such threats.  Statistically, train derailments are a low-probability threat.  On the other hand, it is a threat that grew significantly recently, is projected to remain at its current level or worsen in the coming decades, and seems eminently preventable (at least in the abstract).  (U.S. Energy Information Administration data on which DOT based its analyses suggest that oil-by-rail will soon peak in volume—and begin to taper in another decade or so.)  oil-by-rail carloads

It is also a threat that disproportionately affects those living near the train routes.  For most of us who don’t live in such places, it is not a risk we think much about.  Hence: local media coverage of this issue in the U.S. in places where lots of oil trains pass and national media coverage in Canada (where a nationally-scaled tragedy has already occurred). The inherently variegated distribution of risk is a problem for governing everything from pesticides to crude-by-rail.  And so the “median” voter becomes a myth given how the risks and benefits are distributed—unless you consolidate this rulemaking at the Whitehouse, where the median U.S. voter (and the pollsters that purport to speak for him/her) always reigns supreme.

Given the technicality of estimating event probabilities, the technicality of characterizing cargoes and their relative threat levels, the technicality of the technological options available for addressing the threats, and the sheer volume of information to be sorted in the exercise, it may be hard to believe that any of this  could  be truly public.  But NEPA routines, and NEPA’s focus on alternatives analysis first and foremost, would almost certainly have done better than what we got: months of delay inside a White House office known for its back-room proceedings and a Solomonic deal that seems to simply split differences left and right.

Projections always rest on key—and typically questionable—assumptions.  Will there be enough shop capacity to build the new DOT 117’s in time?  If you doubt the initial assumptions, you doubt the whole analysis.  {See, for example, this report on tank car shortages.}  Oil’s price volatility could undermine lots of DOT’s assumptions, actually.  As drilling capacity is being idled and the pressure to supply ever more crude to refineries on the East and Gulf coasts has subsided {see this Bloomberg report,} the “reasons” (profits) to take risks like those inherent in crude-by-rail, ca. 2009-14, have receded.  Trains can slow down and shrink in size.  What industry might call a “self-regulation” fix between now and when the legal battle is fought might look real—while really just being a function of fluctuating market conditions.  And when the market returns us to super-hot oil prices, we might be back where we were in Lac Megantic and Casselton.  Of course, it is not clear that a reviewing court will or must scrutinize industry’s claims so skeptically.  Thus, there is some chance that an arbitrariness challenge could work here.  All the DOT will have to fall back on is its outsourced risk estimates, its partial cost data—provided by the regulated parties (who will now attack its completeness and pertinence)—and its mostly off-the-record decision-making.


{Image: Rail car explosions at Casselton, N.D., Dec. 30, 2013}

I teach environmental, natural resources, and administrative law at Penn State Law. Before teaching I was an enforcement lawyer at U.S. EPA. Along the way I've done work for environmental nonprofits and written a fair bit about NEPA.
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