US court throws out Trump-era rule allowing LNG rail transport

By Nate Raymond

Jan 17 (Reuters) - A federal appeals court on Friday threw out a rule the U.S. Department of Transportation had adopted during Republican President-elect Donald Trump's first term which allowed liquefied natural gas to be transported by train.

A three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit agreed with 14 Democratic-led states, the District of Columbia, environmentalists and a Native American tribe that Trump's administration had not sufficiently evaluated the safety risks of allowing transport by rail.

The rule was adopted by the Department of Transportation's Pipeline and Hazardous Materials Safety Administration (PHMSA) in July 2020 after Trump issued an executive order directing the department to permit (LNG) shipment in rail tank cars via the U.S. rail network.

Gas and rail industry groups had argued that shipping LNG by train was an economic method that would allow producers to meet increased demand and overcome pipeline limitations.

President Joe Biden's administration in 2023 temporarily suspended the rule until June 2025 amid a broader review of the Trump administration's actions that were inconsistent with the Democrat's climate policies.

But even as it considered rolling back the policy, the Biden administration continued to defend the rule in court against the legal challenges, which were initiated in 2020.

Without the court's ruling, the incoming Trump administration could have allowed the rule to take effect later this year. Instead, the court vacated the rule and remanded the matter to the agency for further consideration in a decision hailed by the environmental groups.

"Communities near harm's way along railroad tracks where trains could carry explosive LNG can breathe a sigh of relief now that this dangerous rule has been struck down," Cathy Collentine, the director of the Sierra Club's Beyond Dirty Fuels campaign, said in a statement.

The department did not respond to requests for comment.

While LNG has been transported overseas by ship and domestically in tanker trucks for decades, domestic shipment of LNG by rail was relatively new, having been approved in a few instances since 2015.

The Trump-era rule imposed no limit on how many LNG tank cars could be included in a single train and set no speed limit for trains carrying combustible, hazardous natural gas, U.S. Circuit Judge Florence Pan noted in Friday's decision.

Pan, a Biden appointee, said the Trump administration went ahead with the rule despite receiving comments that "expressed alarm about the potentially catastrophic consequences of a train derailment in which LNG tank cars were breached or punctured."

"For example, a group of environmental organizations asserted that the amount of energy contained in 22 tank cars of LNG would be equal to that of the atomic bomb that was dropped on Hiroshima, Japan, during World War II," Pan wrote.

Yet despite hearing those concerns, the PHMSA took the position that the rule would have no significant effect on the environment and that, as a result, it did not need to prepare an environmental impact statement, which Pan said was an arbitrary and capricious decision.

"The real possibility of such catastrophes significantly affects the quality of the human environment," she wrote.

Her opinion was joined by U.S. Circuit Judge Patricia Millett, an appointee of Democratic former President Barack Obama, and Senior U.S. Circuit Judge A. Raymond Randolph, an appointee of Republican former President George H.W. Bush.

The case is Sierra Club v. U.S. Department of Transportation, U.S. Court of Appeals for the District of Columbia Circuit, No. 20-1317.

For the environmental groups: Bradley Marshall of Earthjustice

For the states: Brian Lusignan of the New York Office of the Attorney General

For the Puyallup Tribe of Indians: Aaron Riensche of Ogden Murphy Wallace

For the United States: Rebecca Jaffe of the U.S. Department of Justice

Read more:

AGs, enviros warn of 'bomb trains' in new lawsuits over shipping LNG by rail

U.S. states oppose Trump proposal to ship LNG by rail, citing safety risk

(Reporting by Nate Raymond in Boston)