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Taking Actions to Address Rail Safety, but Additional Actions Are 
Needed to Improve Pipeline Safety' which was released on September 22, 
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United States Government Accountability Office: 
GAO: 

Report to Congressional Requesters: 

August 2014: 

Oil and Gas Transportation: 

Department of Transportation Is Taking Actions to Address Rail Safety, 
but Additional Actions Are Needed to Improve Pipeline Safety: 

GAO-14-667: 

GAO Highlights: 

Highlights of GAO-14-667, a report to congressional requesters. 

Why GAO Did This Study: 

Technology advancements such as horizontal drilling and hydraulic 
fracturing (pumping water, sand, and chemicals into wells to fracture 
underground rock formations and allow oil or gas to flow) have allowed 
companies to extract oil and gas from shale and other tight geological 
formations. As a result, oil and gas production has increased more 
than fivefold from 2007 through 2012. DOT oversees the safety of the 
U.S. transportation system. 

GAO was asked to review oil and gas transportation infrastructure 
issues. This report examines (1) overall challenges that increased oil 
and gas production may pose for transportation infrastructure, (2) 
specific pipeline safety risks and how DOT is addressing them, and (3) 
specific rail safety risks and how DOT is addressing them. GAO 
analyzed federal transportation infrastructure and safety data 
generally from 2008 to 2012 or 2013 (as available), reviewed 
documents, and interviewed agency, industry, and safety stakeholders, 
as well as state and industry officials in states with large-scale 
shale oil and gas development. 

What GAO Found: 

Increased oil and gas production presents challenges for 
transportation infrastructure because some of this increase is in 
areas with limited transportation linkages. For example, insufficient 
pipeline capacity to transport crude oil has resulted in the increased 
use of rail, truck, and barge to move oil to refineries, according to 
government and industry studies and publications GAO reviewed. These 
transportation limitations and related effects could pose 
environmental risks and have economic implications. For instance, 
natural gas produced as a byproduct of oil is burned—-a process called 
flaring—-by operators due, in part, to insufficient pipelines in 
production areas. In a 2012 report, GAO found that flaring poses a 
risk to air quality as it emits carbon dioxide, a greenhouse gas 
linked to climate change, and other air pollutants. In addition, 
flaring results in the loss of a valuable resource and royalty revenue. 

Due to the increased oil and gas production, construction of larger, 
higher-pressure gathering pipelines (pipelines that transport products 
to processing facilities and other long-distance pipelines) has 
increased. However, these pipelines, if located in rural areas, are 
generally not subject to U.S. Department of Transportation (DOT) 
safety regulations that apply to other pipelines, including emergency 
response requirements. Historically, gathering pipelines were smaller 
and operated at lower pressure and thus posed less risk than long-
distance pipelines. But the recent increase in their size and pressure 
raises safety concerns because they could affect a greater area in the 
event of an incident. In 2011, DOT began a regulatory proceeding to 
address the safety risks of gathering pipelines, but it has not 
proposed new regulations. Although states may regulate gathering 
pipelines, an association of state pipeline regulators' report on 
state pipeline oversight shows that most states do not currently 
regulate gathering pipelines in rural areas. 

Crude oil carloads moved by rail in 2012 increased by 24 times over 
that moved in 2008. Such an increase raises specific concerns about 
testing and packaging of crude oil, use of unit trains (trains of 
about 80 to 120 crude oil cars), and emergency response preparedness. 
Crude oil shippers are required to identify their product's hazardous 
properties, including flammability, before packaging the oil in an 
authorized tank car. DOT has issued safety alerts on the importance of 
proper testing and packaging of crude oil. However, industry 
stakeholders said that DOT's guidance on this issue is vague and that 
clarity about the type and frequency of testing is needed. In July 
2014, DOT proposed new regulations for crude oil shippers to develop a 
product-testing program subject to DOT's review. Additionally, unit 
trains, which can carry 3 million or more gallons of crude oil and 
travel to various locations through the country, are not covered under 
DOT's comprehensive emergency response planning requirements for 
transporting crude oil by rail because the requirements currently only 
apply to individual tank cars and not unit trains. This raises 
concerns about the adequacy of emergency response preparedness, 
especially in rural areas where there may be fewer resources to 
respond to a serious incident. Also in July 2014, DOT sought public 
comment on potential options for addressing this gap in emergency 
response planning requirements for transporting crude oil by rail. 

What GAO Recommends: 

DOT should move forward with a proposed rulemaking to address safety 
risks-—including emergency response planning-—from newer gathering 
pipelines. DOT generally concurred with the recommendation and stated 
that it is developing a rulemaking to revise its pipeline safety 
regulations. 

View [hyperlink, http://www.gao.gov/products/GAO-14-667]. For more 
information, contact Susan Fleming at (202) 512-2834 or 
flemings@gao.gov or Frank Rusco at (202) 512-3841 or ruscof@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

Increased Oil and Gas Production Presents Challenges for 
Transportation Infrastructure That Could Pose Environmental and Safety 
Risks and Have Economic Implications: 

DOT Has Not Fully Addressed Safety Risks from Expansion of Federally 
Unregulated Gathering Pipelines: 

DOT Is Working to Address Risks Related to the Increase in 
Transportation of Oil by Rail: 

Conclusions: 

Recommendation: 

Agency Comments and Our Evaluation: 

Appendix I: Objectives, Scope, and Methodology: 

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

Appendix III: Comments from Department of Transportation: 

Appendix IV: GAO Contacts and Staff Acknowledgments: 

Tables: 

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

Table 2: National-Level Industry and Safety Stakeholders GAO 
Interviewed: 

Table 3: State-Level Stakeholders GAO Interviewed: 

Figures: 

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

Figure 2: Increased Domestic Oil and Gas Production from Shale and 
Tight Sandstone Formations from 2007 to 2012: 

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

Figure 4: Crude Oil Refinery Receipts by Pipeline, Rail, Truck, and 
Barge from 2008 to 2012 (Millions of Barrels): 

Figure 5: Estimated Number of Crude Oil Rail Carloads in the United 
States, 2008 to 2012: 

Figure 6: Crude Oil Unit Train: 

Figure 7: North American Originations and Destinations of Crude Oil 
Carloads Hauled by Rail, 2012: 

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

Abbreviations: 

AAR: Association of American Railroads: 

DOT: Department of Transportation: 

EIA: Energy Information Administration: 

FRA: Federal Railroad Administration: 

INGAA: Interstate Natural Gas Association of America: 

LNG: liquefied natural gas: 

Mcf: thousand cubic feet: 

MMBtu: million British thermal units: 

NOx: nitrogen oxides: 

NTSB: National Transportation Safety Board: 

PHMSA: Pipeline and Hazardous Materials Safety Administration: 

PSI: pounds per square inch: 

STB: Surface Transportation Board: 

Tcf: trillion cubic feet: 

[End of section] 

United States Government Accountability Office: 
GAO:
441 G St. N.W. 
Washington, DC 20548: 

August 21, 2014: 

The Honorable John D. Rockefeller, IV: 
Chairman: 
The Honorable John Thune: 
Ranking Member: 
Committee on Commerce, Science, and Transportation: 
United States Senate: 

The Honorable Ron Wyden: 
United States Senate: 

U.S. production of oil and gas resources has increased in recent 
years, driven in part by improvements in technologies. Oil and gas 
resources contained in underground shale formations were previously 
considered to be inaccessible because traditional techniques did not 
yield sufficient amounts for economically viable production. The 
application of horizontal drilling techniques and hydraulic 
fracturing--a process that injects a combination of water, sand, and 
chemical additives under high pressure to create and maintain 
fractures in underground rock formations that allow oil and natural 
gas to flow--have increased U.S. crude oil and natural gas production 
dramatically. 

This rapid expansion of domestic oil and gas production has also 
changed dynamics for transporting these products to the market and has 
raised questions about safety. While pipelines transport the majority 
of oil and gas in the United States, recent development of crude oil 
in parts of the country underserved by pipeline has led shippers to 
use other modes, with rail seeing the largest percentage increase. 
Although pipeline operators and railroads have generally good safety 
records, the increased transportation of these flammable hazardous 
materials creates the potential for serious incidents. The explosion 
and fire caused by the July 2013 derailment of a crude oil train in 
Lac-Mégantic, Quebec killed 47 people and extensively damaged the 
city's downtown area, highlighting the consequences that may result 
from such incidents. The U.S. Department of Transportation (DOT) is 
responsible for ensuring the safety of the U.S. transportation system, 
including protecting people and the environment from the risks of 
transporting hazardous materials by pipeline, rail, and other modes. 
In particular, DOT's Pipeline and Hazardous Materials Safety 
Administration (PHMSA) has responsibility for pipeline safety 
oversight as well as hazardous materials transportation safety 
oversight for other transportation modes, including rail. 

You requested that we examine the impact of shale oil and gas 
development on transportation infrastructure and safety. We are 
providing a broad overview of transportation infrastructure impacts 
and a closer look at the infrastructure changes and associated safety 
issues with pipeline and rail.[Footnote 1] Specifically, this report 
addresses: 

(1) challenges, if any, that increased domestic oil and gas production 
poses for U.S. transportation infrastructure and examples of 
associated risks and implications; 

(2) how pipeline infrastructure has changed as a result of increased 
oil and gas production, the key related safety risks, and to what 
extent DOT has addressed these risks; and: 

(3) how rail infrastructure has changed as a result of increased oil 
production, the key related safety risks, and to what extent DOT has 
addressed these risks. 

To identify challenges increased domestic oil and gas production poses 
for U.S. transportation infrastructure and the associated 
implications, we reviewed and synthesized information from studies and 
other publications from federal, state, and tribal government 
agencies; industry; academics; and other organizations. We identified 
these studies and publications by conducting a search of web-based 
databases and other resources containing general academic articles, 
government resources, and "gray literature."[Footnote 2] We believe 
the studies and publications identified through our literature search 
provide key examples of transportation infrastructure limitations and 
associated implications. In addition, we analyzed data from the U.S. 
Department of Energy's Energy Information Administration (EIA) on oil 
and gas produced from 2007 to 2012. To assess the reliability of these 
data, we examined EIA's published methodology for collecting this 
information and found the data sufficiently reliable for the purposes 
of this report. 

To determine how pipeline infrastructure has changed as a result of 
increased oil and gas production, we analyzed PHMSA data on pipeline 
construction from January 1, 2010 through December 31, 2012 and 
interviewed DOT officials and industry representatives, including 
pipeline operators. To determine how rail infrastructure has changed, 
we analyzed the Surface Transportation Board's (STB) data for calendar 
years 2008 through 2012 on crude oil shipments by rail and interviewed 
DOT officials and industry representatives, including railroads. To 
identify the key safety risks related to changes in pipeline and rail 
infrastructure, we analyzed PHMSA data from January 1, 2008 through 
December 31, 2013 on pipeline and rail incidents, reviewed documents 
submitted as part of DOT's rulemaking on rail safety, and interviewed 
DOT officials and representatives from safety organizations, emergency 
responder associations, and industry. We assessed the reliability of 
PHMSA's data on pipeline construction and pipeline and rail incidents 
and STB's data on crude oil shipments by rail by reviewing 
documentation about the data sources, interviewing agency officials 
about how the data were collected, and reviewing related internal 
controls. We also reviewed some of the data for potential 
inconsistencies through testing and comparing the data to publicly 
available sources of similar information. We concluded that these data 
were sufficiently reliable for the purposes used in our report. 
Additionally, to examine infrastructure impacts and safety risks 
closely associated with transporting shale oil and gas, we interviewed 
officials and reviewed related documents from state oil and gas safety 
regulatory agencies, transportation departments, industry associations 
and oil and gas transportation companies (such as pipeline operators, 
railroads, and operators of rail loading terminals) in four states: 
North Dakota, Pennsylvania, Texas, and West Virginia. We selected 
these states because of their significant shale oil and gas 
development and varying geographic locations. To evaluate to what 
extent DOT has addressed safety risks, we reviewed federal laws and 
regulations and DOT emergency orders and guidance, interviewed DOT 
officials, and compared DOT's actions against risk-based management 
principles. See appendix I for a more detailed description of our 
objectives, scope, and methodology. 

We conducted this performance audit from August 2013 to August 2014 in 
accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

Background: 

Location of Oil and Gas Development in the United States: 

Oil and natural gas are found in a variety of geologic formations 
distributed across the country, such as shale and tight sandstone. 
[Footnote 3] Shale plays--sets of discovered or undiscovered oil and 
natural gas accumulations or prospects that exhibit similar geological 
characteristics--are located within basins, which are large-scale 
geological depressions, often hundreds of miles across, that also may 
contain other oil and gas resources. Figure 1 shows the location of 
shale plays and basins in the contiguous 48 states. 

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

[Refer to PDF for image: illustrated U.S. map] 

Shale plays: 
Antrim; 
Avalon-Bone Spring; 
Bakken; 
Barnett; 
Barnett-Woodford; 
Bend; 
Chattanooga; 
Cherokee Platform; 
Conasauga; 
Cody; 
Devonian (Ohio); 
Eagle Ford; 
Excello-Mulky; 
Fayetteville; 
Floyd-Neal; 
Gammon; 
Haynesville-Bossier; 
Heath; 
Hilliard Baxter Mancos; 
Lewis; 
Manning Canyon; 
Marcellus; 
Monterey-Temblor; 
Mowry; 
New Albany; 
Niobrara; 
Pearsall; 
Pierre; 
Tuscaloosa; 
Utica; 
Valley & Ridge Province; 
Woodford. 

Basins: 
Anadarko Basin; 
Appalachian Basin; 
Ardmore Basin; 
Arkoma Basin; 
Big Horn Basin; 
Black Warrior Basin; 
Denver Basin; 
Forest City Basin; 
Ft. Worth Basin; 
Greater Green River Basin; 
Illinois Basin; 
Marfa Basin; 
Michigan Basin; 
Montana Thrust Belt; 
Monterey, Santa Maria, Ventura, Los Angeles Basins; 
Raton Basin; 
Palo Duro Basin; 
Paradox Basin; 
Park Basin; 
Permian Basin; 
Piceance Basin; 
Powder River Basin; 
Raton Basin; 
San Joaquin Basin; 
San Juan Basin; 
TX-LA-MS Salt Basin; 
Uinta Basin; 
Western Gulf; 
Williston Basin. 

Sources: Energy Information Administration (shale location data); 
(map) copyright © Corel Corp., all rights reserved. GAO-14-667. 

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

[End of figure] 

Shale plays can contain oil, natural gas, or both. In addition, a 
shale gas play may contain "dry" or "wet" natural gas. Dry natural gas 
is a mixture of hydrocarbon compounds that exists as a gas both 
underground in the reservoir and during production under standard 
temperature and pressure conditions. Wet natural gas contains natural 
gas liquids, or the portion of the hydrocarbon resource that exists as 
a gas when in natural underground reservoir conditions but that is 
liquid at surface conditions. The natural gas liquids are typically 
propane, butane, and ethane and are separated from the produced 
natural gas at the surface. Operators may then sell the natural gas 
liquids, which may give wet shale gas plays an economic advantage over 
dry gas plays. According to a 2014 EIA publication, operators moved 
away from the development of shale plays that are primarily dry gas in 
favor of developing plays with higher concentrations of crude oil and 
natural gas liquids such as the Eagle Ford in Texas, because given 
natural gas prices at that time, crude oil and natural gas liquids 
were more valuable products.[Footnote 4] Another advantage of liquid 
petroleum and natural gas liquids is that they can be transported more 
easily through different modes of transportation than dry natural gas, 
which is transported almost entirely by pipelines to markets and 
consumers. 

Oil and Gas Production: 

In recent years, domestic onshore production of oil and gas has been 
steadily rising. For example, from 2007 through 2012, annual 
production from shale and tight sandstone formations increased more 
than sixfold for oil and approximately fivefold for gas (see figure 
2). Horizontal drilling and hydraulic fracturing have advanced 
significantly over the last decade and are largely credited with 
spurring the boom in oil and gas production in the United States. 

Figure 2: Increased Domestic Oil and Gas Production from Shale and 
Tight Sandstone Formations from 2007 to 2012: 

[Refer to PDF for image: 2 line graphs] 

Oil: 

2007: 0.34 million barrels per day; 
2008: 0.61 million barrels per day; 
2009: 0.69 million barrels per day; 
2010: 0.87 million barrels per day; 
2011: 1.31 million barrels per day; 
2012: 2.25 million barrels per day. 

Gas: 

2007: 1.99 trillion cubic feet; 
2008: 2.87 trillion cubic feet; 
2009: 3.96 trillion cubic feet; 
2010: 5.82 trillion cubic feet; 
2011: 8.50 trillion cubic feet; 
2012: 10.30 trillion cubic feet. 

Source: Energy Information Administration. GAO-14-667. 

Note: As of July 2014, EIA had not released data for oil and gas 
production from shale and tight sandstone formations for 2013. 

[End of figure] 

Oil: Average domestic crude oil production from shale and tight 
sandstone formations in 2012 has increased more than sixfold compared 
with average production in 2007, from 0.34 million barrels per day in 
2007 to 2.25 million barrels per day in 2012. To put this into 
context, according to EIA data, the United States consumed an average 
of more than 18 million barrels of petroleum products per day in 
2012.[Footnote 5] According to EIA officials, oil from shale and tight 
sandstone formations accounts for 31 percent of total U.S. production. 
According to EIA, increased production in 2012 and 2013 was the 
largest annual increase since the beginning of U.S. commercial crude 
oil production in 1859. Much of the increase in crude oil production 
has been from shale formations, such as the Bakken in North Dakota, 
the Eagle Ford in Texas, and the Niobrara in Colorado. According to 
EIA officials, U.S. production of crude oil is expected to continue to 
increase--by 48 percent from 2012 to 2019--and will remain above the 
2012 level through 2040. 

Natural Gas: Domestic natural gas production in 2012 has increased 
about fivefold compared with production in 2007, from less than 2 
trillion cubic feet in 2007 to more than 10 trillion cubic feet in 
2012.[Footnote 6] To put this into context, annual domestic 
consumption of natural gas was just over 25 trillion cubic feet in 
2012, according to EIA data. In September 2012, we found that, 
assuming current consumption levels without consideration of a 
specific market price for future gas supplies, the amount of domestic 
technically recoverable shale gas could provide enough natural gas to 
supply the nation for the next 14 to 100 years.[Footnote 7] Much of 
the increase in natural gas has been from shale formations, such as 
the Barnett, Fayetteville, Haynesville, and Marcellus formations. 

Transportation Modes: 

Multiple modes of transportation, including pipeline, rail, highways, 
and waterways, connect oil and gas production infrastructure (such as 
wells and processing plants) in shale areas to customers, which 
include refineries, industrial users, and individual consumers. 
Additionally, when products switch modes of transportation, oil-
loading terminals, sometimes referred to as "transload" terminals, 
transfer the product from one mode to another, such as when crude oil 
is transferred from a truck or gathering pipeline to a train. 
Responsibility for maintaining these modes vary: pipelines and rail 
are generally privately owned, while highways and waterways are 
generally public. Figure 3 illustrates how various transportation 
modes work together to bring oil and gas from production areas to 
users. 

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

[Refer to PDF for image: illustration] 

Depicted on the illustration: 

Crude oil (may contain gas/gas liquids): 

Oil and gas shale play: 
Oil wells; 
Gas flare; 
Oil gathering pipelines; 
Oil processing plant; 
Oil transmission pipeline; 
Oil refinery; 
Users. 

Oil and gas shale play: 
Oil trucks; 
Oil loading terminal; 
Oil unit train; 
Oil refinery; 
Users. 

Natural gas (may contain gas liquids): 

Gas shale play: 
Gas wells; 
Gas gathering pipelines; 
Gas transmission pipeline (from Oil processing plant; 
Gas processing plant; 
Gas transmission pipeline; 
Gas distribution; 
Users. 

Source: GAO. GAO-14-667. 

Note: This figure illustrates concepts presented in this report. It 
does not include all modes of transportation for oil and gas products 
nor does it depict all types of potential end users. 

[End of figure] 

Approximately 2.5 million miles of pipelines transport roughly two-
thirds of domestic energy supplies throughout the United States. These 
pipelines carry natural gas and hazardous liquids, including crude oil 
and natural gas liquids from production areas to end users, such as 
residences and businesses. Gathering pipelines collect produced oil 
and gas from their source and transport these products to processing 
facilities and transmission pipelines. Transmission pipelines then 
transport these products longer distances to users such as residences 
and businesses.[Footnote 8] Distribution pipelines transport natural 
gas to consumers for use and are not within the scope of this report. 
Characteristics of gathering and transmission pipelines are described 
in table 1. 

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

Estimated number of miles: 
Gathering pipelines: At least 230,000; 
Transmission pipelines: More than 400,000. 

Function: 
Gathering pipelines: Collect gas or hazardous liquids from 
production areas and then typically transport these products to 
processing facilities where they are refined; 
Transmission pipelines: Carry gas or hazardous liquid to communities 
and large-volume users (e.g., factories). 

Description: 
Gathering pipelines: Traditionally, range in diameter from 
2 to 12 inches and operate at pressures ranging from 5 to 800 pounds 
per square inch (psi); 
Transmission pipelines: Traditionally over hundreds of miles long, 
range in diameter from 12 to 42 inches, and operate at pressures 
ranging from 400 to 1440 psi. 

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

[End of table] 

The U.S. rail network consists of about 200,000 miles of track, which 
runs mostly through rural areas. The railroad industry is dominated by 
the seven largest railroads, known as Class I railroads, which 
collectively accounted for more than 90 percent of annual railroad-
freight revenues in 2012. Smaller regional and short-line railroads 
transport freight shorter distances and can help connect customers in 
areas not served by the larger railroads. The railroads' national 
association, the Association of American Railroads (AAR), represents 
the interests of the industry and works with railroads and other 
stakeholders to develop industry standards. Crude oil travels by rail 
in tank cars, commonly DOT-111 tank cars, which are generally owned by 
shippers or third parties. The DOT-111 is a DOT-specification tank 
car, meaning it must be built to conform to standards specified in DOT 
regulation.[Footnote 9] It is a non-pressurized car that is used to 
transport a variety of liquid products, including hazardous, flammable 
materials like crude oil. Terminals, referred to as transload 
facilities, transfer crude oil from other transportation modes 
(typically trucks or gathering pipelines) to tank cars for transport 
by train. 

In addition to pipeline and rail, other modes, including barge and 
truck may transport oil and gas products. For example, barges may 
transport oil over longer distances on major waterways, such as the 
Mississippi River, while trucks typically transport oil over short 
distances to transload facilities. While this report provides a closer 
look at transportation infrastructure and safety impacts of shale oil 
and natural gas development on pipeline and rail nationwide, we also 
discuss highway infrastructure and safety impacts in the four selected 
states we examined (see appendix II for a summary of highway-related 
impacts). 

Department of Transportation: 

DOT is responsible for ensuring the safe transportation of people and 
goods through regulations, oversight, inspections, and other efforts, 
sometimes in partnership with states. Within DOT, PHMSA's Office of 
Pipeline Safety oversees the safety of pipelines through regulation 
and an inspection program, which includes over 100 PHMSA inspectors, 
and also collects information about the location of pipelines. PHMSA 
also has arrangements with states, which collectively have over 300 
inspectors, to assist with overseeing interstate pipelines, intrastate 
pipelines, or both.[Footnote 10] PHMSA's current pipeline regulations 
cover all hazardous liquid (including crude oil) and natural gas 
transmission pipelines. In addition to minimum safety standards that 
all transmission pipeline operators must meet, PHMSA employs a risk-
based approach to transmission pipeline regulation and requires 
operators to systematically identify and mitigate risks in "high-
consequence areas," which include populated and environmentally 
sensitive areas.[Footnote 11] PHMSA also applies this risk-based 
approach to gathering pipelines and regulates gathering pipelines in 
non-rural areas, resulting in regulation of approximately 10 percent 
of the nation's gathering pipelines.[Footnote 12] Generally, PHMSA 
retains full responsibility for inspecting interstate pipelines for 
compliance with its regulations and taking enforcement actions when 
needed. However, states may be authorized to conduct inspections of 
interstate pipelines, as well as inspections and associated 
enforcement for intrastate pipelines. States can also promulgate 
regulations for intrastate pipelines, including gathering pipelines, 
even if these pipelines are not covered by PHMSA's federal safety 
requirements.[Footnote 13] 

PHMSA, through its Office of Hazardous Materials Safety, also 
regulates shippers and railroads transporting hazardous materials like 
crude oil by rail and other modes.[Footnote 14] A memorandum of 
agreement details how PHMSA works with the other DOT modal agencies to 
address hazardous-material transportation safety. DOT's other modal 
administrations have responsibility for safety of their respective 
modes, such as the Federal Railroad Administration (FRA), which 
oversees rail safety. FRA enforces its own and PHMSA's safety 
regulations through inspections by FRA officials and state partners in 
some states.[Footnote 15] PHMSA also has hazardous materials 
inspectors who enforce requirements for hazardous material packaging 
for transportation. Additionally, PHMSA's regulations include 
emergency response planning requirements for pipelines and the 
transportation of crude oil by rail. Specifically, regulations require 
operators of transmission pipelines and urban gathering pipelines to 
prepare emergency response plans and coordinate them with emergency 
responders.[Footnote 16] Railroads that transport crude oil in tanks 
larger than 42,000 gallons are required to develop comprehensive oil-
spill response plans with additional requirements for contingency 
planning, ensuring response resources by contract or other means, and 
training. Railroads are required to submit comprehensive plans to FRA 
for review. Otherwise, railroads are required to develop basic 
response plans, for which there are fewer requirements.[Footnote 17] 
Because PHMSA applies a risk-based approach to its transportation 
oversight, we believe it is appropriate to apply principles of risk-
based management to assessing the agency's efforts in this area. Risk-
based management has several key characteristics that help to ensure 
safety, including (1) using information to identify and assess risks; 
(2) prioritizing risks so that resources may be allocated to address 
higher risks first; and (3) promoting the use of regulations, 
policies, and procedures to provide consistency in decision making. 
[Footnote 18] 

Increased Oil and Gas Production Presents Challenges for 
Transportation Infrastructure That Could Pose Environmental and Safety 
Risks and Have Economic Implications: 

Increased oil and gas production presents challenges for 
transportation infrastructure because some of the growth in production 
has been in areas with limited transportation linkages to processing 
facilities. According to studies and publications we reviewed, 
infrastructure limitations and related effects could pose 
environmental and safety risks and have economic implications, 
including lost revenue and hindered oil and gas production. 

Increased Domestic Oil and Gas Production Presents Challenges for 
Transportation Infrastructure: 

Though capital investments in U.S. infrastructure for oil and gas 
transportation, processing, and storage have increased significantly 
in recent years--by 60 percent from 2008 to 2012, according to a 
December 2013 industry report--expansions in infrastructure have not 
kept pace with increased domestic oil and gas production.[Footnote 19] 
In the United States, most oil and nearly all natural gas are 
transported by pipeline.[Footnote 20] According to EIA data, U.S. 
refinery receipts of domestic crude oil by pipeline increased almost 
25 percent from 2008 to 2012, from 1.6 billion barrels to nearly 2 
billion barrels.[Footnote 21] However, according to a number of 
studies and publications we reviewed, including a 2013 report from the 
Fraser Institute, oil and natural gas production in the United States 
is outpacing the capacity to transport the resources through existing 
pipeline infrastructure.[Footnote 22] In February 2013, EIA reported 
that pipeline capacity to deliver crude oil to a key hub increased by 
about 815,000 barrels per day from 2010 through 2013; however, the 
increase has been inadequate to transport crude oil from production 
sites to refineries. In March 2014, we found that most of the system 
of crude oil pipelines in the United States was constructed in the 
1950s, 1960s, and 1970s to accommodate the needs of the refining 
sector and demand centers at that time. We also found that, according 
to Department of Energy officials, this infrastructure was designed 
primarily to move crude oil from the South to the North, but emerging 
crude oil production centers in Western Canada, Texas, and North 
Dakota have strained the existing pipeline infrastructure.[Footnote 
23] For example, according to a 2013 industry publication, oil 
production exceeded pipeline capacity in North Dakota by about 300,000 
barrels of oil per day in the state.[Footnote 24] 

The limited pipeline capacity to transport crude oil has resulted in 
the increased use of other transportation options, in particular rail, 
truck, and barge (see figure 4). 

Figure 4: Crude Oil Refinery Receipts by Pipeline, Rail, Truck, and 
Barge from 2008 to 2012 (Millions of Barrels): 

[Refer to PDF for image: stacked vertical bar graph] 

Year: 2008; 
Truck: 69.3 million; 
Barge: 48.4 million; 
Rail: 4.3 million; 
Pipeline: 1.61 billion. 

Year: 2009; 
Truck: 67.8 million; 
Barge: 61.6 million; 
Rail: 4.2 million; 
Pipeline: 1.7 billion. 

Year: 2010; 
Truck: 72.2 million; 
Barge: 46.1 million; 
Rail: 4.3 million; 
Pipeline: 1.8 billion. 

Year: 2011; 
Truck: 95.2 million; 
Barge: 69.4 million; 
Rail: 6.2 million; 
Pipeline: 1.9 billion. 

Year: 2012; 
Truck: 131.3 million; 
Barge: 151.2 million; 
Rail: 30.1 million; 
Pipeline: 2.0 billion. 

Source: GAO analysis of EIA data. GAO-14-667. 

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

[End of figure] 

* Rail: According to a 2014 EIA report, U.S. refinery receipts of 
domestic crude oil by rail increased more than sevenfold from 2008 to 
2012, from 4 million barrels to 30 million barrels.[Footnote 25] The 
increased use of rail for transporting crude oil is due to the 
increases in crude oil production in North Dakota, Texas, and other 
states, which have exceeded the capacity of existing pipelines to move 
oil from production areas to refineries, according to a number of 
studies and publications we reviewed.[Footnote 26] 

* Truck: According to a 2014 EIA report, U.S. refinery receipts of 
domestic crude oil by truck increased almost 90 percent from 2008 to 
2012, from 69 million barrels to 131 million barrels.[Footnote 27] In 
addition, according to a North Dakota Pipeline Authority publication, 
some natural gas liquids are transported to market by truck.[Footnote 
28] 

* Barge: According to a 2014 EIA report, U.S. refinery receipts of 
domestic crude oil by barge increased more than 200 percent from 2008 
to 2012, from 48 million barrels to 151 million barrels.[Footnote 29] 
According to the EIA report, the increase in barge shipments may be 
partially explained by crude oil being transferred to barges from rail 
cars for the final leg of some journeys to refineries, particularly on 
the East Coast and along the Mississippi River. 

According to a number of studies and publications that we reviewed, in 
addition to pipeline capacity limitations, rail, barges, and 
processing facilities and storage facilities also face limitations. 
For example, a 2013 industry publication identified a backlog for tank 
cars, needed to transport oil by rail, in the United States at nearly 
60,000--representing over 20 percent of the existing U.S. tank car 
fleet.[Footnote 30] In addition, a 2014 Congressional Research Service 
report states that significant development of loading and unloading 
facilities could be required if rail is to continue substituting for 
pipeline capacity.[Footnote 31] Further, a number of studies and 
publications identified that oil and gas production in some areas can 
exceed the capacity to process and store the resources.[Footnote 32] 
For example, state officials in North Dakota reported in 2013 that 
maintaining sufficient natural gas processing capacity is a challenge 
of increased production. 

Transportation Infrastructure Limitations and Related Effects Could 
Pose Environmental and Safety Risks and Have Economic Implications: 

A number of studies and publications we reviewed identified 
environmental and safety risks or economic implications from 
transportation infrastructure limitations. For example: 

Risks to air quality: These risks can be the result of intentional 
flaring--a process of burning the gas developed along with oil--of 
associated natural gas that results from limited pipeline 
infrastructure and of engine exhaust from increased truck and rail 
traffic. 

Oil and natural gas are often found together in the same reservoir. 
The natural gas produced from oil wells is generally classified as 
"associated-dissolved," meaning that it is associated with or 
dissolved in crude oil. In areas where the primary purpose of drilling 
is to produce oil, operators may flare associated natural gas because 
no local market exists for the gas and transporting to a market may 
not be economically feasible. In September 2012, we found that flaring 
poses a risk to air quality because it emits carbon dioxide--a 
greenhouse gas linked to climate change--and other air pollutants that 
can increase ground-level ozone levels and contribute to regional 
haze.[Footnote 33] In January 2014, the North Dakota Industrial 
Commission reported that nearly 30 percent of all natural gas produced 
in the state is flared. According to a 2013 report from Ceres, flaring 
in North Dakota in 2012 resulted in greenhouse gas emissions 
equivalent to adding 1 million cars to the road.[Footnote 34] 

Increased truck and rail traffic associated with the movement of oil 
from well sites also creates a risk to air quality as engine exhaust, 
containing air pollutants such as nitrogen oxides and particulate 
matter that affect public health and the environment is released into 
the atmosphere.[Footnote 35] Specifically, the Department of State 
reported in 2014 that increasing the number of unit trains 
transporting crude oil could increase greenhouse gases emitted 
directly from the combustion of diesel fuel in trains[Footnote 36] and 
in 2011 we found that trucking freight produces more air pollution 
than other transportation modes.[Footnote 37] Air quality may also be 
degraded as fleets of trucks traveling on newly graded or unpaved 
roads increase the amount of dust released into the air--which can 
contribute to the formation of regional haze.[Footnote 38] 

Inherent safety risks: Transporting oil and gas by any means--through 
pipelines, rail, truck, or barge--poses inherent safety risks. 
However, in January 2013, we found that pipelines are relatively safe 
when compared with other modes, such as rail and truck, for 
transporting hazardous goods because pipelines are mostly 
underground.[Footnote 39] For example, we found that large trucks and 
rail cars transporting hazardous materials, including crude oil and 
natural gas liquids, resulted in far more fatalities and incidents 
than pipelines. Specifically, we found that from 2007 to 2011, 
fatalities averaged about 14 per year for all pipeline incidents 
reported to PHMSA, including an average of about 2 fatalities per year 
resulting from incidents on hazardous liquid and natural gas 
transmission pipelines.[Footnote 40] In comparison, in 2010, 3,675 
fatalities resulted from incidents involving large trucks and 730 
additional fatalities resulted from railroad incidents. Therefore, 
increased transport of oil and gas by rail, truck, or barge could 
increase safety risks. 

According to state officials and several publications we reviewed, 
increased truck traffic resulting from increased oil and gas 
production can present hazardous driving conditions--particularly on 
roads not designed to handle heavy truck traffic.[Footnote 41] Our 
analysis of data from PHMSA found that in recent years, the number of 
reported incidents involving the transport of crude oil by truck in 
both Texas and North Dakota has increased. Specifically, such 
incidents increased in Texas from 17 incidents in 2008 to 70 incidents 
in 2013, and in North Dakota they increased from 1 incident in 2008 to 
16 incidents in 2013. 

Barge accidents also pose safety risks and can have associated 
environmental and economic effects. For example, according to the U.S. 
Coast Guard Polluting Incident Compendium, in 2011, a barge struck a 
bridge on the Lower Mississippi River causing damage to the barge and 
a discharge of just over 11,000 gallons of oil.[Footnote 42] In 
February 2014, a barge crash resulted in the spilling of about 31,500 
gallons of crude oil into the Mississippi River, temporarily shutting 
down transportation along the river. According to a 2012 Congressional 
Research Service report, an oil spill from a barge can cause 
significant harm to marine ecosystems and individual aquatic organisms 
and negatively affect business activity near the spill, particularly 
businesses and individuals that count on the resources and reputation 
of the local environment.[Footnote 43] For instance, the local fishing 
and tourist industry may be affected, and in some cases, a well-
publicized oil spill can weaken local or regional industries near the 
spill site, regardless of the actual threat to human health created by 
the spill. 

Economic implications: According to a number of studies and 
publications we reviewed, infrastructure limitations and related 
effects could have economic implications, including lost revenue, 
higher energy prices, and hindered development. 

* Lost revenue: In addition to the risks to air quality from flaring, 
we found in October 2010 that flaring natural gas has economic 
implications,[Footnote 44] and in April 2014 the Environmental 
Protection Agency reported that flaring results in the destruction of 
a valuable resource.[Footnote 45] For example, in 2010 we found that 
on federal oil and gas leases, natural gas that is flared, instead of 
captured for sale, represents a loss of about $23 million annually in 
royalty revenue for the federal government. According to a 2013 report 
from the North Dakota Pipeline Authority, in August 2013, 2.7 percent 
of the total economic value and 7.2 percent of the total energy 
content being produced in North Dakota were lost due to flaring. 
[Footnote 46] In another example, a Ceres report found that in May 
2013 roughly $3.6 million of revenue was lost per day, at market 
rates, as a result of flaring in North Dakota.[Footnote 47] 

* Higher energy prices: Growing shale development and the resulting 
increased availability and lower prices of natural gas have 
contributed to an increasing reliance on natural gas as a source of 
producing electricity in some parts of the country. However, pipeline 
infrastructure limitations have at times contributed to price spikes. 
For example, according to a paper from ICF International, pipeline 
limitations were a contributing factor to higher natural gas prices in 
the northeast in January 2014.[Footnote 48] A cold weather pattern 
involving record low temperatures led to increased demand for natural 
gas for space heating and for generating electricity across parts of 
the country. With the surge in demand, several major pipeline systems 
became constrained and could not deliver sufficient natural gas to 
meet demand. According to a 2014 EIA publication, prices at the 
Algonquin, Massachusetts trading point, which normally are around $3 
to $6 per million British thermal units (MMBtu) during unconstrained 
periods, reached up to $38/MMBtu in early January.[Footnote 49] These 
price increases for natural gas led electricity systems to use more 
oil-fueled generating resources during this period. 

* Hindered oil and gas production: A 2013 study sponsored in part by 
the Utah Department of Transportation found that oil and gas 
production from the Uinta Basin is likely to be constrained by 
limitations in the capacity of transportation infrastructure. 
Specifically, the study found that existing pipelines in the state are 
already at or near capacity, and by 2020, demand on the infrastructure 
network to transport oil and gas will exceed capacity--resulting in a 
loss of 12 percent of potential production over the next 30 years. 
[Footnote 50] Further, according to a 2013 industry report, 
infrastructure constraints such as pipeline limitations and 
bottlenecks from the Permian Basin in Texas to a key hub have 
contributed to discounted prices for some domestic crude oils. 
[Footnote 51] For example, we found in March 2014 that West Texas 
Intermediate crude oil--a domestic crude oil delivered to a key hub 
that is used as a benchmark for pricing for all crude oil--was priced 
just under $18 per barrel less in 2012 than Brent, an international 
benchmark crude oil from the European North Sea that has historically 
been about the same price as West Texas Intermediate.[Footnote 52] 
These discounted prices mean resource developers have received lower 
prices for their crude oil production. According to a 2013 Energy 
Policy Research Foundation report, discounted prices may eventually 
lead to production growth constraints.[Footnote 53] 

DOT Has Not Fully Addressed Safety Risks from Expansion of Federally 
Unregulated Gathering Pipelines: 

Increases in the Number, Size, and Operating Pressure of Gathering 
Pipelines Pose Additional Risk, Particularly Where They Are Not 
Federally Regulated: 

Gathering pipeline construction has increased significantly as a 
result of increased shale oil and gas development; however, the 
increase in pipeline mileage is unknown because data on gathering 
pipelines are not systematically collected by PHMSA nor by every 
state. The Interstate Natural Gas Association of America (INGAA), a 
trade organization representing interstate natural gas transmission 
pipeline companies, estimated in March 2014 that shale oil and gas 
development will result in approximately 14,000 miles of new gas 
gathering pipelines and 7,800 miles of new oil gathering pipelines 
added each year from 2011 through 2035.[Footnote 54] State officials 
in Pennsylvania, North Dakota, Texas, and West Virginia said that 
companies have invested significantly in gathering pipeline 
infrastructure. For example, according to data published by Texas 
state officials, 15,684 new miles of federally unregulated gathering 
pipelines were added in the state between 2010 and 2013.[Footnote 55] 
In response to the growth in gathering pipelines, Texas officials told 
us that their state enacted legislation to increase state regulatory 
authority over gathering pipelines. Similarly, North Dakota passed 
rule changes in 2013 to increase state regulatory authority over 
gathering pipelines. Texas officials told us that they plan to study 
and determine what parts of their rules should apply to gathering 
pipelines during 2014 and then issue guidance in 2015. In April 2014, 
North Dakota implemented regulations requiring companies to report the 
location and characteristics of gathering pipelines carrying any 
products including natural gas, crude oil, natural gas liquids, water, 
and others. The National Association of Pipeline Safety 
Representatives, an association representing state pipeline safety 
officials, produced a compendium of state pipeline regulations showing 
that most states with delegated authority from PHMSA to conduct 
intrastate inspections do not have expanded regulations that cover 
increased oversight of gathering pipelines.[Footnote 56] As a result, 
companies building gathering pipelines in rural areas are generally 
not subject to inspection and do not have to report the location and 
characteristics of much of the gathering pipelines being installed. 

Although the majority of the total gathering pipeline network that 
exists are the traditional small pipelines, state pipeline regulators, 
PHMSA officials, and pipeline operators we spoke with said that some 
newly built gathering pipelines have larger diameters and higher 
operating pressures that more closely resemble transmission pipelines 
than traditional gathering pipelines. For example, while gathering 
pipelines have traditionally been 2 to 12 inches in diameter, one 
company operating in the Texas Eagle Ford shale region showed us plans 
to build 30-and 36-inch natural gas gathering pipelines, which is near 
the high end of diameters for regulated transmission pipelines. 
Historically, federally unregulated gathering pipelines were low 
pressure, smaller-diameter pipelines and were generally in rural areas 
where there was less safety risk. Now, according to PHMSA, industry, 
and state pipeline safety officials we spoke to, gathering pipelines 
of larger diameter and higher pressure are being constructed, 
including in areas closer to populations. Such construction could 
increase safety risk, since an incident occurring on one of these 
larger, high-pressure unregulated gathering pipelines could affect a 
greater area and be as serious as an incident involving a regulated 
transmission pipeline of similar diameter and pressure. 

Pipeline operators and industry organizations told us that new 
gathering pipelines are likely safer because new pipelines are less 
susceptible to issues like corrosion--a common reason for failure in 
older pipelines. Pipeline operators also told us that some large-
diameter, high-pressure gathering pipelines are built to the same 
specifications as regulated transmission pipelines and that these 
pipelines are in very rural areas with little risk to people. They 
also expressed that safety is very important to the industry and that 
companies understand not only the potential harm to the network, 
people, and environment, but also the public perception following a 
high-profile incident and therefore manage their assets to avoid 
incidents. Nonetheless, state pipeline regulators, PHMSA officials, 
and safety organizations expressed concern with the potential safety 
threat of unregulated gathering pipelines of this size. For example, a 
citizens' shale development awareness group in Pennsylvania has 
documented construction of several unregulated gathering pipelines in 
the state that are 24 inches in diameter. The group argues that while 
these gathering pipelines are in rural areas, they are being built 
unnecessarily close to homes. PHMSA officials told us that the large 
diameter and pressure of the pipelines increase the concern for the 
safety of the environment and people nearby. 

In addition to potential increased safety risk as a result of the 
changing characteristics of the pipelines, some stakeholders shared 
concerns about the readiness of emergency responders to address 
potential incidents that could occur with unregulated gathering 
pipelines. PHMSA's emergency response planning requirements that apply 
to other pipelines do not apply to rural unregulated gathering 
pipelines. Consequently, response planning in rural areas with 
unregulated gathering lines may be inadequate to address a major 
incident. Transmission pipeline operators with pipelines similar in 
size to the new gathering pipelines are required to develop 
comprehensive emergency response plans and coordinate with local 
emergency responders. Emergency response officials whom we spoke with 
stated that lacking information about the location of some gathering 
pipelines, responders--particularly in rural areas--may not be 
adequately prepared to respond to an incident. A representative from 
the National Association of State Fire Marshals told us that training 
and communication with pipeline companies are key for emergency 
responders' knowledge and awareness. Additionally, emergency response 
officials also told us that rural areas in particular lack the level 
of hazardous-materials response resources found in metropolitan areas 
where more is known about the extent of local pipeline networks. The 
National Transportation Safety Board (NTSB) has also stated that 
emergency response planning is critical for pipeline safety and has 
recommended that pipeline operators help ensure adequate emergency 
response by providing local jurisdictions and residents with key 
information on the pipelines in their areas. 

DOT Has Not Proposed Regulatory Changes to Address Risks Posed by 
Gathering Pipelines: 

As previously discussed, PHMSA applies a risk-based approach to 
regulating pipeline safety. A key principle of risk-based management 
is promoting the use of regulations, policies, and procedures to 
provide consistency in decision-making. PHMSA has acknowledged the 
growing potential risk of federally unregulated gathering pipelines as 
more are constructed and at larger diameters and higher pressures, but 
DOT has not proposed regulatory changes to address this risk. In 
August 2011, PHMSA published an Advance Notice of Proposed Rulemaking, 
stating that the existing regulatory framework for natural gas 
gathering pipelines may no longer be appropriate due to recent 
developments in gas production.[Footnote 57] In the notice, PHMSA 
asked for comment on whether it should consider establishing new, risk-
based safety requirements for large-diameter, high-pressure gas 
gathering pipelines in rural locations, among other potential changes 
to gathering pipeline regulations.[Footnote 58] The proposal also 
states that enforcement of current requirements has been hampered by 
the conflicting and ambiguous language of the current regulation that 
can produce multiple classifications for the same pipeline system, 
which means that parts of a single pipeline system can be classified 
as rural gathering pipelines and therefore be unregulated, while other 
parts of the same pipeline with the same characteristics are 
regulated. PHMSA officials told us they have drafted proposed 
regulations for both gas and hazardous liquid gathering pipelines but 
as of June 2014, the agency had not issued the Notice of Proposed 
Rulemaking for comment. According to DOT officials, the proposed gas 
rule is being reviewed internally and the proposed hazardous liquid 
rule is with the Office of Management and Budget for review.[Footnote 
59] PHMSA officials also told us they have studied existing federal 
and state gathering pipeline regulation to help identify where 
gathering pipelines are currently regulated and remaining gaps; 
however, this study has been in the final stages of review during the 
course of our work and has not yet been published. 

Given the lack of PHMSA regulation of rural gathering pipelines, the 
extent, location, and construction practices for rural gathering 
pipelines is largely unknown by federal, state, and local officials, 
and oversight to verify the construction and monitor operators' safety 
practices is lacking. In 2012, we concluded that unregulated gathering 
pipelines also pose risks due to construction quality, maintenance 
practices, and limited or unknown information on pipeline integrity. 
[Footnote 60] We recommended at that time that PHMSA collect data on 
unregulated gathering pipelines to facilitate quantitatively assessing 
the safety risks posed by these pipelines, which we said could assist 
in determining the sufficiency of safety regulations for gathering 
pipelines. According to DOT officials, as of July 2014, PHMSA has 
compiled data on existing gathering pipeline requirements, and the 
resulting report is under internal review. Furthermore, officials said 
that data collection is part of the proposed rules also under review. 
In 2010, the National Association of Pipeline Safety Representatives 
recommended that PHMSA modify federal pipeline regulations to 
establish requirements for gathering pipelines in rural areas that are 
presently not regulated. The association stated that with the advent 
of new production technologies, there has been rapid development of 
gas production from shale formations such as the Barnett, Marcellus, 
and Bakken resulting in a significant amount of new gathering pipeline 
construction. Further, in these newer gas gathering systems, it is not 
uncommon to find rural gathering pipelines up to 30 inches in diameter 
and operating at 1480 psi, which is the higher end of traditional 
transmission operating pressure.[Footnote 61] Enhanced pipeline safety 
for all types of pipeline was also on NTSB's "Most Wanted List" in 
2013 and 2014. NTSB has prioritized overall pipeline safety because of 
the increased demand in oil and gas and the aging pipeline 
infrastructure. 

Resources are an important consideration in evaluating how to address 
the increased risk of gathering pipelines. According to PHMSA 
officials, inspection resources are limited and would be further 
stretched if rural gathering pipelines were regulated. If PHMSA were 
to receive increased staff funding in the near future, there could be 
a lag in ramping up the inspection workforce because inspectors would 
have to complete PHMSA's 3-year pipeline-inspection training to become 
fully certified.[Footnote 62] However, if PHMSA were to set minimum 
federal regulations for gathering pipelines, this would enable the 
agency to include currently federally unregulated rural gathering 
lines in decisions for prioritizing resources for addressing safety 
risks. This is in line with the principles of risk-based management, 
while also enabling data-driven, evidence-based decisions about the 
risks of rural gathering pipelines, which our previous work has shown 
is especially important in a time of limited resources.[Footnote 63] 
State regulators in all four states we spoke with acknowledged their 
resources could also be strained; however, the officials supported 
regulating rural gathering pipelines. State officials said that 
without rural gathering pipeline regulation, such as provisions for 
inspections or industry reporting, they have limited knowledge of the 
construction and maintenance practices of rural gathering pipeline 
operators, do not always know where new rural gathering pipelines are 
being constructed, and may not even have communication with the 
operators. 

Transmission Pipeline Infrastructure Has Not Increased Substantially 
as a Result of Shale Development: 

Gas flows from shale plays into transmission pipelines have increased, 
but construction of new transmission pipelines has not increased 
dramatically as a result of increased shale development. According to 
PHMSA data, approximately 4,500 miles of new oil and gas transmission 
pipelines were built between January 2010 and December 2012. This 
includes about 2,000 miles each of crude oil and natural gas pipelines 
and the remaining is pipeline for natural gas liquids. 

Oil and gas pipeline industry representatives and transmission 
pipeline companies we spoke with stated that transmission pipeline 
companies have been able to accommodate increased demand in various 
ways. Transmission pipeline companies have repurposed existing 
pipelines, made operational changes--including increased compression 
and change in directional flow--and added additional capacity to the 
current network through smaller-scale construction projects. Companies 
have repurposed pipelines by changing them from one product to 
another, such as converting a natural gas pipeline to a natural gas 
liquid pipeline or a crude oil pipeline. Companies have also 
instituted operational changes such as adding additional compression 
to their line, which allows them to move more gas through the same 
lines, and changing directional flow of a pipeline. One pipeline 
operator we spoke with is reversing flow of its gas transmission 
pipeline. Prior to shale development, this pipeline moved natural gas 
from the Gulf Coast to the Northeast. By 2017, the volume of gas that 
once flowed north will flow south. The pipeline operator stated that 
changing the direction of the flow, while not as easy as flipping a 
switch, requires significantly less time and money than building a new 
pipeline. Smaller-scale construction projects, such as short pipeline 
extensions, help meet the demands of shale areas like the Marcellus 
because the natural gas being produced is in close proximity to its 
destination market. Therefore, it is primarily a matter of connecting 
new gas production into the existing transmission pipeline network. 

However, accommodating increased demand through new construction is a 
challenging proposition. To build a transmission pipeline requires a 
long-term commitment--often a contract that spans 30 to 50 years from 
producers. Major transmission pipeline projects may also face long 
timeframes. Pipeline companies we spoke with stated that once 
contracts are in place it usually takes 2 to 4 years to complete a 
pipeline. This is in part a result of the permitting process, which 
can include multiple federal and state agencies as well as obtaining 
rights to build on properties of individual land owners.[Footnote 64] 
Timelines can be longer if the pipeline construction project is 
contentious.[Footnote 65] The construction timeline is also dependent 
on terrain and weather. Pipeline industry representatives in West 
Virginia told us that constructing pipelines in mountainous terrains 
is much more difficult than in flat land. State officials in North 
Dakota said that long winters and short construction seasons cause 
construction projects to last over several construction seasons to 
complete. Other reasons provided by state officials and industry 
officials for a slower growth in pipeline infrastructure in North 
Dakota include the challenge of securing right-of-ways, as well as 
uncertainty in market demand. It is possible that continued shale 
exploration and development in other parts of the country could 
displace demand for Bakken shale products. Developers have proposed 
some future pipeline projects, and some have been approved in areas 
like North Dakota, but transmission pipeline mileage has not seen the 
same kind of rapid increase as gathering pipeline mileage. For 
example, Enbridge Energy Partners has proposed a transmission pipeline 
called Sandpiper that spans 612 miles from North Dakota through 
Minnesota to Wisconsin. The pipeline is proposed to be 24 inches and 
30 inches in different places and will carry between 225,000 and 
375,000 barrels of oil. WBI Energy announced planning for a 375-mile 
natural gas transmission line called the Dakota Pipeline in January 
2014. The proposed route would start in North Dakota and continue into 
Minnesota. 

In areas of shale development without access to an established 
pipeline network, such as the Bakken region, lengthy timelines and 
high costs associated with building transmission pipeline have led 
producers to seek alternative methods for transporting some of the 
production--primarily rail. 

DOT Is Working to Address Risks Related to the Increase in 
Transportation of Oil by Rail: 

Crude Oil Is Transported Increasingly by Rail and Travels Long 
Distances in Large Volumes: 

The use of rail to transport crude oil from development areas to 
refineries has increased dramatically. STB data show that rail moved 
about 236,000 carloads of crude oil in 2012, which is 24 times more 
than the approximately 9,700 carloads moved in 2008 (see figure 5). 
[Footnote 66] Carloads further increased in 2013, with AAR reporting 
that Class I freight railroads originated 407,761 carloads of crude 
oil that year.[Footnote 67] 

Figure 5: Estimated Number of Crude Oil Rail Carloads in the United 
States, 2008 to 2012: 

[Refer to PDF for image: line graph] 

Estimated carloads per year: 

2008: 9,684; 
2009: 13,148; 
2010: 34,776; 
2011: 65,596; 
2012: 237,932. 

Source: GAO analysis of Surface Transportation Board Data. GAO-14-667. 

Note: The number of crude oil carloads, which was small in 2008-2011, 
had for those years a declining margin of error that started at 19 
percent in 2008 and went down to about 8 percent in 2011. For 2012, 
the margin of error for crude oil carloads was less than 5 percent. 

[End of figure] 

According to railroads, the majority of this increased movement of 
crude oil by rail is done using unit trains, which are trains that 
carry only one commodity to a single destination. Crude oil unit 
trains may consist of 80 to 120 tank cars, each carrying about 30,000 
gallons of product, for a total of about 2.4 million to 3.6 million 
gallons of crude oil per train (see figure 6). This has resulted in an 
increase in demand for tank cars. According to AAR, nearly 50,000 tank 
cars were used to transport crude oil by rail as of April 2014. 
[Footnote 68] 

Figure 6: Crude Oil Unit Train: 

[Refer to PDF for image: photograph] 

Source: GAO. GAO-14-667. 

[End of figure] 

There are different types of crude oil, which affects where crude is 
refined, as refineries are configured differently to handle the 
various types. This, in turn, affects where crude oil is transported 
for refining.[Footnote 69] Increasingly, crude oil produced in the 
United States is "light and sweet" (lower in density and sulfur 
content); in contrast, a portion of new Canadian production has been 
"heavy and sour" crude oil (higher in density and sulfur content). 
[Footnote 70] We have previously reported that not all U.S. refineries 
can take advantage of domestic crude oils to the same extent because 
of configuration constraints at some refineries.[Footnote 71] 
Therefore, oil may travel long distances to a refinery with the 
matching refining configuration even if there is refinery capacity 
nearer to the crude oil source. According to an oil industry 
association in North Dakota, much of the domestic refining capacity 
for Bakken crude oil, which is a lighter crude, is located along the 
Gulf, East, and West Coasts. According to STB data, about 69 percent 
of crude oil transported by rail in 2012 originated in North Dakota, 
followed by Texas and all other states (see figure 7). STB data show 
that crude oil originating in North Dakota in 2012 traveled to 19 
destination American states or Canadian provinces across North 
America. While most Bakken crude oil was shipped to destinations along 
the Gulf Coast, there was a large increase in oil shipped to East and 
West Coast destinations in 2012, signaling a shift in demand from the 
Gulf region to the other coasts. 

Figure 7: North American Originations and Destinations of Crude Oil 
Carloads Hauled by Rail, 2012: 

[Refer to PDF for image: pie-chart and subchart] 

Origination: 
North Dakota: 69% (163,649 loads); 
Texas: 11% (26,476 loads); 
Other[A]: 20% (45,969 loads). 

Destination (originating from North Dakota): 
Louisiana: 81,545 loads; 
New York: 16,748 loads; 
Oklahoma: 12,998 loads; 
Texas: 9,326 loads; 
Washington: 8,786 loads; 
Illinois: 7,232 loads; 
New Jersey: 5,939 loads; 
Delaware: 5,550 loads; 
Missouri: 2,811 loads; 
New Brunswick (Canada): 2,790 loads; 
Quebec (Canada): 2,526 loads; 
Arkansas: 2,092 loads; 
California: 2,016 loads; 
Other[B]: 1,762 loads; 
Michigan: 1,528 loads. 

Sources: GAO analysis of Surface Transportation Board data. GAO-14-667. 

[A] "Other" originations include 22 other American states and Canadian 
provinces, among the largest of which are Saskatchewan, Alberta, 
Oklahoma, California, and Colorado. 

[B] "Other" destinations include 5 other American states and Canadian 
provinces where the estimated carloads received was fewer than 1,000, 
including oil that was shipped to final destinations within the state 
of North Dakota. Multiple destinations may exist in some states. 

Notes: Carload numbers are rounded to the nearest hundred. The sum of 
carloads by destination does not equal the number of carloads 
originated in North Dakota due to rounding. The margins of error for 
estimates of carloads received by individual states or provinces are 
as follows: Missouri (57%), Quebec (55%), New Brunswick (52%), 
Arkansas (50%), California (40%), Delaware (40%), Michigan (38%), New 
Jersey (35%), Washington (32%), Texas (27%), Illinois (26%), Oklahoma 
(25%), New York (22%), and Louisiana (9%). For example, we are 95 
percent confident that the value for Missouri is within +/-57 percent 
of the estimate itself. Additionally, the relative margins of error 
for estimates of origination carloads are as follows: Texas (16%), 
North Dakota (7%), and all other originations (9%). 

[End of figure] 

While pipelines generally deliver commodities to a fixed customer, 
rail offers the flexibility to serve different customers, allowing 
shippers to shift product quickly in response to market needs and 
price opportunities. Despite the great increase in crude oil 
transported by rail, the commodity remains a small percentage of 
railroads' business, comprising about 1.4 percent of Class I 
railroads' freight originations in 2013, according to AAR. As 
previously discussed, there are thousands of miles of track in the 
United States, providing various shipping opportunities for crude oil, 
as well as other commodities.[Footnote 72] Officials from Class I 
railroads said they have not extensively added new infrastructure to 
specifically accommodate the increased shipping of crude oil by rail, 
although officials from some railroads said they have added track 
infrastructure in specific areas of increased shale oil development to 
increase capacity. 

DOT Is Taking Action to Address Safety Risks Resulting from the 
Transport of Crude Oil by Rail: 

As the movement of crude oil by rail has increased, incidents, such as 
spills and fires involving crude oil trains have also increased. 
PHMSA's hazardous materials incident data show that rail crude oil 
incidents in the United States increased from 8 incidents in 2008 to 
119 incidents in 2013.[Footnote 73] These data show that the majority 
of the 2013 incidents were small; however, two incidents in 2013, in 
Aliceville, Alabama and Casselton, North Dakota resulted in large 
spills and greater damage. Significant incidents have continued to 
occur in 2014, including an April derailment and fire in Lynchburg, 
Virginia. During a presentation at an April 2014 forum on rail safety, 
NTSB noted that significant accidents involving crude oil have 
increased in recent years, with one incident occurring between 2008 
and 2012 compared to eight incidents since 2012. 

DOT, primarily through PHMSA and FRA, sometimes jointly, has taken 
steps to engage the rail and oil and gas shipping industries and 
emergency responders to address the safety of transporting crude oil 
by rail, particularly in response to concerns stemming from the July 
2013 Lac-Mégantic, Quebec accident: 

* In August 2013, February 2014, and May 2014, DOT issued emergency 
orders to compel shippers and railroads to address safety risks by 
taking steps to secure unattended trains, ensure proper testing and 
packaging of crude oil, and notify emergency responders about crude 
oil shipments.[Footnote 74] DOT also issued safety advisories during 
this period recommending additional actions.[Footnote 75] 

* In August 2013, PHMSA, with FRA assistance, initiated an ongoing 
special inspection program to examine whether crude oil rail shipments 
are appropriately tested and packaged. The effort consists of spot 
inspections, data collection, and testing crude oil samples taken from 
tank cars. Initial information from the program has identified 
deficiencies; DOT issued fines against three companies in February 
2014 for not following proper crude oil packaging procedures. 
According to PHMSA officials, this effort inspects about 2 percent of 
Bakken crude oil trains. 

* In September 2013, PHMSA issued an Advance Notice of Proposed 
Rulemaking seeking comments from industry and other stakeholders on 
improvements to standards for crude oil rail tank cars.[Footnote 76] 
This action was in response to the railroad industry's 2011 petition 
for improved standards and recommendations from NTSB. 

* In January 2014, PHMSA issued a safety alert notifying the general 
public, emergency responders, shippers, and carriers that Bakken crude 
oil may be more flammable than traditional heavy crude oil based on 
tests associated with PHMSA and FRA's special inspection program. 
PHMSA said it planned to issue final results of the tests at a later 
date. 

* In February 2014, DOT entered into a voluntary agreement with AAR to 
improve the safety of moving crude oil by rail including increased 
track inspections, improved emergency braking capabilities, use of a 
risk-based routing tool to identifying the safest routes, travel at 
lower speeds, and emergency response training and planning. 

* Also in February 2014, PHMSA officials met with emergency responders 
and industry groups to discuss training and awareness related to the 
transport of Bakken crude oil. 

* In July 2014, DOT issued an update on PHMSA and FRA's joint special 
inspection program that includes results to date of their crude oil 
testing efforts and related discussion of the appropriate packaging of 
oil tested. 

Additionally, in July 2014, PHMSA, in coordination with FRA, proposed 
new rules that align with key areas of concern cited by stakeholders: 
crude oil classification, testing, and packaging; crude oil tank car 
design; and emergency response. Specifically, PHMSA issued a Notice of 
Proposed Rulemaking seeking comment on proposals for new regulations 
to lessen the frequency and consequences of train accidents involving 
large volumes of flammable liquids, such as crude oil. The proposal 
includes new operational requirements for certain trains transporting 
a large volume of flammable liquids; revisions to requirements for 
crude oil classification, testing, and packaging; and improvements in 
tank car standards.[Footnote 77] Additionally, PHMSA, also in 
consultation with FRA, issued an Advance Notice of Proposed Rulemaking 
seeking comments in response to questions about potential revisions to 
current regulations for emergency response planning for crude oil 
transported by rail.[Footnote 78] 

Crude Oil Classification, Testing, and Packaging: 

PHMSA's current regulations for transporting hazardous materials 
require that shippers classify and characterize the materials they 
ship to identify the materials' characteristic properties and select 
an appropriate shipping package based on those properties.[Footnote 
79] "Classification" refers to identifying a material's hazard class, 
which could be one or more from the list of nine in PHMSA's hazardous 
materials regulations, such as a flammable liquid or flammable gas. 
"Characterization" refers to ascertaining other characteristics of the 
product to determine its proper packing group, a designation based on 
risk that identifies acceptable packages.[Footnote 80] Specifically, 
PHMSA's regulations classify crude oil as a flammable liquid and offer 
acceptable tank cars under three packing groups based on 
characteristics such as the oil's flash point--lowest temperature at 
which a liquid can vaporize to form an ignitable mixture in air--and 
boiling point.[Footnote 81] PHMSA's regulations provide options for 
the tests shippers may use to determine these characteristics. 
[Footnote 82] Crude oil with higher boiling and flash points is 
considered less risky, since it is less likely to form flammable vapor 
unless exposed to extreme temperatures, and more approved packaging 
choices exist for such oil than for oil with lower boiling and flash 
points that could form ignitable vapor at lower temperatures. 
Substances that are gases, rather than liquid, at ambient temperatures 
are even more flammable, and thus more stringent packaging 
requirements apply to flammable gases than to flammable liquids. In 
particular, flammable gases must be packaged in pressure tank cars, 
which provide additional safety in the event of an accident.[Footnote 
83] 

According to PHMSA officials, because crude oil is a natural resource, 
it has greater characteristic variability than a hazardous material 
manufactured under strict specifications or quality guidelines. Thus, 
testing may need to be done more frequently to make sure the proper 
packaging rules are followed, since different rules may apply 
depending on the characteristics of a particular oil shipment. A 
review by Canadian transportation safety officials determined that the 
crude oil involved in the Lac-Mégantic accident was packaged under 
less stringent packing requirements than those which should have been 
followed, given the flammability characteristics of the oil involved. 
Although, as DOT officials pointed out, a different packing group 
would not have changed the package itself, since the type of tank car 
involved in the incident, the DOT-111 tank car, is allowed for crude 
oil transport under all three packing groups.[Footnote 84] 

Stakeholders we spoke to have differing views on the volatility of 
crude oil from the Bakken region, the area where the most crude oil is 
being shipped by rail. Some industry stakeholders, including the 
operators of Bakken crude oil rail terminals, characterized Bakken 
crude oil as being like any other crude oil produced in the United 
States, while other stakeholders said it has differences that may make 
it more volatile. In particular, PHMSA and AAR officials said that 
Bakken oil has variable composition and may sometimes contain higher 
than usual levels of dissolved natural gases. According to AAR 
officials, this can lead to flammable gases building up in a tank car 
during transport. AAR officials also said that the presence of natural 
gas makes fires more likely when crude oil tank cars are involved in 
an accident. Additionally, a May 2014 industry study noted that Bakken 
crude oil may contain higher amounts of dissolved flammable gases; 
however, the report states that it is not enough to warrant new 
regulations for crude oil rail transportation.[Footnote 85] 

According to PHMSA officials, the current regulatory framework for 
classifying and packaging crude oil for transport by rail may need to 
be further examined to ascertain if it addresses all of the risks 
posed by some shale crude oils that have properties unlike other 
typical crudes. PHMSA's July 2014 Notice of Proposed Rulemaking calls 
for shippers of mined gases and liquids to be transported by rail, 
including crude oil, to develop and implement a program for sampling 
and testing to ensure the shippers' materials are properly classified 
and characterized. The procedures must outline a frequency of sampling 
and testing that accounts for the potential variability of the 
material being tested, sampling at various points to understand the 
variability of the material during transportation, sampling methods 
that ensure a representative sample of the entire packaged mixture is 
collected, and testing methods used, among other requirements. The 
sampling and testing program must be documented in writing and 
retained for as long as it remains in effect and be made available to 
DOT for review upon request. 

Representatives from railroads and crude oil terminals we spoke to, as 
well as from the oil and gas industry, have indicated that 
clarification about the requirements for testing and packaging crude 
oil is needed. Specifically, two of the railroads and two crude oil 
rail terminal operators told us that PHMSA needs to clarify its crude 
oil testing requirements, including to more clearly state which tests 
should be done and with what frequency.[Footnote 86] One of the 
terminal operators told us that without clearer guidance, they are 
unsure whether they are performing the right tests and testing with 
sufficient frequency. They are also concerned they may be incurring 
unnecessary expense from over-testing. PHMSA's July 2014 Notice of 
Proposed Rulemaking does not state which tests should be performed or 
specifically how often, but does state that testing methods used 
should enable complete analysis, classification, and characterization 
of the material as required by PHMSA's regulations and that the 
frequency of testing should account for the potential variability of 
the material. The notice also seeks comment on whether more or less 
specificity of these requirements would aid shippers and whether the 
proposed guidelines provide sufficient clarity for shippers to 
understand whether they are in compliance. PHMSA has also drafted more 
detailed guidance on classification and packaging crude oil, including 
testing procedures, but had not released it publicly as of June 2014. 
[Footnote 87] 

Additionally, the American Petroleum Institute, an oil and gas 
industry association, formed a working group in 2014 to develop 
industry standards for testing and packaging of crude oil for 
transportation by rail, which the group hopes to implement by October 
2014. PHMSA officials said that PHSMA scientists have been attending 
the group's meetings and providing input. In its July 2014 Notice of 
Proposed Rulemaking, PHMSA noted that it is encouraged by the 
development of an industry standard and that once finalized, PHMSA may 
consider adoption of such a standard. 

Crude Oil Tank Car Design: 

Under PHMSA's current packaging regulations, a number of types of tank 
cars are approved for transporting crude oil.[Footnote 88] However, 
DOT-111 tank cars are most commonly used, according to industry and 
railroad representatives, and PHMSA's regulations allow its use for 
all types of crude oil, regardless of packing group. 

NTSB has documented a history of safety concerns with the DOT-111 tank 
car. Specifically, NTSB has raised concerns regarding the tank car's 
puncture resistance, heat tolerance, and potential for 
overpressurization during a fire. In its report of a 2011 
investigation of the derailment of a train hauling ethanol tank cars, 
NTSB noted that its 1991 safety study and four train-derailment 
investigations from 1992 to 2009 had identified problems with DOT-111 
tank cars.[Footnote 89] The report further concluded that the car's 
poor performance suggested that DOT-111 tank cars are inadequately 
designed to prevent punctures and breaches and that the catastrophic 
release of hazardous materials can be expected when derailments 
involve DOT-111 cars.[Footnote 90] In response to that and other rail 
incidents, in 2012, NTSB recommended that PHMSA upgrade its DOT-111 
tank car standards to improve tank shielding and puncture resistance, 
a move the industry had already begun to address. 

In 2011, the railroad industry petitioned PHMSA to adopt improved 
standards for DOT-111 tank cars and worked with tank car manufacturers 
and other stakeholders to develop improved industry standards that 
were implemented later that year. These standards called for a thicker 
shell to improve puncture resistance, shielding at both ends of the 
tank car, and protection for the top fittings of the tank car. More 
recently in November 2013, following the Lac-Mégantic accident, the 
railroad industry called for further tank car upgrades, including a 
thicker shell, protection to prevent overheating, additional 
shielding, protection for outlet handles on the bottom of a tank, and 
high-capacity pressure relief valves.[Footnote 91] Figure 8 shows how 
these various proposed upgrades may be incorporated into a crude oil 
tank car. 

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

[Refer to PDF for image: illustration] 

Head shields: Shielding at both ends of a tank car provide additional 
puncture resistance. 

Bottom outlet handles: Handles for the tank's bottom outlets are 
reconfigured to prevent them from inadvertently opening during an 
accident. 

High-capacity pressure-relief valve: A high-capacity pressure-relief 
device is designed to protect against the risk of increased internal 
pressure resulting from a fire, providing for faster pressure release. 

Top fittings protection: Valves and other fittings on the top of the 
tank car are protected from damage in the event of an accident. 

Thermal protection and jacket: A thermal protection layer insulates 
tank contents to protect against overheating in the event the tank is 
exposed to fire. A metal jacket protects the thermal protection layer 
and may offer additional puncture resistance. 

Tank thickness: Tank thickness is increased to provide better puncture 
resistance. 

Sources: GAO, AAR and railroads. GAO-14-667. 

[End of figure] 

Although tank cars are generally owned by shippers or third parties, 
one railroad told us they intend to acquire their own fleet of tank 
cars built to the railroad industry's 2013 proposed standards. The 
railroad hopes to incentivize the cars' use by shippers; however, 
railroads are obligated to move materials as long as they are packaged 
according to federal standards, and told us they cannot force 
customers to use upgraded cars and have to accept cargo so long as it 
is in an allowable package, which includes older model DOT-111 cars. 

A wide range of stakeholders we interviewed--including those from 
PHMSA, NTSB, state transportation agencies, railroad industry, and 
rail suppliers--told us that crude oil tank car standards need to be 
improved. Most shippers, railroads, and rail suppliers providing 
comments in response to PHMSA's September 2013 rail safety Advance 
Notice of Proposed Rulemaking also stated this opinion. However, there 
were some differences in their views on how improvements should be 
implemented. Those who commented in response to PHMSA's notice 
supported enacting the industry's upgraded tank car standard into 
regulation and were generally supportive of proposals to strengthen 
tank cars' puncture resistance through design features such as thicker 
tank walls, jackets, and shielding. However, stakeholders disagreed on 
the extent to which existing tank cars should--or even could--be 
retrofitted to meet higher standards. For example, shippers and rail 
suppliers stated that existing tank cars built to the current industry 
standards that already exceed the regulatory standard should be exempt 
from retrofitting if PHMSA were to adopt an even higher standard. 
Shippers also expressed concerns that retrofitting would be costly, 
take tank cars out of service, and put a burden on the already busy 
shops that also build new tank cars. Local-government and rail-
industry commenters supported retrofitting existing cars. 

In its July 2014 Notice of Proposed Rulemaking, PHMSA sought comment 
on requirements for a new DOT-117 tank car standard to replace the 
current DOT-111 standard for newly manufactured tank cars transporting 
flammable liquids, which could be one of three options: 1) a design by 
PHMSA and FRA that would increase puncture resistance, provide thermal 
protection, protect top fittings and bottom outlets, and improve 
braking performance; 2) the design in the railroad industry's proposal 
from November 2013 previously discussed; and 3) the 2011 industry-
developed tank car design with some enhancements. PHMSA's Notice of 
Proposed Rulemaking concluded that cars built to the option 3 standard 
would likely be built in the absence of a new rule, based on 
commitments from industry, but that options 1 and 2 would provide 
additional safety benefits, along with additional cost. Specifically, 
PHMSA estimated that the improved braking, roll-over protection and 
increased shell thickness under option 1 would cost $5,000 more per 
car than option 3. According to PHMSA, option 2 would have most of the 
same safety features as option 1 except rollover protection and the 
improved braking system, resulting in a cost of $2,000 more per car 
than option 3. In addition to the new DOT-117 standard, the proposal 
would create a performance standard for the design and construction of 
new tank cars equivalent to the DOT-117, subject to FRA approval. 
Under the proposal, existing tank cars would have to be retrofitted to 
comply with the performance standard.[Footnote 92] The proposal calls 
for phasing out use of all DOT-111 tank cars for transporting 
flammable liquids by October 1, 2020, although the cars could still be 
used to transport other materials.[Footnote 93] 

Although this proposed rule had previously been scheduled for release 
in November 2014, PHMSA accelerated its efforts to issue a proposal, 
resulting in the July 2014 release. According to PHMSA officials, the 
agency did not issue a proposal sooner because the industry, as well 
as the public, have had different opinions on tank car specifications. 
Since 2011, PHMSA has received multiple petitions seeking changes to 
tank car safety standards. In the interim, the railroad industry has 
moved to adopt higher standards, and in a May 2014 safety advisory, 
PHMSA and FRA asked companies to refrain from using older tank cars if 
possible. 

Emergency Response: 

Transporting a large volume of flammable liquid in one train increases 
the risk of a large fire or explosion in the event of a derailment, 
such as in the Lac-Mégantic incident. DOT has noted that the 
transportation of crude oil in unit trains compounds the risk of 
ignition, and NTSB has reported that crude oil unit trains present the 
potential for disastrous consequences in the event of an accident. 
Associations representing emergency responders told us they are 
particularly concerned about the risk these trains pose to rural 
areas, which generally have fewer resources to respond to hazardous 
materials incidents. They also cited concerns with the general lack of 
awareness about risks and the need for industry to better communicate 
with local responders about them. Railroad officials told us that 
risks from unit trains can be managed. Further, railroad officials 
told us that transporting crude oil in trains that carry a mixture of 
freight commodities could be higher risk, due to the need to sort 
crude oil tank cars in rail yards, and that doing so would lead to 
reduced efficiency by increasing the turn-around times for crude oil 
trains. In August 2013, AAR revised its guidance on hazardous 
materials operating practices so that its restrictions would apply to 
crude oil unit trains; these restrictions include a 50 MPH speed 
limit, limitations on the use of track siding, and requirements for 
addressing defective bearings.[Footnote 94] However, associations 
representing emergency responders told us that industry should do more 
to prepare responders for potential incidents, such as by providing 
information, training, and resources. These organizations also shared 
concerns about rural responders lacking resources and information to 
respond as effectively as responders in urban areas. As previously 
mentioned, stakeholders told us that rural areas may lack sufficient 
resources to respond to a major event, like an accident involving a 
crude oil unit train. 

As previously discussed, PHMSA has engaged emergency responders on 
crude oil transportation safety, and the voluntary commitment DOT 
secured from railroads included emergency response planning and 
training efforts. However, PHMSA's requirements for comprehensive 
emergency response planning do not apply to unit trains used to 
transport crude oil, raising concerns about the abilities of 
responders and other stakeholders to effectively handle potential 
incidents. As currently worded, PHMSA's regulations require 
comprehensive plans for trains that haul any liquid petroleum or non-
petroleum oil in a quantity greater than 42,000 gallons per package--
greater than the about 30,000 gallons of crude oil typically 
transported in a tank car--even though a unit train of 100 cars could 
carry about 3 million gallons of crude oil.[Footnote 95] Instead, 
PHMSA requires railroads to have a basic plan that includes 
information about the maximum potential discharge, response plans, and 
identification of (but not coordination with) private response 
personnel and the appropriate people and agencies to contact in the 
event of an incident.[Footnote 96] Federal regulations require that 
comprehensive emergency response plans include a written plan 
outlining contingency planning, an identified central coordinating 
official during an incident, private personnel secured by contract or 
other means to respond to a worst-case incident, training, equipment, 
and response actions and be subject to review by FRA.[Footnote 97] 
Without a comprehensive plan, PHMSA does not have assurance that 
railroads have taken steps to plan for response needs and identified 
and coordinated with the appropriate responders. PHMSA's July 2014 
Advance Notice of Proposed Rulemaking seeks comment on several 
possible ways of expanding the comprehensive planning requirement to 
include crude oil unit trains by changing the threshold under which 
such plans are required.[Footnote 98] 

Although this review focuses on the packaging and movement of crude 
oil in tank cars, our prior work has found that while DOT has taken 
actions in this area, there are other safety issues that are also 
relevant to the context of the safety of transporting crude oil by 
rail. Specifically, in a December 2013 report, we found that FRA has 
developed a risk-based approach to direct its inspection efforts, but 
the agency had been slow to implement broader risk reduction planning. 
[Footnote 99] As required by the Rail Safety Improvement Act of 2008, 
FRA was tasked with overseeing railroads' development of risk 
reduction plans.[Footnote 100] Specifically, FRA was required to issue 
a final rule by October 2012 directing railroads to develop these 
plans, but our report found that FRA had not yet issued the final 
rule. Our report described safety challenges that railroads face, some 
of which can contribute to derailments. Other actions have been taken 
subsequently. FRA issued a final rule in January 2014 revising track 
inspection requirements to increase the standard for track used to 
transport hazardous materials.[Footnote 101] And, as discussed, 
railroads entered into a voluntary agreement with DOT in February 2014 
to improve the safety of crude oil trains.[Footnote 102] In their 
comments in response to PHMSA's September 2013 Advance Notice of 
Proposed Rulemaking on rail safety, several shippers noted that recent 
incidents have generally been caused by defective track, railroad 
equipment or operational issues, and supported improvements in these 
areas. NTSB's accident report for the aforementioned 2011 derailment 
of ethanol tank cars noted that although problems with tank cars were 
a contributing factor, the probable cause of the accident was a broken 
rail. PHMSA has also noted that addressing the causes of derailments, 
not just upgrading tank cars, is important for improving the safety of 
transporting crude oil by rail. According to PHMSA officials, the 
severity of a derailment may present a wide range of forces for any 
particular tank car to withstand, and therefore, even an enhanced tank 
car may have variable performance and may not always perform better in 
a given derailment. PHMSA's July 2014 Notice of Proposed Rulemaking to 
address safety of transporting crude oil by rail includes a number of 
other provisions in addition to those already discussed for trains 
carrying 20 or more tank carloads of flammable liquids, including a 
routing analysis, enhanced braking, and codifying the May 2014 
emergency order requiring notification to emergency responders about 
crude oil shipments. 

Conclusions: 

The advent of new oil and gas production technologies has created a 
new energy boom for the United States. However, with this increase in 
production comes the responsibility to move those flammable, hazardous 
materials safely. 

While the Department of Transportation has worked to identify and 
address risks, its regulation has not kept pace with the changing oil 
and gas transportation environment. Gathering pipeline construction 
has increased, but some of these new pipelines in rural areas fall 
outside the current safety framework, despite operating at the size 
and pressure (and therefore similar risk) as federally regulated 
transmission lines. DOT began a rulemaking to address this issue in 
2011 but did not issue proposed rules. Subsequently, new gathering 
pipeline infrastructure has continued to grow, with industry 
predicting such growth will continue for the foreseeable future, 
raising concerns where such pipelines are not subject to safety 
regulations. 

The growth in the use of rail to move crude oil has likewise revealed 
risks not fully addressed by the current safety framework, 
particularly in ensuring that oil is properly tested and packaged for 
shipping. Emergency responders also need to be adequately prepared in 
the event that incidents occur, both for pipeline and for rail. Recent 
transportation incidents, such as the July 2013 train accident in Lac-
Mégantic, Quebec, have highlighted the need for risk-based federal 
safety oversight. Since the Lac-Mégantic accident, much emphasis has 
been placed on the need to upgrade standards for tank cars that carry 
crude oil, but attention to tank cars alone is not sufficient to 
address safety, a sentiment shared by some railroads and shippers, as 
well as DOT. Oil and gas shippers, railroads and pipeline operators, 
emergency responders, and government all have a role to play. 
Shippers, in particular, play an important role in making sure that 
hazardous materials like crude oil are properly packaged for safe 
transport. This underscores the importance of DOT's role in assessing 
the risk such oil poses and providing clear guidance for handling it 
safely. Without timely action to address safety risks posed by 
increased transport of oil and gas by pipeline and rail, additional 
accidents that could have been prevented or mitigated may endanger the 
public and call into question the readiness of transportation networks 
in the new oil and gas environment. DOT's recent proposed rulemakings 
to address concerns about transporting crude oil by rail signal the 
department's commitment to addressing these important safety issues. 
Because of the ongoing rail safety rulemakings, we are not making 
recommendations related to rail at this time. 

Recommendation: 

To address the increased risk posed by new gathering pipeline 
construction in shale development areas, we recommend that the 
Secretary of Transportation, in conjunction with the Administrator of 
PHMSA, move forward with a Notice of Proposed Rulemaking to address 
gathering pipeline safety that addresses the risks of larger-diameter, 
higher-pressure gathering pipelines, including subjecting such 
pipelines to emergency response planning requirements that currently 
do not apply. 

Agency Comments and Our Evaluation: 

We provided a draft of this report to DOT for comment. We received 
written comments from DOT's Assistant Secretary for Administration, 
which are reproduced in appendix III. These comments stated that PHMSA 
generally concurred with our recommendation to move forward with a 
rulemaking to address risks posed by gathering pipelines. Further, the 
letter stated that PHMSA is developing a rulemaking to revise its 
pipeline safety regulations and is examining the need to adopt safety 
requirements for gas gathering pipelines that are not currently 
subject to regulations. Additionally, the letter stated that proposed 
regulations are under development to ensure the safety of natural gas 
and hazardous liquid gathering pipelines that include collecting new 
information about gathering pipelines to better understand the risk 
they pose. 

In the version of the draft report we sent to DOT for comment, we had 
also recommended that PHMSA develop and publish additional guidance on 
testing, classification and packaging of crude oil for transport by 
rail and that PHMSA address emergency response planning regulations 
for transporting oil by rail so that they include shipments of crude 
oil by unit trains. DOT's written response stated that PHMSA generally 
concurred with these recommendations and was taking steps to address 
them. Subsequently, on July 23, 2014, PHMSA, in coordination with FRA, 
issued rulemaking proposals that, if implemented, would likely address 
these concerns. Therefore, we are no longer making those 
recommendations in this report and we have added language to the 
report describing the objectives of the proposals. We also received 
technical comments from DOT, which we incorporated as appropriate. 

As agreed with your offices, unless you publicly announce the contents 
of this report earlier, we plan no further distribution until 30 days 
from the report date. At that time, we will send copies of this report 
to the appropriate congressional committees and to the Secretary of 
Transportation. In addition, the report will be available at no charge 
on the GAO website at [hyperlink, http://www.gao.gov]. 

If you or your staffs have any questions about this report, please 
contact Susan Fleming at (202) 512-2834 or flemings@gao.gov or Frank 
Rusco at (202) 512-3841 or ruscof@gao.gov. Contact points for our 
Offices of Congressional Relations and Public Affairs may be found on 
the last page of this report. Major contributors to this report are 
listed in appendix IV. 

Signed by: 

Susan Fleming: 
Director, Physical Infrastructure Issues: 

Signed by: 

Frank Rusco: 
Director, Natural Resources and Environment: 

[End of section] 

Appendix I: Objectives, Scope, and Methodology: 

This report addresses (1) challenges, if any, that increased domestic 
oil and gas production poses for U.S. transportation infrastructure 
and examples of associated risks and implications; (2) how pipeline 
infrastructure has changed as a result of increased oil and gas 
production, the key related safety risks, and to what extent the U.S. 
Department of Transportation (DOT) has addressed these risks; and (3) 
how rail infrastructure has changed as a result of increased oil 
production, the key related safety risks, and to what extent DOT has 
addressed these risks. 

To identify challenges increased domestic oil and gas production poses 
for U.S. transportation infrastructure and examples of the associated 
risks and implications, we reviewed and synthesized information from 
36 studies and other publications from federal, state, and tribal 
government agencies; industry; academics; and other organizations. We 
identified these studies and publications by conducting a search of 
web-based databases and resources--including Transport Research 
International Documentation, ProQuest, and FirstSearch--containing 
general academic articles, government resources, and "gray 
literature."[Footnote 103] Studies and publications were limited to 
those focused on domestic onshore oil and gas production and published 
in the years 2008 through 2013. In addition, we reviewed prior work we 
have conducted. We included examples of known transportation 
infrastructure limitations and associated effects from these studies 
and publications in this report. We believe the studies and 
publications identified through our literature search and included in 
our review have identified key examples of known transportation 
infrastructure limitations and associated effects. In addition, we 
analyzed data from the U.S. Department of Energy's Energy Information 
Administration (EIA) to identify oil and gas produced from 2007 to 
2012. To assess the reliability of these data, we examined EIA's 
published methodology for collecting this information and found the 
data sufficiently reliable for the purposes of this report. 

To determine how pipeline infrastructure has changed as a result of 
increased oil and gas production, we analyzed data from DOT's Pipeline 
and Hazardous Materials Safety Administration (PHMSA) on pipeline 
construction from January 1, 2010 through December 31, 2012 and 
interviewed PHMSA officials and representatives of pipeline industry 
associations and operators. We assessed the reliability of the data on 
pipeline construction by reviewing documentation about the database, 
interviewing agency officials about how the data are collected, 
comparing the data to similar information from EIA on completed 
pipeline projects, and reviewing the agency's related internal 
controls. We determined that the data were sufficiently reliable for 
describing new pipeline construction projects. We identified key 
pipeline safety risks by reviewing documents provided by and 
interviewing officials from PHMSA, pipeline industry associations and 
operators, and safety organizations. To examine trends in pipeline 
incidents, we analyzed PHMSA's pipeline incident data from January 1, 
2008 through December 31, 2013. This analysis only examined 
transmission pipeline incidents, since many gathering pipelines are 
not regulated and therefore the data may not include potential 
gathering pipeline incidents. We assessed the reliability of these 
data by reviewing documentation on the collection of these data, 
interviewing agency officials about how the data are collected and 
whether there are potential limitations for using the data as we 
intended, and reviewing the agency's related internal controls. We 
determined that these data were sufficiently reliable for identifying 
trends in pipeline incidents. We also examined transportation 
infrastructure changes and safety risks specific to key shale 
development areas in four states selected because they are located 
above shale plays in different parts of the country with generally the 
highest levels of oil and gas production from 2007 through 2011, 
according to EIA data. The states and corresponding shale plays were 
Pennsylvania and West Virginia (Marcellus shale play), North Dakota 
(Bakken shale play), and Texas (Eagle Ford shale play). In these 
states, we spoke with state oil and gas regulatory and transportation 
agencies, oil and gas industry associations, oil and gas companies, 
railroads, and crude oil rail terminal operators, as well as a 
community advocacy organization in Pennsylvania. We also reviewed 
documents provided by these organizations. 

To determine how rail infrastructure has changed, we analyzed Surface 
Transportation Board (STB) data on crude oil shipments by rail for 
calendar years 2008 through 2012 and interviewed DOT officials from 
PHMSA and the Federal Railroad Administration and industry 
representatives, including railroads.[Footnote 104] We assessed the 
reliability of the STB data by reviewing documentation about the data, 
interviewing agency officials about how the data were collected and 
ways they could be analyzed, and reviewing the agency's related 
internal controls. We determined that the data were sufficiently 
reliable for describing trends in the movement of crude oil. To 
identify the key safety risks related to changes in rail 
infrastructure, we analyzed PHMSA's data on rail hazardous-materials 
incidents from January 1, 2008 through December 31, 2013, reviewed 
documents submitted to a DOT rulemaking proceeding on rail safety, and 
interviewed DOT officials and representatives from safety 
organizations and industry. We assessed the reliability of PHMSA's 
incident data by reviewing documentation about the data, interviewing 
agencies officials about how the data were collected, testing the data 
for inconsistencies, and reviewing the agency's related internal 
controls. We concluded that the data were sufficiently reliable for 
discussing trends in rail hazardous-materials incidents. Additionally, 
to examine infrastructure impacts and safety issues closely associated 
with shale areas, we Interviewed officials from state oil and gas 
regulatory and transportation agencies, industry associations and oil 
and gas transportation companies in the four states mentioned 
previously: North Dakota, Pennsylvania, Texas, and West Virginia. To 
evaluate to what extent DOT has addressed safety risks, we reviewed 
federal laws and regulations, DOT emergency orders and guidance, and 
interviewed DOT officials. National and state-level stakeholders we 
interviewed are listed in tables 2 and 3.[Footnote 105] 

Table 2: National-Level Industry and Safety Stakeholders GAO 
Interviewed: 

Industry stakeholders: 

Stakeholder: American Petroleum Institute; 
Description: Oil and gas industry. 

Stakeholder: American Short Line and Regional Railroad Association; 
Description: Railroad industry. 

Stakeholder: American Trucking Associations; 
Description: Trucking industry. 

Stakeholder: Association of American Railroads; 
Description: Railroad 
industry.
Stakeholder: Association of Oil Pipe Lines; 
Description: Oil and gas industry. 

Stakeholder: BNSF Railway; 
Description: Class I railroad. 

Stakeholder: CN; 
Description: Class I railroad. 

Stakeholder: Canadian Pacific; 
Description: Class I railroad. 

Stakeholder: CSX Transportation; 
Description: Class I railroad. 

Stakeholder: Dominion; 
Description: Gas pipeline operator. 

Stakeholder: Interstate Natural Gas Association of America; 
Description: Oil and gas industry. 

Stakeholder: National Tank Truck Carriers; 
Description: Trucking industry. 

Stakeholder: Norfolk Southern; 
Description: Class I railroad. 

Stakeholder: Railway Supply Institute; 
Description: Tank car manufacturers. 

Stakeholder: Spectra Energy; 
Description: Gas pipeline operator. 

Stakeholder: Williams/Transco; 
Description: Gas pipeline operator. 

Stakeholder: Union Pacific Railroad; 
Description: Class I railroad. 

Safety stakeholders: 

Stakeholder: Commercial Vehicle Safety Alliance; 
Description: Highway safety. 

Stakeholder: International Association of Fire Chiefs; 
Description: Emergency responders. 

Stakeholder: National Association of Regulatory Utility Commissioners; 
Description: State regulatory officials. 

Stakeholder: National Association of State Fire Marshals; 
Description: Emergency responders. 

Stakeholder: National Fire Protection Association; 
Description: Emergency responders. 

Stakeholder: National Transportation Safety Board; 
Description: Federal incident investigation. 

Stakeholder: Pipeline Safety Trust; 
Description: Pipeline safety advocates. 

Source: GAO. GAO-14-667. 

[End of table] 

Table 3: State-Level Stakeholders GAO Interviewed: 

North Dakota: 

Stakeholder: Hess Corporation; 
Description: Rail crude oil terminal operator. 

Stakeholder: North Dakota Department of Mineral Resources; 
Description: State oil and gas regulator. 

Stakeholder: North Dakota Department of Transportation; 
Description: State transportation agency. 

Stakeholder: North Dakota Petroleum Council; 
Description: Oil and gas industry. 

Stakeholder: North Dakota Pipeline Authority; 
Description: State pipeline agency. 

Stakeholder: North Dakota Pipeline Association; 
Description: Oil and gas industry. 

Stakeholder: North Dakota Public Service Commission; 
Description: State oil and gas regulator. 

Stakeholder: Savage Services; 
Description: Rail crude oil terminal operator. 

Pennsylvania: 

Stakeholder: C.O.G.E.N.T.; 
Description: Community pipeline safety. 

Stakeholder: MarkWest; 
Description: Gas company. 

Stakeholder: Pennsylvania Department of Transportation; 
Description: State transportation agency. 

Stakeholder: Pennsylvania Public Utility Commission (Gas Safety 
Division); 
Description: State gas regulator. 

Texas: 

Stakeholder: Gardendale Railroad; 
Description: Short line railroad. 

Stakeholder: Marathon Oil; 
Description: Oil and gas company. 

Stakeholder: Railroad Commission of Texas; 
Description: State oil and gas regulator. 

Stakeholder: South Texas Energy Economics Roundtable; 
Description: Oil and gas industry. 

Stakeholder: Southcross; 
Description: Gas company. 

Stakeholder: Texas Department of Transportation (Rail Division); 
Description: State rail agency. 

Stakeholder: Texas Oil and Gas Association; 
Description: Oil and gas industry. 

Stakeholder: Texas Pipeline Association; 
Description: Oil and gas industry. 

West Virginia: 

Stakeholder: Energy Partners; 
Description: Oil and gas company. 

Stakeholder: West Virginia Department of Transportation (Division of 
Highways); 
Description: State highway agency. 

Stakeholder: West Virginia Public Safety Commission; 
Description: State oil and gas pipeline regulator. 

Source: GAO. GAO-14-667. 

[End of table] 

We conducted this performance audit from August 2013 to August 2014 in 
accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

[End of section] 

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

Pipeline and rail are used to transport shale oil and gas long 
distances; however, truck transportation via local roads and highways 
also plays an important role. Trucks transport these goods from 
production areas to pipeline and rail as well as haul most materials 
needed to develop oil and gas, such as water, sand, and equipment used 
during drilling and hydraulic fracturing. State agencies within the 
four states we examined (Pennsylvania, North Dakota, Pennsylvania, and 
Texas) have noted significant local road and highway impacts and 
safety concerns as a result of shale oil and gas development and have 
taken steps to address these impacts. 

Infrastructure Impacts: 

States have reported a significant increase in truck traffic as a 
result of shale oil and gas development, the effects of which are 
particularly acute in rural areas unused to this level of road 
congestion. State officials provided estimates of the number of truck-
loads required to drill and fracture a shale gas well ranging from 
about 1,200 to about 3,000. Although the number of trucks is greatest 
during the initial drilling and fracturing phases, significant truck 
volume may return if a well is re-fractured and, in the case of oil 
wells, trucks can be used to remove oil if the wells are not connected 
by pipeline. State officials told us that roads in many of these areas 
prior to development were built for light local and farm use and were 
not built for the additional thousands of heavy truck loads associated 
with oil and gas development, leading to deterioration. North Dakota 
officials told us that many of the roads the oil industry is using 
were built to handle approximately 600 loads a day and now these roads 
can see thousands of heavy truck loads per day. Officials also told us 
that state-wide, truck traffic accounts for approximately 18 percent 
of all traffic, but in development areas truck traffic can account for 
35 to 50 percent. As a result, it has been much more difficult to 
predict where the biggest road deterioration is going to happen 
because it depends on the location and intensity of shale development. 
In Pennsylvania, officials told us the increased volume of trucks has 
shortened the roads' normal life cycle, leading to accelerated 
deterioration and significant damage. The costs of shoring up and 
rebuilding roads to address these impacts are significant. The Texas 
Department of Transportation estimated an annual impact to farm-to-
market roads, state highways, and local roads in the Eagle Ford area 
of about $4 billion. 

Safety Concerns: 

Road deterioration and increased truck volumes have created safety 
concerns in these states. Reported highway incidents involving crude 
oil have increased in recent years in North Dakota and Texas, the two 
states we examined with significant shale oil development.[Footnote 
106] In Texas, for example, the Texas Department of Transportation 
reported an increase in highway crashes in the Eagle Ford shale and 
Permian Basin areas, with the Permian area seeing a 13 percent 
increase in roadway fatalities between 2012 and 2013. 

Actions to Address Impacts and Safety: 

The following actions are examples of ways state officials said they 
have addressed highway infrastructure and safety concerns: 

* Extraction taxes. Officials in North Dakota told us the state uses 
taxes on extracted mineral resources to pay for road improvements. In 
2013, the Texas state legislature voted to transfer a portion of the 
state's oil and gas severance tax to pay for road maintenance, a 
measure that will go before Texas voters for approval in November 2014. 

* Use agreements. In Pennsylvania and West Virginia, states have 
entered into road-use agreements with energy companies making the 
companies responsible for their damage to the roads and maintaining 
them. Companies must also pay a bond as part of the agreement. 
Officials told us these agreements have helped make companies more 
responsible for their impact. For example, in Pennsylvania, officials 
told us industry had invested over $750 million in roadway 
infrastructure improvements. 

* Public awareness. Texas launched a public education campaign to 
alert drivers to the need to use caution when driving through energy-
related work zones. 

Although much of the impact has been on rural, nonfederal roads, the 
Federal Highway Administration has been involved in helping states to 
coordinate information sharing. For example, in 2011, the Federal 
Highway Administration hosted an information-sharing meeting between 
officials in Pennsylvania and West Virginia, who told us the session 
was beneficial. 

[End of section] 

Appendix III: Comments from Department of Transportation: 

U.S. Department of Transportation: 
Office of the Secretary of Transportation: 
1200 New Jersey Ave., SE: 
Washington, DC 20590: 

Ms. Susan Fleming: 
Director, Physical Infrastructure: 
U.S. Government Accountability Office: 
441 G Street NW: 
Washington, DC 20548: 

Re: GAO Draft Report on Oil and Gas Transportation (GAO-14-667): 

Safety is the Department's top priority. Over the past 12 months, the 
Department has aggressively increased its efforts to improve the safe 
transport of crude oil and other hazardous materials through emergency 
orders, voluntary agreements with the industry, and regulatory actions. 

The Department combined immediate actions to protect safety with a 
comprehensive longer term approach to address the transportation 
safety challenges related to new domestic energy production. The 
Pipeline and Hazardous Materials Safety Administration (PHMSA) and the
Federal Railroad Administration (FRA) are working on comprehensive 
long term solutions to the issues concerning crude oil transportation 
by rail and have also made full and appropriate use of regulatory 
authority including Emergency Orders and enhanced oversight to address 
urgent public safety issues.[Footnote 1] The Department has taken 
numerous specific actions to date, including: 

* Safety Alerts and Advisories - have been issued warning of potential 
safety challenges and calling for the proper classification and 
management of crude shipments and the use of enhanced tank cars. 

* Emergency Orders (EO) - requiring companies to address the risks 
associated with rail transportation of crude oil, including proper 
testing and classification, and notification requirements to ensure 
State Emergency Response Commissions are aware of shipments. 

* Enhanced Oversight - to verify industry actions have resulted in 
enforcement action including three Notices of Probable Violations. 

* Voluntary Measures - were enacted through agreements with industry 
to implement a number of voluntary measures that immediately improved 
safety. 

* Updated Regulations: 

- The Department announced a comprehensive Notice of Proposed Rulemaking
(NPRM), on July 23 , 20 14. This proposed rule would strengthen tank car
standards for new and existing tank cars used to transport ethanol and 
crude oil. The proposed rule would also require offerors of mined 
gases and liquids to create a sampling and testing program to aid in 
proper classification and impose operational restrictions on railroads 
that transport large volumes of these liquids, including speed 
restrictions and advanced braking systems. 

- The Department also announced an Advanced Notice of Proposed 
Rulemaking (ANPRM), on July 23, 2014, which requests comment on 
revisions to the thresholds requiring a comprehensive Oil Spill 
Response Plans (OSRP), clarity of the current comprehensive OSRP plan 
requirements, and costs of developing and implementing comprehensive 
OSRP. 

- Additionally, proposed regulations are under development to ensure 
the safety of natural gas and hazardous liquid gathering lines that 
include collecting new information about gathering lines to better 
understand the risks they pose. 

* Encouraging States - to adopt requirements that go beyond Federal 
Regulations for gathering lines. Both the federal government and the 
states have jurisdiction over gathering pipelines. 

* Workshops - have been conducted to engage industry on technical and 
safety topics related to the safe transport of crude by pipeline and 
gathering lines. 

* National Standards Committee - PHMSA actively participates in 
national consensus standards incorporated by reference in pipeline 
safety regulations. 

The Department will continue to develop long term comprehensive 
solutions including new technologies, constructive interaction with 
industry, and effective oversight to mitigate risk and enhance safety 
through all phases of oil and gas transport. 

PHMSA generally concurs with the recommendation concerning gathering 
line safety and is developing a rulemaking to revise the Pipeline 
Safety Regulations applicable to gas transmission and gathering 
pipelines, and examining the need to adopt safety requirements for 
those gas gathering lines that are not currently subject to the 
regulations. PHMSA also generally concurs with the recommendation for 
additional guidance for testing, classification and packaging of
crude oil transport by rail, and is considering alternatives for 
providing that information (e.g., revised regulation or industry 
guidance). PHMSA also generally concurs with the recommendation 
related to emergency response planning, and will ensure that the 
public is afforded the opportunity to comment on appropriate 
regulatory thresholds. The Department will provide a detailed response 
to each recommendation within 60 days of the GAO report issuance. 

We appreciate the opportunity to offer additional perspective on the 
draft report. Please contact Martin Gertel, Director of Audit 
Relations, at 202-366-5145 with any questions or if you would like to 
obtain additional detail about these comments. 

Sincerely, 

Signed by: 

Brodl Fontenot: 
Assistant Secretary for Administration: 

Footnote: 

[1] For more details of the actions taken to date, please visit our 
Safe Delivery website at [hyperlink, 
http://phmsa.dot.gov/hazmat/osd/calltoaction]. 

[End of section] 

Appendix IV: GAO Contacts and Staff Acknowledgments: 

GAO Contacts: 

Susan Fleming, (202) 512-2834 or flemings@gao.gov: 

Frank Rusco, (202) 512-3841 or ruscof@gao.gov: 

Staff Acknowledgments: 

In addition to the individuals named above, Karla Springer (Assistant 
Director), Sara Vermillion (Assistant Director), Melissa Bodeau, 
Lorraine Ettaro, Quindi Franco, David Hooper, Andrew Huddleston, John 
Mingus, Joshua Ormond, James Russell, Holly Sasso, Jay Spaan, Jack 
Wang, Amy Ward-Meier, and Jade Winfree made key contributions to this 
report. 

[End of section] 

Footnotes: 

[1] We focused our work on pipeline and rail because pipeline is the 
most used mode for transporting oil and gas products and rail has seen 
the largest percentage increase in use in recent years. 

[2] "Gray literature" publications may include, but are not limited 
to, the following types of materials: reports (pre-prints, preliminary 
progress and advanced reports, technical reports, statistical reports, 
memorandums, state-of-the art reports, market research reports, etc.); 
theses; conference proceedings; technical specifications and 
standards; non-commercial translations; bibliographies; technical and 
commercial documentation; and official documents not published 
commercially (primarily government reports and documents). 

[3] Shale is a sedimentary rock that is predominantly composed of 
consolidated clay-sized particles. 

[4] EIA, "High value of liquids drives U.S. producers to target wet 
natural gas resources," Today In Energy (May 8, 2014). 

[5] Petroleum includes crude oil and petroleum products. Petroleum 
products include gasoline, diesel fuel, heating oil, jet fuel, 
chemical feedstocks, asphalt, biofuels, and other products. 

[6] Natural gas is generally priced and sold in thousand cubic feet 
(abbreviated Mcf, using the Roman numeral for 1,000). Units of a 
trillion cubic feet (Tcf) are often used to measure large quantities, 
as in resources or reserves in the ground, or annual national energy 
consumption. One Tcf is enough natural gas to heat 15 million homes 
for 1 year or fuel 12 million natural-gas-fired vehicles for 1 year. 

[7] Technically recoverable gas resources are a subset of in-place 
resources that are producible given available technology. Technically 
recoverable resources include those that are economically producible 
and those that are not. Estimates of technically recoverable resources 
are dynamic, changing to reflect the potential of extraction 
technology and knowledge about the geology and composition of geologic 
formations. For additional information on shale oil and gas estimates 
and methodology to develop the estimates, see GAO, Oil and Gas: 
Information on Shale Resources, Development, and Environmental and 
Public Health Risks, [hyperlink, 
http://www.gao.gov/products/GAO-12-732] (Washington, D.C.: Sept. 5, 
2012). 

[8] We use the term transmission pipeline to refer to both hazardous 
liquids and natural gas pipelines carrying product over long distances 
to users. 

[9] See 49 C.F.R. §179.200. In addition to DOT specification tank 
cars, there are also tank cars built to specifications set by AAR. 

[10] These arrangements, in which states act as "agents" for PHMSA, 
can cover hazardous liquid pipelines only, gas pipelines only, or both 
(49 U.S.C. § 60105). States' pipeline safety offices are allowed to 
issue regulations supplementing or extending federal regulations for 
intrastate pipelines, but these state regulations must be at least as 
stringent as the minimum federal regulations (49 U.S.C. § 60104(c)). 
If a state wants to issue regulations that apply to pipelines that 
PHMSA does not regulate, such as federally unregulated gathering 
pipelines, there are no minimum federal standards that need to be 
adhered to, and the state is free to regulate as it sees fit. 

[11] 49 C.F.R. 192, Subpart O. 

[12] 49 C.F.R. Part 192.5 and 49 C.F.R. § §195.1(a)((4) and 
195.11(a)(2). 

[13] For pipelines, there are 48 states, the District of Columbia, and 
Puerto Rico in PHMSA's natural gas pipeline program and 17 states in 
its hazardous liquid pipeline program (49 U.S.C. § 60104(c)). 

[14] 49 C.F.R. Parts 171-179. 

[15] FRA has 30 state partners for rail safety. 

[16] 49 C.F.R. § § 192.615 (a)(8) and 195.402 (c)(12). Operators of 
hazardous liquid pipelines must also establish a response-training 
program and maintain firefighting equipment for their personnel who 
will execute the spill response plan, including firefighting 
equipment, techniques, and use of protective clothing. 

[17] 49 C.F.R. § 130.31. 

[18] We applied these principles to PHMSA's efforts in our previous 
report on pipeline safety, see GAO, Gas Pipeline Safety: Guidance and 
More Information Needed before Using Risk-Based Reassessment 
Intervals, [hyperlink, http://www.gao.gov/products/GAO-13-577] 
(Washington, D.C.: June 27, 2013). A fourth principle, monitoring 
performance, was also discussed in that report. 

[19] IHS Global Inc., Oil and Natural Gas Transportation & Storage 
Infrastructure: Status, Trends, & Economic Benefits, prepared for the 
American Petroleum Institute (Washington, D.C.: December 2013). 

[20] In February 2013, we found that both the interstate and 
intrastate natural gas pipeline permitting processes are complex and 
can involve multiple federal, state, and local agencies, as well as 
public interest groups and citizens, and include multiple steps. 
According to some industry representatives we spoke with at that time, 
the interstate permitting process can be time-consuming, depending on 
the size and complexity of a project. GAO, Pipeline Permitting: 
Interstate and Intrastate Natural Gas Permitting Processes Include 
Multiple Steps, and Time Frames Vary, [hyperlink, 
http://www.gao.gov/products/GAO-13-221] (Washington, D.C.: Feb. 15, 
2013). 

[21] According to EIA, a refinery is an installation that manufactures 
finished petroleum products from crude oil, unfinished oils, natural 
gas liquids, other hydrocarbons, and oxygenates. Oxygenates are 
additives, such as ethanol that increase the oxygen content of the 
fuel. 

[22] For example, Fraser Institute, Intermodal Safety in the Transport 
of Oil, Studies in Energy Transportation (October 2013). The Fraser 
Institute is a public policy research and educational organization. 
For another example, see John R. Aures and John Mayes, "North American 
Production Boom Pushes Crude Blending," Oil and Gas Journal (May 6, 
2013). 

[23] GAO, Petroleum Refining: Industry's Outlook Depends on Market 
Changes and Key Environmental Regulations, [hyperlink, 
http://www.gao.gov/products/GAO-14-249] (Washington, D.C.: Mar. 14, 
2014). 

[24] Kevin Smith, "Risk and Reward from the U.S. Fracking Boom," 
International Railway Journal (Sept. 11, 2013). 

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

[26] For example, see Fraser Institute, Intermodal Safety in the 
Transport of Oil, Studies in Energy Transportation (October 2013); 
Paula Dittrick, "US shale production boosts midstream growth," Oil and 
Gas Journal (Nov. 25, 2013); and Statement of Adam Sieminski, 
Administrator, Energy Information Administrations, U.S. Department of 
Energy, before the Subcommittee on Energy and Power, Committee on 
Energy and Commerce, U.S. House of Representatives, 113TH Cong., 2nd 
sess., March 6, 2014. 

[27] EIA, Annual Refinery Report (2014). 

[28] In addition to transporting oil to refineries, in 2012 we found 
that oil and gas development can require a few hundred to more than a 
thousand truck loads to transport the water, chemicals, sand, and 
other equipment needed for drilling and hydraulic fracturing. Further, 
some of the fracturing fluid that was injected into the well will 
return to the surface (commonly referred to as "flowback") along with 
water that occurs naturally in the oil-or gas-bearing formation, 
collectively referred to as produced water [hyperlink, 
http://www.gao.gov/products/GAO-12-732]. The produced water may also 
be transported by truck from the well site to an injection well or a 
wastewater treatment plant. 

[29] EIA, Annual Refinery Report (2014). 

[30] IHS Global Inc., Oil and Natural Gas Transportation and Storage 
Infrastructure: Status, Trends, and Economic Benefits (December 2013). 

[31] Congressional Research Service, U.S. Rail Transportation of Crude 
Oil: Background and Issues for Congress, R43390 (Washington, D.C.: 
Feb. 6, 2014). 

[32] For example, Nick Snow, "Massive investment needed for oil, gas 
facilities, experts say," Oil and Gas Journal (May 28, 2012) and 
Ceres, Flaring Up: North Dakota Natural Gas Flaring More Than Doubles 
in Two Years (July 2013). Ceres is a nonprofit organization. 

[33] [hyperlink, http://www.gao.gov/products/GAO-12-732]. 

[34] Ceres, Flaring Up: North Dakota Natural Gas Flaring More Than 
Doubles in Two Years (July 2013). 

[35] Nitrogen oxides are regulated pollutants commonly known as NOx 
that, among other things, contribute to the formation of ozone and 
have been linked to respiratory illness, decreased lung function, and 
premature death. Particulate matter is a ubiquitous form of air 
pollution commonly referred to as soot. GAO, Diesel Pollution: 
Fragmented Federal Programs That Reduce Mobile Source Emissions Could 
Be Improved, [hyperlink, http://www.gao.gov/products/GAO-12-261] 
(Washington, D.C.: Feb. 7, 2012). 

[36] According to the Department of State's Final Environmental Impact 
Statement for the Keystone XL Pipeline, the use of liquefied natural 
gas (LNG) as a fuel source for trains is being developed and tested. 
The use of LNG could reduce greenhouse gas emissions compared to the 
use of diesel fuel. 

[37] GAO, Surface Freight Transportation: A Comparison of the Costs of 
Road, Rail, and Waterways Freight Shipments That Are Not Passed on to 
Consumers, [hyperlink, http://www.gao.gov/products/GAO-11-134] 
(Washington, D.C.: Jan. 26, 2011). 

[38] T. Colborn, C. Kwiatkowski, K. Schultz, and M. Bachran, "Natural 
Gas Operations From a Public Health Perspective," International 
Journal of Human & Ecological Risk Assessment 17, no. 5 (2011). 

[39] GAO, Pipeline Safety: Better Data and Guidance Needed to Improve 
Pipeline Operator Incident Response, [hyperlink, 
http://www.gao.gov/products/GAO-13-168] (Washington, D.C.: Jan. 23, 
2013). 

[40] More recently, we analyzed PHMSA's pipeline incident data for 
2008 through 2013 and found that there was an average of about 3 
fatalities per year from incidents involving natural gas pipelines and 
hazardous liquid pipelines that carry crude oil. Of the 17 reported 
fatalities during that time, 8 were attributed to a natural gas 
pipeline incident in 2010. 

[41] For example, testimony of Dana "Sam" Buckles Tribal Executive 
Board Member Assiniboine and Sioux Tribes of the Fort Peck Reservation 
before the Senate Committee On Indian Affairs Oversight hearing on 
Tribal Transportation: Pathways to Infrastructure and Economic 
Development in Indian Country, 113TH Cong., 2ND sess., March 13, 2014. 

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

[43] Congressional Research Service, Oil Spills in U.S. Coastal 
Waters: Background and Governance, RL33705 (Washington, D.C.: Jan. 11, 
2012). 

[44] GAO, Federal Oil and Gas Leases: Opportunities Exist to Capture 
Vented and Flared Natural Gas, Which Would Increase Royalty Payments 
and Reduce Greenhouse Gases, [hyperlink, 
http://www.gao.gov/products/GAO-11-34] (Washington, D.C.: Oct. 29, 
2010). 

[45] Environmental Protection Agency, Oil and Natural Gas Sector 
Hydraulically Fractured Oil Well Completions and Associated Gas During 
Ongoing Production, (April 2014). 

[46] North Dakota Pipeline Authority, "North Dakota Natural Gas: A 
Detailed Look at Natural Gas Gathering," Oct. 21, 2013. 

[47] Ceres, Flaring Up: North Dakota Natural Gas Flaring More Than 
Doubles in Two Years (July 2013). 

[48] ICF International is a consulting firm that provides information 
to public-and private-sector clients. 

[49] EIA, Northeast and Mid-Atlantic power prices react to winter 
freeze and natural gas constraints (Jan. 21, 2014). 

[50] Duchesne County, Uintah County, Uintah Transportation Special 
Service District, and the Utah Department of Transportation, Final 
Report: Uinta Basin Energy and Transportation Study, Project No. S-
LC47 (14) (Salt Lake City, Utah: April 2013). 

[51] John R. Auers and John Mayes, "North American Production Boom 
Pushes Crude Blending," Oil and Gas Journal (May 6, 2013). 

[52] GAO, Petroleum Refining: Industry's Outlook Depends on Market 
Changes and Key Environmental Regulations, [hyperlink, 
http://www.gao.gov/products/GAO-14-249] (Washington, D.C.: Mar. 14, 
2014). 

[53] Energy Policy Research Foundation, Pipelines, Trains and Trucks: 
Moving Rising North American Oil Production to Market (Washington, 
D.C.: Oct. 21, 2013). The Energy Policy Research Foundation Inc. is a 
not-for-profit organization that studies energy economics and policy 
issues. 

[54] The INGAA Foundation Inc. North American Midstream Infrastructure 
through 2035: Capitalizing on Our Energy Abundance, An INGAA 
Foundation Report, Prepared by ICF International (Mar. 18, 2014), 
available at [hyperlink, http://www.ingaa.org/File.aspx?id=21498] 
(accessed May 16, 2014). 

[55] State officials from the other three states could not provide 
precise numbers on gathering pipeline construction because most of 
this new construction is in rural locations where pipeline operators 
are exempt from federal reporting and oversight regulations and these 
states, unlike Texas, did not have their own reporting requirements. 
PHMSA regulations for natural gas gathering pipelines do not apply to 
rural areas designated as Class 1 which is defined as any location 
with 10 or fewer buildings intended for human occupancy within 220 
yards of the centerline of the pipeline for a 1-mile segment of 
pipeline, see 49 C.F.R. § § 192.5 and 192.8 . For hazardous liquid 
gathering pipelines, PHMSA regulates only certain rural gathering 
pipelines within one-quarter mile of environmentally sensitive areas, 
see 49 C.F.R. §195.11. However, as discussed in the background of this 
report, PHMSA regulates non-rural pipelines. 

[56] Based on our analysis, we determined that expanded regulations 
vary by state, but the compendium shows that at least 6 states have 
some form of expanded regulation. National Association of Pipeline 
Safety Representatives, Compendium of State Pipeline Safety 
Requirements & Initiatives Providing Increased Public Safety Levels 
compared to Code of Federal Regulations, second edition (Sept. 9, 
2013). 

[57] An Advance Notice of Proposed Rulemaking is an initial step in a 
rulemaking proceeding seeking comment on issues the agency may address 
in future proposed regulation. 

[58] 76 Fed. Reg. 53086 (Aug. 25, 2011). 

[59] 75 Fed. Reg. 63774 (Oct. 18, 2010). 

[60] GAO, Pipeline Safety: Collecting Data and Sharing Information on 
Federally Unregulated Gathering Pipelines Could Help Enhance Safety, 
[hyperlink, http://www.gao.gov/products/GAO-12-388] (Washington, D.C.: 
Mar. 22, 2012). For this report, we surveyed state pipeline agencies, 
among which there were 39 agencies that reported they had gathering 
pipelines in their state that PHMSA does not regulate. Eighteen of the 
state agencies reported that the quality of installation procedures 
and construction materials is a safety risk for unregulated gathering 
pipelines because the construction phase of pipeline installation is 
critical to ensure the long-term integrity of the pipeline. Sixteen 
state agencies reported that the extent to which pipeline operators 
maintain their pipelines is a moderate or high safety risk for 
unregulated gathering pipelines. According to agency officials, after 
a pipeline is installed and operational, periodic maintenance--such as 
inspecting and testing equipment--is important to prevent leaks and 
ruptures and could extend the operating life of a pipeline. 

[61] National Association of Pipeline Safety Representatives, Urging 
PHMSA to Establish Regulatory Requirements for Gas Gathering Lines in 
Class 1 Areas, Resolution 2010-2 AC-2 (Sept. 30, 2010). 

[62] Some state officials also expressed concern about the capacity of 
PHMSA's inspector training program, which all state inspectors are 
also required to complete. The 3-year program must be completed mostly 
in PHMSA's Oklahoma City, Oklahoma, training center, which can create 
scheduling and budget challenges. 

[63] We have applied these criteria to PHMSA before when reviewing its 
gas integrity management program; see [hyperlink, 
http://www.gao.gov/products/GAO-13-577]. 

[64] [hyperlink, http://www.gao.gov/products/GAO-13-221]. 

[65] For example, the Keystone pipeline, which would move 
approximately 100,000 barrels of Bakken crude oil per day, applied for 
a Presidential Permit in 2008, which has not been approved. For 
proposed petroleum pipelines that cross international borders of the 
United States, the President, through Executive Order (EO) 13337, 
directs the Secretary of State to decide whether a project serves the 
national interest before granting a Presidential Permit. 

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

[67] We did not independently verify the AAR data. 

[68] Specifically, AAR stated that during the period of 2013 through 
April 2014, there were 104,597 tank cars used to transport flammable 
liquids by rail, including 49,182 tank cars used for crude oil. 

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

[70] Crude oil is generally classified according to two parameters: 
density and sulfur content. Less dense crude oils are known as 
"light," while denser crude oils are known as "heavy." Crude oils with 
relatively low sulfur content are known as "sweet," while crude oils 
with higher sulfur content are known as "sour." In general, heavier 
and more sour crude oils require more complex and expensive refineries 
to process the crude oil into usable products. 

[71] [hyperlink, http://www.gao.gov/products/GAO-14-249]. 

[72] We have ongoing work examining freight congestion in railroad 
corridors and the impact on local communities. 

[73] PHMSA's incident database can be searched at [hyperlink, 
https://hazmatonline.phmsa.dot.gov/IncidentReportsSearch/] (accessed 
June 12, 2014). 

[74] FRA's August 2013 emergency order required railroads to take 
additional steps to secure unattended trains to prevent unintended 
movement; DOT's February 2014 emergency order, amended in March 2014, 
specified requirements for testing and classifying crude oil for 
transportation by rail and required shippers to package crude oil 
under the more stringent standards as allowed by regulation; DOT's May 
2014 emergency order required railroads shipping 1,000,000 or more 
gallons of crude oil in a single train (about 35 car loads) to notify 
states' emergency response commissions about the movement of such 
trains through their states and which specific counties trains would 
be traveling through. 

[75] DOT's August 2013 safety advisory recommended that railroads 
review the circumstances of the Lac-Mégantic accident and consider 
changes to their operating practices related to crew staffing, human 
factors, and train securement. DOT's November 2013 safety advisory 
reinforced the importance of proper testing and packaging for 
flammable liquids transported by train. DOT's May 2014 safety advisory 
asked companies to use tank cars with the highest integrity available 
for transporting Bakken crude oil and to avoid using older DOT-111 
tank cars. 

[76] 78 Fed. Reg. 54849 (Sept. 6, 2013). 

[77] 79 Fed. Reg. 45016 (Aug. 1, 2014). 

[78] 79 Fed. Reg. 45079 (Aug. 1, 2014). 

[79] 49 C.F.R. Parts 172 and 173. 

[80] 49 C.F.R. § 172.101. Hazardous liquids, including crude oil, can 
be packaged under three sets of increasingly stringent requirements 
known as "packing groups," which range from the least restrictive 
group III to the most restrictive group I. In addition to specifying 
what types of tank cars may be used under each packing group, packing 
groups I and II require the shipper to develop a security plan that 
includes assessment of transportation security risks and measures to 
address those risks, see 49 C.F.R. § 172.800 (a)(6). According to 
PHMSA officials, the security plan would include planning for leaving 
a train unattended, which could have been a factor in the Lac-Mégantic 
accident, since that train was unattended at the time of the accident. 
The crude oil in the Lac-Mégantic accident had been assigned to 
packing group III, which does not require this plan. Subsequently, 
investigators have determined that it should have been assigned to 
packing group II, which would have required a plan. Details of the Lac-
Mégantic accident are incomplete because the Transportation Safety 
Board of Canada's investigation of the accident is still ongoing. As 
of January 2014, the agency was completing its examination and 
analysis phase and planned to soon move onto its reporting phase. 

[81] 49 C.F.R. § § 172.101(g), 173.120, 173.121, 173.242, 173.243, and 
179.200. 

[82] 49 C.F.R. § § 173.120(c) and 173.121 (a)(1). 

[83] 49 C.F.R § § 172.101, 173.115(a), 173.314, and 179.100. 

[84] Transportation Safety Board of Canada, Rail Safety Advisory 
Letter--12/13 (Gatineau, Quebec, Canada: Sept. 11, 2013). 

[85] American Fuel & Petrochemical Manufacturers and Dangerous Goods 
Transport Consulting Inc., A Survey of Bakken Crude Oil 
Characteristics Assembled For the U.S. Department of Transportation 
(May 14, 2014). 

[86] The other railroads did not mention the issue, and the third 
terminal operator said the current guidance is sufficient. 

[87] PHMSA provided us a draft of this guidance in March 2014; 
according to PHMSA officials, the document is still under development. 

[88] 49 C.F.R. § § 173.242(a) and 173.243(a), 

[89] NTSB, Railroad Accident Brief, NTSB/RAB-13/02 (Washington, D.C.: 
Aug.14, 2013). 

[90] According to FRA officials, tank car specifications and design 
requirements were based on forces and stresses incident to normal 
transportation, not crash survivability, since derailments are not 
normal transportation events. Officials said that recently crash 
survivability has been a metric for tank car specification and design. 

[91] Additionally, an AAR official speaking at an NTSB forum and 
officials from one railroad that we spoke to suggested that the type 
of tank cars currently used may not be appropriate for transporting 
crude oil of higher flammability and that pressure tank cars may be 
preferable. PHMSA's hazardous materials regulations require flammable 
gases to be transported in pressure tank cars. According to FRA 
officials, if the vapor pressure of crude oil is high enough, 
regulations would require putting it in a pressure car. According to 
PHMSA's and FRA's July 2014 update on its special inspection effort, 
the current classification of Bakken crude oil as a flammable liquid 
is accurate under the current classification system; however, the 
update also notes that Bakken crude oil tested has a higher gas 
content, higher vapor pressure, lower flash point, and lower boiling 
point than most other crude oil in the United States. Consequently, 
the update concluded that Bakken crude oil has a higher degree of 
volatility than other oil, which correlates to increased ignitability 
and flammability. 

[92] PHMSA's Notice of Proposed Rulemaking notes that retrofitting 
could be costly, potentially exceeding $30,000 per car, and would 
result in out-of-service time of at least 1 month. Due to cost 
concerns, PHMSA's proposal for retrofitting existing tank cars does 
not include requirements for top-fittings protections. 

[93] Specifically, PHMSA's Notice of Proposed Rulemaking states that 
existing DOT-111 tank cars may be retrofitted to DOT-117 standards, 
retired, repurposed, or operated under speed restrictions. 

[94] AAR's hazardous materials operating practices guidance had 
previously applied to trains carrying poison inhalation hazards, toxic 
inhalation hazards, spent nuclear fuel, and high-level radioactive 
waste, but was expanded to also include trains carrying 20 car loads 
or intermodal portable tank loads of any combination of hazardous 
material, which would include unit trains carrying 20 or more carloads 
of crude oil. 

[95] The House Appropriations Committee called on PHMSA to address 
this problem in a report that accompanied the committee's 
Transportation-HUD appropriations bill H.R. 4745, for fiscal year 
2015. H. Rpt. 113-464, p.62. 

[96] 49 C.F.R. § 130.31(a). 

[97] 49 C.F.R. § 130.31(b). 

[98] Specifically, the notice asks whether the threshold should be set 
at 1) 1,000,000 gallons or more of crude oil per train, 2) 20 or more 
carloads of crude oil per train, 3) 42,000 gallons of crude oil per 
train, or 4) another threshold. The notice states that comments will 
inform a potential future Notice of Proposed Rulemaking on the issue. 

[99] GAO, Rail Safety: Improved Human Capital Planning Could Address 
Emerging Safety Oversight Challenges, [hyperlink, 
http://www.gao.gov/products/GAO-14-85] (Washington, D.C.: Dec. 9, 
2013). 

[100] Pub. L. No. 110-432, § 103, 122 Stat. 4848, 4853. 

[101] 79 Fed. Reg. 4234, 4245 (Jan. 24, 2014). 

[102] Additionally, railroads we spoke to said they have invested 
heavily in upgrading their track in recent years. 

[103] "Gray literature" publications may include, but are not limited 
to, the following types of materials: reports (pre-prints, preliminary 
progress and advanced reports, technical reports, statistical reports, 
memorandums, state-of-the art reports, market research reports, etc.), 
theses, conference proceedings, technical specifications and 
standards, non-commercial translations, bibliographies, technical and 
commercial documentation, and official documents not published 
commercially (primarily government reports and documents). 

[104] In addition to DOT officials from PHMSA and FRA, we also 
interviewed officials from the Federal Highway Administration, Federal 
Motor Carriers Safety Administration, and Maritime Administration. 
Since we focused our evaluation of DOT's efforts on pipeline and rail, 
we did not evaluate the efforts of these other DOT administrations. 

[105] Additionally, Kinder-Morgan, an oil pipeline operator, declined 
to participate, and Enbridge, an oil pipeline company, was not able to 
schedule an interview with us within our time frame. We also contacted 
five other crude oil rail terminals in North Dakota that either did 
not respond to our requests or declined to be interviewed. 

[106] The other two states, Pennsylvania and West Virginia, have shale 
formations where natural gas is primarily developed, which is not 
transported by truck. 

[End of section] 

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