May 25, 2010

Hazardous Materials: Improving the Safety of Railroad Tank Car Transportation of Hazardous Materials

Proposed Rule
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Additional details
Agency
Department of Transportation
Regulatory Identification Number
2130-AB69
Agency Name
Department of Transportation
Rule Publication Date
04/01/2008

RULE SUMMARY

The rule creates interim standards for tank car construction and reduces to 50mph rail speeds for these cars when they are loaded.

METHODOLOGY

There are twelve criteria within our evaluation within three broad categories: Openness, Analysis and Use. For each criterion, the evaluators assign a score ranging from 0 (no useful content) to 5 (comprehensive analysis with potential best practices). Thus, each analysis has the opportunity to earn between 0 and 60 points.

Criterion Score

Openness

1. How easily were the RIA , the proposed rule, and any supplementary materials found online?
Upon initial scoring, the RIA was found in the docket on regulations.gov. However, upon second review, the RIA was missing from the docket and could not be found with an RIN search. The RIA also could not be found on the web site, although the rule itself was there.
0/5
2. How verifiable are the data used in the analysis?
Sources are given but not links or URLs for all data.
3/5
3. How verifiable are the models and assumptions used in the analysis?
Justifications and calculations are clearly given, but there are no citations or literature backing up assumptions and parameters in some parts.
3/5
4. Was the analysis comprehensible to an informed layperson?
It is very understandable to an economist and probably to anyone.
4/5

Analysis

5. How well does the analysis identify the desired outcomes and demonstrate that the regulation will achieve them?
4/5
Does the analysis clearly identify ultimate outcomes that affect citizens’ quality of life?
The analysis identifies reduced train accidents with poisonous inhalation hazard materials on board that harm human health as result of leakage. Several recent traffic accidents are recounted that illustrate the danger to people near railways.
5/5
Does the analysis identify how these outcomes are to be measured?
Yes, the analysis suggests that a reduction in the number of tank breaches would be the measurement, as well as reductions in the magnitudes of leaks that occur.
5/5
Does the analysis provide a coherent and testable theory showing how the regulation will produce the desired outcomes?
The required car construction and operating restrictions will reduce accident frequency and severity. This is not really testable, but there is not much alternative. Though we cannot run a controlled experiment, it is possible that we could compare the likelihood of a tank car rupturing given the particular factors that have occurred in particular instances.
3/5
Does the analysis present credible empirical support for the theory?
The theory uses recent cases where the rupture of a tank car carrying hazardous materials caused the loss of life and a host of costly problems. DOT's assertion that there could be more such incidents (and much worse ones) seems plausible.
4/5
Does the analysis adequately assess uncertainty about the outcomes?
The analysis recognizes that there are many variables and that the estimation of the value of a human life drives the benefit estimate. Some of the calculations are not clear, particularly in assessing how effective the new cars would be (Volpe model cited, but not shown). It includes a general recognition of uncertainty and analysis thereof.
3/5
6. How well does the analysis identify and demonstrate the existence of a market failure or other systemic problem the regulation is supposed to solve?
4/5
Does the analysis identify a market failure or other systemic problem?
The RIA claims that despite some tort liability, the damages caused by poison inhalation hazardous materials, "especially environmental damage, first responder costs, and disruptions to the economy," are external to railroads. Not given a 5 because, while this is a plausible assertion, it is not demonstrated here nor are publications showing that tort liability is less than total social damages cited.
4/5
Does the analysis outline a coherent and testable theory that explains why the problem (associated with the outcome above) is systemic rather than anecdotal?
The RIA puts forth the case that uncertainty as to whether an accident will occur and what the severity will be has prevented railroads from investing adequately in safety. It also mentions the externality costs (see above) inherent in shipping hazardous materials.
4/5
Does the analysis present credible empirical support for the theory?
The analysis provides data from costs of previous crashes and projections from that.
4/5
Does the analysis adequately assess uncertainty about the existence or size of the problem?
The analysis examines uncertainty around crash severity.
5/5
7. How well does the analysis assess the effectiveness of alternative approaches?
2/5
Does the analysis enumerate other alternatives to address the problem?
Other than the baseline and the suggested new cars, no other options (e.g. make the poison non-shippable, use pipelines, pricing and insurance options, etc.) are provided.
2/5
Is the range of alternatives considered narrow (e.g., some exemptions to a regulation) or broad (e.g., performance-based regulation vs. command and control, market mechanisms, nonbinding guidance, information disclosure, addressing any government failures that caused the original problem)?
Alternatives are pretty narrow—no non-engineering options are considered.
1/5
Does the analysis evaluate how alternative approaches would affect the amount of the outcome achieved?
The analysis evaluates baseline (self-imposed rules by Association of Amercian Railroads that force hazmat shippers to buy a certain type of car for use) in comparison.
2/5
Does the analysis adequately address the baseline? That is, what the state of the world is likely to be in the absence of federal intervention not just now but in the future?
Self-imposed rules are the baseline.
4/5
8. How well does the analysis assess costs and benefits?
3/5
Does the analysis identify and quantify incremental costs of all alternatives considered?
Costs of chosen option are discussed, but not other options.
3/5
Does the analysis identify all expenditures likely to arise as a result of the regulation?
It discusses hypothetical costs to tank car.
4/5
Does the analysis identify how the regulation would likely affect the prices of goods and services?
There is no analysis of the effects of higher PIH materials (assuming it's costlier) on industries that use them; it does not discuss auto traffic costs of slower trains, if there are any.
2/5
Does the analysis examine costs that stem from changes in human behavior as consumers and producers respond to the regulation?
Changes in behavior of railroads/shippers are discussed, but not changes in the use of PIH in industries or its production.
3/5
If costs are uncertain, does the analysis present a range of estimates and/or perform a sensitivity analysis?
Costs are discussed but not shown in explicit detail.
3/5
Does the analysis identify the alternative that maximizes net benefits?
Given the two (baseline and this reg) approaches it considered, it chose the maximum net benefits.
4/5
Does the analysis identify the cost-effectiveness of each alternative considered?
It discusses cost-effectiveness of proposed railcar changes under baseline and regulated scenarios, but not of other regulatory actions like speed limitation.
2/5
Does the analysis identify all parties who would bear costs and assess the incidence of costs?
Only in the railroad industry, not knock-on effects for industries using these materials or creating them.
3/5
Does the analysis identify all parties who would receive benefits and assess the incidence of benefits?
It includes humans who would avoid harm to health and environmental benefits, which seems like all there is.
4/5

Use

9. Does the proposed rule or the RIA present evidence that the agency used the analysis?
It seems the other way around—the RIA was done after the rule was proposed. Some aspects or calculations may be used in the rule to justify it.
1/5
10. Did the agency maximize net benefits or explain why it chose another alternative?
The option chosen maximized net benefits compared to just a very small set of options.
3/5
11. Does the proposed rule establish measures and goals that can be used to track the regulation's results in the future?
The agency already collects data on leaks and releases of PIH material, which are the measures to track. The RIA does not explicitly commit to continuing collecting these data.
3/5
12. Did the agency indicate what data it will use to assess the regulation's performance in the future and establish provisions for doing so?
The agency did not actively commit to continuing collection of data on leaks and releases, but it seems likely that it will. It also collects data on lives lost and injuries from accidents, which are ultimate outcomes.
3/5
Total 33 / 60