Union Pacific chief threatens action on oil train brake rules

Repost from Financial Times

Union Pacific chief threatens action on oil train brake rules

Robert Wright in New York, May 31, 2015 4:55 pm
In this photo from Aug. 8, 2012, a Union Pacific train travels in Council Bluffs, Iowa. Union Pacific said Thursday, Oct. 18, 2012, that its third-quarter profit climbed 15 percent because price increases and more automotive and chemical shipments helped the railroad offset a 12 percent drop in coal shipments. The railroad reported $1 billion in net income, or $2.19 per share. That's up from $904 million, or $1.85 per share, a year ago. (AP Photo/Nati Harnik)
In this photo from Aug. 8, 2012, a Union Pacific train travels in Council Bluffs, Iowa. Union Pacific said Thursday, Oct. 18, 2012, that its third-quarter profit climbed 15 percent because price increases and more automotive and chemical shipments helped the railroad offset a 12 percent drop in coal shipments. The railroad reported $1 billion in net income, or $2.19 per share. That’s up from $904 million, or $1.85 per share, a year ago. (AP Photo/Nati Harnik)

The chief executive of Union Pacific, the US’s largest rail network, has vowed legal action over a provision of new rules for oil trains that he says would cost billions of dollars and provide little benefit.

The pledge from Lance Fritz threatens further delay to rules that have already been years in preparation.

The Federal Railroad Administration and Canadian regulators jointly announced the rules less than a month ago to improve the safety of oil movements by rail, which have risen sharply following the surge in US oil and gas production in recent years.

The surge — from only about 1m tonnes of traffic in 2007 to roughly 40m in 2013, the last year for which full data are available — has exposed the shortcomings of existing safety rules for tank cars, with several trains exploding following derailments.

While Mr Fritz said that most of the new provisions were “great regulation”, he criticised provisions demanding that railways start controlling tank cars’ brakes via an electric signal either transmitted wirelessly from the lead locomotive or via electrical wires running along the train.

The new arrangement, known as electronically controlled pneumatic (ECP) braking, is intended to speed up the transmission of the braking command compared with current methods, which rely on pressure changes in a pipe running along the train. That should reduce the number of cars that derail in a crash.

Mr Fritz said, however, that virtually the same improvements could be gained by spacing locomotives out along a train, as Union Pacific frequently does, and the extra benefits of ECP did not justify the costs. The new equipment would cost about $75,000 for each of UP’s 6,500 locomotives, while there would also be substantial costs for fitting out tank cars, nearly all owned by oil shippers or leasing companies.

“The juice isn’t worth the press,” Mr Fritz said. “We think that’s very ill-considered. We provided that feedback and we will continue to provide that feedback.”

The industry could appeal against the rule both through administrative channels and in the courts, Mr Fritz said. “We as an industry are taking that path,” he added.

Railways have been pressing for improvements in tank car design to avoid a repetition of disasters like the Lac-Mégantic explosion in Canada in 2013, in which 47 people died when a poorly secured oil train broke lose, derailed and exploded in the centre of a small town.

Operators are barred from refusing to carry cargo that meets the minimum regulatory requirements but have been concerned that under existing regulations cars were excessively vulnerable in an explosion.

Mr Fritz also criticised the new rules’ standards for thermal protection for cars, meant to prevent their exploding in a fire, saying they were not strict enough.

The Federal Railroad Administration declined to comment publicly on Mr Fritz’s criticisms but looks determined to press ahead with the mandate for ECP brakes.

UP, which has a larger track network than any other US railway, has been a significant beneficiary of the surge in oil movements. Mr Fritz said he expected a strong continuing role for rail in transporting US-produced crude oil.

The sharp fall in the oil price in recent months has shifted traffic away from the routes that UP serves, however, pushing down crude oil movements on its network by 38 per cent in the first quarter compared with last year.

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Did lack of oversight lead to Santa Barbara spill?

Repost from the San Francisco Chronicle
[Benicia Independent Editor: This analysis of a pipeline failure might also shed some light on the lack of adequate State and Federal oversight of crude by rail.  No PHMSA administrator for 7 months?!  Only 3 state inspectors!?  Information not shared with first responders at the County level!?  Gosh … where have we heard this before?  – RS]

EDITORIAL: Did lack of oversight lead to Santa Barbara spill?

San Francisco Chronicle, May 31, 2015

All-too-familiar images of picture-postcard California beaches befouled with crude last month revealed that regulatory oversight is sadly lacking. But whom to blame? The accountable parties are missing in action.

First missing party: The federal Pipeline and Hazardous Material Safety Administration has been without an administrator for more than 210 days, thus exceeding the legal limit for an acting director to serve. The May 19 rupture of the Plains All American Pipeline at Refugio and El Capitan state beaches in Santa Barbara County heightened concerns the federal regulators weren’t protecting the public safety or sensitive lands.

On Thursday, Sens. Dianne Feinstein and Barbara Boxer, both Democrats, sent a letter to the pipeline administration, declaring the Santa Barbara oil spill response “insufficient,” and giving the agency two weeks to answer questions about spill response plans, legal authority to require automatic shutoff valves, and cleanup and response efforts that ignored local knowledge and expertise. On Friday, the Obama administration announced it had a nominee, lawyer Marie Therese Dominguez, for the pipeline administrator’s job.

Second missing party: Oil transport and spill oversight in California is overseen by the Office of the State Fire Marshal, but there are only three full-time inspectors. Inspectors would leave for higher paying industry jobs as soon as the state trained them. In 2012, the fire marshal requested the authority to pay inspectors more — inspectors are paid out of a state account funded with fees paid by the oil companies — but the Legislature said no, and state oil transport oversight was ceded to the federal agency in 2013.

Third missing party: Santa Barbara County had an agreement with the pipeline owner that was overridden by federal law. Pipeline operators must file oil spill response plans with the federal agency, but due to terrorism concerns, they aren’t available to the public (including first responders who would have needed local knowledge).

Clear lines of oversight, more inspectors, and a requirement to update spill response plans would help build trust with communities over transport of this necessary energy resource.

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BNSF Railway plans temporary layoffs with slipping freight demand

Repost from the Fort Worth Star Telegram

BNSF plans temporary layoffs with slipping freight demand

Associated Press, May 27, 2015
BNSF is furloughing some employees due to a decline in demand for shipping, including crude oil.
BNSF is furloughing some employees due to a decline in demand for shipping, including crude oil. Curtis Tate, MCT

BISMARCK, N.D.  –  BNSF Railway says it’s planning employee furloughs due to a drop in freight shipping demand across its rail network.

The Fort Worth-based company said Wednesday in a statement that it hopes to call back employees “as soon as business needs require.”

The railroad declined to say how many employees were being furloughed but that they are “at different locations across our network.” The company also said it’s reducing it’s hiring plans for the next several months.

“Customers’ volumes in the near term have come down somewhat from their prior estimates. As a result we are having to adjust our workforce demand numbers down to match volume and the work required to move that volume,” the statement said.

BNSF is part of Warren Buffett’s Berkshire Hathaway, based in Omaha, Nebraska.

The railroad is the biggest player in North Dakota’s oil patch, hauling most of the 1.1 million barrels that moves out of the region daily. Oil drilling has been curtailed significantly in North Dakota’s Bakken Shale and other fields following the collapse in oil prices.

The railroad also is the biggest hauler of freight in the Upper Great Plains.

Just last year, the railroad was expanding rapidly, adding 6,000 workers and 500 locomotives to meet demand for shipping and ease backups caused by severe winter weather.

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