Tag Archives: Canadian Pacific

Minnesota Gov. Dayton pressures railroads to pony up for safety upgrades

Repost from The Mineapolis StarTribune

Dayton pressures railroads to pony up for safety upgrades across Minnesota

By: Kyle Potter, Associated Press, March 13, 2015 – 3:45 PM

ST. PAUL, Minn. — Gov. Mark Dayton gave railroad companies and Republicans a public tongue-lashing Friday for their resistance to his tax plan to fund safety improvements across Minnesota’s railroad network.

Seven trains haul North Dakota crude across Minnesota daily — an influx that has contributed to backlogs of agricultural shipments and raised safety concerns after a string of recent explosive derailments.

With a throng of officials from towns dealing with the headaches of heavier train traffic behind him, Dayton called it “totally unacceptable” that railroads would oppose contributing more money to the state’s safety efforts. The governor and other fellow Democratic lawmakers have proposed a series of tax increases and annual fees on railroads to upgrade railroad crossings and ease congestion across Minnesota.

“That is the responsibility of the railroad,” Rep. Paul Marquart, DFL-Dilworth, said of improvements.

By taxing train cars and levying an annual fee on Minnesota’ four major freight railroads, the state would net $330 million over the next decade, mostly for improvements at railroad crossings. Dayton’s plan would also fund increased training for first responders, including a new statewide training facility.

The governor is also planning to carve out $76 million from a bonding bill this year to build underpasses or overpasses in Moorhead, Prairie Island, Coon Rapids and Willmar, where passing trains block crossings for hours every day.

Railroad companies such as BNSF Railway, the state’s largest freight railroad and a major shipper of Bakken crude, balked at the governor’s proposal. In a statement, spokeswoman Amy McBeth said the company believes Dayton’s proposed taxes violate federal law “because they single out railroads for discriminatory taxation.”

The other three major freight railroads operating in Minnesota are Canadian Pacific, Union Pacific and Canadian National.

Majority House Republicans have also signaled they’re not on board with the tax increases.

“While the governor and I agree that our railroad crossings need improvements, the funding source is still the main issue,” said Rep. Tim Kelly, the Republican chair of the House Transportation Finance committee.

Dayton criticized Republicans for not supporting his plan, but he saved his strongest words for the railroad companies.

The governor said state officials believe they’re on solid legal ground to foot railroads with a larger tax bill. And he remained defiant in the face of a possible lawsuit from railroads if his proposal goes ahead.

“We’re going to do what we know is right for Minnesota. If they want to take us to court, that certainly shows their true colors,” Dayton said.

    ABC News: Low Oil Prices Unlikely to Hurt Railroads Much

    Repost from ABC News
    [Editor: Significant quote: “…even with oil prices falling off a cliff, industry analysts and railroad executives point out that crude shipments still make up just a sliver of the overall freight delivered by rail. What’s more, because fuel is such a huge cost in the industry, railroads are a direct beneficiary of those falling prices.”  – RS]

    Low Oil Prices Unlikely to Hurt Railroads Much

    By Josh Funk, AP Business News, Jan 5, 2015

    The stunning collapse in oil prices over the past several months won’t derail the railroads’ profit engine even if it does slow the tremendous growth in crude shipments seen in recent years.

    Carloads of crude oil spiked well over 4000 percent between 2008 and last year — from 9,500 carloads to 435,560 — as production boomed and the cost for a barrel of oil soared into the triple digits.

    Those prices have tumbled severely, to just above $50 per barrel Friday, and that has rattled some of the investors who have plowed money into companies like Union Pacific, Norfolk Southern and CSX.

    All three of those companies have seen their stock prices slip over the past month, along with major U.S. stock markets.

    But even with oil prices falling off a cliff, industry analysts and railroad executives point out that crude shipments still make up just a sliver of the overall freight delivered by rail. What’s more, because fuel is such a huge cost in the industry, railroads are a direct beneficiary of those falling prices.

    Crude oil shipments remain less than 2 percent of all the carloads major U.S. railroads deliver. Sub-$60 oil might force producers to rein in spending but railroads ? which spend hundreds of million of dollars every quarter on fuel? will see their costs fall away.

    Those falling energy prices have also proven to be the equivalent of a massive tax cut for both consumers and businesses, and railroads stand to benefit from that as well.

    Fueled by a rebounding employment as well as rising consumer and business confidence, U.S. economic growth reached a sizzling 5 percent annual rate last quarter, the government reported this month. The rebounding economy is likely to drive even greater demand for shipping.

    Edward Jones analyst Logan Purk says the importance of crude oil shipments by rail seems to have been inflated by investors.

    “It seems like whatever loss in business they see will be offset by the drop in fuel costs,” Purk said.

    The crude oil business has provided a nice boost for railroads at a time when coal shipments were declining. Profits at the major U.S. railroads have been improving steadily along with the economy, reaching $13.4 billion in 2013, up from $11.9 billion in 2012 and $10.9 billion in 2011.

    Officials from Union Pacific Corp, Norfolk Southern Corp., CSX Corp. and Canadian Pacific all tried to reassure investors about crude oil shipments during their latest investment conferences.

    “I don’t think that we are going to see any knee-jerk reaction. I don’t think we are going to see anything stopped in the Bakken,” said Canadian Pacific CEO Hunter Harrison said of the massive oil and gas fields that stretch from North Dakota and Montana into Canada.

    The Bakken region is one of the places where railroads are hauling the majority of the oil because pipeline capacity hasn’t been able to keep up with production.

    Through the fall, North Dakota oil drillers remained on pace to set a sixth consecutive annual record for crude oil production.

    Justin Kringstad, director of the North Dakota Pipeline Authority, said the lower prices will prompt oil companies to look for ways to reduce costs, but he’s not yet sure how much of an effect it will have on production in the region.

    “It’s still a little early to make any firm assessments,” Kringstad said.

      Federal Inspector General to audit transport of volatile crude by rail cars

      Repost from The Chicago Sun Times
      [Editor: See the Inspector General’s audit announcement here and the PDF notice to the Federal Railroad Administrator here.  – RS]

      Federal IG to audit transport of volatile crude by rail cars

      Rosalind Rossi, October 29, 2014
      A CSX train from Chicago carrying crude oil derailed in April in Lynchburg, Va., forcing the evacuation of hundred.
      A CSX train from Chicago carrying crude oil derailed in April in Lynchburg, Va., forcing the evacuation of hundreds.

      A federal inspector general is launching an audit of whether hazardous materials are being carried safely over the nation’s rails — including highly-volatile Bakken crude that travels through the Chicago area.

      “Due to the public safety risk posed by increases in the transportation of hazardous materials by rail, we are initiating an audit assessing the Federal Railroad Administration’s (FRA) enforcement of hazardous materials regulations using inspections and other tools,” a memo on the website of the Office of Inspector General of the U.S. Department of Transportation said Wednesday.

      The memo specifically cited a fatal July 2013 Bakken oil train derailment in Lac Megantic, Canada, that “highlighted the importance of oversight of hazardous materials being transported by rail.” The Lac Megantic blast decimated more than 30 downtown buildings in the Canadian town and killed 47 people.

      At least eight rail lines carry Bakken crude through Illinois, according to the Illinois Emergency Management Agency. They are BNSF, Norfolk-Southern, Alton & Southern, CN, CSX, Indiana Harbor Belt, Union Pacific and Canadian Pacific. Maps provided by BNSF to the Illinois emergency agency indicated BNSF rails carry Bakken through Cook County.

      A candlelight vigil about what protestors called “bomb trains” was held July 10 at the BNSF terminal at 16th Street and Western Ave out of fear that black tank cars observed there with  placards indicating they held flammable petroleum were actually carrying Bakken crude. The protest was among those waged nationally to observe the one-year anniversary of the Lac Megantic disaster.

      “We saw 47 people killed in Lac Megantic,’’ Debra Michaud, an organizer of the Pilsen protest, said at the time. “A bomb train explosion in Pilsen or Little Village would be many times that.’’

      In April, a CSX train traveling from Chicago and loaded with crude oil derailed and exploded in Lynchburg, Va.. The incident shut down roads and bridges and forced the evacuation of hundreds. No one was injured or killed.

      The crash was among series of accidents across North America involving railroads’ crude oil shipments, which have surged dramatically as oil production rises in regions like North Dakota’s Bakken shale and western Canada.

      Wednesday’s inspector general memo noted that crude oil shipments have increased from 9,500 carloads in 2008 to 407,761 in 2013 — a more than 4000 percent jump.

      Mayors Karen Darch of Barrington and Tom Weisner of Aurora have been particularly vocal about the increasing transport of volatile crude and other dangerous products. They say their residents face frequent traffic jams caused by long trains carrying volatile liquids and worry about the sturdiness of tank cars holding such liquid.

      Some volatile fluids are being transported in the equivalent of the “Ford Pinto” of rail cars and such tankers should be upgraded, Darch has contended.

      Darch Wednesday welcomed the IG audit as a positive development.

      “We are all concerned about public safety risk and hopefully this report will have suggestions for further enhancing public safety,” Darch said.