Oil Train Insurance: Washington State and the Billion Dollar Disaster
By Alex Ramel, extreme oil campaign field director, March 28, 2016
Washington is now one of only two states that requires railroads to disclose whether they have sufficient insurance to cover a “reasonable worst case spill.” This is a step in the right direction. But the new rule falls far short of requiring enough insurance to cover a catastrophic oil train derailment, spill and explosion.
The new State rule requires that any major rail company operating in Washington — today, only BNSF — report whether they have sufficient financial resources or insurance to cover the costs of an oil train spill of around $700 million (smaller railroads have smaller requirements). That’s better than nothing, which is what most states have. But it’s not nearly enough.
The deadly Lac Megantic oil train disaster cost more than $1 billion (see page 98 in the federal regulations) and the cost of rebuilding is more like $2.7 billion. As terrible as the Lac Megantic disaster was, and it was a heartbreaking catastrophe, a worst case oil train disaster in Washington could be even much worse.
Washington State’s failure to require railroads to pay the full and true cost of doing business in Washington is an even greater concern if it becomes a precedent in other states. The confusing, undefined phrase “reasonable worst case” appears to have already been copied into a proposed bill in the New York State Assembly.
The federal Pipeline and Hazardous Materials Safety Administration suggested that a disaster inside a major city could cost $12.6 billion (see page 110). What could a $12 billion derailment look like? BNSF runs oil trains within 20 yards of Safeco Field in downtown Seattle during Mariners games when fans are in the stands.
Insurance monetizes risk, assigning a direct cost to risky behavior and assigning financial value to safety. What would your homeowners insurance company do if you wanted to unload oil tanker trucks in your driveway? They would raise your rates (astronomically) or cancel your policy. Railroads, which operate without requirements to carry adequate insurance, make decisions about assuming risk without an important financial feedback loop. If railroads had to be properly insured for the risk to life, property, and the environment from oil trains, there would be far fewer or zero oil trains.
Last year BNSF was fined for 14 spills and leaks and for failing to report problems along the track in Washington. The summer before that three oil tank cars tipped over in downtown Seattle. Over the last two years four BNSF oil trains have derailed and either spilled or exploded in Casselton, ND, Galena, IL, Heimdal, ND, and Culbertson, MT. Under usual circumstances a safety record like that should lead to a very awkward conversation with an insurance agent. And an already expensive, high-risk policy should get even more expensive. But BNSF doesn’t seem to carry enough insurance to cover the real cost of an oil train disaster, and they don’t seem to care.
BNSF has already intimated that they don’t think that the state should be able to require insurance, and it is likely that the company will challenge the rule. The railroad wants the cost of insurance and the calculation of possible damages kept off of their books. That means that in addition to living with the risk, the public is also asked to shoulder the cost. That’s the most unreasonable proposition yet.
Repost from The Center for Investigative Reporting and KUOW.org [Editor: This is an important report. State regulators can’t get accurate oil train data from the federally regulated railroads, so Washington officials are turning to the refineries: “Washington state lawmakers passed a law recently that requires oil refineries, which are state regulated, to give weekly notice of the train schedule to first responders.” (See previous report.) The story of Dean Smith’s Train Watch is inspiring – we should set up annual counts in all of our frontline refinery communities. – RS]
Growing oil train traffic is shrouded in secrecy
By Ashley Ahearn / June 13, 2015
EVERETT, Wash. – Dean Smith, 72, sits in his car by the train tracks here north of Seattle.
It’s a dark, rainy Tuesday night, and Smith waits for an oil train to come through town. These trains are distinctive: A mile long, they haul 100 or so black, pill-shaped cars that each carry 30,000 gallons of crude oil.
Smith has been counting the trains for about a year, noting each one on a website he built. The former National Security Agency employee does it because the railroads share little information about oil train traffic with Washington state. They don’t have to because they’re federally regulated.
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What is known: The railroads are moving 40 times more oil now than in 2008 due to an oil boom in the Bakken formation of North Dakota. Bakken crude oil contains high concentrations of volatile gas, with a flashpoint as low as 74 degrees Fahrenheit.
Derailments and explosions have occurred around North America since the oil boom began, including a 2013 catastrophe that killed 47 people in rural Quebec.
This has prompted emergency responders to call for more information from railroad companies about oil train traffic patterns and volumes. The railroads mostly have refused; they say that releasing that information could put them at a competitive disadvantage.
Which is why Smith decided to find out for himself. “It’s pretty hard to hide an oil train,” he said with a chuckle.
Last year, Smith launched the first Snohomish County Train Watch. He organized 30 volunteers to take shifts counting trains around the clock for a week.
In their first week of watching oil trains, the group collected more information about oil train traffic than the railroads had given Washington in the three years the trains have come here.
State officials say Smith’s data is helpful but insufficient. They say they shouldn’t have to rely on citizen volunteers to get critical information in case of disaster.
Dave Byers, the head of spill response for the state’s Department of Ecology, said his team needs the information to plan area-specific response plans to protect the public and keep oil from getting into the environment.
“It gives us an idea of what the risk is, the routes that are taken,” Byers said. “The frequency and volume of oil really gives us an idea of what level of preparedness we need to be ready for in Washington state.”
Oil train traffic shows no signs of slowing, which adds to the state’s sense of urgency. The oil industry wants to build five new terminals in Washington to move crude oil off trains and onto ships.
Meanwhile, Congress is considering legislation to lift a federal ban on exporting crude oil that’s been in place since 1975 – allowing American crude to be shipped around the world.
Close call in Seattle
Anyone who has attended a Mariners baseball game in downtown Seattle likely has seen or heard oil trains passing the ballpark. The trains continue north through the city to refineries on Puget Sound.
Seattle had a close call last year when an oil train derailed near downtown.
Byers and his team weren’t notified for one and a half hours and initially were not told there was oil in the derailed train cars.
No oil was spilled, but Byers is critical of how BNSF Railway, the company that moves most of the oil out of the Bakken oil fields, handled the situation.
BNSF did not tell the state there was highly flammable Bakken crude oil in the derailed train cars – that information came five hours later from the oil refinery waiting for the train. Additionally, Byers said that when his team arrived on the scene, no BNSF representative was present, but welders were working on the derailed cars. The welders said they did not know what was inside.
“We became concerned because people were wandering off the street and taking selfies of themselves next to the rail cars,” Byers said. “There was no preparing for the potential that one of those cars could actually start leaking.”
BNSF spokeswoman Courtney Wallace said in an emailed statement that BNSF Railway had its hazardous materials team quickly in place to evaluate the situation. “This derailment did not cause a release at any point, nor was there a threat of a release,” she said.
The state and BNSF Railway have sparred over the railroad company’s reports of hazardous materials spills. Earlier this year, state regulators released an investigation and recommended that BNSF be fined up to $700,000 for not quickly reporting these spills. The company has disputed the state’s findings. A final decision is expected next year.
Concern in Anacortes
This spring, several hundred people packed into the Anacortes City Hall for information from oil companies and BNSF Railway about the oil trains moving through their community. Just that morning, a BNSF oil train had derailed and caught fire in North Dakota.
In northern Puget Sound, Anacortes is home to two refineries that receive oil by rail from North Dakota. Its residents, like others in small communities along the tracks in Washington state, have voiced concern about oil trains. Congestion woes are among their complaints; unlike Seattle, where the trains mostly pass through tunnels and over bridges, trains here disrupt traffic.
Audience members were allowed to submit written questions only. Oil refineries’ representatives told them about safety precautions at their facilities to prevent and respond to spills. They also talked about their commitment to getting newer oil train cars.
Wallace, the BNSF spokeswoman, gave a presentation about the company’s commitment to safety. She said BNSF believes that every accident is preventable.
When pressed by a reporter about how much information BNSF shares with local emergency responders, Wallace said BNSF has “always provided information to first responders, emergency managers about what historically has moved through their towns.”
She cautioned that sharing regular updates or notifications of oil train movements could put the public at risk.
“We’re always cognizant of what information is shared, because we don’t want to see an incident that involves terrorism or anyone else who might have that kind of frame of mind,” Wallace said.
Fight for information
A federal emergency order demands that railroads share limited information with states – but state officials want more.
Washington state lawmakers passed a law recently that requires oil refineries, which are state regulated, to give weekly notice of the train schedule to first responders.
State Rep. Jessyn Farrell, a Seattle Democrat who sponsored the bill, said BNSF and the oil industry opposed the legislation from the beginning.
“We’re going to get the information,” she said. “I don’t really care who gives it to us as long as it’s good information and it stands in court, because we need that information now.”
BNSF Railway spent more than $300,000 on lobbyists and political contributions in Washington state in 2014.
“I think they’re absolutely on the wrong side of this,” Farrell said. “In the public mind, and morally, they are absolutely wrong.”
BNSF’s Wallace said the company still is reviewing the law to see how federal regulatory authority will interact with state authority.
Back in Everett, Dean Smith said he isn’t waiting for politicians or lawyers to duke this one out.
Instead, he’ll wait for trains, he said, and he’ll continue gathering information about them.
Four hours into a recent train-watching shift, Smith perked up.
“There’s something coming,” he said. He opened the door of his Chevy Volt and stepped into the rain. An orange BNSF engine emerged from the tunnel. Behind it were oil cars – about 100 of them, black as night.
The streetlight reflected off Smith’s glasses and shadows gathered in the furrow of his brow as he stood by the tracks, shoulders hunched.
“Sometimes I wonder, why fight it? Why not just move? That’d be the easiest thing to do,” he said. “But I think we have to fight. And I would like to see citizens groups acting like this all over the country. That’s the form of checks and balances we can create. All it takes is a few people.”
Did a “Bomb” Train Full of Volatile Crude Oil Pass By Tuesday’s Mariners Game?
By Sydney Brownstone, Apr 23, 2015 at 1:50 pm
Maaaaaybe it wasn’t the thrill he was looking for.
A spectator at Tuesday night’s Mariners game caught a glimpse of what appeared to be a crude-oil unit train moving past Safeco Field.
The attendee took video and photos while taking a walk behind the scoreboard, but didn’t want to be credited for them. David Perk, a friend of the photographer’s who was also at the game, passed along the images on that person’s behalf. Perk, a volunteer with the Washington Environmental Council, went to the game because of the ticket special to honor local volunteering efforts.
Perk says he first spotted the train while driving to the game from Renton. “I was wondering if it was going to roll north while having our tailgate party on the side of the tracks,” Perk said. Nearly 14,000 people attended the game, according to Seattle Mariners spokesperson Rebecca Hale.
Burlington Northern Santa Fe wouldn’t confirm whether the train was carrying crude, but the Sightline Institute’s Eric de Place said that the train was “almost certainly a unit train of crude.” Unit trains often contain a hundred or more tank cars, and can measure as long as a mile. The train was also heading north, which means that it was likely full and heading for refineries near Anacortes or Ferndale.
Unit trains moving crude from the shale oil fields of North Dakota (also known as “bomb trains”) carry a unique risk of derailing and exploding. The US Department of Transportation has estimated that an average of 10 crude-oil trains will derail a year over the next two decades. The DOT has thus far failed to finalize safety rules for crude-by-rail, but did order a 40-mile-per-hour speed limit on unit trains through populated areas last week. On April 14, the Washington State House also passed an oil transportation safety bill sponsored by Representative Jessyn Farrell (D-Seattle).
Much of downtown Seattle falls within the crude-oil route’s half-mile blast zone, including Safeco Field, which sits right next to the railroad. But railroads aren’t required to share crude-oil routes with the public. Earlier this month, Seattle’s new fire chief, Howard Scoggins, told reporters that a derailment in Seattle would “exhaust our resources and require assistance from communities around us.”