Exclusive: Safety deadline may exempt U.S. railroads from freight obligations
By David Morgan, September 8, 2015
U.S. railroads may not be obligated under federal law to carry freight including crude oil and hazardous materials from Jan. 1 if they fail to meet a year-end deadline for implementing new train safety technology, according to a top federal regulator.
In a Sept. 3 letter to the Senate Commerce Committee, U.S. Surface Transportation Board Chairman Daniel Elliott says the common carrier obligation requiring freight railroads to honor reasonable requests for service from shippers “is not absolute, and railroads can suspend service for various reasons, including safety.”
The letter, reviewed by Reuters, presents the most tangible sign yet of what could lie ahead for rail carriers and their customers, if Congress fails to extend its Dec. 31 deadline for railroads to implement positive train control, or PTC.
The National Transportation Safety Board, which has been calling on railroads to adopt PTC since the late 1960s, says the technology would prevent major rail accidents such as the May 12 Amtrak derailment that killed eight people and injured more than 200 others.
The approaching deadline has prompted at least one major railroad company to look seriously at suspending service: billionaire investor Warren Buffett’s BNSF Railway Co (BRKa.N), the No. 2 freight railroad operator and the leading carrier in the $2.8 billion U.S. crude-by-rail market.
“BNSF confirmed that it will not meet the deadline and offered the possibility that neither passenger nor freight traffic would operate on BNSF lines,” Elliott said in the letter, which was addressed to the committee’s Republican chairman, Senator John Thune of South Dakota.
In a July 24 letter provided to Reuters by BNSF, railroad president and chief executive Carl Ice informed Elliott that BNSF is analyzing the possibility of a service shutdown and actively consulting with customers.
CSX Corp (CSX.N), the No. 3 U.S. freight handler, also told the board that it would not meet the PTC deadline but did not discuss possible decisions on whether to continue service, Elliott said.
A CSX spokeswoman said the company was working diligently to implement PTC but that a “seamless, safe operation is imperative to maintain the fluidity of the national rail network.”
Railroad officials in June raised the possibility of shutting down service as a way to avoid potential legal liabilities and fines for operating outside the law.
Elliott told Thune it was unclear whether railroads would be exempt from their obligation to provide freight service for cargo, including hazardous materials, under federal rules that say service cannot be denied simply because it is inconvenient or unprofitable for the carrier.
The Surface Transportation Board, a regulatory agency charged by Congress with resolving rail disputes over rates and service, had no immediate comment, nor did the Federal Railroad Administration, the main U.S. railroad regulator.
Up to now, the board has mainly handled common carrier obligation cases involving services that have complied with federal safety rules. “A carrier-initiated curtailment of service due to a failure to comply … would present a case of first impression,” Elliott wrote. “I cannot predict the outcome of such a case.”
PTC can avoid accidents by using a complex network of sensors and automated controls to slow or stop a train under dangerous conditions.
In 2008, Congress mandated that railroads implement the technology by the end of 2015. But only a small number of U.S. passenger, commuter and freight railroads will meet the deadline, according to an Obama administration report released last month. [ID: L1N11A275]. The report named BNSF as one of only three railroads that have provided regulators with a PTC implementation plan.
Railroad officials have complained about the cost and complexity of adopting PTC and have produced freight and commuter rail estimates showing full implementation could cost the industry nearly $13 billion.
A six-year transportation bill approved by the Senate last month would allow the Obama administration to extend the deadline for up to three years.
“The administration requested authority to extend the deadline for positive train control and the Senate subsequently advanced a bipartisan proposal to create accountability and set realistic deadlines,” said Frederick Hill, Republican spokesman for the Senate Commerce Committee.
“This provision in the surface transportation bill will address the concerns summarized in Chairman Elliott’s correspondence,” he added.
But the Senate measure is not expected to be taken up by the House of Representatives when lawmakers return from their summer break this week. Republican staff with the House Transportation Committee were not available for comment.
(Reporting by David Morgan; Editing by Nick Zieminski)
Repost from McClatchyDC News [Editor: Despite the curious analogy to foie gras, this is a SERIOUS discussion of Federal pre-emption and California’s attempt to regulate crude by rail. Apologies for the auto-play video. – RS]
Are California foie gras, oil train court cases on parallel tracks?
By Curtis Tate, January 15, 2015
WASHINGTON — Perhaps the only imaginable connection between trains and foie gras, the famous French delicacy obtained by force-feeding duck or geese to fatten up their livers, would be as an appetizer in the dining car of the luxury Orient Express.
Ah. Pas vrai.
A California court recently overturned the state law against selling foie gras because poultry regulation is a federal concern. And that’s just what the railroad industry is arguing about a state law enacted last year requiring it to develop oil spill response plans.
The law came about as an expected increase in crude oil transported to California by rail raised concerns about public safety and emergency response.
Like the restaurants that serve foie gras and the industry that supplies it, railroads have decided they won’t be forced to swallow a state law that they think is pre-empted by a federal one.
In the foie gras case, a producer and a restaurant that served it argued that California’s attempt to choke off sales ran afoul of the federal Poultry Products Inspection Act. Last week, a U.S. district judge agreed, citing the Supremacy Clause of the Constitution, which gives Congress the ability to displace state laws.
Similarly, the Association of American Railroads, the rail industry’s principal advocacy organization, and two of California’s major railroads, Union Pacific and BNSF, argue that the Federal Rail Safety Act derails the state’s oil spill response requirements.
According to some attorneys who know the issue well, California’s law is heading to the end of the line.
“I don’t think the court will struggle with this,” said Kevin Sheys, a Washington attorney who advises railroads but has no involvement in the California case. “The law will be struck down.”
Environmental groups, however, argue that other federal laws apply to the railroads. Patti Goldman, a Seattle-based attorney with Earthjustice, an environmental group, said the Clean Water Act and the Oil Pollution Act, the latter passed in response to the Exxon Valdez oil tanker disaster, gave states the power to enact stricter oil spill response requirements than federal ones.
That’s in contrast to the Federal Rail Safety Act, which doesn’t allow states much room to exceed what’s required at the federal level. A court decision that weighs more heavily on the rail safety act would favor the railroads. A reliance on federal water pollution laws would favor the state.
“The structures for pre-emption in there are almost polar opposite,” Goldman said. “The federal government sets a minimum standard, and the states can go further. All of that is a structure that is meant to preserve state authority.”
Sometimes pre-emption works in California’s favor. Opponents of the state’s $68 billion high-speed rail system tried to slow down the project by arguing that it was subject to the California Environmental Quality Act and required extensive impact reviews.
But in a 2-1 ruling last month, the federal Surface Transportation Board said the project was exempt from the state law. Last week, state and federal officials, including Gov. Jerry Brown, broke ground on the project in Fresno.
As a more practical matter, railroads have largely prevailed in pre-emption cases because courts have been sympathetic to the notion that a patchwork of 50 different state laws could unreasonably burden interstate commerce.
In a notable case in Washington, D.C., a decade ago, a federal court struck down a local law that prohibited the shipment of hazardous materials by rail within two miles of the Capitol. A busy CSX freight line runs only blocks away, and the law would have forced lengthy and expensive detours of hazardous cargo.
But a massive increase in the transportation of crude oil by rail in recent years, and with it an increase in high-profile accidents, has exposed gaps in safety and emergency preparedness. California is bracing for a big increase in crude by rail, and last year the legislature extended the state’s oil spill response requirements to cover inland waterways.
That, naturally, affected railroads, which historically followed rivers because of the level terrain for heavy trains, including California’s Feather and Sacramento rivers.
The Association of American Railroads declined to comment on the California case, but spokesman Ed Greenberg noted that railroads “have extensive emergency plans in place, which include procedures in working with local first responders” and have “stepped-up emergency response capability planning and training.”
David Beltran, a spokesman for California Attorney General Kamala Harris, who’s defending the law, wouldn’t comment on the case beyond what’s in court filings.
State Sen. Jerry Hill, a San Mateo Democrat, said the attorney general’s office had assured him that the law wouldn’t be pre-empted when it came before his committee last year.
“We feel comfortable based on the legal opinions we have,” Hill said.
He thinks it’s premature to predict that the law will be invalidated. But Hill said that he and others who supported it should be prepared for that outcome.
“Everyone would regroup and try to find a way to meet the goals that we’re trying to achieve,” he said.
Harris, who’s said she’ll run next year for the U.S. Senate seat of retiring Democrat Barbara Boxer, also defended the foie gras ban. She tried to have that suit dismissed by arguing that she had no present intent on enforcing the law while reserving the right to do so.
That prompted a quip from Judge Stephen Wilson in his 15-page ruling striking it down: “Defendant seeks to have her paté and eat it, too.”
Harris made a similar argument in the rail case.
“I think it’s going to be decided the same way,” said Mike Mills, an oil and gas attorney in Sacramento. “I don’t see a different outcome.”
Mills said the California case might put a federal solution on a faster track.
The U.S. Department of Transportation issued an Advance Notice of Proposed Rulemaking in August for a new regulation that would require railroads hauling crude oil to have comprehensive oil spill response plans. The rule would apply uniformly across all states, and it would achieve what California tried to do on its own.
“Oftentimes, litigation will produce a decision that forms the basis for new legislation,” Mills said. “Potentially, it could happen.”
Groups Question Industry Influence on Oil Train Safety Rules
Freedom of Information Requests Target Five Federal Agencies, Nearly 100 Lobbyists
By Eddie Scher, Jan 15, 2015
Today four public interest groups requested records exchanged between five US government agencies and nearly 100 oil and rail industry representatives on new oil train safety standards. The Department of Transportation announced yesterday that the agency would miss the January 15 deadline set by Congress and issue final rules by May 12, 2015.
“New oil train safety standards are decades late: the National Transportation Safety Board first called antiquated DOT-111 tank cars unsafe for hauling crude oil in 1991,” says Ross Hammond, ForestEthics US campaigns director. “But the administration seems to have trouble asking the oil and rail industry for common sense safety standards like speed limits, sharing information with firefighters, and a ban of the most dangerous cars.”
The Freedom of Information Act requests filed by ForestEthics, Communities for a Better Environment, Ezra Prentice Homes Tenants Association (Albany, NY), and Citizens Acting or Rail Safety (La Crosse, WI) name 97 individual lobbyists from the American Petroleum Institute, Association of American Railroads and specific oil and rail companies, including Chevron, Tesoro, and Burlington Northern Santa Fe (BNSF). Among the lobbyists named are six former members of Congress: Trent Lott, Vin Weber, John Breaux, Steve LaTourette, Max Sandlin and Bill Lipinski.
“The public has the right to know how an army of lobbyists is influencing the Department of Transportation,” says Ross Hammond, ForestEthics US campaigns director. “Oil trains carrying millions of gallons of toxic, explosive crude oil threaten the 25 million Americans who live in the blast zone. DOT should listen their own safety experts and quickly finalize strong new standards that take DOT-111s off the tracks, slow these trains down, prepare first responders and protect families.”
Government agencies and officials covered by this FOIA request are US Department of Transportation, National Transportation Safety Board, Surface Transportation Board, Federal Railroad Administration, and Pipeline and Hazardous Materials Safety Administration (PHMSA).
ForestEthics demands that corporations and government protect community health, the climate, and our wild places. We’ve secured the protection of 65 million acres of wilderness by pushing major companies to shift hundreds of millions of dollars to responsible purchasing. www.ForestEthics.org
Repost from The Wall Street Journal [Editor: This is a must-read. IMPORTANT – See the Wall Street Journal site for an excellent video report and an interactive U.S. map showing the weekly average number of crude oil trains from the Bakken Shale in North Dakota that pass through each county. – RS]
Oil Trains Hide in Plain Sight
Rail Industry’s Secret: Volatile Crude Routes Often Kept From Cities and Towns
By Russell Gold, Dec. 3, 2014
NEWARK, Del.—Early last year, a new kind of pipeline full of volatile oil appeared in this college town, halfway between Philadelphia and Baltimore.
If it had been a traditional pipeline, there would have been government hearings and environmental reviews. There would be markers or signs along the line’s route and instructions for nearby residents on how to react in an emergency. A detailed plan for responding to a spill would be on file with the federal government.
None of that happened here in Newark. In fact, nobody initially notified the city’s fire chief about the new line, which can carry more than a hundred thousand barrels of oil a day along Amtrak’s busiest passenger-rail corridor.
This was possible because the oil here is transported by a virtual pipeline: mile-long strings of railroad tanker cars that travel from North Dakota to a refinery in Delaware. In Newark, the cars are especially easy to spot as they often sit for hours on tracks 10 feet away from passing passenger trains, waiting for an opening at the nearby PBF Energy Inc. plant.
While the existence of this virtual pipeline is obvious to its neighbors—trains are visible from homes, the local commuter rail station, a park and a popular jogging trail—it is officially secret. Delaware Safety and Homeland Security officials contend that publicizing any information about the oil trains parked there would “reveal the State’s vulnerability to terrorist attacks,” according to a letter to The Wall Street Journal.
Finding the locations of oil-filled trains remains difficult, even in states that don’t consider the information top secret. There are no federal or state rules requiring public notice despite several fiery accidents involving oil trains, including one in Lac-Mégantic, Quebec, that killed 47 people.
The desire for secrecy seems wrongheaded to some experts. “If you don’t share this information, how are people supposed to know what they are supposed to do when another Lac-Mégantic happens?” asked Denise Krepp, a consultant and former senior counsel to the congressional Homeland Security Committee.
She said more firefighting equipment and training was needed urgently. “We are not prepared,” she said.
In May, federal regulators ordered railroads to tell states about the counties traversed by trains carrying combustible crude oil from the Bakken Shale in North Dakota so local first responders could be notified.
The Journal submitted open-records requests to all 48 contiguous states and the District of Columbia and received at least some information from all but 14: Colorado, Delaware, Idaho, Indiana, Louisiana, Maine, Maryland, Michigan, Nevada, Ohio, Tennessee, Texas, Vermont and West Virginia.
Mapping data received from the disclosing states, the Journal found a lot of other cities in the same situation as Newark. On its way to refiners on the East Coast and along the Gulf of Mexico, oil often sits in tank cars in railroad yards outside Harrisburg and Pittsburgh, Penn., and passes through Cleveland, Chicago, Albany, Seattle and a dozen other cities.
Bakken oil is flowing in two directions from North Dakota: west toward Portland and the Puget Sound; and east through Minneapolis, then southeast through Chicago, and across the northern edge of Indiana and Ohio. There it splits into three routes: One heads to Albany; another goes to Yorktown, Va., where the crude is transferred to barges for trips up and down the East Coast. The third heads to Philadelphia through Ohio, which is one of the states that doesn’t disclose data, but the Journal was able to deduce the routes by following available maps.
Other oil trains run south from Oregon to California, from Minnesota to Texas, and from Wisconsin toward the Gulf Coast.
Maryland previously had attempted to release oil-train information, but was successfully sued by Norfolk Southern Corp. and CSX Corp. Norfolk argued that these trains were carrying “highly volatile cargo” that could be a target for terrorists.
Railroads have continued to press for secrecy; in August, the Association of American Railroads and the American Short Line and Regional Railroad Association wrote a confidential letter to the federal government asking that routing information be kept from the public. The request was denied.
“The rail industry is concerned making crude oil route information public elevates security risks by making it easier for someone intent on causing harm,” said AAR spokesman Ed Greenberg. The group said it supports sharing information with local officials.
Neither the oil nor the railroad industry anticipated the rapid and dramatic rise of oil shipments by train. In 2009, U.S. railroads transported about 21,000 barrels a day of oil; today they carry 1.1 million barrels a day, according to data from the Surface Transportation Board, a federal regulator. Last year, railroads generated about $2.15 billion in revenue from moving crude.
Shipments of hazardous material, especially crude oil, have soared recently, even for railroads whose routes are far from the oil fields of North Dakota. Norfolk Southern and CSX, which serve the East Coast, moved 53,001 carloads of oil in the three months ended September, compared with just seven carloads during the same period of 2009, according to data from the federal Surface Transportation Board. They transported 156,731 carloads of industrial chemicals, some of which are hazardous, in the third quarter of this year, up 8% from five years ago.
Trains are the new pipelines, and have become a vital link in the energy infrastructure, said Dave Pidgeon, a spokesman for Norfolk Southern. “We are the keystone, the bridge, between the source of where the energy is extracted and where it is refined,” he said. Moving hazardous material like crude, he added, is “safe and getting safer.”
Trains offer the energy industry flexibility to move oil where it can fetch the highest prices. Building the needed loading and unloading terminals is fast and inexpensive, and an extensive rail network connects the Midwest to the East and West coasts.
While these virtual pipelines can be created in months, traditional pipelines have become increasingly difficult to install as environmental groups seek to block permits for new energy infrastructure.
“What we are seeing on rail is largely due to opposition to and uncertainty around building pipelines,” said Brigham McCown, who was the chief pipeline regulator under President George W. Bush . Pipelines, he adds, are far safer than trains.
Since Lac-Mégantic, several trains have derailed and exploded. Most of these accidents have happened in relatively rural areas like Casselton, N.D., a town of about 2,500 people 24 miles west of Fargo. But one occurred in downtown Lynchburg, Va., forcing the evacuation of much of the downtown in a city with 78,000 residents.
In response, railroads agreed to slow oil trains to 40 miles an hour in urban areas, and federal regulators have proposed a broader speed limit for older tank cars carrying volatile crude oil.
The rules don’t apply to other freight trains or Amtrak trains that share tracks in Newark with oil trains; about 85 Amtrak trains run through Newark every day, according to a spokesman, at speeds of up to 100 miles an hour. In addition to Norfolk Southern, which operates on the outskirts of town, CSX runs oil trains on a wholly separate track heading north toward refineries near Philadelphia.
Without oil trains, the local PBF Refinery might not be operating. Opened in 1956 on the Delaware River, the refinery handled imported oil that arrived by water from overseas; it was mothballed in 2009 as the economics of importing crude oil soured and demand for gasoline slumped.
PBF bought the refinery in 2011, reopened it the next year and began adding facilities to unload crude from trains. The company owns or leases 4,000 tank cars, has 1,900 more on order and said it is committed to using the safest cars available.
The refinery built a double loop that can accommodate two trains, each holding 70,000 barrels of crude. It can take workers 14 hours to unload each train by connecting hoses to drain out the cargo.
The Bakken crude contains a lot of butane, making it volatile but useful for mixing with heavier oils or as a refined byproduct, said refinery manager José Dominguez. On a recent afternoon, the refinery was running mostly Bakken oil, along with some diluted crude from Canadian oil sands and a ship’s worth of light sweet oil from Basra, Iraq.
When Norfolk Southern began routing crude trains through Newark, it didn’t notify the local emergency officials. Last March, a year after trains started turning up, Fire Chief A.J. Schall sat down with officials from the railroad and refinery to discuss the crude shipments.
“It shows a lack of communication,” he said. By the summer, Norfolk Southern and PBF paid for Mr. Schall and another local fire chief to fly to Colorado and attend a three-day class on crude-by-rail trains.
Some people who live and work along the tracks say that they are disquieted by the increased traffic and especially of the new presence of mile-long strings of black tanker cars, but unaware of any new accident-preparedness plans.
Demitri Theodoropoulos, who manages a record store facing the intersection, said that since 2004 his security cameras have recorded 14 collisions, including one in 2012 when a train smashed into a large truck.
“We have major, major freight traffic here,” he said. “I see trains with crude every day or so. I don’t like it, but this is the way it is.”