Tag Archives: Tesoro Corp

CSX letter supports federal pre-emption of local regulation, including authority over non-rail-related permits

By Roger Straw, July 5, 2016

CSX Railroad files letter with STB in support of Valero Crude by Rail

CSX_letter3
CSX letter

On July 1, the City of Benicia received a copy of a letter from CSX` Railroad to the DOT’s Surface Transportation Board (STB).  The letter, released to the public today, supports Valero Refinery’s request for an STB declaratory order which would address the permitting authority of local and state governments over projects on non-railroad properties when a project involves transport of goods by rail.

CSX is the 3rd largest railroad in North America, after Union Pacific and BNSF.  The CSX letter exposes their vested interest in the matter:

The ICC Termination Act (“ICCTA”) was passed to “prevent a patchwork of local regulation from interfering with interstate commerce.”…But state and local governments are now testing the scope of ICCTA preemption with rules, permitting conditions, or other actions that indirectly affect railroads. While indirect, this practice still has the effect of creating a patchwork of inconsistent and disruptive regulation.

Note CSX’ clear reference to indirect regulation.  As Benicia Planning Commissioner Steve Young, environmental attorneys and others have pointed out, federal preemption of indirect regulation is an untested point of law.

Valero is not a railroad, and its proposed crude oil offloading rack is on Valero property within the City of Benicia. Valero, Union Pacific, CSX, Tesoro, along with other rail and oil industry activists and their allies want to extend their power to limit local and state authority. This is unprecedented.  The City of Benicia has every right – and responsibility – under its police and permitting powers to regulate land use on behalf of its citizens’ health and safety.

Note that in petitioning the STB, CSX, like Valero and the others, makes absolutely no reference to, nor shows any interest in the health and safety of California’s wildlands or communities.  This is all about the freedom of big business to do as it likes in pursuit of profit.

By petitioning the STB, Valero has thrust the City of Benicia squarely into what will surely become a litigated test case, perhaps rising all the way to the US Supreme Court.  Benicia’s staff and tax-supported finances will suffer years of time, effort and expense.

Benicia’s City Council can steer clear of this mess by denying the permit for Valero’s proposed project based on the many non-rail-related, local environmental impacts that have been brought to light in the last 3 years’ review.

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    Washington regulator unaware of oil train consultant’s connections

    Repost from The Oregonian / OregonLive
    [Editor:  The consultant’s connections with BNSF were noted nearly a month ago here and in Curtis Tate’s McClatchy DC report.  On November 24 Tate wrote, “The rail spill analysis portion of the Washington state draft document was written in part by three consultants who are former employees of BNSF and its predecessor, Burlington Northern. In addition to the state agency for which they prepared the analysis, their clients include BNSF and the Port of Vancouver.”  I  understand that the Washington agency that hired the consultant, the Energy Facility Site Evaluation Council, was asked about the possible conflict of interest in advance of publication of Tate’s article, but they never got back to him.  Staff at the Energy Facility Site Evaluation Council should have been aware well in advance of the Oregonian story.  – RS]

    Washington regulator unaware of oil train consultant’s connections

    By Rob Davis, Dec. 17, 2015, updated Dec.18, 2015 9:44 AM
    vancouver oil train
    An oil train parked outside Vancouver, Wash., in 2014. A terminal proposed there would bring four oil trains to the city each day. (Rob Davis/Staff)

    A consulting firm that helped write a report underestimating the risks of catastrophic spills from a proposed Vancouver oil train terminal has worked for two groups that will gain financially if the project moves forward.

    Stephen Posner, the Washington energy regulator who approved the company’s hiring, didn’t know about all those connections until The Oregonian/OregonLive told him. But he did not answer repeated questions about whether he would investigate further.

    Three of the four authors who wrote the risk analysis for Washington’s Energy Facility Site Evaluation Council are former executives of BNSF Railway Co. The railroad would move oil trains to the Vancouver terminal.

    The authors’ company, MainLine Management, lists BNSF as a client on its website.

    MainLine, which didn’t respond to repeated queries, recently worked for another project supporter: the Port of Vancouver, which owns the land where the terminal would be built.

    Much remains unclear about MainLine’s relationships with BNSF and the port. It is not known whether BNSF is a current MainLine client. It’s also unclear whether MainLine’s past work for the port would constitute a conflict.

    Washington law prohibits the energy council from hiring consultants with a significant conflict of interest with a project’s applicant or others involved.

    MainLine finished its work for the port before it was hired to analyze the terminal. The port awarded a $121,000 contract to MainLine in April 2013 to analyze part of its freight rail system serving the oil train terminal. A port spokeswoman said the final payment was sent to MainLine Sept. 25, 2014, four months before the firm was hired to analyze oil spill risks.

    The relationships raise questions about the thoroughness of Washington’s review of the experts it’s using to independently evaluate the Vancouver oil terminal.

    The $210 million terminal proposed by Tesoro Corp. and Savage Services is the highest profile project pending before the Washington energy council.

    The small agency is designed to be a one-stop permitting shop for major energy projects, studying their impacts and recommending a decision to Gov. Jay Inslee. The governor has final approval.

    Posner, the agency’s manager, approved hiring MainLine. He said he was unaware the firm listed BNSF as a client until The Oregonian/OregonLive told him.

    But neither Posner nor an agency spokeswoman, Amanda Maxwell, would commit to inquiring further about whether the company has a current connection with BNSF.

    Before MainLine was hired, Posner said he discussed the company with Washington’s lead consultant, Cardno. He said his agency relied on Cardno to vet MainLine’s clients and past work.

    How did Cardno review MainLine’s potential conflicts? That’s unclear. Posner told The Oregonian/OregonLive to direct that question to Cardno, which didn’t immediately respond.

    Cardno has provided written assurance that its subcontractors, including MainLine, are forbidden to discuss the terminal with any outside party, Maxwell said.

    “This written assurance provided by Cardno is the basis for trusting in the credibility of the work being performed,” she said.

    When we asked Posner whether he was concerned that MainLine could have a conflict, the spokeswoman, Maxwell, interrupted, saying it was inappropriate for him to comment.

    “Without having the information, it’s not something he could put in context,” she said.

    The agency should have that knowledge and be able to answer such a question, said Robert Stern, a good government advocate who helped write California’s post-Watergate conflict of interest law. He said the energy agency’s review appeared inadequate.

    “Maybe they don’t have any conflicts, but how do you know?” Stern said. “There should be something in writing saying we have no conflicts of interest.”

    Both BNSF and the Port of Vancouver stand to benefit financially from the project’s construction. The port estimates netting $45 million in lease revenue from the project over 10 years. BNSF has rallied supporters to send comments to the energy council praising the project, saying its construction would strengthen the rail company’s customer base.

    Gus Melonas, a BNSF spokesman, didn’t specifically answer a question about whether MainLine is currently under contract with the railroad.

    “BNSF does not discuss specific relationships involving contract companies,” Melonas said by email, “however MainLine Management Inc. has worked with Northwest agencies providing modeling on rail related projects.”

    If built, the Vancouver project would be the Pacific Northwest’s largest oil train terminal, capable of unloading 15 million gallons of oil from four trains daily. The oil would be put on barges and sent to coastal refineries.

    It has drawn strong opposition from Vancouver elected officials and environmental groups amidst a string of fiery oil train explosions nationwide since 2013.

    The report co-authored by MainLine lowballed those risks. It called a 2013 oil train spill in Aliceville, Alabama the worst on record, using it to analyze impacts of a disaster in the Pacific Northwest. The study said a slightly larger spill is “the most credible or realistic” worst-case scenario.

    But a far larger spill has already happened. An out-of-control oil train derailed and exploded in Quebec in July 2013, fueling a raging inferno that killed 47 people and leveled part of a small Canadian town.

    The analysis incorrectly said the Quebec accident spilled just 36,000 gallons of crude. Far more did. Canadian safety regulators concluded 1.5 million gallons escaped from tank cars. Much of it burned in the resulting fire.

    Just a third as much oil spilled in the Alabama accident.

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      Federal budget bill sets January deadline on safety rules for oil tanker cars

      Repost from The Seattle Post Intelligencer (seattlepi.com)

      Federal budget bill sets January deadline on safety rules for oil tanker cars

      December 10, 2014 | By Joel Connelly
      Tanker cars from a derailed CSX oil train burn after derailing in downtown Lynchburg, Virginia, last April. Increasing numbers of oil trains pass through Seattle and other Puget Sound cities en route to four refineries on northern Puget Sound. (AP Photo/City of Lynchburg, LuAnn Hunt)

      Hidden away in Congress’ big spending bill, designed to fund the federal government through FY 2015, are stern marching orders to the U.S. Department of Transportation:

      Deliver a final rule for new, safer oil tank car design standards by Jan. 15, 2015, and require that all rail carriers put in place comprehensive oil spill response plans.

      The budget provisions, inserted by Sens. Patty Murray, D-Wash., and Susan Collins, R-Maine, are prompted by an oil train disaster in Quebec, and the rapid increase in trains carrying volatile Bakken crude oil from North Dakota to four refineries on northern Puget Sound.

      “In Washington state, we’ve seen a startling increase in oil train traffic through communities of all sizes, from downtown Seattle to smaller, rural communities across the state,” said Murray, who has chaired the Senate Appropriations subcommittee on transportation.

      “That’s why I worked to set a deadline for the Department of Transportation to issue new safety standards for tank cars next month and worked to fund a Shirt Line Railroad Safety Institute that will help protect smaller communities without sufficient resources to respond to oil trains.”

      Oil tanker cars derailed under the Magnolia Bridge.  No harm done, but not the case elsewhere.

      An old adage applies to the oil train issue: There’s nothing like a hanging in the morning to focus the mind.

      In July of 2013, brakes failed and an unmanned runaway train sped into the small town of Lac-Megantic, Quebec, just over the border from Maine. It blew up, killing 47 people and leveling downtown.

      The train was using 1960′s-designed DOT-111 tank cars. Another train, using DOT-111 cars, exploded into mushroom-cloud flames last December outside Casselton, N.D.. It forced evacuation of more than 2,000 people from the small town.

      While promising new safety measures, the Department of Transportation has been criticized for giving railroads too much wiggle room.

      The DOT said last summer it is setting a two-year deadline for getting DOT-111 tank cars off the rails. In reading the fine print, however, the clock would begin ticking in September of 2015 — giving rail carriers more than three years to stop use of the explosion-prone tank cars.

      The federal budget bill would make available $10 million in grants to improve safety at railroad grade crossings that handle crude oil or other hazardous flammable liquids.

      The DOT gets resources to hire 15 new hazardous-materials and rail-safety inspectors and $3 million to expand the use of automated track inspections to make sure rail tracks are maintained on crude oil transportation routes.

      In this Aug. 8, 2012 photo, a DOT-111 rail tanker passes through Council Bluffs, Iowa. DOT-111 rail cars being used to ship crude oil from North Dakota's Bakken region are an "unacceptable public risk," and even cars voluntarily upgraded by the industry may not be sufficient, a member of the National Transportation Safety Board said Wednesday, Feb. 16, 2014. The cars were involved in derailments of oil trains in Casselton, N.D., and Lac-Megantic, Quebec, just across the U.S. border, NTSB member Robert Sumwalt said at a House Transportation subcommittee hearing. (AP Photo/Nati Harnik, File)

      Refiners and shippers have responded.

      Tesoro has stopped use of DOT-111 tank cars to supply its Anacortes refinery. The Burlington Northern-Santa Fe Railroad has announced a purchase of new, safer tank cars.

      But the railroads have continued to resist making full, up-to-date information on oil shipments available to state and local emergency responders. They are fearful the information will be made public.

      While Murray is touting its oil train provisions, the $1.1 trillion spending bill has drawn some fire from the political left.

      Republicans have secured concessions, loosening Wall Street regulation and letting wealthy donors give more to political campaigns. The bill has slightly weakened school lunch nutrition standards championed by first lady Michelle Obama.

      Liberal Rep. Jim McDermott, D-Wash., is voting against the bill.

      “It is inconceivable that Congress would cut crucial regulations in the Dodd-Frank Act, when risky derivatives trading was at the center of the 2008 financial crisis,” said McDermott.

      “Why is Congress giving Wall Street a massive Christmas present, when so many hard-working Americans are struggling to make ends meet?”

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        Reuters Exclusive: California getting more Bakken crude by barge than rail

        Repost from Reuters
        [Editor:  At the 9/11/14 Benicia Planning Commission meeting, John Hill, vice president and general manager of the Valero Benicia Refinery, stated that Bakken crude has been refined at Valero.  Commissioner Steve Young asked Hill to confirm his statement, which he did.  Young then asked the means of transport, and Hill replied “by barge.”  Our communities might well ask when, how much, and with what new volatile emissions output, etc….  – RS]

        Exclusive: California getting more Bakken crude by barge than rail

        By Rory Carroll, SAN FRANCISCO, Oct 23, 2014
        A pumpjack brings oil to the surface  in the Monterey Shale, California, April 29, 2013.  REUTERS/Lucy Nicholson
        A pumpjack brings oil to the surface in the Monterey Shale, California, April 29, 2013. REUTERS/Lucy Nicholson

        (Reuters) – Shipments of Bakken crude oil from North Dakota to California by barge have quietly overtaken those by train for the first time, showing how the state’s isolated refiners are using any means necessary to tap into the nation’s shale oil boom.

        While tough permitting rules and growing resistance by environmentalists have slowed efforts to build new rail terminals within California itself, a little-known barge port in Oregon has been steadily ramping up shipments to the state, a flow expected to accelerate next year.

        From January through June, California received 940,500 barrels of the North Dakota crude oil from barges loaded at terminals in the Pacific Northwest, the highest rate ever, Gordon Schrempf, senior fuels analyst for the California Energy Commission, told Reuters.

        Bakken crude transported to California on railcars, which has gained widespread attention after a series of fiery train derailments in North America, accounted for just 702,135 barrels over the same time period, according to published figures.

        “We’re seeing marine transport of Bakken crude outpace rail for the first time,” Schrempf said. In 2013, rail shipments of 1.35 million barrels exceeded barge shipments of 1.33 million barrels. The year before, almost no crude arrived by barge.

        Bakken shipments by barge and rail may only comprise a tiny portion of the crude California imports, at about 5,200 and 4,000 barrels per day respectively, with Alaska supplying over 20 times as much crude.

        But companies, including refiner Tesoro Corp and logistics company NuStar Energy LP, have plans to significantly expand that volume with new terminals along the Pacific Northwest that would unload trains from North Dakota and pump the oil onto tankers.

        They would help make California a major destination for Bakken oil, a trend that has drawn objections from environmental groups who have been seeking to stem the tide, often by blocking local permits to built oil-train offloading terminals.

        “Bringing it in by barge gets you around cumbersome permitting and the growing citizen opposition to crude-by-rail,” said Lorne Stockman, research director of Oil Change International, a research and advocacy organization working on energy, climate and environmental issues.

        To be sure, their objections may differ. The principle concern over transporting Bakken by rail is the risk that a derailment could cause a deadly explosion similar to the one in Lac Megantic, Quebec, last year that killed 47 people.

        There is no suggestion that waterborne oil transportation poses similar explosive risks, although the environmental impact of a barge spill could be much greater.

        “The barges are designed to carry the grade of oil that the Bakken is,” said Ted Mar, prevention branch chief for the state’s Office of Spill Prevention and Response and a former member of the Coast Guard.

        That is small comfort to environmentalists, who oppose all forms of oil production, in particular shale crudes like Bakken, extracted through hydraulic fracking they fear contributes to global warming and poses a potential risk to water supplies.

        “Our end goal is to leave these more dangerous, unconventional fuels in the ground,” said Jess Dervin-Ackerman, conservation manager for the San Francisco Bay Chapter of the Sierra Club.

        SMALLER BUT CLOSER

        With state production declining since the mid-80s, California’s refiners have increasingly relied on deliveries of crude by oceangoing tankers carrying 500,000 barrels or more from places like Alaska, Saudi Arabia, Ecuador and Iraq, which supplied two-thirds of their needs last year.

        The refiners have been scrambling for several years to get better access to cheaper domestic shale oil by any means necessary, replacing costlier imports. But with the big shale fields to the east of the Rocky Mountains and a lack of major pipelines, it has not been easy.

        The articulated tug barges (ATBs) now arriving are tiny by comparison to the tankers, carrying as little as 50,000 barrels.

        Such shipments cost more than bringing Bakken directly to California by rail, but easily plug into existing port and terminal infrastructure – avoiding the need for new permitting that can take years.

        While many are working to build out their own rail facilities, a handful of major rail-to-barge terminals along the Pacific Northwest coast that would ship over 500,000 bpd of Bakken crude have been in the works for several years. But most are incomplete, and several face delays.

        One of the few exceptions is an idled ethanol terminal and processing plant in Clatskanie, Oregon, run by Global Partners LP. The facility, on a small canal that feeds into the Columbia River, began quietly transshipping oil from trains to barges in 2012 and is now receiving so-called “unit trains”, mile-long trains that only carry crude oil.

        “Unit train volume into our Clatskanie terminal is up, and interest in the facility from prospective customers is at an all-time high,” Global Partners Chief Executive Eric Slifka said in August.

        Global Partners did not respond to a request for comment.

        Later that month, the firm received a new air permit from the Oregon Department of Environmental Quality that will allow it to ship as much as 1.84 billion gallons of volatile liquids, or some 120,000 bpd. It did not specify crude or ethanol.

        Much of those shipments moved north to refineries in Washington, including BP’s Cherry Point in Puget Sound, and Phillips 66’s Ferndale facility. But both those plants are expanding their own facilities to bring more Bakken in by rail, likely curbing some demand for barges.

        Top oil barge operator Kirby Corp, which runs vessels out of Clatskanie, is currently building two larger 185,000-barrel barges to deploy on the coast next autumn.

        Environmentalists say they are monitoring the rise in Bakken-by-barge deliveries.

        “This won’t pull our focus away from crude by rail, but rather expand the lens with which we look at dangers of Bakken entering our communities,” said the Sierra Club’s Dervin-Ackerman.

        (Reporting by Rory Carroll, editing by Jonathan Leff and Marguerita Choy)
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