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The dark side of the oil boom – analysis of federal data from more than 400 oil-train incidents since 1971

Repost from Politico

The dark side of the oil boom

By Kathryn A. Wolfe and Bob King | 6/18/14

Communities throughout the U.S. and Canada are waking up to the dark side of North America’s energy boom: Trains hauling crude oil are crashing, exploding and spilling in record numbers as a fast-growing industry outpaces the federal government’s oversight.

In the 11 months since a runaway oil train derailed in the middle of a small town in Quebec, incinerating 47 people, the rolling virtual pipelines have unleashed crude oil into an Alabama swamp, forced more than 1,000 North Dakota residents to evacuate, dangled from a bridge in Philadelphia and smashed into an industrial building near Pittsburgh. The latest serious accident was April’s fiery crash in Lynchburg, Virginia, where even the mayor had been unaware oil was rolling through his city.

(WATCH: News coverage of recent oil train spills)

A POLITICO analysis of federal data from more than 400 oil-train incidents since 1971 shows that a once-uncommon threat has escalated dramatically in the past five years:

  • This year has already shattered the record for property damage from U.S. oil-train accidents, with a toll exceeding $10 million through mid-May — nearly triple the damage for all of 2013. The number of incidents so far this year — 70 — is also on pace to set a record.
  • Almost every region of the U.S. has been touched by an oil-train incident. These episodes are spreading as more refineries take crude from production hot spots like North Dakota’s Bakken region and western Canada, while companies from California and Washington state to Missouri, Pennsylvania, Virginia and Florida build or expand terminals for moving oil from trains to barges, trucks or pipelines.
  • The voluntary reforms that DOT and industry have enacted so far might not have prevented the worst accidents. For example, the department announced a voluntary 40 mph speed limit this year for oil trains traveling through densely populated areas, but DOT’s hazardous-incident database shows only one accident in the past five years involving speeds exceeding that threshold. And unlike Canada’s transportation ministry, DOT has not yet set a mandatory deadline for companies to replace or upgrade their tank cars.

Starting this month, DOT is requiring railroads to share more timely information with state emergency managers about the trains’ cargoes and routes. But some railroads are demanding that states sign confidentiality agreements, citing security risks.

Transportation Secretary Anthony Foxx says each step is a move in the right direction.

“There’s been such exponential growth in the excavation of this crude oil that it’s basically outrun our normal systems,” Foxx said in an interview. But Foxx, who became secretary four days before the Quebec disaster, added: “We’ve been focused on this since I came in. … We’re going to get this right.”

Defending the voluntary speed limits, Foxx said: “You have to understand that all these pieces fit together. So a stronger tank car with lower speeds is safer than a less strong tank car at higher speeds.”

Members of Congress are joining the call for more action.

“The boom in domestic oil production has turned many railways and small communities across our country into de facto oil pipelines, and the gold-rush-type phenomenon has unfortunately put our regulators behind the eight ball,” said Sen. Chuck Schumer (D-N.Y.), who has been pushing for stricter safety and disclosure rules. “It has become abundantly clear that there are a whole slew of freight rail safety measures that, while for many years have been moving through the gears of bureaucracy, must now be approved and implemented in haste.”

Sierra Club staff attorney Devorah Ancel said the rising damage toll should “ring alarm bells in the minds of our decision-makers, from cities all the way up to Congress and the president.”

“Our fear is that the regulators are being pushed over by the industry,” she said.

Like the oil boom itself, the surge in oil-train traffic has come much faster than anyone expected. Meanwhile, the trains face less onerous regulations than other ways of moving oil, including pipelines like TransCanada’s Keystone XL project.

Keystone, which would carry oil from Alberta to the Gulf Coast, has waited more than five years for a permit from the Obama administration while provoking a national debate about climate change. But no White House approval was needed for all the trains carrying Canadian oil into the United States. In fact, freight railroads in the U.S. are considered “common carriers” for hazardous materials, meaning they can’t refuse to ship it as long as it meets federal guidelines.

The oil-trains issue is bringing a flurry of foot traffic to the White House Office of Management and Budget these days as railroad and oil industry representatives press their case on what any new regulations should look like. Representatives of the country’s leading hauler of Bakken crude, Warren Buffett’s BNSF Railway, met with OMB regulatory chief Howard Shelanski on June 3 and June 6, and joined people from railroads including CSX, Union Pacific and Norfolk Southern in another meeting June 10.

DOT says it has been working to address the problem since as far back as September 2012, and that efforts accelerated after Foxx took over in July. His chief of staff, Sarah Feinberg, holds a meeting each morning on the issue, and she and Foxx meet regularly with top leadership at the two key DOT agencies that oversee railroads and the transport of hazardous materials.

The voluntary agreements that Foxx’s department has worked out with the freight rail industry and shippers address issues like track inspections, speed limits, brakes and additional signaling equipment. Those are all “relevant when dealing with reducing risk” from oil train traffic, the freight rail industry’s main trade group said in a statement.

“The number one and two causes of all main track accidents are track or equipment related,” the Association of American Railroads said. The statement added, “That is how the industry came up with the steps in the voluntary agreement in February aimed at reducing risks of these kinds of accidents when moving crude oil by rail.”

Meanwhile, the oil train business is primed to get bigger. Even TransCanada might start using rail to ship oil to the U.S. while waiting for Keystone to get the green light, CEO Russ Girling said in an interview in May — despite agreeing that trains are a costlier and potentially more dangerous option.

“If anybody thinks that is a better idea, that’s delusional,” Girling said.

In fact, the State Department estimated this month that because of the risks of rail compared with pipelines, an additional 189 injuries and 28 deaths would occur every year if trains end up carrying the oil intended for Keystone.

But environmentalists who warn about the dangers of crude-by-rail say it would be wrong to turn the issue into an excuse to approve Keystone. For one thing, the Texas-bound pipeline would replace only part of the train traffic, which has spread its tendrils all across the U.S. “There are no pipelines that run from North Dakota to the West Coast,” the Sierra Club’s Ancel said.

 

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    White House agency under pressure from big oil & rail – accused of “coddling” the industries

    Repost from DESMOGBLOG
    [Editor: The influential White House Office of Information and Regulatory Affairs (OIRA) is reviewing the newly-proposed oil-by-rail safety regulations rolled out by the DOT and PHMSA.  Significant quote: “A DeSmogBlog review of OIRA meeting logs confirms that in recent weeks, OIRA has held at least ten meetings with officials from both industries on oil-by-rail regulations. On the flip side, it held no meetings with public interest groups.”  See also important statements by BNSF and the DOT on the need for an entirely new tank car design near the end of this article.   – RS]

    Meeting Logs: Obama White House Quietly Coddling Big Oil on “Bomb Trains” Regulations

    Sun, 2014-06-15  |  Justin Mikulka and Steve Horn

    When Richard Revesz, Dean Emeritus of New York University Law School, introduced Howard Shelanski at his only public appearance so far during his tenure as Administrator of the White House Office of Information and Regulatory Affairs (OIRA), Revesz described Shelanski as, “from our perspective, close to the most important official in the federal government.”

    OIRA has recently reared its head in a big way because it is currently reviewing the newly-proposed oil-by-rail safety regulations rolled out by the Department of Transportation (DOT) and Pipeline and Hazardous Materials Safety Administration (PHMSA).

    During his presentation at NYU, Shelanski spoke at length about how OIRA must use “cost-benefit analysis” with regards to regulations, stating, “Cost-benefit analysis is an essential tool for regulatory policy.”

    But during his confirmation hearings, Shelanski made sure to state his position on how cost-benefit analysis should be used in practice. Shelanski let corporate interests know he was well aware of their position on the cost of regulations and what they stood to lose from stringent regulations.

    Regulatory objectives should be achieved at no higher cost than is absolutely necessary,” Shelanski said at the hearing.


    Howard Shelanski; Photo Credit: White House Office of Information and Regulatory Affairs

    With the “cost-benefit analysis” regarding environmental and safety issues for oil-by-rail in OIRA’s hands, it appears both the oil and rail industries will have their voices heard loudly and clearly by the White House.

    A DeSmogBlog review of OIRA meeting logs confirms that in recent weeks, OIRA has held at least ten meetings with officials from both industries on oil-by-rail regulations. On the flip side, it held no meetings with public interest groups.

    Cost-Benefit”: A Brief History

    OIRA was created in 1980 by President Ronald Reagan with the goal of getting rid of “intrusive” regulations.

    “By instructing agencies to clear drafts of regulations through OIRA, Presidents have made the agency…a virtual choke point for federal regulation,” explains the Center for Progressive Reform, a think-tank critical of OIRA and its cost-benefit analysis.

    Cost-benefit analysis was put on the map by Harvard Law School professor Cass Sunstein, “regulatory czar” and head of OIRA for President Barack Obama before Shelanski.

    The ideology, which is embraced by President Obama, is inspired by the “Chicago School” of free market economics, unpacked in depth in Naomi Klein’s book, “The Shock Doctrine.

    He’s a University of Chicago Democrat, so he’s very attuned to the virtue of free markets and the risks of free-market regulation,” Sunstein told The Wall Street Journal about Obama in 2009. “He’s not an old-style Democrat who’s excited about regulations.”


    Cass Sunstein; Photo Credit: Wikimedia Commons

    The Washington Post described Sunstein as Obama’s “intellectual mentor” who “had a major influence on Obama’s view of government — stressing pragmatism over ideology.”

    But of course, the “Chicago School” has its own ideological roots: neoliberalism.

    Big Oil Meet and Greet

    The first on-the-books meeting OIRA held in the second quarter of 2014 about the newly-proposed oil-by-rail safety regulations written by the U.S. Department of Transportation (DOT) was with lobbyists, economists and attorneys representing both the American Petroleum Institute (API) and Chevron on May 19.

    Attendees of that meeting included Misty McGowen, Director of Federal Relations for API and Michael Yoham, Manager Rail Transportation Services for Chevron.

    This API-Chevron White House visit parallels the one they made together when OIRA mulled over new rules on sulfur in gasoline. In 2012, a group led by API president Jack Gerard went to the White House to discuss this issue with another of President Obama’s closest advisers, Valerie Jarrett.

    This visit clearly paid dividends for the industry when the new regulations were delayed.

    Akin to what is currently happening with the oil-by-rail regulations regarding Bakken shale oil and the DOT-111 tank cars, it was coordinated with a big public relations push trashing the regulations as unnecessary.

    History, as they say, has repeated itself in the oil-by-rail sphere.

    A new report touting the safety of oil obtained from hydraulic fracturing (“fracking”) in the Bakken Shale was released by industry groups the same week as the API-Chevron visit with OIRA.


    Image Credit: ShutterstockTrueffelpix

    Less than two weeks later on May 30, OIRA met with representatives from the American Fuel & Petrochemical Manufacturers (AFPM) and Tesoro, among others. Stephen H. Brown, a Tesoro lobbyist, represented the company — which has a multi-pronged oil-by-rail footprint — at the meeting.

    AFPM has also gone on the record saying Bakken fracked oil is safe for railway transportation, also concluding DOT-111 tank cars are “fine” for moving Bakken crude to market.

    Can we have an intellectually honest discussion about mechanical and track integrity on the rails?,” AFPM president Charles Drevna asked rhetorically in a May 19 Railway Age article. “You shouldn’t blame the cargo for an accident.”

    Other Big Oil companies that got the ear of OIRA in June included Phillips 66 (purchased as a wholly-owned subsidiary by ConocoPhillips in 2001) and ExxonMobil.

    BNSF Lands Two Meetings in One Week

    Records also reveal OIRA met twice in one week with Burlington Northern Sante Fe (BNSF), the oil-by-rail behemoth owned by Warren Buffett. The first was held on June 3 and the second on June 6.

    Buffett was a major donor to President Obama for both the 2008 and 2012 presidential elections. He also gave big money to Hillary Clinton — former Secretary of State for the Obama Administration and likely presidential candidate in 2016 — during the 2008 Democratic Party presidential primaries, and has already endorsed her for 2016.


    Warren Buffett (L), President Barack Obama (R); Photo Credit: Wikimedia Commons

    BNSF Executive Chairman Matthew Rose came to the June 3 meeting flanked by two BNSF lobbyists: Amy Hawkins and Cliff Rothenstein (who maintains BNSF as a client on behalf of K&L Gates). Some speculate Rose could succeed Buffett as CEO of Berkshire Hathaway, the holding company that bought BNSF in 2009.

    On June 6, Roger NoberBNSF Executive Vice President for Law and Corporate Affairs, landed a one-on-one meeting with Shelanski. Before working for BNSF, Nober passed through the government-industry revolving door, serving as an attorney for the Department of Transportation.

    According to an article published in EnergyWire, BNSF supports an “aggressive phase out” of its DOT­-111 tank cars.

    ”[BNSF] believe[s] the next ­generation tank cars should exceed the 2011, stronger new standard known as the CPC­-1232 tank car,” Roxanne Butler, a spokeswoman for BNSF told EnergyWire.

    Butler did not respond to questions from DeSmogBlog about what BNSF discussed with OIRA in the meetings, nor did she specify what she meant by an “aggressive phase out.”

    The CSX Corporation oil-by-rail train that exploded in Lynchburg, Virginia in late-April, though, had CPC-1232 “next ­generation tank cars.”

    On the May 14 edition of The Rachel Maddow Show, Secretary of Transportation Anthony Foxx told Maddow that he does not believe the CPC-1232 is the solution.
    Secretary of Transportation Anthony Foxx interview with Rachel Maddow, via YouTube.

    I can tell you that I don’t have confidence in the DOT-111 [and] I’m unconvinced that the 1232 — which is the upgraded car — is the absolute solution,” said Foxx. “I think there’s going to have to be a new type of tank car established to keep this country as safe as possible.”

    Oil Exports Connection

    For its first oil-by-rail meeting of June, DOT officials and OIRA officials sat alongside Russell Smith, lobbyist for oil and gas industry capital investment firm Quantum Energy; FTI Consulting lobbyist John Cline; and John Whitcomb, legislative analyst for FTI Consulting.

    Cline formerly headed up C2 Group, a Washington, DC-based lobbying group purchased in March 2013 as a wholly-owned subsidiary of FTI Consulting.

    BNSF is one of C2 Group’s clients.

    As his C2 Group biography explains, Cline has also passed through the revolving door, formerly working for both the White House and DOT

    John served in the White House as a Special Assistant for Intergovernmental Affairs under President George H.W. Bush,” Cline’s bio states.

    Prior to his service in the White House, he was Director of the Office of Congressional Affairs for the U.S. Department of Transportation (DOT)… John entered public service in 1989 upon his selection by President Bush as Associate Administrator for the Federal Transit Administration at DOT.”

    FTIoverseer of public relations efforts for fracking front group Energy in Depth — published a report promoting oil exports in June 2013.

    Many prospective coastal crude oil export terminals rely on oil-by-rail to move product to the coast.

    For example, the exploding CSX Corporation oil-by-rail train in Lynchburg, Virginia owned by Plains All American was on its way to the Yorktown facility. Yorktown has been marked a potential export terminal if the ban on exporting U.S. oil is lifted.

    Map Credit: CSX Corporation

    Cui Bono?

    While Shelanski’s remarks at NYU discussed cost-benefit analysis, he also talked about how the question over regulatory policy often boils down to shifting costs.

    A more honest debate and better policy will emerge if the debate acknowledges the difference between creating costs and shifting costs back to their source to reduce harmful externalities,” he said.

    Which raises the big questions on oil-by-rail regulations, or lack thereof: cui bono? And who pays the costs?

    A case in point is Lac-Mégantic, Quebec — site of the massive “bomb train” explosion which killed 47 people on July 6, 2013 — where the cost to clean up and rebuild the town is estimated at $2.7 billion.


    Lac-Mégantic Disaster; Photo Credit: Wikimedia Commons

    With all six of the oil and rail companies involved refusing to pick up the tab, the cost has been transferred to taxpayers from the oil and rail industries.

    Exactly what API, Chevron, ExxonMobil, BNSF and other powerful factions discussed in their meetings with OIRA remains unknown for now.

    But one thing remains clear: the only side OIRA has listened to so far in official meetings is Big Oil and Big Rail.

    This is consistent with the trend-lines unpacked in the Center for Progressive Reform’s study titled, “Behind Closed Doors at the White House,” a comprensive review of OIRA meeting logs between 2001-2011.

    “Over the last decade, 65 percent of the 5,759 meeting participants who met with OIRA represented regulated industry interests — about five times the number of people appearing on behalf of public interest groups,” stated the report.

    “[E]ven under this ostensibly transformative President [Obama]…industry visits outnumbered public interest visits by a ratio of almost four to one.”


    Table Credit: Center for Progressive Reform

    As the old adage goes, the more things change, the more they stay the same.

    “The oil-by-rail situations illustrates the way that the process is, all too often, stacked in favor of industry,” Daniel A. Farber, professor at University of California Law School, scholar for the Center for Progressive Reform and critic of OIRA‘s version of cost-benefit analysis, told DeSmogBlog.

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      BNSF Railway: Future of crude by rail depends on safety

      Repost from The Kansas City Star
      [Editor: Significant quote by BNSF Executive Chairman Matt Rose: “Without focus on the elements of safety, the social license to haul crude by rail will disappear, to say nothing of the regulatory agencies’ response.”  – RS]

      BNSF: Future of crude by rail depends on safety

      James MacPherson, The Associated Press | 2014-05-21

      — The future of crude oil shipments by train depends on proving to the public that it can be done safely, the head of BNSF Railway Co. said Wednesday.

      “Without focus on the elements of safety, the social license to haul crude by rail will disappear, to say nothing of the regulatory agencies’ response,” BNSF Executive Chairman Matt Rose told several hundred people at the Williston Basin Petroleum Conference in Bismarck.

      BNSF is based in Fort Worth, Texas, but is part of Warren Buffett’s Berkshire Hathaway Inc., based in Omaha, Nebraska. The railroad is the biggest player in the rich oil fields of Montana and North Dakota, hauling about 75 percent of the more than 1 million barrels that moves out of the region daily.

      Rose told the conference that the railroad is committed to preventing accidents like its Dec. 30 crash outside Casselton that left an ominous cloud over the town and led some residents to evacuate. The disaster in the small town west of Fargo was one of at least eight major accidents during the last year, including an explosion of Bakken crude in Lac-Megantic, Quebec that killed 47 people. Other trains carrying Bakken crude have since derailed and caught fire in Alabama, New Brunswick and Virginia.

      Rose last month joined U.S. Secretary of Transportation Anthony Foxx at the North Dakota crash site, where options for enhancing tank car standards were discussed.

      The crash occurred when a train carrying soybeans derailed in front of a BNSF oil train, causing that train to also derail and set off fiery explosions. The crash spilled about 400,000 gallons of crude oil, which took nearly three months to clean up.

      Rose said the railroad has learned from the disaster and has done such things as decreased train speeds in some areas and increased inspections. The railroad also announced in February that it would voluntarily purchase a fleet a of 5,000 strengthened tank cars to improve safety for hazardous materials shipments. The company said it hoped to accelerate the transition to a new generation of safer tank cars and give manufacturers a head start in designing them as federal officials consider changes to the current standards.

      Not everyone in the oil sector is eager to transition to stronger tank cars. At the expo a day earlier, Kari Cutting, vice president of the North Dakota Petroleum Council, said it was “not proven that extra steel is going to prevent those breaches.”

      Cutting also said the newer, stronger DOT-111 tank cars have 14 percent less capacity than older tank cars. Cutting said making those cars the standard will require hundreds more trains to make up the lost volume, actually increasing the risk of accidents.

      Oil from North Dakota began being shipped by trains in 2008 when the state reached capacity for pipeline shipments. The state is now the nation’s No. 2 oil producer, behind Texas.

      BNSF said it plans to invest $5 billion in its railroad this year, including $900 million to expand capacity where crude oil shipments are surging. Its 2014 spending plan is about $1 billion more than last year, a record, Rose said.

      Much of the upgrades will be aimed at safety, he said.

      “BNSF believes, at the end of the day, that every rail accident is preventable,” Rose said.

      Read more here: http://www.kansascity.com/2014/05/21/5037936/bnsf-future-of-crude-by-rail-depends.html#storylink=cpy
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