All posts by Roger Straw

Editor, owner, publisher of The Benicia Independent
Crude By Rail, Environmental review, Local Regulation, Rail industry, Rail Safety

Milton Mayor: residents ‘will be lying down on the tracks’ to prevent surprise railyard plan

Repost from The Hamilton Spectator

Milton residents ‘will be lying down on the tracks’ to prevent surprise CN plan

By San Grewal, March 17, 2015
MILTON MAYOR
MILTON MAYOR Gordon Krantz says his town has been “blindsided” by a CN plan to have a facility between Britannia Rd. and Lower Base Line that would bring 1,500 trucks and four additional trains into Milton every day. Zoe McKnight,Torstar News Service

A “David and Goliath” battle is shaping up in Milton, where the Toronto Star has learned CN is about to announce plans for a 400-acre rail distribution centre that throws a wrench into the region’s carefully crafted growth management strategy.

Milton’s mayor and top bureaucrat are vowing the town will not go down without a fight.

“We have 50,000 residents, 20,000 houses planned for the area north of this (intermodal) facility. CN came in last week and pronounced that they are going forward — no formal application, no formal announcement,” said Milton’s chief administrative officer, William Mann.

“We know they are announcing it on Thursday. When Milton residents hear about this, they will be lying down on the tracks.”

Mann said the town, one of Canada’s fastest growing municipalities, has been told that CN, as a former Crown corporation, still has a certain power to circumvent municipal planning as governed by the province of Ontario.

Mann and Mayor Gord Krantz told the Star the town has been “blindsided” by the plan for a facility between Britannia Rd. and Lower Base Line that the town says would operate 24/7, transferring containers between trains and trucks. The town says it would bring 1,500 trucks and four additional trains into Milton every day, on CN-owned land that isn’t supposed to be used for such a facility according to Milton’s planning strategy.

Under Sustainable Halton, the region’s widely lauded plan for growth management, the land has been earmarked for strategic employment, with a mix of residential and commercial development surrounding it, as well as environmentally protected lands.

“It’s completely contrary to what we had planned,” Krantz said. “If I knew what was being proposed by CN I certainly wouldn’t be purchasing. Or if I already purchased one (of the newly built homes) and I wanted to get out from under it — I can imagine the possible legal battles.”

But Krantz is vowing to do everything the town can to fight CN, even if the rail giant has the federal government on its side, along with its powers to ignore local planning jurisdiction.

Referring to the tale of David and Goliath, Krantz said: “We all know how that story ended. I’ve got my one shot ready.”

He said Milton is already working with Halton Region and other partners on a legal strategy, but said he didn’t want to tip his hand.

CN responded to the Star’s questions about the project with a brief statement: “CN owns approximately 1,000 acres of land in the Milton, Ont., area. As part of its ongoing business operations, CN continually reviews its facilities and real estate holdings to ensure they are adequate to accommodate growth in its various businesses. Such is the case with CN’s Milton property. CN has no further comment at this time.”

One of the world’s largest rail companies, CN has a market capitalization of almost $71 billion.

CN had proposed a similar project in 2001 — preceding the province’s strategy to manage growth — that was withdrawn after the town and region identified major issues with it, according to a news release from the Town of Milton.

Multiple sources told the Star the CN plan is to be unveiled Thursday at a breakfast event hosted by the local chamber of commerce. As the MP for Halton riding, Federal Transport Minister Lisa Raitt represents Milton. A statement from the ministry to the Star said only that Raitt would attend the Chamber event Thursday “and looks forward to the presentation.”

The Ministry of Municipal Affairs and Housing was asked whether the province would guarantee a public consultation and that provincial environmental and safety rules as well as municipal planning processes would be complied with. A spokesperson said the ministry, and the Ministry of Transportation, “have been advised by CN that they are revisiting the need for an intermodal yard in the Town of Milton … CN has not provided the province with specific details of their proposal.”

With concern mounting over rail safety in the wake of the Lac-Mégantic disaster and more recent fiery derailments of trains carrying crude oil, Krantz and Mann said they have been disheartened by the province’s unwillingness to address the CN plan.

When asked if he has an idea of what would be passing through the area, Krantz said: “That’s a good question. We don’t know what’s going to be transported.”

Beyond the negative impact on surrounding property values, and environmental and safety concerns, the development industry is going to be extremely upset with CN’s decision, he said.

“You ain’t seen nothing yet. Wait until the developers, especially in the residential sector, hear. I suspect their reaction will be something like mine.”

Mann said Milton has behaved like the model municipality for Ontario’s Places to Grow Act, which established managed population growth targets throughout the GTA. The town has grown from about 7,000 residents in 1971 to 84,362, according to the 2011 census.

“We could go to over 400,000 under Places to Grow. Places to Grow is all about taking your fair share. Now, upward of 500 acres of employment land and all the residential around it, could be taken out of the picture. That means the rest of the GTA will have to pick up that population.

“This plan has nothing but negative consequences for Milton, from a community perspective.”

Bakken Crude, Crude By Rail, Oil Industry, Oil producers, Rail industry

Crude oil joins rail industry staples as key revenue producer

Repost from Reuters

Crude oil joins rail industry staples as key revenue producer

By Jarrett Renshaw, Mar 16, 2015 2:05pm EDT

(Reuters) – U.S. railroads generated almost as much money last year hauling crude oil and sand, largely used in hydraulic fracturing, as they did moving industry staples like field crops and motor vehicles, according to a Reuters’ analysis of newly released federal data.

The previously unreported company data submitted to the U.S. Department of Transportation provides the latest piece of evidence of the blossoming marriage between the energy and rail industries, forged on the back of the U.S. shale oil boom.

Led by Berkshire Hathaway-owned BNSF Railways, the seven largest railroads operating in the United States generated $2.8 billion in gross revenue from hauling crude oil in 2014, up nearly 30 percent from 2013, according to company data filed with the federal government and released earlier this month.

The $2.8 billion figure puts crude oil in sixth place among similarly classified products, trailing industry standards like coal, field crops and motor vehicles, the analysis shows. Sand and gravel, an often overlooked winner in the shale boom, generated $2.7 billion last year in gross revenue.

Crude oil provides the biggest return on a per-carload basis, drawing $5,700 in gross revenue for each car that originated on the network, more than double than what coal brings.

The continuing financial success comes as the industry faces threats from a massive drop in oil prices and impending new U.S. regulations aimed at public safety that could impose additional costs.

“Will the major carriers go belly up? No,” said Barton Jennings, a professor of supply chain management at Western Illinois University. However, short-line cariers that rely upon crude for the bulk of their business may be exposed, he said.

Overall, the seven major carriers reported U.S. profits of $14.4 billion last year, led by Union Pacific and BNSF, which combined accounted for 67 percent of the industry’s U.S. profits, the analysis shows.

KING CRUDE

The biggest player in the U.S. crude rail business is BNSF, which dominates North Dakota, home to the Bakken shale.

BNSF’s gross revenue from crude oil rose to $1.48 billion from $63 million in 2010. Gross revenue from hauling sand and gravel climbed to $651 million last year, a more than 300 percent jump from 2010.

The growth in crude and sand hauling helped BNSF boost profits, which climbed from $2.6 billion in 2010 to $4.4 billion last year.

(Reporting By Jarrett Renshaw; Editing by Jessica Resnick-Ault and Jonathan Oatis)
Bakken Crude, Crude By Rail, DOT-111, Oil Industry, Rail industry

Refiners’ Association sues railroad over fee on oil loaded in older tank cars

Repost from McClatchy DC
[Editor:  Incredible: The complaint says, “Despite BNSF’s distaste for the DOT-111 cars, (emphasis added) they are authorized bulk packaging for crude oil service.”  “Distaste?”  Really!  Oh, and … the BNSF surcharge would suggest that $1000/car will help exactly whom if/when the next explosion occurs?  Surely not those whose bodies and livelihoods are incinerated.  See this story also at Bloomberg Business News and Courthouse News Service.  – RS]

Refiners sue BNSF over fee on oil loaded in older tank cars

By Curtis Tate, McClatchy Washington Bureau, March 16, 2015

A trade group representing oil refiners has sued the nation’s largest hauler of crude oil in trains over a surcharge for oil loaded into older tank cars that have punctured and ruptured in numerous derailments.

The American Fuel & Petrochemical Manufacturers, a trade association for producers of gasoline, jet fuel, home heating oil and other refined products, sought an injunction last week in U.S. District Court in the Southern District of Texas to block BNSF Railway from imposing a $1,000 surcharge for every DOT-111 model tank car loaded with crude oil.

Tens of thousands of DOT-111 cars have carried a surge in domestic energy production, but their poor safety record in oil and ethanol train derailments has drawn fresh scrutiny from regulators, lawmakers and the National Transportation Safety Board.

BNSF hauls 600,000 barrels a day of crude oil, mostly from North Dakota’s Bakken region, to refineries on the east and west coasts. In October, the railroad announced it would impose a $1,000 surcharge on oil shipped in DOT-111 tank cars, effective Jan. 1.

But the trade group, which represents more than 400 companies, said in its complaint that BNSF asserted “unlawful regulatory authority” when it began imposing the surcharge.

The U.S. Department of Transportation regulates rail transportation, and until regulations require tank cars of a different design for oil shipments, the group’s complaint says that BNSF and other railroads are obligated by law to accept them in whatever cars the government currently allows.

“Despite BNSF’s distaste for the DOT-111 cars,” the complaint says, “they are authorized bulk packaging for crude oil service.”

One DOT-111 tank car holds about 30,000 gallons, or 700 barrels of oil. The complaint says the $1,000 surcharge adds $1.50 per barrel in rail transportation costs.

The trade group’s complaint says that BNSF’s surcharge causes “direct and substantial harm” to its clients and “breaches BNSF’s common carrier duty to ship hazardous materials.” By law, railroads must provide rail transportation on reasonable request.

The Pipeline and Hazardous Materials Safety Administration submitted a new design for tank cars to the White House Office of Management and Budget for review in January.

Four crude oil trains have derailed and caught fire across North America since mid-February. One of them was a BNSF train that derailed earlier this month near Galena, Ill.

In all four derailments, the tank cars were a modestly improved version of the DOT-111.

Bakken Crude, CPC-1232, Crude By Rail, Oil spill, Tank car retrofit

McClatchy investigative reports result in enforcement actions

Repost from McClatchy DC and The Bellingham Herald
[Editor:  McClatchy News investigative reports have alerted Washington State and federal officials, and resulted in fines and enforcement actions.  For background, see Washington state officials unaware at first of November oil spill (1/26); Officials say oil train leaked as it crossed Washington state (2/6); and Oil-loading facility sanctioned in Washington rail car spill (3/12).  Don’t miss the excellent video near the end of this story.  – RS]

More oil-train fixes: Feds order defective valves replaced on leaking cars

By Samantha Wohlfeil and Curtis Tate, March 13, 2015 
APTOPIX Train Derailment
Derailed oil tanker train cars burn near Mount Carbon, W.Va., Monday, Feb. 16, 2015. A CSX train carrying more than 100 tankers of crude oil derailed in a snowstorm, sending a fireball into the sky and threatening the water supply of nearby residents, authorities and residents said Tuesday. MARCUS CONSTANTINO — AP

WASHINGTON — The Federal Railroad Administration on Friday ordered rail tank car owners to replace defective valves never approved for installation on thousands of tank cars, causing oil to spill from moving trains.

The directive applies to a 3-inch valve installed on roughly 6,000 tank cars, and their owners have 60 days to replace them. Within 90 days, tank car owners must also replace 37,000 1-inch and 2-inch valves manufactured by the same company. While the smaller valves were not found to be defective like the larger ones, they were not approved for the tank cars.

The affected cars can be used in the interim, but none can be loaded with hazardous materials if they are still equipped with those valves after the deadlines.

The enforcement action comes after a story last month in McClatchy’s Bellingham Herald about 14 tank cars that were discovered leaking en route from North Dakota’s Bakken region to the Tesoro refinery in Anacortes, Wash.

Friday’s enforcement action is the second to follow an investigation launched after McClatchy reported on leaking cars in Washington.

On Thursday, the agency said it had sanctioned the operator of a North Dakota loading facility for not properly closing a valve on another oil car after McClatchy reported in January that the car arrived at the BP Cherry Point refinery in northwest Washington state with 1,600 gallons missing.

That spill was discovered in early November but wasn’t reported to state officials until early December. Local emergency officials were never notified, according to a report sent by BNSF Railway to the U.S. Department of Transportation and the Washington state Utilities and Transportation Commission.

The 1-inch, 2-inch and 3-inch valves were all manufactured and sold by McKenzie Valve and Machining, a company in Tennessee. The Bellingham Herald could not immediately reach anyone at McKenzie, but left messages with the company Friday.

The Federal Railroad Administration also announced Friday that it was launching a full audit of the approval process for tank car components to determine why the unapproved valves were installed.

Under federal regulations, tank car valve designs must be approved by the Association of American Railroads Tank Car Committee.

The Federal Railroad Administration said it would begin working immediately with the association, which is the rail industry’s principal trade group in the nation’s capital.

Sarah Feinberg, the FRA’s acting chief, said Friday that removal of the valves will help reduce the number of non-derailment releases of hazardous materials.

“Any type of hazardous materials release, no matter how small, is completely unacceptable,” she said in a statement.

Ed Greenberg, a spokesman for the railroad association, said Friday that it supported the order. Railroads don’t own most of the tank cars used to transport oil.

“Officials from our association will be working closely with the administration in reviewing the tank car valve approval process to ensure the agency is fully satisfied with the current approval requirements that are in place,” he said in a statement.

The Federal Railroad Administration’s order came about a month after crews discovered tank cars leaking oil from their top fittings on a handful of trains hauling different types of crude oil through Washington state.

In mid-January, a train loaded with Bakken crude needed to have more than a dozen leaking cars removed at three separate stops as it traveled through Idaho and crossed Washington state.

The train was headed from Tioga, N.D., to the Tesoro refinery in Anacortes.

In a report to the U.S. Department of Transportation, BNSF reported a total of 26 gallons of oil leaking from 14 cars. Tesoro reported two more leaking cars. The oil was found only on the tops and sides of tank cars, and no oil was found on the ground.

Crews had first noticed oil on the side of a tank car while the train was in northern Idaho, and after checking the rest of the train, removed that car, which had leaked about two gallons, according to BNSF spokeswoman Courtney Wallace.

After the train had crossed through the state, following the Columbia River to Vancouver, Wash., crews found that crude oil had leaked onto the top of seven more cars, which were removed from the train on Jan. 12. BNSF reported the incident to the state Department of Ecology on Jan. 23.

BNSF also reported that about 10 gallons total had leaked from six more cars removed in Auburn on Jan. 13.

Wallace said the railroad would work with customers and shippers to take the required actions.

“Although BNSF does not own the tank cars, nothing is more important to us than safely operating through the communities that we serve,” she said in a statement.


The state Utilities and Transportation Commission and the FRA investigated the cars that were pulled from the train in Vancouver, which led to the discovery that closure plugs on the valves caused damage to the valve’s seal, and when tightened, would press down on and damage the ball.

The cars involved were CPC-1232 model cars built after 2011, which some oil companies have started using after several fiery derailments caused concerns about older DOT-111 rail cars, which have been found more likely to puncture or burst.

However, newer CPC-1232-standard cars that lack features that reduce damage from punctures and fire exposure have performed no better in four recent oil train derailments in West Virginia, Illinois and Ontario.

The White House Office of Management and budget is reviewing a new tank car standard proposed by the Department of Transportation. It is scheduled for publication on May 12.

Wohlfeil, of The Bellingham Herald, reported from Washington state. Tate reported from Washington, D.C.