Bakken Crude, Federal Rail Administration, Federal Regulation (U.S.), National Transportation Safety Board, Pipeline and Hazardous Materials Safety Administration (PHMSA), Rail accidents, Rail inspection, Rail Safety

Cozy relationship between North Dakota’s oil industry and a chief federal inspector

Repost from In These Times

Official Tipped Off Hess Rail Yard About Oil-Carrier Inspection

Emails cast doubt on the integrity of a federal crackdown on unsafe shipping practices.
BY Cole Stangler  /  Web Only / Features » April 29, 2014
Oil containers wait at a train yard near Williston, North Dakota before transporting crude oil across North America. Shippers and carriers often mislabel their cargo, which leads to improper handling and potentially dangerous accidents. (Andrew Burton / Getty Images)

Emails obtained by In These Times show a cozy relationship between North Dakota’s oil industry and a chief federal inspector charged with monitoring the safety of shipping crude oil by rail. The emails cast serious doubts on the integrity of the federal government’s supposed crackdown on the industry’s shoddy shipping practices—a subject of growing concern in the midst of a largely unregulated, and in some cases, deadly, transport boom.

Last August, the Pipeline and Hazardous Materials Safety Agency (PHMSA) and Federal Railroad Administration announced they were rolling out the “Bakken Blitz”—a crackdown on shippers and carriers that mislabel their cargo. Federal hazmat regulations require trains carrying oil to properly classify and identify their shipments with placards. These practices are supposed to ensure that oil is safely packaged before being shipped. They’re also aimed at informing railroad personnel and, in the event of a mishap, any emergency responders. Regulators introduced the Blitz just one month after the Lac Mégantic disaster, when a runaway freight train carrying oil exploded in the small Quebec town, killing 47 people. In that case, Canadian safety investigators found American shippers in North Dakota’s Bakken region had understated the volatility of the oil that ignited and destroyed much of Lac Mégantic’s downtown area. Improper classification caused the shipment to be transported in an improper package. Emergency responders, too, were caught by surprise at how quickly the fire spread and how long it burned.

As part of the Department of Transportation’s new enforcement effort, PHMSA officials show up unannounced at rail facilities to conduct classification inspections—at least that’s what an agency spokesperson told In These Times at first. An email obtained through a Freedom of Information Act request strongly suggests that Kipton Wills, Central Region Director of PHMSA’s Office of Hazardous Materials Enforcement, pre-arranged at least one of his agency’s visits to a Hess Corp. rail yard in Tioga, North Dakota, last October.

“We will accommodate your request to inspect trucks at the Tioga Rail Terminal,” Jody Schroeder, the rail terminal supervisor, wrote in an email to Wills dated October 3, 2013—five days before the inspection took place. “At your convenience please let me know your schedule for this event.”

Schroeder later confirmed that Wills reached out to him about the visit.

Earlier this month, PHMSA spokesperson Gordon Delcambre told In These Times that such inspections are impromptu. “They’re unannounced,” he said. “[Inspectors] figure out who they’re going to visit ahead of time, make plans, go to the area and then start knocking on doors.”

Indeed, this is normal procedure. The agency’s handbook notes “the policy of the PHMSA hazardous materials enforcement program is to conduct unannounced inspections.” Exceptions can include cases of “apparent imminent danger to enable the company to correct the danger,” instances where special preparations, records and equipment are necessary, and cases where “giving advance notice would enhance the probability of an effective and thorough inspection.”

Delcambre said he would follow up with PHMSA’s Central Region director Wills to confirm the crude-by-rail inspections were unannounced. “Our field hazmat inspector procedures have not changed with our Bakken region effort,” Delcambre wrote later that day in an email. “PHMSA inspectors still do ‘unannounced’ visits to hazmat shippers and offerors and have been taking crude oil samples as needed at the facilities they call on.”

But when asked to respond for this story, Delcambre qualified that answer.

“Because we were conducting inspections on Hess Property of other entities (highway carriers) and in order to do that safely, in some cases such as this one, prior open coordination for facility orientation and confirmation of appropriate personal protective equipment was needed,” he wrote in an email.

The inspection of the Hess facility, which also services other oil and gas companies like Marathon, did turn up “probable violations.” Out of 18 oil samples that PHMSA collected and tested at the Tioga plant, the labeling on 10 of them understated how flammable the cargo was. In each of those cases, Hess and Marathon misclassified Packing Group I oil as belonging to Packing Group II. Packing Group I is the highest risk designation, reserved for crude oil with an initial boiling point lower than 95 degrees Fahrenheit. It’s the most explosive kind of crude.

Months after the inspection took place, on February 3 of this year, PHMSA slapped Hess with a proposed $51,350 fine and Marathon Oil with a proposed $30,000 fine for the improper classification. Whiting Oil & Gas was hit with a proposed $12,000 fine for misclassifying Packing Group II oil as Packing Group III.

But Martin MacKerel, an environmental activist with the Bay Area-based Sunflower Alliance, says that these fines could have been much higher. “It’s clear that announcing the inspections gave the oil company the opportunity to reduce their fines,” says MacKerel. “These kinds of inspections need to be unannounced to have any real value.”

As he announced the slew of fines, the only federal enforcement thus far to stem from the “Bakken Blitz,” Transportation Secretary Anthony Foxx sounded a stern warning:

The fines we are proposing today should send a message to everyone involved in the shipment of crude oil. You must test and classify this material properly if you want to use our transportation system to ship it.

But emails from the top PHMSA official on the ground to Hess strike a much friendlier tone.

On February 4, the day that the fines were publicly announced, Schroeder reached out to PHMSA’s Wills asking if he knew anything about the violations that the inspector’s higher-ups had just announced. Wills replied to Schroeder that he had just learned about the fines, but said that he hoped PHMSA and industry leaders could “get it all on one page working together as a coordinated effort not an enforcement effort.”

Avoiding “enforcement” would appear to contradict the point of the Bakken Blitz, not to mention the very mission of PHSMA—whose job is to enforce existing regulations. After all, federal hazmat regulations are nothing new. The Department of Transportation’s crackdown is only supposed to make sure that North Dakota oil shippers are following the same practices that other truck drivers and railroad operators across the country have to comply with every day.

The emails may indicate a disconnect between federal priorities and those of local regulators. Just before the fines were issued, safety concerns over crude-by-rail shipments had again taken the national stage. On December 30, 2013, a derailed grain train collided with an oil train in Casselton, North Dakota, sending 400,000 gallons of Bakken crude up in flames, and forcing residents to evacuate. Days after that, PHMSA issued a safety alert warning, noting “the type of crude oil being transported from the Bakken region may be more flammable than traditional heavy crude oil.” And later that month, Secretary Foxx issued a “Call to Action” and met with railroad executives and major players in the oil and gas industry like the American Petroleum Institute.

Referencing this meeting in his email to rail supervisor Schroeder, Wills appeared to suggest the impetus for the fines came from agency superiors in Washington “Once the results came back and the Secretary of Transportation met with the energy companies and railroad CEO’s [sic], it left the control of field staff and became a larger issue,” he wrote. “In my mind, the solution is getting the bosses from both sides around the table and discussing feasible testing schedules, etc. I will be in North Dakota next week and I am hoping to have a lot more information from my own agency by then on what the [Notice of Proposed Violation] means and what we can do as far as working in partnership.”

Those bosses eventually did sit around the table. PHMSA spokesperson Gordon Delcambre tells In These Times that officials from the agency’s Hazmat Safety Office met with representatives from the North Dakota Petroleum Council on April 1 to discuss “joint interest in the safe transportation of crude oil.” The Council does not publicly disclose all of its members, but the board of directors includes Hess, Marathon, Whiting and other major energy companies such as Enbridge Pipelines and ConocoPhillips.

There have been no fines announced since February, although Delcambre says that Bakken Blitz is still ongoing.

Safety advocates say the emails illustrate a business-friendly regulatory approach that runs counter to the core mission of the agency.

“It’s telling that PHMSA has no interest in enforcement,” says Matt Krogh, Tar Sands Free West Coast campaign director at ForestEthics, an environmental group based in the Pacific Northwest. “Their goal appears to be to work together with industrial violators, not to provide the enforcement mechanism provided for in the law, and requested by higher ups in the Department of Transportation. Companies that routinely misclassify hazardous materials destined to transit America’s main streets and urban centers should be prosecuted, not coddled.”

It’s a familiar critique of what’s been referred to as a “sleepy, industry-dominated organization.” PHMSA routinely comes under fire for being too friendly with the energy industry that it regulates and for taking too long to issue much-needed rules. The small-budget agency also has oversight of the nation’s interstate oil and gas pipelines. Its 151 inspectors cover more than 2 million miles of pipeline across the country. And the unexpected shale-drilling boom has left the agency in charge of another daunting task—monitoring crude-by-rail shipments. Grappling with a dearth of pipelines, North Dakota oil producers have found rail to be the easiest, cheapest means of getting their product to market. Railroads carried more than 400,000 carloads of crude oil last year, according to the Association of American Railroads—compared to only 9,500 in 2008.

As shipments have increased, so, too, have accidents. The industry’s safety practices—from the tank-cars and routes it uses to the way it tests and classifies its shipments—garner increasing national and international attention. Last week in Washington, the National Transportation Safety Board convened a “Rail Safety Forum,” bringing together different government agencies and industry officials to discuss growing challenges. And in an unprecedented move, earlier this month, a United Nations panel on hazardous materials agreed to weigh in to the matter. The panel reportedly accepted a request from American and Canadian authorities to examine whether existing shipping rules in North America properly account for how dangerous and volatile Bakken-drilled crude actually is.

Washington may well be making moves to beef up safety practices and enforcement efforts. However, the emails obtained by In These Times raise questions about how successfully that message is being transmitted to inspectors on the ground.

—–


Cole Stangler is an In These Times staff writer and Schumann Fellow based in Washington D.C., covering labor, trade, foreign policy and environmental issues. His reporting has appeared in The Huffington Post and The American Prospect, and has been cited in The New York Times.
Bakken Crude, Crude By Rail, DOT-111, Emergency Readiness & Response, Federal Regulation (U.S.)

A first time divergence between Canadian and U.S. railway regulations

Repost from Rabble.com

Safety and climate concerns as oil by rail surges forward in North America

By Roger Annis | April 29, 2014

CN locomotive and oil wagons on the shore of Halifax harbour, photo Flikr Commons

On April 23, Canada’s minister of transport, Lisa Raitt, announced changes to railway transportation regulations in Canada that she says will make safe the rapidly growing transport of crude oil and Alberta tar sands bitumen in North America.

Raitt’s changes come in response to citizen pressure following a string of spectacular oil train crashes in the past nine months, most particularly the crash in Lac Mégantic, Quebec on July 6, 2013 that killed 47 people.

Raitt proposed two measures of substance: speed limits of 80 kilometers per hour must be followed henceforth by trains containing 20 or more wagons of dangerous goods (that speed can be lowered in populated or ecologically sensitive areas), and the most dangerous of the DOT 111 rail wagons used to transport oil—those without continuous crash shields along the bottom, numbering 5,000 or so—be withdrawn from carrying dangerous cargo within 30 days.

Otherwise, the minister says that Canada’s estimated fleet of 65,000 older DOT 111s must undergo modifications within three years to improve crash resistance, and better emergency response plans must be in place for when crashes of trains carrying oil and other dangerous goods occur.

Until now, modifications to DOT 111s have been voluntary in the U.S. and Canada. As for emergency response, Canada already has a required ‘Emergency Response Assistance Plan’ (ERAP) system on its railways for the transport of chorine, liquid petroleum gases, explosives and other exceptionally dangerous cargo. That dates from the fallout of a 1979 rail crash and explosion of chlorine and propane in a Toronto suburb that forced the evacuation of 200,000 people from their homes. ERAPs will now be required for any train carrying crude oil or other liquid fossil fuel.

Raitt’s announcement creates for the first time a divergence between Canadian and U.S. railway regulations. Cross-border harmonization has been previously assured by Canada simply following any U.S. regulatory lead. Now, for the first time, several distinct, Canadian regulations may come into place for trains that U.S. railways and shippers wish to bring across the border.

This could become a real headache in three years time if U.S. shippers and carriers take longer to modify or phase out older DOT 111s. And since Lac Mégantic, they are showing few signs of any hurry. At a recent National Transportation Board hearing, a representative of the American Petroleum Institute said that older rail cars will be needed for at least ten more years.

Two measures that the federal government is refusing to take, responding to railway pressure, is advance notification by the railways to municipalities of the movement of dangerous cargos through their jurisdictions, and more extensive ‘route planning’ that would direct trains carrying dangerous cargos around populated areas. The latter measure would be costly for the railways and not logistically possible in many cases.

Of continuing note is the failure of the federal government to convene a judicial inquiry into the cause of the Lac Mégantic disaster. For the railways, oil shippers and the federal government, such a proceeding would be very uncomfortable. It would shed light on the string of circumstances that produced the disaster, and that might shed further light on criminal wrongdoing or liability in such areas as:

  • The dilapidated condition of the Montreal, Maine and Atlantic Railway. The consignee of the oil on the fateful train was Irving Oil of New Brunswick. A consortium came together to begin to ship oil from North Dakota to Irving’s refinery in Saint John, New Brunswick in 2012. The consortium included CP Rail.
  • The failure to notify and warn communities of the possible safety consequences of the oil by train operation.
  • The successive decisions by federal rail regulators that allowed MM&A to operate with lesser safety standards that the Class I rail duopoly in Canada, including operating its trains with one employee only.
  • The mislabeling of the volatility of North Dakota oil that listed it as less dangerous than it was.

To this day, most U.S. oil shippers in North Dakota are refusing to share with the U.S. Department of Transportation the results of their chemical analyses of the crude product they are shipping.

North Dakota (and to a lesser extent Saskatchewan) is the location of the Bakken oil field, the second largest oil field in the U.S. Seventy per cent of its crude oil product is shipped by rail. The volatility of Bakken crude, it turns out, resembles that of refined gasoline.

The danger of railway shipments in North America is illustrated by a front page article appearing in the Toronto Star on April 26. It reports that in a 24 hour survey the newspaper recently conducted of one of the rail lines running through Toronto, owned by CP Rail, it counted more than 130 cars of crude oil, and tankers carrying methyl bromide and ethyl trichlorosilane — highly poisonous chemicals rated among the world’s most dangerous — as well as radioactive material, methanol, diesel, sulfuric acid and other hazardous goods.

The article reports that the railways and the federal government cite ‘security’ reasons for not divulging their shipments. But Fred Millar, a U.S. consultant on chemical safety and rail transport, tells the newspaper, “This security excuse is really a hoax. These are giant tank cars with placards on the sides that tell you what’s in them.”

Surge of oil by rail

In 2013, there were 450,000 carloads of oil moved by rail in the U.S. (not including movements by Canada’s two railways). So far in 2014, U.S. carload movements are up nine per cent over last year.

According to Statistics Canada, railways in Canada moved app. 165,000 carloads of fuel oils and crude petroleum in 2013, including movements into the U.S. The number jumps to 237,000 when liquid petroleum gas (propane, butane, etc) is included. Carloads of fuel oil and crude petroleum were up 18 per cent in January 2014 over the same month last year.

This will soon pale in comparison to the huge surge of Alberta tar sands bitumen and conventional oil that is coming. Tar sands and conventional crude producers and shippers are building rail capacity in Alberta and Saskatchewan at a dizzying rate. Some is already operational. The Financial Post reports that a total of 850,000 barrels per day of rail shipping capacity is under construction in Alberta, more than the amount of oil that the Keystone XL pipeline would carry. If all that went into trains, it would be half a million carloads in one year.

By the end of 2014, some 550,000 barrels daily will be rolling.

Investment broker Peters & Co says crude oil carloads originating in Canada could triple by 2015.

One of the largest operations under construction is being built by Kinder Morgan and Imperial Oil. It will handle 100,000 barrels of dilbit per day, app.1 1/3 unit trains per day, with an expansion capacity to take it to 250,000 bpd once further, feeder pipeline connections are made.

Whether by rail or by pipeline, port authorities in Houston and coastal Texas are gearing up for much more export traffic.

Port export projects are also planned in Saint John, New Brunswick (Irving Oil), on the lower St. Lawrence River at Cacouna, Quebec (TransCanada), and in Portland, Maine. These three projects are in anticipation of the Energy East tar sands pipeline with its planned capacity of 1.1 million barrels per day and the proposed ‘reversal’ of Enbridge Inc.’s aged Line 9 across southern Ontario.

One factor affecting oil by rail prospects is shipping costs. Compared to pipelines, the cost of shipping oil by rail is approximately double–$15-20 per barrel by rail compared to $7-11 for pipelines. More use of unit oil trains can bring down rail costs, though these heighten the dangers compared to mixed-cargo trains in which groups of cars carrying flammable liquids are separated by cars less-flammable products.

The Financial Post reports that the first unit bitumen train rolled out of Alberta late last year. Gary Kubera, chief executive of Canexus, one of the first oil train terminal companies to expand facilities in Alberta, told Reuters recently, “We expect unit trains will be going to the East, West and Gulf coasts. There is a lot of investment going into refineries to allow them to move crude by rail.”

One of the consequences of the surge of oil by rail (and coal) is that non-fossil fuel customers get short shrift because oil (and coal) shipments are more lucrative for the railways. For grain farmers in Canada and the U.S., 2013 was a bumper year, but they have lost significant income for lack of timely rail transport to get crops to market. The situation in Canada has become so bad that the federal government was obliged to adopt a special law in late March directing the rail companies to transport specified, weekly amounts of grain for the foreseeable future under penalty of fines. U.S farmers are also complaining, but so far there is no government action.

In Canada, there is a legislated maximum rate dating from the year 2000 that the railways can charge to grain farmers.

Last December, some Amtrak passenger train service connecting Chicago and the west coast was cancelled because of heavy coal and oil traffic on shared rail lines.

Meanwhile, a new entry to the fossil fuel-congested rail line story is… sand! The product is required extensively for oil and gas fracking. U.S. fracking-sand shipments have jumped more than fourfold since 2007, to 20.9 million tonnes in 2012, according to Freedonia Group, a Cleveland-based market researcher. Demand is expected to more than double to 47.3 million tonnes by 2022, the group predicts.

It’s all a major profit bonanza for the railways. In Canada, CN and CP reported first quarter profits in 2014 of $254 million and $623 million, increases of 17 per cent and 12 per cent, respectively, over the same quarter last year. Overall revenues in 2013 were up seven per cent at CN and eight per cent at CP.

In the U.S., the largest rail carrier of oil, BNSF, had 2013 earnings of $6.7 billion, up 15 per cent over the previous year. Union Pacific earned $7.4 billion the same year, up ten per cent.

All of this comes as scientists are saying ever more urgently that if humanity is to avoid runaway global warming with catastrophic consequences for human society, a rapid shift is needed away from the extraction and burning of fossil fuels. The latest such warning is in a report by the United Nations’ Intergovernmental Panel on Climate Change released in late March. The report was the result of three years’ work by more than 300 scientists around the world.

Alberta Canada, Keystone XL, Tar sands crude

Neil Young: “We need to end the fossil fuel age”

Repost from Democracy Now!
[Editor: Our struggle here in Benicia, California is in many ways a “NOT IN MY BACKYARD” fight.  But our work is incredibly important to those whose backyards, front doors, ranches and open spaces are located uprail from here.  We are called upon to STOP crude by rail on behalf of those  who live near the tar-sands mining operations in Canada and the fracked shale fields in North Dakota and Montana.  Listen as Neil Young speaks from the heart.  – RS]

“We Need to End the Fossil Fuel Age”: Music Legend Neil Young Protests Keystone XL Oil Pipeline

29 April 2014  |  By Amy Goodman, Democracy Now!

Bakken Crude, Davis CA, Local Regulation, Santa Maria Refinery, Valero Crude By Rail

Davis Enterprise: Council passes unanimous resolution: no oil trains here

Repost from The Davis Enterprise
[Editor: Thanks to Milton Kalish of Davis for referring us to this story in the Davis Enterprise.  – RS]

No more oil trains chugging through our town, says Davis City Council

By Elizabeth Case | From page A1 | April 23, 2014

The Davis City Council passed a unanimous resolution Tuesday opposing projects in Benicia and Santa Maria that would increase the number of oil trains running through the city until certain safety issues have been addressed.

If both the Philips 66 Santa Maria refinery project and the Benicia rail terminal proposal are approved, 180 more oil cars will chug daily along Second Street and through downtown. A majority would roll in from Canada and North Dakota, whose Bakken shale oil has been recognized as especially flammable.

To support the opposition, the staff report cites the derailment in Lac-Mégantic, Quebec, last year that killed 47 people and caused $1 billion in damage, and the 1.15 million gallons of crude oil spilled in the United States in 2013. In addition, the railroad in Davis has one of the few turns in this area of the corridor, requiring trains to reduce their speeds.

“Given the record of crude-oil rail accidents in recent years, an event such as Lac-Mégantic could have catastrophic effects if it occurred amidst any populated area,” the report reads.

While railroads generally are regulated by the federal government, cities have local control over permits for land use, among others. The Davis City Council resolved to file comments opposing oil project permits “with the objective of ensuring that adequate … safety measures … are in place to ensure the safety and security of residents and visitors of the city of Davis and our adjacent habitat areas.”

The city will simultaneously work with railroad and transport companies, and the U.S. Department of Transportation, to assess and mitigate risk, including outdated rail cars and updated systems to warn operators of upcoming changes in speed.

The resolution’s passage followed a meeting hosted by the Sacramento Area Council of Governments on April 17. Berkeley’s city council passed a similar resolution opposing the Philips 66 project and Richmond called for tighter regulations last month.

For safe and healthy communities…