Oil industry lawsuit against BNSF: a look behind the scenes

Repost from DeSmogBlog

Purposeful Distraction? Unpacking the Oil Refiners’ “Bomb Trains” Lawsuit vs. Warren Buffett’s BNSF

By Steve Horn, Tue, 2015-03-24 15:58

On March 13, American Fuel & Petrochemical Manufacturers (AFPM) — the oil refiners’ trade association — sued oil-by-rail carrying giant Burlington Northern Santa Fe (BNSF) for allegedly violating its common carrier obligation under federal law. A DeSmogBlog investigation has revealed there may be more to the lawsuit than initially meets the eye.

Filed in the U.S. District Court for the Southern District of Texas, Houston Division, AFPM sued BNSF “for violating its common carrier obligation by imposing a financial penalty” for those carrying oil obtained via hydraulic fracturing (“fracking”) in North Dakota’s Bakken Shale basin and other hazardous petroleum products in explosion-prone DOT-111 rail cars.

AFPM‘s beef centers around the fact that BNSF began imposing a $1,000 surcharge for companies carrying explosive Bakken fracked oil in DOT-111 cars, as opposed to “safer” CPC-1232 cars, at the beginning of 2015.

The Warren Buffett-owned BNSF did so, argues AFPM, illegally and without the authority of the federal government.

“This $1,000 surcharge on certain PHMSA-authorized rail cars breaches BNSF’s common carrier duty to ship hazardous materials under the auspices of PHMSA’s comprehensive regime governing hazardous materials transportation,” wrote AFPM‘s legal team, featuring a crew of Hogan Lovells attorneys. “Allowing railroads to penalize companies that ship crude oil in federally-authorized rail cars would circumvent PHMSA’s statutory and regulatory process for setting rail car standards for hazardous materials shipments.”

Upon a quick glance, it seems like a fairly straight-forward case of federal law and an intriguing example of an intra-industry dispute. But as recent history has proven, the devil is in the details.

BNSF Surcharge Not Unique

Though unmentioned in AFPM‘s lawsuit, BNSF is not the only oil-by-rail “bomb trains” company promulgating a surcharge.

In February 2014, eight months before BNSF announced its surcharge, Canadian Pacific Railway Ltd. (CP Rail) and Canadian National Railway Company both announced their own DOT-111 surcharge intentions.

CP Rail will add a $325 ‘general service tank car safety surcharge’ on each car of crude that is shipped in any container other than the CPC 1232 model, effective March 14, it said in a notice issued to customers,” Reuters reported. “The new tiered pricing scheme comes the same week that Canadian National Railway Co also confirmed it was increasing rates for the older variety of DOT-111 tank cars.”

In its lawsuit, AFPM disapprovingly cited minutes from a March 19 meeting held between BNSF higher-ups and U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) higher-ups in which a BNSF told PHMSA that “there needs to be [a] disincentive to use DOT 111.”

Those minutes were included as an exhibit to the complaint.

Yet in the Reuters article, CP Rail spokesman Ed Greenberg stated that his company had the same goal as BNSF: to “encourage shippers to work towards an upgraded tank car standard for crude by rail shipments.”

AFPM Lobbies vs. Regs, Funds Denial

As first reported here on DeSmogBlog, AFPM has attended meetings with the Obama White House’s Office of Information and Regulatory Affairs (OIRA), which serves as an industry-friendly mediator between industry and executive-level regulatory agencies like PHMSA. BNSF top-level lobbyists, executives and attorneys have also had a seat at the table at those myriad meetings.

PHMSA is expected to publish a final version of updated oil-by-rail regulations in May, after announcing a delay in JanuaryAFPM also submitted comments in opposition to PHMSA‘s draft rules in September 2014, arguing it’s an issue of train tracks and people, not the rail cars themselves.   

While AFPM supports appropriate and effective mitigation, several of PHMSA’s proposed measures fail to take meaningful steps toward preventing derailments, risk significantly reducing crude rail capacity, and cost billions of dollars,” wrote AFPM. “AFPM respectfully submits that any effort to enhance rail safety must begin with addressing the primary root causes of derailments and other accidents: (1) track integrity and (2) human factors.”

Beyond advocating against oil-by-rail regulations, AFPM also funded a May 2014 study concluding that Bakken crude oil is no more chemically volatile than any other oil.

“Bakken crude oil was found to be well within the limits for what is acceptable for transportation as a flammable liquid,” the report concludes. “This survey shows that Bakken crude oil does not pose risks that are significantly different than other crude oils and other flammable liquids authorized for transportation as flammable liquids.”

BNSF Responds — Sort Of

Five days after AFPM filed its lawsuit, BNSF responded in the form of a press release. Well, kind of.

BNSF continues to review the complaint…challenging [its] recent implementation of rate discounts for crude shippers that load their product in rail cars with improved safety characteristics,” stated the company.

“This rate structure is also consistent with BNSF‘s ongoing efforts to ensure the safe transport of crude on our network, including voluntary adoption of enhanced operating practices around crude oil shipments and requesting the federal government to make newer, safer tank cars the new standard for crude-by-rail shipments, replacing the older DOT-111 and non-modified CPC-1232 cars.”

Purposeful Distraction?

So, what gives? Why a lawsuit against BNSF by AFPM and not against CN Rail nor CP Rail? No clear answers exist and AFPM did not respond to a request for comment sent by DeSmogBlog.  

Despite the murkiness at play, some answers do exist.

Firstly, CPC-1232 tanks cars — the centerpiece of the lawsuit — have proven no “safer” than DOT-111 tank cars to begin with. And secondly, the lobbying and advocacy track records of both BNSF and AFPM demonstrate they both prefer the status quo over robust regulations, which would hurt their corporate bottom lines.

Purposeful or not then, at the end of the day, the lawsuit still serves as a distraction for the central issues in the oil-by-rail debate as the May deadline nears for PHMSA to publish its final regulations.

Image Credit: Cartoonresource | Shutterstock

REUTERS: Crackdown on oil trains in Canada?

Repost from Reuters

Exclusive: CN Rail derailment numbers soared before recent crashes

By Allison Martell, Mar 23, 2015 5:37am EDT
Smoke rises from fires caused by the derailment of a CN Railway train carrying crude oil near the northern Ontario community of Gogama, Ontario in this March 7, 2015 Transport Safety Board of Canada handout file photograph.  REUTERS/TSBCanada/Handout via Reuters
Smoke rises from fires caused by the derailment of a CN Railway train carrying crude oil near the northern Ontario community of Gogama, Ontario in this March 7, 2015. Transport Safety Board of Canada handout file photograph. Credit: Reuters/TSBCanada/Handout via Reuters

(Reuters) – Canadian National Railway’s safety record deteriorated sharply in 2014, reversing years of improvements, as accidents in Canada blamed on poor track conditions hit their highest level in more than five years, a Reuters analysis has found.

Canada’s Transportation Safety Board (TSB) said on Tuesday that track failure may have played a role in CN’s three recent Ontario accidents, which have fueled calls for tougher regulation. The agency said oil unit trains, made up entirely of tank cars, could make tracks more susceptible to failure.

Data obtained under access to information laws and analyzed by Reuters shows a broader trend, which has not been previously reported, and could pile more pressure on CN Rail to slow down trains or reduce their length. A crackdown on oil trains could raise the cost of shipping Canadian crude by rail.

Trains operated by CN in Canada derailed along main lines 57 times in 2014, up 73 percent from 33 in 2013 and well above a 2009-2013 average of 39 accidents per year. On CN’s full 21,000 mile (33,800 km) network, which also includes the Midwestern and southern United States, freight carloads rose 8 percent last year.

At least 27 of the domestic derailments were caused by track problems, up from a previous annual average of 14. Data for smaller rival Canadian Pacific Railway showed no similar pattern.

“CN is keenly aware of its recent safety trends, starting with a sudden increase of its accident rate in 2014,” Canada’s biggest railway said in a response to Reuters’ analysis.

The railway pointed out that its performance improved between 2007 and 2013, and so far, 2015 has been better than 2014. It said it was reviewing recent trends and has started testing tracks more frequently, boosted spending on infrastructure and installed new technology to detect problems with its tracks and equipment.

For 2015 it is planning to increase capital spending by C$300 million, to C$2.6 billion ($2.1 billion).

The rapid rise of crude by rail traffic has made more derailments potentially deadly, exposing railways to more scrutiny, particularly since 2013, when a runaway oil train leveled the center of the Quebec town of Lac-Megantic, killing 47 people.

Doug Finnson, president of a Teamsters union representing CN Rail’s train crews, said he was particularly concerned with the recent Ontario derailments.

“We’re on the record saying the trains are too long, the cars are too heavy, and the trains go too fast.”

Click on image to enlarge.

Yet it is not clear what was behind CN’s poor safety performance last year.

BROKEN RAIL

New Brunswick farmer Paul-Emile Soucy, who experienced CN’s troubles first-hand, faults inadequate maintenance.

On Jan. 26, 2014, a CN train derailed crossing his 230-year-old family farm. He said CN workers had marked railroad ties that needed to be replaced months before the accident, but they were replaced only after the derailment.

“They knew that the ties were bad and rotten and had to be replaced, but they didn’t do anything about it,” said Soucy. Data obtained by Reuters indicates that a broken rail caused the derailment.

Click on image to enlarge.

But CN rejected Soucy’s criticism, saying it spent C$41 million on basic maintenance in the area between 2012 and 2014.

The railway blamed bad weather and increased freight volume for last year’s spike in derailments. Rough weather, however, did not prevent rival Canadian Pacific from improving its safety performance, and the rise in volume was far less pronounced than the jump in derailments.

Both railways shipped similar volumes of crude last year – CN moved 128,000 carloads, or some 2 percent of its freight volume, and CP moved 110,000 carloads, 4 percent of its total.

The safety watchdog TSB has suggested that oil trains may have contributed to track problems that caused the Ontario accidents, but declined to comment on whether those trains could also be behind the overall rise in derailments, or comment on Reuters’ analysis in general.

Transport Canada, the industry’s main regulator, also did not comment specifically on Reuters’ findings, but spokesman Zach Segal noted that Transport Minister Lisa Raitt has asked a parliamentary committee to invite CN Rail to discuss its operations.

CN suggested last year could have been an outlier.

“It’s important to view CN’s safety performance over a span of time to assess meaningful trend lines, not just on the basis of a single or two-year perspective,” the railway said.

Its own statistics, shared with Reuters, show that its Canadian accident rate declined 26 percent from 2007 to 2013, to 1.71 accidents per million train miles. In 2014, the rate jumped to 2.67, its highest in at least a decade, but it is down to 2.15 so far this year. A less commonly used measure, accidents per billion gross ton miles, has improved markedly over the last decade, but jumped 58 percent in 2014.

(See related INTERACTIVE map of Major Oil Train Derailmentsin the U.S. and Canada since 2013: here)

Reuters’ analysis showed last year’s spike in accidents was driven mainly by track problems.

Ian Naish, a former director of rail and pipeline investigations at the TSB, said weather and traffic could have played a role, but one should also consider the impact of unit trains, which carry single commodities, on tracks.

“The intensity of loading is heavier than a mixed-freight train, generally,” said Naish. “All the cars are the same design, and the loads are all the same, so it’s the same impact, the same way, all the time.”

Unit trains have long been used to carry coal, grain and other commodities, but oil trains are a product of the rise of crude by rail and the shale boom of the past few years.

CN declined to comment on its recent accidents in Ontario, citing ongoing investigations. It said, however, that it had seen no indication that unit trains cause accidents, noting that such trains carrying other commodities, many with heavier loads, have run safely for decades. But the railway said it was reviewing the issue with outside experts.

($1 = 1.2549 Canadian dollars)

(Additional reporting by Nia Williams in Calgary; Editing by Tomasz Janowski)

 

Future Blast Zones? How Crude-By-Rail Puts U.S. Communities At Risk

Repost from teleSUR

Future Blast Zones? How Crude-By-Rail Puts U.S. Communities At Risk

By Steve Early, March 23, 2015
Smoke rises from derailed train cars in western Alabama on Nov. 8, 2013.
Smoke rises from derailed train cars in western Alabama on Nov. 8, 2013. | Photo: Reuters

The transport of petroleum via rail is now a well-known and unwelcome sight in many other U.S. communities. Its long distance rail transport has resulted in five major train fires and explosions in the last 16 months alone.

Richmond, California began life more than a century ago as a sleepy little railroad town. It was the second place on the eastern shore of San Francisco Bay where a transcontinental rail line connected with ferries, to transport freight and passengers to San Francisco. Now a diverse industrial city of 100,000, Richmond is still crisscrossed with tracks, both main lines and shorter ones, serving its deep-water port, huge Chevron oil refinery, and other local businesses.

Trains just arriving or being readied for their next trip, move in and out of a sprawling Burlington Northern Santa Fe (BNSF) rail yard located right next to the oldest part of town. Some train formations are more than 100 cars long. The traffic stalls they create on nearby streets and related use of loud horns, both day and night, have long been a source of neighborhood complaints. Persistent city hall pressure has succeeded in cutting horn blasts by about 1,000 a day, through the creation of several dozen much appreciated “quiet zones.” No other municipality in California has established so many, but only after many years of wrestling with the industry.

Despite progress on the noise front, many trackside residents continue to experience “quality of life” problems related to the air they breath. Some of their complaints arise from Richmond’s role as a transfer point for coal and petroleum coke (aka “pet coke”) being exported to Asia. As one Richmond official explained at a community meeting in March, these “climate wrecking materials” wend their way through the city in open cars—leaving, in their wake, houses, backyards, and even parked cars covered with a thick film of grimy, coal dust. Coal train fall-out has become so noisome in Richmond that its seven-member city council—now dominated by environmental activists— wants the Bay Area Air Quality Management District (BAAQMD) to mandate the use of enclosed cars.

This would seem to be a no-brainer, public health-wise.  But the track record of this particular governmental agency—in any area related to public health and safety—has not been confidence inspiring lately. The BAAQMD is already complicit with the creation of Richmond’s most troubling new fossil fuel hazard in recent memory. For the last year, that threat has been on display, as far as the eye can see, at BNSF, which is owned by Nebraska billionaire Warren Buffett. Buffett’s rail yard has been filled with hundreds of black, tubular metal tank cars containing a particularly volatile form of crude oil that’s come all the way to Richmond from the new energy boomtowns of North Dakota.

Buffett’s Bomb Trains

The arrival of this highly volatile petroleum product is now a well-known and unwelcome sight in many other U.S. communities. Its long distance rail transport has resulted in five major train fires and explosions in the last 16 months alone. In addition to these spectacular non-fatal accidents, mostly occurring in uninhabited areas, North America’s most infamous crude-by-rail disaster took the lives of 47 people in July, 2013. That’s when a runaway train—improperly braked by its single-man crew—barreled into Lac-Megantic, Quebec, leveling all of its downtown.

Despite this alarming safety record, the BAAQMD has allowed Kinder Morgan, a major energy firm, to store up to 72,000 barrels per day at a Richmond facility leased from the BNSF; from there, it’s loaded tank trucks bound for the Tesoro Golden Eagle Refinery in Martinez, CA., (which has been shutdown recently due to a nationwide strike by the United Steel Workers).  Before issuing the necessary permit for bringing Bakken crude into Richmond, the BAAQMD gave no prior notice, held no public hearings, and conducted no review of any possible environmental or health impacts.

Aided and abetted by regulatory lapses at multiple levels of government, this stealth approach has served the oil industry well. The precipitous drop in petroleum prices has recently made rail transport of Bakken crude less cost effective (leading to a curtailment of Bay Area shipments). But, prior to that temporary reprieve, the number of rail cars commandeered nationally for this purpose jumped from 9,500 six years ago to 500,000 last year. As labor and environmental critics have pointed out, the Achilles Heel of crude-by-rail everywhere is the aging condition and structural weakness of most tank cars, designed and used, in the past, for hauling less hazardous rail cargo.

Even newer, supposedly safer tank cars have failed to protect the public from the consequences of oil train collisions, rollovers, tank car ruptures, and spills. The total amount of oil spilled in 2013, due to derailments, was greater in volume than all the spills occurring in the U.S. during the previous forty years. On February 17, a major accident in West Virginia triggered a fire that burned for five days, forced the evacuation of two nearby towns, and seriously threatened local water supplies.

Trackside communities like Richmond lack sufficient legal tools to avert such disasters in the future, because rail safety enforcement rests with the federal government. Among its other foot-dragging, the U.S. Department of Transportation has failed to mandate tank car modernization and upgrading in timely fashion. As for the BAAQMD, according to Communities for a Better Environment (CBE) organizer Andres Soto, that agency may be “legally responsible for protecting Bay Area air quality but it really just acts as a tool of industry.”

A Contested Permit

CBE, the Sierra Club, and Asian Pacific Environmental Network filed suit last year to block Kinder-Morgan’s operation in Richmond. A superior court judge in San Francisco ruled that their challenge to the BAAQMD’s permit-granting authority wasn’t timely, a decision still under appeal. The Richmond City Council supported the permit revocation and urged Congress to halt all Bakken crude transportation by rail until tougher federal safety rules were developed and implemented

In the meantime, concerned citizens of Contra Costa County began fighting back, first by educating themselves about the dangers of crude by rail and then mobilizing their friends and neighbors to attend informational meetings and protests. Last March, Richmond’s then mayor, Gayle McLaughlin, a California Green, hosted a community forum that featured Marilaine Savard from the Citizens Committee of Lac-Megantic, and Antonia Juhasz, a leading writer and researcher about oil-related hazards. “The oil industry is far too powerful,” Savard told 150 people packed into the storefront headquarters of the Richmond Progressive Alliance. “The first duty of government should be to protect citizens, not shareholders.”

Since that event, CBE organizer Soto has been on the road, sounding the alarm before audiences throughout the county. In his power-point presentation, he highlights maps illustrating how big the “blast zones” would be in Richmond and other refinery towns if crude-by-rail triggered a fire and explosion on the scale of Lac-Megantic’s.  Last September, direct actionists from the Sunflower Alliance and other groups took the fight directly to Kinder Morgan’s front door. Eight activists locked themselves to a gate leading to the facility; along with other supporters, they succeeded in disrupting truck traffic for three hours. After negotiations between Richmond police and BNSF security personnel, the protestors were allowed to leave without being arrested for trespassing.

Rail Labor And Environmentalists Meet

In the wake of recent high-profile oil train wrecks in West Virginia and Illinois, Richmond played host last weekend to more than 100 railroad and refinery workers, other trade unionists, community organizers, and environmentalists.  They were attending the first of two regional strategy conferences sponsored by Railroad Workers United (RWU) and allied groups. RWU is national rank-and-file organization that seeks to build greater unity among rail industry craft unions long prone to bickering, back stabbing, and estrangement from potential non-labor allies.

“As railroaders,” the RWU declares, “we know that the safest means of transport is the railroad—far safer than roads and highways, inland waterways, and even pipelines. But the rail industry has taken advantage of a lax regulatory environment, conservative pro-business governments and weakened unions across North America to roll the dice on safety. It’s time for railroad workers, community, and environmental activists to come together and take a stand.”

One joint project discussed at the March 15 conference is the fight against single employee train crews. After Lac-Megantic was destroyed, the Canadian government banned one-person crews on trains hauling hazardous materials. In the U.S, carriers, big like BNSF continued to seek union approval for staffing reductions (while insisting that transport of crude oil, ethanol, or other flammable cargo would still require two person crews). To stop any further rail labor slide down this slippery slope, RWU rallied conductors to reject a deal their union negotiated with BNSF last year that would have permitted one-person crews.

Other safety concerns raised at the Richmond meeting included crew fatigue and railway attempts to cut labor costs by operating trains that are longer, heavier, and harder to stop in emergency situations. “Recent oil train derailments are directly linked to the length and weights of trains,” argued Jeff Kurtz, a railroad engineer from Iowa who spoke at the Richmond meeting. “The railroads know how dangerous it is to have 150-ton tank cars running on a 8,000 foot train.” Kurtz expressed confidence that “we can address these problems in a way that would improve the economy and the environment for everyone, “ if labor and climate change activists continue to find common ground.

RWU organizers are holding a second educational conference on March 21 in Olympia, Washington. According to Seattle switchman-conductor Jen Wallis, this kind of “blue-green” exchange, around rail safety issues, has never been attempted before in the Pacific Northwest. “Rail labor hasn’t worked with environmentalists to the degree that steelworkers and longshoreman and teamsters have, “ Wallis says. “It’s all very new.”

Steve Early is a former union organizer who lives in Richmond, California. He is the author, most recently, of Save Our Unions from Monthly Review Press. He is currently working on a new book about labor and environmental issues in Richmond.

For safe and healthy communities…