Berkshire’s BNSF to Add Surcharge on Older Oil Tank Cars
By Thomas Black, Dan Murtaugh and Lynn Doan, Oct 24, 2014
BNSF Railway Co. plans to apply a $1,000 surcharge for each older tank car that hauls oil, as the railroad owned by Warren Buffett’s Berkshire Hathaway Inc. encourages shippers to scrap the puncture-prone cars.
The charge, which will take effect Jan. 1, will add about $1.50 a barrel to the cost of shipping oil across the country. It’s the first one announced by a major U.S. railroad for older cars known as DOT-111s, and won’t apply to cars called CPC-1232s that are built to higher standards adopted in October 2011, according to a BNSF notice.
The Obama administration in July proposed phasing out thousands of the older tank cars within two years and lowering speed limits as part of new rules to reduce the risk of hauling crude by rail. The plan followed a series of fiery accidents, including the derailment and explosion of a crude train last year that killed 47 people in the Canadian town of Lac Mégantic.
The extraction of oil from shale fields with limited pipelines, such as in North Dakota’s Bakken, caused U.S. rail carloads of crude to surge to 415,000 last year from 9,500 in 2008, according to the Transportation Department.
Mike Trevino, a spokesman for BNSF, confirmed the surcharge notice.
Tank cars typically hold about 700 barrels of oil, which means the surcharge would boost the cost of shipping in older cars by $1.50 a barrel. The cost to ship crude by train to East Coast refineries from North Dakota is about $9 to $10 a barrel, San Antonio-based Tesoro Corp. said in a September presentation.
BNSF, which operates tracks that connect into the Bakken and other shale oil fields, said in February it plans to order 5,000 new crude tank cars with safety standards higher than the CPC-1232s in an effort to push shippers toward safer cars.
Benicia sees cash in crude oil; neighbors see catastrophe
By Jaxon Van Derbeken, October 23, 2014
Ed Ruszel and his family own a woodworking business that fronts the railroad tracks next to the Valero refinery in Benicia where the crude oil would be delivered. | Lea Suzuki / The Chronicle
A plan to bring tank-car trains filled with crude oil from Canada and North Dakota to a Benicia refinery is pitting the Solano County town against Northern California neighbors who say they will be burdened with the risk of environmental catastrophe.
Benicia officials must decide whether to approve a draft environmental impact report on a $70million terminal at Valero Corp.’s refinery near Interstate 680, where two 50-car oil trains a day would deliver crude.
Supporters and the company say California consumers stand to benefit: With no major oil pipelines running to the West Coast and marine transport both costly and potentially hazardous, they say, rail is the best way to keep local gasoline prices low.
“Right now, that refinery relies on more expensive crude from Alaska,” said Bill Day, spokesman for Valero. “Rail is the quickest, most efficient and safest way of delivery.”
Benicia’s environmental study weighing the risks of the project, however, has done nothing to assuage critics who say the city is downplaying the dangers of delivering oil by rail.
Crude from North Dakota shale is extra-volatile, they say, and the city’s environmental report assessed only the chances of a spill along the 69 miles of track from the Sacramento suburbs to Benicia — not the chance of a catastrophic explosion, or the possibility of an accident of any kind along the more than 1,000 additional miles the trains would have to travel to reach the shores of the Carquinez Strait.
“This project is not in our region — it is outside of our region — but the impacts on the 2.3million people who live here we view as very significant, very troublesome, very disturbing,” said Don Saylor, chairman of the Yolo County Board of Supervisors and vice chairman of the Sacramento Area Council of Governments, which represents 22 cities and six counties through which the oil trains could travel.
‘A street fight’
Benicia itself is divided by the proposed project. Some locals worry about the environmental risks and traffic problems, while others tout the benefits of low-cost crude to Valero — a company that accounts for a quarter of the city’s tax revenue.
Benicia Mayor Elizabeth Patterson hasn’t taken a stand on the Valero oil-trains terminal, but says, “We need to make sure that just because one industry wants to do something, we don’t ignore the adverse impact to the other businesses and the community.” | Lea Suzuki / The Chronicle
“This is going to be a street fight,” said oil-train opponent Ed Ruszel, whose family woodworking business fronts the railroad tracks next to the refinery. “They have to come across my driveway every day — we’re at ground zero.”
The issue is so contentious that the city attorney recently told Mayor Elizabeth Patterson to stop sending out e-mail alerts about city meetings regarding the oil-train project. According to Patterson, the city attorney warned that her activism could open Benicia’s final decision to legal challenge.
Patterson said she has not taken a stand on the Valero terminal, but that “we need to make sure that just because one industry wants to do something, we don’t ignore the adverse impact to the other businesses and the community.”
She called City Attorney Heather Mc Laughlin’s warning “a blatant effort to muzzle me.” Mc Laughlin did not respond to a request for comment.
Canadian disaster
For Ruszel and other critics of the project, the danger is real. They cite several recent oil-by-rail explosions, including the derailment of a 72-car train that killed 47 people and wiped out much of the town of Lac-Mégantic in Quebec in July 2013.
The Valero refinery in Benicia wants to build a rail terminal where crude oil could be delivered by trains. | Lea Suzuki / The Chronicle
The Valero-bound trains would pass through Sacramento, Davis and Fairfield, among other cities, en route to Benicia. Those cities have voiced concerns about the terminal, where trains would deliver a total of 2.9million gallons a day of shale oil and tar sands.
“We have lots of support here from our own local people,” said project critic Marilyn Bardet of Benicia, “but the real difference is that there are so many agencies and people from up rail looking at this problem. We feel exonerated — everybody has chimed in and agreed with us.”
Not everyone along the rail line is against the idea, however. State Sen. Ted Gaines, a Republican who represents Rocklin (Placer County) and is running for state insurance commissioner, called the project “beneficial environmentally and economically.”
It “can be done safely given the prevention, preparedness and response measures in place by both Valero and Union Pacific Railroad,” Gaines said.
Setting precedents
The Benicia battle will probably be a preview of numerous local fights over oil trains in California. Oil-by-rail shipments jumped from 1million barrels in 2012 to 6.3million barrels in 2013, according to government estimates. By 2016, the state could be awash with 150million rail-shipped barrels of crude a year.
What Benicia does could influence how future oil-train plans play out. Several cities have called on Benicia to require that all train tanker cars have reinforced walls and be better controlled by new, electronically activated braking systems, and that officials restrict what kind of oil can be shipped to Valero.
Such efforts, however, could run afoul of federal law that preempts states and local governments from setting standards on rail lines. Valero has already warned city officials that it may “invoke the full scope of federal preemption,” a thinly veiled threat to sue if Benicia imposes too many restrictions.
Much of the crude that would arrive via train at Valero is expected to come from the Bakken shale formation in North Dakota. Federal transportation officials recently deemed Bakken crude to be an “imminent hazard” because it is far more easily ignitable than more stable grades of crude previously shipped by rail.
In issuing an alert in May, federal transportation officials warned that oil trains with more than 20 cars are at the highest risk because they are heavier than typical cargo and thus more difficult to control. The federal government is considering requiring additional reinforcement of tanker cars and more robust braking systems.
The federal alert about the danger of crude by rail comes as accidents have skyrocketed, with nine major explosions nationwide since the start of 2013. Last year alone, trains spilled more than 1million gallons of crude in the United States — 72 percent more than the entire amount spilled in the previous four decades combined, California officials say.
The consultants who wrote Benicia’s draft environmental impact study concluded that because the type of crude that would be brought to Valero is a trade secret, they could not factor it into their risk assessment. They calculated that a major spill on the 69 miles of track between Roseville (Placer County) and Benicia could be expected roughly once every 111 years.
Among those who think Benicia needs to take a harder look is state Attorney General Kamala Harris, whose office wrote a letter challenging the environmental impact report this month.
Harris’ office says the report’s authors assumed that the safest rail cars available would be used, disregarded spills of fewer than 100 gallons in determining the likelihood of accidents and, in looking only as far as Roseville, ignored 125 miles of routes north and east of the Sierra foothills town.
Some possible routes go through treacherous mountain passes that historically have seen more accidents, say oil-train skeptics. While not specifically mentioning a legal challenge, Harris’ office called Benicia’s study deficient and said it ignored the “serious, potentially catastrophic, impacts” of an accident.
Not her call
Valero says Harris can voice all the objections she wants, but that she doesn’t get a say on whether the terminal will be built.
“This is really the city of Benicia’s decision,” said Day, the company spokesman. The attorney general and others, he said, are “free to file comments” on the environmental report.
He added that “all the crude oil that Valero ships will be in the newest rail cars, which meet or exceed rail safety specifications.”
“Rail companies have products moving on the rails every day that are flammable,” Day said. “The overwhelming majority of everything transported gets there safely, on time, with no incidents.”
Benicia’s City Council now has to decide whether to order to certify the draft study, order it revised or reject it entirely. When that decision comes, Benicia will be getting a lot of out-of-town attention.
“We have near-unanimity in our region to address the safety issues of the crude-oil shipments by rail,” said Saylor, the Yolo County supervisor. “For us, it has been strictly about public safety. It’s a high-risk operation — we have no choice but to take on this issue.”
California AG Rejects Trade-Secret Claims for Crude-by-Rail
By Victoria Slind-Flor, Oct 22, 2014
California Attorney General Kamala Harris expressed reservations about the trade-secret provisions in a proposal for a crude-by-rail project in Benicia, California.
In a letter to the city’s Community Development Department, she said the draft environmental impact report for San Antonio-based Valero Energy Corp. (VLO)’s project “frustrates” the California Environmental Quality Act by not disclosing information about which particular crude oil feedstocks would be delivered in as many as 100 tank cars a day.
She said the missing information includes the weight, sulfur content, vapor pressure and acidity of the crude oil feedstocks, information she said is “critical for an adequate analysis” of the effects of the project on public safety and air quality.
Harris said the California governor’s Office of Emergency Services and the state Transportation Department determined that information about the specific characteristics of the crude moved by rail “are not protected trade secrets and should be publicly released.”
The attorney general said these issues “must be addressed and corrected” before the City Council of Benicia takes action on the draft environmental impact report.
Benicia, a city of about 27,000, is on the edge of the Carquinez Strait emptying into San Francisco Bay.
Repost from HuffPost GREEN, The Blog [Editor: Note reference near the end on federally designated National Heritage Areas and Estuaries of National Significance which “require special protection from potential explosions and spills. Rerouting bomb trains away from such specially designated regions would avert a disaster-waiting-to-happen to prime assets along their rail lines.” The San Francisco Estuary Partnership is one of 28 Estuaries of National Significance. (I am trying to confirm that the Sacramento-San Joaquin Delta is a National Heritage Area – their website is out of date.) How might these agencies be brought into the discussion on Valero Crude By Rail? – RS]
Fed Measures on Crude Oil Fall Short, Put Hudson River at Risk
Last May, we wrote about how the Hudson River Valley has become a virtual pipeline for the transport of highly flammable Bakken crude oil in unsafe DOT-111 railcars–the same tankers whose derailment has caused numerous explosions across the U.S. and the death of 47 people in Lac-Megantic, Canada.
Since then, very little has changed, which means the situation has just gotten worse.
Each day, more than 320 of these oil-laden cars continue to pass through our communities and along the shores of the Hudson River, one of the world’s most biologically diverse tidal estuaries. To date, we’ve escaped disaster, although three trains pulling empty DOT-111s have derailed in the Hudson Valley. Each time a rail accident occurs in the region, as it did just last week, the environmental community holds its breath, expecting the worst.
What will happen if cars full of Bakken crude do go off the tracks? The federal Pipeline and Hazardous Material Safety Administration (PHMSA), quoting the National Transportation Safety Board (NTSB), recently provided the answer: They “can almost always be expected to breach,” making them “vulnerable to fire.” The result would be catastrophic to the public health, vital natural and historic resources, and drinking water supplies of a region stretching from Albany to New York Harbor. It would cause long-lasting, if not permanent, damage to the estuary’s entire ecosystem and the foundation of a vibrant, $4.75-billion tourism economy.
Both Scenic Hudson and Riverkeeper have been advocating vigorously for increased federal protections, including an immediate ban on the use of DOT-111s for transporting crude. Therefore, we were bitterly disappointed and frankly frustrated by new draft regulations proposed by the PHMSA regarding tanker redesign and other measures for reducing the risks of explosions and spills from these “bomb trains.” They just don’t go far enough fast enough, meaning our communities remain at grave risk. It also means the proposed rules don’t comply with federal law, which requires strict safety upgrades that will protect the public.
In formal comments on the regulations our organizations submitted jointly, we outline how the PHMSA’s rules are replete with loopholes and weak safety proposals.
Despite acknowledging the safety hazards of DOT-111s, the proposed regulations would very slowly phase out their use for transporting Bakken crude and allow 23,000 of these outdated, dangerous cars to remain on the rails for shipping heavy Canadian tar sands crude, which presents different but equally serious safety and environmental risks.
The regulations fail to require full disclosure of rail traffic information to first responders, and instead ask the industry if it would prefer to keep this information confidential.
The regulations fail to require the most protective braking improvements or speed restrictions, and fail to even consider limits on the length of trains that could reduce accident risks and impacts of a derailment.
The regulations would allow railroads to continue operating 120-car trains of Bakken crude oil without requiring any train-specific spill response plans–despite the fact that a 120-car train carries as much oil as an oil barge or tanker, both of which must have spill response plans approved by the Coast Guard.
Put simply, these rules defer to the rail and oil industries at every turn–and they won’t stop the next bomb train disaster. As the NTSB warned in its official comments on these proposed rules, “Each delay in implementing a new design requirement allows the construction of more insufficiently protected tank cars that will both increase the immediate risks to communities and require costly modification later.” Further, the NTSB concludes that the government’s proposed standards for new and existing tank cars offer options that “do not achieve an acceptable level of safety and protection.”
We deserve real protection for our communities and the environment. And we deserve it now.
For these reasons, Riverkeeper and Scenic Hudson have called on the PHMSA to issue an emergency order requiring immediate adoption of the most stringent tank car standards, speed restrictions and use of electronic controlled pneumatic braking in all trains carrying crude, as well as closing loopholes in the rule that leave heavy tar sands crude and trains carrying fewer than 20 cars of Bakken crude completely unaddressed. (Scenic Hudson also has called for rules requiring Bakken crude to be processed at its source in North Dakota, making it much less volatile for shipment. This is done at many Texas oil fields.)
In addition, we are calling on federal rail regulators to designate the Hudson River Valley, as well as other similarly situated regions, highly important natural and cultural resources under PHMSA routing regulations. This means that the natural and cultural resources within this federally designated National Heritage Area (one of only 49) and Estuary of National Significance (one of 28) require special protection from potential explosions and spills. Rerouting bomb trains away from such specially designated regions would avert a disaster-waiting-to-happen to prime assets along their rail lines. In the Hudson Valley, those assets include six drinking water intakes; 91 state, county and municipal parks; 40 Significant Coastal Fish and Wildlife Areas; nine colleges; 69 public schools and 80 medical facilities.
The federal government has the responsibility to ensure the public’s safety. Until Washington steps up and fulfills this obligation, we’ll have to keep on holding our breath.
