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.
Derailment’s cause pinned down, but anxiety lingers
By Brian Nearing, October 23, 2014
Railcars are derailed Wednesday night, Oct. 23, 2014, at the CSX yard in Selkirk, N.Y. (Sheriff Craig Apple)
A misplaced piece of safety equipment triggered the slow-motion derailment of 18 railroad cars overnight at the spawling Selkirk rail yard, the state Department of Transportation said Thursday.
Eighteen cars — two of which had been earlier emptied of highly explosive propane — derailed about 7:40 p.m. at the sprawling Selkirk yard, which can handle thousands of freight cars a day for rail company CSX and is a critical transit gateway to much of the Northeast. No cars ruptured or spilled, and no one was hurt.
State transportation investigators said the mishap was caused by safety equipment — called a derailer — inadvertently left on the tracks by a crew that had been making repairs. A derailer is meant to protect workers by blocking trains from running over them.
Another worker elsewhere later began using a remote-controlled engine to move freight cars slowly around the yard, unaware the derailer was in the path of the oncoming cars, according to a DOT statement.
“The remote control operator was moving freight cars onto that section of track when they ran into the derailer, pushing them off the tracks. Investigators believe the remote control operator was initially unaware of what was happening and continued to move the cars down the track, causing more to derail,” according to DOT.
Albany County Executive Dan McCoy said the accident, coming days after a liquid propane spill at a tank farm near a sprawling interstate highway intersection, shows the Capital Region is “dancing with the devil” as fossil fuel-laden trains surge through from the Midwest.
Fifteen of the cars in Selkirk had been righted by Thursday afternoon, said CSX spokesman Rob Doolittle. He said four cars were classified for hazardous materials, including two for propane, as well as one containing residue of a chemical herbicide and another containing an industrial acid.
Doolittle said “several of the remaining cars were empty, and none of the other cars contained any hazardous freight.” He said the accident was not causing backups or delays elsewhere on CSX lines.
A vocal opponent of a surge of crude oil rail shipments from North Dakota that are arriving daily in Albany, some carried by CSX, McCoy said the rail company was “downplaying” the mishap and “making it sound like less than it was.” He and Albany County Sheriff Craig Apple went to the yard Wednesday night to inspect the mishap.
Derailed cars were “stacked two or three high,” said McCoy. “There was a huge crater or hole near one of the derailed cars … and one car was leaning against” a tanker that was marked with a placard identifying its contents as propane. “Cars were beaten up, dented in. It looked like a bomb had gone off.”
State DOT spokesman Beau Duffy said CSX notified the state at 8:23 p.m., within a one-hour notification window required under law. He said previous state inspections of the yard have “not found anything out of the ordinary.”
This is the second derailment at the Selkirk yard this year. In February, 13 tanker cars each carrying about 29,000 gallons of highly flammable crude oil derailed, but did not spill or explode. DOT later fined CSX $5,000 for failing to notify the state of the derailment within the one-hour requirement.
Later, inspectors from DOT and the Federal Railroad Administration looked at a mile of track in the Selkirk yard and found 20 “non-critical defects” that were to be repaired, according to a March press release from Gov. Andrew Cuomo.
On Monday, there was “a small release” of liquid propane from a tank farm in North Albany, near the intersections of Interstates 90 and 787, according to statement from tank farm owner Global Partners.
Workers found the leak during a “routine site inspection” about 3:45 p.m., according to a statement by Global Partners Vice President Edward J. Faneuil. The company informed the city Fire Department and burned off “excess gas which could not be recovered,” he said. No one was hurt and the cause of the leak was being investigated.
McCoy said flames from the gas burn went on for hours Monday night. City Fire Chief Warren Abriel said his department was notified by Global about 5 p.m. that they were going to burn off excess gas from one of its storage tanks. He said he was not aware that burn was linked to a leak.
Burning gas vented from tanks is a routine procedure at the Global facility that is not unusual, said Abriel. Global expanded its 540,000-gallon propane storage facility in April; it has been receiving propane shipments by rail there since April 2013.
Spokesman from both state DOT and the state Department of Environmental Conservation said their agencies were not required to be notified about the propane spill.
Railroads say California lacks authority to impose safety rules on oil shipments
By Tony Bizjak and Curtis Tate, Oct. 8, 2014
Virginia emergency responders learn about the different types of railroad tank cars in a safety class at a CSX yard in Richmond, Va., on Oct. 3, 2014. About 66 first responders, including firefighters, participated in the daylong event. CSX has brought its “Safety Train” this year to communities in states where it hauls large volumes of crude oil. (Curtis Tate/McClatchy)
The battle over crude oil trains in California intensified this week, reaching into the legal sphere with potential national repercussions.
The state’s two major railroad companies, Union Pacific and the BNSF Railway, went to federal court Tuesday to argue that neither California nor any other state can legally impose safety requirements on them because the federal government already does that.
The lawsuit came days after California Attorney General Kamala Harris joined other officials in challenging one crude-by-rail project, in the Bay Area city of Benicia. In a letter to Benicia officials, Harris said the city has failed to adequately analyze the potential environmental consequences of Valero Refining Company’s plan to ship two 50-car oil trains daily through Northern California to its Benicia refinery.
Those shipments would run through downtown Sacramento and other Valley cities.
The Valero project and similar plans by other oil companies prompted the state Legislature this summer to pass a law ordering railroad companies to submit an oil spill prevention and response plan to the state, and to provide proof to the state that they have enough money to cover oil-spill damages.
Railroads fired back this week, filing a lawsuit in the U.S. District Court in Sacramento. Their argument: Federal law pre-empts the state from imposing safety restrictions on the railroads.
The suit was filed by the two largest railroads in the Western United States, Union Pacific and BNSF Railway Co. The industry’s leading trade group, the Association of American Railroads, is listed as co-plaintiff.
The fight involves a long-standing friction point between railroads and U.S. states and cities. Railroads contend that local governments cannot place requirements or restrictions on freight travel because federal laws cover that ground.
The railroads have used the federal pre-emption argument to stop states from trying to impose speed limits on trains and ban certain types of shipments. In one notable case, railroads got the courts to overturn a Washington, D.C., law that attempted to ban trains carrying hazardous materials from using tracks within 2 miles of the U.S. Capitol.
“Federal law exempts this entire regime,” the railroads declared in the California lawsuit. Citing “a sweeping set of intricate federal statutes and regulations,” the lawsuit argues that allowing states to impose a “patchwork” of requirements on railroads essentially interferes with interstate commerce.
In a separate email statement Wednesday, BNSF spokeswoman Lena Kent said, “The state gives the industry no choice but to challenge the enforcement of the new law so as to not inhibit the efficiencies and effectiveness of the freight rail industry and the flow of commerce.”
Officials at the state Office of Spill Prevention and Response, the state agency listed as the defendant in the case, declined comment Wednesday, saying the agency does not publicly discuss pending litigation. Harris’ office is listed as a co-defendant.
The U.S. Department of Transportation in July proposed a rule that would require railroads to have oil spill response plans for trains carrying large volumes of crude oil. But that proposal could be months away from becoming law.
National transportation law and safety experts say the onus may be on California to prove that it is not usurping federal law or impeding interstate commerce.
“The state has to prove it is tackling what is a local or statewide issue, that it is not incompatible (with federal law) and doesn’t unreasonably burden interstate commerce,” said Brigham McCown, an attorney and former head of the federal Pipeline and Hazardous Materials Safety Administration. “That is a high bar.”
California might have an opening in a 2007 law Congress passed after the 9/11 Commission issued its recommendations. The 9/11 Act required rail companies to develop security plans and share them with state and local officials. The requirement was not limited to planning for a terrorist attack, but for any rail disaster, including derailments and spills involving hazardous materials.
“Those plans are required to be done and required to be shared,” said Denise Rucker Krepp, the former senior counsel on the House Homeland Security Committee, who wrote the provisions.
The Transportation Security Administration has not enforced the requirement, Krepp said, partly because of its focus on aviation security. But now that the railroads have taken California to court, Krepp said the state could use the 9/11 Act as leverage to get what it tried to get from the railroads through legislation.
“It’s never been tested like this,” Krepp said of the federal law.
It was unclear Wednesday whether the railroads also are challenging the section of the California law that imposes a 6.5-cent fee on oil companies for every barrel of crude that arrives in California on rail, or that is piped to refineries from inside the state. The resulting funds, estimated at $11 million in the first full year, will be allocated for oil spill prevention and preparation work, and for emergency cleanup costs. The efforts will be focused on spills that threaten waterways, and will allow officials to conduct response drills.
Crude-oil rail shipments have risen dramatically in the last few years. Those transports, many carrying an unusually flammable crude from North Dakota, have been involved in several spectacular explosions, including one that killed 47 residents of a Canadian town last year. Federal officials and cities along rail lines have been pushing for safety improvements. California officials have joined those efforts, saying they are concerned by estimates that six or more 100-car oil trains will soon be rolling through the state daily on the way to coastal refineries.
Harris, the state’s top law enforcement official, sent a letter to Benicia city planners challenging that city’s conclusion in an environmental impact report that the Valero rail shipment plan poses an insignificant threat of derailment. The report, she writes, “underestimates the probability of an accidental release from the project by considering only a fraction of the rail miles traveled when calculating the risk of a derailment.”
“These issues must be addressed and corrected before the City Council of Benicia takes action” on the project, Harris wrote.
Harris’ letter repeats earlier criticism leveled by the state Office of Spill Prevention and Response and state Public Utilities Commission.
The letter is one of hundreds Benicia has received in the past few months in response to the city’s initial environmental study. Benicia interim Community Development Director Dan Marks said the city and its consultants would review the comments and prepare responses to all of them, then bring those responses to the city Planning Commission for discussion at an as-yet undetermined date.
Under the Valero proposal, trains would carry about 1.4 million gallons of crude oil daily to the Benicia refinery from U.S. and possibly Canadian oil fields, where it would be turned into gasoline and diesel fuel. Valero officials have said they hope to win approval from the city of Benicia to build a crude-oil transfer station at the refinery by early next year, allowing them to replace more costly marine oil shipments with cheaper oil.
A representative for the attorney general declined comment when asked if Harris would consider suing Benicia to force more study of the project.
“We believe the letter speaks for itself,” spokesman Nicholas Pacilio said. “We expect it will be taken seriously.
Editorial: California makes progress on train safety by inspecting railroad bridges
By the Editorial Board, Oct. 9, 2014
Emergency responders learn about the different types of railroad tank cars in a safety class last week at a CSX yard in Richmond, Va. CSX uses its “safety train” to train first responders in communities where it hauls large volumes of crude oil. Curtis Tate / McClatchy-Tribune
It’s encouraging that important steps are being taken to make sure oil trains rumbling through California don’t derail, but the job isn’t nearly done yet.
For the first time, the California Public Utilities Commission plans to check behind safety inspections by private railroad companies of rail bridges across the state, focusing on those traversed by trains carrying crude oil.
The commission is deploying two new bridge inspectors – among seven new rail inspectors hired with money allocated by Gov. Jerry Brown and the Legislature in response to rising concerns about more oil trains in California. The two inspectors will likely work as a team, visiting four bridges a week. They won’t be doing full inspections, but rather reviewing that the railroads’ safety checks are in proper order.
So the commission is compiling a priority list of the first 30 bridges for visits in 2015. Here are two possible ones that should be strongly considered: the heavily used, 103-year-old I Street Bridge in downtown Sacramento and the Clear Creek Trestle in Feather River Canyon. Both are expected to be on primary routes for oil trains.
It’s also significant that state and local officials are pushing for a more complete risk assessment of Valero’s proposal to run oil trains through Northern California to its Benicia refinery.
For one thing, state officials say they want more detail on how Benicia officials came up with a projection that a train derailment would spill 100 gallons or more of oil only once every 111 years along the 69 miles of track between Roseville and Benicia.
At the same time, California’s two U.S. senators are pressing federal transportation officials to expand their requirements for railroads to notify first responders of oil shipments. The U.S. Department of Transportation’s emergency order, issued in May, covers only shipments of at least 1 million gallons (about 35 rail cars) of crude from the Bakken oil field in North Dakota.
Sens. Barbara Boxer and Dianne Feinstein say that notification ought to be required for any quantity of Bakken, or any kind of crude oil or other flammable liquid, for that matter.
They’re right. If safety is the goal, there’s no logical reason that smaller shipments and other kinds of crude aren’t covered. The notification mandate is among proposed rules on oil trains that federal officials plan to impose by year’s end. They also include phasing out older rail cars, lower speed limits and more comprehensive response plans for spills.
Those federal regulations will become even more crucial if California’s two major railroad companies – BNSF and Union Pacific – win their federal lawsuit filed Tuesday that challenges a new state law requiring them to come up with oil spill prevention and response plans. The companies argue that federal law prevents states from imposing such safety rules.
This is often how important safety improvements get made – step by step, at different levels of government, with advocates having to keep pushing for stronger protections against industry resistance. Everyone involved should have one priority – putting public safety first and foremost.
