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.
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.
■ Kamala Harris letter to city: Crude-by-rail report fails to address multiple key issues
CALIFORNIA Attorney General Kamala Harris. oag.ca.gov/
In a letter composed Oct. 2, California Attorney General Kamala D. Harris urged Benicia to revise the Draft Environmental Impact Report prepared for the proposed Valero Crude-by-Rail Project.
She and Deputy Attorney General Scott J. Lichtig wrote Benicia Principal Planner Amy Million, saying, “Unfortunately, the DEIR for this project fails to properly account for many of the project’s potentially significant impacts.”
The city released the lengthy DEIR June 17 and extended the public comment period on the document until Sept. 15 at the request of many members of the public as well as such agencies as the Sacramento Area Council of Governments.
Harris, in her letter, said the DEIR underestimates the chances of accidental chemical releases because it looks at “only a fraction of the rail miles traveled when calculating the risk of derailment, by relying on a currently unenforceable assumption that newer, safer tank cars will be used, by failing to adequately describe the potential consequences of an accident resulting in a release of crude oil, and by improperly minimizing the risk to public safety from increased rail-use.”
In fact, she wrote, the DEIR “ignores reasonably foreseeable project impacts” by limiting its scope to the 69 miles of rail between Benicia and Roseville.
She criticized the emissions baseline used to determine whether the project would affect air quality, and wrote that the document also failed to analyze the impacts from “the foreseeable change in the mix of crude oils processed at the refinery.”
The DEIR, moreover, “fails to consider the cumulative impacts on public safety and the environment from the proliferation of crude-by-rail projects proposed in California,” Harris wrote, saying that about a dozen such projects are in various stages of consideration and completion in the state.
She also wrote that the DEIR “employs an overly broad determination of trade secrets,” meaning the document didn’t provide enough information for an adequate analysis of safety risks and air quality impacts from refining the crude oil.
“The DEIR frustrates the purpose of CEQA (the California Environmental Quality Act) by not disclosing information regarding the particular crude oil feedstocks expected to be delivered upon project completion,” Harris wrote.
Missing information includes weight, sulfur content, vapor pressure and acidity of the crude, she wrote, adding that both the Department of Transportation (DOT) and the California Governor’s Office of Emergency Services have said specific characteristics of crude oil transported by train aren’t protected trade secrets, and that such information has been published about other projects.
“Benicia’s nondisclosure of this information deprives both the public and Benicia officials of the informed decision-making process that is the ‘heart’ of CEQA,” Harris wrote.
In her 15-page letter, the attorney general wrote that from 2012 to 2013 deliveries of crude oil into California increased from 1 million barrels to 6.3 million barrels, “a rise of 506 percent.”
That method of delivery is replacing crude oil transported by ship and pipeline, she wrote.
Harris wrote that about a dozen crude-by-rail projects are in various stages of development in California, and if all are approved, billions of gallons of crude oil could be brought into California by train.
“The trend shows no sign of abatement, and the California Energy Commission projects that by 2016, the state will import up to 150 million barrels of crude by rail,” she wrote.
Only recently has crude oil from the North Dakota Bakken shale and Canadian tar sands been arriving in the state, she noted, adding that “Bakken crude is unlike other crude being produced or shipped in this country, and it presents an ‘imminent hazard’ because it is more ignitable and flammable, and thus more likely to cause large, potentially catastrophic impacts from a train crash or derailment.
“On the other end of the spectrum, crude oil extracted from Canadian tar sands is a low-grade, high-sulfur feedstock that is not as volatile as lighter crudes like Bakken but contains chemical properties that make it particularly damaging to the environment when spilled and/or burned.”
Harris called the increase in oil delivery by “high-hazard flammable trains” a “new potential hazard to public safety and the environment.”
High-hazard flammable trains (HHFT) are those with 20 or more carloads of flammable liquids that Harris wrote would experience more frequent and more severe derailments because they are heavier, longer, less stable and harder to control than other rail traffic.
To back her contention, Harris wrote that in 2013 alone trains spilled more than 1.1 million gallons of crude, saying that represented a 72-percent increase in the amount of oil spilled collectively in the previous 40 years.
Of the nine major accidents she wrote were crude-by-rail-related, she listed four often-cited incidents: the July 5, 2013 derailment at Lac-Megantic, Quebec, Canada, in which 47 died when 72 tank cars on a runaway train crashed into the city’s downtown area; the Nov. 8, 2013 accident and fire in Aliceville, Ala., when 30 tank cars derailed; the Dec. 30, 2013 collision in Casselton, N.D., between an oil train and a grain train in which 34 cars derailed and crude exploded and burned for more than 24 hours; and the April 30, 2014 derailment in downtown Lynchburg, Va., in which three cars caught fire and some cars landed in a trackside river.
When Harris turned her attention specifically to the Benicia DEIR, she wrote that it “employs improper standards of significance, unenforceable mitigation measures and inadequate analyses to conclude that the project will not have a significant impact on ‘up-rail’ communities.”
The project needs a use permit to extend Union Pacific Rail into Valero Benicia Refinery property so two 50-car trains can deliver 70,000 barrels of North American crudes daily. According to the proposal, the oil delivered by rail would replace an equal amount currently brought to the refinery by ship.
Other elements of the project would be construction of offloading racks, rail spurs and supply piping, in addition to a few other changes at the plant.
Harris disagreed with the DEIR’s contention that the chances of a crude oil spill from a train is one in 111 years, in part because the document only looks at tracks from the Union Pacific’s Roseville terminal to Benicia.
“The tank cars containing crude oil do not originate in Roseville,” she wrote. “They are delivered by rail from particular sources, including North Dakota and Canada.”
Even if the odds are correct, Harris wrote, she disagreed that it would be “an insignificant impact,” and pointed out the 27 schools near that stretch of rail weren’t given consideration regarding public health and safety risks.
She also wrote that the DEIR assumes Valero only would use the newer 1232 tank cars for its oil transport.
Those cars are considered to be stronger and more reinforced than the DOT-111 models, designed in the 1960s, that have been involved in some of the recent high-profile derailments, but Harris noted the newer cars aren’t required by current federal regulations. The DOT is currently collecting comments on new tank standards, and is proposing to phase out the DOT-111 models by 2017.
The Association of American Railroads (AAR), an industry trade group, said 98,000 of the older DOT-111 cars remain in service and are carrying both crude and ethanol in the U.S. and Canada, and Harris said the DOT still allows their use for that purpose.
Meanwhile, the attorney general wrote, oil companies are asking to delay that change even longer.
However, not all participants in the industry feel that way. BNSF, the largest carrier of Bakken crude, announced in February that it would buy 5,000 new tank cars built with the most modern safety features — an unusual step for a railroad, since most do not own cars, but haul cars owned or leased by customers.
AAR has recommended phasing out or refitting the older model cars with improved valves and handles, thicker tanks and thermal protection.
Some Canadian companies have chosen to charge higher rates for older-model cars in hopes of accelerating the switch to newer cars.
According to the Rail Supply Institute, an organization representing shippers and tank car owners, 55,000 of the newer model cars have been ordered through 2015.
Some observers remain unconvinced that stronger cars are the solution. The Lynchburg, Va., crash involved cars built after 2011.
Harris wrote that the DEIR doesn’t assure that Valero has enough 1232 upgraded tank cars to avoid the use of the DOT-111 cars.
She also criticized the DEIR for considering only spills of more than 100 gallons as “significant.” She wrote that significant impacts could come from smaller spills.
Should a spill occur and ignite in an urban area, contaminate the Suisun Marsh or require a significant hazardous materials cleanup, “the costs borne by the California taxpayer from such a calamity could be substantial,” Harris wrote.
She explained that the DOT recently acknowledged that insurance policies carried by crude-by-rail transporters are often insufficient to cover even minor accidents.
The DEIR indicates risks of release on marine vessels traveling in the ocean would be reduced by the Valero project. Harris wrote that those risks “are fundamentally different than the risks associated with crude by rail traveling long distances through urban communities and environmentally sensitive lands.”
She did not elaborate about hazards to marine life from spills, collisions or equipment use. Some environmental groups have expressed concerns about those impacts, but their representatives have said accumulating data on those impacts can be challenging because whales, dolphins, sea turtles and other animals sink to the ocean bottom after being killed or injured, and thus can’t be documented.
Harris objected to the DEIR’s contention that the project would not have a significant impact on air quality even if emissions increased. The report said those increases wouldn’t exceed the maximum allowed under the refinery’s existing permits.
“Rather than using a baseline describing ‘existing conditions,’ Benicia incorrectly uses the maximum permitted emissions as the baseline, asserting that this is proper,” she wrote.
“There is no evidence, however, that the refinery has ever operated at the maximum permitted emissions level since the VIP (Valero Improvement Project) was completed.”
Harris also contended that the DEIR doesn’t adequately analyze potential air quality impacts from processing the new blended crude.
Million, City Manager Brad Kilger and Valero officials were asked for comment on Harris’s letter, but did not reply by press time Wednesday.
“We urge the city of Benicia to revise the project’s DEIR to address the deficiencies explained in this letter so that the City Council and general public are provided a full and accurate accounting of the project’s environmental impacts,” Harris wrote.
California Attorney General Kamala Harris blasts Benicia crude-by-rail project
By Tony Burchyns, 10/08/2014
California Attorney General Kamala Harris has blasted Benicia’s environmental review of Valero’s crude-by-rail project, claiming it underestimates safety risks and relies on an overly broad definition of trade secrets in failing to disclose the types of volatile crudes to be shipped.
In a letter to the city last week, Harris said Benicia’s safety analysis was inadequate because it only considers “a fraction” of the rail miles that would be traveled by oil trains headed to the city’s Valero refinery. Harris also faults the city for relying on Valero’s “unenforceable” promise to use newer, safer tank cars that are not currently required by federal regulations.
The letter follows similar critical comments from the state Department of Fish and Wildlife’s Office of Spill Prevention and Response and the Public Utilities Commission. Those agencies called on the city to redo its safety analysis before allowing the refinery to receive two 50-car oil trains a day that would travel through Roseville and other parts of Northern California.
Also, the Sacramento Area Council of Governments, the cities of Davis and Sacramento and the University of California at Davis have sent letters to Benicia expressing concerns about the project.
Valero is seeking city permits to build a rail terminal that would allow the refinery to receive up to 70,000 barrels of crude daily from North American sources such as the Bakken shale in North Dakota and tar sands in Canada.
According to Valero, the rail shipments would replace oil deliveries by boat and allow the refinery to remain competitive on the West Coast.
Benicia is one of at least 12 crude-by-rail related projects that are either operational or being considered in California — including in Richmond, Pittsburg, Martinez, Santa Maria, Stockton, Los Angeles, Bakersfield, Wilmington and Sacramento, according to the attorney general’s office.
Harris, whose duties include enforcing the California Environmental Quality Act, contends the city’s project analysis fails to analyze air pollution impacts from the foreseeable change in crude oils that would be processed at the refinery. It also faulted the city for limiting the scope of its rail safety analysis to 69 miles of track between Roseville and Benicia, and failing to consider cumulative impacts from other crude-by-rail projects proposed in California.
The letter also criticized the city’s finding that the risk of train spills of more than 100 gallons between Roseville and Benicia would be once in 111 years. Critics have said the analysis is flawed because it relies on rail safety data that predates the nation’s crude-by-rail boom.
“This boom in crude oil being transported by rail has corresponded with a major increase in the number of accidents involving such trains,” the letter states. “In 2013 alone, trains spilled 1.1 million gallons of crude oil, a 72 percent increase over the total amount of oil spilled by rail in the nearly four previous decades combined.”
The letter cites notorious spills such as the July 2013 derailment and explosion in Quebec that killed 47 people and destroyed a downtown. Other derailments in Aliceville, Ala., Casselton, N.D., and Lynchburg, Va. resulted in explosions and fires.
Harris also said the city’s nondisclosure of the characteristics of the crude oil to be processed at the refinery undermines states environmental laws by preventing the public to assess the nature of the project’s risks. Further, Harris said the broad grant of trade secret protection conflicts with recent decisions this year by state and federal agencies that the characteristics of crude oil traveling by rail should be publicly released.
“Benicia’s nondisclosure of this information deprives both the public and Benicia officials of the informed decision making process that is the ‘heart’ of (the California Environmental Quality Act),” the letter states.
Benicia has declined to comment on letters received during the report’s public comment phase. However, the city plans to respond to written and verbal comments before the project’s next public hearing.
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