Category Archives: CPC-1232 standard

Bakken Crude, CPC-1232 standard, DOT-111, Federal Regulation (U.S.), Volatile gases

Fox Guarding Henhouse: Oil-By-Rail Standards Led by American Petroleum Institute

Repost from DeSmogBlog

Fox Guarding Henhouse: Oil-By-Rail Standards Led by American Petroleum Institute

By Justin Mikulka, July 9, 2014

“How did it get missed for the last ten years?”

That was the question Deborah Hersman, chair of the National Transportation Safety Board (NTSB), posed to a panel of industry representatives back in April about how the rail industry had missed the fact that Bakken oil is more explosive than traditional crude oil.

“How do we move to an environment where commodities are classified in the right containers from the get go and not just put in until we figure out that there’s a problem,” Hersman asked during the two-day forum on transportation of crude oil and ethanol. “Is there a process for that?”

The first panelist to respond was Robert Fronczak, assistant vice president of environmental and hazardous materials for the Association of American Railroads (AAR). His response was telling.

“We’ve know about this long before Lac-Megantic and that is why we initiated the tank car committee activity and passed CPC-1232 in 2011,” Fronczak replied, “To ask why the standards are the way they are, you’d have to ask DOT that.”

So, now as the new oil-by-rail safety regulations have been sent from the Department of Transportation (DOT) to the White House’s Office of Information and Regulatory Affairs, it seems like a good time to review Hersman’s questions.

How did we miss this? Is there a process to properly classify commodities for the right container before they are ever shipped?

Missed or Ignored?

Fronczak stated that industry knew about the explosive danger of Bakken crude long before the Lac-Megantic disaster, but it was up to the Department of Transportation to do something about it. That begs the question: what did the department know?

In a letter sent by Thomas J. Herrmann of the Federal Railroad Administration (a division of DOT) to the American Petroleum Institute’s CEO Jack Gerard on July 29, 2013, just 23 days after the Lac-Megantic disaster, it would appear the DOT was well aware of Bakken crude classification issues.

FRA audits of crude oil loading facilities indicate that the classification of crude oil being transported by rail is often based solely on Material Safety Data Sheet (MSDS) data that only provides a material classification and a range of material properties. This MSDS information is typically provided by the consignee to the shipper, and the shipper is unaware of validation of the values of the crude oil properties.

FRA‘s audits indicate that MSDS information is not gleaned from any recently conducted tests or from testing for the many different sources (wells) of the crude oil. For example, a shipper provided information to FRA showing that crude oil being transported by rail had a flash point of 68° F, or a Packing Group I hazardous material. However, the crude oil had been improperly classified as a Packing Group III material and was being transported in AAR class tank cars that were not equipped with the required design enhancements.

The letter goes into detail on several other issues with Bakken crude and recommends that “shippers evaluate their processes for testing, classifying, and packaging the crude oil that they offer into transportation via railroad tank cars.”

So it is clear that as of July 2013, the Federal Railroad Administration was well aware of issues regarding misclassification of Bakken crude oil based on its own audits.

Several of the panellists at the NTSB hearing in April made the point that Bakken crude was different.

“We are just not sure what we’re handling,” Fronczak said. “We’ve done some minor sampling, you know a few samples that indicate that the crude oil does have a high vapor pressure and a fairly high amount of dissolved gas and so we feel a pressure car is more appropriate.”

A pressure car is currently the safest possible tank car the new regulations could require.

William Finn of the Railway Supply Institute echoed this sentiment, “For years we’ve transported crude oil in one eleven cars [DOT-111], what’s changed here is the introduction of the unit train and the question of what’s happening with the Bakken crude oil and the high vapor pressures.”

Greg Saxton, chief engineer for tank car manufacturer Greenbrier Companies, said: “The crude we are moving today, we think its different than what we were moving five or ten years ago.”

If the exploding trains weren’t enough to convince people that the Bakken crude oil is different, those comments should remove any doubt.

API Concludes Bakken Oil Poses No “Special Risks”

In April, DOT Secretary Anthony Foxx commented to the Associated Press on how important proper crude oil classification was regarding oil-by-rail safety, saying,  “One of the most fundamental questions that cuts across everything in crude oil-by-rail is how it is classified.”

So who gave the presentation at the NTSB conference on classification of crude oil? The American Petroleum Institute.

Lee Johnson gave a presentation on the API’s current crude oil classification working group, which he stated, “is going to come up with the standard which is going to have guidance on how often you should do that [testing], what tests you should take, sampling techniques, lab techniques.  It’s going to be a very comprehensive standard.  At this point there is no industry standard.”

During his presentation, Johnson highlighted one of the main efforts of the API’s work on classification. The North Dakota Petroleum Council was hiring a firm to conduct testing on Bakken crude for classification purposes.

The results of that Bakken classification testing have since been released and were reported in the Wall Street Journal as follows:

Crude oil from the Bakken Shale formation doesn’t pose special risks to rail transport and shouldn’t require a separate classification regime than other hazardous liquids, North Dakota oil producers said.

This is what happens when you let an industry self-regulate. They make up their own rules and reality. In May, APICEO Jack Gerard made his position clear:

“It is essential to separate fact from fiction as we work to enhance the safe transportation of crude oil. Multiple studies have now debunked the idea that Bakken crude is meaningfully different than other crudes.”

However, not everyone was buying these results. New York’s Senator Chuck Schumer told Reuters that these test results should be “taken with a grain of salt.”

And the Canadian Crude Quality Technical Association said, “We would consider the data suspect.”

The main reason for the association’s suspicion is the sampling technique that was used. The samples were taken using open containers, which allow the volatile gases to escape before testing.

That’s the kind of thing that happens when there are no standards for sampling and testing.

The New Regulations

So as the new oil-by-rail safety regulations are about to be released by the White House, there still are no enforceable standards on how to properly sample, test and classify Bakken crude oil. The only testing data that’s been released up to this point is from the oil industry’s lobbying groups.

The Department of Transportation has taken samples of Bakken crude and conducted testing — however, the report on their results is still pending and there is no scheduled release date. It is nearly a year after the department’s initial letter to Jack Gerard of the American Petroleum Institute.

Further, the Department of Transportation is not ultimately responsible for developing new standards for testing and classifying crude oil.

To understand how the regulatory agency in charge of an industry is not responsible for developing these standards, you must look at the wording of legislation signed into law by President Bill Clinton in 1996 called “The National Technology Transfer and Advancement Act of 1995.”

This legislation essentially privatized the development of standards. The act states:

“All Federal agencies and departments shall use technical standards that are developed and adopted by voluntary consensus standards bodies, using such technical standards as a means to carry out policy objectives or activities determined by the agencies and departments.”

So, for there to be new enforceable regulations regarding the classification of Bakken crude, several things would have to happen. An external standard developer like ASTM International would have to develop standards. Then members of industry or their lobbyists would have to volunteer to petition the DOT to adopt those standards as part of the regulations. This would require a new DOT rulemaking process separate from the one currently in progress, which could take several years.

A Fundamental Question Goes Unanswered

So, on the eve of new regulations, the fundamental question of how to properly sample and test Bakken crude oil for appropriate classification has not been answered. And the only group currently working on an “industry standard” for this is the American Petroleum Institute, which has already concluded that Bakken crude is no different from other crude oils  — at the same time API is having private meetings at the White House regarding the new regulations.

Chair Hersman resigned shortly after the forum in April, ending her 10-year career with the NTSB. At the time she told the AP she had, “seen a lot of difficulty when it comes to safety rules being implemented if we don’t have a high enough body count. That is a tombstone mentality. We know the steps that will prevent or mitigate these accidents. What is missing is the will to require people to do so.”

If the current process regarding new oil-by-rail regulations in the U.S. is any indication, apparently we haven’t achieved a high enough body count yet.

CPC-1232 standard, Crude By Rail, DOT-111, Federal Regulation (U.S.), Tank car design, Tank car retrofit

NTSB and AAR – even the upgraded DOT-111 tank cars are unsafe

Repost from Bloomberg BNA
[Editor: This 7-page PDF report is already a bit dated – March, 2014 – but it is an excellent overview of still-current debate over tank car adequacy and redesign standards.  The article quotes officials of the National Transportation Safety Board AND the Association of American Railroads to the effect that even the upgraded DOT-111 cars are not safe, and will require improvements.  – RS]

BloombergBNA

Tank Car Design Debate Split Over Safety of Voluntary Industry Standard

By Patrick Ambrosio, March 18, 2014

Industry groups, members of Congress and the National Transportation Safety Board are pushing the Transportation Department to quickly establish new safety design standards for rail tank cars used to carry crude oil, but there is disagreement over how stringent the new safety requirements should be.

There is now a consensus that a new federal design standard is needed to provide certainty to the industry and improve the safety of transporting flammable liquids by rail, but groups are split over whether the new standards should go beyond the Association of American Railroads’ CPC-1232 standard, a voluntary industry standard adopted for all new tank cars ordered after Oct. 1, 2011.

The Pipeline and Hazardous Materials Safety Administration, in conjunction with the Federal Railroad Administration, is working on a proposed rule that would update federal design standards for tank cars, commonly known as DOT-111 cars, that are used to carry crude oil, ethanol and other flammable liquids. The rulemaking is partially in response to a 2011 petition filed by the AAR, which represents major U.S. railroad companies such as CSX Transportation Inc. and BNSF Railway Co., requesting that the DOT adopt the CPC-1232 standard as a federal design standard for new cars.

The safety features included in CPC-1232-compliant cars include thicker shells for non-jacketed tank cars, enhanced top fittings protection, reclosing pressure relief devices and half-height head shields on both ends of the tank car.

“Their continued use to ship flammable liquids poses an unacceptable risk to the public.”

Christopher Hart, NTSB

Legacy Cars Called Unsafe

The safety of DOT-111 rail tank cars has been called into question after a series of recent derailments involving trains carrying crude oil, including a July 2013 derailment in Lac-Mégantic, Quebec, that resulted in 47 fatalities. DOT-111 rail tank cars also were involved in a December 2013 derailment near Casselton, N.D., which resulted in the release of more than 400,000 gallons of crude oil, a significant fire and the evacuation of nearby residents.

The AAR estimates that there are about 92,000 DOT-111 rail tank cars in service carrying crude oil, ethanol and other flammable liquids. Of those, about 78,000 are “legacy” cars that do not meet the CPC-1232 standard.

Following the Lac-Mégantic incident, the National Transportation Safety Board reiterated a series of recommendations made to PHMSA after a 2009 derailment involving DOT-111 tank cars in Cherry Valley, Ill. Those recommendations included requirements that all new and existing tank cars used to transport crude oil and ethanol be equipped with enhanced tank head and shell puncture resistance systems, top fittings protection that exceed current requirements and bottom outlet valves designed to remain closed during accidents (37 CRR 1409, 12/16/13).

Christopher Hart, vice chairman of the NTSB, told the Senate Commerce, Science and Transportation Subcommittee on Surface Transportation and Merchant Marine Infrastructure March 6 that the NTSB has warned the DOT since 1991 that older DOT-111 rail tank cars are too easily damaged, even when involved in low-speed crashes and derailments.

“Their continued use to ship flammable liquids poses an unacceptable risk to the public,” Hart said.

Hart said the NTSB thinks the CPC-1232 design standard needs additional changes to improve the “crash worthiness” of tank cars used to carry crude oil and flammable liquids. He cited enhanced head shields and tank jackets and increased tank shell thickness as features that the NTSB recommends.

Rail Industry Reverses Course

Edward Hamberger, president and chief executive officer of the AAR, said at the same Senate subcommittee hearing that since filing its 2011 petition the association has changed its position and now recommends that the DOT require new tank cars to be built to meet specifications exceeding the CPC-1232 standard.

Hamberger said that although the AAR thinks that the CPC-1232 standard is a “big step above” the legacy DOT-111 cars, the railroads now think safety needs to “go beyond” the voluntary industry standard.

The AAR is recommending that the federal tank car standards adopt the following safety design features that exceed those found in the CPC-1232 standard:

  • a high-capacity pressure relief valve to protect the tank car from an increase in internal pressure resulting from a fire;
  • a minimum 9/16-inch-thick steel tank;
  • a 1/2-inch-thick full-height head shield on both ends of the tank car;
  • a bottom outlet handle that will not inadvertently open the bottom outlet in the event of a derailment; and
  • an 1/8-inch-thick steel jacket around the tank car, with thermal protection.

The AAR recommendations also are supported by the American Short Line and Regional Railroad Association, which represents the interests of about 450 short line and regional railroad companies in the U.S.

$7 Billion Already Invested

The AAR estimates that its proposal would require the phase-out or retrofit of about 78,000 legacy cars and the retrofit of about 14,000 cars built since 2011 that meet the CPC-1232 standard.

The Railway Supply Institute, which represents manufacturers, distributors and service providers for the freight and passenger rail industries, estimates that as of December 2013, the crude oil and ethanol sector has invested more than $7 billion to build new tank cars to meet the CPC-1232 standard since the standard was adopted in 2011. Thomas Simpson, president of the RSI, told Bloomberg BNA that an estimated 55,000 new tank cars built to meet the CPC-1232 standard will be in crude oil and ethanol service by the end of 2015.

Prentiss Searles, marketing issues manager at the American Petroleum Institute, told the Senate Commerce, Science and Transportation Subcommittee on Surface Transportation and Merchant Marine Infrastructure that the petroleum industry believes that CPC-1232-compliant tank cars will be sufficient to safely move crude oil and other hazardous liquids.

Searles said a multi-industry committee reviewed available data for three years to determine whether the CPC-1232 standard would be sufficient to carry crude oil.

“Those are safe cars,” Searles said.

Vulnerabilities Addressed

Brigham McCown, managing director of the consulting group Nouveau Inc., told Bloomberg BNA that the government and industry should be looking at the improved DOT-111 rail tank cars manufactured after 2011 to improve rail car safety. McCown formerly served as the first acting administrator and interim CEO of PHMSA.

McCown said the CPC-1232 standard addresses the three major vulnerabilities of the legacy DOT-111 rail tank cars.

He said rail tank cars commonly “flip over” on their sides during derailments, and older DOT-111 tank cars have a propensity to break open during such accidents. He also said that bulkheads on the end of older DOT-111 cars can easily be dented and either break or rupture, and that the valves on older DOT-111 cars can break off if they are not adequately protected, resulting in a release of flammable liquid.

Retrofit Issues

Searles said the API has requested that PHMSA and the FRA lead a task force to review the challenges associated with retrofitting existing DOT-111 cars to include additional safety features.

API, when asked for additional information on the challenge of retrofitting existing DOT-111 rail cars, directed Bloomberg BNA to comments filed with PHMSA in December 2013 on the rail tank car design issue.

The comments raised several concerns associated with a retrofit program, including the difficulty of applying 1/2-inch-thick head shields to non-jacketed tank cars. API said the additional weight could compromise the structure of the car because it would be impossible to measure the existing fatigue on tank cars that have already been in service.

Installing a head shield onto a non-jacketed car also could require existing equipment, including brake wheels and end platforms, to be rearranged on the car before the head shield is welded to the tank for support, which could potentially affect the interior coating of the tank, API said.

Simpson of the RSI told Bloomberg BNA that there are feasible modifications that can be made to legacy DOT-111 cars to get them “close” to the CPC-1232 standard, including removing the handle on the bottom outlet valve to prevent it from opening during a crash and installing a half-height head shield. Simpson noted that adding a 1/8-inch-thick steel jacket to a legacy car is “more problematic,” and said companies are looking at whether that is feasible.

Evolution of Rail Industry Tank Car Standards for Crude Oil

Limited Repair Capacity

API also said the nation’s repair shop network is incapable of handling the large number of existing tank cars that would need to be upgraded if retrofits were required.

“The repair shop network that exists today, even if it were to be increased by a third, could not handle all of the work in a reasonably timely manner,” API said.

API added that most repair facilities are not even capable of completing major retrofits to older tank cars, such as adding jackets to legacy cars or installing top fittings protection.

Simpson said the RSI has suggested that PHMSA give the industry a 10-year timeframe to modify the legacy fleet to meet any upgraded safety design standards.

Simpson said the RSI does support expanding design requirements for all new tank cars intended for crude oil and ethanol service to include full-height head shields and thermal protection and would support the prioritization of retrofitting legacy tank cars over cars that comply with the CPC-1232 industry design standard.

The RSI suggested that PHMSA freeze the current fleet of DOT-111 rail tank cars and not allow any additional legacy tank cars to be assigned to crude oil or ethanol service. Simpson said that under that

proposal, any tank car needed to handle an increase in crude traffic or to replace a non-operational car would at least have to be compliant with the CPC-1232 standard.

Manufacturer Offers Retrofit Packages

The Greenbrier Companies, an Oregon-based supplier of equipment and services to the rail industry, announced in February that it will begin offering retrofits for both legacy DOT-111 tank cars and newer tank cars that were built to meet the current CPC-1232 standard.

The company will retrofit legacy tank cars with high-flow pressure relief valves, head shields, top fittings protection and thermal protection. Greenbrier also will install high-flow pressure relief valves and improved bottom outlet valve handles on any CPC-1232 cars that were not originally built with those features.

Greenbrier announced that it will design a next-generation tank car for use in transporting crude oil and ethanol that will be designed to “better withstand” the demands of carrying flammable liquids on a unit train. The company did not offer specifications for the new tank car, but said the car will address safety concerns about the older DOT-111 tank cars.

A Greenbrier representative said the company anticipates that the design of the retrofitted DOT-111 tank cars and the next-generation tank car will comply with all pending regulatory standards.

Proposal Expected in 2014

PHMSA Administrator Cynthia Quarterman said in March that she is “hopeful” that a proposed rule on rail tank car design standards will be released for public comment by the end of 2014.

Quarterman said PHMSA and FRA staffs are “moving as fast as we possibly can” to draft the rule, but noted the importance of a rulemaking that would establish a standard that could be in effect for decades.

“We really need to get this right,” Quarterman said.

Sen. John Hoeven (R-N.D.) told Bloomberg BNA in early March that he has been informed that the proposed rule will be submitted to the White House Office of Management and Budget “soon,” possibly sometime in early April. That would allow the proposed rule to be released to the public in 2014, probably in November, according to Hoeven.

Hoeven said the estimated time frame from DOT would allow for the publication of a final rule establishing tank car design standards sometime after January 1, 2015.

Push for Faster Action

Although the industry is split on whether the DOT should go beyond the CPC-1232 standard and whether legacy tank cars should be retrofitted or phased out, there is consensus that a resolution of the issue is needed to provide certainty for the industry.

Hoeven said upgrading the nation’s rail tank car fleet represents a “big investment” for the petroleum industry, which needs to make sure that it is meeting federal standards so it can transition from the legacy cars to upgraded cars.

Searles of the API said PHMSA could move forward immediately with an interim final rule on new tank car design that would provide the industry with consistency and certainty, though he added that more study is needed on retrofitting before PHMSA can issue any regulations requiring existing cars to meet more stringent design requirements.

Hamberger of the AAR suggested that PHMSA could speed up the process by splitting its tank car rulemaking in half by addressing the design standard for new tank cars first. He noted that there is currently a two-year backlog of new cars that have been ordered to meet the CPC-1232 standard, which could be deemed inadequate by the time the cars are built.

Hamberger said that there is “not a great deal of difference” between the AAR proposal and the design standards for new cars supported by other groups. The retrofit issue is more complicated because there are different kinds of DOT-111 rail tank cars, including some tank cars that are jacketed and some that are not, according to Hamberger.

Advances in Materials

Ken Grantham, executive vice president at Crompion International, said he is trying to make the crude oil tank car industry aware of advances in materials that could be used in the construction of safer tank cars. Crompion is a Louisiana-based manufacturer and distributor of specialty steel products.

Grantham said the discussion on tank car safety has only focused on design enhancements, even though much stronger metals are available than the metals currently used to construct DOT-111 rail tank cars. The NTSB recommendations and the AAR proposal for a new tank car design standard do not address the issue of using enhanced raw materials to construct rail tank cars.

The stainless steel types used to construct DOT-111 rail tank cars are older varieties of steel that have been around for 100 years or more, according to Grantham. He said there have been a “multitude of advances” in the past 20 years that have resulted in new metals that are much stronger than traditional metals and are comparable or superior in corrosion resistance.

Grantham said he would like to see newer stainless steel added to any design standard as additional materials that could be used to construct tank cars that meet DOT specifications, which would give companies the option of considering the stronger materials. He said combining the proposed enhanced safety features with the use of stronger metals would “optimize” the effort to make tank cars safer.

“We really feel that materials should be as much a part of the conversation as design improvements,” he said.

Grantham noted that Crompion is already supplying large volumes of enhanced stainless steel varieties for use in constructing rail cars used to transport coal. He said that in addition to the safety benefits of using stronger metals, the use of corrosion and abrasion resistant steel allowed for the use of thinner plates to construct those rail cars, which makes the rail car lighter and capable of transporting additional volumes of coal.

Newer generation varieties of steel also are already being used to construct static storage tanks for crude oil and other flammable liquids, according to Grantham.

BNSF Seeks Enhanced Cars

Some companies have decided to move ahead with new car orders without federal design standards.

A spokeswoman with BNSF Railway told Bloomberg BNA that the company issued a request for proposals to major railcar manufacturers seeking bids for the construction of 5,000 new rail tank cars that would be used to transport crude oil.

The design specifications described by BNSF for the new tank cars would meet the standards proposed by the AAR, including thicker tank body shells, full-height head shields, a bottom outlet valve handle that can be disengaged and a thermal protection system incorporating ceramic thermal blanketing and a pressure relief device capable of surviving an ethanol-based pool fire.

The company spokeswoman said the RFP is a “significant voluntary commitment” that will provide tank car manufacturers with a “head start” on tank car design and production while the Transportation Department continues with the formal rulemaking process.

Tesoro Corp., an independent refiner and marketer of petroleum products, has pledged that the company’s entire fleet of tank cars that are used to carry crude oil will meet the CPC-1232 design standard by the middle of 2014 (38 CRR 182, 2/10/14).

Keith Casey, senior vice president of strategy and business development at Tesoro, said in February that the company decided to be proactive in upgrading its rail tank car fleet in advance of expected regulatory changes because “it’s the right thing to do.”

Bakken Crude, CPC-1232 standard, DEIR, DOT-111, Valero Crude By Rail

Benicia Herald – Significant impact to air quality from crude by rail

Repost from The Benicia Herald

‘Significant’ impact to air quality from crude by rail

Long-awaited environmental report addresses, dismisses some concerns over Valero proposal, but says effect on area air would be ‘unavoidable’
June 18, 2014 by Donna Beth Weilenman

After months of investigation and more than one delay, Benicia released the draft of an environmental report on the Valero Crude-by-Rail Project on Tuesday.

The city chose to have the report drafted to meet requirements of the California Environmental Quality Act after Valero Benicia Refinery sought a permit last year to add more Union Pacific Railroad track onto its property so it could bring in North American crude oil by rail car.

The report “discloses to the public and the city’s decision-makers the environmental consequences” of Valero’s proposed project, citing minimal impacts in several areas but “significant and unavoidable” impacts on air quality.

In addition to the project as proposed by Valero, the draft report (DEIR), written by San Francisco-based firm ESA, examined four alternatives, ranging from not doing the project at all to modified versions, including one that proposes cutting the rail delivery of crude oil to the refinery in half.

“The main issue to be resolved in the EIR is which among the alternatives would meet most of the basic project objectives with the least environmental impact,” the report said. “Balancing sometimes competing environmental values can be challenging because it rests on assumptions of relative value,” the report said, explaining that city officials who will be deciding whether to adopt the final environmental report and issue a use permit may have to balance the relative value of those environmental resources.

In doing so, they may resolve the issues that have been examined in the report and reach different conclusions than those reached by ESA.

The DEIR examined and assessed the direct, indirect and cumulative environmental impacts of the construction, operation and maintenance of the project. The analyses are based on information submitted by Valero in its application for the use permit; the consultants made no recommendation how the matter should be decided.

The report analyzed in detail the project’s impact on air quality, biological resources, cultural resources, energy conservation, geology and soils, greenhouse gas emissions, hazards and hazardous materials, hydrology and water quality, land use and planning, noise and transportation and traffic.

The consultants determined that in 10 of those 11 areas, the project could result in no or less-than-significant impacts. But the project would have “significant and unavoidable” impacts to air quality, particularly outside the Bay Area.

The project

The Crude-by-Rail Project as proposed by Valero would provide an alternate means of delivering crude oil to the refinery. Up to 70,000 barrels of day of North American-sourced crude oil would arrive daily by rail, replacing marine vessel delivery of the same amount.

The report noted ways the project could be put in place while reducing its environmental impacts through mitigation methods. It said the project would not change existing refinery operations, and said the plant would continue to meet requirements of existing rules and regulations governing oil refining, including the state of California Global Warming Solutions Act of 2006.

The project wouldn’t increase the amount of oil the refinery receives, nor allow the refinery to produce more than the limits it already has on its output, the report said. But it does change how the refinery would get its raw materials.

Assuming that the average ship holds 350,000 barrels, the project would displace as many as 73 ship deliveries a year, the report said. It could displace the total quantity of crude oil delivered by marine vessel to the refinery by as much as 25,550,000 barrels in a 365-day year.

Based on the deliveries from Dec. 10, 2009 to Dec. 9, 2012, annual marine vessel deliveries would be reduced by as much as 82 percent, the report said.

The refinery has a dock between the Benicia-Martinez Bridge and the Port of Benicia wharf. The refinery’s marine terminal currently receives and ships bulk cargo by marine vessel.

But it already has some existing Union Pacific Railroad rail tracks that provide access to the refinery and the Benicia Industrial Park. The refinery already uses tank cars to receive chemicals used in refining and to ship refined products out, the report said.

The project would install a new tank car unloading rack capable of unloading two parallel rows of tank cars, one on each side, and transferring that crude oil to the refinery.

This would be on the northeastern part of the main refinery property, between the eastern side of the lower tank farm and the fence adjacent to Sulphur Springs Creek.

The new tank car unloading facilities would include a liquid spill containment sump with the capacity to contain the contents of at least one tank car. In addition, the existing liquid spill containment for tanks abutting the tank car unloading facilities would be modified to allow installation of the unloading facilities.

Part of the existing containment berm for the tank field would be removed and a new concrete berm would be built about 12 feet west of the existing earthen berm, the report describes.

The project would install about 8,880 track feet of new track on refinery property — three new track turnouts and one crossover — and would realign about 3,560 track feet on refinery property. New rail spurs and parallel storage and a departure spur would be built between the east side of the lower tank farm and the west side of the fence along Sulphur Springs Creek.

Also part of the project are crude oil offloading pumps and pipeline, and associated infrastructure, spill containment structures, a firewater pipeline, groundwater wells and a service road. It also would include the construction of 4,000 feet of 16-inch-diameter crude oil pipeline.

Should the project be approved, construction is expected to take 25 weeks, involving about 121 construction employees working daily until the project is finished. Afterward, it would provide jobs for 20 more employees or contractors, the report said.

If built, the refinery would be able to accept up to 100 tank cars of crude oil a day in two 50-car trains entering refinery property on an existing rail spur that crosses Park Road. The crude would be pumped to existing oil storage tanks by a new offloading pipeline that would be connected to existing piping within the property.

“Valero would ask UPRR to schedule Valero’s trains so that none of them cross(es) Park Road during the commute hours of 6 a.m. to 9 a.m. and 4 p.m. to 6 p.m.,” the report said.

Valero would operate the project components 24 hours a day, seven days a week and every day of the year.

The North America-sourced crude would arrive in Benicia through Roseville, where cars would be assembled into a train specifically for shipment to the refinery. Valero would own or lease the tank cars (a common practice), and Union Pacific would own the locomotives that pull the train.

Existing rules

Under regulations adopted by the Pipeline and Hazardous Materials Safety Administration (PHMSA), crude oil shipped by rail must be shipped in tank cars built to the DOT-111 specification.

But in 2011, the Association of American Railroads voluntarily imposed more stringent standards on the design of the DOT-111 tank cars, and the sturdier tank cars are numbered 1232.

DOT-111 cars ordered after Oct. 1, 2011 are supposed to meet the new standards; the older ones that aren’t as strong are called “legacy” DOT-111 tank cars.

“Valero has committed that, when the PHMSA regulations call for use of a DOT-111 car, Valero would use 1232 tank cars instead of one of the ‘legacy’ cars,” the report said.

Alternatives

The report looked at alternatives to the project as the refinery described what it wanted to do in its application. Those include a “no project alternative,” wich “would result in higher emissions of criteria pollutants and greenhouse gases within California.

“Global greenhouse gas emissions would be higher with the no project alternative,” the report said. “Valero would not be able to achieve most of its project objectives.”

The DEIR covered two other alternatives. One would limit cars to a single 50-car train delivery a day, and the other proposed two 50-car trains arriving at night.

While the first alternative would reduce the amount of emissions coming from trains, it also would mean that Valero would be unable to reduce as much emissions that come from tanker ships making deliveries.

However, it might reduce impacts to local traffic at Park Road during peak traffic times, the report said.

Union Pacific has taken the stand that limits on volume of product shipped or frequency, route or configuration of the shipments would be preempted under federal law. “Thus, Alternative 1 may be legally infeasible,” the report said.

A second “reduced project” alternative would require trains crossing Park Road to do so only between 8 p.m. and 6 a.m.

The report found the noise generated at night would be “less than significant,” but noted that having all the trains arrive and depart at night might be noisier than the way the project originally is proposed.

Another alternative would have the receiving terminal accepting the train’s oil to be built offsite, and would involve a third party. The oil would be transferred either by tanker ship or a new pipeline. This would cause greater impacts than the original proposal, the report said.

The original project “is environmentally superior” to the alternative that would cut deliveries in half, a version that probably would be declared illegal anyway, the report said. In addition, that alternative “involves 50 percent more emissions of those same pollutants from marine vessels.”

The report looked at eight areas of concern noted during extensive public comment, particularly during the coping phase of the environmental report Aug. 9 to Sept. 13, 2013.

Those involved the properties and parameters of crude oil to be transported and refined; the relationship of the project to the Valero Improvement Project; effects of train operations on local and interstate traffic; effects of construction, operation and transportation on air quality; how the project would affect plant and animal ecology at Sulphur Sprints Creek and Suisun Marsh; what hazardous materials would be released during an accident, and how such accidents would be handled; and the range of potential effects from the time crude is extracted until it’s delivered in Benicia.

“Where significant impacts are identified, feasible mitigation measures are proposed that would reduce each of these potential impacts to a less-than-significant level,” the report said.

What isn’t included

Based on the results of the initial studies made before the city chose to have the EIR drafted, the report doesn’t examine the project’s relationship to agriculture, forests, minerals, aesthetics, population and housing, public services, recreation, utilities and service systems, which the project either wouldn’t affect or have less than significant impact.

The EIR also doesn’t include seven items Valero considers confidential business information.

Under CEQA, a lead agency — in this case, the city of Benicia — may require an applicant to submit data necessary to making a decision on the project, but if the information is considered “trade secrets” as defined by government code, the information isn’t included in an EIR.

Those topics are the specific North American crudes Valero plans to buy, publicly defined as “light, sweet” crude; the weight, sulfur content, vapor pressure and acidity of specific crude blends processed at the refinery; data bought by Valero that shows those properties of various crudes; detailed information about the crude blends suitable for the Benicia refinery based on its unique configuration; and detailed daily measurements of weight and sulfur content of crude blends processed at the local refinery in the past.

The city agreed to keep that information confidential because of its “competitive value,” or because disclosure could allow other refiners to claim violation of antitrust laws.

However, the document noted that based on the refinery’s operation, the optimum range of weight and sulfur for crude blends is narrow, between 24 and 29 degrees American Petroleum Institute gravity, with a sulfur content ranging from .08 percent to 1.6 percent.

The report noted that light, sweet crude is available from Canada, Texas, Wyoming, Colorado, North Dakota, Utah and New Mexico. Light, medium and heavy sour crude comes from Canada.

Valero today

Valero Benicia Refinery produces 10 percent of the California Air Resources Board (CARB) gasoline used in California, and 25 percent of the CARB gasoline used in the San Francisco Bay Area, and it also produces jet fuel, liquefied petroleum gas, heating oil, fuel oil, asphalt, petroleum coke and sulfur.

The Bay Area Air Quality Management District permits Valero to process up to 180,000 barrels of crude oil a day, though it averages 165,000 barrels daily.

It exports petroleum coke and liquid petroleum gas, and already uses rail cars to move products off refinery property to the AMPORTS Benicia Terminal.

Materials then are stored in silos until they’re loaded onto marine vessels.

Refinery emissions

The report said substituting rail cars for maritime crude delivery of the crude would eliminate 11,707 metric tons of carbon dioxide emissions from ships every three years.

The 6,726 metric tons of carbon dioxide released in a year in association with the project is below the annual “conservative significance threshold” of 10,000 tons of carbon dioxide, it said.

The report said that delivery of crude oil by large line haul tank cars would reduce overall emissions outside California when compared to delivery of crude oil by ships.

According to the report, the U.S. Environmental Protection Agency has identified ozone, nitrogen dioxide, carbon monoxide, particulate matter and a variety of other pollutants, including sulfur dioxide and acid rain, as “criteria pollutants” because standards have been established to meet public health and welfare criteria.

The Bay Area Air Quality Management District (BAAQMD), which has a monitoring station on Tuolumne Street in Vallejo, records those pollutants and notes the meteorological conditions that can affect air quality.

The report said that station is close enough to Benicia to have similar background pollutant concentrations, an assumption confirmed by an air monitoring study conducted 2007-08 just west of the refinery.

The report looked past the Bay Area district to a lesser degree to the Sacramento Basin, Yolo-Solano, Sacramento Metropolitan and Placer County air management or pollution control districts to determine the long-term operational impact of the project. However, those impacts “are indirect and difficult to predict, given the speculative nature of the exact rail routes that would be used.”

However, the report said the project wouldn’t conflict with or obstruct implementation of any applicable air quality plan.

The report noted that the refinery is in an industrial district and owns 470 acres of mostly undeveloped property that buffers two sides of the refinery campus. It has general industrial use neighbors on its other two sides.

Past Valero’s buffers are residential neighborhoods, and the closest homes to the project would be in neighborhoods no closer than 2,100 feet northwest of the northernmost part of the new unloading racks.

The report, which used three-year averages from December 2009 to November 2012 for its calculations, said emissions from the refinery wouldn’t increase as a result of the project.

During public review, the report said, “some commenters opined that the project would result in emissions increases from existing, permitted refinery equipment. This is not the case.”

In fact, the report said, “Taking into account the increase in locomotive emissions and the reduction in maritime emissions, the net effect of the project would be to reduce air emissions within the Bay Area Basin.”

The report found the project complies with the BAAQMD Bay Area 2010 Clean Air Plan (2010 CAP).

While the new unloading rack and piping could generate 1.88 tons annually in fugitive reactive organic gas (ROG) emissions, the project’s only direct operational air quality emissions, it said that would be more than offset by reduction in maritime ROG emissions once the project becomes operational.

“The project would not have any other direct operational impacts on air quality,” the report said. There would be no changes in the refinery’s operations, nor increased emissions from processing because of the refinery’s narrow range of weight and sulfur content of the crude it processes, it said. Nor would storage tanks contribute to any emissions.

Even the construction segment, which had potential to interfere somewhat with Bay Area air quality, could be mitigated with the air district’s basic control measures, the report said.

Locomotive emissions

However, long-term emissions from locomotives could contribute to air quality violations in the Sacramento Basin, because reduction of maritime emissions wouldn’t be available to provide compensation, the report said.

Again, since locomotive emissions are regulated at the federal level, Benicia can’t impose any emission controls on tanker car locomotives. “The impact would be significant and unavoidable,” the report said, with no available mitigation.

The report noted that even if railroad-caused emissions increase in North America as crude travels to Benicia, maritime emissions from ships traveling from Alaska, South America, the Middle East and other parts of the world would decrease. However, “These emissions can be described only in general terms because it is impossible to identify and quantify emissions across the vast range of possible routes,” the report said.

Protecting the area

Any impacts on the surrounding environmentally sensitive areas and such inhabitants as nesting birds and threatened or endangered species could be prevented through mitigation measures such as buffers, storm water pollution prevention, care about light placement and other measures, the report noted.

Inhabitants of the federally protected Suisun Marsh already are acclimated to the sounds of rail traffic, it said, and while additional rail traffic may briefly disturb them they also would become used to the sounds.

If any of the 730 trains traveling through the marsh annually caused an oil spill in the vulnerable marsh, the report said that could be “a significant impact,” especially on special-status species.
However, the report said, the risk of releasing greater than 100 gallons along the route “is very low … an estimated frequency of once per 262 years.”

The Federal Railroad Administration requires railroads to meet or exceed national safety standards, including those dealing with earthquakes, and the California Building Code also would come into play, the report said.

The report didn’t examine hazards associated with transporting flammable liquids beyond Roseville, because it called those impacts “speculative.”

Instead, it focused on homes and businesses near the refinery’s rail unloading area, those along the transportation route and around the environmentally sensitive Suisun Marsh from Roseville to Benicia.

Federal and state regulations require annual reports of hazardous chemical inventories, and Solano County companies such as the refinery must comply with local and county regulations as well, the report noted.

Recent accidents, and planned responses

In response to several rail accidents involving crude oil and ethanol, federal regulatory agencies and the Association of Railroads (AAR), an industry trade group, have collaborated to reduce risks.
It took the NTSB until 2012 to note that the DOT-111 tank cars were inadequate, and the board’s report said the track structure was washed out by a flash flood. The board began urging PHMSA to adopt stricter specifications for tank cars that carry ethanol or crude oil.

Instead of waiting for PHMSA to act, the DEIR said, AAR voluntarily imposed more stringent standards for the tank cars, requiring thicker tank shells and heads; higher tensile strength; normalized steel to reduce damage to cars during an accident; protective steel head shields at both ends of the cars; consolidated top fittings beneath a “robust” steel protective housing; and a re-closing pressure relief device to reduce the likelihood of over-pressure if the car is involved in an accident or pool fire.

The report also addressed the fatal derailment near Quebec, Canada that occurred last year.

A train carrying Bakken field crude oil that derailed in Lac-Megantic, Canada, July 6, 2013 was using 72 of the DOT-111 “legacy” cars. In addition, the engineer and crew left the lead locomotive engine idling while the train was unattended.

Someone reported a fire on the locomotive, which was tended by emergency responders.

Left unattended again, the train began to move, gather speed and traveled 7.4 miles out of control down a grade until it derailed at 60 to 70 mph, spilling 1.5 million gallons of crude oil, which ignited and killed 47 people, destroyed 30 buildings and forced 2,000 people to evacuate.

Legacy tank cars filled with sweet Bakken crude were part of a Nov. 8, 2013, derailment in Aliceville, Ala.; in the April 30, 2014 derailment in Lynchburg, Va., the DEIR noted that some of the cars were legacy DOT-111s, and the others were 1232 tank cars.

The accidents “raise the concern that a release of Bakken crude is more likely to result in a fire or explosion because of its low flash point,” the report said. The Bakken oil field is one available source of North American crude Valero may purchase, and “it is important to consider these incidents,” the report said.

The report said the FRA has responded to these accidents by issuing an order Aug. 2, 2013, to increase requirements before trains are left unattended. With PHMSA, FRA issued an advisory that same day about increased safety procedures. Since then, those DOT departments have issued additional safety requirements, some at the prompting or cooperation with AAR.

The report also described regulations governing accidental release prevention, storage of flammable liquid and compressed gas, worker safety and emergency response.

In Solano County, it noted, the emergency safety plan is administered by the California Emergency Management Agency, which coordinates the response of multiple agencies. In addition, Union Pacific has its own hazardous materials (Hazmat) response team in addition to a mandated emergency response plan.

If a train were to derail between Roseville and Benicia, consequences could be minor in the case of a small spill, to “significant” if the spill were great or ignited, particularly in a residential or commercial area, the report said.

Benicia hired Dr. Christopher Barkan to conduct a quantitative assessment about the probability of accidental release of crude oil from a Valero-bound train. The professor and executive director of the Rail Transportation and Engineering Center at the Department of Civil and Environmental Engineering at the University of Illinois at Urbana-Champaign provided an appendix to the report that noted the expected occurrence of a crude oil train release incident exceeding 100 gallons is about .009 a year, or once in 111 years.

The DEIR called Barkan’s figures conservative, saying “they probably overstate the actual risk,” and said a motor vehicle accident between the two cities was 22 times higher than the risk of a Valero train oil release.

Valero’s own emergency response procedures already are on file in its emergency procedures manual, which has been included in the report. The refinery has its own fire department, and has agreements with Benicia and its fire department, the report noted.

In case of an accidental spill or release of oil outside the refinery, its incident command system would be activated, in cooperation with such other agencies as the U.S. Coast Guard, California Office of Spill Prevention and Response, U.S. EPA, Solano County Department of Environmental Management and other emergency responders.

Because of this, the report said, no other mitigation is needed.

Comments and concerns

The Planning Commission accepted additional public comment July 11. Based on those comments, the city sent notice Aug. 9, 2013, that it would seek an EIR instead, and accepted public comments for 30 days about the scope of the report.

The Planning Commission met Sept. 12, 2013 to hear public comment on the EIR scope to assure that areas that concern residents would be covered. Written comments were accepted through Sept. 13, 2013. During that time 18 people submitted written documents and eight oral comments were received, the report said. More comments were submitted after the deadline.

The bulk of those comments aired concerns about the geographic area and potential indirect impacts of the project; the source of the crude feedstock; potential changes in the quality of that feedstock and how that would affect refinery operations and emissions; the relationship between this project and the Valero Improvement Project; the operational safety of railroads and trains hauling hazardous materials, including tank car specifications; and the cumulative effects of this project and similar ones planned elsewhere in California.

The Valero Improvement Project (VIP), the bulk of which was finished in 2011, allows the refinery to process heavier, sourer crude — up to 60 percent, compared to the 30 percent maximum before the VIP project was undertaken. The project also let the refinery reduce the use of gas oil as feedstock and increase maximum crude oil throughout, the DEIR said.

The refinery has permits through December to build a hydrogen plant associated with the VIP plans, but company officials told the DEIR consultants that the plant has enough hydrogen to meet the refinery’s needs.

Next steps

The Valero Benicia Crude By Rail Project Draft Environmental Impact Report is available to the public on the city’s website by clicking here.

The public currently has 45 days to review and comment on the project, though the Planning Commission may decide to extend that period, since the group Benicians for a Safe and Healthy Community, organized to block the project, has asked for a 90-day review period.

Comments also may be made before the Planning Commission July 12 in a hearing at which no vote is scheduled to be taken.

After comments are received, the draft will be modified to address those concerns, and will be sent to the city as a final document to be circulated. If the final EIR is approved, Valero will receive its city permit to proceed, though the refinery must obtain permits from other agencies before construction would begin.

The project requires an approved Authority to Construct from the Bay Area Air Quality Management District, but doesn’t affect the refinery’s operating permit or its emissions limit.

Those interested may request a copy on CD by calling the Community Development Department, 707-746-4280. Print copies are available at the department at City Hall, 250 East L St., and the Benicia Public Library, 250 East L St.

Bakken Crude, CPC-1232 standard, Crude By Rail, DOT-111, Federal Regulation (U.S.)

White House agency under pressure from big oil & rail – accused of “coddling” the industries

Repost from DESMOGBLOG
[Editor: The influential White House Office of Information and Regulatory Affairs (OIRA) is reviewing the newly-proposed oil-by-rail safety regulations rolled out by the DOT and PHMSA.  Significant quote: “A DeSmogBlog review of OIRA meeting logs confirms that in recent weeks, OIRA has held at least ten meetings with officials from both industries on oil-by-rail regulations. On the flip side, it held no meetings with public interest groups.”  See also important statements by BNSF and the DOT on the need for an entirely new tank car design near the end of this article.   – RS]

Meeting Logs: Obama White House Quietly Coddling Big Oil on “Bomb Trains” Regulations

Sun, 2014-06-15  |  Justin Mikulka and Steve Horn

When Richard Revesz, Dean Emeritus of New York University Law School, introduced Howard Shelanski at his only public appearance so far during his tenure as Administrator of the White House Office of Information and Regulatory Affairs (OIRA), Revesz described Shelanski as, “from our perspective, close to the most important official in the federal government.”

OIRA has recently reared its head in a big way because it is currently reviewing the newly-proposed oil-by-rail safety regulations rolled out by the Department of Transportation (DOT) and Pipeline and Hazardous Materials Safety Administration (PHMSA).

During his presentation at NYU, Shelanski spoke at length about how OIRA must use “cost-benefit analysis” with regards to regulations, stating, “Cost-benefit analysis is an essential tool for regulatory policy.”

But during his confirmation hearings, Shelanski made sure to state his position on how cost-benefit analysis should be used in practice. Shelanski let corporate interests know he was well aware of their position on the cost of regulations and what they stood to lose from stringent regulations.

“Regulatory objectives should be achieved at no higher cost than is absolutely necessary,” Shelanski said at the hearing.


Howard Shelanski; Photo Credit: White House Office of Information and Regulatory Affairs

With the “cost-benefit analysis” regarding environmental and safety issues for oil-by-rail in OIRA’s hands, it appears both the oil and rail industries will have their voices heard loudly and clearly by the White House.

A DeSmogBlog review of OIRA meeting logs confirms that in recent weeks, OIRA has held at least ten meetings with officials from both industries on oil-by-rail regulations. On the flip side, it held no meetings with public interest groups.

“Cost-Benefit”: A Brief History

OIRA was created in 1980 by President Ronald Reagan with the goal of getting rid of “intrusive” regulations.

“By instructing agencies to clear drafts of regulations through OIRA, Presidents have made the agency…a virtual choke point for federal regulation,” explains the Center for Progressive Reform, a think-tank critical of OIRA and its cost-benefit analysis.

Cost-benefit analysis was put on the map by Harvard Law School professor Cass Sunstein, “regulatory czar” and head of OIRA for President Barack Obama before Shelanski.

The ideology, which is embraced by President Obama, is inspired by the “Chicago School” of free market economics, unpacked in depth in Naomi Klein’s book, “The Shock Doctrine.”

“He’s a University of Chicago Democrat, so he’s very attuned to the virtue of free markets and the risks of free-market regulation,” Sunstein told The Wall Street Journal about Obama in 2009. “He’s not an old-style Democrat who’s excited about regulations.”


Cass Sunstein; Photo Credit: Wikimedia Commons

The Washington Post described Sunstein as Obama’s “intellectual mentor” who “had a major influence on Obama’s view of government — stressing pragmatism over ideology.”

But of course, the “Chicago School” has its own ideological roots: neoliberalism.

Big Oil Meet and Greet

The first on-the-books meeting OIRA held in the second quarter of 2014 about the newly-proposed oil-by-rail safety regulations written by the U.S. Department of Transportation (DOT) was with lobbyists, economists and attorneys representing both the American Petroleum Institute (API) and Chevron on May 19.

Attendees of that meeting included Misty McGowen, Director of Federal Relations for API and Michael Yoham, Manager Rail Transportation Services for Chevron.

This API-Chevron White House visit parallels the one they made together when OIRA mulled over new rules on sulfur in gasoline. In 2012, a group led by API president Jack Gerard went to the White House to discuss this issue with another of President Obama’s closest advisers, Valerie Jarrett.

This visit clearly paid dividends for the industry when the new regulations were delayed.

Akin to what is currently happening with the oil-by-rail regulations regarding Bakken shale oil and the DOT-111 tank cars, it was coordinated with a big public relations push trashing the regulations as unnecessary.

History, as they say, has repeated itself in the oil-by-rail sphere.

A new report touting the safety of oil obtained from hydraulic fracturing (“fracking”) in the Bakken Shale was released by industry groups the same week as the API-Chevron visit with OIRA.


Image Credit: Shutterstock | Trueffelpix

Less than two weeks later on May 30, OIRA met with representatives from the American Fuel & Petrochemical Manufacturers (AFPM) and Tesoro, among others. Stephen H. Brown, a Tesoro lobbyist, represented the company — which has a multi-pronged oil-by-rail footprint — at the meeting.

AFPM has also gone on the record saying Bakken fracked oil is safe for railway transportation, also concluding DOT-111 tank cars are “fine” for moving Bakken crude to market.

“Can we have an intellectually honest discussion about mechanical and track integrity on the rails?,” AFPM president Charles Drevna asked rhetorically in a May 19 Railway Age article. “You shouldn’t blame the cargo for an accident.”

Other Big Oil companies that got the ear of OIRA in June included Phillips 66 (purchased as a wholly-owned subsidiary by ConocoPhillips in 2001) and ExxonMobil.

BNSF Lands Two Meetings in One Week

Records also reveal OIRA met twice in one week with Burlington Northern Sante Fe (BNSF), the oil-by-rail behemoth owned by Warren Buffett. The first was held on June 3 and the second on June 6.

Buffett was a major donor to President Obama for both the 2008 and 2012 presidential elections. He also gave big money to Hillary Clinton — former Secretary of State for the Obama Administration and likely presidential candidate in 2016 — during the 2008 Democratic Party presidential primaries, and has already endorsed her for 2016.


Warren Buffett (L), President Barack Obama (R); Photo Credit: Wikimedia Commons

BNSF Executive Chairman Matthew Rose came to the June 3 meeting flanked by two BNSF lobbyists: Amy Hawkins and Cliff Rothenstein (who maintains BNSF as a client on behalf of K&L Gates). Some speculate Rose could succeed Buffett as CEO of Berkshire Hathaway, the holding company that bought BNSF in 2009.

On June 6, Roger Nober, BNSF Executive Vice President for Law and Corporate Affairs, landed a one-on-one meeting with Shelanski. Before working for BNSF, Nober passed through the government-industry revolving door, serving as an attorney for the Department of Transportation.

According to an article published in EnergyWire, BNSF supports an “aggressive phase out” of its DOT­-111 tank cars.

”[BNSF] believe[s] the next ­generation tank cars should exceed the 2011, stronger new standard known as the CPC­-1232 tank car,” Roxanne Butler, a spokeswoman for BNSF told EnergyWire.

Butler did not respond to questions from DeSmogBlog about what BNSF discussed with OIRA in the meetings, nor did she specify what she meant by an “aggressive phase out.”

The CSX Corporation oil-by-rail train that exploded in Lynchburg, Virginia in late-April, though, had CPC-1232 “next ­generation tank cars.”

On the May 14 edition of The Rachel Maddow Show, Secretary of Transportation Anthony Foxx told Maddow that he does not believe the CPC-1232 is the solution.
Secretary of Transportation Anthony Foxx interview with Rachel Maddow, via YouTube.

“I can tell you that I don’t have confidence in the DOT-111 [and] I’m unconvinced that the 1232 — which is the upgraded car — is the absolute solution,” said Foxx. “I think there’s going to have to be a new type of tank car established to keep this country as safe as possible.”

Oil Exports Connection

For its first oil-by-rail meeting of June, DOT officials and OIRA officials sat alongside Russell Smith, lobbyist for oil and gas industry capital investment firm Quantum Energy; FTI Consulting lobbyist John Cline; and John Whitcomb, legislative analyst for FTI Consulting.

Cline formerly headed up C2 Group, a Washington, DC-based lobbying group purchased in March 2013 as a wholly-owned subsidiary of FTI Consulting.

BNSF is one of C2 Group’s clients.

As his C2 Group biography explains, Cline has also passed through the revolving door, formerly working for both the White House and DOT. 

“John served in the White House as a Special Assistant for Intergovernmental Affairs under President George H.W. Bush,” Cline’s bio states.

“Prior to his service in the White House, he was Director of the Office of Congressional Affairs for the U.S. Department of Transportation (DOT)… John entered public service in 1989 upon his selection by President Bush as Associate Administrator for the Federal Transit Administration at DOT.”

FTI — overseer of public relations efforts for fracking front group Energy in Depth — published a report promoting oil exports in June 2013.

Many prospective coastal crude oil export terminals rely on oil-by-rail to move product to the coast.

For example, the exploding CSX Corporation oil-by-rail train in Lynchburg, Virginia owned by Plains All American was on its way to the Yorktown facility. Yorktown has been marked a potential export terminal if the ban on exporting U.S. oil is lifted.

Map Credit: CSX Corporation

Cui Bono?

While Shelanski’s remarks at NYU discussed cost-benefit analysis, he also talked about how the question over regulatory policy often boils down to shifting costs.

“A more honest debate and better policy will emerge if the debate acknowledges the difference between creating costs and shifting costs back to their source to reduce harmful externalities,” he said.

Which raises the big questions on oil-by-rail regulations, or lack thereof: cui bono? And who pays the costs?

A case in point is Lac-Mégantic, Quebec — site of the massive “bomb train” explosion which killed 47 people on July 6, 2013 — where the cost to clean up and rebuild the town is estimated at $2.7 billion.


Lac-Mégantic Disaster; Photo Credit: Wikimedia Commons

With all six of the oil and rail companies involved refusing to pick up the tab, the cost has been transferred to taxpayers from the oil and rail industries.

Exactly what API, Chevron, ExxonMobil, BNSF and other powerful factions discussed in their meetings with OIRA remains unknown for now.

But one thing remains clear: the only side OIRA has listened to so far in official meetings is Big Oil and Big Rail.

This is consistent with the trend-lines unpacked in the Center for Progressive Reform’s study titled, “Behind Closed Doors at the White House,” a comprensive review of OIRA meeting logs between 2001-2011.

“Over the last decade, 65 percent of the 5,759 meeting participants who met with OIRA represented regulated industry interests — about five times the number of people appearing on behalf of public interest groups,” stated the report.

“[E]ven under this ostensibly transformative President [Obama]…industry visits outnumbered public interest visits by a ratio of almost four to one.”


Table Credit: Center for Progressive Reform

As the old adage goes, the more things change, the more they stay the same.

“The oil-by-rail situations illustrates the way that the process is, all too often, stacked in favor of industry,” Daniel A. Farber, professor at University of California Law School, scholar for the Center for Progressive Reform and critic of OIRA‘s version of cost-benefit analysis, told DeSmogBlog.