Category Archives: Crude By Rail

Crude By Rail, Diluted bitumen (Dilbit), Oil Industry, Oil prices, Rail industry, Railbit, Tar sands crude

Tar Sands on the Tracks: Railbit, Dilbit and U.S. Export Terminals

Repost from DESMOGBLOG

Tar Sands on the Tracks: Railbit, Dilbit and U.S. Export Terminals

2014-06-17  |  Ben Jervey

Last December, the first full train carrying tar sands crude left the Canexus Bruderheim terminal outside of Edmonton, Alberta, bound for an unloading terminal somewhere in the United States.

Canadian heavy crude, as the tar sands is labeled for market purposes, had ridden the rails in very limited capacity in years previous — loaded into tank cars and bundled with other products as part of so-called “manifest” shipments. But to the best of industry analysts’ knowledge, never before had a full 100-plus car train (called a “unit train”) been shipped entirely full of tar sands crude.

Because unit trains travel more quickly, carry higher volumes of crude and cost the shipper less per barrel to operate than the manifest alternative, this first shipment from the Canexus Bruderheim terminal signaled the start of yet another crude-by-rail era — an echo of the sudden rise of oil train transport ushered in by the Bakken boom, on a much smaller scale (for now).

This overall spike in North American crude-by-rail over the past few years has been well documented, and last month Oil Change International released a comprehensive report about the trend. As explained in Runaway Train: The Reckless Expansion of Crude-by-Rail in North America (and in past coverage in DeSmogBlog), much of the oil train growth has been driven by the Bakken shale oil boom. Without sufficient pipeline capacity in the area, drillers have been loading up much more versatile trains to cart the light, sweet tight crude to refineries in the Gulf, and on both coasts.

Unfortunately, some of these “bomb trains” never make it to their destination, derailing, spilling, exploding and taking lives.

While shale oil, predominantly from the Bakken, has driven the trend, Canadian tar sands producers are increasingly turning their attention to rail. Hobbled by limited pipeline capacity out of Alberta, and frustrated by their inability (so far) to ram the Keystone XL pipeline through the American heartland, tar sands producers are signing contracts with Canadian rail operators. Canadian National Railway is getting the lionshare of the business.

Canadian National not only has the infrastructure in place near Alberta’s tar sands developments, but also operates 19 subsidiary railways in the United States under the Grand Trunk Corporation. Strung together, Canadian National network stretches 2,800 miles from Western Canada down to the Gulf Coast, the only company that can offer straight-through shipping from the tar sands to Gulf Coast refineries.

Of the upstream infrastructure — or the loading terminals up near the tar sands, the Oil Change International report explains:

At the time of writing there were 31 terminals in operation that load tar sands or heavy crude, with six of these expanding and an additional eight planned or under construction…

The first terminal designed to load unit trains with Canadian tar sands crude, the Canexus terminal in Bruderheim, northeast of Edmonton, Alberta, started operations in December 2013. It has a capacity of 70,000 bpd and loads tar sands bitumen from MEG’s Christina Lake SAGD project, among others.

Downstream, rail terminals are similarly adapting to handle shipments of tar sands crude. From the Runaway Train report:

Terminals designed to unload tar sands crude are currently concentrated in the Gulf Coast region, where the biggest concentration of heavy oil refining capacity is located…

The Gulf Coast terminals have about one million bpd of unloading capacity today, set to grow to over two million bpd in 2016. Some of this capacity is at refineries such as those operated by Valero in Port Arthur, Texas, and St. Charles, Louisiana. Valero has ordered 1,600 insulated and coiled tank cars specifically for hauling tar sands crude to its refineries.

The Gulf Coast also has significant midstream capacity on the Mississippi River, where crude oil, including tar sands crude, is unloaded from trains and pumped from storage tanks into local pipelines or loaded onto barges that deliver to coastal refineries via the Intracoastal Waterway.

Meanwhile, refineries on the Atlantic and Pacific coasts are angling to get in on the action, hoping that their shipping advantages to Europe and Asia respectively will prove appealing to tar sands producers.

As described in Runaway Train, terminals on the West Coast are particularly well positioned to serve as a “fast-track out of North America for Canada’s tar sands.”

There are currently 13 crude-by-rail unloading terminals in California, Oregon and Washington, of which four are currently expanding their capacity. There are also 11 terminals planned or under construction.

Many of these are at refineries that, like their counterparts on the East Coast, are looking to take advantage of discounted domestic or Canadian crudes that they have little hope of ever gaining access to via pipeline. With a larger proportion of refining capacity geared up for heavy tar sands processing than exists on the East Coast, West Coast refineries such as the Valero facility in Wilmington, Calif., and the Phillips 66 refineries in California and Washington, are keen to rail in tar sands crude.

Accessing these West Coast refineries by rail, as well as the prospect of export terminals in Washington and Oregon, are potentially the tar sands industry’s best bet for major market expansion in the face of delays and possible cancellation of the Keystone XL pipeline and pipelines to the Canadian west coast such as the Northern Gateway and Trans Mountain expansion.

These latter projects, which are primarily focused on exporting tar sands crude to Asia, face particularly stiff opposition from coastal communities, which fear the destruction of fisheries and coastal environments from the increased tanker traffic that would ensue.

Given the relative proximity particularly of Washington State refineries and ports to Alberta’s tar sands fields, these terminals offer oil companies a potential solution to the transportation bottlenecks that are threatening the viability of tar sands production growth. At least three proposals in southern Washington State have the potential to unload tar sands crude from trains and load it onto tankers for export to Asia or transport to refineries along the California coast.

Tar sands producers are particularly motivated to get their crude to coastal terminals and refineries for export. As we’ve covered in the past on DeSmogBlog, tar sands companies want to export their product, because the low-grade crude is more easily refined into diesel, which has a much larger market in Europe and Asia. This is the core reason that the Keystone XL, if built, would be little more than an export pipeline, and wouldn’t actually provide more oil to American markets, nor lower American gas and heating oil prices.

The Oil Change International report also shines a light on the fact that though crude exports are banned from the U.S., domestic refineries can legally export crude from Canada.

While crude oil of U.S. origin is subject to export restrictions, no such restriction applies to exports of Canadian oil through the U.S., as long as it can be shown that no U.S. oil was blended.

Shippers wishing to export Canadian oil from U.S. ports still have to apply for export licenses from the Department of Commerce, but these can and have been granted. Given the lack of pipeline capacity to Canadian ports, it is attractive for tar sands producers to find ways to get their product to a U.S. port where it can be exported. Crude-by-rail terminals on the West and East Coasts are strategically important as they are closer to Alberta than those on the Gulf Coast and it is therefore cheaper to reach these ports by rail.

Railbit vs. Dilbit

As this still-nascent segment of crude-by-rail develops, it’s worthwhile to take a moment to understand the distinction between a couple of different tar sands products that are being shipped by train. The vast majority of tar sand crude-by-rail shipments thus far have been diluted bitumen, or dilbit. Dilbit, which you have heard of as the tar sands crude that is already funneling through North American pipelines, is composed of the sticky, viscous tar sands bitumen, which is then mixed with about 30 percent diluent, allowing it to flow through pipelines. This mixture of dilbit is particularly volatile and abrasive, and reports have pointed to it being more likely to cause leaks and spills and explosions during transport.

Railbit is a relatively new designation for crude, and is defined as bitumen that has been mix with roughly 17 percent diluent. Moving railbit, rather than dilbit, saves tar sands shippers about half of the so-called “diluent penalty,” or the cost of adding the diluent to the mix.

So why are most trains still loaded with dilbit? Because to this point, most loading terminals are still being fed by feeder pipelines or trucks that can only handle this more watered down blend. That and the fact that special loading and unloading facilities are necessary to handle railbit, which is more viscous and needs to be heated in special tank cars to be unloaded. Some downstream terminals are making these investments, seeing railbit as a viable alternative going forward, but today dilbit is still dominant.

Either way, it’s dirty and dangerous, and tar sands bitumen in any form does nothing to lower American energy bills. Bitumen, by rail or pipeline or barge, is bound to wind up on a tanker to Europe or Asia.

Crude By Rail, Emergency Readiness & Response, State regulation

New Hampshire and Minnesota pass new laws on emergency response

Repost from Inside Climate News

2 States Beef Up Oil-by-Rail and Pipeline Safety After String of Accidents

Other states that have surging oil-by-rail traffic and pipelines carrying tar sands are expected to consider similar safety requirements.
By Elizabeth Douglass, InsideClimate News  |  Jun 16, 2014
Oil tankers on fire at the train derailment site in Lac-Megantic, Quebec, on July 10, 2013. Concern among the public and state lawmakers over the safety of oil transport has been building with each major oil pipeline spill and train derailment. Credit: Sûreté du Québec

Alarmed by a string of explosive and disastrous oil spills, two states recently passed laws aimed at forcing rail and pipeline companies to abide by more rigorous emergency response measures instead of relying on the federal government.

The moves by New Hampshire and Minnesota reflect a desire for more control over in-state hazards, as well as mounting frustration over gaps in federal law involving oil pipelines and oil trains, superficial federal reviews and the secrecy surrounding spill response plans submitted to U.S. regulators.

“At this point, lots of states are looking at oil-by-rail and thinking about how they would respond—whether they have the resources, whether their first responders have the resources, and whether their laws are sufficient to protect their communities,” said Rebecca Craven, program director at the Pipeline Safety Trust, a safety advocacy group based in Washington State.

It’s the same with pipelines. “States are becoming more aware of new pipelines being proposed in their states, or expansion of existing pipelines, or changes in [a pipeline’s] products,” Craven said. “As a result of public concerns being raised, they’re starting to respond by undertaking state-level spill response plans. I think it could be a trend.”

Under New Hampshire’s law, which the governor is expected to sign, the state gains the power to establish its own, more stringent requirements for inland pipeline spill response plans and equipment. Minnesota’s law creates tougher emergency preparedness standards for pipelines and oil-carrying railroads. It also charges rail and pipeline companies a fee to help equip and train local fire departments to handle oil accidents.

“I think it’s pretty much indisputable at this point that what exists at the federal level is not adequate,” said Sheridan Brown, legislative coordinator for the New Hampshire Audubon. “We’re happy that there’s going to be some state level oversight.”

The concern over the safety of oil transport has been building with each major oil pipeline spill and train derailment.

The most catastrophic incident was the July 6, 2013 accident in Lac-Mégantic, Quebec, where a train derailed, causing 63 railcars full of North Dakota light crude oil to explode and killing 47 people. Since then, a series of other oil train derailments have resulted in fires or explosions, including in Aliceville, Ala.; Casselton, N.D.; Plaster Rock, New Brunswick; and Lynchburg, Va.

Major pipeline spills have been in the public spotlight, too. The most notable of them is the July 2010 pipeline rupture in Marshall, Mich., where more than one million gallons of tar sands oil spilled, fouling the Kalamazoo River—a disaster that has yet to be fully cleaned up. In April 2013, a pipeline split open and dumped tar sands oil into a Mayflower, Ark., neighborhood.

Under pressure to provide better oversight, the Pipeline and Hazardous Materials Safety Administration (PHMSA) and the Federal Railroad Administration (FRA) have enacted  and proposed new rules for pipelines and trains and imposed voluntary restrictions for oil-laden trains.

But both agencies have a history of being too thinly staffed to carry out the oversight already required of them. And with industry lobbyists working to derail new regulations, critics worry that the necessary protections will never be enacted.

“Essentially, there’s no meaningful regulation or requirements or standards for oil spill response for railroads,” said Paul Blackburn, an attorney and consultant who helped push for Minnesota’s new law. “Instead, decades old federal regulations continue…[that] for all practical purposes exempt railroads from federal oil spill response standards.”

Urgency Felt in Wash., N.H.

Under the federal 1990 Oil Pollution Act, states are allowed to enact their own rules for spill preparedness as long as they are equal to or more rigorous than the federal regulations. Several, including California, Washington, and Oregon, did so years ago.

Now, railroads carrying crude oil through Minnesota have to submit spill prevention and response plans to the state pollution control agency, carry out practice drills and comply with other requirements in an emergency. Companies that move oil in the state via rail or pipeline also have to pay a fee to fund training and buy equipment for emergency crews to respond to an oil-train explosion or pipeline rupture.

“Minnesota recognized that scores of its cities and towns are threatened by crude oil shipments by rail and pipeline, and that local first responders are almost always the first on the scene,” said Blackburn. “To respond to a major spill—such as from an oil unit train [of around 100 tank cars]—is well beyond the abilities of most rural fire departments.”

Blackburn said he expects other states that have growing oil-by-rail traffic to consider similar fees and requirements.

In New Hampshire, lawmakers were focused on preventing and cleaning up oil possible spills from just one pipeline: the Portland-Montreal Pipeline, the only hazardous liquids pipeline in the state. It is partly owned by Portland Pipe Line Corp.

“They have, by and large, been good neighbors, but you look around the country and you see some of the problems that have occurred,” said state Sen. Jeff Woodburn, who sponsored the New Hampshire bill. “I think it’s pretty important to take steps toward giving more authority, more autonomy, to the states to be more engaged in the potential of a spill.”

The 236-mile line consists of three separate pipes built to carry conventional crude oil from Maine, through New Hampshire and Vermont, and on to refineries in Montreal and Ontario. Two of the pipes are still carrying varying amounts of oil, while a third was retired in 1984.

What worries state officials and environmentalists is that the Portland-Montreal pipeline could be reversed and used to carry tar sands oil to Maine’s coast for export. Canada approved what could be the first part of this plan—a reversal on Enbridge Inc.’s Line 9b so it can deliver Alberta’s tar sands to Montreal.

The Portland-Montreal pipeline runs through New Hampshire’s picturesque northern region, crossing more than 70 streams and wetlands, including two major rivers, according to Brown, the legislative coordinator for New Hampshire Audubon. Brown and others are concerned that oil spills involving dilbit are harder to clean because globules tend to sink in water.

“Our North Country economy is primarily based on recreation, so to have something up there that damages wetlands and rivers would really be catastrophic for those communities,” said Brown.

“That got us looking at what [protections are] in place,” he said. “And there really isn’t a lot at the state level…there is a heavy reliance or faith in the federal government that it’s going to take care of things. But the spill in [Michigan] and some of these other spills have shown that that is not the case.”

Once the governor signs it, the New Hampshire law will give the state’s department of environmental services the authority to craft pipeline spill regulations to cover inland oil transit. Currently, that agency is in charge of marine spill prevention and response.

The catch is that the new law won’t come with any new funding—and least not yet. A proposed fee ran into opposition and was dropped from the legislation.

“Our department of environmental services was very generous to accept additional responsibility without additional money,” said Brown. “They saw enough urgency there to doing this, enough benefit to doing it that they said, ‘let’s go forward, and we’ll figure out the funding part of it some other time’…they were eager to have that tool to make sure the plans are better here in the state.”

See Also

Exxon to Challenge Ark. Oil Spill Fine at Hearing, but Public Not Allowed to Listen
Federal Pipeline and Oil-by-Rail Regulator Making 9% Staff Cut, Confounding Experts
Too Much Propane Could Be a Factor in Exploding Oil Trains
Exclusive: Pipeline Safety Chief Says His Regulatory Process Is ‘Kind of Dying’
Bakken Crude, California Regulation, Crude By Rail, Emergency Readiness & Response, Valero Crude By Rail

California imposes 6.5-cent fee on oil companies for every barrel of crude that arrives by rail or pipeline

Repost from The Sacramento Bee
[Editor: Significant quote: “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.”  Of course, we won’t need this fund if we simply STOP crude by rail and move toward clean energy.  – RS]

California to impose fee on crude oil rail shipments; funds to be used for spill prevention, cleanup

By Tony Bizjak, The Sacramento Bee  |  Jun. 16, 2014
A crude oil train operated by BNSF travels just outside the Feather River Canyon in the foothills into the Sacramento Valley. Jake Miille / Special to The Bee

California leaders have included several safety provisions in this year’s state budget with the aim of preventing toxic spills and fires as oil companies ship more crude oil on trains through cities and wildland areas.

Beginning in the coming fiscal year, the state will apply 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.

The budget also separately includes funds to hire seven more rail safety inspectors for the California Public Utilities Commission, PUC spokeswoman Terrie Prosper said.

The 6.5-cent shipping charge will be administered by the state Office of Spill Prevention and Response. “We consider this a great victory,” office administrator Tom Cullen said Monday. Until now, the office’s scope has been confined mainly to coastal areas. “We weren’t positioned in California to prepare for and respond to oil spills on the interior of the state.”

Cullen and others negotiated the shipping charge over the weekend with oil industry officials. The charge, an extension of an existing marine fee, may be the first of several steps California officials take in coming months to improve the state’s ability to minimize oil spills and handle them more effectively when they happen.

Tupper Hull, spokesman for the Western States Petroleum Association, said his organization will work with the state on the issue.

“The new revenues, the first place they should go, is to make sure local responders are adequately equipped,” Hull said. “We recognized from the beginning that this is a legitimate issue.”

The safety efforts have taken on urgency as oil companies reveal plans for hundreds of crude-by-rail shipments in California, including a proposal by the Valero Refining Co. to ship 100 crude oil tank cars a day through downtown Sacramento and downtown Davis to Benicia. Details of that plan are expected to be released by Benicia officials Tuesday.

Federal officials have warned that one of the crude oils being shipped into the state, from the Bakken region of North Dakota, appears to be more flammable than typical crude oils. Three recent train crashes and explosions, including one that killed 47 people in the Canadian city of Lac-Megantic last year, prompted federal transportation officials last month to require that railroads notify state emergency officials of large Bakken shipment times and routes.

Central to the state’s safety efforts will be keeping a closer watch on the tracks themselves. The state budget includes seven new rail inspector positions to help the California Public Utilities Commission fulfill its mandate to inspect every mile of rail in the state annually. PUC deputy director of rail safety programs Paul King said his agency has failed in that task some years because of lack of personnel.

With rail crude oil shipments on the rise, it’s critical that the state steps up now, King said. “The Bakken crude in particular is a big problem. This is a lot of volatile material coming in on routes where it hasn’t come in before.”

The state Senate on Monday passed a resolution urging the U.S. Department of Transportation and other federal agencies to write tougher standards for train tank cars and to “prioritize safety over cost effectiveness” in dealing with rail crude shipments. Federal officials have said they intend to improve design standards for rail cars hauling crude oil, but haven’t set a date.

Sens. Jerry Hill, D-San Mateo, and Lois Wolk, D-Davis, introduced a bill last week that would impose a second shipping fee on oil companies to be used to train and equip “first responders,” such as fire departments and hazardous materials crews, to deal with major spills and fires on railroad lines. The authors have not yet determined the fee amount.

“It’s not a matter of will (a spill) happen, it’s when,” Hill said. “We have to be prepared. We need to provide the resources for first responders to address the emergency.”

A recent state report found that 40 percent of local firefighters in the state are volunteers whose departments generally lack the training and equipment to deal with major hazardous materials spills.

Assemblyman Roger Dickinson, D-Sacramento, also has authored a bill requiring rail carriers to communicate more closely with state emergency officials about crude oil rail movements.

Read more here: http://www.sacbee.com/2014/06/16/6488137/california-to-impose-fee-on-crude.html#storylink=c

 

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.