Category Archives: Crude By Rail

Oil Train Insurance: Washington State and the Billion Dollar Disaster

Repost from STAND

Oil Train Insurance: Washington State and the Billion Dollar Disaster

By Alex Ramel, extreme oil campaign field director, March 28, 2016
WA Dept of Ecology

Washington is now one of only two states that requires railroads to disclose whether they have sufficient insurance to cover a “reasonable worst case spill.” This is a step in the right direction. But the new rule falls far short of requiring enough insurance to cover a catastrophic oil train derailment, spill and explosion.

The new State rule requires that any major rail company operating in Washington — today, only BNSF — report whether they have sufficient financial resources or insurance to cover the costs of an oil train spill of around $700 million (smaller railroads have smaller requirements). That’s better than nothing, which is what most states have. But it’s not nearly enough.

The deadly Lac Megantic oil train disaster cost more than $1 billion (see page 98 in the federal regulations) and the cost of rebuilding is more like $2.7 billion. As terrible as the Lac Megantic disaster was, and it was a heartbreaking catastrophe, a worst case oil train disaster in Washington could be even much worse.

Washington State’s failure to require railroads to pay the full and true cost of doing business in Washington is an even greater concern if it becomes a precedent in other states. The confusing, undefined phrase “reasonable worst case” appears to have already been copied into a proposed bill in the New York State Assembly.

The federal Pipeline and Hazardous Materials Safety Administration suggested that a disaster inside a major city could cost $12.6 billion (see page 110). What could a $12 billion derailment look like? BNSF runs oil trains within 20 yards of Safeco Field in downtown Seattle during Mariners games when fans are in the stands.

Insurance monetizes risk, assigning a direct cost to risky behavior and assigning financial value to safety. What would your homeowners insurance company do if you wanted to unload oil tanker trucks in your driveway? They would raise your rates (astronomically) or cancel your policy. Railroads, which operate without requirements to carry adequate insurance, make decisions about assuming risk without an important financial feedback loop. If railroads had to be properly insured for the risk to life, property, and the environment from oil trains, there would be far fewer or zero oil trains.

Last year BNSF was fined for 14 spills and leaks and for failing to report problems along the track in Washington. The summer before that three oil tank cars tipped over in downtown Seattle. Over the last two years four BNSF oil trains have derailed and either spilled or exploded in Casselton, ND, Galena, IL, Heimdal, ND, and Culbertson, MT. Under usual circumstances a safety record like that should lead to a very awkward conversation with an insurance agent. And an already expensive, high-risk policy should get even more expensive. But BNSF doesn’t seem to carry enough insurance to cover the real cost of an oil train disaster, and they don’t seem to care.

BNSF has already intimated that they don’t think that the state should be able to require insurance, and it is likely that the company will challenge the rule. The railroad wants the cost of insurance and the calculation of possible damages kept off of their books. That means that in addition to living with the risk, the public is also asked to shoulder the cost. That’s the most unreasonable proposition yet.

INTERVIEW: Benicia Planning Commissioner Steve Young

By Roger Straw, April 1, 2016
Steve_Young
Benicia Planning Commissioner Steve Young

Yesterday, Benicia Planning Commissioner Steve Young was interviewed on KPFA 94.1 radio, Berkeley. Host Andrés Soto questioned Mr. Young on the dirty and dangerous proposal of Valero Benicia Refinery to bring oil trains through northern California to the Bay Area. Listen here, for Andrés Soto’s Friday Afternoon show.

LETTER OF OPPOSITION: Attorney Rachael Koss, for SAFER California

By Roger Straw, March 31, 2016

On March 30, attorney Rachael E. Koss of Adams Broadwell Joseph & Cardozo,  representing Safe Fuel and Energy Resources California (SAFER), sent the Benicia City Council this letter of opposition to Valero’s oil trains project.

SIGNIFICANT EXCERPT:

First, Valero’s argument that the City should not consider Project impacts from crude slate changes because emissions would not exceed its permit limits has already been rejected by the California Supreme Court. The California Environmental Quality Act (“CEQA”)l requires the City to determine whether a project would change the existing environment by increasing emissions as compared to actual existing emissions — not whether the Project will change the environment by exceeding hypothetical emissions allowed under permit limits. This was precisely the issue before the California Supreme Court in Communities for a Better Environment v. South Coast Air Quality Management District.2 The Court rejected the argument that “the analytical baseline for a project employing existing equipment should be the maximum permitted operating capacity of the equipment, even if the equipment is operating below those levels at the time the environmental analysis is begun.”3 The Court held that CEQA requires the baseline to reflect “established levels of a particular use,” not the “merely hypothetical conditions allowable under the permits…”4 Following the Supreme Court decision, the court in Communities for a Better Environlnent v. City of Richmond5 similarly rejected the city’s use of a hypothetical baseline, which failed to reflect actual operational conditions. “The [Supreme Court] stated that using hypothetical, allowable conditions as a baseline ‘will not inform decision makers and the public of the project’s significant environmental impacts, as CEQA mandates.”’6 Thus, Valero’s argument has already been rejected by the California Supreme Court.

HUGE INFLUX OF REPORTS AND LETTERS OF OPPOSITION – City of Benicia website

By Roger Straw, March 31, 2016

I will be pulling individual reports and letters from the City’s latest posting.  For now, please download from the City website:

  • March 25-31, 2016 PART 1 [Here’s a quicker download.] (10MB, 250 pages, with index on page 1 for both Part I & Part II. Some pages are searchable, but not all.  Pages 2-4 are the letter from Attorney Rachel Koss on behalf of Safe Fuel and Energy Resources California (SAFER).  The remainder is a letter from Senior Scientist Greg Karras from Communities for a Better Environment [and some of his attachments].)
  • March 25-31, 2016 PART 2 [Here’s a quicker download.]
    (36.6MB, 234 pages [not indexed – see page 1 in Part I].  Some pages searchable, but not all.  Pages 1 through 188 are a continuation of the CBE attachments.  Individual comments begin on page 189.