Letter from Union Pacific & BNSF attorneys to Governor Brown
By Roger Straw, Editor, The Benicia Independent
On September 15, 2014, San Francisco Baykeeper offered highly critical comments to the City of Benicia on Valero’s Draft EIR. With their comments, Baykeeper attached a VERY interesting letter from attorneys for the two railroads that operate in California, claiming that preemption under The Federal Rail Safety Act and the Interstate Commerce Commission Termination Act render the State of California pretty much helpless in protecting against oil spill prevention and emergency response.
The letter specifically holds that the Federal Clean Water Act is useless as a preemption workaround.
Addressed to Dana Williamson, Cabinet Secretary in Governor Brown’s office and dated July 3, 2014, the letter addresses issues discussed in a June 18, 2014 meeting between Ms. Williamson and the lawfirm Latham & Watkins. The letter is signed by Maureen E. Mahoney of Latham & Watkins LLP, Counsel for Union Pacific Railroad Co. and BNSF Railway Co.
Note that this document is lawyer-talk, and I am not versed in legalese, so I hope my interpretation in the previous paragraph is accurate. I’m advised by a local activist attorney that the document is significant, so am posting it here to highlight the rail industry’s views and their efforts to influence decision-makers in Benicia and elsewhere in California.
Safety of Citizens in Bomb Train Blast Zones in Hands of North Dakota Politicians
2014-09-05, Justin Mikulka
Lac Megantic train explosion
When North Dakota Congressman Kevin Cramer was asked recently if it was scientifically possible to make Bakken crude oil safer by stripping out the explosive natural gas liquids with a process like oil stabilization, his response was quite telling.
“So scientifically can you do it? Sure, but you have to look at it holistically and consider all of the other elements including economics, and is the benefit of doing something like that does that trump other things like speed of trains, and what kind of cars,” he said.
This is very similar to the comments made by Lynn Helms of the North Dakota Department of Mineral Resources according to the July 29 meeting minutes provided to DeSmogBlog by the Industrial Commission of North Dakota.
“In response to a question regarding other mechanisms besides oil conditioning in the field, Mr. Helms stated there are other mechanisms — none of them without a significant downside….It makes sense to do the conditioning in the field. There are other options to do it downstream somewhere in a very large and very expensive operation.”
In a June 24 e-mail obtained by DeSmogBlog through a freedom of information request, Helms identified himself as “the primary contact for Governor Dalrymple’s team on the crude safety issue” in response to an inquiry from the Department of Energy about who would be working on the issue of Bakken crude oil safety.
As the point person on this issue for North Dakota, Helms’ opinions carry significant weight. And just like Congressman Cramer, Helms is pointing out the “significant downside” of stabilization, which is that it is an expensive operation.
It is well established that stabilization works and would make oil trains much safer. Not even North Dakota politicians are arguing that point anymore. But the industry doesn’t want to pay for it. And right now, the only ones who could mandate them to stabilize the oil via new regulations are the three members of the Industrial Commission of North Dakota.
What About The Feds’ Oil-By-Rail Regulations?
The reason North Dakota politicians are discussing this issue at all is because the federal government has essentially punted the question.
In the 200 pages of new proposed oil-by-rail regulations released in July, there is not a single line about requiring the oil or rail companies to stabilize the oil prior to shipping.
Stabilization is a process that removes the explosive natural gas liquids from the oil and is required by pipeline companies. This process would turn the current Bakken “bomb trains” into simple oil trains. They would still pose a threat of oil spills, but would no longer threaten to kill people in massive explosions like the one in Lac-Megantic, Quebec, or be a target for terrorism.
While the proposed regulations don’t require stabiliazation, they do include three questions that indicate lawmakers are aware that stabilizing or “degassifying” the crude makes it safer and that producers have the ability to reduce the volatility of crude oil prior to shipping it by rail.
Is the current exception for combustible liquids sufficient to incentivize producers to reduce the volatility of crude oil for continued use of existing tank cars?
Would an exception for all PGIII flammable liquids further incentivize producers to reduce the volatility of crude oil prior to transportation?
What are the impacts on the costs and safety benefits of degasifying to these levels?
As previously reported by DeSmogBlog, the regulators in charge of finalizing the new proposed oil-by-rail regulations are big believers in cost-benefit analysis. And looking at their questions, it is clear they know the oil can be made less volatile. But they want to hear more from the industry about the costs of doing this before doing anything. And instead of requiring stabilization, they are looking for ways to “incentivize” the producers to do it.
Oil Conditioning vs. Oil Stabilization
The North Dakota Industrial Commission is holding a hearing on September 23rd during which it is requesting input on how to make the Bakken crude oil safer for transport. The headline of its press release, “Hearing set on oil conditioning practices,” almost ensures that oil stabilization will never be required in North Dakota.
Oil conditioning is not the same as oil stabilization. Oil conditioning can be done with all of the existing equipment already in the field in North Dakota and thus the cost is minimal. However, in situations where the industry needs to ensure it strips out all the volatile natural gas liquids from the oil, as in the Eagle Ford formation in Texas, they use a different process called stabilization.
Helms and the members of the Industrial Commission like to cite the North Dakota Petroleum Council Study on Bakken Crude Properties when claiming that Bakken crude is no different than other crude oils and thus doesn’t require stabilization. However, that very report makes it clear that conditioning, done with the equipment currently available, is insufficient and was never designed to achieve the type of results expected from stabilization.
From the report, prepared by industry consultant Turner and Mason:
The data consistency [sic] indicates that field equipment is limited in its ability to significantly impact vapor pressure and light ends content.
This is consistent with the expected capabilities of the equipment.
The field equipment is designed to separate gas, remove water and break emulsions to prepare crude for transport, and not remove significant levels of dissolved light ends from the crude.
Meanwhile, at the August 26 meeting of the North Dakota Industrial Commission, Helms once again acknowledged the effectiveness of stabilization, as reported by Petroleum News: “This is very routinely done with high gravity condensate — oil that condenses out of a gas well as it is produced,” Helms said. “That has to be stabilized before it can move through the system.”
Helms word choice is telling. Oil that “has to be stabilized before it can move through the system.” Oil that is moved by pipeline has to be stabilized before it can be moved because pipeline companies require it. The rail companies do not.
Despite his acknowledgement of how stabilization is routine in the pipeline business, at the August meeting, Helms was also sure to point out that in North Dakota they expected to choose conditioning as their solution, as reported by Petroleum News.
Helms agreed, saying conditioning is likely more suitable for North Dakota since the equipment is already in place on well sites but he’d like to hear from others at the upcoming hearing.
“We haven’t closed the door to (stabilization),” Helms said. “We want to hear what people have to say.”
However, if the North Dakota Industrial Commission actually wanted to hear what people have to say about stabilization, the press release about the September 23rd hearing probably should have actually mentioned stabilization. It doesn’t.
The North Dakota Industrial Commission
If there is going to be any regulation requiring stabilization of the Bakken crude it will require the three members of the North Dakota Industrial Commission to make it happen.
Governor Jack Dalrymple is one member of the commission. And his point man on this issue, Helms, has already made it clear he supports conditioning over stabilization.
North Dakota Attorney General Wayne Stenehjem is another member. When a report by the Pipeline and Hazardous Safety Materials Administration recently concluded that Bakken oil was more flammable than most other crude oils, Stenehjem responded to the science by saying, “It seems like they are picking on us.”
The third member of the commission is Agricultural Commissioner Doug Goehring. At the August 26th meeting of the commission, Petroleum News reported that Goehring opposed stabilization for an unlikely reason for someone who helped oversee the massive expansion of the Bakken oil production.
Agriculture Commissioner Doug Goehring voiced his concern with dotting the landscape with stabilizer units.
“We’ve been trying hard to shrink that footprint out there on the landscape, and that’s going to make that awfully difficult.”
So in all likelihood, stabilization is off the table and conditioning will be the new regulation. Helms and others often say conditioning is already being done because the equipment is already in the field. Yet, according to the minutes from the July meeting of the Industrial Commission, Governor Dalrymple said: “Right now we are assuming producers are doing conditioning but we do not have a mechanism to verify that.”
So, let’s get this straight. It is more than a year after the explosion of a Bakken crude train in Lac-Megantic that killed 47 people. And it’s been more than eight months since a train of Bakken crude exploded in Casselton, ND. And the best the regulators can do is hold a hearing to talk about how to do regulate a practice that’s inadequate and they already assume is being done?
North Dakota seizes initiative in CBR degasification
By David Thomas, Sept. 4, 2014
The vital other shoe in crude by rail reform will drop not in Ottawa or Washington, but in Bismark, N.Dak., where, in the void created by federal inaction, officials are preparing to use state jurisdiction over natural resources to order the degasification of petroleum at the wellhead.
The initiative follows months of opaque pronouncements by federal regulators in both Canada and the U.S. with respect to the need to render volatile crude oil safe before transport by rail.
A spokesman for Pipeline and Hazardous Materials Safety Administration (PHMSA) told Railway Age that rules for the pre-loading treatment of crude oil for shipment by rail are not on its reform agenda, despite earlier, apparently overly enthusiastic, pronouncements.
While Transport Canada and the U.S. Department of Transportation have responded to the succession of oil train explosions this year and last by focusing on railroad operations, hazmat classification, and tank car design, some have been muddled on the need to treat the volatile cargo itself before its loading into railcars—this despite their own warnings that crude, fracked from the mid-continent Baaken shale formation, has the explosivity of gasoline.
Some oil producers and shippers have resisted any new regulatory requirement that they process crude for transport by rail the way they already must for delivery by pipeline.
Removal of toxic, explosive, and corrosive gases from crude for transport by pipeline has been required for years under the regulatory authority of the PHMSA. But neither PHMSA nor its DOT sibling Federal Railroad Administration have seen fit to require similar treatment—variously termed “degasification”, “conditioning”, “stabilization”, or “normalization”—for crude, destined for shipment by rail.
Crude shippers have complained since the first oil train calamity in July 2013 at Lac-Mégantic, Quebec, that PHMSA regulations for testing and classifying oil for transport by rail were imprecise. Such confusion is only augmented by PHSMA’s twice-stated reference to a purported “requirement” that dangerous gases be removed before crude is loaded into railcars.
The most recent such PHMSA pronouncement in a June 11, 2014 letter to the National Transportation Safety Board reiterated an earlier safety alert:
“On Jan. 2, 2014, PHMSA also issued a safety alert warning of the flammability of the crude oil extracted from the Bakken Shale region in the United States. PHMSA noted that the alert reinforces the requirement to properly test, characterize, classify, and where appropriate, sufficiently degasify hazardous materials prior to transportation.”
Railway Age asked the PHMSA media relations office to clarify the requirement to “degasify,” and to cite the underlying legislative or regulatory authority. A PHMSA spokesperson researched the inquiry and responded that there was in fact no such legal basis in existence or under formal consideration. The PHMSA spokesman referred us to North Dakota, which was contemplating the introduction of compulsory degasification.
Indeed, the oil and gas division of the North Dakota Industrial Commission has announced a public hearing for Sept. 23, on the “oil conditioning practices” in the state’s three light-oil pools: Bakken, Three Forks, and Sanich. Oil producers are invited to propose “methods to effectively reduce the light hydrocarbons in crude oil.”
Division spokesperson Alison Ritter told Railway Age, “The hearing is a first step in conditioning the oil to make it as safe as possible for transport.” She said that gas/liquid separators are already required at all North Dakota wellheads. At issue is whether they are being effectively used to render so-called “hot crude” safe for rail transport.
Separators boil off light hydrocarbons such as ethane, butane, and propane from crude oil, reducing its vapor pressure and propensity to explode. Heavy and corrosive hydrogen sulfide is also removed for pipeline transport. None of this is compulsory for shipment by rail.
North Dakota had been an uncritical booster of CBR even after Lac-Mégantic, until the fourth of the conflagrations occurred Dec. 30, 2013, on the outskirts of Casselton, when a westbound BNSF grain train derailed in the path of an eastbound BNSF oil train.
North Dakota is also proceeding with the training and deployment of its own rail inspectors, who will enforce FRA and PHSMA regulations within the state.
Our fight to stop the bomb trains traveling through our backyards
By Suma Peesapati, August 28, 2014
Bruce Crummy/2013 AP file photo | An oil train derailed on Dec. 30 in Casselton, N.D. It was one of a handful of recent incidents of rail cars carrying crude oil exploding and going up in flames.
“This issue needs to be acted on very quickly. There is a very high risk here that hasn’t been addressed. We don’t need a higher body count before they move forward.”
It was a mark-my-words moment from National Transportation Safety Board Chairwoman Deborah Hersman at her farewell appearance before stepping down from the position in April.
She was speaking about the explosive growth of the use of unsafe tanker cars to haul crude oil extracted from the Bakken reserve in North Dakota and Montana to refineries across our nation. When involved in derailments, many of these cars carrying the highly volatile fossil fuel are vulnerable to puncture and explosion upon impact. They were the cars that were involved in explosions in Aliceville, Alaska, in November, Casselton, N.D., a month later and, of course, last summer’s horrific reckoning in Lac Megantic, Quebec.
Not two weeks after Hersman made her remarks, a train carrying Bakken crude derailed in Lynchburg, Va., igniting a roaring blaze and prompting the evacuation of the entire downtown. The tankers involved, however, weren’t the cars that the former chairwoman was warning about. They were a tougher, supposedly safer car tank car that the rail and oil industry is slowly moving toward adopting. It begs the question, though, are these newer cars going to be safe enough?
This question recently hit home when a local news station exposed a clandestine crude by rail-loading operation in Richmond, here in the Bay Area, that had been flying under the radar for months. After making a backroom deal with the local air district, Kinder Morgan secured approval to introduce this highly explosive fracked crude through urban Bay Area neighborhoods without any public notice or environmental review.
Within two weeks after the story broke, Earthjustice sued the air district and Kinder Morgan, demanding a full public airing of the project’s risks to public health and safety. A hearing on the merits of this case is scheduled for Sept. 5 in San Francisco Superior Court. While we await our day in court, Kinder Morgan is unloading its crude just a half-mile from Washington Elementary School, in a low-income community of color that the air district recognizes as already overburdened by the very same carcinogenic toxic air contaminants released by handling Bakken crude.
Piling on to this environmental injustice, this crude is being loaded onto tanker trucks that are not certified by California. Those trucks then travel on Bay Area roadways until this dangerous commodity reaches its ultimate destination — the Tesoro refinery in Martinez.
Tesoro Martinez is also accepting Bakken crude from similar rail-to-truck crude transfer operations in Sacramento, thereby compounding the risk of accident. With some of the most treacherous mountain passes in the country, and a dilapidated railway system that was never designed or upgraded to transport such dangerous cargo, these trains are ticking time bombs.
The anemic response from state and federal regulators has been disappointing. Fortunately, our state and federal environmental laws gives private citizens a voice demand more than “business as usual.”
Suma Peesapati is an attorney for San Francisco-based Earthjustice.
