http://www.bellinghamherald.com/news/local/article60156446.html
February 13, 2016 6:28 AM
Washington asks if railroads could afford $700M oil train spill
Three new rail safety rules scheduled to take effect March 11
Railroads must show they have means to pay for a ‘reasonable worst case
spill’
Railroads disagree with new rule methods and question state authority
By Samantha Wohlfeil
swohlf...@bhamherald.com
Railroads that haul oil trains through Washington state will need to
report whether they could afford around $700 million to pay for a
derailment and spill, under a recently finalized state rule.
As announced Feb. 9, the requirement is one of three oil train safety
rules the state Utilities and Transportation Commission crafted as
required under legislation that state lawmakers passed in 2015.
The new rules, which take effect March 11:
▪ Require signs with basic safety information be posted at private rail
crossings along routes that carry full or empty oil trains.
▪ Allow certain cities such as Bellingham, Aberdeen, Spokane, Tacoma,
and Richland to opt into a state rail crossing inspection program to get
free assistance with inspections.
▪ Require railroads to include financial information in their annual
report to the UTC to show if they could address a “reasonable worst case
spill” of oil.
Reasonable worst case
The portion of the rule most heavily scrutinized during a months-long
comment process was the requirement to show financial ability to pay for
a reasonable worst case spill. The rule required commission staff to
first define what a “reasonable” worst case spill looks like, and
second, calculate what cleaning that up might cost.
Railroads objected to the proposed spill scenarios, and argued that the
requirement to show whether they could afford cleanup was pre-empted by
federal law.
Johan Hellman, on behalf of BNSF, wrote Sept. 21, 2015, that the company
was concerned with a draft that had defined the reasonable worst case
spill as half the train’s contents, and had set minimum cleanup costs at
$400 per gallon.
“We find both the definition and the minimum cost to be greatly
exaggerated,” Hellman wrote.
The worst case calculation was refined to be based on the fastest speed
an oil train travels, but both BNSF and Union Pacific Railroad continued
to object to the requirement.
In a Dec. 7 letter to the commission, Melissa Hagan argued on behalf of
Union Pacific that requiring the railroad to detail the insurance it
carries, along with its ability to pay for the reasonable worst case
cleanup, would “compromise the integrity of Union Pacific’s confidential
business records” and was “blatantly discriminatory.”
Other people who commented said the rule didn’t go far enough in its
estimates for how much oil could spill and how much those damages could
cost.
State Sen. Christine Rolfes, D-Kitsap County, told the commission she
thought the reasonable worst case spill amount was “far too
conservative” and the estimated cleanup cost seemed “excessively low.”
Dale Jensen, spill prevention preparedness and response manager for the
state Department of Ecology, also wrote to say an estimated $400 per
gallon cleanup cost would cover only a “portion of the overall costs of
an oil spill” and “in the event of a worst case spill, the true cost of
damages incurred could certainly exceed the level established within the
proposed rule.”
Calculating the reasonable worst
In crafting the rule, commission staff looked to federal rule-making by
the Pipeline and Hazardous Materials Safety Administration and Federal
Railroad Administration, and to the actual worst derailment of ethanol
or crude oil in North America, which happened in Lac-Megantic, Quebec.
“Quebec was a terrible tragedy that really put a lot of these types of
regulations more in the public eye,” said Jason Lewis, who helped craft
the rule as transportation policy adviser for the commission.
In Quebec, a parked, unmanned 72-car train loaded with Bakken crude oil
rolled downhill, reaching 65 mph before crashing into the downtown and
killing 47 people in July 2013. Sixty-three cars derailed and about 1.6
million gallons of oil leaked.
Although Quebec is the worst oil train derailment to date, Washington
state legislators specifically asked the commission to find a
“reasonable” worst case scenario for the financial reporting
requirement, Lewis said.
“They didn’t want the worst case. They wanted something reasonable,”
Lewis said. “It’s an ambiguous term that we really had to work to define.”
The commission looked to other state rules and used PHMSA and FRA logic
to scale down from the incident in Quebec, Lewis said.
The final rule says to take the maximum oil train speed (usually 45 to
50 mph), divide it by 65 (the speed in Quebec), and account for kinetic
force to get the estimated percentage of the train’s cargo they should
be prepared to clean up.
To illustrate, assume the longest BNSF crude oil unit train transported
in 2015 was 110 tank cars and that those trains go 45 mph at their fastest.
Under the new formula, the railroad needs to show whether it has the
means to pay for a theoretical spill of 47.9 percent of that oil.
Each tank car has a maximum volume of 30,000 gallons, so the train could
carry at most about 3.3 million gallons.
At a cleanup cost of $400 per gallon, the new guidelines want to know if
the railroad could pay $632.3 million.
If that train were to go 50 mph at its fastest, the reporting amount
would be closer to $781 million.
UTC staff also took into account that supertanker vessels that can carry
84 million gallons of oil through Puget Sound are required to get
certificates of financial responsibility through Ecology that cap out at
$1 billion, Lewis said.
“If we went much higher in terms of total release or cost of cleanup, it
would be difficult to justify a higher cap,” Lewis said.
BNSF challenged similar legislation in California, claiming in court
that federal rules pre-empt state laws that try to regulate rail.
When asked whether BNSF would similarly challenge Washington’s rules or
still had concerns about the worst case scenarios, BNSF spokeswoman
Courtney Wallace wrote that BNSF was committed to work in good faith
with Washington to promote safety.
“Nothing is more important to us than safely moving all of the
commodities we carry, including crude oil. BNSF is a common carrier and
our operations are governed by the Interstate Commerce Commission
Termination Act, which generally pre-empts state and local regulations
of railroads,” Wallace wrote to The Bellingham Herald.
“BNSF has a strong record of corporate responsibility,” Wallace wrote.
“We have never expected taxpayers to assume the expense of a cleanup
after a derailment, and we stand by the practices that have allowed us
to keep that record to date. BNSF is financially sound with a long
history, substantial assets and a track record of being a responsible
corporate citizen.”
Because the rule only requires railroads to show whether they could
afford that level of spill in their annual report to the commission,
rather than requiring they carry a certain level of coverage, the
commission believes the rule does not conflict with federal laws.
Annual reports from the railroads are due to the UTC in May.
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