BOOM: North America's Explosive Oil-by-Rail Problem

BOOM: North America’s Explosive Oil-by-Rail Problem

By Marcus Stern and Sebastian Jones

An investigation by InsideClimate News and The Weather Channel, in partnership with the Investigative Fund at The Nation Institute.
See the multimedia version at http://books.insideclimatenews.org/boom

U.S. regulators knew they had to act fast. A train hauling 2 million gallons of crude oil from North Dakota had exploded in the Canadian town of Lac-Megantic, killing 47 people. Now they had to assure Americans a similar disaster wouldn’t happen south of the border, where the U.S. oil boom is sending highly volatile crude oil every day over aging, often defective rails in vulnerable railcars.

On the surface, the response from Washington following the July 6, 2013 explosion seemed promising. Over the next several months, the U.S. Department of Transportation issued two emergency orders, two safety alerts and a safety advisory. It began drafting sweeping new oil train regulations to safeguard the sudden surge of oil being shipped on U.S. rails. The railroad industry heeded the call, too, agreeing to slow down trains, increase safety inspections and reroute oil trains away from populous areas.

But almost a year and a half later—and after three railcar explosions in the United States—those headline-grabbing measures have turned out to be less than they appeared. Idling oil trains are still left unattended in highly populated areas. The effort to draft new safety regulations has been bogged down in disputes between the railroads and the oil industry over who will bear the brunt of the costs. The oil industry is balking at some of the tanker upgrades, and the railroads are lobbying against further speed restrictions.

And rerouting trains away from big cities and small towns? That, too, has been of limited value, because refineries, ports and other offloading facilities tend to be in big cities.

InsideClimate News, The Weather Channel, and The Investigative Fund have monitored the regulatory response to oil train explosions this year, focusing on whether the agency that oversees the railroads—the Federal Railroad Administration (FRA)—is able to ensure that the nation’s aging railroad infrastructure can safely handle its latest task: serving as a massive, rickety network of pipelines on wheels.

We found that regulators don’t have the resources to catch up with—let alone get ahead of—the risks posed by exploding oil trains. That has left the FRA politically outgunned by the railroad industry, leaving it largely to police itself.

Among the issues we identified:

• Too few government inspectors. The railroad agency has only 76 track inspectors, assisted by a few dozen state inspectors, to oversee the operations of some 780 railroad companies that manage 140,000 miles of track, plus railroad bridges. By its own estimate the agency can inspect less than 1 percent of the railroad activities under its oversight each year.

• Little oversight of railroad bridges. The FRA has set no engineering standards for railroad bridges, relying almost entirely on individual railroads to inspect, maintain and repair their own bridges and trestles, some of them built more than a century ago. The agency doesn’t keep an inventory or even a count of the bridges, estimated to number between 70,000 and 100,000.

• Secrecy. State and local governments can’t independently assess the condition of local rail infrastructure because their inspectors don’t have access to the railroads’ design and maintenance records, or to the tracks, trestles and bridges themselves. The railroads consider such information proprietary; the tracks and bridges are their private property and disclosure of those materials is voluntary.

• Meager penalties. Fines are low, on the theory that the cost and consequences of an accident are sufficient incentive for railroads to properly maintain their tracks and bridges. In 2013, the FRA issued $13.9 million in fines to an industry whose top-seven revenue gainers alone took in nearly $84 billion.

“How did it get missed?” Deborah Hersman, former chair of the National Transportation Safety Board, asked at an April NTSB hearing about the hazards of shipping crude oil by rail. “Unfortunately, I’ve seen too much of a tombstone mentality. Did it take derailments and body count for us to understand?”

But Then the Oil Trains Started Exploding

The economic rebirth of America’s railroads is deeply entwined with the gusher of oil that began flowing from North Dakota’s Bakken shale in the mid-2000s. With few pipelines to carry this liquid gold to refineries, producers turned to the railroads. Why wait to build politically contentious pipelines when they could transport huge volumes of crude by train?

Railcar shipments of oil soared from 9,500 in 2008 to more than 400,000 in 2013– most of it crude from North Dakota. Railroad revenue from transporting crude during that period rose from $25.8 million to $2.15 billion.

This bit of industrial alchemy helped keep oil prices from rising during the ongoing turbulence in the Middle East and created billions of dollars in investments in rail loading and unloading facilities, bringing more jobs to parts of America beyond North Dakota.

But then the oil trains from North Dakota started exploding. First in Lac-Megantic, Canada. Then in Aliceville, Ala.; Casselton, N.D.; New Brunswick, Canada, and Lynchburg,Va.

(More on this in the video from our partners at The Weather Channel at the end of this article.)

A tanker train carrying North Dakota Bakken crude oil burns after derailing in western Alabama outside Aliceville, Ala. in November 2013. (Credit: Alabama Emergency Management Agency)

The explosions triggered protests, lawsuits and stormy community meetings: In Albany, N.Y., where Bakken crude is offloaded from railcars and sent down the Hudson River on barges; in Chicago suburbs that are crisscrossed with tracks; in Portland, Ore., a transit point for oil headed to Vancouver, Wash., and in the San Francisco Bay Area, where refineries receive the oil shipped in ocean tankers from Vancouver—and directly by rail from North Dakota.

“When you look at what could happen—and all of us are vulnerable—you’d think there would be more urgency,” said Karen Darch, president of the Village of Barrington, one of several mayors in cities around Chicago alarmed by the rise of oil train traffic through their towns. “… But it looks like the regulators are still keeping their fingers crossed that the next bad accident doesn't happen.”

NTSB board member Christopher Hart said regulators need to respond to the new reality of oil by rail.

“Sometimes business models change quickly, and we need to figure out a way to keep the regulator up to speed with those changes—so that we don't have a disconnect between what's happening in the real world and where the regulations are,” Hart said in an interview. Hart is now the NTSB’s acting chairman.

Government officials and industry trade groups are still sparring over why North Dakota’s crude is much more volatile than traditional heavier crude oil, but many outside experts say the answer is clear: The Bakken’s light crude is more like gasoline and rich in volatile natural gas liquids, including methane, ethane, propane and butane.

There’s an ongoing controversy about how, and how much of, the natural gas liquids should be removed. Currently, North Dakota doesn’t have the equipment and pipelines to process and transport the gases for resale. Instead, some of the gas-laden oil is being shipped to coastal refineries, which are equipped to handle them. There, they can be sold separately, generating additional profits—but creating new dangers along the way.

During the rail journey, the natural gas liquids separate from the oil and become gaseous, forming an explosive propane-butane blanket on top of the oil. If a railcar ruptures—and if some of the gas comes into contact with the outside air and a spark occurs—the railcar will explode and act as a blow torch on the car next to it. The result is a series of explosions like those captured on cellphones after the Lac-Megantic, Aliceville, Casselton and Lynchburg accidents—mushroom-shaped fireballs rising hundreds of feet into the sky.

The danger is compounded when trains are very long. The push to get North Dakota’s oil to refineries as quickly as possible is so strong that trains sometimes stretch for a mile and a half, commonly pulling about 100 railcars. Each car can carry roughly 30,000 gallons of oil, which means a single train can haul as much as 3 million gallons of oil—enough to fill a football field almost as high as the goal posts.

In the past, a train might have included five or 10 cars of crude oil, said the NTSB’s Christopher Hart. Today, “the entire train is nothing but this crude oil.”

Dangers of Tanker Cars Known Since 1991

The type of railcar typically used to carry North Dakota’s oil—the DOT-111—was never intended to haul volatile crude oil. Designed in the 1960s, the cars originally carried corn syrup and other less explosive cargo.

Since 1991, the NTSB has warned repeatedly that the cars are prone to rupture during a derailment. Still, the ethanol industry used the DOT-111 as a workhorse in the mid-2000s, when the United States became the world’s largest ethanol producer. It remained the ethanol industry’s railcar even after 13 DOT-111s ruptured at a railroad crossing in Cherry Valley, Ill. in 2009, igniting a fire that killed a woman sitting in her car. Three people were seriously injured and 600 homes had to be evacuated.

The NTSB said the accident demonstrated “the need for extra protection such as head shields, tank jackets, more robust top fittings protection, and modification of bottom outlet valves on DOT-111 tank cars used to transport hazardous materials.”

The accident prompted the Association of American Railroads, the industry trade group, to petition the U.S. Department of Transportation to require similar standards for tankers. When the Transportation Department didn’t act quickly, the railroad association issued its own industry standard urging that all tank cars built after October 2011 have those features.

But the vast majority of railroad cars are owned or leased by oil producers, refineries and the ethanol industry—not by railroad companies. And those businesses chafed at the estimated $3 billion price tag, arguing that it was impossible to design a tanker to withstand every crash scenario. The solution, they said, was for the railroad companies to make their tracks safer.

“DOT has proposed tank car standards and other measures that would cost shippers billions of dollars to build new tank cars to carry crude and ethanol over old tracks,” David Friedman of the American Fuel and Petrochemical Manufacturers, a refineries trade group, wrote to the Transportation Department. “That approach to risk is backwards: it is far more effective to prevent a derailment than mitigate impacts from it.”

Century-Old Bridge Supports New-Era Oil Trains

While regulators have focused on the failings of DOT-111s since Lac-Megantic, less attention has been paid to railroad infrastructure and operations.

The regulatory system’s weaknesses are apparent in Tuscaloosa, Ala., where a 116-year-old bridge supports oil trains as they cross the Black Warrior River and into the city’s downtown.

The steel bridge is buttressed by wooden trestles that rise about 40 feet above public parks and jogging trails on either side of the river. On one bank sits the Tuscaloosa Amphitheater, where concert-goers can gaze up at trains silhouetted romantically against moonlit skies. Nearby is a construction site where condos are going up. Less than a mile downriver is a major oil refinery.

When InsideClimate News and The Weather Channel visited the bridge in May, a train of DOT-111s filled with crude oil happened to be parked overhead. At the base of the bridge, many of the pilings that support the trestle appeared to be rotted. Scores of pilings had what looked like makeshift concrete braces where the piling had cracked. Cross braces that keep the track from swaying were hanging loose or lay on the ground beneath the structure. One stretch of the trestle had been blackened by fire.

The M&O Bridge and the surrounding track are the responsibility of Alabama Southern Railway, one of 30 short-line railroads owned and operated by Watco Companies, LLC, a transportation conglomerate. Watco’s chief commercial officer, Ed McKechnie, said trains on that particular line carry heavy crude oil from Canada, not the explosive light crude from North Dakota. But Watco doesn’t rule out moving North Dakota crude across the bridge if a customer comes along, McKechnie said.

Many rail industry officials, academic engineers and regulators say that even 19th century bridges that appear rundown can be safe, because redundancy is built into the bridges and the defects are usually cosmetic. They note that rail bridge collapses are rare. According to FRA accident records, only 58 train accidents were caused by the structural failure of railroad bridges for the 27 years from 1982 through 2008. But most of the surge in oil has come since then.

For the public or even local governments, confirming that a specific bridge is safe enough to handle the new oil trains is almost impossible.

The M&O Bridge is inspected annually, McKechnie said, with the most recent inspection on June 14. But he would not disclose or summarize the results. Because railroad companies aren’t required to file that information with federal regulators, there’s no database to check.

In 2009, Congress ordered the FRA to draft railroad bridge safety regulations, but the rule that emerged in 2010 is so narrow that it provides little help. Railroad operators are required to have a maintenance plan for each bridge and conduct at least one annual inspection. But they are not required to submit those plans to the FRA or to give the FRA an inventory of the bridges unless the agency requests that information.

The only direct oversight the rule called for was having the FRA, already dreadfully short of personnel and resources, conduct spot audits of the plans—not the bridges.

A Freedom of Information Act request for any documents related to safety inspections of the M&O bridge produced a January 2006 FRA inspection that found no structural problems but noted that the railroad “has no written policy on bridge inspection and/or maintenance practices.”

An FRA inspection in January 2010 found several problems, including a crushed cap. A cap is a horizontal timber that plays a key role in supporting the elevated track. The railroad took the bridge out of service for four hours to replace the cap.

The inspection report said Alabama Southern is using an outside contractor to inspect its bridge, but noted that “with few exceptions” the railroad “is not following the repair recommendations….” (Emphasis in report)

When asked to comment on the report, Watco’s McKechnie said, “We continue to believe that an on-going maintenance program has kept the bridge safe and in use.”

An FRA spokesman said the agency investigates every complaint about a bridge or track and invariably finds that the bridges are safe. But it’s unclear how those judgments are made, because the federal government has no engineering standards for bridges.

McKechnie said Watco abides by industry standards produced by The American Railway Engineering and Maintenance-of-Way Association (AREMA). AREMA’s Manual for Railway Engineering is available to the public for a fee, $1,370. The chapter on timber structures (purchased for $290) did not address what percentage of pilings may be rotted or otherwise defective without undermining the structural integrity of a bridge.

“It would be difficult to arrive at an allowable percentage of deteriorated piles that would cover all timber railroad bridges because of the variations in geometry, loading, and amount of deterioration among different timber structures,” an AREMA representative wrote in an email. “The decision as to what is safe is left to the bridge engineer.” Watco’s vice president of engineering, Tony Cox, made a similar argument. He said the M&O Bridge is safe.

And what does the FRA say about the absence of federal or industry standards?

“A numerical standard for defective bridge pilings would be an insufficient standard, as every bridge is unique, and the structural integrity of every bridge must be considered in its proper context,” a spokesman for the rail agency explained by email. “Every bridge must be evaluated by an appropriate expert, and within the context of its construction, operational environment, and operational loading.”

Ultimately, the railroad decides whether a bridge is safe.

Crossties Missing or in Decay

Federal regulators have set safety standards for track, but whether they are adequate is another question.

Environmentalist John Wathen pushes a stick into the rotting piling of a rail bridge near Tuscaloosa. (Credit: The Weather Channel)

In June 2014, a train carrying fuel oil derailed just west of Tuscaloosa, a few miles before it reached the M&O Bridge. Local environmentalist John Wathen, an opponent of shipping crude by rail, posted pictures of the track at the derailment site on his blog. They show crossties in varying stages of decay or completely missing.

"Rotten crossties, missing rail plates, dips and waves in the tracks,” Wathen wrote on the blog.

Watco’s McKechnie reviewed Wathen’s photos for InsideClimate News and The Weather Channel. He described the track as “typical Class I track,” meaning it is the lowest grade of track with speed limited to 10 mph. The train that derailed was complying with that regulation, he said, attributing the accident to “a thermal displacement or a ‘sun kink’ caused by the rail overheating.”

“While the observation of this track can lead to concerns, the track should be able to handle trains moving at 10 mph or less,” he said in an email. McKechnie said an inspection of the track in June found “minor deviations which were corrected immediately.”

According to federal track safety standards, 19 out of 24 crossties can be defective and the track still considered safe.

But where do these track safety standards come from, and how do we know they’re sufficient?

Holly Arthur, a spokeswoman for the industry’s Association of American Railroads said the standards were enacted in 1971 and modified in 1982 and 1998 “through decisions by the Federal Railroad Administration… so best asked of FRA.”

When an FRA spokesman was asked whether a track with 19 out of 24 crossties could be safe, he replied, “The track segment being evaluated must be considered in its totality.”

The state of Alabama offered no help in determining whether the M&O Bridge or the nearby tracks where the train derailed are safe. State DOT spokesman Tony Harris said Alabama “does not have any regulatory authority over bridges of that nature. Those are owned by the railroads themselves. Federal law requires the railroads to inspect those and we are not vested with that duty or responsibility.”

Industry Derails Regulations

After the Lac-Megantic tragedy, senior Transportation Department officials vowed to prevent a similar accident from happening in the United States. Cynthia Quarterman, the Transportation official who oversaw the regulatory response until her resignation in October, and Joseph Szabo, the FRA head through the end of this year, assembled working groups for three issues: train securement, crew size and hazardous materials.

Between September 2013 and April 2014, the three groups met, debated and thrashed out their recommendations.

A drafting session of the hazardous materials working group was held on January 27, in a large meeting room at the headquarters of the National Association of Home Builders, five blocks from the White House. About 60 people sat most of the day facing one another around a large rectangular configuration of conference tables.

FRA staffers occupied one line of tables, including Karl Alexy, head of the agency’s Hazardous Materials Division and chair of the meeting. The other seats were occupied by representatives from industries that ship hazardous materials by rail, including the Association of American Railroads, American Petroleum Institute, Chlorine Institute, American Chemistry Council, Fertilizer Institute and the Institute of Makers of Explosives.

Several railroads that run oil trains on their track also attended, including Canadian National Railway, Union Pacific, Watco and BNSF, the largest shipper of crude. Warren Buffett’s investment firm, Berkshire Hathaway, acquired BNSF for $44 billion in 2009, just as the crude-by-rail boom was taking off. Railroad worker unions were at the session, too, including the Brotherhood of Locomotive Engineers and Trainmen.

Throughout the day, the FRA’s Alexy floated safety recommendations drawn up by his staff. But none got past Michael J. Rush, the railroad association’s watchful attorney. Rush interjected, objected and parried with Alexy, dominating the discussion and delaying or diluting the recommendations.

The railroad association denied a request to speak with Rush, who was paid nearly $1.2 million in 2012 by the association and related organizations, according to the association’s tax filing that year, the most recent filing available.

At one point, Alexy proposed that railroads carrying large volumes of crude oil be required to have a comprehensive spill response plan, just as oil pipeline companies must have. Canada’s Transportation Safety Board had made that one of its key recommendations after the Lac-Megantic derailment, and the U.S. NTSB had taken the unusual step of endorsing Canada’s recommendations, simultaneously announcing them from Washington.

But Rush was having none of it.

Swiveling in his chair as he swung the microphone to his lips, he said, “With all due respect to the NTSB, they completely misunderstood this regulation and this topic.”

After some more back and forth, Alexy did what he would do throughout the day: He deferred to Rush.

“I agree, unless there’s any objection,” Alexy said.

There was none.

At one point, Alexy offered a recommendation that would have required better communication between shippers and railroads, to make sure railcars carrying heavier loads don’t travel over bridges that aren’t strong enough to support them. A typical oil train places roughly 15,000 tons of pressure on structures that could be as much as 150 years old.

“I’m not sure we have a problem with this in the industry,” Rush said.

Alexy cited a recent incident where it had been a big problem—a bridge had collapsed under the weight of railcars it wasn’t certified to support, resulting in a derailment. But after a few minutes of discussion, the group “parked” that recommendation, too.

An exchange between Alexy and Cynthia Hilton, executive vice president of the Institute of Makers of Explosives, reflected the tone of the meeting.

Hilton said she believed the goal that day was to produce recommendations that would give the industry guidance, not requirements that would force them to take specific actions.
“And now I’m reading that ‘the shipper must develop and adhere to a sampling and testing program,’” she said. “That doesn’t sound like a guidance document.”

“You’re right and I agree,” Alexy assured Hilton. “This is of course open for editing, ideas and suggestions. I circled the word ‘must’…. ‘Should’ is probably a little more appropriate.”

In April, the hazardous materials working group produced four narrow, technical recommendations. For instance, one recommended a definition for what constitutes an oil train. Another offered a definition for what constitutes an empty rail car.

None of the staff recommendations that Rush had objected to during the drafting session made the cut. Nor did any of the NTSB recommendations, such as the one that would have required railroads to have emergency plans.

The regulations are still under consideration by the Transporation Department without a formal deadline.

In July, California tried to fill part of the regulatory gap by imposing a 6.5-cent per barrel fee on oil shipped into the state by rail. The money will help communities develop emergency response plans for possible spills. BNSF, Union Pacific, and the Association of American Railroads have since filed suit against California, arguing that such matters are the province of the federal government.

Alexy declined through the railroad agency press office to be interviewed for this article. At an NTSB hearing in April, however, he responded to a questioner who asked him to characterize the results of the working group’s activities.

“A lot of things that we took up initially were overcome by events,” he explained.
Fred Millar, an advocate for tighter hazmat rail regulations and a longtime observer of the FRA, had another explanation: “Industry had veto power over everything.”

“Who Was the Guardian of Public Safety?”

If train safety is the topic, the longtime head of the Association of American Railroads, Ed Hamberger, will be there to argue against what the industry sees as unnecessary or wrongheaded regulations. Attending these events is part of the reason the AAR and related organizations paid Hamberger almost $3 million in 2012.

At an NTSB hearing in April, Hamberger stressed the industry’s safety record. He said that since 1980, the railroads had spent $550 billion on capital investments and maintenance, decreasing their overall accident rate by 79 percent.

"2011 was the safest year on record in terms of accident rate until 2012, which itself was the safest year on record until 2013,” he said. “Preliminary data indicate that 2013 will be the safest year on record. With respect to hazardous materials, you've heard the number: 99.997 percent of hazardous materials go from origin to their destination without any accidental releases."

That figure, 99.997 percent, is derived from 2013 data showing that of the 2.4 million railcars carrying hazardous materials, only 78 “released their contents” before reaching their destinations, according to the railroad association’s Ed Greenberg. This calculation does not factor in the magnitude of the spills, any environmental damage they may have caused, or any injuries, inconvenience or cost to nearby residents.

The aftermath of the Lac-Megantic crude railcar explosion in 2013. (Credit: Axel Drainvile via Flickr)

Because the Lac-Megantic accident occurred in Canada, it isn’t included in the railroad association’s safety statistics. But the accident was very much a “Made in America” event. The railroad was based in Hermon, Maine. The oil came from North Dakota, where it was loaded onto American-made railcars and sent on its way to Canada on U.S.-owned track. Because the disaster occurred about 10 miles from Maine, U.S. firefighters rushed to the scene to help fight the fires.

“It felt like an earthquake,” Lac-Megantic resident Yannick Gagne recalled in an interview. After the initial explosion rocked his house, he saw an orange flash. “Our windows were open and we felt the heat come in the house. My children started to cry.”

Gagne and his family survived, but the bar he owned, the Musi-Café, burned to the ground still full of patrons enjoying live music on a festive Saturday night. No remains were found for five of the 47 people who died in the conflagration; the fire vaporized them.

In its final report on the disaster, the Transportation Safety Board of Canada outlined a long list of contributing factors, including a poor safety culture at the railroad, the Montreal, Maine & Atlantic.

But Wendy Tadros, who oversaw the investigation as the head of the safety board at the time, identified a deeper underlying issue: the failure of railroad regulators to keep up with the rapidly evolving safety challenges posed by North America’s energy boom.

"Who was the guardian of public safety?” she lamented during a press conference releasing the report. “That is the role of the government...and yet this booming industry, where trains were shipping more and more oil across Canada and across the border, ran largely unchecked."

####

This article is part of a project supported by the Alicia Patterson Foundation, the George Polk Award program at Long Island University, the Fund for Investigative Journalism and the Society of Environmental Journalists' Fund for Environmental Journalism. It was reported in partnership with The Investigative Fund at The Nation Institute.