Washington’s Crude Awakening

Terry Wechsler is an environmental attorney and co-founder of Protect Whatcom, Safe Shipping Alliance of the Salish Sea, and Healthy People/Health Planet, and a board member of Safeguard the South Fork.

Editor’s Note: In her October-November 2013 article “Doing the Math: Counting the Drops in a Fossil Fuel Tsunami,” (http://www.whatcomwatch.org/php/WW_open.php?id=1620) Terry Wechsler discussed the need for a regional programmatic environmental impact study of the combined impacts of the then-known 20 fossil fuel transportation proposals that would overwhelm Washington’s rail infrastructure and increase risk of a vessel incident in state waters.

Dean Smith, a 72-year-old retired physicist living in Everett, remembers the day he first saw a coal train. “What is that and why is it here?” he wondered. Dean has learned a lot about coal exporting and terminal proposals since that day, but he was even more shocked when he first noticed a crude unit train rolling north through Everett a few months ago.

Though the refineries reported they would each receive one train a day or every other day, Dean was dubious, and he was not alone. He and other volunteers in the Everett community formed a 30-person brigade of 24/7 train spotters, and sat by the tracks from May 21–28 to count crude unit trains. Dean volunteered to take graveyard shifts and estimates he logged 30 hours.

Since only two of the four refineries have completed their rail infrastructure projects, Dean says he expected to count about 12 trains that week.

“I was pretty surprised when the number was actually 18,” he said.

When asked how he differentiated loaded from empty trains to ensure the count only included the former, Dean stated the obvious: “If they were going north, they’re going loaded; coming south, they’re empty.”

The Crude Lay of the Land

A “unit train” is one dedicated to a single commodity. A crude unit train typically consists of four locomotives — three in the front pulling, and one in the back pushing — and up to 120 tanker cars, with a combined length of up to 1.5 miles. What Dean and other activists in the state have learned in the past year is that with diminished supply from Alaska, coupled with the huge increase in supply of Bakken shale oil from North Dakota, Whatcom and Skagit County refineries are hurrying to complete rail infrastructure projects to handle domestic crude.

There are over 20 fossil fuel transportation proposals in the region from the Columbia River to British Columbia which will impact state rails and waters. A table of all proposed terminals is online at http://protectwhatcom.org/table-wsources-.

They vary in type but can generally be classified:

1. New coal terminals: Powder River Basin coal would arrive by rail at terminals and transfer to bulker ships for export to the Pacific Rim. There are two new terminals proposed on the Columbia River, one at Cherry Point and two in British Columbia. In addition, two BC terminals have expansion plans.

2. New crude terminals: Bakken crude would arrive by rail and transfer to tankers or barges for transport to domestic refiners. Proposals include one on the Columbia River, three in Grays Harbor and one in Tacoma.

3. Pipeline-only terminals: several proposals would transfer from pipelines to storage tanks and then to tankers for export to the Pacific Rim. There are two methanol terminal proposals on the Columbia River and one tar sands terminal proposal in British Columbia.

4. Refinery crude-by-rail proposals: the five area refineries — Targa Sound Terminal in Tacoma, Tesoro and Shell in Anacortes, and BP and Phillips 66 at Cherry Point — are in various stages of shifting away from crude received from Russian, Alaskan, and other producers arriving by tanker to accept more Bakken crude-by-rail. The terminals have piers for transfer of refined product to tankers and barges for transport to domestic and foreign customers. The four Whatcom and Skagit County refineries also receive Alberta tar sands by pipeline for refining and could also export tar sands by tanker to domestic and foreign refiners.

The Ban on Export of Domestic Crude

Crude transportation proposals on the west coast differ from coal in a number of respects, chief among them that all coal is bound for export to the Pacific Rim. While the U.S. does allow export of all refined petroleum products, under current federal law, domestic crude including Bakken is dedicated exclusively to the U.S. market and cannot be exported unless specific narrow exceptions apply.

On March 31, the American Petroleum Institute (API) announced that it will lobby Congress to lift the ban on export of domestic crude, citing an API-contracted economic analysis which concluded free trade would lower domestic pump prices and create jobs. The idea has gained traction with congressmen from oil-producing states such as Sen. Lisa Murkowski (R-Alaska), who urged the Obama administration in March to lift the ban on light oil, calling it “in the national interest.”

Goldman Sachs Investment Group analysts disagree that lifting the ban would reap domestic economic benefit at this time and announced in June that the U.S. should not consider a policy change until domestic crude reaches saturation with domestic refining.

U.S. Department of Energy Sec. Ernest Moniz told the Wall Street Journal on May 13, after an energy conference in Seoul, that the Obama administration is studying the ban and considering whether to lift or modify it.

The Magnuson Act

Export of domestic crude could have significant ramifications in the Salish Sea where the Magnuson Act governs crude oil transported by tanker. The most pertinent provision of the Act provides that:

“Notwithstanding any other provision of law,” on and after October 18, 1977, no officer, employee, or other official of the Federal Government shall, or shall have authority to, issue, renew, grant, or otherwise approve any permit, license, or other authority for constructing, renovating, modifying, or otherwise altering a terminal, dock, or other facility in, on, or immediately adjacent to, or affecting the navigable waters of Puget Sound, or any other navigable waters in the State of Washington east of Port Angeles, which will or may result in any increase in the volume of crude oil capable of being handled at any such facility measured as of October 18, 1977), other than oil to be refined for consumption in the State of Washington.”

In their permit applications, the four Whatcom and Skagit County refineries all claimed the need for crude-by-rail infrastructure to increase rail deliveries of domestic Bakken as a means to decrease reliance on imports. All applications stressed that this shift in supply would benefit the region by decreasing tanker traffic at their piers.

Fred Felleman, Western Consultant for Friends of the Earth, takes issue with that assumption, citing a number of scenarios that could result in increased tanker traffic even as crude supplies from the inland U.S. increase.

“Alaska production could increase. They could act as terminals for Alberta tar sands and, if the ban on domestic crude imports were lifted, for Bakken crude,” Felleman said.

The refineries’ crude-by-rail permit applications also all stressed that refining capacity will not increase in spite of the availability of Bakken crude. “Anyone who tracks the refineries’ NPDES permit renewals knows they almost all result in increased capacity,” Felleman said, adding that “[a]ll the refineries in Washington are operating at twice their originally built capacity.”

The BP Pier Expansion

Magnuson was a central issue when Felleman, as Ocean Advocates, sued the U.S. Army Corps of Engineers in 2001 for failure to conduct an environmental impact statement (EIS) under the National Environmental Protection Act (NEPA) when BP built its north pier.

The Corps argued that they did not need a vessel traffic study to justify a conclusion that the second pier reduced risk due to increased berths and reduced anchor time in open waters.

On appeal, Felleman disagreed with the Corps and the Ninth Circuit Court of Appeals agreed, ruling that the Corps could not know with certainty if spill risk declined with operation of the second pier unless it conducted a vessel traffic risk assessment (VTRA).

That court expressly directed the Corps to conduct an analysis applying the Magnuson threshold. That is, the Ninth Circuit wanted to know if there was a scenario under which the second (north) pier at BP might increase BP’s ability to berth crude-loaded tankers without reference to whether those tankers were in- or outbound.

The Corps released a draft EIS (DEIS) the week of June 2 and announced it would accept comments from June 7 through August 6 (see box). The DEIS includes a number of assumptions Felleman will challenge, he said, but there are two major issues.

First, the Corps conducts north pier/south pier Magnuson analyses separately. The original south pier had two berths, one for receiving crude, and one for shipping out refined product. The new north pier is dedicated to refined product. The Corps did not analyze a scenario under which the south pier was dedicated to crude, whether imported or exported.

Second, the Corps announced scoping of their EIS in October 2006, inviting the public to address issues related to vessel traffic. The DEIS released in June 2014, however, contains assumptions about decreased vessel traffic based on new information about Bakken crude by rail. As previously discussed, crude-by-rail does not necessarily result in decreased tanker traffic for a safety analysis, nor even crude tanker traffic for a Magnuson analysis.

Because the DEIS assumes vessel traffic risk decreases due to increased shipment by rail, it must consider the risk associated with that rail shipment. The DEIS, however, does not address rail at all, much less conduct a risk assessment of cumulative rail traffic including existing traffic, the four area crude-by-rail proposals, and reasonably foreseeable future rail traffic if GPT and other terminal proposals are built or expanded.

“It’s almost as if they wrote it so I would have to sue them,” Felleman said, “which, given the amount of time it took to get this DEIS, could mean another decade of unmitigated use by BP of the north dock.”

Refineries and Crude by Rail

Crude has to move to refineries somehow, and if it is not by tanker vessels at sea, it must be by pipelines or railroads on the land. All methods of transportation pose inherent risks, so the key issue is managing the risks. As the anniversary of the July 6, 2013, Lac-Mégantic, Quebec, tragedy approaches, federal and state governments are grappling with how to do what they have been disinclined to do in the past, and more assertively regulate the rail industry.

Currently, railroads have wide latitude to establish safety rules. For instance, BNSF has the “48-Hour Rule” which it imposes on the coastal track north of Seattle during rain season. BNSF embargoes passenger trains — but not freight trains transporting hazardous materials — for 48 hours after clearing the effects of mudslides.

What the federal government does require is that the railroads, in their role as common carriers, transport hazardous materials. When those materials are in tanker cars furnished by the shipper, the railroads argue, they should not be liable for damages that result from tank car failure after derailment.

Sightline Institute, in a report released May 13, documented over 20 derailments in the Puget Sound region in the past three years. Most situations are minor, such as the derailment that occurred at the Shell refinery December 14, 2009, in which six cars loaded with LPG — a mixture of propane and butane — rolled off the tracks. At the time, BNSF spokesman Gus Melonas told the Skagit Valley Herald, “The tanker cars worked as designed, preventing fuel leaks.”

In Washington, DC, arguments continue about increasing appropriate federal regulations to minimize the increased risks associated with crude-by-rail. Industries wrangle and lobbyists argue about appropriate federal responses. At a conference held the week before the April 30 derailment and explosion in Lynchberg, VA, National Transportation Safety Board (NTSB) Chairman Deborah A.P. Hersman said elimination or significant reduction of safety risks would require “improvements to track inspection and maintenance programs,” in addition to improved tank car crashworthiness.

In the meantime, cash-strapped states scramble to prepare for the next derailment and the explosive consequences. Washington State legislators, who did not approve infrastructure budgets in the last two legislative sessions, approved nearly $1 million this year for the Department of Ecology to study risks posed by crude-by-rail. Some of that money will assist local communities in emergency response preparedness and coordination to minimize the destruction after an explosion.

The blast radius at Lac-Mégantic was over one-half mile. Bakken crude fires burn so hot and are so noxious that communities often elect to let them burn themselves out, as was the case with the recent Lynchburg, VA, fire, according to city government spokeswoman JoAnn Martin. Responders focus on containing the spread of the fires and moving people to safety. What no one has budgeted for is the aftermath: cleanup, rebuilding, and compensating for human injuries and loss of life.

In Lac-Mégantic, for example, cleanup costs alone are estimated at $200 million. With that rail carrier (Montreal, Maine and Atlantic Railway) in bankruptcy and its insurance capped at $25 million, no one knows who will compensate the survivors of the 47 killed. Larger carriers typically carry up to $1.5 billion in insurance, but without federal laws assigning liability, legal appeals could last 20 years, as in the case of the Exxon Valdez oil spill in Alaska. The Supreme Court eventually slashed punitive damages awarded by lower courts by ninety percent in that case.

For Washington, the stakes could not be higher. Current proposals total nearly 100 loaded Bakken crude oil trains per week entering the state through Spokane and heading to refineries and proposed crude terminals from the Columbia River, up the coast to Cherry Point. (An infographic illustrating the rail movement is located online at http://protectwhatcom.org/fossil-fuel-transport.)

The Reporting Wars

In early May, the U.S. Department of Transportation, through the Federal Railroad Administration, issued an emergency order effective in June requiring all railroads to report to states when crude unit trains with 35 or more cars pass through their states. Though the reports are made to states’ emergency response centers, the railroads pleaded security issues and initially demanded states agree to gag rules.

The federal order directed states to share the information on a need to know basis, limited to necessary emergency responders. Washington balked, citing its Public Records Act. Washington currently intends to make crude train movements public after giving BNSF, the sole crude carrier in the state, an opportunity to ask a court to enjoin response to a public records request.

That reporting would allow the public to document how many trains are actually delivering to the refineries. That matters because when Whatcom County Planning and Development Services (PDS)issued Mitigated Determination of Nonsignificance (MDNS) for the rail infrastructure projects at BP and Phillips 66, in June 2011 and April 2013, respectively, they stated the determinations related to one train per day as reported by each proponent, and stated additional “train traffic [by BP/Phillips 66] will require additional state environmental policy act (SEPA) environmental review.

Providing access to the public to specific information about train traffic would provide the documentation necessary to seek additional SEPA review, and is not necessarily inconsistent with security concerns, because the public does not need to know what trains are traveling to which refineries until after-the-fact, and does not need to know times or even dates of travel. Gross reporting of number of trains and tanker cars per train, together with destination, would furnish the public with enough information to determine the volume of crude received by rail by the refineries, and whether those totals significantly exceed the amounts permitted.

Area Refinery Proposals

Tesoro and BP Cherry Point have completed their crude-by-rail infrastructure and are receiving trains now, as discussed above. One (Phillips 66) expects to be complete this year, and another (Shell Anacortes) is pending. The specific status of the four proposals is as follows:

1. Tesoro Refinery, Anacortes: Tesoro received all necessary permits after Skagit County Planning and Development Service made a Mitigated Determination of Nonsignificance and elected not to conduct an environmental review under SEPA. According to its permits, the refinery can, at full capacity, receive six trains per week delivering 50,000 of the refinery’s 120,000-barrel-per-day capacity. They received their first train delivery September 4, 2012. Three groups — Protect Whatcom, Friends of the Earth, and Safeguard the South Fork — together with several Skagit County citizens requested reconsideration of the MDNS on January 30, 2014, based on new information (discussed below). Skagit County PDS did not respond.

2. BP West Coast Products, LLC, Cherry Point: Like Skagit County, Whatcom County PDS issued an MDNS on October 18, 2012, and granted permits for a rail infrastructure project to receive up to one train per day of Bakken crude. BP started receiving up to 70,000 barrels per day by rail in December 2013. The three groups that requested reconsideration of the Tesoro MDNS, joined by the League of Women Voters, Bellingham/Whatcom County, made a similar request to Whatcom County PDS on January 30, 2014, for both BP and Phillips 66 (see below). In a response for the county dated February 3, 2014, Tyler Schroeder stated there was no adequate basis to withdraw the MDNS’s.

3. Phillips 66 Co. Ferndale Refinery, Cherry Point: Whatcom County’s MDNS is dated April 29, 2013, and PDS permitted Phillips 66 to receive up to one train every other day of Bakken crude. According to Public Information Officer Jeff Callender, construction should be completed in fourth quarter 2014, probably in December. See BP, above, for results of a Request for Reconsideration.

4. Equilon Enterprises LLC dba Shell Oil Products US, Anocortes: Skagit County PDS issued an MDNS in April 2014, and announced on May 14 that, based on comments received, it was requesting additional information of the applicant and would make its final determination about whether to conduct an environmental study. Shell also seeks a variance under the Shoreline Master Program because its proposed rail loop would extend less than 200 feet from the shore. In a phone conversation on June 13, Dale Pernula, Director of PDS, said that his office intends to wait until the appeal period for the SEPA threshold determination has passed before scheduling the hearing for the variance, because any SEPA appeal will be consolidated with the variance hearing before a county hearing officer. The county is accepting comments through the date of hearing on the shoreline variance (See the sidebar on p.7.).

Rail Capacity Issues

According to the 2013–2035 Department of Transportation (DOT) State Rail Plan, fossil fuel proposals mean Washington’s plans for infrastructure improvements and expansion will be required sooner, and not some time before 2035, as those previously unanticipated proposals come on line and overwhelm capacity. DOT notes rail carriers address capacity demands by first increasing efficiency, such as with longer trains and “schedule and train speed adjustments.” DOT notes that in order to avoid the risk of inadequate return on infrastructure investment, railroads prefer to make “business adjustments” such as “pricing actions, service frequency and provisioning of cars for loading, if they are supplied by the railroad.”

Current coal and crude fossil fuel proposals’ total tonnage exceeds all freight on the rails today in the state, and the percentage of crude on the rails now is only a fraction of that proposed. As existing lines reach capacity, DOT suggests freight that loses the bidding war for access must default to the highways.

Washington’s multimodal ports may be the biggest losers, as crude competes with other non-fossil fuel cargoes needing rail access. The Rail Plan mentions ports 78 times, and notes, “Importers and exporters have flexibility in their choice of port, and could use the ports in Vancouver, British Columbia; Prince Rupert; or California….”

Local impacts of increased rail traffic — particularly traffic interruption at crossings — could be addressed with grade changes, but Paul Roberts, board secretary of the Association of Washington Cities, testified to the Washington Transportation Commission in Bellingham on May 20 that cities cannot expect much assistance from the state and federal governments. Noting that overpasses can cost from $15 to $30 million per crossing, Roberts stressed that local communities cannot address traffic impacts without assistance.

Federal law does not require BNSF to fully pay for grade changes. As Roberts testified, their contribution is capped at five percent.

This is only fair, according to Johan Hellman, executive director of state government affairs for BNSF, because there are thousands of crossings requiring grade changes from the west coast to Montana and Wyoming. Hellman, in his testimony to the Commission, blamed a system that forces communities to compete with each other for scarce public funds to assist them, while noting BNSF will share more than five percent of the cost when it directly benefits the railroad.

Conclusion (a/k/a Commentary)

Globalization, from a local perspective, primarily means that Washington is eyed by U.S. commodities producers as an opportunity to reduce shipping costs to Pacific Rim markets that can absorb virtually all the agricultural and fossil fuel commodities the nation can export. However, the state has a rail infrastructure system designed for a 20th century regional economy.

Our ports are major economic drivers for our state but they stand to be the biggest losers, as fossil fuels overwhelm our rails on the way to our coasts, which lend themselves geographically to deep water shipping terminals.

Our Salish Sea is revered for its seafood production, but it faces increasing stress from ocean acidification and direct impacts of increased shipping and coastal industrial activities. Cash-strapped state agencies do not have the manpower to oversee cleanup of existing toxic sites. Whatcom County alone has 27 sites awaiting cleanup, according to the Washington Department of Ecology’s Hazardous Sites List, and GP is not the worst; it is merely one of the six worst.

Washington already struggles to meet education mandates and needs its ports and trade related to domestic production, particularly from agri- and aquaculture, to generate revenue. Instead, it is facing the need to invest in infrastructure, emergency response and cleanup programs to protect the state’s people, environment, and industries, for the sake of fossil fuel transportation proposals that provide few jobs and revenues relative to the impacts associated with their risky activities.

A perfect storm is descending on our region. That storm overwhelms existing infrastructure, poses extreme risks to rail communities, and adds to the volume and risk of tanker traffic in waters already ecologically stressed. Decisions made at the state and federal level in the next few years may permanently shape whether the Salish Sea can sustain its nature as an aquatic environment, or whether it will be no more than a transportation corridor supporting globalization.