Weekend Reading 9/19/14

PARK(ing) day is here!; Worldwide border abolishment; and more.
This post is 172 in the series: Weekend Reading

Serena

Don’t forget to visit your city’s PARK(ing) Day installations TODAY! (I’m dying to stop by Seattle Met‘s SwaPark.) Here are listings for Seattle, but I’m having trouble finding them for Portland, Vancouver, Eugene, Spokane, Olympia, Salem, Burnaby… others? If you have links, share ‘em! Better yet, if you visit one today, snap a photo and send it to me!

Alan

Three think pieces this week:

Should we aim to open all borders, worldwide? “Allowing free movement of all people across international borders could double world GDP,” argues one academic. It could also eliminate absolute poverty. Provocative. In The Atlantic and Vox.

A proposal for an overhaul of the US tax system that’s bold enough to adequately respond to climate change, economic inequality, and the need to restructure the economy away from financial speculation and toward innovation and production. The proposal includes pollution taxes, a tax on speculation, and overhauls of the main existing taxes, all from a Nobel Prize-winning economist. Read more »

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A Month of Disappointments for Coal Exporters

The bad news for the coal industry keeps rolling in.
This post is part of the research project: Northwest Coal Exports

It’s been a tumultuous month for proponents of massive coal export terminals in BC, Washington, and Oregon. In fact, there’s been so much news that it’s been hard to keep track of it all.

So here’s a synopsis of the month’s biggest stories:

  • Oregon’s denial of the Morrow Pacific coal export project has sent would-be coal exporters into a panic.

On August 18 Oregon denied a key permit for Ambre Energy’s proposed Morrow Pacific export terminal on the Columbia River. Ambre appealed the decision last Monday—and in a somewhat surprising development, the state of Wyoming joined Ambre’s appeal. Meanwhile, the US Corps of Engineers, which must also issue a permit for its project, has halted all work on its environmental assessment until the state permits are resolved.

At a minimum, Ambre faces an uphill battle filled with uncertainty and many, many months of delay…a delay that its financiers may not be willing to put up with.

Coal industry insiders have admitted that the Morrow Pacific denial is terrible news for the industry’s ambitions for Northwest exports—not just because of what it means for Morrow Pacific, but for the kind of permitting troubles the much larger export facilities in Washington may face. Said one (see p. 8 of the pdf): “What’s really frightening…is that the state of Washington has much stricter environmental laws than Oregon. Ambre’s project was expected to be easiest, and most likely to gain approval. This is the kind of thing that keeps coal producers awake at night.” [Emphasis added.]

  • Pacific Rim prices continue to tumble amid a global glut of coal.

The thing that should really be keeping them awake is the ongoing collapse of global coal prices. It’s hard to overstate how steep the declines have been, but this chart from eSignal.com gives some perspective on how steadily price expectations have fallen on the international futures markets. The market peaked back in 2011, when several Northwest coal export projects were just being launched. But prices have fallen so low now that, at today’s prices, none of these projects pencil out.

This article from Mining World summarizes how bad things are for coal exporters worldwide:

Global coal glut prompts coal miners to chant ‘cut, cut, cut’

In the face of stubbornly low coal prices and a global supply glut, struggling North American coal producers are grappling with stalled demand growth and increasingly strict environmental regulations, while simultaneously navigating congested export corridors to critical markets across the Pacific…

The global coal industry…is not in great shape at the moment…owing to the significant oversupply of coal, which was exacerbated by a slower-than-expected growth in demand, especially from China, which was weighing heavy on the industry.

Major BC coal exporter Teck is responding to the stall-out in China’s coal consumption growth by scaling back shipments to China.

And amid all of the other bad news for coal exporters came China’s announcement that it would launch a national carbon market by 2016, focused on the nation’s most coal-hungry sectors: power generation and manufacturing. Putting a price on carbon emissions in China will almost certainly crimp the nation’s demand for coal—and imports could be some of the first casualties.

  • Yet another disappointment for BC’s Ridley terminal.

The situation for the Ridley terminal in west-central BC was already looking grim earlier this year: Walter Energy announced that it was closing two BC coal mines that had shipped 3.6 million tons of coal through Ridley in 2013, and had decided to keep a third mine closed indefinitely. At roughly the same time Teck announced that it wouldn’t restart its Quintette mine, which also was slated to ship through the terminal; and Coalspur announced that it was putting its massive Vista mining project on hold.

Amid all of the production cuts, the port just announced that coal throughput in August 2014 had fallen by 56 percent compared with the previous August. The only small bright spot for the terminal came in early August, when Coal Valley announced that it would shift shipments from Westshore to Ridley.

But last week, another shoe fell for Ridley: Anglo American announced it planned to shut down its Peace River mine, which currently ships through Ridley, at the end of 2014, and would also put expansion plans at the mine on hold.

Ridley has already launched a significant expansion, based on rosy projections for robust export growth. But it looks like it should have saved its money.

  • Amid mixed news, Cloud Peak Energy saw its stock get hammered.

Cloud Peak Energy, a Powder River Basin coal mining firm that has placed major bets on coal exports, scored a minor victory in early August when it purchased about 2 million additional tons of export capacity at BC’s Westshore terminal, by buying out Coal Valley’s contract at Westshore for $37 million in cash. The company notched another small win when it offloaded its stake in the money-losing Decker mine to rival Ambre Energy, which eliminated a significant cleanup liability at the mine. Cloud Peak also had a few marginally favorable announcements about some financial restructuring.

And yet the good news was completely overshadowed by the company’s bigger problems: it was having trouble getting its coal to domestic markets. In early September the company reported both lower shipping volumes and lower earning projections for the year. The market essentially ignored the news about Cloud Peak’s exports—but the announcement of lower earnings and coal shipping volumes sent the company’s stock to its second-lowest closing ever just a few weeks after the announcement.

  • County Coal’s mystery export project shelved.

For a while now, a small Australian firm called County Coal has been talking about a coal export project at an undisclosed site in the Pacific Northwest. But they’ve now shelved the idea, saying that the $400M project “proved to be encumbered in a way that the risk and potential cost was prohibitive.” The company now says that it still has its eye on other sites; stay tuned, I suppose.

  • Port of Metro Vancouver approves Fraser Surrey Docks terminal.

In the one clear piece of encouraging news for would-be coal exporters, Vancouver’s port authority greenlighted the Fraser Surrey Docks coal export proposal. The project is now seeking an air permit from the Metro Vancouver government (even though it argues that it technically doesn’t need one). Both sides are now preparing for a legal battle in BC’s Supreme Court.

On balance, I’d say that it’s been a bloodbath for coal exporters in this part of the world. New coal terminals are facing serious regulatory hurdles, coal shipping volumes are down, coal mines are closing, international coal demand is flagging, prices have continued to fall, and existing coal exporters are calling for deep cuts, rather than more exports.

I’m sure there’s been more news than this…what did I miss?

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How State Public Money Pays for Coal Exports and Oil Trains

Tracking public fund investments in fossil fuel projects.
This post is 49 in the series: The Northwest's Pipeline on Rails

Communities across Oregon and Washington are growing increasingly agitated about the risks of fossil fuel export. Proposed coal terminals generated unprecedented opposition from local residents and, more recently, dramatic increases in oil train traffic have many questioning the grave safety risks associated with a cargo so prone to explode. Yet at the very same time, the state governments of both Oregon and Washington are bankrolling coal, oil, and gas infrastructure.

In some cases, the subsidies and expenditures are known but relatively small. But in other cases, large quantities of public money fund the very same facilities so bitterly opposed by the taxpayers that the states are supposed to be investing for.

The governors of each state have voiced strong concern about—and even outright opposition to—major fossil fuel infrastructure projects. Yet, while Governors Inslee and Kitzhaber preach a sustainable future for our region, another wing of the executive branch is quietly betting public money on a vastly different vision.

The Oregon Investment Council (OIC) and the Washington State Investment Board (WSIB) oversee all public investments made for their respective states. These little-known governing bodies manage the funds that will be used for public employee pensions and retirement accounts, labor and industry insurance and care coverage, the state guaranteed college tuition program (in Washington), developmental disability programs, and the like. They invest the monies in a variety of financial instruments, a major portion of which are private equity funds.

Normally, once invested, funds are very difficult to track. But private equity funds pitch investors like the OIC and WSIB on specific portfolios of investments, highlighting not only the overarching theme of the investment package but often specific companies. While state funds are combined with other monies, investors have a much more specific idea about where their dollars are going. They can’t claim ignorance about its final destination.

In other words, it allows us to follow the money.

Washington State Investment Board

Since 2010, WSIB has invested billions (seriously, billions with a “b”) in private equity funds focused on fossil fuel investments, many of which can be directly linked to energy projects in the Northwest.

Through a $250 million investment (p.3) in Stonepeak Infrastructure Fund, WSIB funded Tidewater Transportation and Terminals in December 2012. Tidewater, a Vancouver, Washington-based firm, later signed a deal with Ambre Energy to barge coal downriver from Boardman to Port Westward, Oregon, for its proposed Morrow Pacific coal export project.

From the same fund, WSIB also invested in an oil train project, the Casper Crude to Rail facility, in October 2013. This Wyoming-based project is a major oil shipment hub moving mostly Bakken shale oil, the volatile crude involved in numerous oil train explosions. While we cannot link individual oil trains to specific rail facilities, we do know that Casper Crude to Rail serves West Coast oil refiners, including Tesoro, Shell, and Phillips 66, all of which have major oil-by-rail projects planned for the Northwest.

In 2012, WSIB invested another $250 million in Global Infrastructure Fund II, a fund targeting “midstream energy” in North America, Europe, and Australia (p.2). Although we cannot directly link WSIB dollars to specific fossil fuel projects in the Northwest, the investment firm that owns the fund, Global Infrastructure Partners, owns 50 percent of the the Ruby Pipeline, a project to  deliver gas to a pipeline hub at Malin, Oregon, from which it would be moved (p.4) to a controversial liquefaction and export site planned at Coos Bay, Oregon. [Note: In an earlier version of this article we reported that Fund II's portfolio included the Ruby Pipeline when, in fact, the Pipeline is included in the portfolio of Fund I, which WSIB has not invested in. Please see the update at the bottom of this post for more detail.]

Oregon Investment Council

In 2012, Oregon invested alongside Washington. OIC put $100 million into the same Stonepeak Infrastructure Fund that the Evergreen State funded. Through Stonepeak, the state of Oregon bankrolled the very same Northwest fossil fuel centers: Casper Crude to Rail—with its West Coast-bound oil trains—and Tidewater—with its designs on Columbia River coal barges that Governor Kitzhaber vociferously opposes.

In 2013, Global Partners acquired an oil train facility at Port Westward on the Columbia River. Bankrolling this purchase was a $70 million loan from a “lender of last resort” and longtime OIC investment partner, GSO Capital. OIC has invested hundreds of millions with GSO. Some of those funds were deployed to provide the loan to the Port Westward project (although they were likely mixed with money from other investment funds).

The site has been a lightning rod in the region, especially after it was revealed that site operators brought in five times more oil than they were legally allowed. (Rather than pare back operations at the site, Oregon authorities subsequently issued a permit allowing Global Partners to ship nearly 120,000 barrels per day, making it by far the largest operating oil-by-rail facility in the Northwest.)

And OIC continues to make major investments with another company that is focused on developing the Northwest for fossil fuel exports, Blackstone Capital. Earlier this year, Blackstone Capital sold $962 million worth of American Petroleum Tankers to Kinder Morgan (p.11). (Kinder Morgan is a huge energy company with a notoriously bad track record, including the deadliest fish kill in a decade on the Willamette River and bribing a Portland ship captain to dump contaminated potash in the Pacific Ocean.) In recent years, the firm that has hatched plans for a (now-scotched) coal export terminal on the Columbia River and a major oil pipeline expansion in British Columbia. It’s entirely possible that Oregon’s public money helped pay for the ships that Kinder Morgan would use to export North American fuel.

We have an obligation to safeguard the public monies we hold in trust for firefighters, schoolteachers, and health care providers. We must protect the value of the investments as well as the economy and natural heritage that sustains us. At a time when the Northwest is choosing whether to become a carbon export hub of global consequence or a thin green line of climate protection, the way we spend our money says a great deal about our priorities.

At the moment, it looks like we’re betting the farm on coal and oil.

 

Update 9/18/14: In the scrum of media coverage that followed the publication of our analysis, WSIB challenged several elements of our analysis claiming that 1) they are not part of the executive branch; 2) they have not invested “billions” in funds focused on fossil fuels; and that 3) the money that they put into Global Infrastructure Fund II did not finance Kinder Morgan’s Ruby Pipeline.

We’ll take each of these in turn.

First, and easiest, WSIB is indeed part of the executive branch. The State Treasurer, who is indisputably a member of the executive branch, has an official job description that reads: “…custodian for all state-owned investments…including $30 billion in state pension and accident insurance funds managed by the State Investment Board. The Treasurer is one of nine members of the State Investment Board.”

So although the Board itself is independent in some sense, the Treasurer is legally responsible for the investments. In fact, the Treasurer Office’s website even takes credit for the investments and the return that WSIB provides. Finally, journalistic accounts of WSIB commonly refer to WSIB as part of the executive branch. For example, the Puget Sound Business Journal characterizes the body like so: “Governed by an independent board, the investment board is nevertheless a part of the state’s executive branch.”

Second, WSIB has in fact invested billions of dollars in private equity funds focused on fossil fuel investments. Even under the extremely narrow scope of our analysis—WSIB-supported private equity funds that made fossil fuel investments specifically in Oregon or Washington in the last few years—we identified $500 million. A more complete tabulation of all fund investments past and present that focus on fossil fuels nationally and globally easily yields billions. (We will publish a partial tabulation shortly.) What’s more, in the course of trying to rebut our claims, WSIB acknowledged that $108 million of its Trust Fund is directly invested in coal, an amount that appears to be above and beyond the figures we reported.

To be clear, many of the private equity funds in question invest in an array of projects that include both fossil fuel and non-fossil fuel (and, indeed, non-energy sector) investments. WSIB’s response to reporters, however, seems to imply a myopic view of what counts as an investment in fossil fuels—only direct investments in the energy companies themselves. Our view is that counting only the direct investments is a bit like saying, “we don’t invest in cars, just roads, gas stations, and parking lots.” So Sightline’s accounting includes fossil fuel infrastructure projects—pipelines, oil train loading terminals, and the like—not just direct investments in energy companies and commodities. In summary, we stand by our claim that WSIB has put billions of state dollars into funds that were advertised to investors as focused on the fossil fuel sector or that included specific fossil fuel infrastructure projects.

Third, WSIB argues that the money it invested in Global Infrastructure Fund II did not finance Kinder Morgan’s Ruby Pipeline in southern Oregon. On this score, it looks like we made a mistake. Although we are still exploring the minutiae of the group’s investment allocations, it looks to us now as though we misinterpreted materials available on the Global Infrastructure Partners’ website and, in fact, the Ruby Pipeline was funded by Global Infrastructure Fund I, not Fund II. We have updated the article to reflect our understanding and we regret the error.

That said, WSIB is still invested with Global Infrastructure Partners, the firm that owns and manages the two Funds, and Global Infrastructure still owns 50 percent of the Ruby Pipeline. So, at the very least, WSIB is investing money with a company that owns the pipeline. Furthermore, we found plenty of coal, oil and gas assets in the Global Infrastructure portfolio that we did not list because they are not directly focused on the Northwest. For example, we did not mention East India Petroleum Limited; Access Midstream Partners, a group dedicated to natural gas operations and development; the Transitgas Pipeline ,which will link gas pipelines across Europe; Guacolda Energia’s new coal plant in Chile; Freeport LNG‘s new export facility in Texas; or CLH, a Spanish refined oil storage and transportation facility.

 

Thanks to Cass Martinez, a diligent and informed citizen of the Northwest who first piqued our curiosity, and to Ben Serrurier for his perspicacious finance suggestions.

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Have You Signed?

Countering Big Money in citizens’ initiative signature drives by targeting fraud.
This post is 9 in the series: What Democracy Looks Like

You know the drill. To get into the Safeway, you’re going to have to walk past the man with the clipboards. “Are you a registered voter?” he is asking you already, when you’re still 10 feet away. “Have you signed for…?” Whatever the pitch, it’s hard to decline, because he looked you in the eye and asked politely. It’s a small request. He’ll be here on the way out, too.

Who are these people? They’re paid signature gatherers. They travel from state to state, chasing the big initiatives, working as independent contractors for shady companies that reward them for each signature—a dollar or two or even more per valid signer. This petition derby yields intense incentives for gatherers to mislead voters, making the initiative sound sweeter than it is, and to engage in fraud, copying names from phone books, for example. But it’s also how the system works nowadays.

Citizens’ initiatives have become another business. Petitioning is no longer a test of popular ferment; it’s a test of sponsors’ money. As Western Washington University politics professor Todd Donovan says, “No one can get on the ballot unless they’ve got a million bucks.”

There are ways to mend this signature-gathering process, and they mostly focus on eliminating abuses. That’s the good news. Read more »

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Weekend Reading 9/12/14

#WhyIStayed; This is your region on coal exports; The marriage bonus; and more.
This post is 171 in the series: Weekend Reading

Kristin

My inbox is always too full. Some of it is my fault (yes, I do want to hear more about kid-friendly restaurants in Portland, thank you Red Tricycle), and some of it is other people’s fault (Kristin Gilbert in Cincinnatti, please remind yourself of YOUR email address and stop signing MY address up for emails from wedding caterers and photographers). So I am delighted to have found a way to magically make the unwanted emails stop: unroll.me. Presto!

Wonder what your lifetime earnings would be if you were a man instead of a woman? Hint: you would earn more. You can test drive your alternate earning realities here.

Serena

Last weekend, I watched the absolutely breathtaking film DamNation, and I highly recommend it. It was an informative, engaging, moving, and visually stunning feat of film-making by some very talented folks, with a generous deal of bankrolling by the company Patagonia. Just wow. (H/t Stephen S.) See it as soon as you can, and enjoy the trailer for now:

If you missed the Totem Pole Journey passing through the Northwest (or even if you made it!), these photos of the community that came together for it are can’t-miss. Hats off to James Leder for capturing it.

After the Ray Rice domestic abuse video came out earlier this week, a new hashtag began trending on Twitter, bringing together the painful lines of reasoning behind victims’ staying with their abusers: here’s a sampling of #WhyIStayed. Read more »

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Disputing a Study on Coal Exports and Climate

A poorly designed study assumes that breaking the law is "business as usual."
This post is part of the research project: Northwest Coal Exports

I’ve never seen anything like this: an academic study that assumes that a privately held power company will continuously violate state and federal environmental laws.

That’s just one of several surprising flaws in a recent paper by researchers from Duke University and the University of Calgary. The study purports to show that, under certain assumptions, exporting coal to Korea will reduce the amount of CO2 emitted per megawatt-hour of power produced globally. Yet the study is based on premises so absurd that they render the authors’ conclusions meaningless. Read more »

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Climate Change in Plain Language

Your new go-to one-pager on talking climate like a pro.
This post is part of the research project: Flashcards

Sometimes those of us who are very deeply immersed in climate communications become so focused on crafting messages that effectively convey certain complex issues, ideas, and policy measures that we forget some of the most fundamental communications rules.

I speak for myself. I should probably stick a Post-It note on my computer screen with a checklist: Is it first and foremost about people? Emotions!! Are you going for the gut or brain? Did you say it in plain language? (In fact, I’m making that sticky note right now).

Based on those most basic, simple yet powerful rules of thumb, Jeremy Porter, a super-smart freelance communications strategist (Jeremy Porter Communications), has summed up nicely how to talk about climate change so that people will care. Noting that most people don’t care at all or very much (or don’t have the time or energy to), Porter insists that it’s not a matter of piling on more facts nor a question of saying “global warming” instead of “climate change.” Instead, we can make global warming more relevant to people by talking about why it matters to them, their families, and their daily lives. One of Porter’s examples really hit home: People don’t want a “safe climate” or a “healthy climate”. They want to be safe and healthy.

Porter reminds us that the language we use to communicate about climate change needs to be simple and uncontroversial. A word like pollution, for example, works better than “carbon emissions.” A person does not have to believe in or understand global warming to care about these things. “People understand pollution,” he explains, “They don’t like it, they think there should be less of it, and they understand it’s bad for their health.”

Porter’s cheat-sheet could almost fit on a sticky note, but a Flashcard works better. (I invite you to stick it somewhere front and center, so you’ll see it as you work.)

Flashcard_How To Talk About the Climate

The guide is adapted from Jeremy Porter’s guide. His communications recommendations are based on research and recommendations by Drew Westen, professor in the Departments of Psychology and Psychiatry at Emory University and founder of Westen Strategies, LLC, and partly based on research conducted by Jeremy Porter with Alex Frankel & Associates.

Download Jeremy Porter’s original one-page guide here: How to talk about the climate. And check out his blog here: jrmyprtr.com.

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Canada vs. the USA on Oil Train Standards

Who is number one?
This post is 48 in the series: The Northwest's Pipeline on Rails

With what passes for chest-beating in the world of railway regulation, US politicians this summer claimed that the Transportation Department’s newly proposed crude oil, ethanol, and flammable materials train rules made the US Number One when it comes to tank car regulation—and that we are doing better than Canada.

In his reading of a July 23 press release announcing the rule-making (which implied that unsafe DOT-111 tank cars would be off the rails within two years although it was actually 38 months from the date of the announcement), Rep. Rick Larsen said, “That’s a year faster than what the Canadians have proposed. A lot of people have suggested Canada as a model for what we should do. Well, we’re a year faster.”

Was Larsen right? Let’s do the tally to see who is really Number One.

Round 1: Date when legacy DOT-111s are off the rails—Canada 1; USA -1

Neither US nor Canadian regulators proposed an immediate ban on all legacy DOT-111s transporting Bakken crude oil. That’s what ought to happen, and it is the action sought by the recent EarthJustice formal legal petition to USDOT, but that’s not what we’re seeing.

In fact, US regulators proposed a three year-plus delay for even the initial phase-out. The upshot is that according to the proposed rule in the US, trains of 20 or more tank cars of volatile Bakken crude oil will not be able to use DOT-111s after October 1, 2017 or if carrying ethanol after October 1, 2018.

In Canada, by contrast, legacy DOT-111s will not be allowed for crude oil or ethanol oil after May 1, 2017, according the proposed rule by Transport Canada. (Canada’s proposed rule would allow the use of CPC-1232 standard tank cars up to May 1, 2020 for highly hazardous materials.)

In other words, Canada has proposed to phase out legacy DOT-111s for crude oil and ethanol faster than the US. What’s more, the Canadian phase-out covers all oil and ethanol trains, not just those comprised of 20 or more tank cars.

  • That’s 1 point to Canada for a faster phase-out of legacy DOT-111s carrying hazardous fuels. They would have received another point if CPC-1232s were also phased out after May 1, 2017, and we will have to wait for the final rule to see what they decide.

But that’s not the end of this round. We’re penalizing Team America for USDOT’s deceptive press release on its proposed new tank car rules because it implied a shorter phase-out than it really offers. The feds’ statement says [emphasis added]: “Specifically, within two years, it proposes the phase-out of the use of older DOT-111 tank cars for the shipment of packing group I flammable liquids, including most Bakken crude oil…”

Which is highly misleading. In fact, the press release omitted the start date for the phase-out—October 1, 2015—and so it should have read “within 38 months.”

  • Penalty against USA for a bad press release that misled the media and the public (and apparently Rep. Larsen) about when DOT-111s would actually be (partially) phased out. Minus 1 point.

Round 2: Immediate removal of the worst-of-the-worst DOT-111 tank cars—Canada 2; USA 0

On April 23, 2014, Canadian regulators required the immediate removal of 5,000 of the least safe DOT-111s from hazardous service. No phase-out, no comment period, just an immediate halt in using these incredibly unsafe tank cars from hauling hazardous materials to protect the public from an imminent danger. The banned tank cars have a construction weakness in the bottom of the tank car frame that is very prone to failure in a derailment. In Canada, these tank cars now have to carry a big label that says, “Do not load with dangerous goods in Canada.”

Yet in the US, regulators have not taken immediate action on these worst-of-the-worst DOT-111s, not even in the proposed rules. In the US, you can basically just paint over the Canadian warning label and keep using these same tank cars to ship Bakken crude or ethanol all the way until October 1, 2017 under the proposed rule. Even then, you can keep on using them just as long as the shipment is less than 20 carloads.

  • We award 2 points to Canada for a) listening to their Transportation Safety Board; and b) taking immediate action to remove the most hazardous DOT-111s from service.

Round 3: Improved tank car standards—Canada 1; USA 1

In the draft rule, US regulators have proposed a new specification DOT-117 tank car to replace the DOT-111 for use in unit trains of ethanol or Bakken crude oil. However, instead of proposing a single tank car standard based on the best available science, the proposed rule sets out three options for comment. The weakest option is based on what is known as the CPC-1232 tank car standard that the industry already voluntarily agreed to use for new tank cars starting in 2010. Most of the tank cars involved in the Lynchburg, Virginia oil train explosion were CPC-1232s.

On July 2, Canadian officials proposed a rule with an improved tank car design and brakes called the TC-140 for the transport of flammable liquids, which is equivalent to the best option proposed by USDOT. However, Canada has proposed a slower phase-in of the improved standard.

  • So, one point each as this round continues to play out. Canada laid down a marker for the best tank car standard; the final score will depend on the actual rule from the USDOT as well as the harmonization process between the two countries.

Round 4: Taking on underinsurance of railroads for transporting crude oil and ethanol—Canada 2; USA 0

The Lac-Megantic accident revealed the oil-by-rail industry is radically under-insured for the risks of shipping volatile Bakken crude. The railroad involved only had $25 million in liability insurance, and estimates of the total cost to clean up, remediate, and rebuild the town have risen as high as $2.7 billion. Families who lost loved ones and property owners wiped out by the accident are having to go to court, likely for years, to sue anyone connected to the shipment for damages. It is highly likely that provincial and federal taxpayers will end up stuck with a significant bill for the cleanup. An accident in a more populated area would have an even higher cost, far exceeding the $1 billion insurance levels that even major railroads like BNSF carry.

In Canada, requiring the oil-by-rail industry to carry sufficient insurance was a central piece of political leadership’s response to Lac-Megantic along with requiring new tank standards—even if it meant increasing the costs to the energy sector. This was highlighted in the Conservative Party’s 2013 Throne Speech (equivalent to the President’s State of the Union address): “Our government will require shippers and railways to carry additional insurance so they are held accountable. And we will take targeted action to increase the safety of the transportation of dangerous goods.”

Subsequently, Transport Canada undertook a consultation to deal with the liability issue.

In the US, despite several Congressional hearings, there has not been a question about railroad under-insurance. The political focus has instead been on pushing the Department of Transportation to issue new rules for tank cars and to make sure, in effect, that emergency responders have enough foam to spray on the embers of a populated area after an oil train explosion. Elected officials have not wrestled with who will have to pay for the potentially billions of dollars in uninsured damages and whether it’s appropriate that taxpayers will likely have to pick up the tab.

In fairness, USDOT did acknowledge in its Draft Regulatory Impact Analysis (an accompaniment to the proposed rules) that one reason for implementing rules to make crude oil and ethanol transport safer is because “shippers and rail companies are not insured against the full liability of the consequences of incidents involving hazardous materials.”

  • Two points for Canada for taking seriously the problem of under-insurance of oil and ethanol trains. Zero points for the USA ignoring it at the leadership level.

Round 5: Taking on misclassification of Bakken crude oil—Canada 1; USA 1

At the heart of the hazardous materials shipping system is the proper classification of the product being transported, which is the responsibility of the shipper. Regulators have found instances where Bakken crude oil was misclassified and being transported incorrectly. For example, the oil in the train that exploded in Lac-Megantic was misclassified as “Packing Group III,” the lowest hazard, when it should have been classified as “Packing Group I,” the most dangerous. Federal agencies are now focused on ensuring that shippers are properly classifying crude oil for transportation in accordance with regulations.

Along with the draft rules addressing classification issues, the US feds concurrently released a report summarizing an analysis of Bakken crude oil. Unsurprisingly, the federal data show that crude oil from the Bakken region in North Dakota tends to be more volatile and flammable than other crude oils. The new findings contradict recent assertions by the American Petroleum Institute that, based on their private studies, Bakken oil is no different from other flammable liquids commonly shipped in DOT-111s.

On July 2014, Canada adopted changes to its hazardous material regulations to address classification problems found with products like Bakken crude oil. However, Canada’s Transportation Safety Board has raised concerns that Bakken crude oil is still being misclassified, despite assurances from the federal government that everything is okay.

  • One point to the US for pushing back on the oil companies’ idea that Bakken oil is not exceptionally dangerous. One point to Canada for quickly addressing misclassification, though it looks like they have more work to do.

Final score: Canada 7; USA 1

With a few exceptions, the Canadian regulatory response to oil trains has been far superior to the American approach. In many instances, they have bypassed drawn-out rule-making and issued emergency orders to address safety issues raised by their independent safety agency.

That’s not to say that Canada’s requirements are sufficient, but rather to point out just what a poor showing US regulators and leadership are making when it comes to protecting the American public and taxpayer from exploding oil trains.

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Five Keystone XLs: The Carbon in Northwest Fossil Fuel Export Plans

A new Sightline report tallies the emissions in coal, oil, and gas projects.
Original Sightline Institute graphic by Don Baker Design, available under our free use policy.

Original Sightline Institute graphic by Don Baker Design, available under our free use policy.

Sightline is releasing a new report, Northwest Fossil Fuel Exports, showing that the region is poised to become a carbon export hub of global consequence. A tally of the new coal, oil, and gas shipment schemes being planned in the Northwest finds that they would carry five times as much carbon as the controversial Keystone XL Pipeline.

Taken together, these plans would be capable of delivering enough fuel to release 822 million metric tons of carbon dioxide into the atmosphere each year. In the report, Sightline examines each project individually and does the carbon math to find that:

  • Coal terminals. Seven new or expanded coal export terminals would together move 132 million metric tons of coal annually above current levels, enough to emit 264 million metric tons of carbon dioxide per year.
  • Oil pipelines. Two new oil pipelines would be capable of carrying more than 1.1 million barrels per day, enough to emit 199 million metric tons of carbon dioxide annually.
  • Oil-by-rail facilities. Eleven oil-by-rail facilities at refineries or port terminals could move 858,900 barrels per day, enough to emit 132 million metric tons of carbon dioxide each year.
  • Natural gas pipelines. At least six new natural gas pipelines capable of carrying 11.7 billion cubic feet per day would be enough to emit 227 million metric tons of carbon dioxide annually.

The Pacific Northwest has long been known for environmental leadership and clean energy, but it is on the cusp of transforming into a major center for fossil fuel exports. Because the region stands squarely between Asian energy markets and large fossil fuel deposits in the interior of North America, the permitting decisions that Northwest officials make in the coming years will impact the global climate for years to come.

Read the full report.

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“If We Cannot Escape, Neither Will the Coal”

Northwest Tribes and First Nations block fossil fuel exports.
This post is part of the research project: Northwest Coal Exports

Across the Northwest, Native communities are refusing to stand idle in the face of unprecedented schemes to move coal, oil, and gas through the region. It’s a movement that could well have consequences for global energy markets, and even the pace of climate change.

Now is a good moment for pausing to examine some of the seminal moments of resistance from tribal opposition to fossil fuel exports. Yesterday, the second Totem Pole Journey came to an end with a totem pole raising ceremony at the Beaver Lake Cree Nation in Alberta. As it did last year, the journey showcased the tremendous breadth and depth of indigenous opposition to coal and oil schemes—spanning Native communities from coastal forests to the high plains interior of North America.

The journey was a reminder not only of the particular moral authority of the tribes and First Nations in the face of fossil plans, but also the fact that they are uniquely equipped to arrest these export plans.

British Columbia

Like the United States, Canada is in the midst of a natural gas boom. The industry is trying desperately to move its products to foreign markets, but concerns about public health, fishing rights, and environmental damage have First Nations raising red flags.

Many of the First Nations in British Columbia have banded together against a liquid natural gas facility at Fort Nelson in northeast BC. At what is now being called the “Fort Nelson Incident” Chief Sharleen Gale gave a rousing speech, saying:

My elders said, you treat people kind, you treat people with respect… even when they are stabbing you in the back. So I respectfully ask government to please remove yourselves from the room.

Gale later asked LNG representatives to leave as well, and the event galvanized the BC aboriginal community. Since then, no fewer than 28 BC First Nation organizations have signed a declaration to put the facility on hold.

Elsewhere in the province, aboriginal communities have been in a long standoff with proponents of the highly controversial Enbridge Northern Gateway Pipeline, a proposal that would move tar sands oil from Alberta to port facilities in BC where it would be transferred to tankers that would move the crude to Pacific markets. At least 50 First Nation leaders and 130 organizations have signed the “Save the Fraser Declaration.” Citing concerns over water quality, fishing, treaty rights, and sovereignty, nine coastal First Nations even went so far as to preemptively ban oil tankers in their territorial waters.

The Canadian federal government gave approval to the Northern Gateway Pipeline in June, and women of the Gitga’at Nation did not take it lying down. In protest, they stretched a 4.5 kilometer (2.7 mile) crochet chain across the narrow channel near Kitimat, where the export facility is proposed to be built.

“It’s to show that we’re prepared to do what it takes to stop them because we can’t let it happen. It’s the death of our community, our culture,” said Lynne Hill, who generated the idea.

Now, similar opposition is mounting against Kinder Morgan’s planned Trans Mountain Pipeline expansion in southern BC, and BC First Nations are challenging it in court.

Lillian Sam, aboriginal elder from the Nak’al Koh River region, put the situation in perspective:

You cannot eat money…you see the devastation of the oil sands: a huge part of that land is no good. What’s going to happen to us? What’s going to happen to our children?

The US Northwest

Like their neighbors to the north, Washington Tribes have had major concerns over fossil fuel exports, not to mention the way they have been treated by proponents of the projects.

In 2011, the would-be builder of the Gateway Pacific coal terminal near Bellingham got into hot water with permitting agencies after it was discovered that they had begun construction without approval. Not only did construction crews destroy acres of sensitive wetlands, they also damaged local Lummi Nation burial grounds.

It was a not-so-subtle “accident” and was the last straw for many in the local tribal community. The Lummi subsequently burned a mock check from the terminal proponents at the site of the planned coal terminal. It was a pivotal moment for activism in the Northwest.

Opposition from the tribes can be a tremendous barrier for the coal, oil, and gas industries to surmount. Above and beyond their sovereignty, most of the Northwest tribes have specific fishing rights guaranteed to them in their treaties with the US government, rights that were subsequently reaffirmed and clarified by the Boldt Decision of 1974. Those tribes have firm legal footing for demanding access to their “usual and accustomed” fishing grounds, which include most of the places where fuel terminals would be located.

Other Puget Sound tribes have also made it publicly clear that they are firmly against coal exports. In April of last year, tribal leaders joined then-Seattle Mayor Mike McGinn in the Leadership Alliance, a coalition against coal export.

Said Tulalip Tribes Chairman Melvin Sheldon:

When it comes to coal… the negative potential of what it does to our Northwest—we stand with you to say no to coal. As a matter of fact, the Tulalip say ‘hell no’ to coal.

Brian Cladoosby, chairman of the Swinomish Indian Tribal Community and one of the state’s most influential Native American leaders, declared:

For thousands of years, Washington State tribes have fought to protect all that is important for those who call this great state home. We as leaders need to protect our treaty resources, our economies, and the human health of our citizens and neighbors.

The Nisqually Tribe likewise has submitted thorough public comment in opposition to a giant coal terminal planned for Longview, Washington. Beloved tribal leader Billy Frank, Jr., who recently passed away, was a persistent voice in opposition to Northwest fossil fuel exports. In one of the last things he wrote, he declared his solidarity with the Quinault Nation, who are fighting against a trio of oil terminals proposed in Grays Harbor Washington. Frank wrote:

The few jobs that the transport and export of coal and oil offer would come at the cost of catastrophic damage to our environment for years. Everyone knows that oil and water don’t mix, and neither do oil and fish, oil and wildlife, or oil and just about everything else. It’s not a matter of whether spills will happen, it’s a matter of when.

East of the Cascades, too, Native opposition has been fierce. The Yakama Tribe came out publicly and powerfully against Ambre’s proposed coal export facility in eastern Oregon, once again citing tribal fishing rights. Yakama protests and tenacity, in conjunction with other regional tribes like the Warm Springs and the Nez Perce, were a major factor in the proposal not being permitted. In Oregon, the Confederated Tribes of the Umatilla Indian Reservation also joined the Yakama in opposition to coal on the Columbia River, batting down ham-fisted attempts by the industry to buy tribal support.

Networks of tribes, like the Columbia River Intertribal Fish Commission (CRITFC), also voiced their strong concerns about what the proposals would be mean for their communities. The Northwest Indian Fisheries Commission also declared its strong opposition to oil exports from the proposed site at Grays Harbor, highlighting fishing disruption in the Puget Sound, health problems in their communities, and pollution.

In fact, the 57 nations that make up the Affiliated Tribes of Northwest Indians unanimously voted in May of 2013 to officially oppose all fossil fuel export facilities in the Northwest.

Paul Lumley, executive director of the Columbia River Intertribal Fish Commission, may have put the tribal community’s view most clearly:

Our communities are wedged between the railroad and the river. We’ve got nowhere to escape. If we cannot escape, neither will the coal.

Lumley’s words are proving prescient. Last month, yet another Northwest coal export terminal was dealt what was likely a fatal blow. The Oregon Department of State Lands denied a crucial permit to Ambre Energy, which plans to ship coal from a site on the Columbia River. Among the most influential factors the state agency cited for its decision: tribal sovereignty.

The decision was, in some ways, recognition of the power that the region’s tribes and First Nations can exercise over the fossil fuel infrastructure projects that are cropping up across the Northwest. By asserting treaty rights and voicing cultural concerns, tribes are presenting a major barrier—are a key part of the thin green line—to a reckless expansion of coal, oil, and gas schemes.

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