Proposed Oil Train Rules: The Good, The Bad and The Ugly

What new federal standards will do and what they won't.
This post is 45 in the series: The Northwest's Pipeline on Rails

On July 23, the federal regulatory agencies in charge of oil trains released the details of a rulemaking proposal to improve the safety of moving large quantities of flammable materials by rail, particularly crude oil and ethanol. Oil trains have been the subject of increasing worry after five separate derailments in the past year unleashed towering infernos. The recent announcement opened up a sixty-day comment period after which the US Pipeline and Hazardous Materials Safety Administration (PHMSA) will issue a set of final rules.

In our judgment most media coverage of the proposed regulations has been rather credulous, overlooking several important dimensions and ignoring some glaring flaws. (One counterexample is Joel Connelly’s coverage at Seattle P-I.) So to correct the record, here is Sightline’s take on the good, the bad, and the ugly in the new proposed tank car standards.

The Good

  • The proposed rules have been released sooner than expected. Many industry observers speculated that this rulemaking process, which started in September 2013, would drag on much longer.
  • The draft rules are fairly comprehensive, addressing many of the unique safety issues of unit trains carrying oil or ethanol, including questions about how oil producers classify their crude, how train braking systems operate, how emergency responders are to be notified, emergency response planning, rail routing, and train speeds. Among the most closely watched issues are rules that will set standards for new-built and retrofitted tank cars.
  • PHMSA 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 and that therefore there is no need to change tank car standards, which incidentally would increase their costs.
  • The feds propose to create a new improved tank car classification, DOT-117, for transporting Class 3 flammable liquids in unit trains.

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Are You Planning to Have Kids? (Part 2)

10 lessons from Vancouver's efforts to build family-friendly urban housing.
This post is 6 in the series: Family-Friendly Cities

In my last post about Vancouver BC, I outlined the family-friendly policies that have helped make its downtown a magnet for families with children. But how do those policies play out in real life? What works well for families and what drives urban parents crazy?

The University of British Columbia’s planning department has actually devoted a lot of studentpower to answering those questions. They’ve collected extensive feedback from residents and parents in False Creek North, one of the first major downtown redevelopment efforts. Other students have researched how well Vancouver’s urban rowhouses are working for families with kids.

The big picture is that downtown residents and parents really like living there. A whopping 96 percent of False Creek North residents said they would recommend living there. Kids were enthusiastic about their neighborhood, and particularly liked having so many friends and things to do within walking distance. That said, families with children were also more likely to be dissatisfied with their homes, and they were only half as likely to envision staying put for the next five years. So there’s still work to be done.

Based on their input, here are 10 takeaways from Vancouver’s efforts to build family-friendly urban housing: Read more »

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Video: The Northwest’s “Bomb Trains”

VICE News takes an in-depth look at oil trains running through Cascadia.
This post is 44 in the series: The Northwest's Pipeline on Rails

I’m excited to share this just-released VICE News video piece about the threats of oil trains in the Pacific Northwest: “The Crude Gamble of Oil by Rail: Bomb Trains.”

Spencer Chumbley and Nilo Tabrizy put together a top-notch, comprehensive look at how this dangerous “pipeline on wheels” is already affecting our region, interviewing a broad range of stakeholders and experts, including: Jasmine Zimmer-Stucky of Columbia Riverkeeper; Kenny Stuart, president of the Seattle Fire Fighters Union, Local 27; Barry Cain, president of the Oregon real estate firm Gramor Development; Rob Davis of The Oregonian; and yours truly.

It’s a great watch for anyone, whether you’re new to the issue or already familiar with it. And if you have neighbors or friends who don’t know much about oil trains, please share this video with them. It’s a clear introduction to a development that threatens local communities and economies.

Bonus: For more on how these massive new rail shipments are impacting our local economy, see this excellent Seattle Times piece from the weekend on coal and oil trains crowding out grain shipments to our ports.

Extra bonus: VICE is also publishing an editorial I wrote, Warren Buffett Really Likes Oil Trains — Despite the Explosions. Here’s a taste:

Buffett likes to maintain an avuncular and public-spirited image, but the railroad industry fights bitterly against better safety standards and often cloaks itself with intermediaries. In the regulatory arena, Berkshire-owned firms are represented by active membership in an alphabet soup of trade associations and industry lobbying groups…

Last week, federal regulators proposed new rules that were widely heralded by the media as a victory for public safety. But in reality, the oil-by-rail industry got most of what it wanted.

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There’s Plenty of Room at Hotel California

How Oregon and Washington Could Link to California’s cap-and-trade program.
This post is 12 in the series: Cashing In Our Carbon

Pretend you’re the governor of Oregon or Washington, or the head of a key committee in the state legislature in Salem or Olympia. Let’s say you’re convinced: Climate change is real, it’s a huge risk, and we need a fast, smooth transition beyond carbon fuels. Putting a price on carbon is the single best way to nudge the whole economy in that direction.

What do you do? Designing an entire carbon pricing system from scratch… that’s a lot of work! Isn’t there an “off-the-rack” option available? There is! There are, actually. British Columbia’s carbon tax shift is ready to copy. Or, if you prefer to link up with the best US carbon market, California has spent the past eight years building a state-of-the-art cap-and-trade program and writing all the rules and regulations to go with it. Not only that, but Oregon and Washington have already done some of the groundwork for linking to California by contributing to the Western Climate Initiative’s 2010 framework.

Linking isn’t just a way to avoid recreating the wheel. It has a lot of benefits: it can cut the cost of reducing pollution, reduce the risk that emissions will “leak” across state borders, trim the costs of administering the program, and make it simpler for multi-state entities to comply because the rules are the same across borders.

That all sounds great. What do you need to do? Here is a summary of what Oregon or Washington would need to do to link, with comparisons to California’s linkage with Quebec this year. Read more »

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Poll: Are Voters Warming to a Carbon Tax?

Majorities in favor, even Republicans. But it hinges on where the money goes.
istock

istock

The pollsters themselves seemed surprised by new findings that majorities of Americans would support a carbon tax. They start their report saying that “conventional wisdom holds that a carbon tax is a political non-starter.” But they end with the note that “there may be more support for a carbon tax than is commonly believed.”

Indeed, what they found may indicate a narrow political opening.

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Pacific Rim Coal Prices Continue to Tumble

Coal exporters are seeing red...and red ink...in latest price drops.
This post is 24 in the series: Coal Exports: Caveat Investor
Newcastle coal futures prices, August 2014 contract.

Newcastle coal futures prices, August 2014 contract.

In case you don’t check the coal futures markets every day, you may have missed the news that international coal prices recently reached a multi-year low. To understand just how dramatic the decline has been, all you need to do is look at the chart of futures prices for coal at Newcastle, Australia, one of the key pricing points for Pacific Rim coal markets.

If you’re a coal buyer in Korea or Japan you’re probably applauding the ongoing price collapse, because it means that you can buy a ton of coal for a lot less than you used to. But if you’re in the business of selling coal on the seaborne coal markets, the trends have been nothing short of a financial catastrophe.

When Pacific Rim coal prices shot up in 2009 through 2011, mining firms throughout the Pacific Rim invested tens of billions of dollars in new mines and export facilities, expecting a sure payoff. China’s demand looked like it was skyrocketing, and many market observers were convinced that prices would stay high indefinitely—leading many coal companies to lock themselves into long-term contracts with rail and port companies that required them to export coal, or else pay a stiff penalty.

Those long-term coal contracts turned out to be the financial equivalent of a poison pill. The flood of new coal throughout the Pacific Rim sent prices tumbling, even as China started to tap the brakes on its coal consumption, driven by high prices, a cooling economy, and terrible urban air quality.

Yet even though Pacific coal prices have fallen through the floor, those long term export contracts force many coal companies to keep selling coal at a loss. Sure, they’re losing money shipping coal overseas, but if they stopped exporting, they’d lose even more money from the contractual penalties with port and rail operators. This dynamic helps keep the coal flowing, driving prices lower and lower.

If you’re wondering whether these trends spell bad news for coal exports from the Pacific Northwest, the answer is simple: YES.

Read more »

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Why Washington State Should Adopt a BC-style Carbon Tax

My personal prescription.
This post is 11 in the series: Cashing In Our Carbon

Editor’s Note: Washington’s Carbon Emissions Reduction Taskforce is on the job, weighing alternative carbon-pricing proposals. Some members of the panel have asked what our ideal policy would be for Washington State. Yoram Bauman shares his thoughts today. Alan Durning will share his argument for a California-style cap-and-trade system, with key modifications, another day.

If I had my druthers, Washington State would push for a BC-style revenue-neutral carbon tax. Full disclosure: I’m part of the CarbonWA.org campaign to put just such a policy on the ballot in Washington State in 2016. In this article you’ll find information on the latest iteration of the CarbonWA policy proposal.

The BC approach

The basic idea behind the BC approach is to phase in a carbon tax on fossil fuels and pair it with broad-based tax reductions that benefit most households and businesses—which BC does by reducing personal and corporate income taxes—plus targeted tax reductions that focus on communities that may be disproportionately affected by the carbon tax, such as low-income households. (To match the language I’ve used in previous posts, the broad-based tax reduction is the entrée and the targeted benefits are the side dishes.)

Cumulative BC Carbon Tax Revenues and Tax Cuts 2008-2014

Chart by BC Budgets 2008-2013 (Used with permission.)

Adapting the BC approach for Washington State

Something very much like the BC approach might work in Oregon, which, like BC, has an income tax. But Washington State has no income tax, so the CarbonWA proposal is for the entrée to be a reduction in the state sales tax, which generates revenue from just about all of the state’s households, businesses, and organizations, and for the side dishes to be targeted benefits for low-income households, manufacturers, and small businesses. Read more »

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Weekend Reading 7/25/14

A Tesla road trip via GoPro, an alarming industry cover-up, and more.
This post is 164 in the series: Weekend Reading
Original illustration by Nina Montenegro of ghosttide.com.

Alan

Oregonians will vote in November on whether to adopt open, top-two primaries like California and Washington. Here’s the pro argument, from US Senator Chuck Schumer.

“Honk if you’re horny” and other creative signs from a pro-choice couple who stand side by side with abortion clinic blockaders to leaven their messages with humor and perspective.

Did you take a big road trip in your college days? My nephew and niece just did. In a Tesla. With a GoPro. Here’s the video.

Jerrell

Construction in Seattle continues apace, and daily it seems like hulking cranes multiply, filling the skies with mechanical songs. If every projected development is finished, the Seattle skyline is set to see great expansion.

But is it truly the sort of expansion that makes Seattle a more affordable and livable environment? The Stranger cheered one recent victory for affordable housing proponents, but the victory is a costly one. The Squire Park Plaza, located in the Central District, is a 60-unit subsidized apartment complex built in 2006 with $9.7 million in public financing. Presently owned by a nonprofit group, it was to be sold to a for-profit developer that was likely to raise rents. That deal is off. What is not being discussed is the cost to the public for what is, admittedly, a very small number of housing units. At a unit cost of nearly $160,000, filling the city with similar projects would be a terribly costly venture. Read more »

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Coal Exports: Unfair Market Value

By ignoring exports, BLM underprices federal coal.
This post is 23 in the series: Coal Exports: Caveat Investor

Today, Sightline is releasing a new report on the US Bureau of Land Management’s coal leasing programs: Unfair Market Value: By Ignoring Exports, BLM Underprices Federal Coal. As the report documents, coal companies operating in the western United States are buying coal from the American public with the explicit goal of shipping that coal overseas…yet the BLM is ignoring the potential profits from coal exports when setting its prices. As a result, the agency is giving away publicly owned coal for a song—boosting coal company profits, while denying the American public of millions of dollars of revenue each year. For details, read on…

Perhaps you may have seen some of the mile-long coal trains that are now plying the rails in the Pacific Northwest, carrying coal to export terminals to be shipped to Asia. And perhaps you’ve even paused to wonder how those companies got hold of all of that exportable coal in the first place.

As it turns out, there’s a simple answer to that: if you’re a US citizen, they got that coal from you.

The American public, you see, owns vast deposits of coal throughout the western United States. Most of the coal in the Powder River Basin, for example, is owned in common by all Americans. The same is true for major coal deposits in Colorado, Utah, New Mexico, and other states. The coal companies don’t own it: you do.

If coal companies want to mine that coal, they’ve got to go through the US Bureau of Land Management’s (BLM) coal “leasing” program, which gives private companies access to public coal in exchange for leasing payments, royalty payments, and compliance with some basic environmental requirements.

But here’s the thing: the BLM gives away federal coal for a song—sometimes just pennies per ton. And what’s worse—as documented by Sightline’s latest report, Unfair Market ValueBLM almost completely ignores the potential profits from coal exports when deciding on the minimum price it will accept for federal coal.

Read more »

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Oil Train Derails in Seattle

Loaded train off the rails under Magnolia Bridge.
This post is 43 in the series: The Northwest's Pipeline on Rails

Multiple news accounts reported just now that a loaded oil train derailed under the Magnolia Bridge, about a mile north of downtown Seattle. Joel Connelly’s account here. Many others here. The derailment apparently happened at slow speeds; no fuel spilled and no fire resulted.

Here are some important resources on oil trains:

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