Towns launch ‘David and Goliath’ challenges to crude-by-rail traffic

By Blake Sobczak | 03/19/2015 08:13 AM EDT

First of two stories.

Jim Adams, mayor of Crystal, Minn., said he and his constituents are "going to make as much noise as we can" over a half-mile stretch of train tracks that haven’t even been built.

The result? Several packed public meetings, an unusual multimillion-dollar real estate deal and even state legislation that would bring the matter to President Obama’s desk.


"This came from a local Crystal issue to a regional issue in a very short time," Adams said, adding that he has been "completely amazed" by the response.

The BNSF Railway Co. proposal in question would link a little-used rail line in Crystal to busier tracks run by Canadian Pacific Railway Ltd. The connection could send mile-long oil trains through Minneapolis suburbs that have never seen such traffic.

Local pushback against BNSF’s project reflects broader discontent around freight rail lines across the nation. The surge in crude traffic in recent years — coupled with a string of oil train derailments and fires — has pushed cities to act against the very railroads they were often built around.

But city leaders who challenge railroads can be hamstrung by eminent domain laws, federally pre-emptive regulations and other legal realities that favor interstate commerce.

"This is their property through our cities, and they intend to use it," noted hazardous materials consultant and rail safety advocate Fred Millar. "The railroads are going to be very careful not to give away anything that intrudes on their overall sovereignty."

In Crystal, Adams said he is not contesting the rail business or even crude shipments. Instead, he’s calling on federal transportation regulators to require a full environmental assessment of BNSF’s rail spur, a step he expects will highlight safety problems posed by blocked crossings. The Federal Railroad Safety Act of 1970 gives some leeway to regulate railroads outside the federal level if "necessary to eliminate or reduce an essentially local safety or security hazard."

Adams said his town likely couldn’t dissuade BNSF from the project if the Berkshire Hathaway subsidiary pitched a legal battle.

"We know we’re dealing with someone who’s got more power than we have, and we’re just doing pretty much everything that we can," he said.

Thrown into the fray

BNSF spokeswoman Amy McBeth said the company is considering the Crystal connection "to more efficiently move all kinds of freight traffic already moving through the metro area."

She pointed out that 2014 "was our all-time safest year, even while volumes of all kinds are increasing."

Nevertheless, county officials this month moved to buy property BNSF would need for the project before the company could get hold of it.

Hennepin County Commissioner Mike Opat, who represents Crystal, said the purchase was to prevent BNSF "from connecting up to Canadian Pacific to run oil trains through densely populated suburbs."

A BNSF oil train derailed and exploded near Galena, Ill., earlier this month, just weeks after a separate CSX Corp. crude-by-rail accident near Mount Carbon, W.Va.

"Purchasing the property was sort of a county effort to throw ourselves into the fray and protect and preserve public safety," said Opat’s principal aide, Steve Gershone. "We hope it will just make the cost of this connection too high for [BNSF] and maybe they’ll look somewhere else to alleviate that congestion."

A bill under consideration in the Minnesota Legislature would exempt Hennepin County from eminent domain laws that BNSF could normally use to acquire the three small properties needed for the connection.

A separate bill urges the federal Surface Transportation Board "to order the BNSF Railway Company or the Canadian Pacific railroad to complete an environmental impact statement prior to acquiring land, completing final design, or commencing construction of the railroad connector track." It would also dispatch copies of the resolution to Obama and several U.S. lawmakers.

CP declined to comment.

The freight rail industry has launched several programs to head off tensions with communities. The TRANSCAER initiative aims to improve community relations through hazardous materials education and training exercises. In the event of an oil train derailment, companies set up community outreach centers and compensate victims and businesses affected by the accident.

A devastating oil train derailment in 2013 shook that approach to compensating communities, however. That July, a Montreal, Maine & Atlantic Railway Ltd. train hauling crude from North Dakota jumped the tracks and exploded in Lac-Mégantic, Quebec, killing 47 people and decimating the center of town. The railroad soon declared bankruptcy, leaving surviving victims and the Canadian government to sort out how to recover hundreds of millions of dollars in cleanup costs and other damages.

BNSF’s Executive Chairman Matt Rose said at a conference in January that "we are sympathetic to these communities we operate in," noting that the railroad is "working with local officials on their concerns."

Given rising rail traffic, he said "there’s no easy answers."

"On our railroad, we have 38,000 crossings, and if you go out and talk to the people who live there, every one of them is absolutely critical to the long-term well-being of that small town," Rose said. "There are going to be really hard decisions made on both the community side, as well as the policy side."

‘Extreme measures’

Crystal isn’t the only city to have caused a stir in the railroad industry.

"Any small town you talk to would tell you that the railroad doesn’t always listen to you real well, and you sometimes have to take a little more extreme measures to get their attention," said Alan Lee, mayor of Berthold, N.D.

The Berthold City Council recently approved an ordinance to bar trains from blocking crossings for more than 20 minutes in the small town of 600.

Lee said mile-long "unit" trains of oil and other commodities risked tying up ambulances or fire trucks on one side of the tracks.

Nearly 700,000 barrels of oil leave North Dakota daily by rail, according to the latest figures available from the North Dakota Pipeline Authority, bringing record hazardous materials traffic through the region.

Berthold’s decision to ticket trains that hold up crossings mirrors a similar move by Enderlin, N.D., last year.

But Enderlin rolled back its 10-minute parking limit in January after a legal challenge from Canadian Pacific.

CP’s lawyers argued in court filings that Enderlin’s ordinance "will substantially interfere with railroad operations, create safety risks, and unduly burden interstate commerce."

The company’s complaint went on to say that Enderlin had violated the U.S. Constitution and sought to recover attorney’s fees and "further relief" from the city of some 900 residents.

Asked whether he was worried about a similar court battle over Berthold’s ordinance, Lee said he expected the railroads to "be better citizens" given public scrutiny following recent derailments.

"They’re big enough and have enough money that most of these towns can’t afford to challenge them," Lee said. "The railroads have a bank of lawyers — we have one.

"He’s a good one," Lee added.

‘David and Goliath’

Karen Darch, village president of Barrington, Ill., has pitched her own yearslong battle to draw attention to local concerns along a busy Canadian National Railway Co. line.

Most recently, Darch has petitioned the Surface Transportation Board to make CN pay for part of a planned $64 million grade-separated crossing to ease the disruption to the Barrington community.

"It would be great if they just said, ‘OK, we’ll pay part of the underpass,’ but I think they’re looking at it from a business perspective," Darch said of CN.

CN acquired the Barrington tracks seven years ago to give the company a way around the rail chokepoint of Chicago. Darch and her city’s legal team have argued that the company failed to account for an uptick of crude traffic through the area since its initial environmental review.

The Canadian railroad has contested those claims.

"It is true that CN has experienced some increases in energy-related traffic through Barrington in the form of (i) heavy crude oil from Western Canada and (ii) frac sand from Wisconsin, but neither is moving or is expected to move in overwhelming volumes through Barrington," CN countered in a Dec. 16, 2014, reply to STB.

The following month, Fiona Murray, vice president of corporate marketing for CN, updated that assessment to reflect the decline in oil prices. "If oil remains at or below $50 per barrel, I project that the additional volume of loaded heavy crude unit trains for 2015 will be no greater than the low end of my earlier estimate, that is, 8 trains per week, or 1.1 trains per day," Murray wrote.

The company has urged STB to dismiss Barrington’s case.

Darch, a former attorney, said she has no intent on dropping her requests. She said her legal skills have come in handy during "cordial" but occasionally tense exchanges with CN.

"It helped to be a lawyer — the bargaining position here was, you know, David and Goliath," she said. "It’s been a long haul in terms of trying to tip the balance of power."