Thursday, September 10, 2015

High Peaks Oil Trains: A Primer On The Issues

Iowa Pacific oil trainsThe Iowa-Pacific rail company took state officials and environmental activists by surprise in July when it unveiled a plan to store hundreds of drained oil-tanker cars on its tracks near Tahawus on the edge of the High Peaks Wilderness.

Ed Ellis, the president of Iowa Pacific, says revenue from storing the cars will help keep afloat its tourist train, the Saratoga & North Creek Railway, which has been losing money. Critics contend Iowa Pacific is creating a quasi-junkyard in the Adirondack Park.

Ellis and other officials at Iowa Pacific did not reply to numerous phone messages and emails from the Adirondack Explorer, but Ellis presented the plan to the Warren County Public Works Committee on July 28, saying the company hoped to begin moving cars to Tahawus within a few months, possibly in just a few weeks.

The company hopes to receive three hundred to five hundred cars, which would take up three to five miles of track. The cars would be kept near an abandoned mine at Tahawus as well as on rail sidings and possibly on the main track. Ellis said the cars would be stored for at least a year.

The cars in question, known as DOT-111s, are prone to puncture and explosion in derailments when they’re full. The federal government is requiring some forty-three thousand cars to be modified or scrapped by 2020. Owners are putting many DOT-111s in storage until they decide what to do with them.

Ellis said the cars stored on Iowa Pacific’s tracks will contain only residual oil – perhaps a few gallons each. The risk of a leak contaminating the environment, he told the committee, “is virtually non-existent.”

Environmentalists have expressed alarm at Iowa Pacific’s plan, pointing out that the tracks run for long stretches beside the Hudson and Boreas rivers and end in a valley bordered by the High Peaks. What’s more, much of the line passes through forever-wild Forest Preserve, including the 6,200-acre MacIntyre East parcel acquired by the state this year.

“People are astounded by this. This company has decided without any consultation with the state to turn one of the most scenic and protected areas of New York State into an oil-train junkyard,” said Christopher Amato, chairman of the green group Adirondack Wild.

One question is whether the state – through the Department of Environmental Conservation (DEC) and Adirondack Park Agency (APA) – has authority to regulate the operation. Iowa Pacific did not inform either agency of its plan.

As of press time, DEC and APA officials had said little about the matter other than that they were concerned and were researching the legal issues.

Adirondack Wild wrote Governor Andrew Cuomo arguing that Iowa Pacific needs permits from both agencies. The August 19 letter says that storing tank cars on private land within the corridor would constitute “a new junkyard” that would require an APA permit. It also asserts that the company needs a DEC permit to operate a solid-waste-management facility.

Furthermore, Adirondack Wild urged Cuomo not to allow any cars to be stored on the thirteen miles of tracks in the Forest Preserve. It contends that Iowa Pacific’s use of the line amounts to “an illegal occupation of Forest Preserve lands.” The argument is that the corridor was legally abandoned when Iowa Pacific acquired it in 2011.

“The proposed storage of old, potentially leaking DOT-111 oil tank cars in the High Peaks region would pose a significant threat to the natural resources of the Adirondack Park and be a glaring disfigurement of a scenic landscape,” according to the letter, which was signed by Amato, who is a lawyer and former DEC assistant commissioner, and two staff partners of Adirondack Wild.

Protect the Adirondacks also is researching the state’s legal options. Peter Bauer, the group’s executive director, echoed Adirondack Wild’s claim that storing cars on the tracks may constitute “a new commercial use” requiring APA approval. He added that DEC might claim jurisdiction as well, given its power to regulate hazardous waste and protected river corridors.

One complaint of environmentalists is that details of the proposal are vague. It’s unclear, for example, where exactly the cars would be stored and for how long.

“We’re opposed to the idea, based on what we know now,” said John Sheehan, spokesman for the Adirondack Council. He added: “Parking oil tankers along the Boreas and Hudson rivers would be bad for the environment and worse for tourism.”

Another question is the role of the federal government. Federal officials declined to speak on the record, but they pointed out that Iowa Pacific must adhere to national environmental and safety regulations. Enforcement could include unannounced inspections. The officials said they didn’t know of any problems associated with storing empty cars elsewhere in the country.

The thirty-mile rail line – known as the Sanford Lake Branch – runs north from just north of North Creek to its terminus at the Tahawus mine. It has a complicated history. During World War II, the federal government used eminent domain to obtain a right of way and build the line so titanium could be transported from the mine. In 1962, the federal government renewed the right of way for a hundred years. In 1989, the government sold the tracks and right of way to NL Industries, the mine owner, after which the line fell into disuse. NL sold the rails and right of way to Iowa Pacific in 2011. Thus, the railroad owns the tracks but not the land they sit on.

Charles Morrison, a retired DEC executive, does not believe the state has the authority to stop the project, but he said the state should monitor the operation to make sure oil does not leak out and is disposed of properly. “Storing empty cars is perfectly within the prerogatives of any railroad,” he said.

Morrison said the state and environmentalists should focus on the long-term future of the rail line. He’d like to see it become a multi-use trail. “Somehow we should be getting our Forest Preserve back, and the state has to figure out how to do that,” he said.

When Iowa Pacific bought the line, it said it planned to remove waste rock from the mine. It also applied for common-carrier status from the federal government. At the time, Morrison and others argued that the line had been abandoned and should revert to its original owners — that is, the state and private landowners. The Cuomo administration and both U.S. senators from New York went to bat for the railroad, and the federal government approved the common-carrier application, allowing Iowa Pacific to serve more customers and transport more goods.

Iowa Pacific now contends that its common-carrier status will obligate it to transport the empty tankers across track owned by Warren County. Iowa Pacific leases this section of track (which connects to the Sanford Lake Branch) and uses it primarily for its tourist trains.

“We can’t turn anybody down,” Ellis told the Warren County committee. “So if somebody comes to me and says I want to store my tank cars and we make a deal for that storage, then the movement of those cars is common carriage.”

Frederick Monroe, executive director of the Adirondack Park Local Government Review Board, said Warren County supervisors support Iowa Pacific’s plan. “Warren County’s position is that maintaining the rail is important; that the rail operator needs to make sufficient money to stay in business; that a tourist train operation does not provide sufficient revenue; and that storing virtually empty tanker cars is not a serious safety or environmental risk,” Monroe said.

However, Tahawus and most of the Sanford Lake Branch lie in Essex County. Keene Supervisor Bill Ferebee said that county’s Board of Supervisors, which he chairs, had not discussed the matter yet, but he questioned whether storing tanker cars is appropriate in the Adirondack Park.

“We’re a storage area for trees. That’s all we want to store,” Ferebee said. “We don’t want to store railcars.”

Photo: Iowa Pacific’s tracks crossing the lower Opalescent River — recently acquired by the state — just before reaching Tahawus. Photo by Seth Jones.

This story was first published in Adirondack Explorer, a nonprofit newsmagazine devoted to the protection and enjoyment of the Adirondack Park. Full print and digital subscriptions are available here.


Phil Brown

Since 1999, Phil Brown has been Editor of the nonprofit Adirondack Explorer, the regional bimonthly with a focus on outdoor recreation and environmental issues, the same topics he writes about here at Adirondack Almanack.

Phil is also an energetic outdoorsman whose job and personal interests often find him hiking, canoeing, rock climbing, trail running, and backcountry skiing.

He is the author of Adirondack Paddling: 60 Great Flatwater Adventures, which he co-published with the Adirondack Mountain Club, and the editor of Bob Marshall in the Adirondacks, an anthology of Marshall’s writings.

Visit Lost Pond Press for more information.




23 Responses

  1. Tony Goodwin Tony Goodwin says:

    Thanks Phil for the best and most factual article yet on this issue. Given the current trackage available, even 300 rail cars will of necessity spill out onto the main line beyond the area that is zoned “industrial”. Whether any state agency has jurisdiction at that point is anyone’s guess at this point.

    To reduce some of the anxiety, the actual speed at which these cars will be moved means that there is virtually no risk of rupture in a derailment. The risk of leakage of the residual within the period Ed Ellis says they will be stored is also minimal.

    My concern is the credibility of Ed Ellis and Iowa Pacific Holdings (IPH). Initially IPH sought and received significant political support to gain common-carrier status for the line from North Creek to Tahawus. This support also helped to end any challenges raised by environmental groups that the rail line across Forest Preserve was only an “emergency wartime measure” and that the land should go back to Forest Preserve. The basis of seeking this political support was that IPH would remove thousands of tons or tailings from the old mine and create jobs in the process. After repeated reports to Warren County that a “major deal” on the tailings shipments was “almost complete”, in the end IPH only sold a few carloads to the State of Massachusetts for use on another rail line leased by IPH from the state.

    Now IPH says these cars will only be stored short-term until the owners figure out what to do with them. What if it is much longer than that when the cars start to deteriorate? Of necessity, storing them on the main line ends any chance that the original reason for acquiring this trackage will ever be used. And if IPH stores a bunch of cars on the line, but fails to renew their lease with Warren County for the track south of North Creek, then what?

    • Boreal says:

      Apparently IPH also has Warren Co. officials drinking their cool aid as well. IPH seems to be playing a big shell game with small Adirondack communities hungry for any promise of revenue. And how the feds could extend an emergency ROW corridor for 100(!!) years is beyond comprehension. If mountains of tailings could turn a profit, NLI certainly would have pursued it.

      • Terry says:

        As a life-long resident of the Park, I’ll take my chances for increased revenue with a revitalized effort to increase year-round tourism over year-round rail car storage.

  2. Bill Quinlivan Bill Quinlivan says:

    Look, “virtually empty” is corporate speak for “contains some oil”. The environmental supervision of such storage will be impossible to carry out and even if it is done with some modicum of efficiency and effectiveness, it will only catch problems after they have began. If the railroad owns the tracks and not the land they are installed upon, then they should be told to drop the plan of storage or pick up there tracks and go away.

  3. Paul says:

    “One question is whether the state – through the Department of Environmental Conservation (DEC) and Adirondack Park Agency (APA) – has authority to regulate the operation. Iowa Pacific did not inform either agency of its plan.”

    This doesn’t see like a complicated legal question. Either they do or the don’t. If they don’t this is all moot.

    It looks like they are already storing old rail cars there so I imagine it is fine for them to do it.

    Why do the cars need to be on the rails? Why not use a crane to stack them in the mining area where there isn’t much to see or worry about. Seems like that would satisfy everyone. Then if you want to get them out just put them back on the track. Is that so difficult?

  4. pamela says:

    If these things are “bomb trains” when full, I can’t help wondering if “a few” gallons in each turns them into a line of Pintos ready to explode if exposed to an ignition source. If these cars have a capacity of over 30,000 gallons, I suspect even a thin layer of product on the bottom of the tank amounts to multiple gallons in each – enough to make a mess if released & a bomb from the vapors if ignited.

  5. john jongen says:

    These partially-empty DOT-111 oil tanker rail cars will continue to vent harmful gasses into the atmosphere. Only a complete NYDOT environmental impact study can determine if these warehoused obsolete tanker cars present a health hazard to residents living in adjacent ADK communities. The cars are scrap metal and must be disposed of immediately and permanently.

  6. john jongen says:

    Studies indicate that even partially-empty DOT-111 oil tanker rail cars will continue to vent harmful gasses into the atmosphere. Only a full NYDOT environmental impact study can determine if these warehoused obsolete tanker cars present a health hazard to residents living in adjacent ADK communities. These tanker cars are scrap metal and should be disposed of immediately and permanently.

  7. Hawthorn says:

    Maybe they can fill one of those tankers with gasoline so the snowmobilers using the new superhighway to Newcomb won’t get stranded there! Does anyone else wonder why tiny Newcomb and Essex County seem to attract “economic development” ideas that are so horrible for the environment?

  8. Phil Brown says:

    @Tony, thanks for the compliment. You raise good questions that so far have not been answered.

    @Bill, they do not own the land, but they do own an easement on the land that allows them to operate the railroad.

    @Paul, I don’t think the legal question is as simple as you say. Generally, the federal government regulates railroads, but the state has an interest in protecting scenic and natural resources in the Adirondack Park. As far as storing cars at the mine outside the corridor, the railroad does not own that land.

    • Paul says:

      Perhaps it is more complicated but it seems like who has jurisdiction over RR cars on a RR, especially ones that are pretty much empty is something that can be figured out pretty quickly. Why would an APA permit for a junkyard be required? Has the APA required permits for the other storage of cars that is ongoing? Why would a DEC permit for a solid waste management facility be required? Are other RR’s in the state that are storing cars (and that is probably all of them to some degree) required to have such a permit?

      It seems like this is just one of those things that is kind of gross and unsightly but it is a RR after all. What do we expect?

    • Curt Austin says:

      That’s correct: federal preemption is not so simple. At the very least, we all know the threat of a lawsuit can influence matters, whatever the merits. Folks at the APA work for the state, not the federal government – their duty is to push back on federal preemption when it conflicts with state law. I was once informed that this is their formal policy – the context was converting this line to a rail trail.

      Good questions can be raised. For example, the easements are “for railroad purposes”. How can storage of cars on the main line meet that qualification when it actually prevents railroad operations? The company that handles stone sales in Tahawus (Mitchell) will be blocked from shipping stone, which is inconsistent with the line’s common carrier status.

  9. Paul says:

    Looks like an issue in other areas:

    http://www.thecitizenvt.com/2015/06/05/david-vs-goliath-charlotte-family-battles-railway-giants-over-stockpiled-freight-cars/

    From this story it looks like it is a federal issue. My guess is we will learn that the DEC and APA have zero jurisdiction. We have demanded and gotten the RR’s to switch to safer cars for transportation of oil. Now we have to deal with the fallout related to getting rid of the old cars. This is a simple NIMBY issue. Perhaps storing them away from where people live close by is the safest way to deal with them. Once you get away from where people live it starts to get pretty wild. It is a catch 22.

    • Bruce says:

      Paul,

      You seem to approach these issues with a cooler head than some. I read the article in the link, and it seems that the property was already divided by an active railroad when they bought it, and they assumed operations on those tracks would remain at a low level and not be obtrusive, “the occasional freight train”, was how they put it. Now they’re demanding action because their assumptions about something over which they have no control didn’t pan out.

      Personally, I believe the only leg those folks have to stand on is concerning parked rolling stock blocking their access crossing to another part of the property, which they said was happening or perhaps if engineers weren’t sounding their horn or bell when they should.

      Railroads like any other business, find they must change with the times, and not necessarily in ways those around them might like.

  10. Danielle says:

    This is complete nonsense…. if your tourist train cannot support itself get it out of the ADK too. Society needs to stop allowing nature to be destroyed before we have none, frankly the ADK should be kept as wild as possible!

  11. Christine Bourjade Christine says:

    This is horrible! The chance those tankers spread over miles and maybe more will stay for ever and have to be taken care of at taxpayer expense is high considering the short but telling track record of the present owner of the right of way. In the meantime we will be able to encourage the artists defacing some of the Higheaks trails rock ledges to let their creativity blossom along the Sanford Lake Branch rail line instead.

    And to think that for months, even years, we were told a tourist line from Lake Placid would be profitable.

  12. Christine Bourjade Christine Bourjade says:

    Phil,

    Is there any possibilities since there is right now a huge demand for storage for this 5 miles + line of tankers to be full?

    Christine

  13. Curt Austin says:

    An elegant solution to this issue is to convert the corridor to a rail trail. Given the dire financial state of Iowa Pacific’s efforts here, and the threat of requiring various permits, the state ought to be able to persuade them to abandon the corridor and sell it to the state or the counties. The Rail Banking act can be invoked during the abandonment procedure, which prevents reversion and allows interim use as a trail. The state actually anticipated this day by insisting that Iowa Pacific cooperate with rail banking when they applied for STB jurisdiction.

    The customary sales price of corridors like this is usually the net salvage value, so the net cost would be quite low. In fact, Iowa Pacific suggested last March that the counties purchase the line from them (for $1.5M), ostensibly to facilitate getting track upgrade grants. That’s $0.5M over salvage value.

    Instead of an oil tank car junkyard, we’d have an awesome multi-use trail from North Creek to Tahawus. Or even from Saratoga Springs to Tahawus – stay tuned.

  14. Dick Carlson says:

    I don’t think Warren County Supervisors gave a formal OK – it was just a committee of the the full Board. I was also under the impression that there is a HAZ-MAT provision in the contract with IP and Warren County disallowing transport of hazardous materials across the Warren County rail line.

    What to do with the Dot 111 cars. Sure – store them – but start a business refurbishing these cars. All the businesses doing this now can’t even begin to keep up with demand. Create jobs.

    IP’s contract with Warren County is due for renewal next June – losing $1M/year (their claim) isn’t any kind of business model I would continue with (even with the rail car storage).

    • Curt Austin says:

      Ellis said the cars cannot be scrapped because they are entangled with financing arrangements, which I understood to mean tax avoidance schemes with holding periods.

      • James Falcsik says:

        That’s good Curt; any opportunity to vilify the railroad operator to gain support for the rail-trail conversion. The rail cars are most likely owned by a leasing company; not the railroad or the shipper. Lease contract periods may extend for years whether the cars are in use or not. There are four letters on the car that usually identify the owner. For example UTLX is the “reporting mark” for Union Tank Car Co. The financial entanglement Ellis speaks of is likely the contract or lease arrangements.

        • Curt Austin says:

          Everyone understands that these cars are not owned or leased by Iowa Pacific. The tax benefits of “safe harbor leasing” are being accrued by other villains. I once worked for the biggest: General Electric. GE tax attorneys were astonished when the IRS issued the rule that permits this depreciation sleight of hand. As a consequence, they became the largest owner of rail cars, and are still No. 2.

  15. Phil Brown says:

    Dick, at the committee meeting Ed Ellis asserted that the haz-mat clause was superseded by the railroad’s obligations as a common carrier.