Last week, company President Ed Ellis made a presentation to the Warren County Board of Supervisors Public Works Committee about the company’s new plans. Ellis sees an exciting business opportunity for his rail lines with low traffic in the long-term storage of hundreds of oil-soaked tanker cars.
The Saratoga-North Creek Railway is part of the larger Iowa Pacific Railroad, which owns or leases tracks in eight areas around the U.S. They lease the county-owned rail line in Saratoga and Warren counties and own the Sanford Lake section in Essex County, which runs along the Hudson and Boreas rivers, and along the Tahawus Road to the Tahawus mine.
Company President Ellis stated that they have had big success in Colorado storing these cars and says they can line 100 cars per mile. They currently have 3-5 miles of such cars stockpiled on a rail line in Colorado which Iowa Pacific owns.
These cars were all recently used to haul crude oil from Canada or from the Midwest. Canada recently passed new regulations requiring all tanker cars to be doubled-hulled, with the addition of an outer insulated shell to prevent cars from heating and exploding in the event of a fire. New rules for retrofitting oil tankers in the United States have been issued and are being challenged. This has placed the future of the current oil tanker car fleet in question.
In this confusion, Ellis sees an opportunity. He says new regulations will affect as many as 80,000 oil tankers and since the retrofitting market can’t handle that volume the old cars will need to be stored for years before they’re upgraded. He stated that many cars could be recycled as they have valuable scrap steel, but they would need to be cleaned of oil residues that coat the inside of each car beforehand. The cleaning process is not cheap – $3,500 to 4,000 per car according to Ellis, who said the cleaning market is overwhelmed and backlogged by the volume of cars.
All of this points to a robust storage market and Ellis said he has a sales person working full time selling storage on their lines. He stated that in Colorado, he has hundreds of such cars within two miles of his home. He said there is no storage capacity in the Northeastern United State and that his line is Essex County would be ideal.
Ellis was questioned about whether he would use various sidings or the main track. He said he has limited siding capacity, so he would use the main line. There is some siding track at the Tahawus mine and a long section, where a few dozen cars could be stored, along the main track in a section that runs through the Vanderwhacker Mountain area of the Forest Preserve. That stretch of rail line is a stone’s-throw from the Boreas River. Ellis said that the main track would have to be used, which would block future opportunities to haul rock from the Tahawus mine.
Over five miles of the Sanford Lake Rail Line also runs through the new MacIntyre East Tract which the state recently purchased for the Forest Preserve. This section includes a long stretch of the Hudson River, a fun and beautiful paddle south of the mine. In this tract the rail line runs close to the Hudson River.
Ellis maintains that empty tanker cars are safe and do not leak, although they are coated inside and may contain a few gallons of remnant crude. They will be marked with hazardous waste flags due to the fumes produced, but all the cars will be vented.
In his presentation, Ellis made a number of things very clear to county leaders. The tourist train runs at a loss and he needs freight service to finance the rail line and meet lease payments. Their plan to haul rock from the Tahawus mine (which he referred to as “imaginary rock”) has sputtered. A negligible amount of rock has been hauled to date, just 80,000 tons, which lost money. He said that without a viable freight market, the lease deal will collapse and Iowa Pacific will not be able to run the line. Its first 5-year contract concluded at the end of June 2015, and a new contract has yet to be signed.
At this point it’s unclear what local permits are needed for storage of potentially toxic waste. Would this be a new commercial use under the Adirondack Park Agency (APA) Act? Are there other state permits that are needed? Are there federal permits needed? Ellis says few, if any, permits are needed. He states that he has the clear right to haul these oil tanker cars through Saratoga and Warren counties, and because he owns the track he can store them in Essex County.
One big question: Is this what the Adirondack Park is all about? Governor Mario Cuomo stood behind the APA commissioners in the early 1990s when they passed a resolution that the Adirondack Park should handle locally generated garbage and waste, but not be used for outside materials. This principle was upheld in 1995-1996 by Governor George Pataki who rebuffed an effort by Essex County leaders to sell the Essex County landfill to a company that wanted to make it a major regional landfill. Does the storage of hundreds of oil-soaked tanker cars in Essex County comport with Governor Andrew Cuomo’s vision of the Adirondack Park?
There are also questions about the legal history of the Sanford Lake Rail Line, allowed to be built through the Forest Preserve for a specific purpose during World War II, which did not include storage of used oil tanker cars.
The idea of hundreds of used tanker cars lining the Sanford Lake Rail Line alongside the Hudson and Boreas Rivers, in places that are otherwise deep in the Forest Preserve, is jarring. This proposal merits a wide public discussion and should be subject to a public hearing and a public review where all facts and information are detailed.
Photos: Above, a railroad train of tanker cars transporting crude oil (photo courtesy Earthjustice); middle, Sanford Lake (John Warren photo); and below, the Tahawus rail line (Phil Brown photo).