Wednesday, December 27, 2017

Bauer: Another Setback For Adk Tanker Storage Plans

stored tanker carsThe plan by Iowa Pacific Holdings and its owner/CEO Ed Ellis to use the Adirondack Park as a junkyard to store thousands of out-of-service oil tanker railcars has hit significant stumbling blocks in the recent days.

Last week, the Cuomo Administration announced plans to petition the federal Surface Transportation Board (STB) to reject use of the Sanford Lake Railway, which stretches 30 miles from North Creek to the Tahawus Mine in Newcomb, for storage of used, out-of-service oil tanker railcars. Ed Ellis has claimed that he could store between 2,000 and 3,000 railcars along the 30-mile line. Ellis will now have to lawyer-up and fight the state in the official proceedings before the STB.

Ellis has repeatedly attempted to extort money from the state, saying he would stop storage if the state paid him to do so. He has bandied a figure of $12 million to the state to buy-out the Sanford Lake Railway. Ellis has used extortion techniques in other parts of the U.S.

Last night, things got even harder for Ellis as his main client for storing out-of-service oil tankers, Union Tank Car Company, called for Ellis to pull its oil tankers out of the Adirondacks. So far he had brought in around 80 oil tankers. Here’s the statement from the company that was released last night:

Union Tank Car Company Orders Removal of Its Railcars from Adirondack Park

(December 26, 2017) – Union Tank Car Company today announced it has ordered removal of all of its railcars from New York’s Adirondack Forest Preserve. A total of approximately 65 empty, cleaned tank cars owned by Chicago-based Union Tank Car had been temporarily placed on rail lines controlled by the Iowa Pacific Railroad. Removal of all 65 Union Tank Car units is expected to be completed by mid-January 2018.

“As we have previously explained, all railcar owners store idle railcars from time to time until they can be returned to active service,” said William Constantino, General Manager-Leasing for Union Tank Car. “We select the storage provider, but not the precise storage location. We regret the railroad’s decision to place some of our railcars in the Adirondack Park, which raised public concern about their effect on the park’s beauty and environment. We are acting to remove all Union Tank Car units from the Adirondack Park as soon as possible, relocate them to other areas outside the state of New York until they are returned to service, and ensure none of our cars are stored in the Adirondack Park in the future.

Union Tank Car Company and its Canadian affiliate, Procor Limited, are subsidiaries of Marmon Holdings, Inc., a Berkshire Hathaway company. They are unaffiliated with Iowa Pacific Railroad, owner of the rail lines in the Adirondack Park. Any railcars that remain in the Adirondack Park after removal of the 65 Union Tank Car units will not be affiliated with Union Tank Car, Procor, Marmon, or Berkshire Hathaway.

This decision came down from the top tiers of Berkshire Hathaway and is a major blow to Ed Ellis’s shaky railroad. Ellis has failed to utilize the Sanford Lake Railway to haul minerals, mine tailings and overburden aggregate rock from the Newcomb Mine for commercial purposes up and down the East coast. His business plans for the Sanford Lake Railway have been a bust.

Similarly, Ellis has failed to make any money with his Saratoga & North Creek Railway, which operates tourist trains and other excursion trains between North Creek and Saratoga Springs. Ellis leases these rail lines in Warren and Saratoga Counties from Warren County and the Town of Corinth. All enterprises there too have been a bust. Ellis’s plans for storing railcars in the Adirondacks, including on tracks that traverses the Forest Preserve and run alongside the Hudson, Boreas and Opalescent Rivers, has met with strong opposition from local government officials, environmental groups, and the general public.

The vote of no confidence in using the Adirondacks as a junkyard for old oil tankers from Union Tank Car Company, along with the opposition of Governor Andrew Cuomo, is likely to ripple across the industry and sharply reduce any other railroad car companies that seek to store their fleets. Ed Ellis and Iowa Pacific Holdings will probably find few new takers for storing excess railcars in the Adirondacks. Any company seeking to work with Ellis will probably only be those, like Ellis, who are a few steps away from collapse and who show little concern for community values and environmental protection.

Photo of stored tanker cars courtesy Protect The Adirondacks.

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Peter Bauer

Peter Bauer is the Executive Director of Protect the Adirondacks.

He has been working in various capacities on Adirondack Park environmental issues since the mid-1980s, including stints as the Executive Director of the Residents' Committee to Protect the Adirondacks and FUND for Lake George as well as on the staff of the Commission on the Adirondacks in the Twenty-First Century and Adirondack Life Magazine. He served as Chair of the Town of Lake George Zoning Board of Appeals and has served on numerous advisory boards for management of the Adirondack Park and Forest Preserve.

He lives in Blue Mountain Lake with his wife and two children and enjoys a wide variety of outdoor recreational activities throughout the Adirondacks.




25 Responses

  1. Mimi Michalski says:

    Good news!

  2. tom prevost says:

    Peter, Storing these outdated tank cars and other rail cars has been a major problem, not just for the Adirondacks, but a nation as a whole. No one wants them and salvage companies will not accept them for reclamation due to the liability posed by residue chemicals contained. So, I expect this will not be the end.
    But, in my opinion, the greater future risk is the storage of hazardous materials on the vast open mine area they own. Again, drug and pesticide companies are paying mucho bucks for companies to store or dispose of these waste. This is the problem with the fracking industry. The millions of gallons they pump into the wells is waste water containing the manufacturing waste. These is the hazardous chemicals we read about. We don’t need it here!

    • Boreas says:

      “But, in my opinion, the greater future risk is the storage of hazardous materials on the vast open mine area they own.”

      Tom,

      I don’t believe IP owns the Tahawus mine, if that is the one you are talking about. I believe they were just contracted to remove tailings by rail. But I may be wrong.

      • tom prevost says:

        You are correct, my error. I was told by the manager in North Creek they have a long term lease on the property that states they my use it for “any lawful use” including mining. This was a few years ago when I attempted to get permission to go in and photograph “the works” and buildings left.

  3. Bob Meyer says:

    From an economic development point of view and from an environmental point of view it’s inevitable and only a matter of time before all but the Utica to Thendera R.Rs are converted to multi use recreational trails. I’m all for it!

    • Chip Ordway says:

      The Utica to Thendara line has absolutely *nothing* to do with this news story.

      • Bob Meyer says:

        Really?
        Unless you look at the inevitable future use of these corridors, i.e. the bigger picture of railroads vs recreational trails in the Adirondacks as a whole.

      • Big Burly says:

        @ Chip, in fact the Remsen to Lake Placid line in its entirety, a NYS owned property, except for those most intermittent parcels in the ROW that are privately owned with RR easements, is never likely to be involved in this type of issue.

  4. Michael Simko says:

    Amen!

  5. hikerva says:

    Tie Ellis up in court for however long it takes to break him. In the mean time find a technicality to halt any rail traffic on the line. There’s also eminent domain to break the lease. I’m sure the grease and lubricants on those cars pose a threat to some species. Find a technicality to support tearing up a southern section of track to end this charade once and for all. Ellis will retreat and find some other loclaity to try and squeeze. Net is – play hardball. This guy doesn’t have the means nor appetite to fight.

  6. LeRoy Hogan says:

    I thought the area was being used for an idle area of tank cars until they would be called up to go back into service. Not exactly fitting my description of a junkyard for old tank cars. Seems to be more emotion than fact in this article.

    • Boreas says:

      “Seems to be more emotion than fact in this article.”

      What else do you dispute in the article?

      We have no idea how long any of this rolling stock will be parked along the river. If we did, perhaps we wouldn’t be as emotional. Rusty cars and engines sitting idle for extended periods fit many people’s definition of junk. Whether it moves or not is immaterial.

    • tom prevost says:

      Unless someone can correct me, it is my understanding that these are cars that have been removed from service because they do not meet current FTA safety standards. This may or may not be cost effective to retrofit in the future depending upon the demand for oil and its products.

  7. Tony Goodwin says:

    The DOT-111 cars are no longer considered safe for petroleum transport without some significant retrofits. i believe, however, that they can be used for other bulk liquids that are less flammable. There probably aren’t enough of those types of bulk liquids to put all the “retired” DOT-111s to use, so many will have to be stored somewhere until there is enough demand to have them retrofitted and put back into service.

    The fracking “boom” started to suddenly produce a lot of oil in places where there were no pipelines, and it was faster to build rail cars than pipelines. Now that the world price of oil has fallen, fracking is no longer as attractive economically and thus the need for fewer oil tankers. Who knows what world oil prices will do in the next few years, so there is definitely an incentive to hang onto tanker capacity in storage where it can be relatively quickly retrieved to meet any sudden new demand for fracked crude oil.

    I’m definitely not defending Iowa Pacific in any way, but I though it might be useful to see the global arc of the reason for the current demand for tanker storage.

    • Boreas says:

      Thanks Tony. It is ironic that IP ultimately chose to store the unneeded tankers in a state that has banned fracking. I feel if a state reaps benefits from fracking and oil exploration, then they should also be responsible for safely storing or disposing of their “by products”. But storing them beside rivers along the Tahawus line seems a step too far.

    • Big Burly says:

      Mr. Goodwin there is no defense for the I&P plan for RR car storage in the DAKs. Your explanation is however facile and not up to date with rail industry efforts that take the DOT-111 cars out of service and writing off their remaining tax life. Car leasing companies like those owned by Mr. Buffett’s holding company have little continuing incentive to continue using this type of non-compliant equipment. Letters may well have brought the matter to Buffett’s personal attention — it for sure did not hurt the year-end fundraising efforts of many ADK concerned organizations — what matters as Mr. Janeway has stated so eloquently is this faux pas will likely never be repeated on this property.

      • Tony Goodwin says:

        Big Burly; Sorry that my last few sentences were not as clear as they perhaps should have been. I was just trying to say that the reasons tank cars need to be stored is not a credible defense for what Iowa Pacific is now doing. I was simply trying to offer a perspective as to why this was happening and why (possibly, just maybe) these cars could someday be returned to service.

        My main point all along has been that: in order for Iowa Pacific to collect anything near the stated million dollars per year in storage fees, they would have to store thousands of cars and that would close the line for any shipping of tailings – or indeed anything else. It was to ship goods, not store old RR cars, that Iowa Pacific was granted “common carrier” status over this line with the unique history that it was constructed in the 40s over Forest Preserve without any constitutional amendment to approve this taking of Forest Preserve land.

  8. John says:

    I think it’s great that the State soon plans to ban all automobile, truck, snowmobile, and powered boat traffic from entering the Adirondack Park. The oil that drips from engines and the pollutants from exhaust pipes are clearly ruining the environment. This will also solve solve the environmental problems and costs associated with salting roads in the winter. Gas-powered generators, lawnmowers and chainsaws will be grandfathered.

  9. Charlie S says:

    “The oil that drips from engines and the pollutants from exhaust pipes are clearly ruining the environment. This will also solve the environmental problems and costs associated with salting roads in the winter….”

    > “How about posting an intelligent comment instead of wasting our time?”

    >> He might be onto something here Bob! I mean after all there is much truth to what John says, ie “The oil that drips from engines and the pollutants from exhaust pipes are clearly ruining the environment.” Salt is very bad for the soil, the roots that depend on that soil to sprout, the water, etc.. Think about all of the damage we do because of our need for convenience! It is really sad that we are not creative or disciplined enough to want to do what’s right so that there might be something unspoiled left for future generations to take in. Generally it’s all about us without any regard for the natural world that surrounds us, the natural world that sustains us. No matter how bad things may seem right now we’re living in good times compared to the way it most certainly will be in the future.

    • Bob Meyer says:

      You are correct in what you say. It is his non useful sarcasm that I disdain.
      The future solutions are not no cars, but retiring the internal combustion engine. Sand instead of salt and stopping this absurd need to have bare roads in snow country. SLOW DOWN! ( That all started in NYS with the 1980 Olympics).
      We have many of the answers. What we lack is the political will to carry out progressive policies and actions. I could go on and on but I’m sure you and most of this audience get it.

      • John says:

        I was trying to point out that the entire North Country is up in arms over the potential environmental damage caused by the tank car storage, which is a drop in the bucket when compared to all of the other pollutants that exist in the park. If a study showed that snowmobiles were a bigger environmental hazard than the tank cars, I don’t think everyone would be calling for their ban. How far are people willing to sacrifice for the environment?
        I think this is a case of whose ox is being gored. Since this is one person’s company financially benefitting, the opposition is large. If the taxpayers had to pay to replace all of the school buses and highway trucks that operate in the park with a Tesla-like replacement, who would take odds on those referenda passing?

  10. Charlie S says:

    “What we lack is the political will to carry out progressive policies and actions.”

    Forget about progressive policies and actions for the next three years Bob. We have to just hope that we can dig ourselves out of the manure that will be piled up by then. Heck, we’re still digging out since the last Tory was in power!

    • Bob Meyer says:

      Right you are on all that.. unfortunately.

    • Boreas says:

      Charlie,

      Unfortunately, I think you are right. When I was young, politics pushed the country slowly in one direction – 3 steps ahead, one step back. This push generally made the country better and stronger. Today, it is 3 steps back before we even think of moving ahead. First order of business is to undo everything the previous administration(s) have done. Then, and only then, attempt to come up with legislation to replace what we just removed. Then pass more legislation that is almost guaranteed to be repealed/negated by the following administration. If we don’t have the numbers, change the senate rules or, WRT Supreme Court appointments, just ignore the rules entirely.

      This isn’t how the government is supposed to work, but over the last few administrations, it is becoming more hard-wired into the system. Our currently extreme political and social polarity eliminates any chance of bipartisan legislation and compromise. We are in for a wild ride.

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