good morning and G I've never followed Yoda before that's tough I've been asked to just sort of set the table there's a lot of people here some of you know a lot about this issue much more than I know some of you actually are new to the issue and so I've been asked to sort of just give a general introduction and when I when people in the past year and a half have asked me what i'm working on journalistically and I explained exploding oil trains I generally draw a blank look they've never heard of lac-megantic aurillac marg antique or dot-111 s or even Bakken oil for them I have to start with the basics I tell them once upon a time crude oil was at black gooey stuff that was pumped out of the ground in places like Texas and made people in Stetsons very rich but in the past decade that quaint notion of crude oil has been transformed by a substance coming out of the ground in other places in America especially North Dakota all of this has happened in just the past seven or eight years it's happened because of technological developments in a hydraulic fracturing or fracking in terms of consistency this new oil called shale oil or type oil is a lot more like gasoline than bubblin crude that black gold Texas T that rocketed Clampett to stardom in the beverly hillbillies this oil lies deep beneath the earth's surface it's North Dakota in North Dakota it's two miles down when it comes out of the ground it's a mixture of oil water and something called natural gas liquids that's propane butane methane and ethane these gases are entrained within the oil so the first thing that happens the oil when it reaches the surface is it sent through a machine called a separator it's called this for a rather obvious reason it separates the oil water and natural gas liquids into separate streams the water goes one way the oil goes another and the gas goes somewhere else how much of the protein propane butane and other gases are removed from the soil determines how volatile the oil will be when it transported to a refinery twist the pressure dial on the separator one way and more gas has taken out twisted the other way and less gases taken out the Bakken formation is one of the largest deposits of shale oil being tapped it lies beneath about 200,000 square miles of ground in North Dakota Montana Saskatchewan and Manitoba and it contains an estimated 18 million barrels although only a very small fraction of that is considered to be recoverable in North Dakota the production of crude oil went from quite little or almost none eight years ago to 1.2 million barrels a day last year the state is now second only to Texas input in oil production but it has none of the infrastructure tuxes Texas is built over the course of a century installing pipelines decalcification plants refineries in North Dakota would take years and cost billions of dollars some projects especially the pipelines might meet with political pushback adding to the cost and delay given the gold rush mentality of the energy industry the Bakken play might well be over by the time this infrastructure was in place so the situation was this the energy industry had a way to get the Bakken oil out of the ground and a great deal of it but it couldn't do anything with it once it got it there that's where good old American private equity ingenuity came into play the railroads have been used for more than a century to carry grain from the Great Plains to points east and west the tracks were already there meanwhile many East Coast refineries were struggling because they bought crude oil on the world market from West Africa that oil was more expensive than the Texas crude the Gulf Gulf Coast refineries were using putting the East Coast refineries at a competitive disadvantage many of those refineries from Philadelphia to New York were considering shutting down or going or being put up for sale so some very smart person somewhere saw the potential synergy between these underutilized in endangered industrial assets the sudden availability of vast amounts of oil that need to be moved refineries that badly needed that oil that cheaper oil so they could compete and the railroads which were languishing except for grain shipments which could sure use the business so moving oil by trained to the refineries occurred and it sparked an American energy and transportation Renaissance that's what some people are calling it the oil companies in the railroads formed a lucrative alliance one that some in this room might describe as unholy the railroads and the East Coast refineries were revitalize and North Dakota became an energy giant overnight it was at the advent of what is called the oil unit train or some critics call them rolling pipelines the number of rail cars carrying crude oil skyrocketed from 9500 in 2008 to almost half a million in 2014 a 50-fold increase or five thousand percent oil began moving in trains pulling more than 100 tankers stretching more than a mile in length now each tanker carries 30,000 gallons of crude so a single train can pull three million gallons or more this explosion of production in North Dakota played a role in the reduction of the prices of oil worldwide and in turn to a reduction in the price of gas at the pump in the United States at this point okay it sounds like a win-win-win good news story a good news business story anyway jobs energy low gas prices economic boom then the train started exploding the place was lac-megantic a quaint lakeside town in Quebec Canada it was a nice saturday night in July 2013 an oil train was left unattended overnight on the tracks seven miles west of town it was left with its engines running a standard operating procedure for railroads about 1am the brakes failed in the train began a long slow descent toward lac-megantic by the time this ghost train hit the bend in the tracks in the heart of town it was doing more than 60 miles an hour it jumped the track and rail cars ruptured mushroom-shaped fireballs rose hundreds of feet into the night a tide of flaming oil flowed in every direction each railcar acted like that each blown railcar acted like a blowtorch on the unexploded tanker next to it that car to eventually blue sending off yet another violent explosion and these explosions rocked the night much of the downtown was destroyed 47 people were killed and the remains of some of these victims were never even found over the next twenty nine months there would be nine more fiery derailments of crude of crude oil trains across North America although no one has been killed because they occurred in remote locations lac-megantic was the first sign of a dark underside of the crude-by-rail paradigm in the afternet math had became clear that the oil industry and railroads had turned to a flawed railcar to use as their workhorse the dot-111 this black torpedo shaped anchor had been designed in the 1960s for things like corn syrup in fact the National Transportation Safety Board had been warning for almost 15 years that it was unsuitable for flammable liquids because it had a tendency to rupture doing derailment as one fiery derailment followed another it became clear that the oil from North Dakota was far more volatile than traditional crude oil to a lesser extent attention was also focused on the state of the nation's freight rail infrastructure and on the railroads operations themselves the Federal Railroad Administration the F RA and the pipeline and hazardous materials Safety Administration femmes a-- issued a series of safety alerts emergency orders and emergency orders femmes de began a broader rule making process top transportation officials vowed to generate new rules that would prevent a disaster like lac-megantic from ever happening in the United States Transportation Secretary Anthony Foxx entered into private conversations with railroads representatives leading to an agreement in which the railroads took some voluntary steps including slowing the trains down and increasing rail inspections they agreed to reroute rail trains away from populous areas although that's really hard to do since a lot of the refined these are in populous areas the grand rulemaking itself would take two years coming the Justice past May it called for a new far sturdier railcard have replaced the dot-111 they gave it a name the d.o.t 117 and a timetable it would be phased in over three years or six years or ten years depending on who you ask the rulemaking made little in the way of changes to rail operations and infrastructure and it was virtually silent on the one issue that had been the focus of many of the emergency orders and safety alerts the questions surrounding the volatility of Bakken oil privately administration officials noted that the state of North Dakota had enacted month or months earlier a moderate ceiling on volatility of oil transported by rail apparently US Transportation u.s. department transportation White House officials were willing to let North Dakota make the call on the volatility of oil moving by rail through communities all over North America as is often the case the rulemaking left many stakeholders to satisfy public safety advocates feel the switch over to the new story your cars will take too long and the government has almost has said almost nothing about the oils volatility safety advocates believe speed limits must come down even more especially and congested urban and environmental environmentally vulnerable areas the rule this new rule that took two years to be produced actually backtracked on the public's hard one right to note to be privy to the roots and the size of the train coming through their communities the fact that the railroads are regulated by the federal government means they still have enormous power to ignore the concerns and questions of state and local authorities or the public by claiming something called federal preemption you'll hear more about this later the federal government still leaves it largely to the railroads to inspect their infrastructure especially bridges which the Federal Railroad Administration rarely inspects the railroads do not have to let state and local authorities see the inspection reports and lastly the process itself this regulatory process showed me something I guess I already knew but I saw it play out that regulatory outcomes in Washington are too heavily dominated by the lawyers and lobbyists for industry and i'll give you just close with a case in point one of the first steps that was taken after lac-megantic was an emergency meeting of something called the railroad safety advisory committee it was charged with coming up with recommendations for these new safety rules but the committee is totally dominated by representatives of industry all the major railroad companies energy industry chemical industry makers of explosives and on and on industry had veto power over recommendations the fr a staff floated before the group they shot things down one after another one of them was a very good recommendation was to require railroads to have comprehensive emergency plans similar to what the what the pipeline companies have after six months of deliberations this committee the hazardous materials task force approved for narrow recommendations one was a definition for what is a unit train and another was a definition for what is it empty railcar these are not the kinds of steps that are needed to keep America safe there were no mayor's there were no emergency management officials no stewards of the environment there I watched the railroad safety advisory committee proceedings closely I'm sorry to have to say in the end based on the performance its performance a more apt name for this panel might be the railroad unsafety Advisory Committee sorry for taking so long