As U.S. railroads scramble to haul growing volumes of freight and North Dakota crude oil, they are expanding workforces and sinking record amounts of money into their networks.
That translates into major investments along the Upper Mississippi River corridor, where BNSF and Canadian Pacific, the region’s two major rail carriers, have together undertaken more than a dozen major upgrades in the region.
The construction boom means more jobs and economic activity in communities along the route, but has environmentalists concerned about one of the nation’s premier natural resources becoming a freight corridor – especially for the flammable and toxic crude oil that accounts for a growing share of the rail volume.
In the spotlight are BNSF’s plans to add a second set of tracks on four miles of its line through La Crosse. Work is already underway in the Forest Hills golf course, where BNSF will install an overpass as part of an agreement with the city.
The railroad’s plans to add tracks through the La Crosse River marsh have met with more regulatory hurdles.
Earlier this month, the Wisconsin Department of Natural Resources granted BNSF a permit to fill 7.2 acres of the marsh and construct a new bridge over the river, though the railroad is still awaiting approval from the U.S. Army Corps of Engineers before work can proceed.
Members of Congress have joined the group Citizens Acting for Rail Safety in asking the Corps to require a comprehensive study known as an Environmental Impact Statement, arguing that the La Crosse expansion is part of a large-scale project designed to increase capacity and allow for the transport of even more crude oil from North Dakota.
Rep. Tim Walz of Minnesota added his voice to the chorus on Thursday with a letter pointing out the potential impact to residents of that state.
While BNSF has said the La Crosse project is designed to alleviate a bottleneck on what is one of the only stretches of single track in the region, opponents say it will lead to increased train traffic, a position supported by the railroad’s own permit applications for other projects in the corridor.
“If someone wanted to put a pipeline up and down the Upper Mississippi River corridor, it would automatically prompt an Environmental Impact Statement,” said Ralph Knudson, a spokesman for the La Crosse-based group. “The risk of spills from a railway is three times greater than a pipeline, and essentially what we already have is a pipeline on wheels.”
Economic recovery, oil boom
Freight railroads will spend a record $29 billion this year upgrading tracks and purchasing new locomotives and cars, according to the Association of American Railroads, the industry trade group. They are also expected to hire some 15,000 workers.
BNSF leads the field with a planned $6 billion investment. CP plans to spend $1.5 billion across the U.S. and Canada.
Railroads aren’t substantially expanding the 140,000-mile national network but upgrading in order to handle more traffic on existing routes.
And they aren’t just spending on infrastructure.
BNSF said it hired about 190 new workers in Wisconsin last year – 130 of them in La Crosse. That would account for more than 10 percent of the metro area’s estimated job growth last year.
About half the company’s 1,000 Wisconsin employees are based in La Crosse.
CP employs 1,323 workers in Minnesota and 325 in Wisconsin but did not provide information on where they are stationed or the number of recent hires.
The AAR says growing customer demand — for all kinds of cargo — is fueling the spending.
U.S. freight rail volumes grew by 4 percent last year, according to the AAR, which points to a surge in shipment of intermodal containers, the boxes that carry most of our consumer products and which account for more than 47 percent of the industry’s cargo. Grain and sand accounted for the next biggest growth by volume.
But despite that growth, volumes are still 10 percent below the pre-recession peak set in 2007.
So why are the railroads spending so much money now?
The AAR says infrastructure investment correlates to profits, which have been growing steadily since 2009.
It’s also likely a response to the rapid increase in oil production in North Dakota over the past five years, said Frank Douma, a transportation researcher at the University of Minnesota’s Humphrey School of Public Affairs.
“The corridors that are under pressure have changed and the commodities have changed,” he said, noting that in the early 2000s, railroads invested heavily in other routes as they anticipated growth of container shipments.
“I’m not sure the oil boom was quite as well forecast.”
While crude oil represents less than 3 percent of the industry’s volume by carload, that sector grew by 12.7 percent last year, second only to grains, which enjoyed a record harvest in 2014.
And oil constitutes a much larger share of the traffic moving through this region, said Lorne Stockman, research director for Oil Change International, a clean energy advocacy group that tracks crude by rail shipment.
“The crude oil shipments are the big new driver for those expansions,” Stockman said.
There are at least 16 rail expansion projects in the works along the banks in Minnesota and Wisconsin.
Documents filed with the Wisconsin DNR show BNSF has plans for a more than a dozen track construction projects between St. Paul, Minn., and the Illinois border, including the addition to the four-mile section of new track through La Crosse.
BNSF has said it will spend $120 million of its capital improvement budget in Wisconsin, on projects including the La Crosse double track, a series of cross-overs and other technology that will allow trains to flow more smoothly.
The railroad is also replacing a bridge south of Stoddard that required emergency repairs last year after an “incipient failure” was discovered on one of the spans.
CARS has previously criticized BNSF for the condition of its Mississippi River bridges, many of which are cracked and crumbling. BNSF insists the bridges, while not pretty, are structurally sound.
The railroad says the projects will give it the ability to meet its customers’ growing demands and maintain a safe system and are a response to growing customer demand.
Spokeswoman Amy McBeth acknowledged that oil accounts for some of that growth, though she notes the railroad has seen growth across other sectors as well.
“This added capacity will benefit all traffic moving on our routes,” she said. “Industrial products, which includes crude oil, make up a just a small portion of all the traffic on our route there and in the region. This is our major route from Chicago to the Pacific Northwest and on it we ship consumer products, coal, energy products, automobiles and more.”
On the west bank, Canadian Pacific has four major projects in the works this year, including an upgrade of its switch yard in La Crescent and a bridge replacement and new sidings to allow trains to pass on its Marquette line, which follows the river south from La Crescent, through Iowa and west to Kansas City.
Most of CP’s traffic – including almost all the oil – now crosses the Mississippi at La Crescent and follows the main line east through Wisconsin.
CP has been coy about the reasons for the projects.
“We add capacity based on the routes where we believe we have demand,” said spokesman Andy Cummings, who notes the railroad moves all types of commodities, including grain, coal and cars.
The company’s 2014 investors report notes that crude is the company’s fastest-growing line of business – expected to nearly double in 2015. That document indicates CP is working with other carriers who could pick up crude shipments in Kansas City.
“I would say it’s highly likely the crude by rail is a major driver of that just because crude by rail is the big new growth sector for the rail network in that region,” Stockman said. “And because Kansas City is a transfer point to other lines that would take it south to the Gulf Coast.”
‘boiling a frog’
The volume of crude moving by rail has skyrocketed since 2008, when U.S. railroads moved about 9,500 carloads of oil. Last year, according to the AAR, it was 813,846 carloads. The AAR estimated the seven Class 1 railroads were transporting 900,000 barrels of crude oil out of North Dakota each day in 2014.
Greg Nemet, an associate professor at the La Follette School of Public Affairs and Nelson Institute for Environmental Studies, says all those trains are partly the result of new technologies and partly a response to two national energy policy statements: former Vice President Dick Cheney’s push to increase domestic supply and infrastructure and President Barack Obama’s “all of the above” strategy.
“As a result, we’ve got more sources of oil … that wasn’t available 15 years ago,” he said. “But it’s still oil and it still has to get to our gas stations, ultimately. There’s not that many ways of moving it around. There’s trucks, rails and pipelines.”
While low oil prices could slow the growth, Stockman said oil train traffic is unlikely to slow in the absence of “tougher safety regulations that add the necessary costs that will ensure public safety rather than industry profits.”
Much of that oil moves down the Mississippi River corridor on its way to refineries in the east and south, according to reports that railroads file with state emergency officials.
Canadian Pacific now moves 7 to 11 trains a week – about twice the number it reported in May – on the west side of the river, while BNSF hauls 29 to 39 on the east, according to industry reports released by the states under open records law.
Assuming each train carries about 3 million gallons, that works out to an average of more than 420,000 barrels of oil per day.
Knudson said that growth is part of the reason government should step in and assess the risk and accountability.
“Up until a few years ago, the way in which the rails were being used was different,” he said. “This is a bit like the boiling of a frog … if we were to say suddenly this little railroad – we want to expand the volume on it three or four times and we want to do it tomorrow and we want to start hauling all this stuff, people would be a lot more likely to question it.”
More oil, more spills
With the additional crude has come additional spills. In 2010, there were nine reported crude oil spills by rail. From 1975 through 2010, there were 113 reported crude oil spills by railroads, according to data from the Pipeline and Hazardous Material Safety Administration.
Last year alone, there were 144.
There have been major disasters, such as a November 2013 derailment in Aliceville, Ala., that spilled 455,520 gallons of crude – more than the total of every spill in the preceding four decades. But the vast majority of spills are small – nearly 90 percent of those reported since 2011 involved less than 10 gallons; 40 percent were less than one gallon.
CARS members worry that even minor incidents – such as the CP train that leaked about 7,500 gallons of oil last year on its way from Winona to La Crosse – will degrade the Upper Mississippi River National Fish and Wildlife Refuge, a 240,000-acre fish and bird habitat that stretches across four states and attracts 3.5 million visitors each year, injecting an estimated $226 million into the local economies.
“To haul even more materials like crude oil and other volatile things that the risk of spills is going to increase proportionately, and not just major spills … but what you would consider minor spills, like the drainage out of the car from Winona,” Knudson said. “The word we’re stressing is cumulative impact. This is a cumulative impact on the whole upper Mississippi River corridor.”
The Corps of Engineers is still reviewing BNSF’s permit application to determine if an EIS is necessary to consider cumulative impact, said spokesman Patrick Moes.
“There’s potential,” he said. “It’s really hard to speculate. The assessment kind of looks at all those issues and determines what the next step is.”
The National Environmental Policy Act requires the study of cumulative impacts, said Steph Tai, a former attorney with the U.S. Department of Justice who now teaches environmental law at UW-Madison.
“It’s pretty traditional to do that,” she said. “When I was at DOJ … we did highway studies and the Federal Highway Administration was required to study not just the environmental impact directly resulting from the expansion of the highway but also the additional transit and what that means.”
But there are loopholes when it comes to wetland permitting, said Morgan Robertson, an associate professor of geography at the University of Wisconsin-Madison, who specializes in water policy.
In its petition to the Corps, CARS argues that fragmenting the projects and claiming only local impacts is an unacceptable approach that has been rejected by the courts.
Knudson said an EIS would help determine appropriate regulations for train speed and inspection criteria and other ways to mitigate risk.
“We have a private enterprise which is impinging on public lands – at least on public use and public values – to be able to expand its ability to take advantage of what it has there, and the risk is being borne largely by the public,” Knudson said. “The public should have a say in how this risk is spread about and where the accountability is for the risk. That’s what our government agencies are supposed to be for.”