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Archive for January, 2014

Melanie Neilan is appearing in a principal role in Steppenwolf Theater’s Chicago premiere of the play Russian Transport, which runs from February 6 – May 11, 2014.
Steppenwolf Ensemble Member Tim Hopper and Melanie Neilan in Russian Transport

Steppenwolf Ensemble Member Tim Hopper and Melanie Neilan in Russian Transport

The play is about a rowdy Russian family in the Sheepshead Bay section of Brooklyn that is on a daily hustle to achieve the American Dream. When Uncle Boris arrives from the old country, his mysterious business ventures force the family to decide just how far they are willing to go to come out on top. A funny, passionate family drama that slyly transforms into a heart-pounding thriller, Russian Transport is a fascinating look at the contemporary American immigrant experience.
Steppenwolf Ensemble Member Mariann Mayberry and Melanie Neilan in Russian Transport

Steppenwolf Ensemble Member Mariann Mayberry and Melanie Neilan in Russian Transport

More info & tickets at Steppenwolf’s web site.
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The City of Lancaster, California, has mandated solar energy facilities for all new homes built in the city. The city’s goal is to be the first “net zero” energy community in the world. Read the article here. 

Lancaster’s Mayor, Rex Parris, said that the city developed a prototype home in cooperation with developer KB Homes and a solar energy company. The city’s goal is not just to eliminate a home’s electric bill, but to serve as a model that other cities can follow or adapt. Lancaster obviously takes sustainability seriously, and even has its own Power Authority.

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The ruins of Lac Megantic, Quebec smoulder in the aftermath of an oil-by-rail explosion that left 47 dead.

The ruins of Lac Megantic, Quebec smoulder in the aftermath of an oil-by-rail explosion that left 47 dead.

Recent oil-by-rail accidents are beginning to wake the nation up to the hazards of this type of freight. A lot of the rail lines used for this purpose run through cities and towns, and mayors (including Chicago’s own Mayor Emanuel) are calling for fees on hazardous rail shipments.

Both the oil and rail industries should be paying close attention to these developments and responding with serious safety improvements, otherwise public opinion could move decisively against them. The Bakken is no longer a place out west. Rather, it’s literally going right by people’s back doors.

The industry will likely argue, and I would agree, that no technology for oil extraction or oil transportation is risk-free. Yes, if the Keystone Pipeline had been finished in 2013, it might have leaked too. However, it probably would not have been routed through the middle of a town.

But that doesn’t end the inquiry. The Montreal, Maine and Atlantic Rwy., which is responsible for the deaths of 47 innocent people in Lac Megantic and the destruction of most of that town’s center, filed bankruptcy in August 2013. Here’s a quote from Bloomberg:

“Montreal, Maine & Atlantic traces its roots to 1864. …. The company listed assets of as much as $100 million and debt of as much as $10 million in its U.S. bankruptcy filing.

“Environmental cleanup costs will probably exceed C$200 million ($194 million), according to the company’s Canadian court filing. Montreal, Maine & Atlantic’s liability insurer, XL Insurance Co., has failed to make any payments under the insurance policy, and neither Montreal, Maine & Atlantic nor its Canadian unit is able to pay at this stage “given their financial situation,” according to the document.

“Montreal, Maine & Atlantic holds a $25 million liability insurance policy with XL, which covers costs for evacuation, fire suppression, pollution cleanup, bodily injury and property damages, according to the filing.

“The U.S. government is among the Montreal, Maine & Atlantic’s creditors, with the railroad owing $27.5 million under a Federal Rail Administration credit facility, according to court papers.”

http://www.bloomberg.com/news/2013-08-07/montreal-maine-railway-files-for-bankruptcy-after-crash.html

That estimated $194MM for clean up does not include any damages to those who were injured or to the estates of those killed.

At the outset, and on its face, this situation represents a huge implicit subsidy provided to the oil and rail industries because the government (whether Canadian or American, federal or state) must fill the damages gap by cleaning up the mess, rebuilding an entire town, providing some form of assistance to the survivors, etc. Indeed, some portion of that subsidy will have been provided with tax dollars paid by the victims, a grotesque reality to which the press has given insufficient attention.  Memo to Tea Party: This is one of the ways that the oil and rail industries are getting “stuff” from the government.

The problem of shipment of oil by rail is a failure to properly align financial incentives. The oil and rail industries have done a Ford Pinto risk/benefit analysis. Let’s see… At 42 gallons per barrel of oil and 34,500 gallons per DOT 111 tanker car, each car holds about 821 bbl of crude. With oil at today’s price of about $97/bbl on the NYMEX, a 100-car tanker train from the Bakken is carrying almost $8MM worth of crude. Assume the Bakken ships out ten trains a day, which is not an unreasonable figure. In that case, if a gas tank (which is what a DOT 111 tanker car is, more or less) explodes on people in Lac Megantic, and the business forfeits $100MM in assets in BK, that’s just a little more than a day’s worth of oil production. Drill, baby, drill.

First, there should be a minimum insurance coverage for these carriers far above the piddling $25MM carried by the MM&A line. One need be neither an attorney nor an environmental expert to look at these accidents and realize that that coverage level is inadequate to the risk.

Second, the MM&A railroad most likely has a parent somewhere up the corporate food chain, and perhaps they have deeper pockets. Whether those entities can be cast in liability for these accidents is certainly a question worth looking into, especially since they put into the stream of commerce an inherently dangerous commodity through an entity that was woefully under-capitalized and under-insured for the business in which it was engaged.

Third, the law should provide a far more extensive net of liability, akin to the approach with other environmental issues. Consignors and consignees of these loads should be potentially responsible parties, or PRPs.These are the big dogs who ship or receive these hazardous materials. If they could be held liable, you’d see safety improvements PDQ.

Fourth, that extended liability net should reach the directors of these corporations if insurance is not sufficient, which would not be much different from the liability of Lloyd’s of London syndicate members. After all, they’re willing to take risks with the lives and bodily integrity (not to mention property) of persons in towns along the rail lines, and they should not be able to do that risk-free.

Until these or other measures are taken, the financial rewards will continue to go to the oil and rail industries, the government will subsidize accident reparations, and the risks (including death, burns and loss of property) will be allocated to the public — not unlike the Financial Crisis of 2008-09.

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The Financial Times reports that, in the wake of several catastrophic crude oil-by-rail accidents over the last year, a former rail transport regulator is recommending tightening up the rules for this type of shipment:

US expert Brigham McCown calls for new crude oil transport rules – FT.com.

The recent Casselton, North Dakota collision is certainly high-profile, but it is hardly the only accident in the Bakken, including spills and pipeline ruptures. Yes, there are some pipes out there, and some carry salt water, or brine, from drilling rather than crude. In fact, the impact on farmland from a brine spill can be much worse than the impact of a crude oil spill.

Most of these receive little or no media attention, though that doesn’t diminish the seriousness of these incidents.

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