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Union Pacific president visits

Railroad chief meets with local leaders

The top executive for Union Pacific Railroad and his communication team met Tuesday with city, county and port officials in the gorge to discuss safety concerns related to crude oil shipments.

During an interview May 5 at The Dalles Chronicle office, Lance Fritz, UP president and chief executive officer, noted that railroads are prohibited by federal law from turning down coal and oil shipments.

“If our customer delivers a commodity to us that conforms to U.S. Department of Transportation requirements, we must ship it,” he said.

Transport of both products has drawn fire from environmental groups concerned about pollution from coal dust and explosive fires caused by a derailed oil train. On a larger agenda, the Sierra Club and other organizations have vowed to stop production and use of both fuel sources out of the belief they contribute to global warming.

“We are somewhat caught in the middle between a group of highly motivated individuals who don’t want these products to move and our obligation,” said Fritz.

At the end of the day, he thinks it is highly unlikely that coal and crude shipments by rail will be shut down altogether by political will. Especially when truck transports of oil have not only the highest rate of accidents but the highest fatality rate, according to a Manhattan Institute report. Seventy percent of crude oil and petroleum products are shipped by pipeline in the U.S., with 23 percent by barge or ship, three percent via rail and four percent in trucks.

“Every generation of leadership has new challenges so we just need to have dialogue and understand each other a little better,” said Fritz.

BACKGROUND

Oregon Rep. John Huffman, R-The Dalles, worked with Rep. Mark Johnson, R-Hood River, to coordinate the visit by UP executives.

Huffman felt it was important to have a conversation about oil shipments to address concerns expressed by city councilors in The Dalles and Hood River.

In January The Dalles passed a resolution urging state officials to pursue greater federal regulations of crude oil shipments. Hood River went even further by calling for a total ban on these transports.

“I was very pleased with the turnout of gorge elected officials and community leaders,” said Huffman about Tuesday’s visit.

“They had the opportunity to ask UP managers questions about what they are doing as a company to address safety concerns, whether transporting oil or any potentially hazardous material.

“I sensed a real desire on UP’s part to be a good partner and be available in the future to address concerns that communities may have.”

Fritz was accompanied on the “whistle stop tour” by Scott Moore, vice-president of public affairs, Brock Nelson, director of public affairs and Francisco Castillo, director of corporate relations and media.

SAFETY ISSUES

He said many people don’t know that railroads have 20 times fewer incidents involving hazardous material shipments than trucks.

And that train accidents, grade crossing collisions and employee injuries have dropped across the nation from 100 per year in 1980 to fewer than 20 in 2014.

He expects those numbers to continue declining with UP’s $31 billion expenditure on infrastructure safety measures between 2005 and 2014.

He said these continuing investments come out of the company’s bottom line.

“As a transportation network, we are not tax based, we are privately funded,” said Fritz.

“Our whole business is shipping product, serving our customer, and we do our best to ship it safely.”

One safety cost has been $2.4 billion to meet a federal mandate for “positive train control.”

That method of monitoring and controlling freight trains automatically regulates speed and stops the locomotive before certain accidents can occur that would have been caused by human error.

Fritz said lasers and ultrasound equipment now identifies rail imperfections and acoustic vibration tracking on wheels can detect problems with bearings.

Between 2010 and 2014, UP’s capital investment in Oregon was more than $520 million for track and rail car safety.

Fritz said work continues to replace wooden ties racks with concrete in high traffic corridors. Since 2014, the company has replaced 1.3 million ties and 377 miles of rail in Oregon.

“We spend a lot of time and money trying to get maintenance right,” he said.

FEDERAL RULES

Because of the ongoing expenditures in safety measures, including the training of 50,000 first responders since 2004 to deal with an incident, Fritz said UP, like other railroads, opposes the mandate for new brakes that was handed down last week by the U.S. Department of Transportation.

Federal officials want ECP (Electronically Controlled Pneumatic) brake systems on trains carrying flammable liquids at speeds above 30 miles per hour by the year 2021 and all trains by 2023.

Currently, UP uses air brake technology that Fritz said is proven, something that can’t be said for ECP brakes, which have not been widely used.

He said the requirement for slower speeds if trains don’t install these brakes will greatly hamper operations.

“It’s not a cost effective way to minimize risk,” he said.

The Association of American Railroads questions how a safety mandate of “such magnitude” could become a regulation when DOT officials have publicly admitted there is negligible simulation analysis regarding ECP brakes.

“Attention and resources should be allocated to addressing the underlying causes of rail accidents and brakes simply aren’t on that list,” said Edward Hamberger, AAR president and chief executive officer.

“Unjustified regulations such as this trigger a reallocation of investments that will not generate the kind of safety benefits the industry and the public expects.

“The regulation does not take into account the disruption the ECP mandate will wreak on railroads — both freight and passenger operations.”

Fritz said railroad companies do strongly support new enhanced design standards that require train cars to have thicker shells and other upgrades that will prevent leaks and fires in the event of a derailment.

SHIPPING STATS

Although crude oil makes up only 1 percent of UP’s total freight revenue, Fritz said additional capital is earned from hauling materials for drilling and other operations related to fossil fuel extraction.

Crude oil shipments comprise about 2 percent of UP transports in Oregon, between 600-800 carloads each month.

In 2014, UP shipped about 141,000 carloads of crude oil in its 23-state networks.

“We do not currently move any crude that originates in the Bakken region (North Dakota) through Oregon,” said Fritz.

Bakken shale crude oil is considered more explosive than tar sands crude from Canada and shipments are opposed for that reason by environmental groups and some government leaders.

UP, which operates on the Oregon side of the Columbia, does not ship coal through the Gorge at this time, said Fritz.

Oil shipments generate 18 percent of UP’s total freight revenue, with intermodal products, such as building supplies and industrial products sharing the top spot at 20 percent.

“The beauty of UP is the strength of our franchise and that franchise is very broad — so if one industry is suffering, another is doing well,” he said.

Crude is moved through Oregon on two primary routes: the first follows the I-5 corridor from California’s northern border north to Washington and the second runs through the Gorge once lines from Spokane, Wash., and Boise, Idaho, meet near Hermiston.

ECONOMIC STATS

Fritz said UP invested $5 million in 2014 to train emergency responders for a potential derailment, another investment that continues.

“We have 38 fire departments on our route in Oregon and we’ve offered to train each and every one of them,” he said.

“Our employees live communities along these lines and we care about safety as much as anyone else.”

What needs to be given consideration when decisions about rail shipments are being made, said Fritz, is the economic benefits of commerce and trade.

“If we can help the U.S. compete globally, we win,” said Fritz.

In Oregon alone, UP has 1,698 employees with an annual payroll of $144.6 million and in-state purchases of $116.2 million.

According to the Association of American Railroads, each freight rail job supports 4.5 jobs elsewhere in the economy.



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