Monday, December 23, 2013

Crude oil loaders fail in hazmat classification

Written by  David Thomas, Contributing Editor
In their quest for a smoking gun, lawyers developing a class action suit on behalf of the victims of the July 6 calamity at Lac-Mégantic say they have found disturbing evidence that at least some managers in the oil industry knew beforehand that the hazmat classification of mid-continent crude oil for rail transport was systematically bogus.

What they found, hiding in plain sight on the Internet, is a June 6, 2013 conference presentation by Irving Oil’s quality manager explicitly stating that the company knew high-volatility oil from multiple sources was being comingled as it was transferred to tank cars, and that no testing whatsoever was done before the cargo was classified as the lowest-risk crude and sent on its way by rail.

Evidence of systematic misclassification at loading terminals is contained in a presentation by Irvings Oil’s Gary Weimer to a conference of the Crude Oil Quality Association in Seattle, precisely one month before a cargo of Bakken crude exploded on its way to Irving’s Saint John refinery. The slide presentation is available on the association’s website (http://www.coqa-inc.org/20130606_Weimer.pdf).

If true, the Irving Oil contentions would mean that North American railroads have knowingly been given erroneous hazmat shipping documents to accompany crude oil shipments. As common carriers, railroads are legally bound to accept crude oil certified by the shipper to be correctly classified and legally contained. The railroads have no control over loading practices or the interior condition of tank cars, which are owned and maintained by the shippers and receivers.

Misrepresenting to railroads and customs officials the true nature of hazardous material shipments is an offense in both Canada and the U.S. Nonetheless, Irving’s Weimer told his industry colleagues that oilfield sampling of outbound crude “is almost non-existent.”

In mid-December, Transport Canada criminal investigators obtained a warrant to search Irving Oil’s refinery offices for the results of tests performed when crude is unloaded at Saint John. At issue is just who in the long chain of possession between loading terminal and refinery was aware that crude oil was being misclassified.

The implications extend beyond any criminal or civil liability for Irving Oil, the importer of the doomed cargo that exploded upon derailment of a runaway Montreal, Maine & Atlantic (MM&A) unit train that fateful midsummer night in rural Quebec. In all, 47 people were incinerated, some beyond identification. Their survivors are among those represented in the case, which is to be presented to a Canadian court June 9, 2014, for judicial authorization as a collective class action.

MM&A and the train’s engineer are prospective defendants in the proposed class action, but the lawyer for the engineer has said his client’s liability does not extend to the death and destruction caused by the explosion of the cargo, but simply to the immediate trackside impact of the derailment and the subsequent foreseeable fire. A long-standing legal principle says defendants are not held responsible for the consequences of something they had no reason to be aware of, according to lawyer Thomas Walsh. None of the investigating authorities has so far suggested that anyone died as a result of the derailment itself.

The shipping documents presented to MM&A and its engineer indicated that the cargo was of the lowest flammability classification for crude oil—Packing Group III—not the explosive mix it tragically turned out to be. What the Irving presentation shows is that the misclassification of the Lac-Mégantic cargo was not a procedural lapse but instead was consistent with widespread disregard for hazmat law at the transloading terminals where oil is received by truck or pipeline and often comingled in holding tanks before being loaded into tank cars, where it may be comingled again.

Testing at the receiving refinery is complicated by the separation and layering of car contents during the journey, with water settling at the bottom, and the highest-volatility liquids floating at the top of the tanks, according to the Irving Oil presentation.

One of the Irving Oil slides, titled “Railcars and Sampling Current Practice,” sets out (albeit in industry jargon and bullet-point grammar) critical failings in the standard practice:

• “Sample at delivery point only of either single railcars, multiple rail with common product or blended offloads.”

• “Source sampling program is almost non-existent. Only [done] when issues arise or concerns have been raised. Rely primarily on established and sometimes outdated assays for purchase decisions.”

The Irving Oil manager also presented photographic evidence that tank cars were being used “as trash receptacles” and that “unknown substances” were commonly found in the “heels” (residues) of drained tank cars.

Weimer’s presentation paints an unsettling picture of a crude oil transloading sector casual in its duty to accurately inform carriers what they are being asked to haul through vulnerable towns and cities. More upsetting revelations should be expected as lawyers delve deeper into just what happens (and doesn’t) at the crude oil loading terminals.