Crude oil terminal owners called to show pollution cleanup funding

Crude oil terminal owners called to show pollution cleanup funding

Source:, May 30, 2014
By: Brian Nearing

A state lawmaker from Albany is proposing that oil storage terminals that handle Bakken crude oil or tar sands oil — like the two terminals at the Port of Albany — be required to put up financial guarantees to cover the multimillion-dollar costs of dealing with spills, fires or explosions.

Assemblywoman Patricia Fahy said Friday the change is needed to make sure Albany does not face the same situation as the small Canadian town of Lac Megantic, which was devastated July 6, 2013, by a Bakken crude oil train explosion that killed 47 people. The railroad company involved went bankrupt, leaving insurance that falls far short of covering billions of dollars in damage.

“We think that terminal operators should put up enough financial security to cover expenses after something happens,” said Fahy, a Democrat whose district includes Albany, and the suburban towns of Bethlehem, Guilderland and New Scotland. “If anything were to happen at the oil terminals at the port, it could be a massive bill.”

Existing state law does not require terminal owners to demonstrate financial guarantees to pay for cleanups and decontaminations, she said.

Two oil terminal operators — Massachusetts-based Global Partners, and Buckeye Partners, of Houston — are handling millions of gallons of oil arriving daily on massive oil trains from the Bakken oil fields of North Dakota.

“Oil spills take an enormous toll on public health, our environment, and our economy,” said Peter Iwanowicz, executive director of of New York. “Oil companies can simply close shop after a catastrophe, leaving taxpayers saddled with the costs and consequences. Assemblywoman Fahy’s legislation is a common-sense measure that should be law.”

Fahy’s bill would require oil terminals that handle Bakken crude— a highly flammable form of crude — and bitumen crude, a heavier, less flammable crude produced from tar sands, to provide financial security to the state to meet “all responsibilities for cleanup and decontamination costs associated with the release of such oil.” Such security could be insurance, a surety bond, or a letter of credit.

Lac Megantic officials have estimated it will cost $2.7 billion to rebuild the shattered town, where more than 30 buildings were destroyed, and another $200 million to clean up oil-contaminated land, the sewer system and nearby bodies of water like the Chaudiere River.

A oil crude train that had been parked outside town for the night started rolling and hurtled into the downtown about 1 a.m., with tankers crashing, rupturing, spilling Bakken crude and igniting in gigantic fireballs. Within a half hour, the entire downtown area had burned, reducing some 30 building to rubble.

The Canadian government has taken immediate financial responsibility to cover ongoing recovery costs while the railroad company, oil shippers, rail equipment manufacturers and federal regulators are sued by victims and each other to determine liability.

The Montreal Maine and Atlantic Railway, a Chicago-based company that operated the train that carried the crude oil, had $25 million in insurance.The company declared bankruptcy shortly after the accident, and its assets are being purchased by Fortress Investment Group, a New York-based firm, for $15.7 million.

The U. S. Surface Transportation Board approved the purchase on March 17, and Canadian regulators are reviewing the sale.

Fahy’s bill is also being sponsored by Assemblyman, a Long Island Democrat who heads the Environmental Conservation Committee, as well as members John McDonald III of Cohoes whose district includes the port, and Phil Steck, who represents parts of Albany and Schenectady counties. The bill is on the agenda for Tuesday’s meeting of the Environmental Conservation Committee, she said.

Fahy said she hopes the bill will pick up a Senate sponsor and be acted on by the full Legislature before lawmakers go home for the summer in June.

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