Cover Your Crude

Environmental Advocates Strongly Support this Bill

Explanation: 

Oil spills have profound health, environmental, and safety impacts, as well as enormous economic costs. Right now, after an oil spill, companies can just pack up, leaving taxpayers with the bill and the consequences of contamination.

This legislation requires companies operating facilities that handle crude oil (including the notorious Bakken Shale oil and the Canadian tar sands crude oil) to demonstrate to the Department of Environmental Conservation (DEC) that they possess adequate financial security to cover all cleanup and decontamination costs associated with any spill or accident. The DEC shall not allow the storage of crude oil until it has approved surety.

The legislation also requires that railroads submit to the DEC information pertaining to the railroad’s ability to pay for the cleanup of spills including those associated with “worst case” scenarios. The DEC is required to post information gathered from railroads on its website.

On July 6, 2013, a train carrying Bakken crude oil exploded following a derailment in the Canadian town of Lac Megantic, killing 47 people and leveling scores of buildings. Costs for rebuilding and decontamination efforts are estimated at $2.9 billion. The company responsible, Montreal Maine and Atlantic Railway, had only $25 million worth of insurance and subsequently declared bankruptcy, forcing taxpayers to shoulder the multi-billion dollar burden. In 2010, a pipeline carrying Canadian tar sands crude ruptured, spilling over one million gallons of oil into Michigan’s Kalamazoo River. The pollution spanned 35 miles of the waterway and nearly five years later, cleanup efforts are still ongoing. The company responsible, Enbridge Energy, has already incurred more than $1.2 billion in cleanup costs.  

In New York, there has been a significant influx of crude oil moving on the rail lines of the state and along the Hudson River. These crude oil shipments flowing through the state put communities at risk. This legislation takes the necessary step of requiring companies storing crude oil to ensure that they have the surety equal to all cleanup and decontamination costs. 

Summary: 

This bill amends the Navigation Law to require all crude oil storage facilities to demonstrate the financial security sufficient to meet all responsibilities for the cleanup and decontamination costs associated with the release of such oil for the duration of the facility’s operations in New York State. It also requires railroads to provide surety information to the DEC.

Memo #: 

18