California to impose fee on crude oil rail shipments; funds to be used for spill prevention, cleanup
06/16/2014 4:31 PM
10/07/2014 8:51 PM
California leaders have included several safety provisions in this year’s state budget with the aim of preventing toxic spills and fires as oil companies ship more crude oil on trains through cities and wildland areas.
Beginning in the coming fiscal year, the state will apply a 6.5-cent fee on oil companies for every barrel of crude that arrives in California on rail, or that is piped to refineries from inside the state. The resulting funds, estimated at $11 million in the first full year, will be allocated for oil spill prevention and preparation work, and for emergency cleanup costs. The efforts will be focused on spills that threaten waterways, and will allow officials to conduct response drills.
The budget also separately includes funds to hire seven more rail safety inspectors for the California Public Utilities Commission, PUC spokeswoman Terrie Prosper said.
The 6.5-cent shipping charge will be administered by the state Office of Spill Prevention and Response. “We consider this a great victory,” office administrator Tom Cullen said Monday. Until now, the office’s scope has been confined mainly to coastal areas. “We weren’t positioned in California to prepare for and respond to oil spills on the interior of the state.”
Cullen and others negotiated the shipping charge over the weekend with oil industry officials. The charge, an extension of an existing marine fee, may be the first of several steps California officials take in coming months to improve the state’s ability to minimize oil spills and handle them more effectively when they happen.
Tupper Hull, spokesman for the Western States Petroleum Association, said his organization will work with the state on the issue.
“The new revenues, the first place they should go, is to make sure local responders are adequately equipped,” Hull said. “We recognized from the beginning that this is a legitimate issue.”
The safety efforts have taken on urgency as oil companies reveal plans for hundreds of crude-by-rail shipments in California, including a proposal by the Valero Refining Co. to ship 100 crude oil tank cars a day through downtown Sacramento and downtown Davis to Benicia. Details of that plan are expected to be released by Benicia officials Tuesday.
Federal officials have warned that one of the crude oils being shipped into the state, from the Bakken region of North Dakota, appears to be more flammable than typical crude oils. Three recent train crashes and explosions, including one that killed 47 people in the Canadian city of Lac-Megantic last year, prompted federal transportation officials last month to require that railroads notify state emergency officials of large Bakken shipment times and routes.
Central to the state’s safety efforts will be keeping a closer watch on the tracks themselves. The state budget includes seven new rail inspector positions to help the California Public Utilities Commission fulfill its mandate to inspect every mile of rail in the state annually. PUC deputy director of rail safety programs Paul King said his agency has failed in that task some years because of lack of personnel.
With rail crude oil shipments on the rise, it’s critical that the state steps up now, King said. “The Bakken crude in particular is a big problem. This is a lot of volatile material coming in on routes where it hasn’t come in before.”
The state Senate on Monday passed a resolution urging the U.S. Department of Transportation and other federal agencies to write tougher standards for train tank cars and to “prioritize safety over cost effectiveness” in dealing with rail crude shipments. Federal officials have said they intend to improve design standards for rail cars hauling crude oil, but haven’t set a date.
Sens. Jerry Hill, D-San Mateo, and Lois Wolk, D-Davis, introduced a bill last week that would impose a second shipping fee on oil companies to be used to train and equip “first responders,” such as fire departments and hazardous materials crews, to deal with major spills and fires on railroad lines. The authors have not yet determined the fee amount.
“It’s not a matter of will (a spill) happen, it’s when,” Hill said. “We have to be prepared. We need to provide the resources for first responders to address the emergency.”
A recent state report found that 40 percent of local firefighters in the state are volunteers whose departments generally lack the training and equipment to deal with major hazardous materials spills.
Assemblyman Roger Dickinson, D-Sacramento, also has authored a bill requiring rail carriers to communicate more closely with state emergency officials about crude oil rail movements.
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