Railroads & oil industry must insure against costs of clean-up after catastrophic accidents

Repost from The Times Union, Albany, NY

Editorial: A cost of rail oil profits

Thursday, June 5, 2014

First, 47 people were killed and a town flattened last summer when a crude oil-filled freight train exploded in Lac-Megantic, Quebec. Then, as residents mourned the death and destruction, the railroad at fault declared bankruptcy, leaving the Canadian government holding a nearly $3 billion bill.

The Canadian tragedy has helped fuel a national cry on this side of the border for greater scrutiny of what has become a boom in crude oil rail transport. Capital Region residents need look no farther than the continual ring of tanker cars around downtown Albany for reason to worry that a disaster could happen here, and to wonder: If it does, who will be held responsible?

As we wait for the White House’s release of new federal rules regarding the railroads themselves, state Assemblywoman Patricia Fahy, an Albany Democrat, has proposed that terminal operators also be required to have some responsibility in controlling this surge.

Since the Quebec disaster, at least eight significant accidents have occurred in North America, involving trains carrying either tar sands crude oil or Bakken crude oil, which is the source for the tankers bound for the Port of Albany. Ms. Fahy, pointing to the bankruptcy of the railroad company involved in the Lac-Megantic accident and the failure of its insurance to cover the billions in damage, suggests “terminal operators should put up enough financial security to cover expenses after something happens.”

That makes sense. In the same way General Electric is being held responsible to clean up PCBs from the Hudson River, the railroads and terminal operators profiting from crude oil transport should be required to invest in upgrades to safeguard against accidents, as well as surety for when an accident happens. This is a cost of doing dangerous business.

With Global Companies and Buckeye Partners seeing twofold increases in just a couple of years to 3 billion gallons of crude flowing through their terminals annually, and with railroad profits surging nearly 20 percent since 2009, these modern-day rail magnates can handle the expense.

Ms. Fahy’s bill would apply to all bulk storage facilities in the state that handle crude oil, and require financial security to meet all the responsibilities for cleanup and decontamination associated with any release of the oil.

She notes that, as freight railroads went from just 9,500 carloads of crude in 2008 to more than 434,000 carloads in 2013, the storage needs have increased accordingly.

According to the Times Union’s Brian Nearing, 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.

We can’t let that happen here. Ms. Fahy’s bill is a step in the right direction.