Repost from Crosscut.com, Seattle, WA

Inslee is eyeing a tax on oil shipments arriving by rail

His measure could also target pipeline shipments.

By John Stang, December 6, 2014

The Inslee administration’s leaders expect to introduce a bill to extend Washington’s 5-cents-a-barrel oil tax to pipelines and railroad oil cars.

Currently, the tax on the 42-gallon barrels applies only to oil arriving in Washington by ship. Dale Jensen, director of the Washington Department of Ecology’s oil spill program, briefed the House Environment Committee on the matter Friday.

Officials are also considering the possibility of increasing the current 5-cents-a-barrel tax on oil arriving in the state. Part of the money goes to oil spill prevention and response programs across the state. The administration has not yet calculated how much money will be needed in upcoming years, meaning it has also not decided yet whether to increase the five-cents tax or keep it intact, Jensen said.

Extending the tax to oil railcars and pipelines reflects the shrinking of the amount of oil arriving in Washington by ship, while pipeline traffic and rail oil traffic are increasing, Jensen said.

In 2003, 91 percent of the oil going to Washington’s refineries came by ship, with 9 percent arriving by pipeline, and none arriving by rail. In 2013, 67.4 percent arrived in Washington by ship, 24.2 percent by pipeline and 8.4 percent by railroad.

A typical tanker railcar holds 29,200 gallons. Washington’s five refineries process roughly 24.3 million gallons of crude oil a day, and have the capacity of processing 26.5 million gallons daily. At 42 gallons per barrel, that translates to approximately $34.75 in tax per tanker car or roughly $28,900 per day for the amount of imported oil to be refined in Washington.

In the 2014 legislative sessions, Sen. Rodney Tom of Medina — who retired this year and was the leader of the Senate’s Majority Coalition Caucus at that time — introduced a bipartisan bill to extend the oil tax to railroad oil cars, but not pipelines. With support from both parties, the Senate Ways & Means Committee recommended passage on March 10. But that bill did not make it to a full floor vote by the time the 2014 session ended on March 13.

Frank Holmes, representing the Western States Petroleum Association, said the organization supported Tom’s 2014 bill, which the association membership believed accurately reflected Washington’s oil traffic shifting from ship to rail. However, the association opposes installing the tax on pipeline oil. Holmes said Washington’s pipelines have had an excellent safety record during the past 50 years.

All this unfolds as Gov. Jay Inslee is digesting a draft state report on factors to consider on designing legislation to improve oil train safety in Washington. In the Legislature’s 2014 session, Democrats and Republicans introduced somewhat similar oil train emergency prevention and response bills, including requirements that oil companies and railroads provide advance information on each oil train to emergency agencies. But the two sides could not get past one major point. The Democrats wanted to make the volumes and chemical compositions of the oil in each upcoming train available to the public. The Republicans were against that provision, arguing it would expose proprietary corporate secrets.

Jensen speculated that Inslee may push for full public disclosure of the oil train information.