A proposed law to hold oil storage facility owners accountable is again up for debate.
Requiring companies to be properly insured will protect people and property around the oil storage operations.
Federal law regulates the transportation of crude oil, but it falls on the state to regulate storage of that petroleum, protect the people and property around the storage sites, and make sure the owners of those facilities are held accountable for any accidents.
Considering the dramatic increase in shipments of highly flammable crude oil coming through this region and being stored at the Port of Albany since 2008, the possibility for a disaster is real. Yet a state law to require oil-related firms to guarantee they can cover costs of cleanup, decontamination and other consequences keeps hitting a dead end.
Since 2014, Assembly member Patricia Fahy, D-Albany, has led the push for legislation to require oil storage operators, vessels and railroads to provide proof of coverage for spills, fires or explosions. This financial surety bill has easily made it through the Democrat-dominated Assembly, but hasn't been able to get out of committee and onto the floor for a vote in the Republican-controlled Senate.
The dangers of mishandling highly flammable crude oil came into focus in 2013 with the explosion in Lac-Megantic, Quebec, that killed 47 people and caused $2 billion in damage after a tank car filled with highly volatile crude oil broke free, crashed and exploded. The small railroad company involved subsequently went bankrupt and its insurance only covered $20 million — a fraction of the damage the explosion and fire caused. It underscored the need to make sure companies handling explosive oil have adequate financial resources in the event of a disaster.
The costs can be enormous. Beyond the immediate cleanup from a spill, there may be damages to people, businesses and public property, and bills — possibly long-term ones — for monitoring of air, soil and water after a significant breach and mitigating environmental impacts.
Most of us are used to carrying some kind of insurance for our home or auto. The proposed legislation would simply require the same for oil interests.
The Business Council of New York State, which advocates on behalf of businesses, opposes Ms. Fahy's legislation with two weak arguments: The federal government already regulates oil trains, and spills of crude oil are infrequent and usually minor. When they happen, though, the industry must be prepared to pay.
We saw this sort of resistance when gas drilling companies wanted to bring large scale fracking to the state, even in New York City's vast Catskills watershed. Asked if it would guarantee to pay for a multi-billion dollar city filtration system if it ruined the watershed, though, the industry said no.
Like the gas industry, the oil industry seems happy to privatize profit and socialize risk. That's business looking out for its interests. The Senate, however, is supposed to be looking out for the public's interest. Passing the Petroleum Storage Surety legislation would do just that.