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Maine Oil Spill Cleanup Fund Declines, Leaving State Vulnerable, Specialists Warn

AUGUSTA, Maine, July 11 (Reuters) – A steep decline in revenues from pipeline tariffs and a loophole that allowed corporations shipping crude by rail to keep away from payment have slashed Maine’s oil-spill fund to ranges consultants say might harm its means to reply to an accident.

Deal with the safety subject has intensified within the wake of the deadly Lac-Megantic disaster in Quebec. Maine’s emergency fund has shrunk more than 40 p.c over nine years. Surging practice shipments, meanwhile, are making the state certainly one of the biggest conduits of crude produced from U.S. shale to Canada.

In accordance with Maine Department of Environmental Protection figures obtained by Reuters, revenues of the Maine Coastal and Inland Floor Oil Clean-up Fund have dropped from $6.7 million in 2003 to $3.7 million in 2012.

The fund collects a three cent per barrel transit tax on crude oil and refined petroleum merchandise. Expenditures from the fund have exceeded revenues in 4 of the previous 5 years.

As well as, considered one of Maine’s two main oil-by-rail transporters, Pan Am Railways, stopped paying any fees into the fund in April, in accordance with Maine DEP data.

The corporate has declined to comment on why it halted payments.
“We’re investigating the matter totally and if obligatory will take appropriate enforcement motion,” stated Logan on Wednesday.

Montreal Maine & Atlantic, owner of the road on which the Quebec derailment occurred, has continued to pay the tariff. But by December 2012, the fund’s stability dropped to $1.9 million, less than a 3rd of the $6 million cap set by legislation and a stage that raised concerns from some members of the crude oil futures expiry committee that helps oversee the fund.

“Anything beneath $2 million places us in a precarious spot,” said Joe Payne, a member of the oil crude oil futures expiry spill advisory committee.

Shipments of oil through the state are much decrease than they had been in 2003, in theory decreasing the chance of a spill. However the price of cleansing up after one is the same.

While Canada is a major oil producer, its east-coast refineries are closely dependent on expensive overseas oil shipped throughout the Ceramic cross Atlantic. To cut prices, low-cost crude, transported by rail from North Dakota and other shale oil performs, has turn out to be an more and more attractive different. The Portland-Montreal Pipeline, Maine’s solely pipeline system, presently flows inland from Portland to Montreal and is unable to fulfill demand, leaving suppliers dependent on rail.

Graphic on Maine oil traffic:

Maine’s cleanup fund covers salaries and training for first responders, in addition to tools and upkeep, guaranteeing a quick reaction and shielding taxpayers from the costs of litigation to recoup the prices of an preliminary spill restoration.

Transport of crude via the state dropped off 60 p.c from 2005 to 2012, principally due to a decline in flows from the Portland-Montreal pipeline as refinery closures in Montreal crimped demand.

The line is the largest contributor to the fund. Output has dropped from over 350,000 barrels per day in 2007 to only over one hundred fifty,000 bpd in the primary 5 months of 2013.

“With this much of a drop, how is the fund going to do anything however ultimately peter out ” mentioned Payne.

The fund’s monetary woes come even as railroad transportation of crude oil by means of Maine is booming, up from zero in 2010 to over 14,000 bpd in 2012. That number swelled to over 28,000 bpd in March however remains to be far beneath historical totals for pipeline transportation, crippling fund revenues.

To help stem revenue loss, Payne, the DEP and state environmental groups testified in favor of legislation this spring that clarified an existing law, requiring all carriers of crude – truck, rail and pipeline – to pay the 3 cent per barrel payment, closing any loophole for railways to avoid the tariff. The bill handed the legislature and becomes regulation in October.

One other amendment, promoted by state environmental teams and a few oil spill committee members, would have triggered an extra tariff of 1.5 cents per barrel ought to the fund fall beneath $2 million, nevertheless it failed to move. Payne and others believe any smaller amount would render the fund inadequate in the occasion of a significant spill.

Ryan Tipping-Spitz, the state lawmaker who presented the bill, said he did not feel a further penny per barrel could be a lot to ask given the danger of serious environmental injury ought to such a spill happen.

“The individuals who trigger that risk ought to be putting cash on the table,” he stated.
The fund’s 3 cent per barrel price has not modified in 20 years, in response to meeting minutes of the oil spill advisory committee.

Despite the fund’s dwindling coffers, the Maine Division of Environmental Protection testified towards Tipping-Spitz’s legislation, citing different cleanup funding sources.

On Tuesday, Maine DEP spokeswoman Jessamine Logan stated the state company continued to make sure that “expenses are under income” and stated it had instituted “extra aggressive cost-recovery mechanisms following a spill” that require the accountable social gathering to pay for the cleanup.

Peter Blanchard, director of response companies for the agency, said brief-term funding was secure however acknowledged his workers was stretched skinny, with planning for future spills typically inhibited by the need to reply to other sorts of accidents.

Payne mentioned he doubted the present revenues, even with the newly passed laws, can be enough, given the declines in crude transport by pipeline and the quantity traveling by rail.

“There may be less oil coming through Maine, but that does not imply there’s much less threat of a major spill. Accidents can happen, and we have to be prepared to reply,” mentioned Payne.

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