State Comptroller Thomas P. DiNapoli, in a letter released today, called on the U.S. Department of Transportation and the Federal Railroad Administration to strengthen safety measures to prevent oil spills and other hazardous accidents on New York’s railways and require oil transporters to carry sufficient insurance to cover cleanup costs and other liabilities associated with major rail accidents.
“The potential for oil train accidents demands that we take every measure to avoid loss of life and financial loss,” DiNapoli said. “A major accident could impose not only tragic human costs, but loss of local jobs and tax revenues. The state has stepped up inspections, but incidents such as the recent derailment in Ripley, N.Y. demonstrate that the risk of a disaster remains a major concern. Federal regulators must do more to protect the taxpayers and communities of New York.”
DiNapoli, the state's chief fiscal officer and administrator of the New York Environmental Protection and Spill Compensation Fund (Oil Spill Fund), noted that accidents could easily pose serious threats that could overwhelm New York’s communities, the environment and the financial resources of the state as well as local governments and taxpayers. He cited the finding by the U.S. Department of Transportation that the shippers of oil and the rail companies they utilize carry insurance that may not be sufficient to cover liabilities resulting from a serious accident involving trains carrying crude oil or other hazardous materials.
A review of Securities and Exchange Commission filings of the two major carriers of crude oil in New York state – CSX Corporation and Canadian Pacific Railway Limited – revealed that CSX is self-insured at a level of $25 million per occurrence for what it terms as “non-catastrophic” property damage, such as that caused by a train derailment, and for catastrophes such as floods or hurricanes at a level of $50 million per occurrence. Canadian Pacific’s filings do not include information on the levels of insurance per occurrence.
If an incident such as the catastrophic train disaster in Lac-Mégantic, Quebec, where cleanup costs and damages are estimated to exceed $2 billion, were to occur in New York, it would quickly exhaust the state’s resources for emergency responses and victim compensation. The U.S. Department of Transportation estimates that 10 “higher consequence” events with oil trains may occur in the United States within the next 20 years.
Trains hauling hazardous or flammable materials cross 21 New York counties. The CSX line runs through Chautauqua, Erie, Genesee, Monroe, Wayne, Cayuga, Onondaga, Madison, Oneida, Herkimer, Montgomery, Schenectady, Albany, Greene, Ulster, Orange and Rockland counties. The Canadian Pacific line runs through Clinton, Essex, Washington, Saratoga, Schenectady, and Albany counties.
Presently along these routes, only Buffalo is designated as a “High Threat Urban Area” where federal regulation requires trains to lower their speeds if their tank cars do not meet enhanced standards.
To ensure public safety and preparation, DiNapoli’s proposed safety measures would:
- Assess the need to designate additional municipalities requiring slower train operating speeds;
- Consider rerouting trains carrying hazardous materials around population centers;
- Ensure that adequate resources and oversight are directed toward track and rail car maintenance;
- Review the FRA’s Action Plan for the Safe Transportation of Energy Products to determine if additional measures are needed to limit risks at at-grade crossings;
- Partner with state and local officials to evaluate emergency response planning and preparedness and determine if adequate resources are available to respond to high-risk spills;
- Require that railroad safety plans called for in new federal rules and the results of track and railcar safety monitoring are shared with State Emergency Response Commissions; and
- Require railroads to obtain insurance or provide financial security to cover emergency response, remediation and other liabilities associated with major accidents.
New York’s primary source of funds for emergency responses to oil spills and victim compensation for resulting damages is the Environmental Protection and Spill Compensation Fund (Oil Spill Fund), The Oil Spill Fund, capped at $40 million, was created to protect public health and the environment by providing quick access to funds to clean up petroleum spills without having to wait for action by the responsible party. In addition, it compensates spill victims for financial losses and seeks reimbursement from spillers for damages and cleanup costs.
DiNapoli noted in his letter that cost recoveries to the Oil Spill Fund often take years, and that a major accident could jeopardize the Fund’s long-term financial viability, as well as delaying clean-up of other contaminated sites.
“Comptroller DiNapoli has shined a light on the troubling reality that railroads often are grossly underinsured against catastrophic spills and accidents - potentially putting billion dollar burdens on taxpayers and communities after an accident,” said Roger Downs, conservation director for the Sierra Club Atlantic Chapter. “Demanding adequate insurance from those that transport shale oil may not only save the state’s emergency oil spill fund, but incentivize real safety reforms where exorbitant insurance premiums may be more compelling than pressure from federal regulators.”
“The increase of crude oil transportation has unfortunately come with devastating consequences in many communities across North America,” said Marcia Bystryn, President of the New York League of Conservation Voters. “We applaud Comptroller DiNapoli’s efforts to ensure that crude oil transport companies, not taxpayers or local towns and villages, are financially responsible when something goes wrong.”
“With a dramatic increase in crude oil coming through our state, federal and state authorities must step up oversight,” said Peter Iwanowicz, Executive Director of Environmental Advocates of New York. “We have seen too many communities left with the bill when an oil spill occurs, and companies exploiting bankruptcy laws to escape the costs. Insurance coverage is an accepted responsibility for people and businesses in America – yet we have a situation where oil executives and rail companies are not required to insure against the full cost of a potential catastrophe. Environmental Advocates of New York applauds Comptroller DiNapoli for advocating for measures to protect public health and hold industry accountable.”
“Riverkeeper welcomes State Comptroller DiNapoli’s much-needed and comprehensive call for federal regulators to ensure the financial security, economic vitality and public safety of New Yorkers who remain threatened by the daily rail transport of crude oil through their communities, within blocks of their homes, schools and hospitals, said Kate Hudson, Riverkeeper’s Director of Cross Watershed Initiatives. “The Comptroller’s well-documented letter makes inescapably clear that further federal actions must be taken to address this threat.”
DiNapoli’s letter to the US DOT and FRA is here: http://www.osc.state.ny.us//sites/default/files/other/documents/pdf/2019-03/foxx-usdot-oil-train-safety-letter.pdf