2015-11-27 / Front Page

City seeks increased liability from oil companies

By Duke Harrington
Staff Writer

SOUTH PORTLAND — The City Council has agreed to petition the Maine Department of Environmental Protection, asking that it require all oil companies with marine terminals in the city to file an engineering assessment of closure costs as a condition for obtaining a new operating license.

Over the past year, petitions filed by members of Protect South Portland, a nonprofit environmental advocacy group, have secured that condition on Sprague Energy and Portland Pipe Line Corp. Sprague’s report is due to DEP by the end of the year, while PPL must respond by Jan. 30, 2017.

City Manager Jim Gailey credited the activists with uncovering the $2 million assurance requirement during the long battle to ban diluted bitumen or “tar sands” from South Portland.

Taking a lead from the activists, Gailey filed a similar petition in September during the DEP’s open comment period regarding relicensing of the CITGO terminal. Gailey said Monday he received word from DEP last week that CITGO also will be compelled to submit an engineering report.

Obtaining such reports is seen as preparatory to eventually changing state law to increase the minimum funding oil companies must have available – whether in the form of insurance, bonds, letters of credit, trust funding, or cash on hand – to close and clean all environmental hazards.

Currently the state requires a “financial assurance” of $2 million from any company with total oil storage of more than 63,000 gallons. However, in a report filed with its 2010 license renewal, CITGO pegged safe cleanup of its site as a $56 million project, Gailey said.

“That’s just proof that something needs to be addressed,” Gailey said.

A June 2014 recommendation of South Portland’s ad hoc Draft Ordinance Committee – the group that wrote the ordinance banning tar sands – lays out the case for making oil companies prove they can cover their costs of a shutdown or spill.

“South Portland residents have only to look a few hours north to the Lac-Megantic/Montreal, Maine and Atlantic Railway tragedy to understand what could happen to a community if a petroleum-related tragedy struck,” the recommendation reads.

“These are very real risks to life and property. The railroad did not have giant multinational corporations as shareholders. The accident forced the railroad into bankruptcy. Virtually all damages and cleanup costs fell on the shoulders of provincial and Canadian taxpayers. South Portland must ask whether they should trust private owners or corporate shareholders to step up in the event of an accident and pay 100 percent of the damage costs.”

However, Gailey said city staff presumes the administration of Gov. Paul LePage will scuttle any attempt to increase the current $2 million minimum assurance.

“The ultimate goal here is to try to get this $2 million that is within state statute changed – moved up significantly,” he said. “However, I think we can all agree that maybe the environment in Augusta [means] now is not the right time to do that. But there is some preplanning that we can do.”

In addition to Sprague, PPL and CITGO, three other petroleum companies store 63,000 gallons or more of product at South Portland terminals. All three – Buckeye Development, Irving Oil, and Gulf Oil – are due for license renewals from DEP within the next five months.

At its Nov. 23 workshop, the council agreed to seek engineering assessments of cleanup costs as a condition of all three licenses. That policy is expected to go up for a formal vote at the council’s Dec. 9 meeting.

“I personally think this is a no-brainer,” Councilor Maxine Beecher said. “The state is never going to pass a law on how much these companies, who do put our lives at risk, have to pay if something horrible should something happens, unless we make the companies who are in our homeland stand up and do it.”

“It’s really, really important that we cannot be left holding the bag,” Councilor Brad Fox said.

Mayor Linda Cohen said the $2 million limit was “set in the 1960s, when that was a lot of money.” Gailey said the figure was “arbitrary,” having nothing to do with the operation of oil terminals. It was derived from the cost to close landfills in the state, he said.

Meanwhile, Cohen suggested oil terminal operators may not be the only companies in the city required to prove they can clean up after themselves.

“Maybe we need to take a look around the community, and maybe it’s not something DEP licenses every year, but what is out there as far as us holding the bag when a business leaves,” she said.

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