Maine’s financial capacity to respond to an oil spill has been cut by 60 percent since 2005 because of a sharp decrease in tariffs collected from companies shipping crude oil and legislators’ decisions to raid a designated cleanup fund.
Meanwhile, as crude oil shipments across Maine skyrocket, oversight of the state’s 1,154 miles of railroads is largely left to one federal inspector and the private companies that own the lines.
Most of the track on those lines barely had the capacity to support a modern tank car filled with oil, according to a 2006 Maine Department of Transportation study.
Those facts stand out amid questions about safeguards against a train accident similar to the one that occurred in Lac-Megantic, Quebec, that recent reports say could claim at least 60 lives. The disaster is particularly relevant for Maine, the scheduled pass-through for the Montreal, Maine & Atlantic Railway train that was hauling 50,000 barrels of light crude oil on its way to New Brunswick.
Nearly 5.3 million barrels passed through the state last year, a number that’s on the rise as market forces make Maine a waypoint for oil extracted from the Bakken oil fields in North Dakota. The light crude from Bakken is also more explosive than traditional heavy crude, according to Mark Kaiser, a professor and director of research at the Center for Energy Studies at Louisiana State University.
“It’s a hazardous material and volatile,” Kaiser said. “The lighter it is, the more volatile, with the extreme being gasoline.”
The increased freight activity and the Lac-Megantic accident have already prompted a review of the state’s rail safety conditions and disaster preparedness. Gov. Paul LePage this week signed an executive order calling for a safety review.
However, the state has little authority over its railroads, most of which are privately owned. Oversight falls to the Federal Railroad Administration and the private railroad companies themselves, which employ their own inspectors. The federal agency is charged with making sure the private companies comply with safety regulations.
In Maine, track inspection is assigned to one state employee deputized by the Federal Railroad Administration. Maine Transportation Department spokesman Ted Talbot said the federal agency determines the inspector’s schedule.
“States have no regulatory role over the railroads,” said Talbot. “The idea behind the governor’s order is to take a look at those federal safety reports.”
Safety oversight of Maine’s rails reflects national conditions. Last month the Government Accountability Office, the watchdog agency for the federal government, reported that the Federal Railroad Administration has 470 inspectors in its headquarters and regional office in addition to 170 state inspectors. The U.S. railroad system consists of 760 railroads with 230,000 employees and 200,000 miles of operational track.
FRA is a small agency relative to the railroad industry, making the railroads themselves the primary guarantors of railroad safety, the report noted.
The condition and inspection of the state’s railroads have been a topic of discussion before. In 2006, a report published by MDOT found that budget constraints, decreased federal dollars and limited investment by railroad companies threatened to deteriorate the infrastructure. It also found that status quo maintenance wasn’t keeping pace with the industry.
According to the study, 92 percent of Maine’s active track would not support a 286,000 pound rail car, which the report said, “is quickly becoming the rail industry standard.”
A modern oil tanker car carries 650 barrels of oil and has a maximum weight of 285,000 pounds, according to Steven Kelly, senior vice president at Purvin & Gertz, a consulting company for the oil and gas industry.
Pan Am Railways and Montreal, Maine & Atlantic Railway are two of the leading carriers of the Bakken crude. The companies did not respond to requests for comment Thursday.
Last year Pan Am told the Portland Press Herald that it had “spent several million dollars” upgrading its tracks in Maine.
According to the 2006 Maine DOT report, installation of 132-pound rail would cost $208,000 per mile. Last year the American Society of Civil Engineers gave Maine’s railroads a grade of C.
Crude oil shipments in Maine jumped from 25,000 barrels in 2011 to 5.2 million in 2012. Oil shipments for the first three months of this year were averaging about 800,000 barrels a month.
Chalmers Hardenbergh, editor of Atlantic Northeast Rails & Ports, a trade journal, said that with oil shipments on the Maine Montreal & Atlantic now shut down, Pan Am Railways will likely see its oil shipments increase.
The Pan Am trains travel through the most populated parts of the state, including the cities of Saco, Biddeford, Portland, Auburn and Lewiston. Pan Am runs about seven to 10 oil trains per month, Hardenbergh said.
Pan Am has become the subject of an investigation by the Maine Department of Environmental Protection for failing to pay two months’ worth of tariffs into the Maine Coastal and Inland Surface Oil Clean-up Fund. The fund, established in state law, assesses a 3-cent tariff on each barrel of crude oil shipped through the state and is designed to help pay for cleanup.
Reuters reported Thursday that Pan Am has not paid the fee since April.
Jessamine Logan, spokeswoman with the DEP, said Thursday that a delay isn’t uncommon, but a two-month delay is.
“We are investigating and following up with them,” Logan said.
The revenues in the cleanup fund have also come under scrutiny, falling sharply from $6.7 million in 2003 to $3.7 million in 2012, and by 60 percent from 2005 and 2012, according to DEP data.
Fund expenditures for cleanup have exceeded revenues four times since 2007, including last year.
The decrease is driven by a sharp reduction in tariffs collected from oil transports on the Portland-Montreal pipeline.
Logan noted that the Legislature has pulled nearly $1 million from the fund over the last 10 years to balance the state budget. Additionally, she said, lawmakers have drawn over $2 million from a separate groundwater remediation fund.
This year the DEP supported L.D. 1340, a bill sponsored by Rep. Ryan Tipping-Spitz, D-Orono, that closed a loophole that allowed railroads to escape paying the tariff. However, the department opposed a section of the bill that would have increased the tariff by 1.5 cents if the fund fell below $2 million.
The Groundwater Cleanup Fund has a similar trigger, allowing the DEP commissioner to reassess tariffs if the fund falls below $10 million and increase them if it hits $5 million.
According to testimony submitted at the public hearing, the department said the increase in the Surface Water Fund wasn’t necessary because “if a catastrophic event occurs, the state can leverage other funding sources to finance cleanup and recover those costs from the responsible parties.”
Joe Payne, a member of the state’s Oil Spill Advisory Committee and the Friends of Casco Bay, an environmental group, disagreed. He said Thursday that the fund barely paid for the numerous small oil spills that occured in 2012. A large disaster, he said, could knock the state on its heels.
“Less oil coming in doesn’t mean less risk,” Payne said. “All it takes is one big one.”
The state has managed to avoid rail-related oil disasters. In March Pan Am had a close call when 13, 31,000-gallon tanker cars derailed about 100 yards from the Penobscot River.
Just 3 gallons spilled, according to state officials, and none of the tankers was punctured.
Steve Mistler — 791-6345
Tom Bell — 791-6369