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Bipartisan bill requires advanced notice for crude-by-rail shipments and a new tax

Washington state lawmakers passed legislation last week that adds new requirements to oil being transported into the state by rail. The bill, Senate Bill 5057, was initially authored to cover a wider range of crude oil being transported in the state, but was altered to be more exclusive on crude-by-rail. Although Washington has zero crude oil production, it has the fifth most refinery capacity of any state in the U.S. and is recognized by the Energy Information Administration as the crude refining center for the Pacific Northwest.wsh-crude

The bill requires that the Department of Ecology be notified a week in advance of any oil transferred by rail in the state. That notice has to include the route the oil train travels, its scheduled arrival and how much oil is aboard. A tax of $0.04 per barrel will be levied to fund the programs in the bill.

The main points concerning crude-by-rail are as follows:

  • Authorizes the utilities and transportation commission to adopt rules governing safety standards for private crossings along the railroad tracks over which crude oil is transported in the state;
  • Requires facilities that receive crude oil from a railroad car to provide advance notice to the department of ecology that the facility will receive crude oil by rail;
  • Authorizes employees of the utilities and transportation commission, certified by the federal railroad administration to perform hazardous materials inspections, to enter the property of any business that receives, ships, or offers for shipment hazardous materials by rail;
  • Establishes minimum crew size requirements for freight and passenger trains carrying hazardous materials;
  • Imposes an oil spill response tax and an oil spill administration tax on the privilege of receiving crude oil at a bulk oil terminal within this state from a tank car.

The bill also requires cities to update their emergency plans for hazardous materials every five years, assess vessel traffic within the Columbia River and Grays Harbor, and for the Department of Ecology to provide grants to emergency responders to assist with oil spill and hazardous materials response and to hold a symposium on oil spill prevention and response.

The original bill also proposed to levy a tax on oil moved into the state by pipeline, raising the tax to $0.10 per barrel from $0.04 per barrel to fund the program, and included more extensive risk assessment for sea vessel traffic.

Senator Doug Ericksen (R-Ferndale) said there was greater bipartisan support once it became clear the bill would focus on crude-by-rail. “As soon as some of the Democrats realized we’re working on crude by rail, we made better progress,” Ericksen said of the negotiations made to reach consensus. The bill was originally sponsored by Rep. Jessyn Farrell (D-Seattle).

BNSF, the largest railroad operating in the state, was still reviewing the details of the legislation, but welcomed working with the state to advance their interests in crude oil safety, reports Bellingham Herald. “While the details and interaction of these new requirements at all levels are being sorted out, one thing that’s clear is that all parties have stepped forward to aggressively improve safety,” said BNSF Spokeswoman Courtney Wallace.

Once signed by the governor, the new law will require railroads to submit oil spill contingency plans to the state and show they have the ability to pay for the worst-case spill, and require a review of all the state’s geographic response plans.

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Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.