The Washington Department of Ecology is establishing regulations to ensure that companies handling oil in bulk have adequate resources to pay for oil spill response and damage costs.
As now written, the proposed state regulation is dangerously inadequate and based on data that’s more than 30 years old.
The stakes are high. We all treasure the Salish Sea, the inland marine waters of Washington and British Columbia, with its juxtaposition of jigsaw coastlines and cityscapes and snow-capped peaks in all directions. It’s a region where lush forests on distant ridgelines seem to stitch earth to sky, where from a ferry you can glimpse pods of whales and where Coast Salish peoples have lived since time immemorial.
Now imagine a major oil spill spreading across this landscape. Next, imagine the company responsible can’t fully pay for the spill response and damages.
In March 1989, the tanker Exxon Valdez spilled 11 million gallons of oil that devastated another precious area: Prince William Sound in Alaska. Populations of herring, clams and seals collapsed. Native corporations filed for bankruptcy. The loss of fishing, recreation and tourism harmed economies many miles away. The effects of this spill are still felt today, 35 years later.
Today in Washington, facilities like oil refineries, marine terminals, and pipelines, termed Class 1 facilities, are not required to have financial responsibility coverage. Ecology is proposing that these facilities carry a maximum of $300 million — the same coverage required of passenger vessels with fuel tanks of just 6,000 gallons. For context, a typical ferry carries 120,000 gallons, an oil tanker 20 to 50 million gallons.
Our state mandates that Ecology consider both the cost of oil spill response and the damages it could cause.“ Based on 2006 numbers, a large spill could cost the state $10.8 billion and 165,000 jobs, according to Ecology, yet $300 million would cover less than 3% of Ecology’s estimate.
For more than a century, oil companies have made trillions of dollars from dirty fossil fuels. It’s ridiculous to suggest they cannot afford oil spill insurance. Tank vessels and barges have a $1 billion financial responsibility requirement. Class 1 facilities should, at least, carry the same.
Ecology explains that such coverage is neither available nor affordable. Yet tank vessels and barges comply with this requirement through mutual insurance associations. This approach could easily work for Class 1 facilities.
Incredibly, the proposed $300 million cap is based on 1993 figures. This research, now absurdly outdated, used 1992 dollars to estimate spill response and damage costs, clearly far short of what would be needed today.
Canada’s Trans Mountain Pipeline transports Alberta tar sands to refineries in the north Puget Sound. Tar sands spills cost more than typical oil spills. In 2010, a tar sands spill into the Kalamazoo River in Michigan cost $1.208 billion or $60,153 per barrel. Since The Salish Sea is much deeper than a river, spill response here would cost more and would be extremely difficult.
A major expansion of the Trans Mountain Pipeline soon will be finished, increasing annual capacity by 590,000 barrels and annual tanker traffic by 696 transits. More than 20 billion gallons of oil is transported through Washington each year by vessel, pipeline and rail. Each barrel, each transit, multiplies the chances of an accident.
Oil companies — not Washington taxpayers, not local businesses or governments, not tribes — should pay to make sure there are adequate funds to pay for response and damage costs when the unthinkable happens and there’s a large oil spill.