Line of Sight: Pipeline Law Alerts and Analysis

Next fiscal year, California will apply a 6.5-cent fee on oil companies for every barrel of crude that arrives in the state on rail, or that is piped to refineries from inside the state. The fees are expected to raise an estimated at $11 million in the first full year that will be allocated for oil spill prevention and preparation work, and for emergency cleanup costs. The state plans to include training and drills to prepare for any spills that threaten waterways, and will allow officials to conduct response drills.

In the aftermath of three recent train crashes and explosions, federal regulations now require that railroads notify state emergency officials of large Bakken shipment times and routes. In response to reports of oil companies planning hundreds of crude by rail shipments in California, the State has budgeted to hire seven more rail safety inspectors for the California Public Utilities Commission to fulfill its mandate to inspect every mile of rail in the state annually.

The California Senate passed a resolution urging the U.S. Department of Transportation (DOT) and other federal agencies to write tougher standards for train tank cars and to “prioritize safety over cost effectiveness” in dealing with rail crude shipments.  Tank car safety has been an ongoing issue for regulators in the U.S. and in Canada, where more stringent requirements have already been pushed through.

U.S. DOT officials have said they intend to improve design standards for rail cars hauling crude oil, but haven’t set a date for finalizing standards. Sens. Jerry Hill, (D-San Mateo), and Lois Wolk, (D-Davis), introduced a bill that would impose a second shipping fee on oil companies to be used to train and equip first responders to deal with major spills and fires on railroad lines.