Pan Am Railways airs reasons for not paying into oil spill cleanup fund

Posted July 25, 2013, at 6:33 p.m.
Last modified July 26, 2013, at 7:04 a.m.

Pan Am Railways is a freight shipper in a competitive industry that objects to the state’s top environmental agency making public the amount of oil it ships through Maine every month, a company executive said Thursday.

Pan Am Executive Vice President Cynthia Scarano said the company has several objections to her company being required to make monthly contributions to the state’s surface oil cleanup fund. She spoke Thursday for the first time about Pan Am’s dispute with the Maine Department of Environmental Protection, which administers the fund.

“We understand [state officials] have to get the money from somewhere,” Scarano said, but Pan Am pays to clean up its own spills — and its cleanups conform to environmental regulations.

The shipping data is public information, state officials said.

“We are working with the [Department of Environmental Protection] right now trying to figure out how to pay this without making the shipping data public knowledge,” Scarano said. “It has an economic effect and a safety effect too. [The department is] giving out this information that doesn’t need to be given out.”

The department this week served Pan Am, parent company of Maine Central Railroad Co., with a notice requiring that within 15 days, the company make its lapsed payments or provide evidence that it is not required to pay into the fund, said Jessamine Logan, Department of Environmental Protection’s spokeswoman.

Pan Am hasn’t reported its April or May shipment totals. Nor has it given any reasons to the Department of Environmental Protection for not paying the $.03 a barrel the state requires, Logan said.

Pan Am stopped making payments, Scarano said, when the Department of Environmental Protection officials testifying in Augusta said themselves that the cleanup fund law applied to shippers of refined oil, not the crude oil Pan Am ships.

Logan conceded that a new state law will go into effect in October that clarifies that crude-oil carriers must make cleanup fund contributions.

Department of Environmental Protection officials will review Pan Am’s response to their notice of violation. If they find that under the new law the company is not required to make payments on its crude oil shipments until October, it will suspend the payment requirement until then, Logan said.

The agency would also be willing to work with the Maine Attorney General’s office to see if sensitive business information can be shielded appropriately, Logan said.

Until then, “We comply with [Freedom of Access] laws and try to be as open as possible with the public,” Logan said. “Right now, we are committed to being as transparent as possible.”

Punitive options available to the state include a 10 percent fine tagged on to the original unpaid fee amount.

Pan Am has paid about $120,000 in fees to the department since it started collecting the funds in 2011, Scarano said.

The fee pays for the department’s Coastal and Inland Surface Oil Clean-up Fund. After a decline in the amount of oil transported through the Portland-Montreal Pipeline, money in that fund has shriveled to below one-third of the $6 million cap set by the Legislature, prompting concern among some officials about whether Maine could handle a disaster.

According to Maine Department of Environmental Protection figures obtained by Reuters, revenues into the fund dropped from $6.7 million in 2003 to $3.7 million in 2012. That’s because the amount of oil shipped to Canada’s refineries through the pipeline — the largest contributor to the fund — has declined, even as the number of barrels shipped by rail has increased.

By December 2012, the fund’s balance dropped to $1.9 million. That decline has raised concerns from some members of the state legislative committee that helps oversee the fund.

As of Thursday, the fund balance was $2.69 million, Logan said. Railroad companies paid $150,000 into the fund in 2012.

Maine has a history of responding promptly to oil spills, Logan said. Other states rely on local fire departments and private contractors to respond to oil and hazardous material spills, but Maine Department of Environmental Protection provides constant response and assistance to any type of spill.

“Mainers can be assured that in the event of a large scale oil spill, the state would have various funds to withdraw from in the event of a large scale oil spill. First and foremost, [Department of Environmental Protection] would be looking at the responsible party to pay for the entire clean-up costs,” Logan said. “And we would take aggressive measures to recover [Department of Environmental Protection] costs from the responsible party.”

Bangor Daily News writer Mario Moretto contributed to this report.

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