What's happening
This bill strengthens financial responsibility requirements for major facilities, vessels, and railroads transporting crude oil in New York, ensuring they can cover costs from oil discharges.
Why it matters
Eliminates flexibility for lower financial responsibility amounts for major facilities. The bill removes prior language allowing facility operators to demonstrate that a lesser amount of coverage is sufficient based on factors like size, risk, and insurance affordability, meaning all operators will now be held to a stricter, standardized requirement.
Establishes clear expiration and renewal procedures for proof of financial responsibility. The new provisions set specific timelines for when financial responsibility certifications expire, require advance notice to the state for any changes or cancellations, and mandate timely renewal filings, increasing regulatory oversight and reducing the risk of lapses in coverage.
Creates new annual reporting requirements for railroads transporting crude oil. Railroad companies must now annually submit detailed information to the state demonstrating their financial capacity to cover the costs of a “reasonable worst case” oil discharge, increasing transparency and accountability in a sector with high potential for environmental damage.
Requires public disclosure and legislative review of railroad financial preparedness. The state will publish railroad financial preparedness data online each year and provide recommendations to lawmakers on addressing any identified financial shortfalls, which could lead to further reforms or requirements if deficiencies are found.
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Who cares
Headline styles
Hold Polluters Financially Accountable
Plain English, a few words. Used as the page title.
Sponsors
History
- Referred to environmental conservation
- Referred to environmental conservation
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Hold Polluters Financially Accountable
In Senate Committee · Environmental Conservation · Sponsor Patricia Fahy
Full text
3 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
1515
2017-2018 Regular Sessions
IN SENATE
January 10, 2017
Introduced by Sens. AVELLA, BRESLIN, CARLUCCI, HOYLMAN, KRUEGER, LATIM- ER, PERKINS, SERRANO -- read twice and ordered printed, and when printed to be committed to the Committee on Environmental Conservation
AN ACT to amend the navigation law, in relation to financial responsibility for the liability of a major facility or vessel
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Paragraph (e) of subdivision 3 of section 181 of the navigation law, as amended by chapter 584 of the laws of 1992 and subparagraphs (ii) and (iii) as amended by chapter 585 of the laws of 1992 and as further amended by section 104 of part A of chapter 62 of the laws of 2011, is amended and a new paragraph (f) is added to read as follows:
(e) (i) The owner or operator of a major facility or a vessel shall establish and maintain with the department evidence of financial responsibility sufficient to meet the amount of liability established pursuant to paragraph (a) of this subdivision. A person may not cause or permit the operation of a major facility or vessel in the state until the person has furnished to the department, and the department has approved such evidence. The owner or operator of any vessel which demonstrates financial responsibility pursuant to the requirements of the Federal Oil Pollution Act of 1990 (33 U.S.C. 2701 et seq.), shall be deemed to have demonstrated financial responsibility in accordance with this paragraph.
(ii) [The commissioner in consultation with the superintendent of financial services may promulgate regulations requiring the owner or operator of a major facility other than a vessel to establish and maintain evidence of financial responsibility in an amount not to exceed twenty-five dollars, per incident, for each barrel of total petroleum storage capacity at the facility, subject to a maximum of one million dollars per incident per facility in an aggregate not to exceed two million dollars per facility per year; provided, however, that if the owner or operator establishes to the satisfaction of the commissioner
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD01216-01-7
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that a lesser amount will be sufficient to protect the environment and public health, safety and welfare, the commissioner shall accept evidence of financial responsibility in such lesser amount. In determining the sufficiency of the amount of financial responsibility required under this section, the commissioner and the superintendent of financial services shall take into consideration facility size, storage capacity, throughput, proximity to environmentally sensitive areas, type of petroleum handled, and other factors relevant to the risks posed by the class or category of facility, as well as the availability and affordability of pollution liability insurance. Any regulations promulgated pursuant to this subparagraph shall not take effect until forty-eight months after the effective date of this section.
(iii)] Financial responsibility under this paragraph may be established by any one or a combination of the following methods acceptable to the commissioner in consultation with the superintendent of financial services: evidence of insurance, surety bonds, guarantee, letter of credit, qualification as a self-insurer, or other evidence of financial responsibility, including certifications which qualify under the Federal Oil Pollution Act of 1990 (33 U.S.C. 2701 et seq.).
[(iv)] (iii) The liability of a third-party insurer providing proof of financial responsibility on behalf of a person required to establish and maintain evidence of financial responsibility under this section is limited to the type of risk assumed and the amount of coverage specified in the proof of financial responsibility furnished to and approved by the department. For the purposes of this section, the term "third-party insurer" means a third-party insurer, surety, guarantor, person furnishing a letter of credit, or other group or person providing proof of financial responsibility on behalf of another person; it does not include the person required to establish and maintain evidence of such financial responsibility.
(f) (i) Acceptance of proof of financial responsibility shall expire:
(1) one year from its issuance for self-insurance;
(2) on the effective date of a change in the surety bond, guarantee, insurance agreement, letter of credit, or other proof of financial responsibility; or
(3) on the expiration or cancellation of the surety bond, guarantee, insurance agreement, letter of credit, or other proof of financial responsibility.
(ii) The person whose proof of financial responsibility is accepted by the department under this section shall notify the department at least thirty days before the effective date of a change, expiration or cancellation in the surety bond, guarantee, insurance agreement, letter of credit, or other proof of financial responsibility. Application for renewal of acceptance of proof of financial responsibility under this section must be filed at least thirty days before the date of expiration.
(iii) The department, after notice and hearing, may revoke acceptance of proof of financial responsibility if it determines that:
(1) acceptance was procured by fraud or misrepresentation; or
(2) a change of circumstance has occurred other than a change specified in clauses one through three of subparagraph (i) of this paragraph, which would have warranted denial of the application.
(iv) Upon acceptance and approval of proof of financial responsibility under this section, the department shall issue to the applicant a certificate stating that the state's financial responsibility requirements have been satisfied. The certificate must include the name of the
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major facility, vessel, or pipeline for which it is issued and the expiration date of the certificate.
§ 2. The navigation law is amended by adding a new section 181-f to read as follows:
§ 181-f. Railroad financial preparedness. 1. The department shall annually require a railroad company that transports crude oil in the state to submit information relating to the railroad company's ability to pay in the event of a discharge involving the transport of crude oil. The information submitted to the department must include a statement of whether the railroad has the ability to pay for discharges resulting from a reasonable worst case discharge as determined by the department pursuant to rules and regulations. For the purposes of this section:
a. "Crude oil" shall mean any naturally occurring hydrocarbons coming from the earth that are liquid at twenty-five degrees Celsius and one atmosphere of pressure including, but not limited to, crude oil, bitumen and diluted bitumen, synthetic crude oil, and natural gas well condensate.
b. "Railroad" shall have the same meaning as provided in subdivision twenty-four of section two of the transportation law.
c. "Railroad company" shall have the same meaning as provided in subdivision twenty-five of section two of the transportation law.
d. "Street railroad" shall have the same meaning as provided in subdivision twenty-nine of section two of the transportation law.
2. The department shall make such information available on its public website not later than February first of each year. In addition, the department shall also provide recommendations to the legislature on how to address any financial deficiencies identified by railroad companies.
§ 3. This act shall take effect on the one hundred twentieth day after it shall have become a law.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the navigation law, in relation to financial responsibility for the liability of a major facility or vessel
Purpose or general idea of bill
To require the owner or operator of a major facility or a vessel to establish and maintain with the department evidence of financial responsibility sufficient to meet the amount of liability.
Summary of provisions
Section 1: amends paragraph (e) of subdivision 3 of section 181 of the navigation law and adds a new paragraph (f).
Section 2: amends the navigation law by adding a new section 181-f to require railroad financial preparedness, and requires the department to make that information on its public website.
Section 3: sets forth an effective date of one hundred and twenty days after it shall have become a law.
Justification
The Petroleum Storage Surety bill is in response to recent accidents resulting in substantial financial losses to both public and private entities due to injuries, loss of life, damages and cleanup costs, all as a result of explosions and spills from improper handling of volatile and toxic crude oil shipments. This bill would apply to crude oil stored and transferred at all bulk storage facilities, vessels and railroads in New York State, and require financial security to meet all responsibilities for cleanup and decontamination costs associated with the release of such oil.
The transport of crude oil by rail has increased exponentially nationwide over the past five years, from over 9,000 carloads of crude oil in 2008 to over 400,000 in 2013, and the need for storage facilities has expanded accordingly. There is a heightened awareness of safety issues related to the transportation and storage of crude oil and the Petroleum Surety bill is one attempt to address the negative impacts of mishandling and improper storage of crude oil. Rail transportation of crude oil is regulated by federal law whereas bulk storage of crude oil is governed by state law.
It is necessary that financial surety measures be put in place to ensure that the public is not burdened with the high costs resulting from crude oil accidents. This may include evidence of insurance, a letter of credit, or a bond from a corporate surety licensed to do business in New York State.
The Petroleum Storage Surety bill will ensure that any bulk petroleum storage facility, vessel, and railroad has the necessary financial security to balance the risk of any accident occurring that is directly related to storing crude oil.
Prior legislative history
2015-2016: S5751/A7625(Fahey)
Fiscal implications for state and local governments
None to the State
Effective date
This act shall take effect one hundred and twenty days after it shall have become a law.
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