S.5751 (Avella) /A.7625 (Fahy)


Director of Government Affairs


S.5751 (Avella) /A.7625 (Fahy)


Petroleum Storage Surety Requirements



The Business Council of New York State opposes the above-referenced legislation that would require the owners or operators of a major facility or a vessel to establish and maintain with the department of environmental conservation evidence of financial responsibility sufficient to meet an unspecified amount of liability. The proposed legislation would establish regulations of railroad operations that contravene federal law. Additionally, the legislation would amend the surety requirements for major petroleum storage facilities (MOSFs) completely unrelated to the transportation of crude by rail.

Three overlapping federal statutes preempt most State laws addressing the transportation of crude oil by rail. First, the Federal Railroad Safety Act prevents states from supplementing federal safety laws once the DOT has prescribed regulations or issued orders that cover the subject matter. Second, the Hazardous Materials Transportation Act contains a preemption provisions that relates specifically to the transportation of hazardous materials. Third, the Interstate Commerce Commission Termination Act of 1995 (“ICCTA”) contains a broad and sweeping preemption provision that blocks attempts to impinge on a railroad’s ability to conduct rail operations. Taken together the proposed surety requirements of railroads would be preempted because they can impinge on a railroad’s ability to conduct rail operations.

In addition this bill would amend the surety requirements for MOSFs .An MOSF is a facility that stores a total of 400,000 gallons or more of petroleum in aboveground and underground storage tanks. Facilities must be licensed by the DEC and managed in compliance with applicable regulations for the storage and handling of petroleum.

A considerable number of MOSFs store products other than oil (43% - this includes asphalt, gasoline, kerosene, and other products) only 6% is crude oil. Many owners of MOSFs are end users of the petroleum products (ie, manufactures, utilities, food processors).

Most importantly MOSFs are safe in last 10 years; there were an average of 14 spills per year with a median spill of 50 gallons. The majority of these are prevented from escaping to the environment by secondary containment measures. To put this into context, the Department of Environmental Conservation receives approximately 14,000 non-MOSF spill notifications per year. In 2013, there were 17 MOSF spills with only four affecting the environment – all were considered minor and cleaned up by the responsible party.

For the following reasons the Business Council opposes this legislation.