New York Comptroller Wants Railroads to Increase Oil Spill Insurance

New York state’s comptroller urged federal authorities Tuesday to strengthen safety measures against oil spills and require trains to carry sufficient insurance to cover cleanup costs from major accidents.

Comptroller Thomas DiNapoli is administrator of New York’s $40 million Oil Spill Fund. He cited a U.S. Transportation Department finding that oil shippers and rail companies carry insurance that won’t cover a serious accident involving tankers carrying crude oil or other hazardous materials.

In a letter sent Tuesday to the department and the Federal Railroad Administration, DiNapoli said a review of 2014 Securities and Exchange Commission filings showed CSX Corp. was self-insured for $25 million for “non-catastrophic” property damage and $50 million for natural catastrophes. He said Canadian Pacific Railway filings didn’t contain similar information on insurance coverage.

They are the two major carriers in New York with tankers often containing highly volatile oil with high levels of natural gas that pass through many communities and alongside major waterways, including the Hudson and Mohawk rivers, Lake Erie and Lake Champlain.

“The increased volume of crude oil transported by rail in recent years increases the potential for catastrophic accidents,” DiNapoli wrote. He cited the 2013 fiery derailment in Quebec that caused $2.7 billion in damage, killed 47 people and drove into bankruptcy the Montreal, Maine and Atlantic Railway that was insured for only $25 million.

CSX and Canadian Pacific didn’t immediately reply to requests for comment Tuesday.

The department has estimated there may be 10 oil train accidents of “higher consequence” within the next 20 years at costs exceeding $1.15 billion in each case and possibly more than $5.75 billion in a single incident, DiNapoli wrote. He noted many safety improvements federal and state authorities have imposed recently, including more safety inspections of cars and tracks, as well as enhanced equipment and train crew standards, but called for others like making oil trains slow down in more municipalities and rerouting them around population centers when possible.

First Deputy Comptroller Pete Grannis, New York’s former environmental commissioner, said the office began with letters to CSX and other companies involved in oil shipping where the state’s public pension fund is an investor, with concerns over the possible financial impact on the companies of potential spills. There are also major concerns over the state’s liability beyond the capacity of its oil spill fund and the broader safety and environmental issues both statewide and nationally that led to Tuesday’s letter, he said.

“Railways historically had a tendency to be right next to waterways,” Grannis said. “The concern is one of these catastrophic kinds of derailments with large quantities of oil going into the environment. Obviously these have grave concerns for safety and health and well-being of people who live along rail lines and along waterways.”