Adequate insurance urged for potentially volatile oil trains

New York State Comptroller Thomas P. DiNapoli has sent a letter to U.S. Transportation Secretary Anthony Foxx calling on the federal government to require railroads that transport oil to carry adequate insurance to cover cleanup costs and other liabilities associated with major rail accidents.

Railroads should be required to “acquire insurance or provide financial security that adequately addresses emergency response, remediation and liability costs associated with ‘higher consequence accidents’,” such as those forecast by the transportation department, wrote Mr. DiNapoli in a letter dated April 25. He said such a requirement is needed to “ensure that states and communities are not burdened financially in case of a disaster.”

Mr. DiNapoli said that a review of U.S. Securities and Exchange Commission filings of the two major carriers of crude oil in New York state — CSX Corp. and Canadian Pacific Railway Ltd. — showed that CSX is self-insured at a level of $25 million per occurrence for what it terms as “noncatastrophic” property damage, such as that caused by a train derailment, and for catastrophes such as floods or hurricanes at a level of $50 million per occurrence. He said that Canadian Pacific’s filings do not include information on the levels of insurance per occurrence.

He said that if an incident such as the catastrophic train disaster in Lac-Mégantic, Quebec, in 2013, “where cleanup costs and damages are estimated to exceed $2 billion, were to occur in New York, it would quickly exhaust the state’s resources for emergency responses and victim compensation.”

He added that the U.S. Department of Transportation estimates that 10 “higher consequence” events with oil trains may occur in the United States within the next 20 years.