An Oct. 5 News Tribune editorial argued that the oil industry should pay a tax on rail shipments of crude oil in our state. What many will find surprising is that our industry backed a bill to do just that during the last legislative session.
For more than two decades, Washington’s oil refineries have paid a tax of five cents per barrel on marine landings of crude oil in our state. The funding generated by this tax has allowed the Department of Ecology, working with the industry, to develop a comprehensive oil spill prevention, preparation and response program that has become a model for other states.
Changes in our industry are driving some crude oil shipments that once traveled by sea to now reach our refineries by rail. In Washington state, about 8 percent of our crude shipments now arrive by rail.
Senate Bill 6567 would have extended the existing barrel tax to cover these shipments, generating an additional $1.6 million for the Department of Ecology in Fiscal Year 2015. In the 2015-17 biennium, the tax would have generated more than $6 million for DOE. This important new funding would have supported Ecology’s efforts to bring the same level of preparation and protection to rail shipments that it maintains for maritime shipments.
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Our industry recognizes that an unintended consequence of growth in rail shipments has been a reduction in Ecology’s funding for its preparation and response programs. So we supported the legislation to tax ourselves on these shipments.
The bill made it through several steps in the legislative process, passing out of the Senate Ways & Means Committee on a bipartisan vote. Then a not-so-funny thing happened on the way to the Senate floor.
The very day that the legislation came up for a vote by the entire Senate, the Washington Environmental Council and the Washington Conservation Voters distributed an alert arguing that extending the tax to crude-by-rail shipments was not enough. They also wanted to impose a new tax on shipments of blended biodiesel and other consumer products.
They could have supported the SB 6567, extending the barrel tax to crude by rail shipments, so that it would immediately start generating funding for the Department of Ecology, and then made the case for why new taxes on consumer products should be imposed, but they didn’t.
With SB 6567, our state had the opportunity to again be a leader in environmental preparation and protection. If it had passed, Washington would have imposed a tax on crude-by-rail shipments before California did, and implementation of the Department of Ecology’s preparation and response programs for rail shipments would now be well underway.
WSPA invites the Washington Environmental Council and the Washington Conservation voters to join with us in the 2015 legislative session to extend the barrel tax to crude by rail shipments. Working together we can continue to maintain the most effective oil spill preparedness, prevention and response program in the nation.
Cathy Reheis-Boyd of Sacramento, California, is the president of the Western States Petroleum Association.