The Senate Commerce and Energy gets first crack at holding big oil pipeline companies responsible for their business activities. Tomorrow morning (Thursday!) it hears Senate Bill 126, a measure to require a $500-million indemnity bond prior to construction of oil pipelines larger than 25 inches in diameter.
I got a chance to ask Senate Commerce and Energy chairman Tom Nelson (R-31/Lead) at Saturday's crackerbarrel here in Spearfish if he would support Senate Bill 126. His short answer: yes:
Sen. Nelson's only hedge was to say that he wouldn't support new requirements on pipeliners that are redundant with existing regulations. Now last fall, Governor Daugaard saw the light for a couple weeks and acknowledged that South Dakota doesn't have enough safeguards in place for big pipelines like Keystone XL. He re-flipped his public position two weeks later, saying we shouldn't consider new legislation until the federal permitting process for Keystone XL concluded. Well, President Obama concluded that process two weeks ago, right? Even in the Governor's book, now should be the right time to take up SB 126.
The bill gives South Dakota necessary fiscal and environmental security, ensuring that if something goes wrong with a big pipeline like TransCanada's Keystone and the stymied Keystone XL, the company has the resources ready to clean up the mess. $500 million may sound like a lot, but consider that the Silvertip spill in Montana last summer has run up a tab of $135 million, while the Enbridge Kalamazoo spill the summer before has so far cost $700 million. The Silvertip pipeline is 12 inches in diameter. The Enbridge 6B pipeline was 30 inches in diameter, same size as the existing Keystone 1 pipeline in eastern South Dakota. TransCanada's Keystone XL would have been 36 inches in diameter. The Enbridge spill released at least 27,000 barrels of oil, roughly the amount of oil that Keystone XL was designed to carry in less than 45 minutes.
I'd still like to tax the crap out of TransCanada and other pipeliners who put our land, water, and property rights at risk while perpetuating our addiction to unsustainable energy resources. (Hey, Rep. Hoffman! What happened to your pipeline tax bill?) In the absence of such a proposal, I can accept a strong indemnity bond as a fair compromise. Senate Bill 126 is that compromise. Do pass!
A surety bond is a bad idea, it places too much reliance on a third party surety company who'll fight tooth and nail not to pay. A requirement that they put cash on deposit with the state is a better option. We then control the money, have cash available instantly for early clean-up efforts (quick reactions to spills are critical) and we don't run the risk of the surety provider going belly-up. Lehman Bros. ring any bells folks? A combination of required deposits and a pipeline tax over a period of a few years could fund it and lessen the cash impact on Keystone at the same time. If we take a little risk at the outset, we avoid far greater risks down the road.
Cory, Have just returned home from testifying on SB 126 and I want to show you how Senator Nelson spells yes. Ney, no, nope, nea, negative, not, I dont think so, not today, not tomorrow, not next week, never...