SOUTH PORTLAND — City officials are taking steps to make sure six waterfront fuel terminals and their storage tanks are properly closed and cleared of contamination if they’re ever decommissioned.

With more than 80 massive fuel tanks and miles of pipe stretching across the city, the fear is that taxpayers might be saddled with closure and cleanup costs that could far exceed the minimum $2 million in liability coverage required by the Maine Department of Environmental Protection. But the agency’s goals for closure and cleanup might fall short of citizens’ expectations because state law doesn’t require the removal of tanks and pipelines.

The push for engineering-based cost estimates and full liability coverage comes as the flow of foreign crude oil from the Portland Pipe Line Corp. terminal to a refinery in Quebec has slowed to a relative trickle because of increased oil production in Canada. The company also has put 10 of 23 storage tanks in South Portland out of service, according to the DEP marine terminal license order issued in September.

It’s the city’s latest move to control and – as some would have it – possibly eliminate petroleum facilities in South Portland, following last year’s passage of an ordinance that banned crude exports from the city and blocked the company from reversing the pipeline’s flow.

A major concern was that the pipeline could bring controversial tar sands oil into the community to be shipped elsewhere. The company is challenging the law in federal court.

Portland Pipe Line’s light green storage tanks tower amid residential neighborhoods near Kaler Elementary School and South Portland High School, and on the waterfront between Ferry Village and Bug Light Park. Knowledge that many of the tanks are now empty is fueling thoughts of what might happen if the pipeline’s holdings were one day redeveloped for nonindustrial uses.

“Clearly $2 million is not enough to cover cleanup and remediation by today’s standards,” said City Councilor Claude Morgan.

“At some point we have to start thinking beyond the tanks. Someday the tanks will be obsolete and some new purpose will be proposed and some enterprising community is going to want to do something different with that land.”

COUNCIL VOTE SCHEDULED

On Wednesday, the City Council is expected to authorize City Manager Jim Gailey to ask the DEP to require that Global Petroleum, Irving Buckeye and Gulf Oil provide engineering-based closure cost assessments and statements of full liability coverage as conditions of renewing their marine terminal licenses in the coming months.

In September, Gailey sent a letter to the DEP asking the agency to apply the renewal conditions to Citgo’s terminal license, which expired in August. The conditions have been included in Citgo’s draft license renewal order, said Rick Kaselis, an environmental specialist with the DEP.

Prompted by recent requests from South Portland residents, the DEP has already required Sprague Energy and Portland Pipe Line each to submit “an engineering assessment of probable closure costs to determine the adequacy of financial responsibility.” The condition was included in license renewal orders issued by the agency in March and September, respectively.

Sprague’s assessment is due Dec. 31 and Portland Pipe Line’s assessment is due Jan. 30, 2017. Within 120 days of submitting its assessment, Portland Pipe Line must submit “additional evidence of financial responsibility” for any estimated closure costs exceeding $2 million. Sprague’s license renewal order doesn’t include this condition.

To fulfill this condition, Portland Pipe Line must show it has commercial insurance, self-insurance or a letter of credit to cover closure costs, Kaselis said.

Portland Pipe Line declined to comment for this story because of pending litigation. Sprague Energy “has no problem” with submitting an engineering closure assessment to the DEP and expects to meet its Dec. 31 deadline, said spokesman Taylor Hudson.

The four other terminal operators either didn’t respond or couldn’t be reached for comment.

For Natalie West, a former city attorney and community activist who submitted a petition about the Portland Pipe Line terminal, pushing for stricter licensing conditions is a matter of being practical and wielding good policy.

“What happens if any of these companies leaves?” West said. “That waterfront has tremendous potential, but it’s blighted by those tanks.”

The citizens’ group Protect South Portland also supports the city’s move to ensure proper terminal closures, and the city’s Conservation Commission recently issued a position letter urging city officials to transition from “the perpetuation of fossil fuel infrastructure” to the promotion of sustainable energy sources.

WHAT CLOSURE MEANS

South Portland’s marine terminals receive a variety of petroleum products, including crude oil, heating oil, gasoline and diesel. Some products are stored in tanks that are more than 70 years old.

The DEP licenses 10 marine oil terminals across the state, including two in Searsport, one in Bucksport and one in Hampden, agency officials said. State law allows the DEP to require terminal operators to provide an engineering assessment of closure costs and a financial statement showing that they can cover costs exceeding $2 million.

The possibility of Portland Pipe Line’s fuel tanks and miles of pipeline someday being obsolete concerns the South Portland City Council as well as many residents.

The possibility of Portland Pipe Line’s fuel tanks and miles of pipeline someday being obsolete concerns the South Portland City Council as well as many residents. Staff photo by Derek Davis

Terminal operators must notify the DEP and submit a plan before closing a site, which consists largely of removing residual fuels and contaminated materials, such as soils and equipment that cannot be cleaned, and capping tanks, pipes and other equipment that’s left behind. If Portland Pipe Line or any other terminal operator decided to shut down, it could be allowed to leave its tanks and underground pipes in place, said Scott Whittier, director of the Oil and Hazardous Waste Facilities Division at the DEP.

“The structures themselves could remain, depending on circumstances, as long as any contamination has been removed.” Whittier said. “The rules do provide for facilities to be abandoned in place.”

The rules also allow for the possibility that a terminal may one day reopen, Whittier said.

Whittier and Kaselis declined to comment on whether the $2 million minimum is adequate to cover closure costs for a marine oil terminal.

Environmental regulations for marine oil terminals date back to 1971, Kaselis said, but there was no condition to provide financial assurances for closure costs until the rules were rewritten in 2001, which is when the $2 million minimum was added.

In 2011, the DEP ordered the Chevron Corp. to pay a $900,000 settlement after a now-closed terminal and tank farm in Hampden leaked 140,000 gallons of oil into the Penobscot River from the 1940s to the 1980s, according to published reports. A multimillion-dollar site cleanup, paid for by the company and overseen by the DEP, is ongoing, Whittier said.

Barring a change in regulations, South Portland officials must continue seeking special conditions to ensure that marine terminal licenses require the operators to show what it would cost to close their facilities.

“It’s a good provision,” Whittier said. “There’s room to talk about whether $2 million is enough.”