Are New Jersey’s onshore petroleum and chemical industries about to be punished for BP’s disastrous oil rig spill in the Gulf of Mexico?   

That’s how some may view S-2108, legislation that will be taken up on Thursday in Trenton by the Senate Energy and Environment Committee. 

Sponsored by committee chairman Bob Smith (D-Middlesex), the bill would raise the state Spill Fund’s liability limit for hazardous substances spills from the current $50 million to a new maximum of $1 billion.

Hal Bozarth, the Chemistry Council of New Jersey’s executive director, said the bill would “ increase taxes and fees on hundreds of New Jersey facilities, significantly affecting industry jobs.”

New Jersey’s Spill Compensation and Control Act, which has been in effect for  30 years, covers the owners and operators of large petroleum and chemical facilities. They support the fund through an annual tax which is based on  the amount of hazardous substances they manufacture, store or transport. 

The law was enacted to cover spills at existing facilities and the cleanup of hazardous discharges at abandoned sites whose former owners have gone out of business.

Jim Benton, executive director of the New Jersey Petroleum Council, notes that the Gulf spill liability issue is already being debated in Congress where legislation would impose a $1 billion liability cap on oil companies.  

Benton questioned the appropriateness of grafting the same limit onto the New Jersey spill act, where he says the current $50 million limit has proven sufficient and where spills have historically been limited to facility sites.

He said his members were “concerned about the bill’s impact on our energy supplies and our onshore facilities in New Jersey.”

Benton concedes that the legislation does not directly raise the Spill Fund tax on refineries but noted that affected companies would be required to support higher reserves to accommodate their increased legal liability.

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