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Chesapeake authorizes a
permitting fee on flammable and combustible liquid tankage on the basis of
ethanol emergency response preparedness.
During 2006, the City of
Chesapeake, VA proposed a new tax, designated as a "permitting fee" for all bulk
ethanol tankage within city limits. In April of 2006, the Chesapeake municipal
fire department expressed a concern regarding preparedness for responding to
ethanol-related emergencies from increased ethanol volumes entering and
traversing its community, thereby prompting the "fee". The final proposal
before a City Council vote was for a 0.5 ¢/gallon capacity, plus additional fees
for tank truck, rail and barge deliveries. This proposal reflected a change
from the initial October, 2006 proposal of a single 3.5 ¢/gallon annual “fee” on
ethanol tankage and was the basis for industry comment.
On April 24, ILTA attended a
Chesapeake, Virginia city council budget hearing to defend against these
proposed terminal “fees”. Joined by representatives from four member companies,
ILTA spoke in opposition to the proposal on the basis of (1) the unprecedented
nature of the proposed “fee” on a single product and sub-segment of industry,
(2) the disconnect between concerns of transportation-related ethanol fires and
3rd party terminal responsibility, and (3) terminal industry efforts
through the Ethanol Emergency Response Coalition (EERC) to educate the domestic
emergency response community on materials and methods to effectively combat
industrial ethanol fires. ILTA submitted comments to the City Council first in
October following the initial proposal, available
here:
ILTA further submitted a
comment letter to the city council on May 4th prior to their final vote,
reinforcing ILTA statements made during the April budget hearing. This letter
is available here:
The city council has
surprised many by voting on May 8 for a new fee structure to “offset the costs
of training and equipment” necessary to respond to ethanol fires. The
ordinance, as passed, is available
here:
Rather than limiting the fee
to ethanol tankage as proposed, the new fee of 0.05 ¢/gallon will apply to all
combustible or flammable liquid tanks larger than 100,000 gallons, greatly
expanding the scope of the tax.
While projections of total
revenue under the new scheme is similar to the flawed estimates proposed by the
city earlier, the scope of products impacted has been significantly expanded,
and further detaches the tax from the targeted concerns relating to ethanol.
This near complete departure from prior discussions between the municipality and
industry leaves many concerned about the process followed.
Incidental to this new fee
structure, as of June, permitting is underway for a $500 million, 216 million
gallon ethanol manufacturing plant located partially in Chesapeake. Operations
are scheduled to begin in April of 2008. If constructed, it will become one of
the largest domestic ethanol refineries.
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