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South Portland sees way to turn oil into cash: 500% hike in tanker inspection fee

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South Portland sees way to turn oil into cash: 500% hike in tanker inspection fee

SOUTH PORTLAND — The city is looking to cash in on the hundreds of tankers that annually dock and unload oil at eight local terminals to help fight the effects of declining revenues. 

During budget deliberations last week, City Manager Jim Gailey unveiled a proposal, drafted with input from Fire Chief Kevin Guimond, to increase oil tanker inspection fees by 500 percent, from $50 to $250.

Gailey said the proposal would net the city an additional $18,000 in revenue at a time when other non-property revenues have declined by more than $700,000.

"The $50 doesn't really cover the time it takes to do the inspections," Gailey said this week. "I would say ($250) is a more accurate estimate."

U.S. Coast Guard Commander Kevin Ferrie said the agency also inspects the 300 oil tankers that annually visit South Portland to ensure compliance with international trade treaties. The agency charges around $1,800 for a two-year certificate.

The Coast Guard has no oversight of the South Portland program, Ferrie said.

Gailey said the city also explored instituting a docking fee for oil tankers, but was told by the city attorney that it couldn't, since it would be an attempt at regulating interstate commerce.

The inspection fees are typically paid by the oil terminal, rather than the vessel. Two oil terminal operators reached this week were unaware of the city's proposal.

"The issue you raise is something we don't have a lot of information or background on, so we need to look into to it," Portland Pipeline Treasurer David Cyr said. "At this point, we don't have any comment."

A supervisor at Sprague Energy did not want to comment either, because the terminal manager was on vacation. He said the company has a good working relationship with the city.

Exxon, Global, Citgo and Gulf also own terminals in South Portland.

Revenue from oil tanker inspection fees has been on the rise in recent years. After bringing in $5,450 in revenue in fiscal 2008, the city took in nearly $8,000 the following year, simply by inspecting more vessels.

Gailey's original budget anticipated $10,000 in revenue from inspections, the equivalent of 200 inspections under the current rate of $50.

If the new fee structure is implemented and the city inspects 200 vessels, the city could net and an additional $40,000 – far more than the $18,000 budgeted by the city manager.

Gailey said he was deliberately conservative with his estimate, because thin staffing at the Fire Department and increased responsibilities have made it difficult to reach the 200-vessel target. 

"We felt as though we should take a conservative approach to this revenue increase in hopes of achieving the projected revenue amount rather than budgeting for a huge increase in revenue and falling short," Gailey said.

Deputy Fire Chief Miles Haskell said the department is on pace this calendar year to surpass the 200-vessel target.

Haskell said the department has inspected 100 of the 195 tankers and barges that have docked on South Portland's coastline since January. Last year, the department inspected 175 of the 620 vessels, he said. 

"We try to get down there every day, but it depends on what else is going on," Haskell said.

One fire engine and a crew of three firefighters are typically used during inspections, which can take between a half hour to an hour, Haskell said. Oil tankers and barges are held to standards outlined in the city ordinance.

Beyond ensuring vessels meet those standards, Haskell said the inspection program allows firefighters to familiarize themselves with the layout of the ships.

"We're always on the ships, so its a great training tool for us," Haskell said. "(Firefighters) need to know what to expect before they respond."

Randy Billings can be reached at 781-3661 ext. 100 or rbillings@theforecaster.net