Toxic and Tax Exempt

As discussed in threads this week on ATS (here and here), last Friday an Exxon Pegasus pipeline ruptured, spilling approximately 80,000 (numbers are fuzzy on exact amounts) gallons of 'dilbit' into an Arkansas residential area. Clean up is costly, so who pays?

According to an article at The Price of Oil, eventually, US taxpayers will. People will, as I did, logically suppose that clean up's will be paid out of the Oil Spill Liability Trust Fund, a fund that oil companies are required to pay into if their oil is transported within/through US territory. However, there's a huge problem with this.

The Enbridge pipeline in Michigan and the Exxon pipeline in Arkansas, however, are exempt because these pipelines are not considered to be carrying “conventional oil”, despite the fact bitumen spills are more expensive and more dangerous.

In a January 2011 memorandum, the IRS determined that to generate revenues for the oil spill trust fund, Congress only intended to tax conventional crude, and not tar sands or other unconventional oils. This exemption remains to this day, even though the United States moves billions of gallons of tar sands crude through its pipeline system every year. The trust fund is liable for tar sands oil spill cleanups without collecting any revenue from tar sands transport. If the fund goes broke,the American taxpayer foots the cleanup bill.

So they can use the funds but don't have to pay into them for tar sands oil transported through our pipelines. The Keystone XL pipeline, though yet to be approved (it's been reported that Obama stands ready to do so), will transport 800-900,000 barrels of dilbit per day.

Last year, there were 364 spills from pipelines that released about 54,000 barrels of oil and refined products. In 2010 in Marshall, Michigan an Enbridge pipeline sent 819,000 gallons of toxic tar sands crude into the town’s creek just 80 river miles from Lake Michigan

How long until that trust fund is burned through and US taxpayers are on the hook for cleanups?

According to an article on RT

Exxon's Response
Answering RT’s detailed questions, ExxonMobil stated they are paying for all costs related to the spill. However, the company didn’t reveal how much it contributes to the OSLTF, or the value of the company’s crude which is not taxed by the law.

Exxon media relations manager Alan Jeffers told RT that teams are working directly with residents of Mayflower and are “paying all valid claims relating to the spill and providing interim housing for people from the homes which the city of Mayflower recommended be evacuated following Friday's spill.”

Doesn't exactly say they aren't using the trust fund.