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Republican Legislator Backs South Dakota Pipeline Tax

Rep. Charlie B. Hoffman (R-23/Eureka) provides the blog scoop of the day, declaring his support for a state pipeline tax. He still finds my anti-Keystone XL pipeline position misguided, but...

On the other side of the coin we must insist upon a penny or nickle per barrel of oil pumped through our state charged for the unlikely event of a major oil spill should one occur [Rep. Charlie B. Hoffman, blog comment, Madville Times, 2011.09.20 15:20].

I ask the representative whether he would co-sponsor pipeline tax legislation in the 2012 session. He responds thus:

...I am all over putting legislation together making sure SD does not have to go to court to obtain dollars needed in the event of an oil spill from a pipeline should the oil company not provide full compensation for clean up. It is on my list of things to do! [Hoffman, 2011.09.20 16:26]

When it comes to Keystone XL, I take even small things as cause for optimism. Various members of the South Dakota Legislature have proposed pipeline taxes in each session since 2008. The Legislature has whacked those bills each time (see killed bills from 2008, 2009, 2010, and 2011). I haven't noticed Hoffman's name on the sponsor lists of any of those previous pipeline tax bills. If he's willing to sponsor a 2012 pipeline tax bill, that may signal a greater willingness in Pierre to hold TransCanada accountable and seek an easy and easily justifiable revenue source for South Dakota.

Thank you, Rep. Hoffman, for brightening my day!


  1. Bob Mercer 2011.09.21

    Been tried, failed.

  2. Charlie Hoffman 2011.09.21

    It looks like in 2008 SB190 started out as a 2 cent per barrel tax, amended up to a $5 million max but ended up as an advisory board without any taxing properties.

  3. caheidelberger Post author | 2011.09.21

    Yeah, Bob, that's the attitude the Libyan rebels took back in March. Not.

  4. caheidelberger Post author | 2011.09.21

    And Charlie, yes, that's exactly what happened. Let's try again and get TransCanada to pay its fair share!

  5. Donald Pay 2011.09.21

    Back in the late 80s environmentalists tried to initiate a small tax on mined ore that would go into a fund to be used for cleanup of environmental problems caused by the heap leach gold mines. We lost the vote. Within five years, Brohm's Gilt Edge mine had serious acid mine drainage issues, went bankrupt, had insufficient state bonding, and ended up on the Superfund list. Taxpayers, rather than the gold mine, pays for the remediation of this site. Pipeline spills are much more common than acid mine drainage.

    South Dakota does have a mechanism for underground tanks already set up that could be modified for the purpose of accepting and dispensing funds for pipelines. No new bureaucracy would need to be developed.

    I suspect this company is large enough and will be making mega-bucks, so it won't go out of business like Brohm. But you never know how these companies structure themselves so that liability is limited. The fund would be under the state's control, and so if the company does a slipshod job of cleaning up after itself, the state can contract for a better cleanup with the fund and then present the pipeline company with the bill.

  6. Douglas Wiken 2011.09.22

    Montana required a fund to be set up before they allowed pipeline surveyors to enter the state. They also ran the pipeline approval process through the environmnetal agency rather than their version of the PUC.

    It is insane to not have a fund set up large enough to clean up leaks in the White River, Keyapaha River, Ogalalla aquifer. Clean up equipment should be along the line and river crossings, etc. not several hundred miles away.

    Oil and pipeline companies probably remember SD flirted with toxic waste dumps, etc and probably share the attitude of the nuclear dump supporters in Nebraska who assumed all rural residents were ignorant hicks to stupid and economically deprived to produce any serious opposition.

  7. caheidelberger Post author | 2011.09.22

    I agree, Doug: TransCanada loves taking advantage of rural folks who see nothing but increased property tax revenues from the pumping stations. But hey: if the cavalry isn't coming, maybe the Indians can save us from Keystone XL!

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