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Republicans Leave Keystone XL Oil Exempt from Oil Spill Cleanup Tax

Keystone XL wouldn't be such a bad project if pipeline builder TransCanada could assure us that it would pay for cleaning up whatever messes the pipeline might make if it spills tar sands oil in our fair state. Oil companies provide us that assurance by paying an eight-cents-per-barrel excise tax on the oil they ship into the Oil Spill Liability Trust Fund. (One barrel produces 19 gallons of gasoline, among other products, so that tax adds far less than a penny to the price you pay at Kum & Go.)

But not TransCanada, not on Keystone XL. Back in 2011, the Internal Revenue Service ruled that tar sands oil imported into the U.S. is exempt from the Oil Spill Liability Trust Fund tax, because it's "synthetic petroleum," not "oil."

Rep. John Garamendi (D-Calif.) tried last week to amend the Keystone XL bill to require TransCanada to pay that cleanup tax on the tar sands oil it seeks to ship across South Dakota:

If you break it, you buy it, and if you spill oil over the heartland of America, you should pay for its cleanup. In recent years, we have witnessed major pipeline breaks in Michigan, Arkansas, Montana, and North Dakota, spewing oil in these communities. Instead of getting a $24 million-a-year tax break not afforded to other pipeline companies, TransCanada should be held responsible if they put America’s environment and the health of American citizens at risk [Rep. John Garamendi, floor statement, 2015.01.09].

Rep. Garamendi is talking basic responsibility. But if I'm reading the roll calls right, his amendment, rolled into a motion to recommit, failed on a straight party-line vote, with every Republican in the room, including our Rep. Kristi Noem, saying that making TransCanada pay for its messes is too much responsibility for our corporate Canadian friends to bear.

Hmm... I wonder if Congresswoman Noem picks up all of her son's dirty socks for him every weekend when she comes home from Washington.


  1. Porter Lansing 2015.01.16

    This is a travesty of justice and a true indicator of which side of the toast their peanut butter is on.

  2. mike from iowa 2015.01.16

    And a straight party line vote against personal responsibility by the party of no-morals is a surprise-how?

  3. Bill Fleming 2015.01.16

    Then surely they won't be surprised if/when Obama vetoes their bill. Suppose we can count on Mr. Thune to put Garamendi's amendment on when the bill goes to the Senate, Cory?

    Or is a veto what they're really after?

    Troy, help us read the GOP tea leaves here, buddy.

  4. larry kurtz 2015.01.16

    The earth haters want to paint President Obama as a radical environmentalist with a commie agenda that harms job creators like the Kochs who own all the Canadian tar sand leases and donated millions to their campaigns.

  5. Nick Nemec 2015.01.16

    Pick up the dirty socks? More like wipe his butt. At some point you have to be held responsible for the messes you make.

  6. Kenny Weiland 2015.01.16

    Rep.Noem isn't even thinking about her constituents. "Our Canadian friends?" So if the extracted oil spills into the ocean on its' way to China, who is responsible?

  7. Paul Seamans 2015.01.16

    For five years in a row Dakota Rural Action lobbied at the legislature to have South Dakota establish a spill trust fund capped at $30 million to make landowners whole in case of a spill from the Keystone system. Because of pushback from TransCanada's lobbyists and Governors Rounds and Daugaard we were never successful. Opponents excuses always included that the Oil Spill Liability Trust Fund would handle any cleanup costs. This was going on about the time that the legislature changed SD law that would have refunded close to $90 million in contractors excise tax to TransCanada. It is no surprise that Mike Rounds still votes TransCanada's way every chance he gets.

  8. Paul Seamans 2015.01.16

    In Kristi Noem's defense, she votes the way that she does because she doesn't have a clue to what is going on with the Keystone XL and votes how she is told to vote. Maybe her tune will change if a Bakken pipeline were to cross her family farm.

  9. Craig 2015.01.16

    Note to whoever opts to run against Noem in two years.... this is the type of thing you need to hammer on. Blatant disregard for South Dakota landowners, blatant disregard for the South Dakota environment, and blatant protections for big oil.

    You can't spin this to make it anything other than what it is, and since most of the voters aren't paying attention these are the types of votes that need to be discussed via commercials and press releases. Let the people know who the real Kristi Noem is and who she really cares about.

  10. caheidelberger Post author | 2015.01.16

    Hey now, Nick. Let's not talk about any minor's bottom. ;-)

    Hey, Paul! Is anyone bringing a pipeline responsibility bill to Pierre this year?

  11. caheidelberger Post author | 2015.01.16

    Right on, Craig! Candidates, bookmark this post. It's the perfect 30-second ad. Clear roll call vote, clear environmental and fiscal risk to South Dakota and USA, clear and simple alternative proposal to solve the problem without costing South Dakotans a penny.

  12. Paul Seamans 2015.01.16

    Cory, I don't think that any pipeline responsibility bill will be brought back to the legislature until the Governor signals that it might have a chance and that hasn't happened so far. A couple of years ago TransCanada was trying to curry favor with Nebraska landowners and they promised to establish a $100 million spill fund for Nebraska. A couple of days later Gov. Daugaard says that if Nebraska gets a $100 million trust fund then South Dakota wants the same thing. A few days after that Gov. Daugaard says, "just kidding". Did Gov. Daugaard speak out of turn and get reminded who makes the decisions around the Capitol?

  13. Donald Pay 2015.01.16

    Paul Seamans points out some history on this issue. It goes back even farther---back to repeated and ultimately successful attempts by the special interests and Republicans to undermine the "polluter pays" concept and various fees and taxes under Superfund.

    The only SD official that I know of who was semi-rational on the issue was Governor Mickelson. At first, he tried to be reasonable with Williams Pipeline when they had their spills. He just wanted the company to own up to the facts of its leakage, fix it and pay for damages caused to off site properties. They dragged it out until Mickelson finally had had enough, and turned them in to the still-intact Superfund Program. Williams whined for years about how unfair it was that they had to clean up the mess they caused, and monitor so that any further mess would be caught.

    But you can't really blame politicians. South Dakota voters prove over and over again that they are patsies for big special interests. Voters turned down an initiative that would have set up a groundwater protection fund to fix problems at mines with an increase in the mineral severance tax. Then, just a few years later Brohm had their leaks, and went bankrupt.

  14. bret clanton 2015.01.16

    Paul even with this new ammunition I would give our chances of getting any meaningful spill regulations passed at somewhere south of 1%.....

  15. Porter Lansing 2015.01.16

    ..... multi-state Federal class action suit? The potential for multi-state individual harm seems evident.

  16. jerry 2015.01.16

    In the meantime, NOem and the rest of the earth haters should be made to address this, 2014 was the warmest year in recorded history.

    This ain't no joke. Bernie Saunders will put the republicans on record for denying this, but what good with that do when our planet is telling us good bye? The tar sands add an incredible amount to the reason, but so does all carbon burning. It must be curtailed if we give a shit about our children and their grandchildren.

  17. Porter Lansing 2015.01.16

    Non-contribution to the "oil spill fund" is the largest hornswaggle since VP Dick Cheney bullied Congress into allowing BIG FRACK to bow out of the water pollution standards. Now Texas, NoDak, Colorado and anywhere fracking is going on are experiencing earthquakes and ground water contamination at unprecedented levels. Cheap gas is very good but unregulated procurement is not. PS....burning coal, oil and natural gas kills pheasants and walleyes by filling clouds with acidic components which these creatures just can't tolerate.

  18. Jake Cummings 2015.01.16

    Given how little traction pipeline opponents have gained when airing concerns about possible environmental degradation thus far, I am skeptical that Noem's opponent(s) would be able to damage her standing if s/he raised the issue during a campaign. I suspect she would simply recite the "jobs" mantra, and sadly voters would probably re-elect her. However, I would be ecstatic if my prediction were to be proven wrong.

  19. Porter Lansing 2015.01.16

    If I may ..... one political party has "made hay" for their campaign contributors by attacking Al Gore's assertion that "global warming" will take us down.....soon. Their refusal to acknowledge this, be it right or wrong is a deception. The issue is now and was way before Mr. Gore, that burning coal, oil and natural gas kills pheasants and walleyes by filling the clouds with acidic components these creatures just can't tolerate. It harms baby's respiratory systems. So, when you hear someone claim, "Global warming is unsubstantiated!" the proper reply is, "Who cares?". Burning this stuff is harming us in ways that matter more than a few cents extra at the pump or on the utility bill or a few laborer jobs. The issue is pollution NOT warming. PS ..... the first hydrogen auto will be on the market this year (from Toyota). There's more free hydrogen on Earth than any other substance. It's just a matter of supporting the "hydrogen highway" in your state by demanding legislators give incentives to private business' to ease start-up costs in building refueling stations. No pollution, no pipelines, no Middle East dependency, no problem. In my state the proper first route is from Denver west to the ski areas. In Sodak, from Sioux Falls to Rapid City. Where in your state, Madville readers?

  20. Jake Cummings 2015.01.16

    Porter, do you think that economies of scale for hydrogen autos can exist free of governmental investment?

    The reason I ask is that I see governmental investment as necessary, at least in the short to mid-term. Assuming that is the case, proponents would need to effectively advocate to taxpayers that such investment is prudent. Therefore, we would need to develop strategies to convince skeptics that the investment is vital while addressing their reticence when similar arguments have been made regarding things like pipelines, wind energy, etc. Hopefully that dialogue occurs and is fruitful.

  21. Troy 2015.01.16


    The issue is a lot more complex that alluded to here.

    I've done much unrelated to work so my time is short and I'm going to try to do a lot of short-hand via a similar situation and leave out a few details and use words that aren't wholly analogous.

    We have the Pension Benefit Guarantee Corporation to guarantee most defined benefit pensions from default. Those pensions subject to the PBGC pay a tax/fee/assessment into what is essentially an insurance pool.

    But the law applies to most. Who are exempt, those whose pensions are such they run little risk of default or call on the PBGC. One those options is to procure a private re-insurance policy. Or maintain a certain level of actuarial surplus/coverage.

    For reasons just beyond the ruling of synthetic oil is a different animal with regard to the purpose and structure of that Trust Fund. Conceptually, putting Keystone into the round peg of the Trust Fund wouldn't decrease in any measurable way clean up risk. But, it would transfer "insurance/fee assessment cost" from those pipelines designed to fit in that Trust Fund to Keystone.

    No matter how you feel about Keystone, I have a hard time understanding the rationale for transferring the cost/exposure of other pipelines and their spills because they fit in the box of the Trust Fund to Keystone (which is a different animal) except to just punish Keystone because you don't like Keystone.

    I don't have time to explain fully but our best protection on a spill actually lies in the financial consequences of a spill (not paying into the trust fund doesn't change who is responsbible but only the backstop). In this case, the best protection lies via the bankruptcy code similar to the preference for accrued wages before secured lenders. Same with Keystone.

  22. Jake Cummings 2015.01.16

    Troy, I think one of the complexities that your PBGC analogy could fail to consider is the propensity for pipeline spills. More specifically, in order for the analogy you propose to be comparable, we would need to see PBGC loss risks comparable to pipeline spill risks. That seems highly unlikely. However, if you have data that demonstrates otherwise, I am highly interested in considering it.

  23. leslie 2015.01.16

    porter-are u a shirt-tail to a disk jock in sw sd? i knew a denver lansing family, years ago, so related.

    this amendment to the house kxl bill protecting from spills, is vital for SD because it will be packaged with a vital spending bill Obama may not be able to veto.

  24. jerry 2015.01.16

    If Noah were around now, he would not need such a big boat. Here is what we have now done to our home in the last 4 decades. In my lifetime, we have destroyed an immense amount of species that will never see the dawn again. Maybe the next on the list will be us, not because of war but because of the ignorant group we have sent to represent us and for our own lack of interest in seeing our world decline for the religion of money.

  25. Moses 2015.01.16

    Daugarrd cant make any decision neither can Rounds , they are puppets.All puppets need a master. Look at photo op Thune whats he Done.Nothing say it again Nothing.

  26. Joan Brown 2015.01.16

    i wonder if Noem would be in favor or the pipeline if it was going to run past or on her and her families many, many acres of farm//ranch land.

  27. leslie 2015.01.18

    Woster, as we are speaking here of rounds' desire to open keystone to tars sands oil across SD (for his new koch buddies in SD), mentioned the "penchant for private airplanes" and surely he'll be flying weekly some pricey, tax incentived air plane from sxfalls to pierre (he needs his own runway!).

    but woster also says the senator has an "affection for well managed government" while EB5 was an absolute fail of his own administration (blamed on the guy hired by rounds' own "joop" using taxpayer money rounds paid to those two rather than NBP).

    Rounds committee assignments, in Woster's continuing context of EB5 lead me sadly to conclude that the GOP wouldn't have without a pretty good inside word that nothing more is coming of those continuing FBI and banking committee investigations.


  28. larry kurtz 2015.01.19

    WNAX is reporting this morning that the GOP is having a cow because Democrats have added an amendment to the KXL bill that would kill the ethanol subsidy: Republican hypocrisy know no bounds.

  29. jerry 2015.01.19

    In Montana for the first oil spill, the owner, an American company, says it has paid $135,000,000.00 for the clean up with an additional 3.5 million in fines. Where in the hell where we get 140 million bucks to clean up the spill here in South Dakota from a foreign company that is exempt from cleaning their crap up?

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