WASHINGTON (March 13, 2014) – As the Senate Foreign Relations Committee holds a hearing on the Keystone XL pipeline, Senator Edward J. Markey (D-Mass.) introduced two bills today that would hold the Canadian tar sands pipeline project and tar sands oil in general accountable to the American people and our economy. The first bill would say that if the Keystone XL pipeline is approved, the oil transported and all refined fuels produced from that oil should be kept in America for American consumers and businesses. The other bill, introduced with Senator Carl Levin (D-Mich.), would close a special tax loophole for oil companies that import or produce tar sands oil that allows them to avoid paying into a trust fund for oil spills.
“Keystone XL is the capstone of the oil industry’s plan to export North American energy to China and other markets. We can’t allow our climate to be harmed by this dirty oil, and then be expected to add the insult of exporting that oil abroad to benefit other economies. We need to reduce our dependence on foreign oil and increase our national security, not export domestic resources under the false pretenses of energy security,” said Senator Markey, a member of the Foreign Relations, Commerce, and Environment and Public Works Committees. “We need to close the tar sands loophole that allows the oil industry to skirt paying into the spill trust fund, even as they look to export this oil abroad.”
“If spilled into the environment, oil produced from tar sands is just as damaging as oil produced by other means, if not more so, as residents along the Kalamazoo River in Michigan learned in 2010. Cleanup of that oil spill is still under way four years later. Surely producers of oil from tar sands should help contribute to the costs of cleaning up these spills — just like producers of other oil must do,” said Senator Levin.
The Keystone XL pipeline is set to be a major export conduit for North American oil, contrary to the claims that the oil industry has made that it will benefit energy security interests for America. The Keystone XL pipeline would terminate in Port Arthur, Texas, which is a foreign trade zone, allowing for the re-export of the Canadian tar sands oil without paying taxes. At a hearing in the Energy and Commerce Committee, then-Rep. Markey pressed an official from TransCanada, the developer of the pipeline, to guarantee that oil from the pipeline would stay in the United States. The official would not agree to those conditions.
Unlike other forms of oil sent through pipelines, tar sands projects are not currently paying into the Oil Spill Liability Trust Fund, which provides funding in the case of a spill. In May 2011, the Internal Revenue Service (IRS) issued a ruling that tar sands oil was not crude oil and therefore oil companies importing or producing it are not subject to the same tax to pay into the fund. The largest source of revenue for the fund comes from an 8 cent per barrel excise tax on crude oil received at U.S. refineries or on petroleum products imported into the United States. The Markey-Levin legislation would ensure that oil companies pay into the trust fund for tar sands oil.
Taxpayers stand to lose nearly $2 billion over the next 10 years as a result of this tar sands tax loophole, according to the Congressional Budget Office.
Senator Markey had previously introduced versions of the two bills while a member of the House of Representatives.
Video: Senator Markey on the proposed Keystone XL Pipeline