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Who Will Pay for the Arkansas Tar Sands Spill?

J. Mijin Cha

Last week, over 80,000 gallons of crude oil spilled from an ExxonMobil pipeline in Arkansas. Twenty-two homes were evacuated and the cost of cleanup will be high. So, who will foot the bill? ExxonMobil? Taxpayers? Unfortunately, the answer looks like it will taxpayers will pay for cleanup for a reason that we should be very concerned about as discussion continues over the Keystone pipeline.

Normally, the government has an Oil Spill Liability Trust Fund that companies transporting oil must pay into. This fund is a great example of shifting the cost of clean up onto the companies that cause the problem. If oil companies are going to profit from transporting oil, they should also have to pay for damages caused by transporting the oil. But, here’s the caveat: In January 2011, the IRS determined that Congress intended to tax conventional crude only, not tar sands or other unconventional oils. As a result, all the tar sands and unconventional crude that is being transported is not being taxed. While the Trust Fund will still pay for clean up, it isn’t collecting any revenue from tar sands transport. If the fund goes broke, taxpayers have to foot the cleanup bill.

In the past few years, the Alberta-based energy company, Enbridge, has spilled nearly one million gallons of oil in parts of southwest Michigan and rural Wisconsin. While Enbridge earns hundreds of millions of dollars each quarter, it doesn’t have to pay into the Trust Fund for any of the millions of gallons of tar sands its transports, even though money from the fund will be used to clean up its messes. This reality is particularly egregious as an investigation in the Enbridge’s Michigan leak found significant negligence and inadequacy on the part of the company in implementing proper safety and precautionary measures. 

ExxonMobil has made initial promises to pay for the spill but they have a bad track record when it comes to paying for anything beyond the initial clean up. For the Exxon Valdez spill, the company fought paying damages for over 20 years and has only paid $507.5 million of the original $5 billion decree in punitive damages. Exxon has also failed to pay hundreds of millions of dollars owed to fishermen and other small businesses whose livelihoods were devastated by the spill. The same pattern emerges with spills in 2006 and 2011.

Tar sands are environmentally destructive at every step: mining tar sands is incredibly water intensive and releases substantial amounts of greenhouse gases, pipeline spills are unacceptably common, and tar sands are a fossil fuel that releases climate destructive greenhouse gases when burned. Taking the totality of the costs imposed by tar sands, it’s not an energy source we can afford.