Tax the Pipeline -- My Ten-Cents Worth

It appears from the minutes that the Senate State Affairs Committee didn't get around to Senate Bill 190, the pipeline tax, on Friday; they thus put off action until Monday. The meeting starts at 7:45 a.m., and SB 190 is second on the agenda, so if you're looking to get your two-cents' worth in, better get there early.

Two cents is the tax SB 190 would impose on every barrel of crude oil piped through the state (in pipelines carrying 10,000 or more barrels a day -- see Section 2). That money would go into a "pipeline compensation fund" to be used to cover costs for pipeline clean-up. Any revenue above $30M goes to a water and environment fund (see Section 3).

Two cents is a far cry from the ten cents per gallon that the WEB Water Development Association has called for (see page 20 of this PDF). Ten cents per barrel on $100-per-barrel oil would put $15.9M in the state coffers each year. As noted here previously, a ten-cent-per-barrel tax would be far from burdensome: one day's worth of the oil to be pumped through the TransCanada Keystone pipeline would generate over $40M of revenue. In other words, TransCanada could cover a year's worth of ten-cents-per-barrel tax with the oil pumped through the pipeline before lunch on January 1.

I probably shouldn't push the legislators: it's hard enough getting them to hold Big Oil to any sort of responsibility. Even a two-cent tax is a step in the right direction. But our legislators should understand that they don't need to treat TransCanada with kid gloves: two cents, ten cents, fifty cents a barrel won't stop TransCanada's plans to make billions on tar sands oil.

I'm also not convinced funneling the first $30M (the first ten years of revenue SB 190 would generate, according to the back of my envelope, and assuming there are no disbursements from the fund during that time) strictly into a clean-up fund is the best use of that money. When truckers come through South Dakota, their gas tax dollars don't go into a fund that pays strictly for accidents those truckers cause. Those gas tax dollars go into general upkeep of all roads in South Dakota, while the truckers are still held personally liable for any wreck they cause (or at least that's how I assume it works).

Similarly, TransCanada is still responsible for any spill or other damage that its pipeline might cause. We should expect them to pay any damages out of their own pocket. The tax they pay on their pipeline should simply be the bank account they draw on to pay for spills and explosions on our turf. Instead, pipeline tax revenue should be viewed as the price TransCanada pays for the privilege of doing business in our state. Pipeline tax revenue should be the pipeline company's contribution to the general fund for environmental protection and energy conservation.

If two cents per barrel is the most we can get the cowardly SD GOP to accept, then so be it. The Keystone pipeline is a big project, and it could cause some big environmental damage. The South Dakotans who have to live with this threat to the land, water, and life itself deserve some guarantee that Big Oil will take responsibility for whatever damage it causes.

Below are the Senators on the State Affairs Committee. Click on each name, then on "Detail" in the upper left corner for each Senator's contact info. Give them a call before tomorrow's hearing, tell them to stick up for South Dakota. Let's consider upping that tax rate to make TransCanada pay its fair share for using our resources for its profit. And let's definitely pass SB 190

Abdallah, Gene (R-10/Sioux Falls)
Dempster, Thomas (R-9/SF)-- Chair
Gray, Bob (R-24/Pierre) -- Vice Chair
Hanson, Gary (D-1/Sisseton)
Heidepriem, Scott (D-13/SF)
Knudson, Dave (R-14/SF)
McCracken, Royal "Mac" (R-34/Rapid City)
Nesselhuf, Ben (D-17/Vermillion)
Olson, Ed (R-20/Mitchell)