US law says no ‘oil’ spilled in Arkansas, exempting Exxon from cleanup dues
April 3, 2013

The central Arkansas spill caused by Exxon’s aging Pegasus pipeline has reportedly unleashed 10,000 barrels of Canadian heavy crude - but a technicality says it’s not oil, letting the energy giant off the hook from paying into a national cleanup fund.

At least legally speaking, diluted bitumen like the heavy crude that’s overrun Mayflower, Arkansas is not classified as ‘oil.’ While the distinction might normally not mean much, in the case of the disastrous spill in Arkansas it ensures that ExxonMobil will not have to pay into the federal Oil Spill Liability Trust Fund.

According to ThinkProgress, which has brought attention on the strange legal exemption, ExxonMobil has already confirmed that the compromised pipeline was transporting “low-quality Wabasca Heavy crude” from Canada’s Alberta region. That particular form of crude must be diluted with lighter fluids to evenly flow through a pipeline - it also contains large quantities of bitumen (commonly known as asphalt).

The end result is that both the US Congress and the Internal Revenue Service do not consider tar sand oil as oil at all, and thus exempt any company transporting the crude from paying an $0.08-per-barrel tax - which is the primary source of cash for the federal government’s oil spill cleanup fund.

The strange exemption of heavy bitumen crude from classification as oil dates back to a time when the extraction of tar sands on a large scale was thought improbable with then-contemporary technology. However, as oil companies developed the means to develop Canadian tar sands into a booming energy sector, the legal definition of oil has remained the same.

Funds from that same fund have already helped to clean up another spill caused by a ruptured pipeline. In 2010, more than 1 million barrels of diluted bitumen (crude oil) were spilled into the Kalamazoo River. To make matters worse, unlike conventional crude oil, bitumen heavy crude sinks. The ensuing environmental impact has made that Michigan spill the most expensive in US history, as toxic substances seeped into the surrounding soil.

There is also the fear that bitumen heavy crude could be more corrosive to pipelines than conventional crude. Lorne Stockman, research director at Oil Change International, told ThinkProgress that it’s past time for the law to be changed:

"The question is why we should continue this exemption given that it’s clear tar sands oil is more likely to spill because it’s more corrosive… and more and more tar sands is coming into the US.”

For its part the oil industry disputes the claim, and has produced scientific impact research that does not reflect higher corrosion by transporting bitumen heavy crude.

Judge Allen Dodson of Arkansas’ Faulkner County seemed to reflect the concerns of those impacted by the latest spill of heavy bitumen crude, saying: “Crude oil is crude oil. None of it is real good to touch.”

Photo 12

As the Obama administration deliberates on the Keystone XL, two spills happened in the past week: this one in Arkansas & another in Minnesota, where 15,000 gallons of tar sands spilled from a derailed train. 

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    US law says no ‘oil’ spilled in Arkansas, exempting Exxon from cleanup dues April 3, 2013 The central Arkansas spill...
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