IRS loophole shields tar sands

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WASHINGTON, Aug. 1 (UPI) -- The U.S. Internal Revenue Service needs to close a loophole that exempts importers of tar sands oils from paying into an oil spill fund, a lawmaker said.

U.S. Rep. Ed Markey, D-Mass., ranking member of the House Natural Resources Committee, said the tax loophole gives a free ride to companies transporting oil like that seen from the rich plays in Canada's province of Alberta.

"Tar sands is already the dirtiest, riskiest oil around," Markey said in a statement. "It shouldn't get a free ride from the U.S. taxpayer when it comes to paying into this vital spill response fund."

The IRS based a 2011 memo on the Hazardous Waste Containment Act of 1980. That act classifies tar sands oil differently from conventional crude oil. The IRS decision protects certain companies from paying into an oil spill liability trust fund. The loophole, says Markey, will put the fund into the red.

Pipeline company Enbridge plans to replace hundreds of miles of Line 6B in Michigan under a $268 million plan that would upgrade the pipeline's safety features and increase its volume to 500,000 barrels of oil per day.

A 2010 release from Line 6B, which carried tar sands oil, was the costliest onshore spill in U.S. history. Around 20,000 barrels of oil spilled into southern Michigan waters during the release.