Tar Sands Tax Loophole Elimination Act

This bill would amend federal tax law to clarify that tar sands oil products are subject to the federal excise tax on crude oil. Currently, due to an outdated 2014 regulatory ruling, tar sands oil is exempt from this tax, even though other forms of crude oil must pay it. The excise tax revenues fund the Oil Spill Liability Trust Fund, which covers immediate cleanup costs and damages from oil spills.

Under this bill, tar sands oil companies would be required to pay the same nine-cent-per-barrel excise tax that applies to other crude oil. Supporters argue this closes an unfair loophole where tar sands producers avoid contributing to oil spill cleanup costs while other oil companies must pay. The bill would generate approximately $1.75 billion in revenue for the Oil Spill Liability Trust Fund over ten years. The legislation also gives the Treasury Secretary authority to address other types of crude oil and petroleum products that may similarly avoid the tax.

The bill is currently in the Senate Finance Committee and has not yet advanced. If enacted, it would primarily affect oil companies that produce or import tar sands oil, requiring them to contribute more to the fund that pays for spill response and cleanup.