After the Keystone Pipeline spilled 14,000 barrels of crude oil into Kansas pastures and a creek, Gov. Laura Kelly agrees to reconsider state property tax exemption for pipelines.
“I thought we should have done this a long time ago,” Kelly told Capital-Journal on Tuesday. “Yeah, I think it was a mistake we made. … I think it was a big mistake to provide a property tax exemption.”
The pipeline rupture occurred on December 12. 7 on the 36-inch Keystone pipeline about 3 miles east of Washington. An estimated 588,000 gallons of oil stained the prairie black and spilled into Mill Creek. This is the largest onshore pipeline spill in nine years and bigger than all previous Keystone spills combined.
Cleanup efforts have been slow. The type of crude oil transported by the pipeline is particularly difficult to clean. After two weeks, just over half of the oil has been recovered. the recommended company before the winter storm that weather conditions could further slow the rate of recovery.
Following:As pipeline operator searches for cause of oil spill in Kansas, residents wait for cleanup
Kansas lawmakers could end tax exemption after oil spill
Ending the tax exemption is likely on a short list of what state lawmakers could do in response to the oil spill, as the pipeline falls under federal regulation. Meanwhile, Senator. Mike Thompson, R-Shawnee and the Senate’s top energy policymaker, expressed reluctance to do more than hold hearings.
TC Energy has benefited from millions of dollars in tax exemptions since it opened in 2011 and before. State lawmakers pass a package of tax benefits for various energy projects as part of an effort to woo the Keystone pipeline to Kansas.
Legislative records show that Kelly, then in her second year as a state senator, was one of two senators to vote against the bill with the pipeline tax exemption in 2006.
Kansas Law 79-227 Exempts new oil and gas pipelines from property taxes from the start of construction until 10 years after completion of construction.
While she supports ending the tax holiday, Kelly, who considers herself to have an “all of the above” approach to energy policy, is not opposed to the oil and gas industry as a whole. .
“It was a pleasure to speak at the Kansas Independent Oil & Gas Association conference in Wichita yesterday,” the governor tweeted in August. “This industry unlocks the potential beneath our feet, puts tens of thousands of Kansans to work, and injects hundreds of millions of dollars into our state’s economy.”
In 2006, as TransCanada explored routing a pipeline through Kansas, lawmakers passed the Kansas Energy Development Act to encourage energy projects. The company later said it invested more than $680 million in the Kansas economy with the pipeline.
The Cushing Extension of the Keystone Pipeline connects Steele City, Nebraska, to Cushing, Oklahoma. It stretches approximately 210 miles in Kansas, passing through Washington, Clay, Dickinson, Marion, Butler, and Cowley counties.
Only Kansas state along Keystone Road with this property tax exemption
No other states along the Keystone Highway benefited from such an exemption from property tax. Other layouts in the gut-and-go 21 page invoice created income tax credits and accelerated depreciation. It included refineries, pipelines, coal-fired power plants, ethanol plants, and fertilizer plants.
Legislative staff felt that the provisions of the Pipeline Act would result in $1.7 million in lost revenue for fiscal year 2009, the only year with an estimate. The figure assumed that the Keystone pipeline would qualify.
But in 2012, officials estimated that TransCanada avoided about $19 million in a single year in property taxes. At the time, the Kansas Department of Revenue and local county governments challenged a Tax Appeals Court decision to approve the exemption, citing a legal requirement for Kansas refineries to have access to the pipeline. .
the The Kansas Court of Appeals later upheld the exemptionruling that while the refineries did not have direct access to the Kansas portions of the pipeline, indirect access from existing pipelines connecting the refineries to Oklahoma satisfied the law as legislators did not require otherwise.
While the requirement for direct connection to a “qualifying pipeline” by Kansas refineries would arguably benefit the Kansans more, that is a matter for lawmakers, not the courts. … To find otherwise would require us to rewrite the law, which we have no authority to do,” the court opened.
The legislature didn’t change the law after the ruling — but it was tried.
In 2017, a bill would have repeated the exemption for new projects while leaving existing projects intact. The local authorities supported him. the the bill died in committee after opposition from Kansas Petroleum Council and other oil and gas companies and lobbyists. Similar proposals met the same fate in 2015 and 2016.
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