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Earmarking for Environmental Damage: From Oil Spills to Climate Change

April 2011

Citation: ELR 10334

Author: Janet E. Milne

For a number of years, the U.S. federal tax code has imposed a tax on petroleum that finances the Oil Spill Liability Trust Fund, an earmarked fund to help cover the costs of oil spills. BP’s massive 2010 oil spill in the Gulf of Mexico provided an unprecedented test for the Trust Fund and underscored the question of who pays for the costs of oil spills. The BP spill taught important lessons about the role of the tax and the Trust Fund, and the federal regulatory regime governing the responsible parties’ liability.

Janet E. Milne is Professor of Law and Director of the Environmental Tax Policy Institute at Vermont Law School.

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