Federal support for oil spill fund will end in 2018

Per-barrel tax is set to expire at month’s end, and no replacement is in sight

Michael Penn | Juneau Empire file After the 42-foot boat Whimsea burned and sank in Don Statter Memorial Harbor in June, the federal Oil Spill Liability Trust Fund paid for cleanup and recovery of the boat. A tax supporting that fund is set to expire at the end of the year.

The nation’s main oil-spill response fund will lose its biggest financial support at the end of the month, according to federal officials and watchdog groups.

 

On Monday, Public Employees for Environmental Responsibility said by email that a 9-cent per-barrel excise tax on all American crude oil will expire at the end of the year. That tax goes into the fund to pay for oil spills from a variety of sources, including pipelines, refineries, oil wells and ships.

Rick Steiner, a retired University of Alaska Anchorage professor and board member of PEER, said by email that the issue was a “spectacularly fumbled ball by Congress.”

According to an email from Bill Grawe, director of the fund’s managing agency, to Steiner, the fund contains approximately $5.7 billion. Staff at the agency, when reached by the Empire on Monday afternoon, confirmed that the tax will lapse at the end of the year and that the fund’s value will start to shrink after the tax lapses.

The trust fund doesn’t just pay for immediate response in the case of an oil spill: It also funds pipeline safety programs, aircraft upgrades for the Coast Guard, and liability claims stemming from spills. In federal fiscal year 2015, the fund paid more than $225 million in major expenses, those greater than or equal to $250,000 each.

Created by Congress in 1986, the fund assumed greater authority after the Exxon Valdez oil spill and the subsequent Oil Pollution Act of 1990. That act imposed a 5-cent per-barrel tax that lasted until 1994 when it expired, just as it is scheduled to do at the end of this year. The 2005 Energy Policy Act (effective in April 2006) revived the tax, and legislation in 2008 increased it to 8 cents per barrel, an amount that rose to 9 cents per barrel this year.

While oil-spill costs are supposed to be repaid by the person who spills oil, federal officials said that doesn’t always happen. Frequently, companies or individuals can’t afford the tens or hundreds of thousands of dollars needed to clean even a minor spill, which means the fund relies on the tax to ensure its long-term health.

Lt. James Nunez of the U.S. Coast Guard’s 17th District, said by phone that the fund is used more frequently to pay for small incidents, like a boat sinking, than large events, like the Deepwater Horizon spill in the Gulf of Mexico.

“Right now, just here in Southeast, it’s been used six times in the calendar year,” he said.

Statewide, it’s been used 19-20 times.

“It does get accessed regularly,” he said.

In Juneau, the fund was used after the 42-foot boat Whimsea burned and sank in June in Don D. Statter Memorial Harbor. In 2015 and 2016, the Coast Guard spent almost $900,000 from the fund to raise and dismantle the 96-foot tugboat Challenger, which sank in Gastineau Channel near the Juneau Yacht Club.

Elsewhere in the past few months, the fund has been used to clean up spilled oil in Baltimore’s harbor, to remove a fishing boat stranded off Hawaii’s Waikiki Beach, and to pay claims from a pipeline break in Michigan’s Kalamazoo River.

Even without the tax, the fund is expected to remain available for spill response. How long it lasts will be determined by how many oil spills take place.

By email, Steiner pointed out that the expiring tax is paid by oil companies, who will now benefit from lower costs and recoup as much as $500 million per year.

 


 

• Contact reporter James Brooks at james.k.brooks@juneauempire.com or call 523-2258.

 


 

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