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Citizens Council calls for increased spill funding

Posted: April 9, 2013 - 12:08am

A lesson from all major oil spills is that once the oil is spilled, the damage is done. In Alaska, damage from the 1989 Exxon Valdez persists today, 24 years later. In the Gulf of Mexico, serious impacts from the 2010 Deepwater Horizon blowout are well documented, and will almost certainly persist for decades as well. Despite the billions of dollars spent on these two response efforts, both failed to prevent severe, long-term impacts.

It is important to admit that spill response and restoration are largely ineffective, so we need to do everything possible to prevent spills from ships, pipelines, and offshore drilling. 

But although we know exactly how to better reduce spill risks, we are continually told that there is not enough money available to do so, particularly with current federal budget problems. The federal government’s Oil Spill Liability Trust Fund (OSLTF), which collects 8 cents/barrel on oil nationwide, is authorized to pay for spill prevention measures, but such requests must first go through a politicized congressional appropriations process. Because of this, the Fund is virtually never used for spill prevention, and almost always just for after-spill response costs - a politically easier lift in Congress. Thus, many necessary prevention measures are either left to be paid from government general funds (e.g. us taxpayers), or are left unfunded altogether. Clearly, this is bad economics, and needs to be fixed. It is high time that industry begins to pay its spill prevention bill in full.

Last month, the Prince William Sound Regional Citizens’ Advisory Council (PWS RCAC) took a big step toward fixing this long-standing problem, by unanimously adopting a resolution proposing to amend the OSLTF and the Oil Pollution Act of 1990 (OPA90), in four ways:

1. Increase the oil fee paid into the Fund;

2. Institute a spill fee on cargo ships, which are covered by the Fund but do not currently pay into it;

3. Make the Fund easily accessible for spill prevention measures nationwide;

4. Increase the OPA 90 financial liability limits for spills.

If the U.S. Congress passes legislation based on the RCAC resolution, it would constitute the most significant increase in oil spill prevention and response preparedness funding in U.S. history, and at no cost to the federal budget.

The expanded OSLTF would support additional safety measures in PWS, Cook Inlet, the Aleutians, and the Arctic, and all the nation’s waterways. It could pay for such safety measures as risk assessments, vessel traffic systems, continuous ship tracking, routing agreements, rescue tugs, escort tugs, weather buoys, enhanced ship inspection, aids-to-navigation, enhanced oversight of offshore drilling facilities and pipelines, additional RCACs, expanded response capabilities, and so on.

To do such, the Fund needs to become easily accessible by the Coast Guard and other federal agencies, coastal states (including Alaska), and local governments without having to go through the congressional appropriations process. The Coast Guard needs discretionary authority to put the Fund to work implementing necessary spill prevention measures.

And while there is presently about $2.7 billion in the Fund, if the RCAC proposal is adopted and the Fund becomes available for enhanced spill prevention measures nationwide, it would be depleted fairly quickly. Thus, it will be necessary to increase the revenue into the Fund by:

1. increasing the current oil fee from 8 cents/barrel to say 20 cents/barrel (only 0.2 percent of current oil price, or ½ cent per gallon of gasoline), and

2. instituting a fee on cargo ships, say 10 cents/ton of cargo shipped through U.S. ports. 

These two enhancements would increase income into the Fund from the current $500 million/year to almost $1.5 billion/year, and again, at no cost to the federal budget. In fact, this additional industry funding would help offset and replace current government spill prevention budgets. This would transfer the current costs of spill risk reduction from government and the taxpayers, directly to the industry posing the risk, something that should resonate with both sides of the political aisle. Reducing the risk of spills, while reducing government costs – a sublime win-win.

The RCAC resolution also proposes that the current OPA 90 financial liability limits be significantly increased, as they do not currently provide sufficient incentive for responsible corporate behavior. Many suggest that spill liability limits be eliminated altogether.

Through this resolution, the PWS RCAC is again providing exemplary leadership in securing the safety of the seas and coasts of Alaska, and the rest of the nation. If Congress and the administration adopt the proposal, then we won’t have to just sit around waiting to mount a multi-billion dollar, ineffective response to the next Exxon Valdez or Deepwater Horizon – we may just be able to prevent such costly disasters in the first place.

Steiner is an environmental consultant based in Anchorage, and works on oil spill issues around the world.

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