Senate bill seeks to boost reserves of dwindling federal oil-spill fund

Sen. Ted Stevens seeks renewal of per-barrel tax as a way to make fund fiscally healthy

Posted: Tuesday, June 14, 2005

FAIRBANKS - A federal oil spill response fund created after the 1989 Exxon Valdez spill will run dry by 2009 unless more money is invested in it, according to the Coast Guard, which administers the fund.

U.S. Sen. Ted Stevens, R-Alaska, is seeking a solution through a bill that would bring back a 5-cents-per-barrel tax that initially paid for the Oil Spill Liability Trust Fund. Established in 1990 by the Oil Pollution Act, the tax expired four years later.

The fund still holds about $842 million. Stevens' bill would maintain a fund balance of between $2 billion and $3 billion.

The fund covers oil removal costs incurred by federal and state agencies, as well as private parties in some cases.

The Oil Pollution Act put a cap on the liability of private parties who spill oil, so long as they were not breaking the law or grossly negligent.

The cap means that the fund may have to cover much of the costs of dealing with recent large spills, including the December grounding of the Selendang Ayu, the soybean freighter that broke in half off the coast of Unalaska, spilling almost 340,000 gallons of fuel oil and diesel.

The Coast Guard said the fund collects some money from fines and interest, but it is losing money much faster than it is earning.

The fund earned about $30 million in fiscal year 2004. Most of the money came from interest and cost recovery from spillers, and about a sixth came from penalties.

At the same time, the fund spent $143 million.

The biggest expense is not the cleaning up of oil spills but feeding the agencies that administer all the regulations that came with the Oil Pollution Act.

Those costs hit $93.2 million in 2004, up from $81.5 million in 2000. Last year, the Coast Guard got $52 million, the Environmental Protection Agency received $16 million and the Department of Transportation took $13 million.

Alaska's Denali Commission received $4.3 million to pay for work on rural fuel tanks. And the Prince William Sound Oil Recovery Institute received about $1 million.

Actual oil removal costs were about $40 million in 2004, about evenly split between the Coast Guard, which handles coastal spills, and the EPA, which handles inland spills.

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