GAO: Increase needed in oil spill liability trust fund

Nick Snow
Washington Correspondent

WASHINGTON, DC, Sept. 11 -- Although major oil spills do not occur frequently, the federal oil spill liability trust fund should be increased to cover higher cleanup costs, the US Government Accountability Office said in a Sept. 7 report.

"To date, the fund has been able to cover costs from major spills that responsible parties have not paid, but risks remain," GAO said in a report to leaders of the US Senate Commerce, Science, and Transportation Committee and the House Transportation and Infrastructure Committee.

While the 2006 Coast Guard and Maritime Transportation Act increased liability limits, the new limit for tank barges "remains low relative to the cost of such spills," said GAO. Similarly, the 1990 Oil Pollution Act (OPA) required that liability limits be adjusted above levels set in the law to reflect increases resulting from inflation, but such changes were not made.

Such inaction during 1990-2006 "potentially shifted an estimated $39 million in costs from responsible parties to the fund," GAO maintained.

The US Coast Guard assumed OPA enforcement responsibilities in 2005. GAO recommended that the Coast Guard determine whether and how OPA liability limits should be changed, by vessel type, and submit those findings to Congress. GAO also suggested that the liability limits for vessels be adjusted every 3 years to reflect inflation changes.

Spills since 1990
Since the 1989 Exxon Valdez spill in Prince William Sound off Alaska, which was the impetus for authorizing the fund's usage, no spill has come close to matching its $2.2 billion in cleanup costs, GAO noted. It estimated that 51 spills costing $1 million or more to clean up have occurred since 1990, requiring $240 million in outlays from the fund and $620-840 million in expenditures from responsible parties.

But payments from the fund could have been reduced by $39 million during that period if liability limits had been adjusted to reflect increases in the Department of Labor's consumer price index, it suggested.

GAO's report said the oil spill liability trust fund also faces other challenges. Additional claims can be made for as long as 3 years after spills have been cleaned up; costs and claims may occur on previously sunken vessels that may discharge oil in the future; spills may occur without an identifiable source (and responsible party); and a spill could be so catastrophic that it strains the fund's resources, the congressional watchdog's analysis suggested.

Responding, Steven J. Pecinovsky, director of the GAO's Inspector Liaison Office in the US Department of Homeland Security, of which the Coast Guard is part, said the service addressed liability limits in a January report to Congress and intends to adjust such limits annually to reflect inflation where appropriate. However, this action alone cannot ensure that the fund will remain viable, given expenses and revenues that GAO mentioned but did not address in detail in its report, Pecinovsky continued.

He said the Coast Guard is adjusting certain OPA liability limits to reflect changes in the consumer price index, and service officials are unaware of any decision to leave limits unchanged, as the report implies.

While the Coast Guard is trying to make financial responsibility certificates consistent with current liability limits, the service cannot predict that a proposed rulemaking notice will be published by the end of 2007, Pecinovsky said. "This remains a goal, and Coast Guard and [DHS] officials are working diligently to this end," he said.

Contact Nick Snow at nsnow@cox.net.

Related Articles

Victoria extends drilling, fracing ban

01/30/2015 The new Victorian Labor government of premier Daniel Andrews has extended the coal seam gas (CSG) exploration and hydraulic fracturing ban in the s...

US Senate passes bill approving Keystone XL pipeline project

01/30/2015 The US Senate has passed a bill approving construction of the proposed Keystone XL crude oil pipeline by a 62-36 vote after 3 weeks of debate. Nine...

Pennsylvania governor reinstates state forest drilling moratorium

01/29/2015 Pennsylvania Gov. Tom Wolf (D) signed an executive order fully reinstating a 2010 moratorium on new oil and gas leases in state forests and parks. ...

DOE could meet 45-day LNG export decision deadline, Senate panel told

01/29/2015 The US Department of Energy would have no trouble meeting a 45-day deadline to reach a national interest determination for proposed LNG export faci...

PHMSA outlines community steps to reduce pipeline incident risks

01/27/2015 The US Pipeline and Hazardous Materials Safety Administration released a guide to best practices for communities to reduce risks from pipeline inci...

DOI’s 2017-22 draft proposed OCS program includes Mid-Atlantic sale

01/27/2015 The US Department of the Interior released a draft proposed 2017-22 Outer Continental Shelf management program that included 14 potential oil and g...

OGUK: Push to ban fracing in UK ‘ill-informed’

01/26/2015 The House of Commons Environmental Audit Committee’s proposed amendment to the infrastructure bill that would introduce a moratorium on hydraulic f...

Obama administration proposes making ANWR Coastal Plain wilderness

01/26/2015 The Obama administration said it will propose managing more of the Arctic National Wildlife Refuge, including its Coastal Plain, as wilderness. Ala...

White House orders steps to curb oil and gas methane emissions

01/26/2015 The Obama administration set a new goal to cut methane emissions from the oil and gas sector from 2012 levels by 40-45% by 2025, and a set of actio...
White Papers

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by

The impact of aging infrastructure in process manufacturing industries

Process manufacturing companies in the oil and gas, utilities, chemicals and natural resource industri...
Sponsored by

What is System Level Thermo-Fluid Analysis?

This paper will explain some of the fundamentals of System Level Thermo-Fluid Analysis and demonstrate...
Available Webcasts


Prevention, Detection and Mitigation of pipeline leaks in the modern world

When Thu, Apr 30, 2015

Preventing, detecting and mitigating leaks or commodity releases from pipelines are a top priority for all pipeline companies. This presentation will look at various aspects related to preventing, detecting and mitigating pipeline commodity releases from a generic and conceptual point of view, while at the same time look at the variety of offerings available from Schneider Electric to meet some of the requirements associated with pipeline integrity management. 

register:WEBCAST



On Demand

Global LNG: Adjusting to New Realities

Fri, Mar 20, 2015

Oil & Gas Journal’s March 20, 2015, webcast will look at how global LNG trade will be affected over the next 12-24 months by falling crude oil prices and changing patterns and pressures of demand. Will US LNG production play a role in balancing markets? Or will it add to a growing global oversupply of LNG for markets remote from easier natural gas supply? Will new buyers with marginal credit, smaller requirements, or great need for flexibility begin to look attractive to suppliers? How will high-cost, mega-projects in Australia respond to new construction cost trends?

register:WEBCAST


US Midstream at a Crossroads

Fri, Mar 6, 2015

Oil & Gas Journal’s Mar. 6, 2015, webcast will focus on US midstream companies at an inflection point in their development in response to more than 6 years shale oil and gas production growth. Major infrastructure—gas plants, gathering systems, and takeaway pipelines—have been built. Major fractionation hubs have expanded. Given the radically changed pricing environment since mid-2014, where do processors go from here? What is the fate of large projects caught in mid-development? How to producers and processors cooperate to ensure a sustainable and profitable future? This event will serve to set the discussion table for the annual GPA Convention in San Antonio, Apr. 13-16, 2015.

This event is sponsored by Leidos Engineering.

register:WEBCAST


The Future of US Refining

Fri, Feb 6, 2015

Oil & Gas Journal’s Feb. 6, 2015, webcast will focus on the future of US refining as various forces this year conspire to pull the industry in different directions. Lower oil prices generally reduce feedstock costs, but they have also lowered refiners’ returns, as 2015 begins with refined products priced at lows not seen in years. If lower per-barrel crude prices dampen production of lighter crudes among shale plays, what will happen to refiners’ plans to export more barrels of lighter crudes? And as always, refiners will be affected by government regulations, particularly those that suppress demand, increase costs, or limit access to markets or supply.

register:WEBCAST


Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected