Federal oil spill fund should be increased, report recommends

(WASHINGTON, DC — September 12, 2007) The federal oil spill fund should be increased to cover higher cleanup costs, according to a September report from the United States Government Accountability Office, released Sept. 11.

Since 1990, there have been 51 separate spills that each cost over $1 million to clean up, according to the report. Responsible parties and the federal Oil Spill Liability Trust Fund have spent between $860 million and $1.1 billion in oil spill removal costs and compensation for damages.

Those responsible paid between 72 and 78 percent of the costs; the trust fund paid the remainder. Since removal costs and damage claims can stretch out over several years the costs of those spills could rise.

So far the fund has been able pay for spills that responsible parties have not paid for, but there are still risks. Although the Coast Guard and Maritime Transportation Act of 2006 did increase liability limits, the GAO’s analysis shows that the new limit for tank barges remains low compared to the average cost of cleaning up those spills.

Also, no adjustments in liability limits have been made to account for significant increases in inflation, although the Oil Pollution Act of 1990 required those changes to be made, according to the report. Failing to make those adjustments shifted about $39 million in costs from responsible parties to the fund between 1990 and 2006.

Additional risks to the fund include: additional claims on spills already cleaned up; costs and claims from spills from already sunken vessels; spills that occur without an identifiable source; and a catastrophic spill, such as the Exxon Valdez spill, that could strain the fund’s resources.

The GAO recommends that liability limits for vessels be adjusted every three years to reflect significant changes in inflation. Since 2005, the U.S. Coast Guard has had the authority to make such adjustments. The GAO report also recommends that the Coast Guard determine whether liability limits should be changed, by vessel type, and send specific recommendation to Congress.

By Professional Mariner Staff