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Sens. Murkowski and Begich Introduce Legislation to Raise Oil Spill Liability Fund to $10 billion


WASHINGTON, D.C. – U.S. Sens. Lisa Murkowski and Mark Begich have introduced legislation to expand the federal Oil Spill Liability Trust Fund (OSLTF) to $10 billion by raising the fee the oil industry pays on each barrel.

The bill (S.3309) also removes the “sunset” provisions in the law so the fund will always be accessible to those impacted by oil spills. Nothing in the bill would limit the liability of oil companies or other responsible parties.

“The liability fund provides a critical, industry-funded source of compensation that’s immediately available to address spill-related impacts,” said Sen. Murkowski, R-Alaska. “It’s now clear that we need to increase the overall size of the fund to ensure that it’s available in the unlikely event that there’s more than one accident at a time.”

“There’s no question we need more resources for oil spill research and prevention. This bill is a solid first step toward that goal,” said Sen. Begich, D-Alaska. “I’ll be working with Sen. Murkowski and other members of Congress to beef up efforts to deal with oil spills. Alaska has historically led the nation in developing new technologies that allow us to develop oil and gas responsibly, so we need build on that expertise.” 

Sen. Murkowski expects additional and similar measures will be introduced by Gulf of Mexico senators in the coming days. Her amendment builds on her previous efforts to ensure the nation has an adequate response fund to address major oil spills.

In 2005, Sen. Murkowski sponsored an amendment to the liability fund that increased the industry per-barrel fee 60 percent. Her new amendment make sure the fund would not be depleted by a single catastrophic spill.

“While this won’t resolve all of the potential issues arising from the Deepwater Horizon accident, it’s one of several steps the Senate should take to see that we’re prepared to respond adequately in the unlikely event of future spills,” Sen. Murkowski said.

The bill would:

· Raise the industry-funded liability reserve amount to $10 billion

· Raise the per barrel fee from 8 cents per barrel to 9 cents per barrel immediately. This 12.5 percent increase in the per-barrel fee is estimated to raise up to $612 million annually.

· Remove the sunset provision from the law so that the liability fund will automatically restore itself in the event of future spills

The Oil Spill Liability Trust Fund currently contains about $1.6 billion and is set to expire in 2017. The fund was established by Congress in 1986, but not activated until after the 1989 Exxon Valdez oil spill. In 2005, Sen. Murkowski sponsored an amendment raising the fee from 5 cents to 8 cents a barrel.

FACT SHEET – Oil Spill Liability Trust Fund

  • The Oil Spill Liability Trust Fund was established in 1986 and activated in 1989. Originally a 5-cents per barrel tax, with a 1994 sunset. Reactivated in EPACT 2005, and subsequently increased to 8-cents a barrel in the Emergency Economic Stabilization Act of 2008. Currently set to increase to 9-cents per barrel in 2017, and then sunset at the end of that year.

  • The fund is administered by the U.S. Coast Guard and designated to pay for response costs and damages in cases where the responsible party hasn’t paid. Payment from the fund does not shield the responsible party from financial responsibility for fund reimbursement or additional claims or lawsuits under state law.

  • Currently $1.6 billion in fund, with $1 billion per incident cap on payout. Government has flexibility in defining multiple incidents occurring from an original accident.

  • By the time the fund is scheduled to sunset, it should be worth approximately $3.5 billion. Because it will have to pay for substantial cleanup and economic losses related to the Deepwater Horizon accident, it’s unclear how much the fund will be depleted.

  • The parties responsible for the spill are required by law to notify the public on how to claim compensation. Claims must be responded to within 90 days. If a claim is denied by the responsible party, the claimant can petition the Oil Spill Liability Trust Fund for payment. As stated above, payment from the fund does not shield the responsible party from financial responsibility or additional claims or lawsuits under state law.

  • Cleanup and removal costs to the responsible party are expressly unlimited by federal statute, as are all compensatory and punitive damages under relevant state law.

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