Former President George H.W. Bush signed the Oil Pollution Act or OPA into a law in August 1990, as well as the authorization to utilize the Oil Spill Liability Trust Fund or OSLTF. The fund was established in 1986, however, the Congress was unable to pass legislation to allow the utilization of the money or the collection of revenue needed for its maintenance. The authorization was only given after the Exxon Valdez incident.

The Uses of the Fund

• Research and development
• Removal expenses incurred by the Coast Guard and EPA
• Payment of claims for unpaid removal expenses and damages
• Payment to federal, state, and Indian tribe trustees to perform natural resource damage evaluation and restorations
• State availability for the removal activities
• Other particular appropriations

There was a provision that increased the optimum size of the fund to $2.7 billion which is stipulated in the Energy Policy Act of 2005.

Two Main Components of OSLTF

The Emergency Fund can be accessed by the Federal On-Scene Coordinators or FOSCs to address the discharges and for federal trustees to start the evaluation of the natural resource damages. The Emergency fund has a recurring $50 million available to the President every year.

The balance from the Principal Fund is utilized to pay the claims and to finance the appropriations by the Congress to Federal agencies to manage the provisions of OPA and promote research and development.

The OSLTF is supervised by the National Pollution Funds Center.

The main mission of the NPFC is to oversee the disbursement and make sure that the Emergency Fund is properly utilized, 24 hours daily, so that the FOSC will be able to respond immediately to a discharge or check promptly or for effective clean-up activities by the concerned party. The Emergency Fund can be utilized by FOSCs to defray expenses related with mitigating the threat of the oil spill, and the costs of oil spill containment, countermeasures, clean-up, and disposal activities. Since the use of the OSLTF is usually related with the discharges from the ships, it is mostly used for discharges at industrial or on-shore oil storage and production facilities.

The Principal Fund

The Principal Fund of OSLTF comprises of many recurring and non-recurring sources of revenues.

Barrel Tax

The biggest source of revenue was the 5-cent-per-barrel tax which was gathered from the oil industry on petroleum manufactured in or imported to the USA. The tax, however, was suspended in July 1993 since the Fund has been exhausted. The Fund was re-established in July 1994 when the reduced to$1 billion but ended at the end of 1994 due to the sunset provision stipulated in the law. The Energy Policy Act of 2005 re-established the tax effective April 2006.

Another main source of revenue was transfers from other recurring pollution funds. The total transfers to the fund since 1990 was more than $550 million. An existing source of OSLTF revenue is the interest on the Principal Fund from the US.

The Department of the Treasury acts as the OSLTFs investment manager.

Cost Recovery

Other source is the cost recoveries from the responsible parties or RPs.

The Penalties

Aside from paying the clean-up expenses, RPs may incur fines and civil penalties under OPA, the Federal Water Pollution Control Act, the Deepwater Port Act, and the Trans-Alaska Pipeline Authorization Act. The Penalty was deposited to the OSLTF and was generally from$4 million to $7million annually.

The Uses of the Principal Fund

The Principal Fund composes of two kinds of expenses.

Claims

An organization or any individual that incurred removal expenses or suffered damages because of an oil spill may tender a claim.

Appropriations

Many federal organizations obtain yearly appropriation from the OSLTF to defray some administrative, personnel, operational, research and development, and enforcement expenses and costs.