Division seeks funds for spill-prevention account

Published on NewsOK Modified: February 13, 2014 at 8:06 pm •  Published: February 13, 2014

JUNEAU, Alaska (AP) — An account used for the cleanup of contaminated sites, non-emergency spill response and other activities soon will not have enough money to keep up with costs, the director of the state's Division of Spill Prevention and Response told lawmakers Thursday.

Kristin Ryan told a House subcommittee the shortfall in the prevention account is projected to happen in fiscal year 2016, and the account will likely need an appropriation from the general fund.

The account gets its money from a four-cent surcharge on each barrel of oil. But the surcharge hasn't been increased to keep pace with inflation, Ryan said, and declining oil production means less money generated by the fee.

In 2010, the surcharge generated $8.9 million. It's estimated the surcharge will produce $7 million this year. Money from fines, penalties and settlements also go into the fund, which helps pay for inspections, readiness activities and other costs.

The account will likely need anywhere from $6.6 million in 2016 to $8.3 million in 2022 from the general fund. If the surcharge were raised to nine cents a barrel, it would largely sustain the account through 2020, assuming a 1.5 percent annual growth in expenses, though the account would still need money from the general fund, Ryan said.

The Legislature last year passed a cut in oil-production taxes in the hope it would lead to more production. In a recent report, the Department of Environmental Conservation, under which the Division of Spill Prevention and Response falls, said oil production would have to top 1 million barrels a day for the current surcharge to generate enough money to cover the division's costs. For the year so far, oil flowing through the trans-Alaska pipeline is averaging just over 560,000 barrels per day.

The account evolved from a response fund created by the Legislature in the wake of the Exxon Valdez oil spill in 1989.

A five-cent-per-barrel surcharge on production was levied for prevention, preparedness and response programs after the disaster, according to the department. That was changed in 1994, with the creation of separate response and prevention accounts, and the five-cent surcharge divided so three-cents a barrel went to the prevention account and the rest toward building and maintaining a $50-million response account for emergencies and major events.

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