January 9, 2018

Tax to fund oil spill clean-up expires (updated)

The Coast Guard administers the Oil Spill Liability Trust Fund (via Wikimedia Commons, by Mike Baird).
The Coast Guard administers the Oil Spill Liability Trust Fund (via Wikimedia Commons, by Mike Baird).

Fluid Handling International reported at the end of last year that the tax suppling the Coast Guard-administered fund was about to expire. It has now expired and is accompanied by a broad liberalisation of drilling regulations. 

Oil Spill Liability Trust Fund was maintained with a $0.09 per-barrel tax, but this has now expired. The balance of the fund is estimated to be at $5.7 billion, with at least $225 million spent in disbursements over $250,000 alone.

Meanwhile, the Trump administration has proposed expanding the scope of domestic drilling and scaling-back safety regulations.

Last year, President Trump’s 28 April executive order directed that “It shall be the policy of the United States to encourage energy exploration and production, including on the Outer Continental Shelf,” citing leadership in global energy production and energy security as the rationale. This statement added that the government should ensure that “such activity is safe and environmentally responsible”.

The executive order has been followed by The Department of the Interior’s (DoI) Bureau of Safety and Environmental Enforcement introducing a proposed rule that would release oil companies from their obligation to get critical safety and anti-pollution measures vetted by an independent third party. The rule is currently open to comments from the public, which ends at the end of January.

4 January this year the Department of the Interior (DoI) published a report outlining a five-year lease programme for drilling operations on the outer continental shelf.

However, the Los Angeles Times has pointed to problems with the President’s proposals: uncertainty about oil prices discouraging additional drilling, states’ ability to obstruct possible leasing for offshore operations, and widespread local opposition to new oil operations being a few.

The plan has also met resistance on the east coast. After proposing the plan for expanded OCS drilling, Secretary for the Interior, Ryan Zinke said that oil operations would not be expanding in Florida, after opposition from Republican Governor, Rick Scott.

Commenting on a meeting with the Governor, Zinke said: “I support the governor’s position that Florida is unique and its coasts are heavily reliant on tourism as an economic driver.”

Speaking to the Associated Press, Democratic Senator for Florida, Bill Nelson doubted the sincerity of the meeting, calling it “a political stunt”, adding that “We shouldn’t be playing politics with the future of Florida.”

Still, environmentalists have condemned the administration’s position. Athan Manuel, Director of the Sierra Club’s lands protection programme said: “By gutting spill response funds at the same time the Trump administration is attempting to dramatically expand offshore drilling off America’s coasts and weakening safety regulations, Congressional Republicans are creating a catastrophe waiting to happen along our coasts”.

In a 4 January press release, the American Petroleum Institute (API) applauded the government’s position. “This new offshore leasing plan is an important step towards harnessing our nation’s energy potential for the benefit of American energy consumers,” said API Upstream Director Erik Milito in a statement. “The ability to safely and responsibly access and explore our resources in the Arctic, Atlantic, Pacific and the Eastern Gulf of Mexico is a critical part of advancing the long-term energy security of the US”

Updated 10:45, 10/01/2018: original story incorrectly stated that the National Outer Continental Shelf Oil and Gas Leasing Program was released by the DoI 6 January, it was corrected to 4 January. Florida’s removal from the expanded OCS drilling plan was also added.

The Coast Guard administers the Oil Spill Liability Trust Fund (via Wikimedia Commons, by Mike Baird).






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