State of Alaska’s oil spill prevention and response funding unsustainable

Council voices support for full funding

Photo of Representatives from the Alaska Department of Environmental Conservation and SERVS observing an oil spill exercise in Prince William Sound.
Representatives from the Alaska Department of Environmental Conservation and SERVS observe an oil spill exercise in Prince William Sound.

The State of Alaska’s Oil and Hazardous Substances Release Prevention and Response Fund is in trouble. Funding for the prevention of spills is projected to be in a deficit by 2025.

Reduced pipeline flow contributes to shortfall

The amount of money going into the accounts ebbs and flows according to how many barrels flow through the pipeline. The amount of oil, which peaked in 1988 at 2.1 million barrels a day, has slowed considerably over the years and is now averaging just over 500,000 barrels a day. The revenues from the .95 cent surcharge on refined fuels were also originally overestimated. These factors, combined with lack of adjustment for inflation, have all resulted in the shortfall.

Response account used for contaminations other than oil and gas

Compounding the revenue problems, money from the response account has recently been used for sites that have been contaminated with per- and poly-fluoroalkyl substances, or PFAS, which is a group of potentially toxic human-made chemicals. It is possible that more funds from this account will be targeted for PFAS testing and remediation in future years. As a result, the fund balance is shrinking and Alaska’s ability to respond adequately to a major oil spill may be at risk.

Currently, crude and refined oil industries are the only contributors to the fund, even though the response account is used for other hazardous substances, such as the previously mentioned PFAS, acid, drilling mud, antifreeze and for remediation of junkyards containing a multitude of hazardous substances.

Effects of reduced funds

The director of the Alaska Department of Environmental Conservation’s Division of Spill Prevention and Response, Denise Koch, spoke with the Council during a recent meeting, voicing concerns about how this shortage could affect the State. She reported that her department is under pressure to reduce its budget, with seven positions eliminated for the upcoming fiscal year. Without an increase in revenue they may lose additional positions in future years.

Council supports stable and adequate funding

During a meeting in January, the Council reaffirmed its position on the 470 Fund, and passed a motion supporting:

  • Revenue adjustments that include an increase in the .95 cent surcharge on refined fuel products.
  • Inflation-proofing the fund.
  • Broadening the tax base to collect revenue from non-oil industries that are served by the fund but do not currently contribute it.

Delays due to coronavirus

There was significant support for making the funding sustainable in both the Senate and House but the legislature recessed early due to coronavirus concerns and did not address the issue. The Council hopes to see a revenue adjustment during either a special session or next year.

How does this spill prevention and response fund work? Where does the money come from?

Commonly referred to as the “470 Fund” after the bill that created the law in 1986, it was meant to ensure adequate funds are on hand for immediate response to major spills, as well as for maintaining an effective prevention program. Designed to be self-sustaining, this fund pays for the State’s efforts to prevent spills of oil and other hazardous substances and the State’s ability to be prepared and respond quickly to spills when they happen.

To accomplish this, a 5-cents-per-barrel tax is paid to the State by the producers of the crude oil that flows through the Trans Alaska Pipeline System. The 470 fund is separated into two accounts: Four of the five cents go into an account for spill prevention, and one cent goes into an account to support response. Additionally, a .95 cent surcharge on refined fuel products is collected for spill prevention. Both accounts collect settlement penalties and interest earnings. Those who spill substances are also required to reimburse the State for those costs.

Council meets with elected officials in DC and Juneau

By STEVE ROTHCHILD
Administrative Deputy Director

Rothchild, Beedle, Sen. Begich, Moore, Swanson. Photo courtesy of Sen. Begich’s office.
From left: Rothchild, Beedle, Sen. Begich, Moore, Swanson.

For two days in March, council board members Dorothy Moore and Robert Beedle, accompanied by staff members Mark Swanson and Steve Rothchild, visited our nation’s capital in an effort to highlight some of the council’s major concerns to Alaska’s congressional delegation and several others.

The trip was facilitated by the council’s Washington based legislative affairs monitor, Roy Jones.

Read moreCouncil meets with elected officials in DC and Juneau

Council representatives head to Washington

By Steve Rothchild, Assistant Deputy Director

Council representatives visited Washington, D.C. in May. Left to right: Mark Swanson, Dorothy Moore, Steve Rothchild, and Patience Andersen Faulkner. Photo by Roy Jones.
Council representatives visited Washington, D.C. in May. Left to right: Mark Swanson, Dorothy Moore, Steve Rothchild, and Patience Andersen Faulkner. Photo by Roy Jones.

For two days in May, council board members Dorothy Moore and Patience Andersen Faulkner, accompanied by staff members Mark Swanson and Steve Rothchild, visited our nation’s capital in an effort to highlight some of the council’s major concerns to the Alaska congressional delegation and several others.

The trip was facilitated by the council’s Washington, D.C. based legislative affairs monitor, Roy Jones.
The purpose of this trip was to continue the general practice of the council of meeting with, briefing, and obtaining guidance from members of the Alaska delegation and others in the federal government on council activities and stakeholder concerns from throughout the Exxon Valdez oil spill region.

The council group met with senior representatives from the U.S. Coast Guard, the Environmental Protection Agency, National Oceanic and Atmospheric Administration, Senate and House committees with jurisdiction relevant to the Prince William Sound oil industry, and the Interagency Coordinating Committee on Oil Pollution Research. The group also met with Alyeska representatives Kim Harb, based in Washington, D.C., and Valdez-based Kate Dugan.

The issues raised were positively received and there were productive discussions on what could be done about them, especially in the new era of federal budget austerity.

Ice detection radar system upgrades

In 2002, the council worked with the U.S. Coast Guard, Alyeska, Prince William Sound tanker operators and other stakeholders to install an ice detection radar system on Reef Island in Prince William Sound to help monitor icebergs in the area. Ice calves from Columbia Glacier and sometimes drifts into the oil tanker lanes, and was a contributing factor in the 1989 Exxon Valdez oil spill. The current Reef Island radar is Coast Guard owned and operated, however the council owns a processor which uses raw Coast Guard radar data to display an ice picture in the Ship Escort Vessel Traffic System’s duty office. The council has been interested in upgrading this processor to newer technology for some time.

Shortly after the group’s return to Alaska, the U.S. Coast Guard approved a request for proposals drafted by the council for purchase and installation of an upgrade to the council’s ice detection signal processor at Reef Island. The council is working with Alyeska and the U.S. Coast Guard to ensure that the new processor will match the technical specifications of the current system and meets approval requirements for installation.

Weather buoy system concerns

The council has become increasingly concerned with the operation and deferred maintenance of several weather monitoring buoys in Prince William Sound. Meteorologists depend on the information from these weather buoys for fine tuning satellite marine forecasts with surface wind and wave information.

Prince William Sound and surrounding coastal waters are known for unique and powerful, localized wind events called “barrier jets” and “williwaws.” These wind events are strong enough to flip smaller boats and to damage or potentially push larger ones, including tankers, onto shore, rocks and reefs. Weather just outside of Prince William Sound can be quite severe causing sea states that can cause harm to tankers and other vessels entering or leaving the Sound.

The primary concern about the weather buoys is that disruptions in service take a long time to repair due to the lack of availability of both ships and personnel to conduct the repairs. Recent examples include a buoy adrift in the middle of the Sound that took six months to replace, and a buoy at Hinchinbrook Entrance which has been operating sporadically since late August of 2012. The council also mentioned their concerns in Prince William Sound are indicative of the overall health of the system throughout Alaska. Currently, only eight of the 20 weather buoys within Alaska are fully operational.

A National Oceanic and Atmospheric Administration, or NOAA, official assigned to the Alaska delegation staff reached out to the council upon our return to Alaska to gather more information about our weather buoy concerns. The council representatives were encouraged by this meaningful dialog following our visit to Washington, D.C. as a great first step in working with NOAA and the delegation towards possible solutions affecting the health of the weather buoy system and the safety of Alaskan maritime transportation in Prince William Sound.

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