A federal fund that pays for oil spill cleanups could end up short of cash if Congress doesn't amend the law, the Government Accountability Office warned today.

The GAO report, the last in a series of three concerning government financial risk in the wake of the April 2010 Deepwater Horizon oil spill, says the federal Oil Spill Liability Trust Fund is likely to lose considerable income if Congress does not renew an 8-cent-per-barrel tax on petroleum products that is due to expire in 2017.

The fund, set up in the wake of the Exxon Valdez disaster and administered by the U.S. Coast Guard, is designed to pay immediate oil spill costs when the responsible party is not able to or refuses to pay promptly. It is used to reimburse federal agencies for the costs they incur in responding to a spill.

Although the fund had a balance of $2 billion in May of this year, federal agencies make considerable use of it.

In fiscal 2011, there were 267 oil spills in which federal agencies took advantage of the fund.

The per barrel tax makes up more than 90 percent of the fund's income, GAO said.

"If the fund's primary source of revenue expires, this could affect future oil spill response and may increase risk to the federal government," the report says.

GAO also suggested that Congress look into amending the current $1 billion cap per incident to allow for reimbursements that federal agencies have received from BP PLC and other responsible parties to be taken into account.

Otherwise, there is a danger that the cap for the Deepwater Horizon incident will be reached. If that happens, the fund could no longer be used to assist agencies.

As of May 2011, the fund had spent $626 million on Deepwater Horizon, the report says.

In a separate finding, GAO concluded that the Coast Guard's accounting of claims was "appropriate and properly documented."

The report also touches upon federal oversight of BP's own $20 billion compensation fund, known as the Gulf Coast Claims Facility (GCCF), which is being supervised by Washington lawyer Kenneth Feinberg.

GAO found that the Justice Department, which is handling that effort, has been "proactive" in encouraging agencies to "establish practices to monitor the cost reimbursement and claims activities of BP and the GCCF."

Feinberg is due to testify about his work when he appears before the House Natural Resources Committee on Thursday morning (E&E Daily, Oct. 24).

Click here to read the report.