The Coast Guard could run out of money for its emergency response to the massive Gulf of Mexico oil spill as soon as next week, the House chairman with jurisdiction over the agency said today.
Transportation and Infrastructure Chairman James Oberstar (D-Minn.) said Coast Guard officials have warned they have nearly exhausted the $100 million provided by an oil spill trust fund to deal with the early response to a major disaster like the one caused by BP PLC's ruptured Macondo well.
The trust fund, created by the Oil Pollution Act of 1990, is funded by an 8-cent tax on each barrel of crude that is refined and is designed to pay for cleanup and economic damages not covered by the responsible parties. Currently, the trust fund has a balance of roughly $1.6 billion.
Under law, the Coast Guard can only draw up to $100 million from the fund to finance emergency response efforts in the immediate aftermath of an accident, Oberstar said. The law also limits the fund payout for a single spill to $1 billion.
BP executives have repeatedly said the company will pay all "legitimate" claims associated with the ongoing spill, even those that exceed current liability caps. But lawmakers are currently considering raising, or even retroactively eliminating, those caps to ensure BP foots the full Gulf bill.
The government can still force BP to reimburse it for the federal response efforts. Last week, the Obama administration told the London-based oil giant that it already owed roughly $70 million and said more bills would follow.
Oberstar stressed that the trust fund as a whole is in no danger of being exhausted, just the $100 million "advance fund," and called for legislative action to raise the cap.
Rep. John Mica (R-Fla.), the ranking member on the Transportation panel, said he was not against the increase but that he did not like that the government was "front-financing BP's responsibility."
"I don't mind raising it," he said. "But I want BP to be paying now."
Rewriting the laws that govern the trust fund -- known as the Oil Spill Liability Trust Fund -- has become a priority in both chambers. The House has already passed legislation that would raise the per-barrel tax from 8 cents to 34 cents and would increase the per-incident cap from $1 billion to $5 billion.