The Oil Spill Liability Trust Fund Tax: Background and Reauthorization Issues in the 116th Congress
link to page 1 link to page 1 
April 3, 2019
The Oil Spill Liability Trust Fund Tax:
Background and Reauthorization Issues in the 116th Congress
The Oil Spill Liability Trust Fund (OSLTF) provides an
Under OPA, parties responsible for an oil spill may be
immediate source of funds for federal responses to oil spills
liable for cleanup costs, natural resource damages, and
and compensation for certain damages. The regulatory
specific economic damages, including personal property
procedures of the National Contingency Plan establish a
damage and lost profits or earning capacity. OPA provides
framework for coordinating a federal response with state
(1) limited defenses from liability—act of God, act of war,
and local officials (40 C.F.R. Part 300).
and act or omission of certain third parties—and (2)
conditional liability limits (i.e., caps) for cleanup costs and
Historically, the OSLTF has been financed primarily by a
other eligible damages.
per-barrel excise tax on domestic crude oil and imported
petroleum products. As illustrated in Figure 1, the
The Omnibus Budget Reconciliation Act of 1986
unappropriated balance of the trust fund increased five-fold
established the OSLTF (P.L. 99-509), but the act did not
over the last decade, largely through the accrual of receipts
authorize appropriations for the fund or authorize its use.
from the excise tax, which expired December 31, 2018. The
The 1986 act also included provisions to establish an excise
President’s FY2020 budget request proposed to reinstate
tax to support the fund, but the tax did not take effect at the
the per-barrel tax. As Figure 1 indicates, if the tax were
time, because a condition triggering the effective date of the
reinstated, the FY2020 end-of-year balance would increase
tax authority was not met. Subsequent laws authorized the
by about $500 million.
OSLTF taxing authority, appropriations from the fund, and
eligible uses for the fund. The tax first took effect at 5 cents
Figure 1. OSLTF Year-End Unappropriated Balances
per barrel on January 1, 1990. The tax expired on December
Actual (FY1991-FY2018) and estimated (FY2019-FY2020)
31, 1994, and was not in effect until Congress reinstated the
tax in 2006 through the Energy Policy Act of 2005 (P.L.
109-58). The Emergency Economic Stabilization Act of
2008 (P.L. 110-343) increased the tax rate to 8 cents per
barrel through December 31, 2016, and to 9 cents per barrel
starting in 2017. The rate was 9 cents per barrel when it
expired in 2018.
The OSLTF is subject to both permanent and discretionary
appropriations. Discretionary appropriations from the
OSLTF have provided funding to several agencies for oil-
spill-related activities. The permanent appropriations are
limited to a maximum of $150 million annually. Permanent
appropriations provide an immediate funding source to pay
for eligible activities, including federal response actions,
eligible claims submitted by affected parties, and natural
resource damages. The U.S. Coast Guard administers the
Source: Prepared by CRS; data from Office of Management and
OSLTF through its National Pollution Funds Center.
Budget, annual Budget of the United States Government, Appendices.
OSLTF Background and Overview
OPA authorizes the federal government to recover costs,
including response costs and damage claims, made from the
The 1989 Exxon Valdez oil spill led to questions in
OSLTF through the enforcement of liability against
Congress regarding oil spill policy issues, including oil spill
responsible parties. Recovered funds are to be deposited
response, liability, and compensation. The Oil Pollution Act
back into the trust fund.
of 1990 (OPA, P.L. 101-380) established a new federal oil
spill liability framework, replaced existing federal liability
The responsible parties may also perform and pay for
frameworks, and amended the Clean Water Act oil spill
response actions with their own monies, subject to direction
response authorities. In addition, OPA transferred monies
from the federal government’s on-scene coordinator. If a
into the OSLTF from existing liability funds: the Clean
responsible party’s payments were to exceed its OPA
Water Act revolving fund (repealed), the Deepwater Port
liability limit, the party may seek reimbursement from the
Liability Fund, the Trans-Alaska Pipeline Liability Fund,
OSLTF for the difference.
and the Offshore Oil Pollution Compensation Fund.
Since its inception, there has been a statutory limitation on
expenditures from the fund that could be used for any
https://crsreports.congress.gov
link to page 2 link to page 2 link to page 1
The Oil Spill Liability Trust Fund Tax:
Background and Reauthorization Issues in the 116th Congress
individual incident. Congress set this limit so that any one
receipts from fines and penalties, cost recoveries, and
individual spill would not deplete the fund. OPA set the
interest. The recent trends for some of these receipts may
per-incident cap at $1 billion. Within this $1 billion limit,
not continue in the future. In particular, the fine and penalty
natural resource damage awards cannot exceed $500
receipts were significantly greater ($2.1 billion) in the eight
million.
years after the 2010 Deepwater Horizon spill than the fine
and penalty receipts collected in the eight years before the
Although the OSLTF per-incident cap has not been
spill ($137 million). Fines and penalties from that spill are
breached to date, some oil spills in recent years have
scheduled to provide additional revenue through 2031.
resulted in costs paid by responsible parties that exceeded
Pursuant to a Clean Water Act civil penalty settlement
$1 billion. For example, payments from BP and other
between the federal government and BP involving the
responsible parties associated with the 2010 Deepwater
Deepwater Horizon spill, the fund is scheduled to receive
Horizon spill exceeded $65 billion. After the incident, some
annual receipts of $76 million through 2031.
Members of Congress proposed legislation to increase or
remove the per-incident cap, but these bills were not
Reauthorization Issues for Congress
enacted.
The recent expiration of the per-barrel excise tax presents a
range of policy issues for Congress regarding financing the
OSLTF Balance, Receipts, and Spending
OSLTF. The sufficiency of the remaining balance of the
Figure 2 presents excise tax receipts, other fund receipts
trust fund would depend on the number, magnitude, and
(described below), and the fund appropriations between
impacts of future spills and the financial viability of the
FY2007 and FY2018 with Office of Management and
responsible parties, who would remain liable for response
Budget estimates for FY2019 and FY2020. This figure
costs and damages with or without the tax. Some receipts
starts with FY2007, the year the tax was reinstated pursuant
would likely continue to accrue to the OSLTF—such as
to P.L. 105-98. Appropriations presented in Figure 2
fines and penalties, cost recoveries, and interest—but their
illustrate the combined total of permanent and discretionary
amounts are uncertain. For instance, if future appropriations
appropriations from the fund.
from the trust fund were to exceed total receipts, the interest
earnings could decrease over time.
Figure 2. OSLTF Fund Receipts and Appropriations
Actual (FY2007-FY2018) and estimated (FY2019-FY2020)
Reauthorizing the excise tax is one option to provide a
source of dedicated receipts to finance the OSLTF. Several
Members have introduced legislation in the 116th Congress
that would reinstate the tax. S. 617 (Grassley) would,
among other provisions, reinstate the tax through December
31, 2019. S. 865 (Sullivan) would, among other provisions,
reinstate the tax indefinitely, but the tax would terminate if
the fund’s unobligated balance rose above $7 billion and
restart if the balance decreased to $5 million or less. This
proposal would also amend the tax code to include oil-
sands-derived crude oil within the scope of the per-barrel
tax.
Another option could be to transfer monies from the
General Fund of the U.S. Treasury to the OSLTF as needed,
Source: Prepared by CRS; data from Office of Management and
similar to the Superfund Trust Fund for responding to
Budget, annual Budget of the United States Government, Appendices.
releases of hazardous substances. The Stafford Act (42
U.S.C. 5121 et seq.) may also provide another potential
Between FY2007 and FY2018 (the most recent year of non-
source of federal funds if the President were to declare an
estimated data), appropriations from the fund totaled $3.37
oil spill a major disaster or emergency under that statute.
billion. Total excise tax receipts were $5.67 billion. Other
However, such a presidential declaration has not been made
receipts totaled $3.77 billion, including:
solely for a human-caused oil spill to date.
$2.13 billion from fines and penalties,
For additional information, see CRS Report RL33705, Oil
Spills: Background and Governance, by Jonathan L.
$1.28 billion from cost recoveries, and
Ramseur; CRS Report R43128, Oil Sands and the Oil Spill
Liability Trust Fund: The Definition of “Oil” and Related
$362 million from interest on investments in U.S.
Issues for Congress, by Jonathan L. Ramseur; and CRS
Treasury securities.
Report R43251, Oil and Chemical Spills: Federal
Emergency Response Framework, by David M. Bearden
Over this time period, the fund’s annual balance increased
and Jonathan L. Ramseur.
steadily (Figure 1). The fund’s annual balance increases
generally matched the annual excise tax receipts. The tax
Jonathan L. Ramseur, Specialist in Environmental Policy
expired on December 31, 2018. If the tax were not
reinstated, future fund balances would depend on the
IF11160
difference between fund expenditures and continued
https://crsreports.congress.gov
The Oil Spill Liability Trust Fund Tax:
Background and Reauthorization Issues in the 116th Congress
Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress.
Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has
been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the
United States Government, are not subject to copyright protection in the United States. Any CRS Report may be
reproduced and distributed in its entirety without permission from CRS. However, as a CRS Report may include
copyrighted images or material from a third party, you may need to obtain the permission of the copyright holder if you
wish to copy or otherwise use copyrighted material.
https://crsreports.congress.gov | IF11160 · VERSION 1 · NEW
April 3, 2019
The Oil Spill Liability Trust Fund Tax:
Background and Reauthorization Issues in the 116th Congress
The Oil Spill Liability Trust Fund (OSLTF) provides an
Under OPA, parties responsible for an oil spill may be
immediate source of funds for federal responses to oil spills
liable for cleanup costs, natural resource damages, and
and compensation for certain damages. The regulatory
specific economic damages, including personal property
procedures of the National Contingency Plan establish a
damage and lost profits or earning capacity. OPA provides
framework for coordinating a federal response with state
(1) limited defenses from liability—act of God, act of war,
and local officials (40 C.F.R. Part 300).
and act or omission of certain third parties—and (2)
conditional liability limits (i.e., caps) for cleanup costs and
Historically, the OSLTF has been financed primarily by a
other eligible damages.
per-barrel excise tax on domestic crude oil and imported
petroleum products. As illustrated in Figure 1, the
The Omnibus Budget Reconciliation Act of 1986
unappropriated balance of the trust fund increased five-fold
established the OSLTF (P.L. 99-509), but the act did not
over the last decade, largely through the accrual of receipts
authorize appropriations for the fund or authorize its use.
from the excise tax, which expired December 31, 2018. The
The 1986 act also included provisions to establish an excise
President’s FY2020 budget request proposed to reinstate
tax to support the fund, but the tax did not take effect at the
the per-barrel tax. As Figure 1 indicates, if the tax were
time, because a condition triggering the effective date of the
reinstated, the FY2020 end-of-year balance would increase
tax authority was not met. Subsequent laws authorized the
by about $500 million.
OSLTF taxing authority, appropriations from the fund, and
eligible uses for the fund. The tax first took effect at 5 cents
Figure 1. OSLTF Year-End Unappropriated Balances
per barrel on January 1, 1990. The tax expired on December
Actual (FY1991-FY2018) and estimated (FY2019-FY2020)
31, 1994, and was not in effect until Congress reinstated the
tax in 2006 through the Energy Policy Act of 2005 (P.L.
109-58). The Emergency Economic Stabilization Act of
2008 (P.L. 110-343) increased the tax rate to 8 cents per
barrel through December 31, 2016, and to 9 cents per barrel
starting in 2017. The rate was 9 cents per barrel when it
expired in 2018.
The OSLTF is subject to both permanent and discretionary
appropriations. Discretionary appropriations from the
OSLTF have provided funding to several agencies for oil-
spill-related activities. The permanent appropriations are
limited to a maximum of $150 million annually. Permanent
appropriations provide an immediate funding source to pay
for eligible activities, including federal response actions,
eligible claims submitted by affected parties, and natural
resource damages. The U.S. Coast Guard administers the
Source: Prepared by CRS; data from Office of Management and
OSLTF through its National Pollution Funds Center.
Budget, annual Budget of the United States Government, Appendices.
OSLTF Background and Overview
OPA authorizes the federal government to recover costs,
including response costs and damage claims, made from the
The 1989 Exxon Valdez oil spill led to questions in
OSLTF through the enforcement of liability against
Congress regarding oil spill policy issues, including oil spill
responsible parties. Recovered funds are to be deposited
response, liability, and compensation. The Oil Pollution Act
back into the trust fund.
of 1990 (OPA, P.L. 101-380) established a new federal oil
spill liability framework, replaced existing federal liability
The responsible parties may also perform and pay for
frameworks, and amended the Clean Water Act oil spill
response actions with their own monies, subject to direction
response authorities. In addition, OPA transferred monies
from the federal government’s on-scene coordinator. If a
into the OSLTF from existing liability funds: the Clean
responsible party’s payments were to exceed its OPA
Water Act revolving fund (repealed), the Deepwater Port
liability limit, the party may seek reimbursement from the
Liability Fund, the Trans-Alaska Pipeline Liability Fund,
OSLTF for the difference.
and the Offshore Oil Pollution Compensation Fund.
Since its inception, there has been a statutory limitation on
expenditures from the fund that could be used for any
https://crsreports.congress.gov
link to page 2 link to page 2 link to page 1
The Oil Spill Liability Trust Fund Tax:
Background and Reauthorization Issues in the 116th Congress
individual incident. Congress set this limit so that any one
receipts from fines and penalties, cost recoveries, and
individual spill would not deplete the fund. OPA set the
interest. The recent trends for some of these receipts may
per-incident cap at $1 billion. Within this $1 billion limit,
not continue in the future. In particular, the fine and penalty
natural resource damage awards cannot exceed $500
receipts were significantly greater ($2.1 billion) in the eight
million.
years after the 2010 Deepwater Horizon spill than the fine
and penalty receipts collected in the eight years before the
Although the OSLTF per-incident cap has not been
spill ($137 million). Fines and penalties from that spill are
breached to date, some oil spills in recent years have
scheduled to provide additional revenue through 2031.
resulted in costs paid by responsible parties that exceeded
Pursuant to a Clean Water Act civil penalty settlement
$1 billion. For example, payments from BP and other
between the federal government and BP involving the
responsible parties associated with the 2010 Deepwater
Deepwater Horizon spill, the fund is scheduled to receive
Horizon spill exceeded $65 billion. After the incident, some
annual receipts of $76 million through 2031.
Members of Congress proposed legislation to increase or
remove the per-incident cap, but these bills were not
Reauthorization Issues for Congress
enacted.
The recent expiration of the per-barrel excise tax presents a
range of policy issues for Congress regarding financing the
OSLTF Balance, Receipts, and Spending
OSLTF. The sufficiency of the remaining balance of the
Figure 2 presents excise tax receipts, other fund receipts
trust fund would depend on the number, magnitude, and
(described below), and the fund appropriations between
impacts of future spills and the financial viability of the
FY2007 and FY2018 with Office of Management and
responsible parties, who would remain liable for response
Budget estimates for FY2019 and FY2020. This figure
costs and damages with or without the tax. Some receipts
starts with FY2007, the year the tax was reinstated pursuant
would likely continue to accrue to the OSLTF—such as
to P.L. 105-98. Appropriations presented in Figure 2
fines and penalties, cost recoveries, and interest—but their
illustrate the combined total of permanent and discretionary
amounts are uncertain. For instance, if future appropriations
appropriations from the fund.
from the trust fund were to exceed total receipts, the interest
earnings could decrease over time.
Figure 2. OSLTF Fund Receipts and Appropriations
Actual (FY2007-FY2018) and estimated (FY2019-FY2020)
Reauthorizing the excise tax is one option to provide a
source of dedicated receipts to finance the OSLTF. Several
Members have introduced legislation in the 116th Congress
that would reinstate the tax. S. 617 (Grassley) would,
among other provisions, reinstate the tax through December
31, 2019. S. 865 (Sullivan) would, among other provisions,
reinstate the tax indefinitely, but the tax would terminate if
the fund’s unobligated balance rose above $7 billion and
restart if the balance decreased to $5 million or less. This
proposal would also amend the tax code to include oil-
sands-derived crude oil within the scope of the per-barrel
tax.
Another option could be to transfer monies from the
General Fund of the U.S. Treasury to the OSLTF as needed,
Source: Prepared by CRS; data from Office of Management and
similar to the Superfund Trust Fund for responding to
Budget, annual Budget of the United States Government, Appendices.
releases of hazardous substances. The Stafford Act (42
U.S.C. 5121 et seq.) may also provide another potential
Between FY2007 and FY2018 (the most recent year of non-
source of federal funds if the President were to declare an
estimated data), appropriations from the fund totaled $3.37
oil spill a major disaster or emergency under that statute.
billion. Total excise tax receipts were $5.67 billion. Other
However, such a presidential declaration has not been made
receipts totaled $3.77 billion, including:
solely for a human-caused oil spill to date.
$2.13 billion from fines and penalties,
For additional information, see CRS Report RL33705, Oil
Spills: Background and Governance, by Jonathan L.
$1.28 billion from cost recoveries, and
Ramseur; CRS Report R43128, Oil Sands and the Oil Spill
Liability Trust Fund: The Definition of “Oil” and Related
$362 million from interest on investments in U.S.
Issues for Congress, by Jonathan L. Ramseur; and CRS
Treasury securities.
Report R43251, Oil and Chemical Spills: Federal
Emergency Response Framework, by David M. Bearden
Over this time period, the fund’s annual balance increased
and Jonathan L. Ramseur.
steadily (Figure 1). The fund’s annual balance increases
generally matched the annual excise tax receipts. The tax
Jonathan L. Ramseur, Specialist in Environmental Policy
expired on December 31, 2018. If the tax were not
reinstated, future fund balances would depend on the
IF11160
difference between fund expenditures and continued
https://crsreports.congress.gov
The Oil Spill Liability Trust Fund Tax:
Background and Reauthorization Issues in the 116th Congress
Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress.
Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has
been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the
United States Government, are not subject to copyright protection in the United States. Any CRS Report may be
reproduced and distributed in its entirety without permission from CRS. However, as a CRS Report may include
copyrighted images or material from a third party, you may need to obtain the permission of the copyright holder if you
wish to copy or otherwise use copyrighted material.
https://crsreports.congress.gov | IF11160 · VERSION 1 · NEW