Response Fund Administration - History of the Fund
The Oil and Hazardous Substance Release Prevention and Response Fund was created by the legislature in 1986 to provide a readily available funding source to investigate, contain, clean up and take other necessary action to protect public health and welfare and the environment from the releases or threatened release of oil or a hazardous substance. Alaska Statute 46.08.030 states: " It is the intent of the legislature and declared to be the public policy of the state that the funds for the abatement of a release of oil or hazardous substance will always be available." (SLA 1986 Sec.1 Ch. 59)
Statutes governing the Response Fund were amended in 1989, 1990,1991, 1994, 1999, and 2006. Generally, these amendments added more purposes for which the Response Fund could be used and increased the Department of Environmental Conservation's reporting requirements. The 1994 amendment made major changes to the Response Fund structure by dividing it into two separate accounts: the "Response account" and the "Prevention account". Click on here to see the illustration of the current Response Fund structure. The 1999 amendment changed the requirement for an annual fund status report to the legislature to a biennial status report. The 2006 amendment changed the surcharge levied on crude oil produced in the state. HB3001C amended Sec. 28 of AS 43.55.300 and imposed a prevention account surcharge of $.04 (formerly $.03) per barrel of oil produced from each lease or property in the state, less any oil the ownership or right to which is exempt from taxation. Sec. 26 of AS 43.55.201 was also amended to change the response account surcharge of $.02 to a $.01 per barrel of oil produced from each lease or property in the state.
The Response account may be used to finance the state's response to an oil or hazardous substance release that is declared a disaster by the governor, or to respond to a release or threatened release that poses an imminent and substantial threat to the public health or welfare, or to the environment. If the Response account is accessed for any incident other than a declared disaster, within 120 hours the Commissioner of DEC must provide the Governor and the Legislative Budget and Audit Committee with a written report summarizing the release, the State's actions and associated costs, both taken and anticipated, and any other information deemed appropriate.
The Response Account receives funding from two different sources: 1) a surcharge of two cents per barrel that is levied on each taxable barrel of oil produced in the state, which is deposited to the response surcharge account until March 31, 2006. Effective April 1, 2006, House Bill 3001C changed the surcharge tax of two cents to a one cent per barrel; and 2) money that is recovered from parties financially responsible for the release of oil or hazardous substance which is deposited in the response mitigation account. The one cent per barrel surcharge is suspended when the combined balances of the surcharge account, the response mitigation account and the unreserved and unobligated balance in the Response Account itself reaches or exceeds $50 million. As of June 30, 2007, the combined balance of the surcharge account, the response mitigation account and the unreserved and unobligated balance of theResponse account is $43.2 million and the surcharge remained on.
The Prevention account may be used to investigate, evaluate, clean up, and take other necessary action to address oil and hazardous substance releases tha thave not been declared a disaster by the Governor, or do not pose an imminent and substantial threat to the public health or welfare or the environment. The prevention Account may also be used to fund Alaska's oil and hazardous susbstance release prevention programs, and to fund activities related to cost recovery.l
The Prevention Account receives funding from three sources: 1) a surcharge of four cents per barrel that is levied on each taxable barrel of oil produced in the state which is deposited in the prevention surcharge account; 2) fines, settlements, penalties, and cost recovered from parties financially responsible for the release of oil or a hazardous substance deposited into the prevention mitigation account; and 3) interest earned on the balance of each of the following accounts deposited into the general fund and credited to the Prevention Account: (a) the prevention account; (b) the prevention mitigation account; (c) the response account; and (d) the response mitigation account.
The legislature appropriates money from the prevention surcharge and prevention mitigation accounts into the Prevention Account to support the State's oil and hazardous susbstance spill clean-up efforts and spill prevention and preparedness planning activities.