GAO/AIMD-OGC-00-250R

United States General Accounting Office

Washington, DC 20548

Comptroller General

of the United States

B-285142

July 5, 2000

To the President of the Senate.

and the Speaker of the House of Representatives

Subject: Final Certification of TAP Fund

This letter transmits the Comptroller General’s final certification of the Trans-Alaska

Pipeline Liability Fund’s payment of claims and administrative expenses. Section

204(c) of the Trans-Alaska Pipeline Authorization Act (TAP Act), Pub. L. 93-153, 87

Stat. 576, 586 (1973), codified at 43 U.S.C. § 1653(c), created the Trans-Alaska

Pipeline Liability Fund (Fund), a nonprofit corporation governed by a Board of

Trustees. The TAP Act, as amended, established the Fund to pay certain claims for

damages caused by discharges of Alaska Pipeline oil from ships transporting the oil

from the pipeline’s terminals to ports within the jurisdiction of the United States that

occurred before August 18, 1990. The Fund is strictly liable for covered oil spill

damages in excess of $14 million up to $100 million, or $86 million, per incident.

43 U.S.C. § 1653(c)(3). The Board of Trustees of the Fund determined that the Fund

was liable for damages caused by two oil spills that occurred before August 18, 1990,

the Exxon Valdez spill in Prince William Sound, Alaska in March 1989 and the

American Trader spill off of Huntington Beach, California in February, 1990.

Section 8102 of the Oil Pollution Act of 1990, Pub. L. 101-380, 104 Stat. 484, 565

(1990), provides that the Fund’s statutory authority, 43 U.S.C. § 1653(c), “is repealed,

effective as provided in paragraph (5),” and the Fund extinguished sixty days after

the Comptroller General certifies to the Congress that under Section 8102(a)(5)(A):

“(i) all claims arising under section 204(c) of the Trans-Alaska Pipeline

Authorization Act (43 U.S.C. § 1653(c)) have been resolved, (ii) all

actions for the recovery of amounts subject to section 204(c) of the

Trans-Alaska Pipeline Authorization Act have been resolved, and (iii) all

administrative expenses reasonably necessary for and incidental to the

implementation of section 204(c) of the Trans-Alaska Pipeline

Authorization Act have been paid.”

Section 8102(a)(2)(C) requires the trustees, after payment of all claims and

certification by the Comptroller General of the payment of all claims, to distribute

any remaining amounts by (1) rebating the pro rata share of the balance to Alaska for
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its contributions as an owner of oil, and then (2) transferring and depositing the

remainder of the balance into the Oil Spill Liability Trust Fund.

Pursuant to section 8102(a)(2)(A) of the Oil Pollution Act of 1990, the Board of

Trustees of the Fund reserved amounts within the fund necessary to pay claims under

section 204(c) of the TAP Act and administrative expenses necessary for and

incidental to the implementation of section 204(c). The Comptroller General certified

to the Congress on December 23, 1994, that the trustees had established the required

reserve. On December 22, 1995, after the trustees reduced the amounts in reserve,

the Comptroller General certified to the Congress that the new reserve satisfied the

requirements of section 8102(a)(2)(A).

On October 28, 1999, the Comptroller General certified to the Congress that the

trustees had paid all claims arising from the American Trader incident, and

established a reserve as required by section 8102(a)(2)(A) that was more than

adequate to pay the court-ordered fees and administrative expenses related to the

Exxon Valdez oil spill. Pursuant to section 8102(a)(2)(B), after each certification,

from amounts in excess of the reserve, the trustees returned to the State of Alaska its

proportionate share of its contributions to the Fund as an owner of oil, and

transferred the remaining amount of the excess to the Oil Spill Liability Trust Fund.

Based upon our work for prior certifications and our review of documents and

discussions with the Fund’s Administrator, General Counsel, and independent

external auditor, we have now concluded that the Fund has made all payments for

claims under the Act, including the amounts held in reserve for court ordered fees in

the Exxon Valdez claims. We have also concluded that all actions for recovery of

amounts subject to 43 U.S.C. § 1453 (c) have been resolved. Thus, all claims and all

actions for recovery of amounts have been resolved as required by section

8102(a)(2)(A)(i)-(ii).

The Board of Trustees of the Fund has notified this Office that it has paid all

administrative expenses, except for those expenses that are incidental to the final

distribution of the Fund’s balance and, thus, are payable, necessarily, only after the

date of the certification. The trustees estimate that the monthly expenses that will be

incurred after our final certification will not exceed $16,500, including legal fees,

salaries, rent, and miscellaneous expenses. Based on our review of these estimated

expenses, we conclude that they are reasonable in comparison to the previous

expenses of the Fund, and incidental to the final distribution of the Fund’s balance.

The trustees request that the Comptroller General issue the final certification

pursuant to section 8102(a)(5)(A) of the Oil Pollution Act of 1990. I have reviewed

the bases for the trustees’ request. Pursuant to section 8102(a)(5)(A) of the Oil

Pollution Act, I hereby certify that (1) all claims arising under the Act have been

resolved, (2) all actions for recovery of amounts have been resolved, and (3) that all

administrative expenses have been paid, except those that will be incurred

necessarily only after this final certification. Once those expenses have been paid,
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the Fund will be extinguished pursuant to section 8102(a)(5)(A) of the Oil Pollution

Act of 1990, and any balances distributed to the state of Alaska and the Oil Spill

Liability Trust Fund pursuant to section 8102(a)(2)(C).

/s/Comptroller General

of the United States