Natural Resources Restoration:

Status of Payments and Use of Exxon Valdez Oil Spill Settlement Funds

RCED-98-236: Published: Aug 13, 1998. Publicly Released: Sep 11, 1998.

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Pursuant to a congressional request, GAO reviewed the management of the Exxon Valdez settlement funds, focusing on: (1) how much Exxon had paid, to whom the funds had been disbursed, and how the money had been used; (2) whether the Trustee Council has funded activities that may not be consistent with the agreement and the council's implementing policies; (3) how the prices paid for land acquisitions compare with government land appraisals; (4) if the public participation process for the habitat acquisition program is similar to that used for other restoration actions; and (5) whether the trust funds are being managed to maximize the overall returns.

GAO noted that: (1) through the end of fiscal year 1997, Exxon had made settlement payments of $620 million; (2) $521 million has been reimbursed or disbursed for various activities; (3) these funds were to: (a) reimburse agencies or credit Exxon for oil spill cleanup or damage assessment costs ($198 million); (b) buy land to protect or enhance damaged resources ($187 million); (c) conduct monitoring, research, or restoration projects ($116 million); and (d) provide administrative, science management, public information and related costs ($20 million); (4) the remaining $99 million represents funds not yet disbursed; (5) most of the activities funded by the Trustee Council appear consistent with the terms of the memorandum of agreement and the council's implementing policies; (6) all of the activities that dealt with habitat acquisition and general restoration and most research and monitoring activities appeared consistent with the agreement and restoration plan in that they were linked to the oil spill, limited to restoration of natural resources in Alaska, and included in the types of restoration activities specified in the memorandum of agreement between the federal government and the state of Alaska; (7) a few monitoring and research projects have been funded even though they have questionable linkage to the spill or appear to run counter to the Trustee Council's policy of not funding projects that would normally be funded by a federal or state agency; (8) the Trustee Council has paid about 56 percent above the government-appraised value for the lands it has acquired; (9) nearly all the amount paid above the government-appraised value is a result of five large parcel acquisitions; (10) for these five acquisitions, involving about 360,000 acres bought outright or containing some type of easement, the council paid from 2 to almost 4 times the government-appraised value; (11) the public participation process followed by the Trustee Council for acquiring land is similar to the process followed for decisions on other restoration activities; (12) GAO found that the council's processes for both habitat acquisition and other restoration activities appear to provide ample opportunities for the public to review information and comment; and (13) the Trustee Council's independent auditors have identified two major ways for increasing returns on settlement funds.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: In November 1999, Congress passed Public Law 106-113 enabling the Trustee Council to deposit Exxon Valdez settlement funds in accounts other than the U.S. Treasury. In July 2000, the Trustee Council voted to transfer existing funds and deposit future funds in an account administered by the Alaska Department of Revenue. In October 2000, the Trustee Council began transferring the funds from the existing accounts to the account administered by the state of Alaska. Final settlement funds from Exxon to the Trustee Council was transferred on September 1, 2001, resulting in minimizing management fees and maximizing net returns.

    Recommendation: To increase the amount of settlement funds available for future restoration activities, the Trustee Council should review ways such as those identified by the Trustee Council's independent auditors to minimize management fees and maximize net returns without compromising the security and reliability of the investment returns.

    Agency Affected: Exxon Valdez Trustee Council

 

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