DEFENDING THE SOUND
CONGENIAL CORDOVA FISHERMAN BECOMES DEAL MAKER

By CHARLES WOHLFORTH
Daily News reporter

ANCHORAGE- Cordova fisherman Rick Steiner, in his loose cotton clothes and Viking beard, looks more like a hippie than a card shark in a political poker game worth half a billion dollars.

The poker game was a deal between the U.S. Department of Justice and Exxon U.S.A. Exxon wanted to plead guilty to criminal charges over its Prince William Sound oil spill and pay $500 million. In exchange the federal government would drop other spill lawsuits for four years, a potentially crippling blow for civil litigants waiting in the wings.

The cards were dealt at a meeting in Washington, D.C., last January. The only players were Steiner and Frank Iarossi, then the president of Exxon Shipping Co. unlikely friends from their days fighting the Exxon oil spill together.

At the meeting, Iarossi gambled by telling Steiner about the Justice Department deal, apparently hoping to enlist his political talents without revealing the deal's negative aspects.

Steiner played his hand, and apparently won. A few weeks later, the deal was up in smoke and Iarossi was in a new job.

It wasn't a bad showing for a guy who a year earlier had been playing with hand puppets, a reluctant wheeler dealer who would rather be a fisherman and small town, small scale greenie.

The spill turned Steiner into a spokesman for fishermen and environmentalists. While angry townspeople and fishermen ranted, Steiner was the reasonable, friendly intermediary willing to work in private with cabinet secretaries and oil company presidents.

The role has grown. The oil spill cleanup has shrunk and fishermen and coastal communities are trying to resume normal lives, but spill litigation that could change their future is just blossoming into full expense and complexity.

Steiner's goals are to protect fishermen's rights, mediate fights between state and federal lawyers, and get money for his own pet cause: blocking clear cutting of trees in the Sound, especially where logging could leave wasteland out Cordova's front door.

Steiner always opposed the proposed cutting, but with the changes the spill brought, he now hopes to do something about it. He was trying to link the spill and the timber issue when he met with Iarossi in January.

The idea of buying out timber rights probably wouldn't have won much credibility in anyone else's hands. It could cost $150 million, it has powerful opponents, and it bears only a tangential relationship to the oil spill.

But Steiner has landed $50,000 in grants to push it, has the conditional support of Alaska Sen. Ted Stevens, and persuaded a Wall Street Journal reporter to write a highly favorable article about it that led the national newspaper's front page.

"I think Prince William Sound deserves a little special attention right now," Steiner said.

Steiner leaves his telephone answering machine on all the time. Calls come in from reporters every day reporters who trust him to provide background about what is really going on in Alaska. When he answers, callers get to feel like Steiner's special friend. A smile in his voice makes mundane information sound like confidence.

In the streets of Cordova, Steiner greets almost everyone as if they shared a secret joke the last time they met. In the sunshine he looks like a huge butterfly. His unbuttoned sweaters with big sleeves make the long arms of his 6 foot 4 inch body look like wings. A leather thong around his waist holds up his baggy pants.

He granted an interview recently, conducted in his University of Alaska office on a shaking dock in the Cordova boat harbor; at his desk at home, in a small living room where there is also a rowboat set up as a bed with a patchwork quilt; and while driving his beatup Chevy truck, which covers so few miles that filling up the gas tank is but an annual chore.

On the dashboard of the truck is a pile of business cards. "Rick Steiner, Purveyor of that Vision Thing," they say.

Steiner, 37, who last summer introduced himself to Vice President Dan Quayle as Rumpelstiltskin, comes from a family accustomed to moving in political circles. His mother, Fay Steiner, began working at the White House as a speech researcher at the beginning of the Eisenhower administration and stayed on under seven presidents in various jobs until she retired six years into Ronald Reagan's term.

When Rich was a teenager, she got him a summer job opening President Richard Nixon's mail. Steiner remembers spending the day checking letters for threats against Nixon's life, then riding his bike to the Washington mall to join in antiwar demonstrations.

He came to Alaska on the National Oceanic and Atmospheric Administration research vessel Fairweather. He got his master's degree in biology and crushed his leg crabbing in the Gulf of Alaska. He counted fish in western Alaska for the Department of Fish and Game.

In 1980 he became the seagoing equivalent of a county agriculture extension agent in Kotzebue, in the University of Alaska Marine Advisory Program. Later he walked across the Arctic National Wildlife Refuge, studied indigenous people in South America, and in 1983 joined the marine advisory program in Cordova, where he now lives with a practitioner of therapeutic massage and her 8 year old son.

Cordova is a cliquish town. The group of friends Steiner fell into even gave itself a name: Pursuit of Happiness. They put on puppet shows, played music and called each other in the middle of moonlit nights to go skiing in the hills.

Steiner and a friend went in together to buy the town's oldest seine boat and a limited entry salmon permit. The $300,000 deal was ready in March 1989, when the Exxon Valdez hit the rocks.

"When the spill happened it was like this sleeping monster awoke and bit me on the leg, as it did a lot of people around here," he said. "And when that happens, what do you do? You get out the sword and start fighting the good fight against the monster."

It wasn't that Steiner had neglected the environment during the preceding years; it was just that he felt he hadn't accomplished much.

Steiner started watching the oil industry in 1985 when he met Chuck Hamel. Hamel is a former oil broker who has been a fulltime nemesis of Alyeska Pipeline Service Co. since 1979, when an oil deal he was involved in went bad. He lives in Washington, D.C., but was working with Cordova District Fishermen United to force improvements in the treatment of oily ballast water discharge by Alyeska's Valdez terminal.

Frustration with that effort led Steiner to look for another way. He heard of an oil terminal that was reportedly better run, the Solom Voe terminal in Scotland's Shetland Islands. Solom Voe, like Alyeska, was owned primarily by British Petroleum, but it had a citizen's watchdog committee to keep its environmental standards up.

Steiner tried to start a similar watchdog committee here, but the Department of Environmental Conservation and Environmental Protection Agency said they lacked authority, and Alyeska refused to cooperate, he said.

Steiner persuaded state Sen. Mike Szymanski, DAnchorage, to introduce a bill in the legislature in 1988 to do the same thing, said a Szymanski aide. It died in committee two years running.

Then the Exxon Valdez spill happened. The legislature this spring passed a bill setting up a citizen's oversight commission. Alyeska set up an advisory committee over the winter and Congress is considering mandating one.

Alyeska's terminal, with new escort vessels following each tanker, now has the best spill prevention system in the world, Steiner said even better than Solom Voe. Many things have changed since March 24, 1989.

Steiner and Iarossi met in Valdez the day after the spill, and became friends like two GIs who'd just met in a foxhole. Steiner flew into Valdez and walked into the chaotic command center Exxon was setting up in the Westmark Hotel.

"I walked in and I asked Iarossi what's going on, and no one seemed to know," Steiner said.

He told Iarossi about three salmon hatcheries in the path of the spill. Exxon officials were unaware the hatcheries existed, Steiner said.

"I told them that would be a multimillion dollar liability if those get trashed," Steiner said. "And they said, "Well, let's get to it.' "

Iarossi did not return telephone calls to comment for this article.

As the Exxon cleanup floundered, Larry Dietrick of the state Department of Environmental Conservation set up Steiner and his friends in their own command center in the Valdez courtroom.

"Rick was everywhere all at once. He's a real cool, calm guy in a crisis, with a lot of common sense," Dietrick said.

Steiner knew the hatcheries, the waters and the Native villages, and he had the trust of the fishermen, Dietrick said.

The fishermen convinced the state to throw all their resources into protecting the hatchery in Sawmill Bay. Then they collected the manpower and boats to mount the defense. When Exxon couldn't provide booms, they called all over the world to get their own.

"To me, he was the brains there," said Hamel, who was also involved. "Iarossi had real problems. He had the ship to save. The DEC had things to accomplish. But Rick Steiner was the glue that held it all together. Nothing was done in the defense of the hatcheries without everyone asking Rick what he thought."

The defense of the hatcheries was successful. Steiner decided to go ahead with the purchase of his fishing boat and started working on long term oil spill issues.

He organized a meeting last June between the oil industry and the fishing industry to talk about tanker safety. In attendance were high ranking officials from all but a few of the companies involved in shipping oil from Alaska.

"To bolster the spirit of reconciliation, fishing industry representatives feel the initial meeting might benefit from the absence of federal and state regulatory agencies," Steiner wrote to the oil company presidents. The public and press also weren't invited.

"It was just an opportunity, with the oil industry up here saying, "OK, what do you want?' " Steiner said.

The fishermen showed up with a three page list of demands. After the fury they had faced, oil industry representatives were relieved to find them so reserved.

"We said, "Here is a list of things we can do,' " Steiner said. " "And we can help call off the dogs or we can turn 'em loose.' "

"A lot of respect was gained," said Capt. Jerry Aspland, president of Arco Marine. "It really showed that in a calm, cool, thinking environment, things can get done."

Not all of the demands have been met, but Aspland said work is continuing.

"He has a very good political presence," Aspland said. "I think Rick has a better grasp on the big picture than others. He is able to get his point across and also listen to the other side."

Steiner is still popular in Cordova, and he continues to play the oil industry's friend among the hostile fishermen.

"Part of it is getting past this barrier that we're enemies, trying to disarm the secretary of transportation and the president of Exxon shipping," Steiner said.

But Steiner has found the political work growing more difficult as the shipwreck recedes into the past and his ambitions grow. He helped start a Cordova environmental research institute, which appears likely to receive a strong dose of state and federal money.

But the timber buyout has met resistance.

Steiner first asked the oil companies to pay for it, arguing that they needed the good publicity. But he admits they didn't bite. Now he is hoping money won from Exxon in lawsuits will buy the timber he wants to save. In the meantime, he is trying to find millions of dollars to stave off cutting until the Exxon Valdez litigation is over.

But he has made an enemy of Chugach Alaska Corp., the Native regional corporation that built a $20 million sawmill in Seward and is counting on Prince William Sound timber to feed it.

Steiner claims the sawmill is economically unrealistic and was built to enlarge the egos of Chugach executives.

"I think Steiner represents his personal, selfish interests," said Edgar Blatchford, chairman of the board of Chugach. "I don't think he represents the public good. I don't think he represents the good of the local people."

"We don't particularly care for the idea of putting Prince William Sound in a deep freeze for people who own limited entry permits," Blatchford said.

Blatchford said environmentalists have long been the enemies of Chugach people. He criticized the Wall Street Journal article, which relied on Steiner as its primary source of information, for characterizing logging in the Sound as potentially worse than the spill.

"What the Exxon Valdez did for Chugach was bring the environmental movement back into Prince William Sound, except this time they have much bigger guns and more money," Blatchford said.

Steiner's guns were big enough to shoot down Exxon's plea agreement with the federal government.

It began in January, when Steiner traveled to Washington to meet Iarossi and sell him on the timber idea.

"It was good to see him again," Steiner said. "It was strange.

"There was some strong sentiment exchanged back in those days in Valdez. In intense time like that, there is some intense bonding that takes place."

The friendship may have set the stage for what happened next.

Toward the end of the conversation, Iarossi mentioned Exxon's negotiations with the Justice Department, suggesting a quick settlement would benefit Steiner. The money Exxon was willing to pay to end the litigation would buy a lot of trees.

Steiner asked Iarossi questions to narrow down the amount of the deal, then guessed, correctly, that it was $500 million.

But Iarossi wanted something from Steiner. Steiner said Iarossi told him Exxon was trying to have the money placed in a restoration fund rather than administered as a fine. A restoration fund would offset Exxon's damages in civil litigation, and could go toward Steiner's buyout plan.

Steiner said he told Iarossi he would talk to Alaska Sens. Frank Murkowski and Ted Stevens, and asked Iarossi if he could tell them about the deal. Iarossi agreed.

Steiner was staying with Hamel. They plotted strategy together.

"(Iarossi) thought he was using Rick to go get your delegation to push Justice," Hamel said. "He didn't think Rick was smart enough to do what he did."

Steiner called the Department of Justice, hoping to get enough information on the deal to decide for himself if he wanted to help it along or try to kill it.

"They were incredibly paranoid. They put me on a speaker phone with three criminal attorneys," Steiner said. "One of them said, "How do you know.' And I said, "Frank Iarossi told me.' And he said, "How can he do that?' And I said, "Well, he's in private industry.' "

Then Steiner called Doug Baily, the Alaska attorney general. Baily didn't know about the negotiations until Steiner called, Baily said.

When Justice refused to let Steiner in on the deal, and it appeared to be going ahead on unfavorable terms, Steiner made his move.

"When we started to get nowhere, that's when we went to the Wall Street Journal," Steiner said.

A short story was published Feb. 14 revealed that Exxon and Justice were in negotiations. It started a storm of legal and political activity that ultimately tore the deal apart.

A federal grand jury indicted Exxon Feb. 28.

Documents that emerged later in Congress showed that the plea bargain would have precluded the federal government from civil litigation against Exxon for four years. The civil litigation is potentially worth much more than the criminal suit, and involves state and private plaintiffs who are counting on federal help.

Steiner wondered if he had hurt himself. The federal lawyers now insist there are no plea negotiations going on, but Steiner still favors a good plea bargain that would provide fast money for the timber buyback and save society the cost of needless litigation.

He said federal attorneys are still angry.

"They were really upset with the state and with us for tanking the deal, as they called it," Steiner said. "But talking to Doug (Baily), I felt better about that. He said it was a terrible deal."

A few days after the Exxon indictment, Iarossi took a new job as president of the American Bureau of Shipping. He said the change of jobs had long been in the works, and Steiner believes him.

"When I was sitting there, breaking up our meeting, I looked in his eye, and there was something about him that suggested he was a shorttimer," Steiner said.

Steiner hasn't talked to Iarossi since. He still isn't sure why Iarossi leaked the information, and wonders if he feels betrayed.

But Steiner says he wouldn't have let the betrayal of a friendship deter him.

"I try to set aside personal feelings," he said.

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