HARD AGROUND - Wreck of the Exxon Valdez - March 24, 1989



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Daily News reporter

Anchorage Daily News
Date: 10/01/91
Day: Tuesday
Edition: Final
Section: Nation
Page: A1

ANCHORAGE- America's biggest oil company has agreed again to pay about $1 billion to settle government claims and criminal charges arising from the 1989 wreck of the Exxon Valdez.

The agreement announced Monday is almost a dead ringer for the extended- payment plan spurned in April by a federal judge and later by the Alaska House. Like its predecessor, it was blasted by environmental groups that say Exxon isn't paying enough.

But Gov. Wally Hickel and others involved in striking the new pact said it's better than the last deal, in part because the state has agreed to share scientific and legal data crucial to Natives, fishermen and others suing Exxon.

"This is a little bit like the day of resurrection," Hickel said before announcing details of the plan Monday morning. "I thought at one time that this situation was dead."

As in the earlier agreement, Exxon Corp. and a subsidiary have agreed to plead guilty to four misdemeanor environmental crimes, while federal prosecutors have agreed to drop four felony and two misdemeanor charges. But this time Exxon would pay $125 million in criminal fines and restitution $25 million more than the amount rejected last spring by U.S. District Judge H. Russel Holland as inadequate to deter future pollution.

"The criminal plea, if accepted, requires Exxon to pay $125 million immediately one of the largest criminal penalties of its kind in American history," said Barry M. Hartman, acting assistant U.S. attorney general for the environment and natural resources.

Also as in the first deal, the oil giant would pay a total of $900 million in annual installments stretching over 10 years for the restoration of Prince William Sound. If additional damage is found after that, Exxon could have to pay another $100 million.

The $900 million payout over a decade will cost Exxon the equivalent of about $508 million in 1991 dollars, according to a Daily News analysis using conservative financial figures.

Hickel said he wanted to shorten that payment period to get more money faster, but he said the alternative to the deal five or six years of litigation was too painful.

Alaska Attorney General Charlie Cole said he was called to Washington, D.C., two weeks ago by the Justice Department, which was ready to deal again with Exxon. A small group of government attorneys, Exxon President Lee Raymond and the company's lawyers began a series of daily meetings in Justice Department offices.

"The governor's instructions were that under no circumstances was I to return to Alaska and report to him a less advantageous agreement," Cole said.

Exxon, he said, was adamant that it would not pay any more money or shorten the period it had to pay off its obligation.

Cole called the deal "substantially better" than the earlier one because the $100 million in criminal restitution will go directly to restore Prince William Sound, twice as much as in the earlier settlement.

The way was cleared for the pact in the past week as fishermen, Natives and other private plaintiffs agreed to drop lawsuits against the state and federal governments in exchange for access to crucial scientific and legal data compiled for the government case against the company. The private plaintiffs wanted to use the data in their suits against Exxon, and the earlier agreement's failure to give them access to it was one reason the legislature rejected it.

"That makes me much more comfortable," House Speaker Ben Grussendorf, D- Sitka, said. "I didn't like the idea of the state being sued by Alaskans who were damaged by that spill."

But Greenpeace spokeswoman Pam Miller said environmentalists were disappointed not only by the amount of money for restoration but because state and federal research given to private plaintiffs won't be made available to the public.

"We don't feel the information Exxon is putting out is correct," Miller said. "But without the data there is no way to counter that."

The people most directly affected by the spill commercial fishermen, Native villagers and other residents of coastal communities had heard few details about the settlement on Monday. What they had heard, several of them said, was so complicated that they were waiting to talk with their lawyers before deciding what to think.

Lloyd Miller, an Anchorage lawyer representing Natives with claims against Exxon, said he and his clients had the same general complaints about the new settlement as about last spring's deal that the fine and civil damage payments by Exxon are too low and that it gives Natives too little voice in deciding what else needs to be done to restore Prince William Sound.

The March 1989 spill "is still very much on people's minds," said Darrell Totemoff, the tribal administrator at Chenega Bay, a Native village of about 80 people in Prince William Sound.

"There's still oil here," he said. "For us, it's like sending the fire trucks home when the garage is still burning."

"The important thing, to many of us around here, is we have to have a settlement," said Cordova environmentalist Rick Steiner. "First there was the oil spill, then the division of people who got Exxon money and those who didn't, then the collapse of salmon prices, and now there's logging all around town, one problem after the next.

"The one solution is to settle this and use the money to protect the habitat that hasn't been damaged."

The legislature doesn't get to vote on the new settlement. But Rep. Dave Donley, D-Anchorage, who called the federal criminal penalty "woefully inadequate," said lawmakers may sue in state court to strike down the civil part of the deal because the settlement doesn't take into account the legislature's constitutional power to appropriate money.

Six trustees, three from the state and three from the federal government, are to determine how to spend the $900 million civil settlement.

Most environmentalists complained the new deal wasn't any better than the last one. A coalition of 10 environmental groups last week urged the state and federal governments to go hard on Exxon and seek a massive criminal fine perhaps several billion dollars.

"For a company that made more than $5 billion in profits last year, this is no more than a mosquito bite," said Wilderness Society President George T. Frampton Jr.

And some were worried that the new deal could be worse because, in this settlement, Exxon money can be used for "enhancements" as well as restoration.

"Enhancement means construction projects," said Pamela Brodie, associate Alaska representative for the Sierra Club.

"We are very afraid that he (Hickel) will get the trustees that he controls to use this money to build the Copper River Highway to Cordova and other environmentally destructive projects."

Hickel refused to say if the controversial Cordova road was a possible project.

"I am not going to get into what we can promote," Hickel said at the news conference. "We could promote the Fourth of July."

The fate of the civil settlement may hinge on whether Holland accepts the plea bargain in the criminal case, which was scheduled to go to trial Oct. 7. If the judge rejects the plea, any of the three parties to the civil settlement can pull out.

U.S. Rep. George Miller, a California Democrat, opposed the first settlement in a letter to Holland. Monday, he questioned how the judge could accept the new one when the penalty was just $25 million more, "considering Exxon's vast financial resources and the magnitude of the tragedy."

Cole said he was confident Holland would approve the plea bargain. But he could not explain why he was so optimistic except that $50 million more would go for environmental restoration.

Some environmentalists charged that state and federal officials want to avoid a public trial that could remind the public of details of the Exxon Valdez spill just as Congress takes up the question of opening the Arctic National Wildlife Refuge to oil exploration.

"We think the government is basically trying to get this issue resolved and off the table before the vote on ANWR," said Sarah Chasis, an attorney representing the Natural Resources Defense Council and the National Wildlife Federation in lawsuits against Exxon.

Wall Street analysts said the settlement would have almost no impact on Exxon's financial picture this year, largely because Exxon already wrote off $3 billion to pay for costs associated with the spill and has a chunk of that money left to make its settlement payments.

The company last year made profits of $5.2 billion, and it is expected to earn about $5.7 billion this year, said Thomas Lewis, an analyst for the Duff & Phelps research firm.

"I was surprised that Exxon was able to negotiate something this attractive to the company," said William L. Randol, senior petroleum analyst at First Boston.

"It's good news for Exxon, good news for the state and federal government that they've got this past them."

Daily News reporters Ralph Thomas, David Hulen, Rich Mauer, David Whitney and Charles Wohlforth and the Los Angeles Times contributed to this story.

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