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


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Daily News reporter

Anchorage Daily News
Date: 10/09/91
Day: Wednesday
Edition: Final
Section: Nation
Page: A1

ANCHORAGE- A federal judge approved the $1 billion Exxon Valdez settlement Tuesday, praising America's biggest oil company as a "good corporate citizen" that deserves credit for the $2.5 billion already spent to clean up Prince William Sound.

U.S. District Court Judge Russel Holland, who had emphatically rejected a similar plea bargain in April, underwent a conversion that left some observers gasping.

"It's the same deal," said Sue Libenson, executive director of the Alaska Center for the Environment, summing up the anger felt by many critics of the deal.

"What happened to the judge?"

In a lengthy explanation, the silver-haired jurist told dozens of reporters and lawyers gathered in his Anchorage courtroom that he approved the new pact because it included $50 million more for restoring Prince William Sound, because it sent a strong message to other potential polluters and because he'd found new faith in Exxon.

"Obviously, Exxon Corp. is very large and has been very profitable," Holland said, contrasting his earlier decision to refuse a $100 million criminal penalty as too low with Tuesday's acceptance of $125 million.

"What is now very clear to me is that Exxon has been a good corporate citizen," he said. "It is sensitive to its environmental obligations."

Some observers suspected Holland's change of heart was not spontaneous.

"There was the sense it was more a question that they must have run it by him beforehand before bringing it to him, because it would be so embarrassing to them if he had rejected it again," said Sarah Chasis, a senior attorney for the National Resources Defense Fund in Washington, D.C.

Charles De Monaco, assistant chief of the environmental crimes section of the U.S. Justice Department, said Holland had been given a copy of the pact Sept. 26 four days before a federal court clerk gave it an official stamp.

But De Monaco and other attorneys denied they knew Holland's decision before Tuesday's hearing and refused to say just what role Holland played behind the scenes.

"It would not be proper for us to discuss what happened in chambers," he said.

Holland doesn't talk to reporters.

The courtroom spectacle featured a contrite appearance by Exxon Corp. Chairman Lawrence Rawl, who sat leaning forward on his elbows, quietly answering Holland's questions leading up to the guilty pleas.

After the first deal was announced in March, Rawl stood in an Irving, Texas, press conference and declared that the spill would not have a noticeable effect on the company's finances and that "the customer always pays everything."

Tuesday was different.

"There is no question, I am sure we've regretted this spill very much," said Rawl, one of the world's most powerful corporate leaders.

"We've all done all we could do to get the spill cleaned up and deal with the people who came forward with claims."

Holland Tuesday said his own research had determined that Exxon had suffered a grave economic harm from the accident and that the oil industry was too competitive for the cost of criminal fines to be passed on to Exxon customers at the pump.

Under the agreement approved by Holland, Exxon and its shipping subsidiary pleaded guilty to four misdemeanors and were sentenced to pay $125 million in fines and restitution, a total of $25 million more than the deal Holland spurned as inadequate almost six months ago.

The companies also must pay $900 million on a 10-year installment plan for environmental restoration and "enhancement" that may include timber buyouts, a boat harbor or even a salmon hatchery.

"It could be anything that enhanced Prince William Sound as a world class recreation area," a triumphant Gov. Wally Hickel said afterward.

"We are whole again," said Hickel. "For the last 21|2 years we have been divided."

Attorney General Charlie Cole said the deal protected the state and federal governments against Exxon countersuits over their own potential liability for the spill and the tardy response in cleaning it up.

"It is not inconceivable the state could face a judgment requiring it to pay certainly in the tens, if not the hundreds, of millions from the state treasury," Cole said. "That is a risk that responsible public officers, the governor and the attorney general, must consider."

Environmentalists and others suing Exxon didn't share Hickel's newfound sense of unity, Cole's relief or Holland's opinion that the company is "a good corporate citizen."

"It's like saying Al Capone was a good citizen of Chicago," said Brian O'Neill, a Minneapolis attorney representing 1,000 Alaska fishermen against Exxon in civil litigation not directly affected by Tuesday's ruling. "I think Exxon got away with murder."

"Exxon has bought its way out of one of the worst environmental insults in this country's history," said Rep. George Miller, D-Calif., chairman of the House Interior Committee.

"This is a continuation of checkbook justice."

Exxon says it has spent $2.5 billion on the oil spill cleanup and in payment for 12,000 claims by fishermen and others.

Darrell Totemoff, administrator of the Chenega Bay IRA Council, said Exxon has "done a terrible job on the cleanup. There's a lot more cleanup that needs to be done."

Many environmentalists said the settlement was not enough.But putting a monetary cost on the 1989 spill will remain guesswork until the government releases its secret studies and economic damage analyses.

"What in the world is the state's interest in burying economic studies now that they are out of the case?" said Macon Cowles, an environmental lawyer. "There can only be one answer to that, and that is that the economic studies would show that the settlement they agreed to (with Exxon) is grossly inadequate."

Several critics cited a report in the Los Angeles Times claiming that the governments' own studies put the upper end cost of the spill at $15 billion.

Cole denied the report.

Dismissing that figure as a "gross exaggeration," Cole revealed in an interview that damage estimates start at about $3 billion, the amount Exxon already has spent, and range up to "$6 billion or $7 billion."

Unlike the first deal that the Alaska Legislature rejected, lawmakers this time have no formal role in approving the new settlement. But the House subcommittee that reviewed the last settlement will reconvene Friday to review the new package.

House Majority Leader Max Gruenberg, D-Anchorage, called the new agreement a "much nicer deal" than the last, primarily because the bulk of the money will go to restoration of the Sound instead of into the federal treasury.

Daily News reporters Charles Wohlforth and Ralph Thomas contributed to this story.

Story Index:
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