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


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Daily News reporter

Anchorage Daily News
Date: 08/23/93
Day: Monday
Edition: Final
Section: Nation
Page: A1

ANCHORAGE- The panel charged with spending the $900 million settlement from the 1989 Exxon oil spill has spent money willy-nilly, without financial controls and audits, and has used the money to subsidize government studies, according to a General Accounting Office report released late last week. "The bureaucrats gave top priority to feathering their own nests with reimbursements and gold-plated studies of questionable merit," Rep. George Miller, D-Calif., said in a news release. Miller, as chairman of the House Committee on Natural Resources, asked for the study.

Exxon Valdez Oil Spill Trustees Council members reached late Friday had not seen the report, which Miller released to the media on Friday.

"We had several meetings with them off and on," said trustee John Sandor, who heads Alaska's Department of Environmental Conservation. "The first were very complimentary. Then they went back and the next meeting they started raising questions that were surprising."

Sandor thought it odd that the trustees didn't get a chance to respond in writing to the final GAO report. Ordinarily, agencies do get an opportunity to respond to reports critical of them. He also wondered why trustees weren't provided with a copy of the report at the same time the media received it.

"Clearly it seems to be a deliberate effort to get it out at the trustee council meeting," Sandor said. "It sure looks orchestrated, but orchestrated for what reason?"

U.S. Interior Secretary Bruce Babbitt is scheduled to speak this morning at the trustee council's regular monthly meeting. Before Babbitt's arrival in Alaska two weeks ago, George Frampton Jr., who oversees the Fish and Wildlife Service and National Park Service, said Babbitt's top priority would be "to get the Exxon Valdez trust funds on track."

"It has been stumbling along, hemorrhaging money for two years," Frampton said in an interview with The Associated Press early this month. "There is an opportunity to leave a tremendous legacy in terms of ecosystem restoration, and right now the opportunity is being frittered away."

A few days later, trustee and state Attorney General Charlie Cole took issue with Frampton's comments at a council meeting in Juneau.

"I want to say that I don't believe that we have frittered away money," according to a transcript of Cole's comments."I don't believe that what we have done is unacceptable in the public interest. And I don't believe that we've been stumbling along.

"Now that brings me to this point. In light of the remarks attributable to the Department of the Interior, I am of the view that we should give serious thought to not committing any additional funds of the Exxon Valdez monies until we ascertain from the department whether the prospective expenditures will lead to another accusation that we're continuing to stumble along and frittering away opportunities."

In October 1991, about 21|2 years after the Exxon Valdez ran aground in Prince William Sound and spilled 11 million gallons of oil, the state and federal governments reached an agreement with the oil giant to settle pending lawsuits. The settlement, which involves a court decree, called for Exxon to pay $900 million to settle civil suits and $50 million to each the federal government and the state of Alaska to settle criminal claims.

As of June 1993, none of the criminal settlement had been spent. However, the federal government is talking about spending $25 million to acquire private land in Chugach National Forest, Kenai Fjords National Park, Kodiak National Wildlife Refuge and the Maritime Wildlife Refuge Islands. The state plans to use its $50 million to fund a marine wildlife center in Seward, for oil spill research programs, for hatchery projects and to build recreational facilities.

The six-member trustee council made up of three state and three federal officials was established to oversee the $900 million civil settlement.

So far, the council has committed to spending $46 million to buy land in Kachemak Bay and on Afognak Island. And by last February, the council had spent $240 million on reimbursements, studies and administrative costs. The trustees voted to spend another $20 million last spring to cover this year's administrative and study costs.

About $107 million went to reimbursing the state and federal governments for their clean-up expenses between 1989 and 1991. That was part of the settlement agreement, which allows the governments to claim up to $142 million in reimbursements plus an unspecified amount for legal fees.

Another $40 million was paid to reimburse Exxon for money it spent on cleanup work in the summer of 1991, which was also part of the settlement agreement.

The GAO launched its investigation in February after Miller's office received complaints from environmental groups and individuals that the settlement money wasn't being spent wisely.

Rick Steiner, a Cordova biologist and fisherman who has closely followed the trustees' spending decisions, was one of those who complained.

"We had heard of a number of alleged abuses and conflicts of interest amongst the very agencies that were appropriating funds," Steiner said. "The whole idea was to get money to the damaged environment and help it recover. But what happened instead was the initial priority was reimbursing themselves."

Also, Steiner said, the public has been cut out of the process in deciding how the criminal settlement money is spent.

"There was a lot of anger that they were making decisions behind closed doors," Steiner said. "They had the veil of litigation, so they used it to exclude the public in developing their own agenda."

GAO officials, who worked on the report for six months, concluded that "the same agencies and sometimes the same individuals that recommend a project for funding also approve and carry out the project. Moreover, financial reviews or audits have not been conducted of the federal and state agencies reimbursement claims or of the use of civil settlement funds.

Miller lay much of the blame on the Bush administration.

"Thankfully, under the leadership of Secretary of the Interior Bruce Babbitt, the Clinton Administration has acted decisively to curb the abuses described by GAO," Miller said in a news release.

Specifically, the GAO found:

* That the trustee council did not put projects up for competitive bid even though the council's chief scientist "believes that open competition would encourage more timely completion of projects at reduced costs."

* That "no financial audits or program reviews have been conducted to ensure the propriety of reimbursements," according to the report. However, the GAO points out that the Coast Guard did conduct an audit of the money reimbursed to Exxon.

* That the trustee council still does not have a restoration plan in place and the date continues to be pushed back.

* That the trustee council is funding some "projects that do not appear to be related to the oil spill, as required in the settlement, or appear to duplicate existing responsibilities of federal and state agencies."

* That the trustee council has failed to hire an executive director to lead and direct the day-to-day operations.

* That "only eight of about 91 scheduled project reports have been approved by the trustee council's chief scientist. Many of the reports have been returned by the chief scientist to the projects' principal investigators for needed revisions because of his belief that they were poorly organized and contained unclear messages, incomplete analyses, overreaching conclusions and imbalanced presentationes."

* That many of the officials working on the restoration plan live in Juneau but must travel to Anchorage to attend meetings. "This travel increases administrative costs for the trustee council organization," the report states.

Story Index:
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