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Daily News reporter

Anchorage Daily News
Date: 05/04/91
Day: Saturday
Edition: Final
Section: Nation
Page: A1

JUNEAU- Exxon Corp. and Gov. Wally Hickel both decided Friday to pull out of the $1 billion Exxon Valdez settlement quashing what would have been the largest environmental legal settlement ever.

Hickel blamed House Democrats who on Thursday voted down the agreement and forced him to withdraw. He called them selfish, said they put "politics ahead of the country" and chose "years of uncertainty and despair" rather than money to clean up Prince William Sound. He said Alaskans should be outraged.

"I will never apologize for what we did and I hope the members that opposed this can say the same thing in a year or two," Hickel said Friday.

But when the deal collapsed it fell hard on Hickel. It even hit the Little Man Hickel's name for the inner voice that tells him the right thing to do.

"The Little Man is not happy," said Eric Rehmann, press secretary to Hickel and, apparently, the Little Man. "The Little Man is not at ease today. He thinks it's the people of Alaska who will suffer."

Hickel was clearly discouraged.

"I'm disappointed because I thought it was a great settlement," the governor said. "This thing got screwed up but not at the executive level."

The House was not willing to be Hickel's "scapegoat," said House Speaker Ben Grussendorf, D-Sitka.

"I guess the governor needs someone to blame for his failure," he said.

Grussendorf said Hickel negotiated a deal that was "too liberal" and the beginning of the end was last week when a federal judge ruled the criminal plea bargain was too lenient.

Senate President Dick Eliason, R-Sitka, said the House turned the settlement into a political battle with "somebody trying to do it to the governor."

Eliason has had reservations about the settlement but said Friday it was better than the alternative.

"I guess we're going to court and spend millions of dollars making lawyers rich and not be able to do anything to help Prince William Sound," he said.

While Hickel clearly picked the House as the cause for the failure, there were other signs the settlement was in peril. Last week, U.S. District Judge Russel Holland in Anchorage rejected a $100 million criminal fine as too lenient. Another judge in Washington, D.C., then questioned whether the civil portion hurt Native claims against Exxon.

Several hours before Hickel made his announcement, Exxon called the governor's office to say it was withdrawing under a clause that gave them an out if the criminal plea was rejected.

Hickel said he was confident Exxon pulled out only because it thought Thursday's House action killed the deal, not because the criminal plea had been thrown out. Neither Hickel nor Attorney General Charlie Cole would say why Exxon would withdraw from a deal it thought was already dead.

Exxon spokesmen would not say why the company pulled out.

The company said it had not yet decided whether to withdraw its guilty plea entered in the federal criminal case. In Anchorage, company spokesman Karsten Rodvik said Exxon would continue to work with the state and federal government to survey Prince William Sound beaches in preparation of a third clean up season.

In Washington, federal lawyers said negotiations toward a new settlement were unlikely and the government would prepare for trial in the Exxon civil case.

"It's too complicated a problem to solve" by negotiation, said Thomas Campbell, a lawyer with the National Oceanic and Atmospheric Administration. "Sometimes there are things that need to be resolved in court."

While Hickel came out slugging when he made his announcement, it was a long, hard day for the governor as he tried to find a way to save the agreement.

The settlement was important to Hickel. Soon after his November election he made it a priority to negotiate a deal with Exxon. When the proposal was unveiled in March, his aides said it was an accomplishment that ranked with William Seward's purchase of Alaska from Russia and statehood.

Friday morning Rehmann told reporters "it's a dead deal" and that the governor would make a statement at 11 a.m. "placing a great deal of blame" on House Democrats.

Hickel spent the morning sequestered with Senate President Dick Eliason, Majority Leader Rick Halford, Cole and other staffers.

When it came time for the announcement, Hickel didn't show. Neither did Rehmann.

Instead, it fell to the governor's audio-visual director, Mark Farmer, to tell reporters, "We're still formulating our options and reviewing our policies." But he assured the crowd, "It's not a dead deal. We're waiting to see what the Senate does."

In the Senate, Eliason had sent word that, "He wants to wait to hear from the governor," said Sen. Sam Cotten, D-Eagle River. Cotten is chairman of the Special Committee on Oil and Gas which had been given the House resolution calling for the settlement to be rejected.

But that didn't mean he knew what was going on.

"They won't tell me," he said. "I hope that there is not some clever strategy going on here."

Hickel was trying to come up with a strategy. Deputy press secretary John Manly said Hickel wanted the Senate to take the House resolution, amend it to call for approving the settlement, and send it back to the House.

"We tried our best to get the Senate to act," Manly said.

While everyone waited, Hickel videotaped an interview that Farmer sent to Cable News Network. In it, Hickel said he would "have to wait until tomorrow (Saturday) to see and we'll have to evaluate it at that time."

That confused just about everybody because Friday was the deadline for the state to withdraw. If Hickel waited until Saturday the state would have no choice but to go along with what Exxon and the federal government decided.

When asked about the governor's statement, Rehmann said the governor "didn't really mean tomorrow" when he said tomorrow.

Finally, shortly after 2 p.m., the Senate adjourned and Hickel issued his statement saying he had withdrawn from the settlement.

There, Hickel and Cole launched their attack on House Democrats.

Cole said it was clear that the Democratic-controlled House Majority, which voted together to reject the settlement, was ignoring the merits of the settlement.

"I think if you took a random sample of the view of 26 people, unadulterated by political taint, at least one of them might have thought this settlement was in the best interest of the State of Alaska," he said.

But, he said, the 13-member Republican Minority, which also voted in a bloc, was voting on the merits. He said that since the minority was half the size of the majority it didn't necessarily hold true that a random sample would find somebody there who didn't like the settlement.

Daily News wire services also contributed to this story.

Story Index:
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