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


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Daily News reporter

Anchorage Daily News
Date: 03/13/91
Day: Wednesday
Edition: Final
Section: Nation
Page: A1

JUNEAU- Government criminal and civil claims against Exxon were settled early today in a deal that calls for the giant oil company to pay $1 billion in installments stretching into the next century.

"Yes, we signed it and, yes, this is a very, very good thing for the people of the state of Alaska," Gov. Wally Hickel said from Washington, D.C., after he, federal officials and Exxon executives signed the agreement at a midnight meeting at the U.S. Justice Department.

Hickel would not discuss the settlement except to say, "It's the very best we could do after 60 days of intense negotiations. I'm happy with it."

The money would be used to pay for spill cleanup, restoration of the Sound, scientific studies and reimbursement of government spill costs. A hundred million dollars would be for a criminal penalty to be split between the state of Alaska and the federal government, according to a National Oceanic and Atmospheric Administration "fact sheet" on the settlement obtained by the Daily News. The rest of the money will be administered by a group of state and federal officials.

Even though it's signed, the deal is far from final. The agreement calls for a 30-day public comment period and, according to the NOAA document, "Each government has the right to withdraw its consent to the settlement agreement within 15 days after the close of the public comment period if the comments disclose facts indicating the agreement is not in the public interest."

During the past three months, the settlement has gone from nothing more than an idea of Hickel's, through weeks of intense negotiations, and into what government officials are calling the largest environmental damage settlement in history.

It was Hickel's personal diplomacy and public prodding that got the talks started. It was, according to state Attorney General Charlie Cole, Hickel's "personal knowledge of Prince William Sound" and "subjective sense about an acceptable settlement" that came up with an original settlement proposal of $1.2 billion not reliance on any of the myriad of scientific and economic studies being done on spill damage.

The $100 million criminal fine against Exxon is much less than the federal government had said it expected to win in court.

When Exxon was indicted one year ago, U.S. Attorney General Richard Thornburgh said at a press conference that the government was throwing "the environmental book at Exxon" and that fines could reach more than $600 million under a federal law that allows the government to collect twice the amount of money it spent on costs associated with the cleanup and claims paid by the defendants.

Environmentalists and attorneys representing clients with cases against Exxon criticized the settlement as too low.

"It seems like we're not going to have a big enough pot of money to do any realistic restoration so it will be interesting to see where the money winds up going to and whose projects get funded," said Riki Ott, a commercial fisherman and founder of the Oil Reform Alliance, which pushes for stronger oil spill laws.

"It sounds horrendously low to me," said Dave Oesting, a coordinating counsel for private plaintiffs suing Exxon.

But Oesting said that, without access to the scientific studies and economic damage models used to arrive at the $1 billion figure, "which the state has assiduously refused to provide, one can only speculate."

"My perception is it was a just a dart throw by Governor Hickel," Oesting said.

Eric Jorgenson, managing attorney for the Sierra Club Legal Defense Fund, agreed it's hard to judge the settlement without seeing the confidential studies, but said, "Obviously, Exxon did some very hard bargaining."

Rep. Cliff Davidson, D-Kodiak, said he thought settling with Exxon was "better than a pile of attorneys' bills" and that he was glad the public will have a chance to comment.

"But I'd like to know if all America will pay for this, because if it's all tax-deductible, where is the penalty?"

The settlement with its long payout also seemed low to John Loomis, an associate professor of environmental studies and agricultural economics at the University of California at Davis and an expert in assessing environmental damage.

"It's like an interest-free loan to Exxon," Loomis said.

The Exxon Valdez ran aground on Bligh Reef in Prince William Sound on March 24, 1989, shortly after its captain, Joseph Hazelwood, left the bridge to do paperwork in his cabin. The National Transportation Board has said Hazelwood was drunk at the time, but in court he was convicted only of negligent discharge of oil.

Wildlife by the tens of thousands were killed by the thick oil that gushed from the tanker into the Sound. Much of that oil seeped deeply into the rocky beaches of the once-pristine waterway where the state claims it remains today.

Under the settlement plan, Exxon would immediately deposit $190 million into an interest-bearing account, according to a draft press release prepared by NOAA, one of the federal agencies involved in the settlement talks.

Of that first installment, $100 million would be a criminal fine paid in exchange for the federal government's dropping its criminal charges against Exxon Corp. and its subsidiary, Exxon Shipping Co. The companies were indicted last year on five criminal counts from the spill.

Half the fine would go to the state as restitution for the nearly 11 million-gallon-spill that coated hundreds of miles of shoreline in oil. The agreement also calls for $25 million of the first year's payment to be spent on continuing scientific studies into the spill and $15 million for restoration projects.

The remaining $50 million of the first installment, according to the NOAA document, would be used to reimburse the state and federal governments for past spill-related costs. That falls far short of the $160 million that Cole has said the state and federal governments are owed. The two governments have also spent more than $100 million on studies and legal fees.

Exxon would pay another settlement installment of $150 million by October of this year to be used "in restitution efforts aimed at returning Prince William Sound to its pre-spill condition."

In fiscal year 1993, Exxon would begin paying off the remaining $660 million. The NOAA fact sheet does not specify the exact payment schedule, but says it will take nine years.

The agreement includes a clause that would allow the governments to reopen the case after a 10-year restoration period if new damage is discovered. The additional claims could not exceed $100 million.

The way was cleared for the settlement Tuesday afternoon when U.S. District Judge Stanley Sporkin lifted a temporary restraining order sought by Alaska Natives who contended that the federal government was settling their rights to recover damage to lands and wildlife which upon which they depend for subsistence.

Sporkin's ruling was hailed by the Natives as a victory because the judge's order precluded the settlement from jeopardizing any of their rights to compensation even if it meant that Exxon would have to pay twice for some damages once in the settlement and again to the Natives.

In a stern warning to government attorneys, Sporkin said that if a settlement did wind up harming the villages' right to sue Exxon, "Hell hath no fury like a judge scorned. . . . It's not fair, it's not right and it's not American."

Daily News reporters George Frost and David Whitney contributed to this story.

Story Index:
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