STAGE SET FOR BATTLE OVER EXXON OIL SPILL

By ROSANNE PAGANO
The Associated Press

ANCHORAGE- Five years after crude oil from the Exxon Valdez blackened Alaska waters, as many as 12,000 fishermen, property owners and Alaska Natives are taking giant Exxon Corp. to court, seeking to prove the pollution damaged their culture and livelihood. At stake in the civil trial opening Monday in Anchorage federal court is an estimated $1.5 billion in compensatory damages and, plaintiffs' attorneys assert, more than 10 times that in punitive damages.

Houston-based Exxon, the world's largest corporation, has refused comment as the case was readied for trial.

Brian O'Neill, the plaintiffs' lead attorney, says the proceedings will captivate even people with no monetary interest because it's a cautionary tale of environmental disaster.

"If something's not done, it will happen in your back yard next," O'Neill said. "This is corporate indifference and arrogance at its worst."

This is the first civil trial resulting from the accident March 24, 1989, when the tanker strayed from shipping lanes, ran aground on a charted reef and gushed almost 11 million gallons of North Slope crude into Prince William Sound.

Exxon has already paid substantial fines and cleanup fees. In 1990, faced with a federal criminal indictment alleging environmental crimes, the company agreed to pay $100 million in restitution and $150 million in fines.

The next year, it paid $900 million to settle state and federal civil claims over environmental damage.

The company has also spent an estimated $2 billion to clean beaches and inlets in Prince William Sound and the Gulf of Alaska and to restore wildlife habitat.

The oil killed half a million birds outright and tainted an estimated 1,500 miles of coastline. Today, scientists still worry that oil trapped under hard-shell mussel beds will slowly leak and cause long-term chronic pollution.

"Money can't really correct all the harm done," John Havelock, a former Alaska attorney general who directed a state commission formed to examine the spill, said last week.

"I guess you could say the trial will show that a million dollars in prevention would be better than a billion dollars in court fines," he said.

The fishermen, landowners and Natives' case will be heard in four phases in front of U.S. District Judge Russel Holland. Each phase is expected to last a month.

In the first phase, jurors will be asked whether Exxon should be liable for punitive damages. Jury members will decide yes or no, according to O'Neill.

O'Neill's strategy hinges on former skipper Joseph Hazelwood, the veteran Exxon employee who was tried and acquitted in state court in 1990 for operating a vessel while drunk. Hazelwood has appealed a misdemeanor conviction for negligently discharging oil.

The 1990 federal indictment filed against Exxon but never brought before a jury alleged that Exxon lawyers had heard allegations about Hazelwood 19 months before the accident, including accusations the skipper "regularly hosted" onboard drinking parties. Jurors will hear from the former captain in a plaintiffs' videotape lasting more than three hours.

"This is a big, powerful company that didn't care enough about its employee or the public to do anything about the employee's personal problems," O'Neill says of Exxon and its captain.

Exxon spokesman Dennis Stanczuk declined specific comment on the trial in two telephone interviews in the last two weeks, but a company lawyer has said Exxon's trial strategy will be to concentrate on marine science, fish abundance and whether there are any lingering effects from the accident.

When the jury comes back with its yes or no decision on punitive damages at the close of the first phase of the trial, it will be put aside as the second phase of the trial begins.

In the second phase of the trial, the same jurors will hear biologists and economists testify about the actual damage done by the spill, including loss of fishing income.

About the same time, June 6, a second civil trial begins in state Superior Court and involves seven towns whose mayors say they lost municipal services diverted to the spill. Other state plaintiffs include 13 Alaska Native corporations, which have claimed damage to lands and archaeological sites.

A second jury will be selected to determine if they suffered any damages. The courts have ruled that the municipalites, villages and Native corporations are not elibible for punitive damages.

Once the federal jury has dealt with the issue of compensatory, or actual damages, phase three of the federal case will begin. There will only be a phase three if the jury decided that Exxon is liable for punitive damages. If Exxon is, phase three is to decide how much.

O'Neill said he will try to show that what Exxon spent on cleaning up the spill and settling with the state and federal governments did not effect the company's profitability. O'Neill said it will take a $15 billion fine to truly punish the oil giant.

The fourth phase of the trial is scheduled to mop up any undecided issues from the first three phases.

Lawyers on both sides predict the trial will last all summer and say it is the most complicated of its kind ever to be tried in the state.

Almost 600 witnesses are scheduled in a case that has amassed 2,000 depositions and 5 million pages of documents. Lawyers planned to manage the paper trail with an in-court computer that will retrieve evidence and automatically display it for the jury.

In pretrial motions, Holland rejected Exxon's request to withhold financial data, including its total wealth, from jurors in the punitive damages stage. He also barred Alaska Natives from collecting for damage to their culture and way of life. They may, however, still sue for economic damage, such as loss of fish, wild game and plants that make up their traditional diet.

Daily News reporter Natalie Phillips contributed to this story.

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