Anchorage Daily News

State and federal officials in charge of spending Exxon Valdez oil spill settlement funds are pushing new efforts to reach "closure" on controversies about environmental damage posed by crude oil, some of which still lies buried in the sands of Prince William Sound.

Since the election of Gov. Frank Murkowski in 2002, the oil spill trustees have put some broader, long-range scientific projects on hold. Instead, the trustee council has directed Exxon settlement funds to studies of herring and other injured species in hopes of writing the final chapter on spill damage and the effects of so-called lingering oil.

A key piece of that work has been contracted to a private Seattle consulting firm that normally does much of its work for companies accused of pollution. Integral Consulting has $850,000 in contracts to weigh conflicting studies by government and Exxon scientists and reach independent conclusions on the lingering spill impacts. A state lawyer said the firm is expected to have some answers by late summer or fall.

The change in priorities has drawn strong protests from public advisers and scientists, who say they don't know what's going on because the council has conducted little open discussion. Some critics say they fear the Murkowski and Bush administrations are eager to close the book on a resource-development public-relations mess.

TRUSTEE COUNCIL MISSION

The trustee council was formed to oversee restoration of the ecosystem damaged by the 1989 Exxon Valdez oil spill. The company tanker hit a charted reef and dumped a reported 11 million gallons of crude oil into Prince William Sound.

The oil spill trustees say they haven't been secretive. But under fire from their public advisory group, which approved a sharply critical resolution last month, they say they are trying harder to make their intentions plain. In recent interviews, several trustees said the new priorities are necessary in part to address the lingering oil, which only showed up in studies beginning in 2001.

"The lingering oil was something no one contemplated back in '89 when the spill happened," said Drue Pearce, the Alaska special assistant for the U.S. Department of the Interior, who holds a federal seat on the Exxon Valdez Oil Spill Trustee Council. Pearce said she visited a beach last summer with still-smelly oil buried in the sand and found it "astounding."

Pearce said findings of the Integral Consulting study will be important to state and federal lawyers, who must decide by the summer of 2006 whether to seek additional damages of up to $100 million from the spiller, now known as Exxon Mobil. The 1991 settlement between Exxon and the state and federal governments included a short "reopener" period allowing new claims based on environmental harm that was not foreseen at the time.

UNRESOLVED QUESTIONS

That litigation deadline aside, the trustees appear uncomfortable with having unresolved questions of environmental damage hover indefinitely over the Sound.

"Maybe (herring) will never recover. But we need to bring closure to that question," said Kurt Fredriksson, acting commissioner of the Department of Environmental Conservation and one of three state trustees. "We need to get restoration of those resources taken care of, or conclude that we cannot."

Scientists involved in past research have questioned the apparent change of direction, saying the new council members were ignoring years of scientific planning and recommendations from peer-review groups. Many were concerned that broader ecosystem research, considered by previous administrations the best way to examine long-term spill impacts, would eventually be canceled. The trustees have $106 million left for scientific work from the $900 million civil settlement paid by Exxon.

Trustees have recently assured them that the long-range work will continue after this pause, said Brenda Norcross, a University of Alaska marine science professor and co-chairwoman of the trustees' scientific advisory committee.

Critics also expressed concern over the Christmas-week firing of the trustee council's science director, Phil Mundy, who had helped build the old research program.

"It's very difficult to get all the work done without a science director," Norcross said.

Mundy said he was given no reason except that his firing was ordered by Murkowski's office. Trustee council executive director Gail Phillips said she could not discuss the decision because it was a confidential personnel matter.

SKEPTICISM ABOUNDS

The council's actions were viewed warily by the advisory committee set up under the settlement to ensure public involvement in how the funds are spent. In January, the committee passed a resolution branding council actions last August secret and illegal, and calling on the council to reconsider its work plan, this time in public.

"I think the controversy is more the secrecy of how they are doing it," said committee member Pat Lavin of the National Wildlife Federation. "We think it's pretty clear the council violated its own procedures."

Lavin and others say the push for new priorities has come largely from trustees representing the state.

Some question giving the important job of summarizing past research to an independent firm like Integral Consulting.

"They're a complete outsider to this. I don't think they've got the history to make the judgment," said Stan Senner, a longtime science coordinator for the trustee council who is now executive director of Audubon Alaska.

But Craig Tillery, an assistant attorney general for the state who has been involved in the oil spill since the tanker hit Bligh Reef, said it's the right time for an independent summary.

"You've got these disparate studies. You don't have an analysis," Tillery said.

Stacy Studebaker, a Kodiak environmentalist who has served nine years on the public advisory committee, is suspicious.

"I think there's a mandate on the state trustees to get this thing over with, to tidy things up," Studebaker said. "They're trying to clean up a PR mess with Exxon."

But her fellow committee member Lavin said the focus on answering the big remaining questions seems to make sense.

"It's exactly what they should be doing," he said. "My great fear is that, voila, the studies show that everything's great. But I have no reason to think that will happen."

LONG-TERM PROJECTS

The trustee council, made up of six top bureaucrats from the federal and state governments, has spent $375 million on buying and protecting habitat, $176 million to reimburse governments for spill response costs, and $173 million on scientific studies.

By the spill's 10-year anniversary in 1999, with echoes of the Exxon Valdez catastrophe growing fainter, officials and science advisers were turning attention to planning long-term projects under the umbrella of the so-called Gulf Ecosystem Monitoring Program, or GEM. In 2002, most of the remaining money, around $87 million, was set aside for GEM studies looking at long-range spill impacts in the context of broader changes in the North Pacific. The council now spends between $3 million and $5 million a year on various studies.

The Bush-Murkowski council began to change course in 2004. An August decision to turn down funding for some GEM projects drew a stern complaint from University of Alaska president Mark Hamilton. He said the council had ignored recommendations of staff and science advisers in rejecting high-ranked projects by university scientists while funding some that had been recommended against.

"Violation of the practices and tenets of science sponsorship which have for generations guided successful research in this country -- including peer review, openness, and transparency -- puts at risk the scientific credibility of not only yourselves as trustees, but the organizations you represent," Hamilton wrote the trustees last September.

The state trustees responded with a stout defense of their prerogative, saying their "highest priority" was projects with "the most direct and immediate restoration effects" on damaged resources and lost services. "While some disappointment is expected among investigators whose projects did not receive funding, no reasonable person should conclude a conspiracy exists in the process or a mystery surrounds our decisions," the state trustees wrote to Hamilton.

Studebaker came back with a newspaper column saying the council didn't need to rubber-stamp projects but did need to explain its reasons. Its failure to do so in August had been "a stick in the eye" to those trying to keep public the often-politicized science surrounding the Exxon Valdez spill, she said.

Trustee council members are now going further to explain their thinking, saying the attention to assessing and restoring damage is essential under the council's 1994 work plan.

"From where I sit, it was a nicety that we jumped to too quickly," DEC's Fredriksson said of the GEM program. "We hadn't completed the restoration work that had to be done."

He said an assessment of resource recovery hadn't been made since 2002. At that point, five species and several other resources were listed as still recovering, while eight species were listed as "not recovering."

The apparent shift in priorities makes some sense to one prominent oil industry critic, Rick Steiner, a marine biologist at the University of Alaska Anchorage. Steiner, who has pushed government officials to stay focused on restoring the Sound, said it is important for the council to not allow its endowment to become a "cash cow" for general scientific research.

Steiner said he's worried, however, that the Bush and Murkowski administrations appear hostile to reopening spill litigation around continuing effects of the spill, which he contends go far beyond sheens leaching into the water from buried oil. He said debating the larger questions in court could reflect badly on their efforts to open other areas to oil drilling.

"The last thing they want is discussion of 15-year long-term damage we didn't expect," Steiner said.

CONFLICTING INTERESTS?

An example of these conflicting interests, cited by Steiner and others, is that Phillips, who made $105,000 last year as the trustee council's executive director, has played a prominent role in Arctic Power, the group promoting oil development in the Arctic National Wildlife Refuge. Last year, Phillips was Arctic Power's co-chairman. She recently resigned the leadership position because of the complaints, she said, though she remains on the group's board.

"In my mind, it was never a conflict because I had been doing it for so long," said Phillips, a former state House speaker and candidate for lieutenant governor. "But I could understand where people could have thought it was."

Phillips said the question of whether to reopen the spill case is up to state and federal lawyers, not the trustee council.

Tillery, the assistant attorney general, said government lawyers are seriously exploring the potential for a reopener. He would not comment further.

It was Steiner who obtained secret trustee council documents in 2003 outlining the possibilities for reopening the case at that point. The documents, featured in a subsequent story in the Wall Street Journal, detailed growing scientific concern over lingering oil and cited unanticipated damage to pink salmon, sea otters, mussels and harlequin ducks.

"Much, if not all, of the information upon which a claim would be made is generated by the Trustee Council's restoration program," wrote Molly McCammon, Phillips' predecessor, in one of the secret memos.

That was then. Now, said Pearce, vital information for making any such claim is likely to be drawn from the analytical study of lingering oil and damaged resources by Seattle-based Integral Consulting.

INTEGRAL CONSULTING STUDY

The national consulting firm was first recommended to the state for spill restoration work by Murkowski's first DEC commissioner, Ernesta Ballard, who served as a spill trustee until resigning last year. Ballard said this month she had worked with Integral on a project for the Ketchikan Pulp Co. before joining state government.

According to the company's Web site, Integral is a specialist in polluted sediments and does much of its work for private companies accused of spills -- "potential responsible parties," in the legal term. Integral has also been involved in cleanup for government agencies such as the Port of Seattle, its Web site said.

The company reported at a January symposium that initial findings show the buried oil continues to leach into the environment, but most of the resources "currently" classified as injured are not exposed to it, Integral's Web site said.

Several calls to Integral officials handling the Alaska project were not returned.

Trustee council meetings are known for the jaw-dropping tedium of discussions about scientific appropriations of tens of thousands of dollars. So it was all the more surprising that there was little discussion on March 1, 2004, when the council returned from a lunchtime executive session and voted to give $1.5 million to the state Department of Law for research "to fill in gaps related to lingering oil."

The motion was made by Jim Balsiger, Alaska administrator for the National Marine Fisheries Service, with little discussion, other than to specify that the department should work with federal agencies and with Integral Consulting. Ballard seconded.

Assistant attorney general Tillery spoke briefly in support, saying the lingering oil was "a cloud hanging over us of unfinished business," according to a transcript of the trustee council meeting.

Integral later received a $200,000 contract to study sediments and a $650,000 contract to analyze the lingering oil data and provide a fresh assessment of how species have recovered. The latter contract also calls for recommendations on monitoring and treatment of old oil, as well as "effective communication" to the public of the technical results.

CONFUSION LINGERS

Public confusion about the state's intentions has not been helped by turnover among the Murkowski administration trustees. In addition to Ballard, who left last October to become a senior vice president for the forest products giant Weyerhaeuser, Fish and Game Commissioner Kevin Duffy resigned at the end of the year to head the factory trawlers association. Now the third trustee, Attorney General Gregg Renkes, has resigned amid conflict of interest allegations involving a coal technology company.

Fredriksson said the spill trustees sought to explain themselves with a passage in their annual report released this month, which Phillips read aloud when asked about the changes:

"Over the next eighteen months, the Council has determined the need to realign priorities and restorative activities, placing focus on critical work required to reach closure in areas of restoration related to lingering oil and injured species."

The trustees also acceded to a request from public advisory committee members for more dialogue, Phillips said. The next council meeting, scheduled for June in Cordova, will include time for an unprecedented back-and-forth conversation with committee members, she said.

"I think most of the trustees would agree we haven't done as great a job of communicating with our PAC as we might," Pearce said.

Reporter Tom Kizzia can be reached at tkizzia@adn.com or in Homer at 1-907-235-4244.