Exxon Valdez trustees and stakeholders differ on spending of final oil spill settlement funds

Nearly 30 years after ExxonMobil agreed to pay $900 million to help restore resources damaged by the company’s disastrous 1989 Prince William Sound oil spill, more money remains than was once expected, and there are plenty of ideas as to what should be done with it.

The Exxon Valdez Oil Spill Trustee Council, the entity responsible for allocating the civil settlement funds, approved structural changes to the traditional spending plan in January for the roughly $200 million left in the spill restoration accounts that many opposed to the changes have dubbed a “spend-down plan.”

Specifically, the six EVOS trustees — three state-appointed and three federally-appointed — voted to shift the council’s previously annual public review and meetings to a five-year cycle. In October, the council is expected to review and vote on 10-year funding proposals.

Shauna Hegna, president of the Kodiak-area Alaska Native regional corporation Koniag Inc., said in an interview the company has long been in the camp that there is significant value in creating an endowment for the remaining EVOS settlement money that could fund projects in perpetuity.

“The trustees have vocalized that they want to spend down the money,” she said, adding such an objective might meet the immediate needs to restore much of the ecological damage caused by the spill but it is unlikely to adequately support the human services needed to help communities fully recover from the spill.

Kodiak-area villages are, or at one point were, fishing communities that lost their primary economic driver after the spill and, according to Hegna, many now lack the resources to rejoin the industry as the ecosystem has recovered.

“How do you position the next generation to enter that economy now that you’ve recovered the fish resource but the workforce has moved on?” Hegna questioned. “Just doing scientific research doesn’t heal an economy; you have to then invest in that economy.”

She suggested investments in workforce training and programs to help would-be commercial fishermen enter the typically capital-intensive industry.

Chugach Alaska Corp. Lands and Resources Vice President Josie Hickel said based on her research that less than 1% of the total EVOS settlement funds dispersed to-date have gone to Alaska Native communities in the Chugach and Koniag regions.

Hickel emphasized that the scientific research funds regularly go to projects such as fish population monitoring managed by the Alaska Department of Fish and Game and the National Oceanic and Atmospheric Administration through the National Marine Fisheries Service it oversees.

Alaska Department of Fish and Game Commissioner Doug Vincent-Lang and NOAA Fisheries Regional Administrator Jim Balsiger both serve as appointed council trustees.

“They’re just giving themselves money and I’m not saying those programs aren’t necessary or effective, but again, it goes back to this whole idea about process and it doesn’t seem to be open and transparent,” Hickel said.

She and Hegna also said projects to help preserve cultural resources and activities not totally lost to the spill should also be a higher priority for the council.

“Many of those (ecological) resources have recovered 30-plus years later but there are still impacts on our communities,” Hegna said. “The cultural resources that were damaged by the Exxon Valdez oil spill are irreplaceable. Our village economies were changed by the oil spill and that has led to outmigration from many villages in our region.”

Vincent-Lang, through a department spokesman, referred questions to current council chair and Alaska Department of Environmental Conservation Commissioner Jason Brune.

Tribes seek input

Additionally, Chugach representatives have heard from tribal leaders in their region that federal officials have not adequately consulted with them on potential council-supported projects in their communities, according to Hickel.

“There certainly hasn’t been any meaningful consultation in the last five years that I’m aware of,” she said, though council members in recent conversations have indicated a desire to improve outreach to the region’s tribes and villages.

“We get the impression that they’re trying to shore things up, improve their processes and make things more open and transparent and understanding the need to work with Alaska Native communities and the people of the region but to this point it’s all been talk.”

NOAA’s Balsiger, who has spent approximately 15 years on the council over two stints, said in an interview that he believes the council needs to improve its tribal consultation and said the trustees have urged council staff to work with tribal representatives on funding proposals that fit under the terms of the 1991 Consent Decree.

“I understand to the tribes, ‘we’re working on it’ is not a good answer but I hope they can be patient,” he said in regards to more tribal involvement in the council.

Balsiger added that he believes projects focused on restarting cultural activities lost after the spill, such as subsistence harvests, or preserving cultural artifacts, can fit under the settlement.

“I think that if they’re properly put together there’s no problem finding them legitimate under the consent decree,” Balsiger said.

Acting EVOS Trustee Council Executive Director Shiway Wang directed questions about the organization to the individual trustees.

DEC’s Brune, who has chaired the last two EVOS council meetings, said the council’s latest invitation for proposals — those proposals are now being vetted by council staff — requires outreach to Alaska Native organizations in the communities where work is proposed and documentation of the consultation that occurs.

At the first meeting he chaired in early 2020, Brune said he heard from representatives of several tribes and village corporations that they were not made aware of the meeting and he has subsequently met with Chugach and Koniag officials countless times, adding he has encouraged staff to increase coordination with those groups as well.

However, Brune also said “consultation does not mean funding,” explaining that he believes local groups should have the opportunity to fairly compete for funding but having it awarded should not be a foregone conclusion.

“If their projects rank up favorably, absolutely,” he said of directing funding to proposals by Alaska Native organizations.

As to the longer-term funding plans, Brune said they are essential to maximize the efficacy of the available funds while providing certainty to the practitioners of the years-long scientific research and habitat restoration projects the council has historically supported.

“That predictability is incredibly important to scientists,” he said.

Return on investment boosts balance

Brune acknowledged that the council’s broad plan for scientific research calls for spending roughly $100 million over 10 years but also emphasized that the money will not all be allocated at once, meaning what remains will continue to generate investment returns, or it will at least as long as the Permanent Fund does.

As of Jan. 31, the latest financial report available for the council, the EVOS research investment account held $108.8 million and the habitat account held another $88.3 million for total EVOS funds of $197.1 million, which Brune and Balsiger said is a lot more than initial estimates projected would be left.

“Because of the investment success the monies have gone a lot further than anyone ever anticipated, both for science and habitat,” Brune said.

While a very short period of time during which market returns have been exceptionally strong, the recent performance to the investment accounts has more than maintained the balances despite withdrawals.

Through the first months of the 2021 fiscal year the research account, for example, grew by more than $5 million despite $7.6 million in withdrawals because $13.3 million in investment income was generated. It’s a similar story for the habitat account, which started the fiscal year at $82.9 million and has grown to $88.3 million even with $4.6 million in withdrawals for projects and administrative costs.

Having the EVOS funds invested alongside Permanent Fund assets — as many other state of Alaska investments are — may not be an official EVOS endowment “but to me it runs pretty much like one,” Balsiger said.

“The Permanent Fund is a good place to put your money.”

To additional concerns about lifting the requirements for annual council meetings, Balsiger said fewer opportunities for the public to directly provide input to the trustees is not ideal, but added that he expects there will be enough issues to address that formal meetings will still be held pretty regularly.

“Things come up so I would think we will continue to have more frequent meetings than every five years,” he said.

Brune stressed that council staff will continue to monitor and require annual reporting for funded projects, also noting that the council held two meeting last year and is very likely to hold a second this year, which is beyond the prior requirements.

“A meeting for a meeting’s sake is not often necessary but if there’s a funding decision that needs to be made, then absolutely, we should meet,” Brune said.

Stakeholder alternatives

In recent years, an informal group of EVOS stakeholders and generally involved individuals self-dubbed the EVOS Think Tank, which includes Hegna, Chugach board chair Sheri Buretta and former Alaska lieutenant governors Fran Ulmer and Mead Treadwell among others, has pressed the council to transfer the EVOS funds to the Alaska Community Foundation under a plan that would set aside $20 million endowments each for the Alaska SeaLife Center in Seward and the Prince William Sound Science Center in Cordova, among other allocations.

A white paper published by the EVOS Think Tank in February 2020 asserts that the administrative burden of transferring funds between multiple government agencies can consume upwards of 40% of the funding for some projects research and habitat projects and investing with the Alaska Community Foundation would be one way to lessen that overhead.

Balsiger said he’s not convinced the nonprofit groups could manage the money more efficiently. There are also questions as to whether or not the council could legally hand over the $197.1 million even if it wanted to.

According to the council, a legal opinion from Department of Justice attorneys states the federal laws establishing and guiding the council make such a fund transfer illegal.

While some Think Tank members contend the DOJ memo posted to the council’s website is largely legalese that falls short of providing a true legal opinion, Brune insisted DOJ attorneys have kept a more detailed opinion provided to the trustees confidential despite his urging to make it public.

Brune said he is in favor of an EVOS endowment in concept — if it were legal — because he believes the administrative burden could be lessened but not some of the specifics of the Think Tank proposal, which got an endorsement from the congressional delegation in 2018.

“The money could be going directly to Gulf of Alaska ecosystem monitoring and other science,” Brune said, adding, “I wanted to see the SeaLife Center and the Prince William Sound Science Center endowed in perpetuity; talk about a great legacy following the spill.”

Balsiger said new ideas could always come forward but at this point the Think Tank’s proposal is “a settled issue” among the trustees.

Hegna said overall she is “cautiously optimistic” that the steps the council has taken to clarify the policies for distributing funds and the new requirements in the proposal process will result in more opportunities for local involvement and help empower communities in the Koniag and Chugach regions to compete for EVOS funding.

“We’ve had 31 years to right the ship and we’re not quite there yet,” Hegna said.