State, Federal Claims Against Exxon Settled

TWO and a half years after the Exxon Valdez supertanker struck Bligh Reef, the biggest legal cases arising from the nation's worst oil spill have ground to a resolution.US District Court Judge Russel Holland accepted a $1.25 billion deal that settles the federal and state governments' civil and criminal claims against Exxon. The slight alterations made in a $1 billion deal he and Alaska lawmakers scuttled five months ago were enough to convince the judge to accept the deal. Even the settlement's major booster, Alaska Gov. Walter Hickel, admitted that the new deal is nearly identical to the old deal, which fell apart after Judge Holland rejected its criminal plea agreement and the Alaska House of Representatives voted 2 to 1 to reject the package. "This is a little bit like the day of resurrection," a beaming Governor Hickel said as he signed the civil agreement in front of a crowd of reporters and state officials on Oct. 1. "I thought at one time that this situation was dead." What is new about this settlement, which is not subject to either legislative or public review, is cooperation among plaintiffs suing Exxon. Just before Holland announced the settlement Oct. 8, the state and federal governments made pacts with Alaska natives, fishermen, and other private parties. The governments agreed to share scientific, economic, and legal information with the private plaintiffs and to start new restoration projects to help natives whose traditional food sources were damaged by the spill. In exchange, the private groups agreed to drop lawsuits against the governments. This removed many of the objections to the previous set tlement and lessened the likelihood of the state fighting its own citizens in court. Also new is the composition of the criminal plea agreement, which enables Exxon to escape a trial. The new criminal package calls for a $100 million restitution payment and a $25 million fine in exchange for guilty pleas to four misdemeanor environmental counts. Holland in April had rejected the earlier deal, which put $50 million into the restoration fund and $50 million into the federal Treasury, as inadequate to deter other potential corporate polluters. But mostly what has occurred since April is the passage of time. "I call it 'oil-spill burnout, says Rick Steiner, a fisherman and environmental leader from the Prince William Sound town of Cordova. "People are tired of the Exxon thing, for sure. Exxon has much more waiting power than we do." Mr. Steiner says he welcomed the settlement because most of the money, to be paid out over a decade, will go into a trust fund designed to restore the spill-damaged environments of Prince William Sound and the Gulf of Alaska. That is a goal he has sought for two years, and he is anxious to stop further environmental degradations on Prince William Sound's shorelines, where chain saws have already begun clearcutting the northern edge of the world's largest temperate rain forest. His top priority is to buy back timber rights for areas in eastern and southwestern Prince William Sound that are scheduled for heavy logging. Despite Steiner's optimism, criticism of the settlement persists. The new settlement actually costs Exxon $4.8 million less, after taxes, in current dollars that the deal rejected last spring, according to a state legislative study. Discounted over the decade-long payment period and accounting for the tax deductibility of restitution payments, the settlement will cost Exxon $462.9 million in today's dollars, the study said. Holland's approval came on the day that the Los Angeles Times published a story, based on preliminary scientific and economic studies, tallying the spill's damages at $3 billion to $15 billion. Critics claim the state and federal governments, particularly the ardently pro-development Hickel administration, sold the spill victims short in order to seal a deal before the US Congress begins debating whether to allow oil drilling in the Arctic national Wildlife Refuge. The Sierra Club and other groups, disappointed by the settlement and concerned about Hickel's development schemes, have mounted a recall campaign against the governor. "This case was settled for political, structural, let's-get-on-with-life purposes," said Dave Oesting, one of the lead attorneys for the thousands of private plaintiffs suing Exxon. Hickel's frequent public declarations that the rejected settlement was a "marvelous" deal for Alaska and that the state and US governments would be lucky to get over $1 billion sorely hampered any negotiating posture public officials might have had with Exxon, Mr. Oesting said. But Alaska Attorney General Charles Cole lauded the deal as the best possible risk-reward tradeoff. The $3 billion-to-$5 billion damage figures were based on contingent valuation, a method that determines the value of natural resources by extrapolating people's willingness to pay for environmental protection. It is a system that has never been used successfully to win legal damages, Mr. Cole said. On March 24, 1989, the Exxon Valdez struck Bligh Reef and spilled about 11 million gallons of crude into Prince William Sound. Although one long chapter is completed, the story of the disastrous spill and the consequent litigation is far from over. Exxon still faces some 300 lawsuits filed by tens of thousands of fishermen, Alaska natives, owners of small Prince William Sound business, and other individuals affected by the spill. Alyeska Pipeline Service Company, operator of the trans-Alaska pipeline and its Valdez marine terminal, also faces hundreds of suits. Alyeska had the legal duty of initial response when the Exxon Valdez went aground; environmentalists say its failures make the consortium as great a villain as Exxon in the spill. The state continues to pursue its lawsuit against Alyeska for punitive damages, even though the Exxon settlement precludes collection of natural-resource damages from the consortium.