Bay Area Spill Negotiation May Set Pattern for Valdez

As experts try to assess damage wrought by the Exxon oil spill in Alaska, government lawyers here are demanding that Shell Oil Co. pay several million dollars in compensation for a major spill near San Francisco Bay last year.

As part of the settlement offer, Shell is being asked to create new parks and wetlands near the site of the 441,000-gallon spill, sources familiar with the case say.

Officials directly involved in the negotiations would not place a value on the proposal, though separate sources familiar with the case say the value may top $10 million. Shell spokesman Bill Gibson declined to comment on the negotiations.

Requests Put in Letter

Shell and 16 federal, state and local agencies with jurisdiction over the spill hope to settle without a court fight. To this end, government lawyers on Feb. 28 sent the company a letter setting forth their requests. The sides now are in secret negotiations. If the talks fail, a suit likely would be filed.

If Shell meets the demand, the deal would be one of the biggest settlements ever over an oil spill affecting U.S. waters. The package would be in addition to Shell’s estimate that cleanup and restoration cost $12 million.

“We’ve done an internal assessment for settlement purposes, and we have commenced negotiations,” said Deputy Atty. Gen. Sara Russell, who is heading the government’s negotiation effort.

“I would hope it would settle. It’s in everybody’s best interest,” said Contra Costa County Deputy Dist. Atty. James L. Sepulveda, who is part of the negotiating team. “It’s no big secret that we’re talking substantial sums.”

Shell’s 441,000-gallon spill pales in comparison to the multimillion-gallon Valdez disaster. But although no two spills are the same, the process leading up to the Shell spill negotiations sheds light on what goes on long after an oil slick dissipates.

“We hope that some of the material we gathered will assist them up there with the legal problems in figuring out how to restore Prince William Sound,” said Mark Pollack, who heads the Solano County district attorney’s environmental crime section and is part of the negotiating team.

In the April 22 Shell spill, tar-like crude leaked from a broken pipe into a moat-like berm that encircled a huge storage tank. The berm might have contained the oil, but an open valve in the berm allowed it to flow into the Carquinez Strait, which separates San Francisco Bay from the Sacramento-San Joaquin River Delta, and eventually into sensitive wetlands, as well as the bay.

The demands on Shell followed a detailed damage assessment by economists and wildlife experts. The process was so specific that economists calculated the worth of individual birds, and emotional stress of mariners whose boat hulls were coated with oil, and homeowners whose waterfront property was despoiled.

In the negotiations, corporate and government lawyers will try to determine the worth of hundreds of birds and animals that died. One factor in the complex computations is what people will spend to view birds, including such costs as park entrance fees and mileage.

To understand the long-lasting effects, Shell is being asked to fund a study of the impact of a spill. At first glance, the wetlands that were fouled reveal virtually no sign of the spill. New foliage is growing and birds are nesting in the marshes. But wildlife populations may be down because of the spill.

Effects Not Isolated

And in an already polluted bay, biologists have had a hard time isolating the effects of the spill. Striped bass, which were spawning, may have been damaged, but the bass population has been troubled for years. Salmon may be depleted, but whether the spill is the cause cannot be known.

“It is reasonable to expect depressed salmon yields three or four years down the road, because of the drought and perhaps because of the spill,” said Larry Kolb of the San Francisco Bay Regional Water Quality Control Board.

There is continuing damage too. As was the case in both the Valdez and Shell spills, some of the oil sank. Each time the shipping channel is dredged, that crude is stirred up--to the detriment of bottom-dwelling fish such as sturgeon.