Exxon Indicted in Alaska Spill : Environment: Federal grand jury’s five criminal counts could bring fines of $640 million. The oil firm is accused of having used incapable crewmen on its tanker.

A federal grand jury here indicted Exxon Corp. and its shipping subsidiary Tuesday on five criminal counts arising from last year’s massive Exxon Valdez oil spill, a move that Atty. Gen. Dick Thornburgh in Washington said “throws the environmental book” at the company.

If convicted on all counts, Exxon could be fined $640 million based on current assessments of the damage caused by the March 24, 1989, spill, which wreaked environmental havoc from Prince William Sound to locations as far as 700 miles away.

The federal charges allege that Exxon, the world’s largest oil company, and its Exxon Shipping Co. subsidiary were responsible for employing crewmen they knew to be “physically and mentally incapable of performing the duties assigned them.”

The grand jury charged that the helmsman of the Exxon Valdez was known to be “incompetent” and that the mate on watch at the time of the accident “lacked the required Coast Guard certification” to pilot a tanker in Prince William Sound.

In a statement issued at the company’s New York headquarters, Exxon Chairman Lawrence G. Rawl said: “Nobody willfully grounded the ship or caused the spill.” Rawl said Exxon is “disappointed that the federal government has taken this step, but we will defend ourselves in court against these charges.”

Describing the spill as “a tragic accident,” he said Exxon has paid more than $180 million to 13,000 fishermen and other claimants and spent more than $2 billion on cleanup efforts. He said the company intended to resume cleanup operations this spring.

The five-count indictment was handed down in a magistrate’s courtroom located just a few blocks away from the chamber where fired Exxon Valdez captain Joseph Hazelwood is standing trial on state criminal charges stemming from the spill.

The federal charges contained no direct mention of allegations raised in the state trial that Hazelwood’s alcohol consumption could have contributed to the disastrous grounding, which dumped nearly 11 million gallons of crude oil into the pristine waters of the sound.

The indictment named only the two corporate defendants and included no officers or employees of Exxon, but Thornburgh said the federal government’s investigation of the oil spill is continuing.

Thornburgh told a press conference in Washington that “the Justice Department believes that the pristine environment in Alaska has been severely damaged due to the negligence and unlawful conduct by Exxon Corp. and Exxon Shipping.”

“By pursuing criminal charges in this case, the federal government is sending a strong signal that environmental crimes will not be tolerated,” Thornburgh said. “Firms which violate the environmental laws will face tough prosecution in the federal courts. We intend to see that the environmental laws are fully and strictly enforced.”

The indictment was returned by the grand jury after attempts by Exxon and the federal government to reach a negotiated plea collapsed. Thornburgh said the plea bargain failed because Exxon rejected “terms we insisted on.” He declined to elaborate.

Although Thornburgh said a plea bargain agreement remains a possibility, the indictment sets the stage for what could become the most bruising environmental battle ever to reach the federal courts.

The plea bargain negotiations had drawn sharp criticism from Alaska’s Atty. Gen. Doug Baily and other state officials who contended the settlement would hamper the state’s ability to recover hundreds of millions of dollars in damages through civil court actions.

That abortive settlement agreement had called for Exxon to pay $150 million into an environmental restoration fund. An additional $350 million might have been added in subsequent years, but under terms favorable to Exxon and with the company retaining veto control over how the money would be spent.

The federal government also would have agreed to drop any civil suits for damages against Exxon, a term Exxon apparently hoped that the state also would accept.

It was unclear Tuesday to what extent Alaska’s rejection of the deal may have affected Exxon’s decision to turn down the government’s final offer.

Alaska Gov. Steve Cowper emerged from a meeting Tuesday with Thornburgh to applaud the collapse of the plea bargain deal, saying Alaska’s bottom line was “we need to recover whatever it takes to restore our environment to what it was before the Exxon Valdez.”

Negotiations over a possible settlement had been going on for months. The Justice Department had expected the matter to be settled as long ago as last fall.

In fact, during Thornburgh’s mid-October trip to the Soviet Union, plans had been made to return via Anchorage so that the attorney general could announce the indictment and settlement agreement, sources said.

A frustrated Thornburgh recently told aides that he was tired of the case dragging on unresolved. A source said his order was: “settle or indict.”

Timing of the indictment drew criticism from Michael Chalos, an attorney for Hazelwood, who said the government should have waited until the Hazelwood trial was concluded.

“They’re risking a mistrial,” Chalos complained. “After 11 months of investigation, why couldn’t they wait another two or three weeks until we’re done?”

In the nine-page indictment, Exxon was charged with violations of the Clean Water Act, the Refuse Act, the Migratory Bird Treaty Act, the Ports and Waterways Safety Act and the Dangerous Cargo Act.

The charges under the latter two laws are felonies that are subject to a fine of up to $500,000, according to Richard B. Stewart, assistant attorney general in charge of the Justice Department’s land and natural resources division.

The 1972 Ports and Waterways Safety Act “requires the owner, master or other persons in charge of a vessel to ensure that the wheelhouse is constantly manned by competent persons.”

The Dangerous Cargo Act bars any person from being engaged on the crew of a tanker vessel if he is known to the employer to be physically or mentally incapable of performing his assigned duties.

The three misdemeanors--all related to damages caused by the spill--each provide for fines of up to $200,000 each.

As of last September, more than 36,000 dead birds, including more than 100 bald eagles, had been found in the areas affected by the Exxon Valdez spill. Stewart said they were “believed to be a fraction of the total which may have been killed.”

The $640-million penalty could be meted out under the Alternative Fines Act, which provides that a fine equal to two times any actual financial loss caused by a defendant can be levied by a court.

In this case, the bigger fine would be based on the amount of money spent by the government on cleanup efforts, damage claims paid by one or both defendants and natural resource damages, including the effect of the spill on the life cycle of plants and marine resources.

Exxon Chairman Rawl said the company believes “there is no statutory basis for the amount of the fines mentioned” by Thornburgh.

The indictment drew praise from environmental groups, tempered somewhat by relief that the reported plea bargain did not materialize.

“We are pleased that the government recognized that the deaths of marine mammals and birds, and the damage to the environment is a criminal offense,” said George T. Frampton Jr., an attorney for the Wilderness Society.

“It might be in the government’s interest to settle these criminal offenses with a plea, but we were alarmed at the reports of setting aside the civil case,” Frampton said.

“I like the idea of putting the blame on Exxon and the system where it belongs,” said Mike Humenik, chairman of Save Our Shores. “Until now, the blame has been focused on Hazelwood when it more appropriately belongs to the system.”

Sharon Newsome of the National Wildlife Federation in Alaska expressed some dissatisfaction, telling CBS News that “It is unconscionable that corporate officials were not also indicted. This does not send the signal to businessmen across America that needs to be sent.”

But Emily Barnett of the Sierra Club’s Alaska field office called the indictment “a very positive first step.”

Ronald J. Ostrow reported from Washington and William C. Rempel from Anchorage. Staff writer Rudy Abramson in Washington also contributed to this story.