Exxon Indictment Unusual in Many Ways, Experts Say : Litigation: The size of possible fines and the use of seldom-used provisions of federal statutes make some suspect a settlement is being sought.

Last year’s spill of 11 million gallons of oil from the Exxon Valdez into Alaska’s Prince William Sound was unprecedented, dwarfing any other oil spill in U.S. history.

So it is not surprising that the criminal indictment returned this week against Exxon Corp. arising from the spill is similarly ground-breaking--both in the magnitude of the potential fines and in the Justice Department’s unorthodox use of existing laws--legal experts said.

Exxon could be fined as much as $640 million if convicted on all counts--an amount that would far overshadow other recent penalties:

It would far surpass the $19.75 million agreed to in November by Shell Oil Co. to settle claims arising from an April, 1998, spill of oil in San Francisco Bay. That is believed to be the largest dollar settlement for natural resource damage resulting from an oil spill in U.S. history.

It would dwarf the $100 million in damages agreed to by Amoco Corp. to settle claims from the world’s worst tanker spill, in which 68 million gallons of oil spewed from the Amoco Cadiz into the ocean off the coast of France in 1978.

The fine would also exceed by many times the total $26.1 million in fines imposed by the Justice Department’s entire environmental crimes unit in the years 1983 through 1989.

“The Exxon Valdez spill is the Everest on a desert landscape,” said Richard Golob, publisher of Golob’s Oil Pollution Bulletin in Cambridge, Mass.

The five-count criminal indictment against Exxon also makes unusual use of seldom-used criminal provisions of several federal statutes and cites a statute that would allow fines to be double the amount of proven losses--believed to be only the second time that the so-called Alternative Fines Act has been applied in an environmental case.

“I think it’s a creatively drafted indictment, but I would certainly look with some suspicion on the prospects for successful prosecution,” said Richard L. Jarashow, a New York lawyer specializing in civil maritime litigation. “I think they really tried to stretch their imaginations, perhaps for a political purpose, to put a square peg into a round hole.”

Critics have even suggested that the Justice Department drafted the indictment in such a way as to make it difficult to prosecute, thereby setting the stage for an out-of-court settlement of the criminal charges.

Such a proposed settlement was reportedly dropped amid intense publicity after opposition by the state of Alaska before the indictment was handed up.

Neither Exxon nor Justice Department officials were available to comment on the indictment Thursday. On Tuesday, U.S. Atty. Gen. Dick Thornburgh said the indictment was intended to send a signal that firms that violate environmental law would face tough prosecution in the courts.

In any case, the Exxon indictment comes during a period of increased activity by prosecutors in the Justice Department’s environmental crimes unit: In fiscal year 1989, the unit reported 107 convictions and settlements, the most in seven years.

The five-count Exxon indictment was returned Tuesday by a federal grand jury in Anchorage, Alaska, charging Exxon with violations of the federal Clean Water Act, the Refuse Act, the Migratory Bird Treaty Act, the Port and Waterways Safety Act and the Dangerous Cargo Act.

“Whereas you typically see civil complaints brought by the U.S. government under the Refuse Act and the Clean Water Act, the applications under the Ports and Waterways Act and the Dangerous Cargo Act are to my understanding unique,” Jarashow said.

It is also unusual for federal officials to pursue huge fines through criminal, rather than civil, proceedings, said Daniel Riesel, a New York lawyer specializing in environmental matters and a former U.S. attorney.

Jarashow also cited the rare use of the Alternative Fines Act in a criminal environmental proceeding. Environmental lawyers could cite only one other such use of the act, by a federal judge who cited it in ordering Ashland Oil Inc. to pay $2.25 million in criminal fines for violating the Clean Water Act in a 1988 spill that fouled two rivers in three states.

All told, Ashland agreed to pay $30 million to settle civil claims arising from the spill of 750,000 gallons of diesel fuel into the Monongahela and Ohio rivers from a ruptured storage tank at Floreffe, Pa.

ENVIRONMENTAL DISASTERS AND THE LAW The Exxon indictment comes during a period of increased activity by prosecutors in the Justice Department. In fiscal year 1989, the unit reported 107 convictions and settlements, the most in seven years. Of the 432 convictions since 1983, 127 were corporations and 305 were individuals.

Source: Justice Department