Exxon Agrees to Pay $1 Billion for Alaska Spill

Exxon Corp. agreed Wednesday to pay $900 million in damages and a $100-million criminal fine for the Exxon Valdez oil spill in Alaska two years ago in a settlement hailed by Atty. Gen. Dick Thornburgh as “by far the largest single amount ever paid as a result of environmental violation.”

The settlement with the state of Alaska and the federal government includes a reopener clause under which Exxon may incur up to $100 million in additional damages for natural resource effects not now foreseen.

The agreement, spelled out in a consent decree filed in federal court Wednesday, remains subject to the approval of a federal court in Alaska.

By agreeing to plead guilty to misdemeanor crimes, Exxon and its subsidiary, Exxon Shipping Co., will avoid going to trial next month on felony as well as misdemeanor charges. The trial would have further tarred the oil giant’s reputation for the unprecedented damage the oil spill caused to Prince William Sound.

The Exxon Valdez tanker ran aground on a reef in the sound on March 24, 1989, spilling some 11 million gallons of crude oil and fouling more than 700 miles of Alaska’s shoreline, national wildlife refuges and national parks. More than 36,000 migratory birds, including 100 or more bald eagles, and many other species of wildlife died as a result of the spill.

The settlement, announced here by Thornburgh and Alaska Gov. Walter J. Hickel, was praised by government and corporate officials for averting what promised to be a protracted court fight and channeling hundreds of millions of dollars into clean-up and restoration operations.

“We have a winner--environmentally, psychologically and financially,” Hickel said.

Interior Department solicitor Thomas L. Sansonetti said that officials faced a choice of either settling now so that funds could be applied to clean-up and restoration or “spend the next decade feathering the nest of corporate and government lawyers.”

Environmental groups, while praising some parts of the settlement, expressed concern about other aspects of the deal, such as its failure to require release of scientific and economic data that would help measure the true cost of the spill.

Under terms of the proposed agreement, Exxon’s $100-million criminal fine will be divided evenly by the federal government and Alaska, with the state’s $50 million to be applied to the cost of restoring damaged natural resources.

The $900 million in civil damages is to be paid over the next 10 years to federal and state trustees. Of the total, $135 million will cover past expenses, including clean-up and scientific research.

Exxon Chairman Lawrence G. Rawl noted that the company will be able to deduct the $900 million in civil damages in calculating its corporate income taxes, although the $100-million criminal fine is not deductible.

Since the spill, Exxon estimates that it has spent $2.2 billion on cleaning up Prince William Sound and the Gulf of Alaska. The $1-billion settlement would be over and above that amount.

Les Rogers, an Exxon spokesman, declined to disclose the after-tax cost of the settlement or its present value, which would take into account the fact that the money will be paid in increments through 2001.

Rogers described that information as “proprietary,” adding: “We have elected not to make it available.” The agreement provides that six government agencies--three federal and three state--will decide how to allocate settlement funds to restore Prince William Sound and the Gulf of Alaska. Those decisions will affect $765 million in damage funds remaining after past expenses are deducted.

Thornburgh noted that the federal government and Alaska are asking the federal court to allow a 30-day public comment period on the settlement--an opportunity for public reaction not required by law.

Jay D. Hair, president of the National Wildlife Federation, said that the $1-billion settlement and criminal plea “will send a strong message to polluters,” but added: “No one can claim victory over a disaster which will impact people and the environment for decades to come.”

John Adams, executive director of the Natural Resources Defense Council, criticized the failure to require release of scientific information. “Because much of the scientific and economic data will not be released, we cannot know whether the amount of the settlement fully vindicates the right of the public and the environment,” he said.

William K. Reilly, administrator of the Environmental Protection Agency, said that the federal trustees who will help decide how to spend the settlement funds plan to release their data “forthwith.”

Rep. George Miller (D-Martinez), acting chairman of the House Interior and Insular Affairs Committee, said that Congress and the public will raise many questions about the settlement.

Miller said that he plans a hearing April 8 to examine such questions as whether the rights of Alaska natives and other injured parties are protected, whether Exxon should be required to release all scientific data and whether settlement funds will be used to acquire timber rights and other natural resources as part of the restoration effort.

A Justice Department attempt to settle the case in February, 1990, before Exxon and its shipping subsidiary were indicted on the felony and misdemeanor charges fell through when top Alaska officials refused to endorse the settlement.

Thornburgh noted that the earlier settlement proposal fell $400 million short of the amount contained in the final deal.

Exxon and Exxon Shipping were indicted Feb. 27, 1990, and charged with felony violations of the Ports and Waterways Act and the Dangerous Cargo Act, along with misdemeanor violations of the Clean Water Act, the Refuse Act and the Migratory Bird Treaty Act.

Under the plea agreement, Exxon will plead guilty to the Migratory Bird Treaty Act misdemeanor, while Exxon Shipping will plead guilty to all three misdemeanors.