Exxon-Alaska Civil Oil Spill Pact Collapses

Exxon Corp. and Alaska Gov. Walter J. Hickel on Friday both pulled out of the civil portion of a proposed $1.1-billion agreement with federal officials that would have settled liability against the oil company arising from the devastating 1989 oil spill in Alaska’s Prince William Sound, scuttling the deal for good.

The withdrawals, which came a day after Alaska’s House of Representatives rejected the civil settlement in a 27-13 vote, signaled the final collapse of the controversial agreement that had been hammered out among Exxon, state and federal officials as a way to avoid a lengthy court battle.

Collapse of the civil settlement had been feared since a federal judge in Anchorage nine days ago threw out the portion of the agreement that would have settled criminal charges against the company, stunning all parties involved.

Judge H. Russel Holland called a proposed $100-million criminal fine, which would have been the largest ever paid for polluting, inadequate to deter a company of Exxon’s immensity from future spills.

Friday’s actions sent all parties back to the drawing boards.

Proponents of the settlement had argued that it would have freed funds immediately to restore lands damaged by the spill and avoid costly and time-consuming litigation. Opponents had said it gave short shrift to Native Alaskans and other third parties and had let Exxon off the hook too easily.

An Exxon spokesman declined to say Friday why the company pulled out of the deal or whether it would either pursue a new civil settlement or proceed to court.

In Washington, U.S. Assistant Atty. Gen. Richard B. Stewart said in a statement: “Since Exxon has terminated the agreement, there is no reason for the United States to take any action other than preparation for trial in this matter.”

For his part, Hickel--who had pushed the settlement--gave no indication of what he would do. He said he was bowing to the will of the Legislature but expressed disappointment that the pact fell through.

“I remain convinced that the settlement would have been in the best interest of the people of Alaska,” he said in a statement. “With the termination of the settlement, we will now have to spend millions each year on lawyers to litigate with Exxon.”

Stewart expressed similar regret. “The United States is disappointed that the availability of funds for restoration of Prince William Sound will apparently have to wait until a long and arduous litigation process has been completed,” he said in a statement.

But others who had attacked the settlement as too lenient on the oil company said they hoped Exxon would now agree to a more generous settlement.

“This should be considered the beginning of the final step of negotiation,” said Rep. Max Gruenberg (D-Anchorage), the House majority leader. “If (Exxon) walks away, a jury will tell them exactly what the House has told them: that the settlement was too low. . . . And if Exxon wants to roll the dice with my constituents, I invite them to do that.”

The litigation arises from the spill of 11 million gallons of crude oil from the tanker Exxon Valdez after it ran aground on Bligh Reef in March, 1989. The spill fouled more than 700 miles of coastline, killing hundreds of thousands of birds, thousands of sea otters and hundreds of harbor seals.

In addition, claims poured in against Exxon from Native Alaskans, fishermen, tour boat operators, small business owners and others who said the spill disrupted their livelihoods.

The settlement would have called on Exxon to pay $900 million to the state and federal governments over 11 years to repair natural resource damage from the spill, and as much as $100 million more for possible damage not yet determined.

But after Exxon Chairman Lawrence G. Rawl said the settlement would not significantly affect the company’s earnings, the House called for much stiffer terms: payment of $700 million within 15 months, as well as a criminal fine of at least $500 million, with $100 million of that going to restitution for economic losses.

The state Senate adjourned Friday with no decision on the settlement.

It’s unclear whether government officials will seek to negotiate a new settlement or proceed to trial.

“It’s been a very expensive day,” said Sen. Richard Eliason (R-Sitka), president of the state Senate. “I don’t think it was in the best interests of the people of Alaska to reject that agreement.”

He doubted that the parties would now be willing to negotiate a new agreement.

As for the criminal charges still pending against Exxon, Holland gave the company 30 days to decide whether to seek a new plea agreement or proceed to trial.

The civil settlement was drawn into doubt earlier this week when another federal judge, Stanley Sporkin in Washington, said he was worried that the settlement might harm the prospects of Native Alaskans to pursue separate claims against Exxon.

David Oesting, an Anchorage lawyer speaking for 13,000 private plaintiffs suing Exxon, said the settlement never adequately represented those people and, therefore, needed to be rejected.