Exxon Withdraws Guilty Pleas in Spill, Setting Stage for Trial

Exxon Corp. on Friday formally withdrew its guilty pleas to federal criminal charges arising from the massive 1989 Alaska oil spill, setting the stage for a trial and marking the final collapse of a proposed $1.1-billion settlement of state and federal lawsuits.

The withdrawal of the pleas to four pollution charges, contained in a filing in Anchorage federal court, comes a month after U.S. District Judge H. Russel Holland rejected a proposed $100-million fine that would have settled the criminal charges.

Holland deemed the fine “simply not adequate” to punish the company and had set Friday as the deadline for Exxon to agree to a new settlement or cancel its guilty pleas.

The criminal case now appears headed for trial. If convicted on the charges, Exxon faces fines as high as $700 million.

The litigation stems from the devastating March, 1989, oil spill in Prince William Sound that killed countless birds, otters, fish and other wildlife and fouled hundreds of miles of pristine coastline. The proposed $100-million criminal fine rejected by Holland would have been the largest ever paid in a pollution case.

On Friday, Exxon announced its action in a terse one-paragraph statement. At company headquarters in Irving, Tex., an Exxon spokesman declined to elaborate on the firm’s rationale or to say whether the company would seek a new agreement.

In Washington, the Justice Department’s top environment official said he was not surprised that Exxon withdrew its guilty pleas. But he left the door wide open to resuming negotiations on a settlement to avoid lengthy litigation. A trial on the charges could take years.

“We deeply regret that the receipt of funds to restore the damaged environment appears to be years down the road,” said Richard B. Stewart, assistant attorney general for environment and natural resources. “However, the United States remains willing to entertain any good-faith proposal by Exxon to resolve this matter short of trial.”

Nonetheless, Stewart said, prosecutors will “continue to prepare for a criminal trial to begin as soon as possible.”

Alaska Gov. Walter J. Hickel said Friday that he would pursue a new civil settlement with Exxon, despite the company’s withdrawal of pleas in the criminal case. “We want to do what is right for Alaska and for our natural resources,” he said in a statement.

Environmentalists were pleased that the settlement was derailed.

“Exxon pleaded guilty in order to get a settlement that fits their needs, and now we’ll have to prove them guilty to get a settlement that fits our needs,” said Robert Hattoy, regional director in Los Angeles of the Sierra Club, one of several environmental groups suing Exxon over the spill. “It’s time to bring them to trial.”

The proposed agreement on the criminal charges was part of an elaborate $1.1-billion settlement reached in March by Exxon, federal authorities and state officials that would have laid to rest their litigation arising from the spill.

Though praised by Bush Administration officials, the proposed settlement drew criticism from environmentalists, Native Alaskan groups and others. They said the deal let Exxon off the hook too easily.

Earlier this month, the company and the state of Alaska pulled out of the civil portion of the agreement after the state House of Representatives rejected it. Exxon this month filed two new suits seeking to limit damages from civil actions pending against it.

But Stewart defended the failed settlement.

“We continue to believe that the plea agreement and the civil settlement were sound,” he said. “In our view, they appropriately served the various goals of punishment and deterrence, while providing immediate and substantial restorative benefit to Prince William Sound and other areas injured by the spill.”

Patrick Lee reported from Los Angeles and Ronald J. Ostrow from Washington. Free-lance reporter David Hulen contributed to this story from Anchorage.