Judge Approves $1.125-Billion Oil Spill Settlement

A federal judge in Anchorage, terming Exxon Corp. “a good corporate citizen,” Tuesday approved a controversial $1.125-billion agreement between the giant oil company and the U.S. and Alaskan governments to settle criminal and civil cases stemming from the largest oil spill in the nation’s history.

U.S. District Judge H. Russel Holland--who had rejected an almost identical settlement last spring on grounds that it was insufficient to deter future spills--accepted guilty pleas from Exxon Chairman Lawrence G. Rawl and Exxon Shipping Co. President Gus Elmer to four misdemeanor pollution charges.

“There’s no question . . . we regretted this spill,” Rawl, surrounded by company lawyers, said in a reference to the March, 1989, Exxon Valdez disaster in Prince William Sound.

“Looking at the criminal case, I think the punishment fits the crime,” Holland said during the three-hour hearing. “What is now very clear to me is that Exxon has been a good corporate citizen.”

Though the final settlement requires Exxon to pay only $25 million more than the pact rejected by Holland last spring, it is structured to provide $50 million more for restoration of Prince William Sound, with less paid in criminal fines to government treasuries.

Environmental groups, disheartened at the news, began conferring Tuesday on whether to try to overturn the settlement.

“This is really very disturbing,” said Sarah Chasis, a senior attorney with the Natural Resources Defense Council. “We’re examining our legal options for intervening.” A federal court first would have to grant outside parties the right to challenge the government settlement.

“We continue to believe that the settlement does not provide an adequate deterrent for Exxon and does not reflect the true damages to Prince William Sound in Alaska,” said Eric P. Jorgensen, staff attorney for the Sierra Club Legal Defense Fund in Juneau, Alaska.

Chasis said she expected that a coalition of national and Alaskan environmental groups--including the National Wildlife Federation, the Sierra Club Legal Defense Fund, the Natural Resources Defense Council, the Trustees for Alaska and the National Audubon Society--would participate in any attempt to block the settlement.

Meanwhile, hundreds of separate lawsuits filed against Exxon by environmentalists, fishermen, Native Alaskans and others will continue to be pursued.

Holland commended Exxon for its cleanup efforts--which the company says have cost $2.5 billion in the 2 1/2 years since the spill--and for voluntarily paying some private claims before they went to court.

The judge deemed those payments “really quite extraordinary.” Of the negotiated $125-million criminal settlement, which includes $100 million to be used in the restoration of Prince William Sound, Holland said its likes “have about never been seen in this country.”

Government lawyers showed Holland charts indicating that the total criminal fines, forfeitures and restitution payments collected in all federal environmental cases between 1983 and 1990 were just $56 million.

The new settlement also includes $900 million in civil payments to reimburse government agencies for cleanup and research costs and to restore Prince William Sound, with the potential of another $100 million if that proves inadequate.

Critics noted that unpublished federal and state studies, as reported Tuesday by The Times, suggest that the total costs of damage to Prince William Sound could run from $3 billion to $15 billion--far above the terms of the settlement.

“The judge seemed to be willing to go forward without the damage data,” said Debra L. Donahue, a staff attorney with the National Wildlife Federation in Anchorage. “We just don’t know how this settlement stacks up against those studies.”

Some economists critical of the settlement terms say that the $900-million civil portion represents far less in real dollars to Exxon--most estimates are half or less--because it will be paid in installments over the next decade.

Exxon stock closed up 87.5 cents at $60.125 in trading Tuesday on the New York Stock Exchange.

“It’s a matter of having that behind them,” explained Thomas P. Blakeslee, an energy analyst with the Pegasus Econometric Group, a financial consulting firm. “The spill was lingering over their heads, depressing the stock, for the past year or so.”

Rep. George Miller (D-Martinez), chairman of the House Interior Committee, denounced the settlement terms.

“Exxon has bought its way out of one of the worst environmental insults in this country’s history,” Miller said Tuesday. “For a company that earned over $5 billion in profits in a year, the $25-million increase over the last settlement is financially inconsequential.” In Anchorage, Holland said during the hearing that many of the settlement’s critics “are more interested in revenge than restitution and restoration.”

The state and federal governments and Exxon had signed the latest settlement last week and sent it to the judge for approval.

Exxon pleaded guilty to violation of the federal Migratory Bird Treaty Act. Its Exxon Shipping Co. unit pleaded guilty to violating the Clean Water Act, the Refuse Act and the Migratory Bird Treaty Act, all federal laws.

Free-lance writer David Hulen in Anchorage contributed to this story.

BACKGROUND

The tanker Exxon Valdez ran aground in March, 1989. The resulting 11-million-gallon oil spill fouled the formerly pristine waters of Prince William Sound as well as 1,200 miles of Alaskan coastline. An earlier plea-bargain proposal was rejected in March, 1991, by a federal judge. The new agreement settles all criminal and civil lawsuits between Exxon Corp., the U.S. government and the state of Alaska over damage.