Ten years later, case is hardly closed
Exxon's PR mess still isn't cleaned up
By Gary Strauss, USA TODAY
March 4, 1999, Money Section Page 1The Native Americans in Alaska's Prince William Sound remember March 24, 1989, as the day the water died.
Ten years after the Exxon Valdez ran aground and spewed 11 million gallons of crude oil into the Sound, the social, legal, political and environmental repercussions are very much alive - a quagmire almost as thick as the spill itself.
Closure? Not anytime soon. As the 10th anniversary of the nation's worst oil spill nears, scores of Prince William Sound residents remain in mourning. To most outsiders, the Sound looks as pristine as it did before the spill. Yet scientific debate rages over the extent of damages and the ecosystem's recovery.
Haunted by images of oil-coated sea otters and waterfowl gasping for life, many area residents are still financially strapped and emotionally scarred.
Exxon has spent almost five years trying to overturn a federal 1994 jury verdict holding it liable for $5.2 billion in punitive spill-related damages. Legal wrangling over the lawsuit by thousands of commercial fishermen and Native Americans claiming losses could drag on another year.
"In 24 years of law, I've never had a case where there have been no settlement talks. Until now," says plaintiffs' attorney Bill O'Neill. "They'll take this to the Supreme Court just to jack us around."
Exxon defense attorney John Daum, now nicknamed Dr. Delay by legal eagles, argues that Exxon shouldn't have to pay beyond the $3 billion already forked out for cleanup, fines and compensation. "We're appealing not to delay, but not to have to pay," he says.
Activists, such as marine biologist Riki Ott, remain steadfast that the spill's physical imprint lingers because, they say, the Valdez spewed triple the amount Exxon reported. The company stands by the 11 million gallon count.
Because his 1990 conviction on negligently discharging oil remained on appeal, former ship Captain Joseph Hazelwood has yet to serve a 1,000-hour community service sentence. Barring further legal efforts, Hazelwood could begin serving time this summer picking up roadside trash in Alaska.
Titanic troubles
"Remember the Valdez!" isn't the official battle cry of environmentalists, but it could be. A coalition of conservation and public interest groups from Greenpeace to Public Citizen is using the spill's anniversary as a clarion against Exxon's planned $77 billion merger with Mobil Oil, global warming and oil development in Alaska's National Wildlife Refuge.
Exxon is the world's seventh-largest company, and its 80,000 employees outnumber Prince William Sound's 50,000 residents. Yet it has used little of its girth to mitigate the public relations fallout from the spill, when the company was criticized for its delayed response. Instead, the Valdez remains emblematic of PR disasters, and Exxon still is reviled by some consumers who no longer buy its gasoline.
Chief Executive Lee Raymond, Exxon's president at the time of the accident, plans no statements or interviews related to the 10-year anniversary. Exxon won't attend the state's leading commemorative event, a symposium sponsored by the University of Alaska's Sea Grant College Program.
"It's a bit too media-oriented than we would find helpful," says Frank Sprow, Exxon's chief environmental and safety program manager. Instead, Exxon will be participating in an industry oil spill conference in March in Seattle. Wednesday, a self-dubbed "truth squad" of scientists and environmentalists said it would attend the conference to refute Exxon.
"Instead of using the 10th anniversary to turn things around, Exxon still has a festering wound," observes Don Neal, a principal in consumer image consultant Focalpoint Marketing. "There may be smart economic reasons to drag this out, but do they outweigh the damage to the Exxon brand?"
Perhaps. While its appeal is pending, Exxon must pay about 6% interest on the $5.2 billion jury award, roughly $800,000 a day. But that's a relative bargain, considering Exxon's double-digit returns on equity as it continues to keep its $5.2 billion at work.
Exxon has yet to suffer much financial fallout from the spill. The $3 billion tab has been mitigated by $780 million in insurance reimbursements and hefty tax breaks for spill-related expenses.
If anything, the spill accelerated Exxon's decision to streamline and restructure operations, moves which most industry rivals later mirrored to boost profits in the wake of slumping crude oil prices, says George Gaspar, an industry analyst with Robert W. Baird.
Exxon shares have outpaced rivals. Their performance isn't too shabby compared with the broader market either - up 360% since the spill, vs. 415% for the Standard & Poor's 500-stock index.
Coming home to port?
Exxon continues to push the psychic envelope of many Prince William Sound residents with a legal fight to bring the Valdez back to Alaska waters. The tanker, renamed the SeaRiver Mediterranean, was permanently banned from the Sound by the 1990 Oil Pollution Act. Built in 1986 for Alaska-to-West Coast refinery runs, the ship cost Exxon $130 million and $25 million for post-spill repairs. Since 1990, it has ferried Middle East crude to Europe.
Exxon's efforts to return the ship to Alaska "is like putting the Enola Gay (the B-29 that dropped the atomic bomb) into passenger service to Hiroshima," says Rick Steiner, a marine conservationist with the University of Alaska Sea Grant Marine Advisory Program. "It shows extraordinary insensitivity and arrogance."
The spill spread over 10,000 square miles, hitting 1,500 miles of shoreline, including several national parks and wildlife refuges. Kill estimates range up to 350,000 birds, 2,800 sea otters, 300 harbor seals, 250 bald eagles and 22 killer whales. Billions of salmon and herring eggs were smothered.
Most Exxon-sponsored studies have found that the Sound's ecosystem virtually has recovered. "What you see is a place that's thriving," says Exxon's Sprow. "The biological communities are in good shape."
David Page, a Bowdoin College scientist who led several Exxon-financed research efforts, says the isolated oil deposits that remain "amount to a basketball court in an area the size of Rhode Island."
Government scientists counter that lingering oil pockets are like toxic land mines, harmful to fish for decades. National Marine Fisheries Service research chemist Jeff Short says his laboratory study found that oil toxicity levels one-tenth Alaska's allowable limit can hurt pink salmon for generations. There are similar levels in the Sound, he says.
Exxon-sponsored research is often sullied, Short says. "Their studies are chronically underpowered. There's not enough statistical support," Short says. The Exxon Valdez Oil Spill Trustee Council says just two of 24 animal species hurt by the spill have recovered - the river otter and bald eagle.
The council, a state and federal group that manages post-spill restoration and research, oversees $900 million Exxon paid in 1991 to settle a civil lawsuit regulators filed after the spill. The council has spent $400 million acquiring 635,000 acres of wildlife habitat.
'Still very hard feelings'
Arguments between lawyers, scientists, environmentalists and the oil industry have done little to help area residents put the Valdez spill behind them. "There are still very hard feelings against Exxon," says Trustee Council Director Molly McCammon. "Many people haven't gotten their lives together and moved on."
That sentiment is pervasive in Cordova, a commercial fishing community of 2,500 hit hard by the fallout. "Prior to the spill, the Sound was just a phenomenal place," says commercial fisherman Alan Capp. "I always thought my future was tied to it. Not anymore."
Regional commercial fishing permit values have sunk from a pre-spill $300,000 to less than $30,000. Many fishermen banked on the permits as floating retirement accounts. Capp blames their plunging market values largely on the spill. He acknowledged that commercial salmon farms, plunging prices and cyclical harvests also have hurt.
Native Americans who counted on the Sound's bountiful fish, crab and shrimp as prime food sources now rely heavily on store-bought goods. "It's not only the money," says Cordovan and Native Alaskan Patience Faulkner. "There's a cultural price to pay, too. Subsistence living used to be a way of life here."
Techno-disaster fallout
J. Steven Picou, a University of South Alabama sociologist who led an interdisciplinary study of the region's residents from 1989-1997, says the long-term financial and emotional stress remains pervasive.
"People were heavily dependent on wildlife for occupational and cultural lifestyles, which were severely threatened by the spill," says Picou, co-author of the Exxon Valdez Disaster. "There are still signs of depression and post-traumatic stress disorder. The anniversary will rekindle lots of bad memories."
Clearly, there are some positives from the spill. It led to stiffer government regulations as well as beefed up spill prevention and response by Alyeska Pipeline Service, the industry consortium that manages the Valdez port terminal and the 800-mile Trans-Alaska Pipeline. Alyeska established the Ship Emergency/Response System - the world's biggest spill prevention and response base, with 300 employees.
Escort tugs now accompany outbound tankers; one is always tethered to the stern. Powerful new tractor tugs are being ushered in to further ensure that tankers don't stray from shipping lanes.
The Coast Guard now tracks tankers throughout the Sound. Pilots now remain with tankers until they pass Bligh Reef, 25 miles south of the port. Ship captains are tested for alcohol and drugs. The combined safety measures have substantially cut risks of a major spill, says Alyeska President Robert Malone.
Double-hulled ships, designed to retain crude if an outer hull ruptures, are perhaps the best risk-reducer. They're required under the Oil Pollution Act, but not mandatory until 2015. Congressman Robert Menendez, D-N.J., wants to toughen legislation to cover more ships. "This goes far beyond Alaska," he says. "This is about preserving our national resources. Spills can still happen."
Indeed, 10 spills greater than the Valdez have occurred the past 10 years, and almost 1 billion gallons of crude have spilled worldwide, says Jim Polson, editor of Oil Spill Intelligence Report. But in terms of impact, the Valdez spill was one of the worst, its aftermath a cancer on Prince William Sound.
"We depend on the Sound economically, culturally, spiritually and emotionally," says Ott. "Even though Exxon is trying its best to make things seem fine, things still aren't fine up here."
© Copyright 1999 USA TODAY, a division of Gannett Co. Inc.
Reprinted here with permission.
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