Rick Steiner is currently in the middle of a legal battle with Exxon Mobil Corp. over the company's reneging on a cleanup agreement stemming from its oil spill in Alaska's Prince William Sound over 22 years ago.
Steiner, an independent consultant of conservation biology and formerly a professor and marine conservation specialist at the University of Alaska,filed an amicus brief in October to compel the government to demand payment from Exxon.
Litigation against Exxon began in 1991 when the State of Alaska and the Justice Department demanded the company pay for the impact of the Exxon Valdez oil spill in Alaska's Prince William Sound. In the lawsuit, Exxon agreed to pay $900 million over ten years for the cleanup costs, which they did. However, the settlement also included a “reopener clause,” which would allot $100 million of the settlement to unforeseen harms in the future (or until the clause expired in 2006).
Curiously, even though both the Department of Justice and the State of Alaska sought the additional funds back in 2006, five years later, they are not holding Exxon Mobil accountable to its promise to pay.
Peter Van Tuyn is an environmental attorney in Alaska and previously held a position as the director of litigation for the trustees for Alaska where he helped push the initial legal pressure against Exxon in the reopener case.
He believes the government is not pushing hard to collect the money Exxon promised because in doing so, uncomfortable questions would raised about official policies. “If the government were to publicly hold Exxon accountable, the general population would have to re-examine this country's relationship to fossil fuels and transportation policy,” he said.
Citing the lingering damages to the environment due to the 1989 spill, Steiner was essentially the only party demanding accountability from the oil company. But the District Court in Anchorage denied his amicus.
“Exxon does not want to pay a dime; the governments say they want to 'study it some more,' knowing they have no case; and the court that approved the provision twenty years ago says now it has no hand here. Everyone is running for cover on this – a real insult to the public interest,” Steiner said.
Jeff Ruch is the executive director of Public Employees for Environmental Responsibility (PEER). PEER has recently filed a Freedom of Information Act (FOIA) request to the Department of Justice asking that it reveal the studies it says are completed or near completion. “If we do not get the requested material by next month, we will likely sue for violation of FOIA,” Ruch said.
There is a six-year statute of limitation that extinguishes the reopener claim entirely next summer. The Department of Justice declined to comment on the grounds that the case was still in litigation; however, the US District Court in Anchorage has set the next, perhaps final hearing in the case for November 15.
According to Steiner, now that his amicus has been thrown out, the outcome will boil down to the court either ruling in Exxon's favor and dismissing the case altogether, or ruling in the government's favor and indefinitely delaying any action.
Exxon Mobil Defends Refusal to Pay Remaining Oil Spill Damages
Alan Jeffers, a spokesperson for Exxon Mobil Corp. said that the company does not think it should pay the reopener money due to the wording of the 1991 settlement:
“Between September 1, 2002 and September 1, 2006, Exxon shall pay to the Governments such additional sums as are required for the performance of restoration projects in Prince William Sound and other areas affected by the Oil Spill to restore one or more populations, habitats or species which, as a result of the Oil Spill, have suffered a substantial loss or substantial decline in the areas affected by the Oil Spill; provided, however, that for a restoration project to qualify for payment under this paragraph the project must meet the following requirements:
(a) the cost of a restoration project must not be grossly disproportionate to the magnitude of the benefits anticipated from the remediation; and (b) the injury to the affected population, habitat, or species could not reasonably have been known nor could it reasonably have been anticipated by any Trustee from any information in the possession of or reasonably available to any trustee on the Effective Date.”
“The bottom line,” Jeffers said, “is that the reopener clause was insurance against a catastrophic failure of species.” Asked if he thought the herring population collapse in Prince William Sound after the Exxon-Valdez oil spill would be enough to invoke the clause, he denied it, saying that the cause of the herring species collapse was undetermined and could not be conclusively linked back to the oil spill.
Semantics, Political Pressure May Lead to Oil Company Win
Van Tuyn cites this same issue of semantics as the likeliest reason Exxon Mobil Corp would win the case. He goes on to say that if the US District Court in Anchorage dismisses the case against Exxon, there would be implications for all such agreements in the energy industry. “Unless you have an ironclad agreement up front, you can't count on this industry to fulfill its promises later on,” he said.
Steiner notes a political relationship in Alaska, which could be a major influence in the outcome of the case: Alaska's current governor is Republican Sean Parnell, who worked for the lobbying firm Patton Boggs, which represents Exxon in all Exxon Valdez matters, including the reopener claim from 2006.
Jeff Ruch agrees that politics are at play when it comes to the failure of the government to hold Exxon accountable. “The position of the Obama Justice Department has not changed a whit from that of the Bush Department of Justice … both governments are seeking to open even more sensitive Alaskan waters to oil and gas development. If it cannot compensate for the effects of this tanker spill in the period of a generation, it raises troubling questions about the prudence of their current stances to open the Alaskan Outer Continental Shelf.”
The one thing Steiner and the oil company can agree on, it seems, is the difference between “cleanup” and “restoration” – the semantics used by Exxon to deny responsibility for any further payment.
“The $92 million government request from 2006 was for more beach cleanup, but Exxon objects to paying it, and wants the claim dismissed entirely,” Steiner said. “Restoration implies a return to the way the environment was before the spill and that isn't likely to happen. Oil spills can last for decades and there is always the possibility the environmental damage can be permanent. Prince William Sound will never be the same again.”
Steiner opposes the proposed “cleanup” plan, arguing that the reopener funds would be better used toward long-term conservation efforts, such as additional habitat protection and marine protected areas.
“It's hard to imagine how more beach cleanup now would be beneficial,” Steiner said. “The additional disturbance to the many struggling wildlife populations, together with the considerable amount of oil that would be remobilized into coastal waters by the cleanup, would likely negate any potential benefit.” Steiner added that if beach cleanup were truly beneficial to recovery, Exxon should follow the “Polluter Pays Principle,” which means that Exxon would be responsible for paying for the damage outside of the reopener clause.
According to Steiner, the 1991 $1 billion settlement with Exxon was the largest attempt in history to restore the environment and reduce the damage caused by the oil spill. This sounds like a lot to you or me, but it is actually small peanuts in the context of Exxon Mobil's profits and one wonders why Exxon is fighting against paying a “measly” $92 million for lingering damages – even less than the sum it agreed to pay under the reopener clause.
It seems like the real “friend of the court” is Exxon itself. In 1994, a separate suit was brought against the company by Alaskan natives for economic damage suffered by the plaintiffs.
An Alaskan court ruled in favor of the plaintiffs, demanding $5 billion in punitive damage awards. After spending hundreds of millions of dollars appealing the ruling, a lower court reduced the verdict to $2.5 billion. Then in 2008, the US Supreme Court overturned the verdict, ruling 5 to 3 that $2.5 billion in punitive damages was “excessive” punishment for the multibillion dollar profiteering oil company and further reduced punitive damages to $500 million.
What this means is that punitive damages, which are essentially punishment fines, cannot exceed compensatory damages the company had already been ordered to pay. The compensatory damages are more or less for the short-term harm caused to the community by the disaster, while the punitive damage money is linked more toward preventing similar negligence in the future.
Community activist and author Riki Ott notes the ominous implications of the Supreme Court case: “By minimizing financial liability – a powerful incentive for corporations to abide by the law – the Supreme Court's ruling practically guarantees that there will be many more such industrial disasters.” This ruling also sets a precedent limiting the size of punitive damages in maritime cases and Ott worries that this will soon be extended to other fields of law.