Exxon Reaches $1.1-Billion Spill Settlement Deal

Exxon, the state of Alaska and the U.S. Justice Department forged a $1.125-billion deal Monday in a fresh attempt to settle criminal charges against the company for the largest oil spill ever to foul U.S. waters.

The pact, announced in Washington and Anchorage, is strikingly similar to a proposal rejected as inadequate earlier this year by a federal court and the Alaskan Legislature.

But proponents believe that the agreement’s modest increase in funds to pay for environmental restoration--along with an earlier settlement with Native Alaskans and other third parties--will satisfy critics.

Details of the proposal were trumpeted by state and federal officials and welcomed by stock market analysts. (Exxon closed up 75 cents Monday at $59.50 a share on the New York Stock Exchange.) But the pact was blasted by environmental groups who say Exxon is not paying enough and that the deal hinders their own lawsuits against the oil giant, which would not be settled under the arrangement.

“This sentence is more than twice the total . . . imposed for environmental crimes in U.S. history,” said Barry M. Hartman, acting assistant U.S. attorney general for the environment and natural resources.

Calling it a “great settlement for the people of Alaska,” Alaska Gov. Walter J. Hickel said: “I believe most Alaskans felt relieved when we brought home the first proposal last March and were rightfully disappointed when the Legislature turned it down.”

The proposal calls for Exxon to pay $25 million in criminal penalties and $100 million in restitution--$25 million more than was agreed to in the first deal--to federal and state agencies for repairs to the damaged environment of Prince William Sound.

In consideration of the estimated $2.5 billion spent by Exxon so far in cleaning up the spill, another $125 million in criminal fines would be forgiven. Exxon Corp. and its shipping affiliate, Exxon Shipping Co., would plead guilty to four criminal violations of federal criminal law.

In an arrangement virtually identical to the initial settlement last March, Exxon would also pay $900 million in civil costs to the state and federal governments--$90 million of it within 10 days of final judicial approval of the agreement.

Though Hickel said he would not submit the new proposal to the Alaska Legislature, some state lawmakers Monday expressed skepticism about the agreement.

The settlement must be approved by U.S. District Court Judge H. Russel Holland in Anchorage--the judge who rejected the earlier pact as an inadequate deterrent to other polluters. The first hearing will be held Oct. 7.

On Monday, most environmental groups rejected the proposal outright.

“For a company that made more than $5 billion in profits last year, this is no more than a mosquito bite,” said Wilderness Society President George T. Frampton Jr.

Environmentalists charged that state and federal officials want to avoid a public trial that could remind the public of details of the Exxon Valdez spill just as Congress takes up the question of opening another vast Alaskan resource--the Arctic National Wildlife Refuge--to oil exploration.

“We think the government is basically trying to get this issue resolved and off the table before the vote on ANWR comes up in the Senate,” said Sarah Chasis, a Natural Resources Defense Council senior attorney representing the NRDC and the National Wildlife Federation in lawsuits against Exxon.

The way was cleared for a deal in the past week as fishermen, Native Alaskans and others dropped lawsuits against the state and federal government in exchange for access to the Valdez spill research gathered by government scientists.

Those groups hope to use the data in their own pending civil suits against Exxon, explained Lloyd Miller, an Anchorage lawyer representing Native Alaskans in their claims against the oil company.

“It just boots us up in the line to get in front of a jury,” said Darrell Totemoff, tribal administrator of Chenega Bay village. Totemoff said that villagers, more than 2 1/2 years after the Valdez spill, still were finding oil in the bays and waterways around their island. They are especially concerned, he said, that the settlement ensure restoration of the environment.

Environmental groups complain, however, that the Native and other so-called “private” groups agreed to keep the government research results out of public hands as part of their settlement talks last week.

“The science is still totally hidden,” said Leonard W. Schroeter, an attorney with Trial Lawyers for Public Justice, a Washington, D.C.-based public interest law firm representing the National Wildlife Federation, Environmental Defense Fund, Alaska Natural Resource Center and Wildlife Federation Alaska in a lawsuit against Exxon.

Yet one Alaskan scientist involved in environmental negotiations since the first days of the spill insisted that the settlement was a good one.

“I think it’s the deal we have to go with,” said Richard G. Steiner, a Cordova, Alaska, commercial fisherman and marine scientist at the University of Alaska. “Without a settlement, we look forward to one to two decades of litigation, and that does no one except a few attorneys any good.”

Exxon officials declined to be interviewed about details of the settlement, but in a statement stressed that the proposal dismisses all federal felony charges and state and federal civil claims against the company.

“I was surprised that Exxon was able to negotiate something this attractive to the company,” said William L. Randol, senior petroleum analyst at First Boston Co. “It’s good news for Exxon, good news for the state and federal government that they’ve got this past them.”

Times staff writer Ronald J. Ostrow in Washington and free-lance journalist David Hulen in Anchorage also contributed to this story.