Judge Orders Exxon, Governments To Resolve Valdez Spill Claim

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March 9, 2011

A federal judge has ordered Exxon Mobil Corp. (XOM), the U.S. Department of Justice and the state of Alaska to expedite talks on a 2006 claim by the federal and state governments for $92 million to restore coastal areas damaged by the Exxon Valdez oil tanker spill in 1989.

Late Monday, U.S. District Court Judge H. Russel Holland rejected a request by a retired university professor to file a “friend of the court” brief in the governments’ decades-old case against Exxon. The judge noted that the case has been closed since 1991, when the governments and Exxon reached an agreement. However, Holland also acknowledged that the case appeared unresolved. He asked the governments and Exxon to resolve the 2006 claim and any other pending issues.

As part of the 1991 agreement, Exxon paid $900 million in civil damages and agreed to pay as much as $100 million in additional funds to cover environmental damage caused by the spill that wasn’t initially known.

In 2006, the federal and Alaska governments invoked the “reopener clause” in the settlement and billed Exxon for $92 million to cover the cost of removing larger-than-expected amounts of crude oil that remained on beaches near Valdez in Prince William Sound. The governments said at the time that the results of pending scientific studies might change the amount the governments would ultimately request.

Richard Steiner, a retired marine conservation professor at the University of Alaska, unsuccessfully filed a motion to reopen the case, then asked the court for permission to file a “friend of the court” brief, in an effort to get Exxon to pay the $92 million in environmental mitigation claims, plus interest.

Steiner, who has studied killer whales and other Alaska marine wildlife, said in an interview that several species of whales, birds and other wildlife have not recovered from the Valdez oil spill, the nation’s second-largest oil spill after BP PLC’s (BP, BP.LN) Deepwater Horizon spill in the Gulf of Mexico last year.

Steiner said he was concerned that the government’s delay in collecting agreed payments to fix environmental damage in Alaska suggested that it may act similarly on any agreement it might reach with BP to cover the cost of environmental damage in the Gulf of Mexico.

“The pit in my stomach over all this is, what’s going to happen in the Gulf of Mexico and any future damage done?” Steiner said. Steiner was referring to the April 2010 explosion on a Gulf of Mexico rig that resulted in the worst offshore oil spill in U.S. history.

Alaska officials are focused on completing scientific studies, perhaps by next year, to build a strong case for obtaining environmental restoration money from Exxon, said Bill McAllister, a spokesman for state Attorney General John Burns.

“When we finally demand the money from Exxon, we want to have a strong scientific basis for the remedial work that we propose to do,” McAllister said in an interview. He added that the governments have been in ongoing negotiations with Exxon on the matter.

Telephone calls to Exxon and the U.S. Department of Justice weren’t immediately returned.

Both the federal and state governments opposed Steiner’s request to file a brief, saying they were handling their claim.

Exxon also opposed Steiner’s request, arguing that it has no further obligations under its agreement with the federal and state governments.

Judge Holland, who has presided over the Exxon Valdez case for two decades, said the governments and Exxon appeared to be making progress on negotiations over additional payment to cover the cost of environmental cleanup. However, he said there was a “public perception that the matter has been unresolved for far too long,” and he urged the governments and Exxon to resolve the claim and report back to the court on the status of those talks by Sept. 15.

“The court urges the governments and their trustees to proceed with all possible speed to complete studies that are underway and any necessary evaluation which they may require,” the judge wrote in the ruling.

-By Cassandra Sweet, Dow Jones Newswires

Photo: Prince William Sound

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