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Thursday, October 15, 2015

United States and the State of Alaska Opt Not to Recover Additional Damages from Exxon Mobil Under Reopener Provision of 1991 Exxon Valdez Oil Spill Settlement

The Department of Justice and the Alaska Department of Law announced that they are bringing to a close the federal and state judicial actions against ExxonMobil Corporation and its corporate predecessors regarding the 1989 Exxon Valdez oil spill.  The Prince William Sound, Alaska, harlequin ducks and sea otters thought in 2006 to have been impacted by lingering subsurface oil have recovered to pre-spill population levels.  Scientists have concluded that exposure to the subsurface oil is no longer biologically significant to these species.  Accordingly, the governments have decided to withdraw their 2006 request to Exxon to fund bio-restoration of subsurface lingering oil patches. 

The March 1989 grounding of the tanker vessel Exxon Valdez on Bligh Reef in Prince William Sound spilled nearly 11 million gallons of North Slope crude oil that ultimately contaminated some 1,500 miles of Alaska’s coastline.  It affected three national parks, four national wildlife refuges, a national forest, five state parks, four state critical habitat areas, a state game sanctuary and killed enormous numbers of birds, marine mammals and fish and disrupted the lives and livelihoods of Alaskans who rely on those resources.

On Oct. 8, 1991, U.S. District Court Judge Russel Holland approved both a plea agreement resolving criminal charges against Exxon Corporation and Exxon Shipping (Exxon) under various federal environmental laws and a settlement agreement between Exxon and the United States and the state of Alaska resolving all civil claims between them pertaining to the spill.  Under the plea agreement, the company paid $125 million for a criminal fine and restitution.  The civil settlement required Exxon to pay the governments $900 million over 10 years to reimburse past costs and fund the restoration of injured natural resources.  

Since 1991, the Exxon Valdez Oil Spill Trustee Council, composed of representatives from both governments, has used civil settlement monies for significant restoration efforts in the areas affected by the spill, including: projects designed to restore the environment, manage human uses and reduce marine pollution; habitat protection and acquisition; and monitoring and research.  These restoration efforts have successfully accelerated and documented the recovery of natural resources that were injured by the spill.  Further, due to income earned on the settlement funds, the Trustee Council currently has more than $200 million at its disposal for future restoration work.

One unresolved aspect of the 1991 settlement has been a provision in the consent decree entitled “Reopener for Unknown Injury” that allowed the governments to seek up to an additional $100 million if they later found substantial losses or declines in populations, habitats or species that could not have been anticipated at the time of the settlement.  This provision allowed the governments to obtain additional funding from Exxon to restore injuries shown to be both unforeseeable and “substantial” if several conditions were met.  Those conditions include presenting a detailed plan to Exxon by Sept. 1, 2006, for how to restore the substantial loss or decline of natural resources. 

The governments took preliminary actions in 2006 to preserve a potential Reopener claim, by presenting to Exxon a plan to address patches of oil from the Exxon Valdez spill that recent surveys had found in the subsurface sediments and among rocks of a number of beaches in the spill area.  Although this “lingering oil” occurred on only a small fraction of the originally oiled shoreline, the governments viewed it as a substantial loss of habitat because it appeared to be impeding the recovery of two species, harlequin ducks and sea otters, that were injured by the Exxon Valdez spill and forage in the types of beach sediments where the oil persists, thereby exposing them to the lingering oil.  

When Exxon declined to participate, the governments undertook the first stages of the habitat restoration plan, which consisted of a series of scientific studies to improve understanding of why the oil had not yet degraded and to design specific measures to make it non-toxic.  These studies were funded by the Trustee Council from the original settlement monies and have produced significant public information about the distribution and characteristics of the lingering oil, as well as pilot tests to improve techniques for accelerating the bio-degradation of subsurface oil in various types of beaches.  These studies will inform restoration and resource management decisions both in Prince William Sound and in similar areas across the United States and the world.  During this period, however, continued wildlife monitoring showed that the harlequin ducks and sea otters that had appeared vulnerable to the lingering oil have recovered to pre-spill population levels and are no longer exposed to oil more than populations outside the spill area.  Based on this information, the governments and the trustee agencies – the Departments of Agriculture Forest Service and the Interior, National Oceanic and Atmospheric Administration (NOAA), Alaska Department of Environmental Conservation, Alaska Department of Fish and Game and Alaska Department of Law – have concluded that the legal requirements for pursuing a Reopener claim are no longer met.

“Our decision today highlights the trustees’ commitment to excellent science and the success of their restoration efforts since the spill,” said Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division.  “The Reopener in our settlement with Exxon was unique and set a high bar for recovery of additional damages.  Together with our partners in the Alaska Department of Law, we preserved a potential Reopener claim and investigated it to its logical end. Our action today allows us to celebrate all that has been accomplished in Prince William Sound since the spill.”

“Although we will not be pursuing Exxon for additional damages, our decision today does not close the book on lingering oil,” said Attorney General Craig Richards for Alaska.   “We are fortunate to have alternatives for dealing with this issue that can be undertaken without the constraints of the Reopener language.  We will be engaging Alaskans through the Trustee Council process to advise us on what steps they would like to see us take. ”

“I expect the Trustee Council will evaluate whether active restoration should be performed at any lingering oil sites using the same standards and process by which it considers other potential restoration projects,” said Trustee Council member and Senior Advisor Michael Johnson for Alaska Affairs to the Secretary of the Interior. 

The Council has directed restoration efforts since the 1991 settlement and has established transparent procedures, with opportunities for public proposals and comment, for spending the restoration funds paid by Exxon.

NOAA scientists, who were instrumental in developing the information that led to the 2006 habitat restoration plan, will continue to monitor lingering oil sites and provide information to the Trustee Council for use in determining whether additional restoration measures will benefit the affected coastline.  

“Naturally, the persistence of oil is of concern to us,” said Lois Schiffer of the NOAA General Counsel.  “Although the lingering oil is largely in subsurface soil or rocks, it does have the potential, if disturbed, to expose intertidal resources to oil, and its presence can be disturbing to people who come across it.  The real question is whether it is better to intervene or to leave it to break down over time.”

Updated October 15, 2015