The Exxon Valdez Reopener: Natural Resources Damage Settlements and Roads Not Taken

• Publication year: 2005

§ 22 Alaska L. Rev. 135. THE EXXON VALDEZ REOPENER: NATURAL RESOURCES DAMAGE SETTLEMENTS AND ROADS NOT TAKEN

Alaska Law Review
Volume 22
Cited: 22 Alaska L. Rev. 135

THE EXXON VALDEZ REOPENER: NATURAL RESOURCES DAMAGE SETTLEMENTS AND ROADS NOT TAKEN

WILLIAM H. RODGERS, JR. WITH J.B. CROSETTO III, C.A. HOLLEY, T.C. KADE, J.H. KAUFMAN, C.M. KOSTELEC, K.A. MICHAEL, R.J. SANDBERG and J.L. SCHORR ^[*]

I. INTRODUCTION

II. ROADS NOT TAKEN

A. The Third Trustee: A Missing Tribal Presence

B. Disapproval of 1991 Settlement

C. A Reconstituted and Better-Directed Council

D. The Civil Suits: More "What Ifs"

E. Double Hulls and Margins of Tolerance

III. THE ROAD TO BE TAKEN: APPLYING THE REOPENER

A. Legal Conditions

IV. CONCLUSION

FOOTNOTES

The 1989 Exxon Valdez oil spill caused extensive natural resource damage to the Prince William Sound. Lawsuits addressing this natural resource damage resulted in a settlement that required Exxon to pay $900 million over time to trustees charged with spending this money to restore the damaged environment of the Sound and nearby areas. The settlement included a "Reopener Clause," which pledges Exxon to spend an additional $100 million to fund restoration or rehabilitation of resources whose injuries were not foreseeable in 1989. This Article urges the State of Alaska and the United States to seek enforcement of the Reopener Clause, to restore natural resources and Native subsistence uses that were not addressed in the initial settlement and have not recovered from the Exxon Valdez oil spill. Alternatively, this Article urges Native entities to intervene in the case and seek enforcement of the Reopener Clause.

[*pg 136]

This was the largest oil spill ever to have occurred in U.S. waters and the largest anywhere this far north. ^[1]

I. INTRODUCTION

Prince William Sound, Alaska, lost its innocence in March of 1989 when the tanker Exxon Valdez went aground on Bligh Reef. This terrible spill killed more birds, contaminated more shoreline, covered more water, spawned more lawsuits, and ruined more lives than any oil spill in the history of this continent. ^[2]

The spill was so big that experts cannot agree on its volume, though it was clearly the largest spill in the United States. Exxon's figure, 10.8 million gallons, ranks it Number 34 in the "Top 65 Spills Worldwide," but more recent calculations -- up to 30 million gallons -- would bump it to Number 15 on the list. ^[3] The spill's geographic reach is more obvious: oil reached to the far corners of Prince William Sound and way down the Alaska Peninsula. ^[4]

[*pg 137]

Figure 1. Spill: The Wreck of the Exxon Valdez, Alaska Oil Spill Commission Final Report, State of Alaska, February 1990, p. 62.

Despite its extensiveness, the lawsuits addressing the natural resources damage were settled amicably. On October 8, 1991 Judge H. Russel Holland approved a settlement among Exxon, the United States, and the State of Alaska. ^[5] The agreement required Exxon to pay $900 million over time to natural resources "trustees," identified in the settlement documents as the United States and the State of Alaska. ^[6] The Trustee Council, composed of three appointees of the United States and three from Alaska, would [*pg 138] spend this money to restore the damaged environment of Prince William Sound and nearby areas. ^[7]

Part of the inducement for this settlement was the so-called "Reopener clause," titled in the Agreement and Consent Decree as a "Reopener for Unknown Injury." This clause reads:

Notwithstanding any other provision of this Agreement, 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:

the cost of a restoration project must not be grossly disproportionate to the magnitude of the benefits anticipated from the remediation; and

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. ^[8]

Resort to the Reopener is constrained by a filing requirement:

The Governments shall file with Exxon, 90 days before demanding any payment pursuant to Paragraph 17, detailed plans for all such restoration projects, together with a statement of all amounts they claim should be paid under Paragraph 17 and all information upon which they relied in the preparation of the restoration plan and the accompanying cost statement. ^[9]

The Reopener helped seal the settlement. The governments told Judge Holland that it was an important hedge against miscalculations or excessive optimism, fueled by the desire to settle quickly. ^[10] Early in the settlement process, Alaska and the federal [*pg 139] government announced they were looking for at least $1 billion in damages. ^[11] Environmental Protection Agency ("EPA") Administrator William Reilly "insisted" that the agreement contain $300 million in a special compensation fund for additional, later-discovered damage to natural resources. ^[12] This demand underlies the Reopener clause in the final settlement agreement, and was opposed by Exxon executives from the start -- the settlement negotiations nearly ran aground because of Mr. Reilly's insistence on the Reopener. ^[13] Exxon and Mr. Reilly compromised on a diminished Reopener, requiring Exxon to pay up to $100 million after 2001, if necessary. ^[14]

This Article urges the State of Alaska and the United States to seek enforcement of the Reopener clause. To date, neither Alaska nor the federal government have requested any of the $100 million Exxon may be required to pay to compensate for additional damages resulting from the oil spill. We offer extended comment on this most famous of all natural resource damage cases. Special attention will be paid to legal roads not taken.

II. ROADS NOT TAKEN

A. The Third Trustee: A Missing Tribal Presence

1. Natural Resource Damages at Common Law.

Modern natural resource damages ("NRD") law is rooted in the common law public trust and parens patriae doctrines. The "public trust" doctrine arose in the 1892 Illinois Central case, ^[15] and supports the idea that public resources must not be lost. ^[16] The Alaska Constitution similarly reflects an understanding of the common ownership and stewardship of natural resources. ^[17]

[*pg 140]

Parens patriae, "parent of the country," protects the public trust by granting states standing to sue as guardians of natural resources. ^[18] A leading case, Georgia v. Tennessee Copper, ^[19] recognized a state's quasi-sovereign interest in protecting its environment for its citizens: "[T]he state has an interest independent of and behind the titles of its citizens, in all the earth and air within its domain. It has the last word as to whether its mountains shall be stripped of their forests and its inhabitants shall breathe pure air." ^[20]

Another powerful underpinning of natural resource protection is the Indian trust doctrine. ^[21] Because of history, tradition, religion, and cultural beliefs, the Native voice is often Nature's voice:

Every part of this soil is sacred . . . Every hillside, every valley, every plain and grove, has been hallowed by some sad or happy event in days long vanished. Even the rocks, which seem to be dumb and dead as they swelter in the sun along the silent shore, thrill with memories of stirring events connected with lives of my people, and the very dust upon which you now stand responds more lovingly to their footsteps than to yours, because it is rich with the blood of our ancestors and our bare feet are conscious of the sympathetic touch . . . . ^[22]

The common law does not isolate who can speak for nature. There are at least three government voices (federal, state, and tribal), and sometimes many others. Moreover, nothing in the common law origins of NRD statutes eschews prevention in favor of restitution.

2. Federal Natural Resource Damages Statutes.

Natural resource damages statutes build on these common law foundations, authorizing the federal government, states, and Indian tribes to act as trustees. The main statutes addressing hazardous substance spills are the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA" or "Superfund") ^[23] and [*pg 141] the Oil Pollution Act of 1990 ("OPA"). ^[24] The tribal presence is confirmed in each. ^[25]

Superfund addresses the clean-up of hazardous substances and counts NRD among recoverable response costs. ^[26] It specifies clean-up responsibilities and techniques. Superfund also makes clear that sums recovered as NRD by the United States or any state -- but not by a tribe -- are available "for use only to restore, replace, or acquire the equivalent" of natural resources. ^[27]

OPA was a direct Congressional response to the Exxon Valdez spill, and it brought oil under the...