News & Media Opinion Pieces Exxon Valdez. Environmental Law R.I.P.

Exxon Valdez. Environmental Law R.I.P.

By David Shearman

This may seem unlikely subject for members of DEA who work to assist and maintain human health in an age of climate change, but I assure you that it is relevant.

In 1989 the Exxon Valdez, a super-tanker, struck a reef and spilled 11 million gallons of crude oil into the Prince William Sound in Alaska. A few days ago, after nearly 20 years in the Courts, the US Supreme Court reduced by 90% what had once been a $5 billion punitive damages award against Exxon Mobil to $500 million. This was the second legal appeal by Exxon, the first had reduced the damages to $2.5 billion.

The punitive damages are shared between more than 32,000 Alaska Natives, landowners and commercial fishermen most of whom lost their livelihood, is about $15,000. A third have already died. Exxon Mobil had a 2007 profit of 40.6 billion dollars.

The important agenda behind the legal decision was apparent from the following statement “This is good news for companies concerned about reining in excessive punitive damages,” said Tom Donohue, president and CEO of the U.S. Chamber of Commerce. “For years the Chamber has argued that punitive damages are too unpredictable and unfair, and today the Court agreed.”

The Exxon Valdez spill was the worst in American history. It damaged 1,300 miles of shoreline, disrupting the lives and livelihoods of people in the region and killing hundreds of thousands of birds and marine animals. Despite the clean-up, oil remains on beaches and the ecology has not recovered. The herring fishing was lost completely.

The facts are these. The spill occurred after the ship’s captain left the bridge at a crucial moment. An alcoholic, he had downed five double vodkas on the night of the disaster, according to witnesses. But that is not the whole story as researched by Greg Palast of the Chicago Tribune.

In 1969 representatives of Humble Oil and ARCO (now Exxon and British Petroleum) met with the Chugach Natives, owners of Valdez Port, the only conceivable terminus for a pipeline that would handle a trillion dollars in crude oil.

The Alaskan Natives agreed to sell to the Exxon consortium this land for a single dollar and asked only that the oil companies promise to protect their Prince William Sound fishing and seal hunting grounds from oil. Exxon and partners agreed in 1971 to place the Natives’ specific list of safeguards into federal law.

 One of the safeguards was that Raycas radar had to be switched on at all times. But the radar was not turned on. In fact, the tanker’s radar was left broken and disabled for more than a year before the disaster, and Exxon management knew it. It was just too expensive to fix and operate.

 Several smaller oil spills from the Alaska pipeline before the Exxon Valdez should have warned of a system breakdown, but a former Senior Lab Technician said that management routinely ordered her to toss out test samples of water evidencing spilled oil. She was ordered to refill the test tubes with a bucket of clean sea water called, “The Miracle Barrel.”

In a secret meeting in April 1988, oil group executives were warned that, because promised safety equipment had not been purchased, it was simply “not possible” to contain an oil spill past the Valdez Narrows — exactly where the Exxon Valdez ran aground 10 months later.

The Native people demanded (and law requires) that the shippers maintain round- the-clock oil spill response teams. Natives especially qualified by their generations-old knowledge of the Sound were hired for this emergency work. They trained to drop from helicopters into the water with special equipment to contain an oil slick at a moment’s notice. In 1979 they were fired. To deflect inquisitive state inspectors, the oil consortium created sham teams, listing names of oil terminal workers who had no idea how to use spill equipment which, in any event, was missing, broken or existed only on paper. In 1989, when the oil poured from the tanker, there was no Native response team, only chaos.

The avoidance of the agreed safety regulations saved Exxon billions of dollars over the years according to Palast who describes the damages of $500,000 “…. so cheap, it’s like a permit to spill”. However, Supreme Court Justice David Souter wrote that Exxon’s recklessness was ”profitless” – so the company shouldn’t have to pay punitive damages!

From the corporate point of view, Exxon made a mistake in not separating itself from the shipper Exxon Shipping Company. Oil companies usually use flags of convenience and shell companies to avoid compensation for the numerous oil spills around the world. In the US Supreme Court, Exxon argued that the captain was not in effect a “managerial agent” of the company, meaning it could not be held liable for punitive damages stemming from his actions. The court rejected this view.

Some facts about Exxon Mobil.

For readers unfamiliar with the activities of Exxon, it is one of the most powerful companies in the world with huge political power in Washington through lobbying and political donations.

According to Robert Reich, Professor of Public Policy, University of California, “In 1998 Exxon embarked on a campaign to give “logical and moral support ” to any dissenter from scientific findings documenting global climate change, “thereby raising questions about and undercutting the ‘prevailing scientific wisdom” according to internal company documents. In 2005, Exxon Mobil distributed $2.9 million to thirty nine groups that would raise doubts about climate change.

In 2005 when annual profit was $36 billion, the retiring Chairman left with $140 million severance plus $280 million in stock.

In 2008, the Rockefeller family, shareholders in Exxon, called on the company at the AGM to invest in alternative energy, treat global warming more seriously, and split its chief executive and chairman positions. They were defeated.

According to the New York Times there is a deal for Exxon and BP to return to Iraq with the protection of long term military bases. Alan Greenspan said the former chairman of the Federal Reserve, said in his memoir last year “Everyone knows the Iraq war is largely about oil.”

Exxon Shipping Company, which operated the Exxon Valdez tanker, has been renamed Sea River Shipping Company. The Exxon Valdez was repaired and renamed the Sea River Mediterranean and today is used to haul oil across the Atlantic Ocean.

Those members of DEA who accidentally turn onto CNN cannot miss a frequent, prolonged and slick advertisement from Exxon indicating their responsibilities to alternative energy etc.!

This story raises a number of important questions

Are these events relevant to Australia?
The modus operandi of fossil fuel giants has been much the same in all Western countries. Their role in thwarting climate change action in Australia is documented by Greg Pearse in “High and Dry” (see this site, September 2007). The federal government’s move to register lobbyists probably reflects concern about inappropriate influence. In terms of access to government, it is quite clear that environmental organisations have extremely limited access to government compared to the corporate empires.

What can we do about this situation?
For each of us, the journey through environmentalism and its links to health commences with a single issue, a local pollution, an endangered species. The trail of causation always leads in the same direction and indicates why battles won have to be fought again and again. It is the author’s view that it is futile to attempt to reorientate the appetite of the tiger towards vegetarianism. Large carnivores at the top of the food chain have to be caged to control them and even then they maul the occasional keeper. As Milton Friedman stated many times – the sole purpose of the corporate sector in to make profits. The role of governance is to regulate in the public interest. Unfortunately this role has been corrupted and has withered. Our role has to be educational to explain how and why the environment is being destroyed by these mechanisms.

Where to buy petrol?
Often I am asked this question! The majors Mobil, Shell and BP have terrible environmental records. Use a bicycle or walk whenever you can!

Note: The author became interested in the Exxon Valdez disaster after visiting the site of the disaster in 1998