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Exxon resists $92 million ‘reopener’ Company argues to court it has no obligation to pay for additional cleanup stemming from 1989 oil spill in Prince William Sound Wesley Loy For Petroleum News
ExxonMobil Corp. is asking a judge to squash a request from the federal and state governments for an additional $92 million to address lingering effects of the 1989 oil spill in Alaska’s Prince William Sound.
In papers filed Aug. 9 in U.S. District Court in Anchorage, lawyers for ExxonMobil argue the governments aim to use the money to reinitiate cleanup activities, in violation of a 1991 civil settlement.
Under the settlement, known as a consent decree, Exxon paid the governments $900 million to settle damages claims from the spill of nearly 11 million gallons of North Slope crude.
The decree contained what’s known as a “reopener” provision allowing the governments to request up to an additional $100 million to deal with unanticipated future injuries to species or habitat.
In 2006, the governments exercised the reopener, requesting $92,240,982 from Exxon for a habitat restoration plan.
But lawyers for Exxon argue the plan is “nothing more than a plan to resurrect the clean-up of the oil spill,” an operation federal and state on-scene coordinators declared complete nearly 20 years ago, in 1992.
The governments cannot now use the reopener to subject Exxon to further payment for cleanup, as the consent decree “expressly released Exxon from such obligations,” says an Aug. 9 motion Exxon filed with the court.
Lack of resolve? Exxon is asking the judge to issue an order confirming that the consent decree frees the company from any further financial obligations with respect to cleanup.
As Petroleum News went to press, the governments had not yet responded to Exxon’s motion.
While the governments did make the $92 million reopener request quite some time ago, in August 2006, they have not actually sued Exxon for the money. A state lawyer has said certain studies were proceeding on questions such as whether attempts to clean away residual oil are advisable.
An oil industry critic, Rick Steiner, asked the court to force Exxon to pay the $92 million, arguing it was clear to him that the governments lacked the resolve to aggressively pursue the payment.
Federal Judge H. Russel Holland in March turned back Steiner’s effort. But the judge did direct the governments and ExxonMobil to provide him with a status report on the reopener issue by mid-September, and this possibly precipitated the company’s Aug. 9 motion.
‘Diminishing returns’ In the motion, Exxon’s attorneys draw a distinction between “cleanup” and “restoration,” and argue the consent decree’s reopener provision is limited to the latter.
When the on-scene coordinators declared the cleanup complete, it was “based on data collected during the 1991 and 1992 shoreline assessments and clean-up, all of which suggested that although not all the oil had been removed, further clean-up would not result in any net environmental benefit.”
The on-scene coordinators concluded the cleanup had “reached the point of diminishing returns,” where continuing might do more harm than good, the Exxon motion says. Now the governments want to resume the cleanup using oil removal technologies such as bioremediation, which is “the same method utilized by Exxon in 1991 and 1992,” the motion says.
But the reopener is limited to “restoration projects,” Exxon argues, while the plan the governments have put forth “contemplates nothing more than clean-up.”
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