Sunday, March 15, 2009
Reuter's reported tomorrow -- the joys of the international dateline -- that Queensland premier Anna Bligh declared Moreton Island, Bribie Island and southern parts of the Sunshine Coast to be disaster zones after an oil spill from a cargo ship spread over 60 kilometers of beach. The cargo ship carries 100 tons of oil and the spill from the ship is far larger than initial reports indicated. The cargo ship's hull was pierced by a container swept overboard in heavy seas caused by a cyclone near the area. The clean-up of the spill will be difficult due to the heavy seas and high tides from the cyclone and the spill is being carried into rivers in the area. The Queensland EPA reports that the spill has already affected seabirds and turtles.
By the standards of major oil spills, the Australian spill is unremarkable. The Exxon Valdez spill involved nearly 11 million gallons or 5500 tons of crude oil. But, like the Exxon Valdez, this spill occurred in an ecologically sensitive area and an area dependent in part on a large tourist industry. When we weigh the small probabilities of large spills associated with various activities, such as offshore oil drilling, with the possible benefits of that activity, we need to carefully examine how close any spill might be to ecologically sensitive areas and areas dependent on tourism. The lesson of the Exxon Valdez is that even the most expensive cleanups cannot fully recover many of the living resources that are destroyed by oil spills close to shore.
For those of you who were not alive or may have forgotten, the Exxon Valdez spill was one of the most destructive oil spills in history. Here's an account of that spill that I recently wrote:
EXXON VALDEZ OIL SPILL
On March 24, 1989, the Exxon Valdez, an oil tanker owned by Exxon Corporation, went aground on Bligh Reef in Prince William Sound, Alaska. The oil tanker had just departed the Valdez terminal with over 53 million gallons of crude oil, transported from Prudhoe Bay Oilfields through the Alaskan pipeline bound for Exxon’s West Coast refineries. The vessel spilled 10.8 million gallons of crude oil into Prince William Sound, and the oil eventually covered 11,000 square miles of ocean and 1300 miles of shoreline. The oil spill immediately killed between 250,000 to 500,000 seabirds, more than 1,000 sea otters, 300 harbor seals, 250 bald eagles, 22 orca whales, and billions of herring and salmon eggs.
Today, twenty years after the spill, 26,000 gallons of oil remain contaminating roughly six kilometers of shoreline. Of the thirty-one natural resources identified by the Natural Resources Trustee as affected by the spill, ten have recovered during the last 20 years, fourteen are still recovering, two have made no progress toward recovery (herring and pigeon guillemot), and five lack sufficient data to determine the extent of recovery.
The Exxon Valdez oil spill is still considered the most environmentally damaging oil spill to date, even though it is no longer in the top 50 oil spills in terms of the size of the spill. As the Exxon Valdez Oil Spill Trustee Council has indicated, “[t]he timing of the spill, the remote and spectacular location, the thousands of miles of rugged and wild shoreline, and the abundance of wildlife in the region combined to make it an environmental disaster well beyond the scope of other spills.”
After a harbor pilot successfully navigated the Exxon Valdez through the Valdez Narrows, he returned control of the ship to Captain Joseph Hazelwood. To avoid icebergs in the outbound shipping lane, Hazelwood maneuvered the ship into the inbound shipping lane. Hazelwood then put the ship on autopilot and left a third mate in charge of the wheelhouse and an able seaman at the helm. The crew failed to reenter the outbound shipping lane. While Hazelwood was relaxing in his stateroom, the Exxon Valdez went aground on Bligh Reef, rupturing eight of her eleven cargo holds.
Hazelwood, who Exxon knew was an alcohol abuser who had not completed treatment and had stopped attending Alcoholics Anonymous meetings, had drunk five double shots of vodka, amounting to 15 ounces of 80 proof alcohol, shortly before leaving Valdez. In addition, neither of the crewmen Hazelwood placed in charge of the tanker had their mandatory rest period before beginning duty. The National Transportation Safety Board’s investigation of the accident identified five factors that contributed to the grounding of the Exxon Valdez: the third mate failed to properly maneuver the vessel, possibly due to fatigue and an excessive workload; the captain failed to provide navigation watch, possibly due to impairment from alcohol; Exxon failed to supervise the captain and provide a rested and sufficient crew for the vessel; the U.S. Coast Guard failed to provide an effective vessel traffic system; and lack of effective pilot and escort services from the Valdez terminal through Prince William Sound.
Five separate sets of lawsuits arose out of the Exxon Valdez Oil Spill.
First, Exxon Shipping pled guilty to negligent discharge of pollutants under Clean Water Act (CWA) section 309 as well as criminal violations of the Refuse Act and the Migratory Bird Treaty Act (MBTA). Exxon pled guilty to criminal violations of the MBTA. Exxon was fined $150 million, the largest fine ever imposed for an environmental crime. The court forgave $125 million of that fine in recognition of Exxon’s cooperation in cleaning up the spill and paying certain private claims. Of the remaining $25 million, $12 million went to the North American Wetlands Conservation Fund and $13 million went to the national Victims of Crime Fund. As criminal restitution for the injuries caused to the fish, wildlife, and lands of the spill region, Exxon agreed to pay $100 million, evenly divided between the federal and state governments.
Second, the federal and state governments sue Exxon Shipping and Exxon under CWA section 311 and the Comprehensive Environmental Response Compensation and Liability Act section 107, to recover damages to natural resources for which the governments are trustees. In settlement of those civil claims, Exxon agreed to pay $900 million with annual payments stretched over a 10-year period. The settlement also contained a $100 million reopener for funds to restore resources that suffered a substantial loss or decline as a result of the oil spill, the injuries to which could not have been known or anticipated by the trustees at the time of the settlement. The United States demanded the full $100 million under the reopener provision in 2006.
Third, within two or three years of the accident, Exxon settled the claims of various fishermen and property owners for $ 303 million.
Fourth, a class action involving tort claims against Exxon, Hazelwood, and others by commercial fishermen, Native Americans, and property owners resulted in a $ 5 billion jury verdict against Exxon. That jury verdict was reduced by the 9th Circuit to $ 2.5 billion and the U.S. Supreme Court in Exxon Shipping Co. v. Baker vacated the 9th Circuit award, limiting punitive damages against Exxon to $ 507.5 million, the same amount of compensatory damages, in addition to the compensatory damages due to plaintiffs.
Finally, Captain Hazelwood was prosecuted by the State of Alaska for operating a vessel while under the influence of alcohol and negligent discharge of oil. Despite evidence that Hazelwood had consumed numerous alcoholic beverages before departing Valdez and still had alcohol in his blood many hours after the accident, an Alaskan jury found him not guilty of the operating under the influence charge. The jury did find him guilty of negligent discharge of oil. Hazelwood was fined $50,000 and sentenced to 1,000 hours of community service in Alaska.
Frequently environmental legislation is the result of a dramatic event or environmental accident. In the case of the Exxon Valdez oil spill, Congress reacted by enacting the Oil Pollution Act of 1990, which created a fund to finance oil spill cleanup when parties do not voluntarily clean up oil spills for which they are responsible, set up a broad liability scheme to provide a federal cause of action for cleanup and other damages arising out of oil spills, set standards for oil tankers and oil storage facilities to avoid future spills and improve spill response, and sought to improve emergency responses to oil spills through regional contingency planning.
For more information about the environmental impacts of the spill and the clean-up that was undertaken under the auspices of the Exxon Valdez Oil Spill Trustee Council, visit the Council's website. http://www.evostc.state.ak.us/
They still don't get it. AIG's CEO who was brought in after the government took over an 80% stake in AIG is continuing to pay bonuses and "retention pay" to people who have virtually destroyed the global economy -- almost single-handedly. AIG will pay its executives, including the folks at Financial Products who created the mess that would have killed the world's largest insurance company, over $720 million dollars in bonuses and "retention pay." Lawyers have concluded that the firm would risk a lawsuit if AIG reneged on the agreed upon retention payments of about $600 million, only $400 million of which was agreed upon before the government started bailing out AIG in September.
AIG has agreed to eliminate bonuses to the top 7 executives and defer 1/2 of the bonuses to another 42 top executives with the other 1/2 to be paid based on performance. Nonetheless 4,700 people in AIG's global insurance units are receiving $600 million in retention pay and $121 million in corporate bonuses will go to more than 6,400 people. That means, on top of salaries, the 4700 people are getting an average of $127,000 worth of retention pay + those people and others are also getting $19,000 worth of bonuses.
All of that for these.....people on top of what I'm sure are handsome salaries to begin with. Let's see. I'm in the 95-99th percentile of taxpayers. These four million taxpayers pay something in excess of 20% of all federal income taxes. So, folks in my group will be paying each be paying just a small amount of bonus (about $ 40 each) to AIG employees who have probably cost each of us on the order of $100,000 - $ 250,000 this year. I'd rather be able to sue them for the money than pay them a dime of bonus!