$10 Billion Sounds About Right


Washington.--How nice for Exxon that in the first quarter of this year, its profits were higher than in any quarter in the company's 109-year history.

How nice for the rest of us that on the same day the company announced this good news, a judge in Alaska threw out the deal by which Exxon would have paid a mere $100 million criminal fine for the Valdez oil spill.

That amount of money "simply was not adequate" as penalty for the damage done to Alaska's waters, shoreline, wildlife and economy, said the judge. He gave the company a month to decide whether to try to work out a more suitable figure or take the case to trial. His decision also calls into question the separate $1 billion agreement by which the company would settle outstanding civil suits over the spill.

The timing of Exxon's record-profit announcement could not have been better for the public interest. Any lawyer who successfully pleads corporate poverty under these circumstances will be a cinch for an Academy Award.

In the first three months of this year, Exxon's profits were $2.24 billion, up 75 percent over the first quarter of 1990. That means the company could have paid the $100 million criminal and $1 billion civil penalties in cash and still have chalked up profits of more than $1 billion.

At $2.24 billion a quarter, its profit this year would come close to $9 billion. A single year's profit seems a minimally reasonable amount to pay for the damage done by the Exxon Valdez, for the negligence that let it happen and the arrogance that virtually folded the company's damage control capability beforehand.

If any renegotiated bargain puts the total bill at less than $10 billion, it is still a sweet deal for Exxon and a raw deal for the public, especially for taxpayers in Alaska. The judge who threw out the earlier agreement thinks public opinion demands a more severe penalty. And if the negotiators have any doubt about that, there is copious supporting evidence.

Americans have learned, through repeated episodes like the Exxon Valdez spill, to give very little credibility to corporate wailing about environmental controls. Last year, for example, a survey by two polling firms, one Democratic and one Republican, asked more than 1,000 registered voters this question:

"Say there were three research scientists -- one from the federal government; one from a major corporation; and one from an environmental group -- each expressing a different point of view about a major environmental issue. Which person would you be inclined to rely on most?" Sixty-eight percent said the environmental group, 15 percent the federal government, and 6 percent the corporation. Sixty-six percent thought there was too little environmental regulation, 19 percent that there was about the right amount, and only 9 percent thought there was too much.

Industry officials, and administration spokesmen for the past decade-plus, have asserted that the price of protecting the environment is lost jobs and retarded economic progress. Asked whether we should be willing to sacrifice environmental quality for economic growth or vice versa, 72 percent said sacrifice growth rather than endanger the environment.

The Exxon Valdez spill was exactly the kind of disaster predicted when the Alaska pipeline was first proposed, and the narrow Valdez fiord with its tricky approach was chosen as the terminal. Despite those warnings, when no major catastrophe took place in the early years of the pipeline's operation, stand-by clean-up crews were let go and equipment was mothballed. That is one of the reasons criminal and civil penalties for that spill should be much higher.

Now, after Exxon Valdez and despite environmental protests, the industry and the Bush administration are still pushing for oil drilling in the Arctic National Wildlife Refuge. Mandating more efficient cars would save more oil than that field would produce even by industry's highest estimates. Yet the industry and the administration continue to oppose better miles-per-gallon standards for U.S. automakers.

If this profit-driven shortsightedness prevails, the result will be other messes like the Exxon Valdez. It's not a question of whether, just of when. The judge in Alaska wants to be sure that tough, reasonable penalties are just as inevitable as disaster.

Ernest B. Furgurson is associate editor of The Sun.

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