If Exxon Corp. had intentionally dumped 258,000 bbl of crude oil into Alaska's Prince William Sound, $100 million in criminal penalties would certainly not constitute justice. But the Exxon Valdez spill of March 1989 was an accident. It was a dumb mistake that killed wildlife, disrupted local commerce, and turned a beautiful place into a gooey mess for a while. It was an accident nevertheless.

To a federal judge in Anchorage, that doesn't seem to matter, U.S. District Judge H. Russel Holland wants criminal fines to hurt Exxon enough to discourage the company from repeating its offense. By ruling Exxon's $100 million criminal plea bargain agreement insufficient, what he more likely discouraged is some degree of business activity in the U.S.

LYNCH MOB ATMOSPHERE

Holland's ruling follows a trend. Environmentalism has created a lynch mob atmosphere. An oil spill in U.S. waters can subject a tanker operator to unlimited liability. Now a judge sets out to dispel the notion that "spills are a cost of business which can be absorbed." In order to call on U.S. ports, shippers soon will have to bet their net worths they won't have accidents.

There's a certain rough justice to this. Until the last decade or two, businesses of all types dumped and spilled with impunity and walked away from the mess. Appropriately, a concerned public protested. Laws and regulations now demand responsible behavior and require clean-up of what past irresponsibility left behind. What's more, most of the business world has come to share the public's environmental concern. That concern is more than public relations. It's more than grudging adherence to ever-toughening laws. Business environmental concern is becoming a matter of simple conscience.

Exxon never tried to duck its responsibilities in Prince William Sound. It has spent $2.5 billion cleaning up after itself and plans another summer of work. Its rejected plea bargain was part of a settlement package in which it agreed to pay civil damages of $900 million.

That package is in jeopardy because Holland doesn't think a criminal fine of $1 00 million would hurt a company with 1990 operating revenues of nearly $116 billion. He's wrong. Most costs of business help generate revenue; criminal penalties do not. A nonproductive $100 million outlay hurts even Exxon. Yes, a $500 million criminal fine would hurt five times as much, a $1 billion fine 10 times. But those fines would not make Exxon five or 10 times more careful in the future. To ignore what the company has paid and endured as a result of the spill, to ignore what it has accomplished in the clean-up, then to suggest that its future behavior will relate mainly to the size of criminal penalties it ultimately pays-if any-is legalistic nonsense.

SPENDING CONSTRUCTIVELY

Exxon will spend plenty beyond its $2.5 billion clean-up outlay to set things right in Alaska. Well it should. It's in the interest of the court and everyone else that the money be spent as constructively as possible: finishing the cleanup, compensating persons and businesses hurt by the spill, and finding safer ways to operate tankers. The important issues in this clearly accidental disaster are safety and clean-up, not criminality and revenge.

Holland's ruling should worry anyone who conducts business in the U.S. There's a difference between deliberate pollution and accidental spills. Not every environmental mishap represents a crime against nature. Present-day companies can and will and do clean up when they make mistakes. The judicial system must recognize these critical advances of the modern economy. Until it does, the U.S. will be a very risky place in which to work.

Copyright 1991 Oil & Gas Journal. All Rights Reserved.

RISK AND ENVIRONMENTAL 'CRIMES'

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