A BUZZFLASH NEWS ANALYSIS
by Meg White
This is the second in a series addressing the upcoming 20th anniversary of the Exxon Valdez oil spill. Click here for part 1.
You’d be hard-pressed to find a newspaper in this country that didn’t contain at least one heart-breaking story of financial woe on any given day. The recession has become part of our national narrative. But it’s important to remember that there are communities that have been feeling the pinch for decades.
Such is the case with Cordova, AK. This small fishing town on the coast of Prince Williams Sound was devastated by the Exxon-Valdez oil spill in March 1989. While environmental and social fallout persists — something we’ll be talking about tomorrow as part of this series — Cordova has not been able to get back on its financial feet, despite promises from Exxon to make the community whole again.
Cordova, with a population of just less than 2,500 according to the most recent census data available, was one of the most hard hit when 11 million gallons of oil spread along the Alaskan coast. It was the worst oil spill in U.S. history.
Life has been especially tough on the fishermen of Cordova. John Platt is a third-generation Alaska fisherman. He’s incensed by the way Exxon and the government have treated him, but you can tell after only a few minutes talking with him that worries over his two sons, both in college, wear on him as well.
“So much for a fourth generation of Platts fishing the Sound,” he told a fellow Alaska fisherman.
When I talked to Platt, he was in Oregon to watch his oldest son compete in a college wrestling tournament. After the oil spill, day-to-day living was so tough that the Platt family had to use the boys’ college money they’d saved just to live on. Now Platt is thankful that he started his oldest child in wrestling at age four. Platt jokingly describes his son’s wrestling scholarship as a “dividend” coming to fruition.
That is especially helpful now, as it becomes clear that what little faith he put in Exxon and the government won’t pay off.
Ever since the original disaster, Exxon and affected Alaskans have been in and out of court. As I noted in part one of this series, part of the reason the fishermen of Cordova resisted the haste at which oil companies wished to proceed with building the oil pipeline in the 1970s was the lack of a baseline study, which would have given courts an idea what had been lost in the event of a disaster such as the Exxon Valdez spill.
“We fought tooth and nail not to have the pipeline in there,” Platt said. “And here we are, 38 years later and what we feared would happen happened and nobody seems to give a damn.”
Though appellate courts have consistently reaffirmed the need for compensation for damages in the case, unrelated U.S. Supreme Court rulings about the upper limits of punitive damages whittled down the legally permissible amount of the award.
The original amount of punitive damages to be paid to the fishermen was $5 billion. That amount was reduced to 4 billion, raised back up to $4.5 billion, then cut to $2.5 billion, then further reduced to $507 million. A Supreme Court ruling is expected soon on whether Exxon should pay interest on this payment after 20 years of waiting.
In a recent interview with In These Times, Cordova fisherwoman and marine biologist Riki Ott addressed the injustice of the Exxon settlement being whittled down:
“It was devastating. That’s just 10 percent of the original award, and for the survivors, it will result in bankruptcies, foreclosures and people having to sell their homes and move away.
The jury didn’t pull $5 billion from the air. They determined that this was the amount of one year’s worth of net profit for Exxon, and that’s what it would take to punish the corporation for the damage to our community. More than 6,000 people eventually lost their livelihoods because of the spill.
What the Supreme Court did was to decide that a one-to-one ratio of compensatory damages was just punishment under maritime law. So, Exxon’s “punishment” was reduced to four days of net profit, instead of one year’s worth. For them, this is not punishment. It’s the victory of ‘corpocracy.’”
Meanwhile, the fishermen of Cordova are worried about what that ultimate payment might mean. Of the original 32,000 plaintiffs against Exxon, 8,000 have liens on their settlements, meaning most if not all of the money Exxon owes them will go straight to the government. But the kicker is this: They’ll still have to pay thousands in taxes on the supposed “windfall.”
Commercial fishing in Alaska requires a great deal of initial investment. Not only will boats and equipment set you back tens of thousands of dollars, but also the fishing permits are expensive as well. The value of the permits depends upon the productive output of the Sound, so when fish levels crash, so do the value of the permits.
Platt took out a loan for $235,000 to get his permits, using the value of one paid-off permit and the other two purchased on credit to secure the loan. But when the value of his permits for fishing both herring and salmon plummeted after the oil spill, the Alaska Division of Investment found him to be “under-collateralized.”
On top of that, there weren’t any fish to catch, so his income has fallen precipitously. He said there are days where “had I left the boat tied up, I would have been better off.” His salmon permit does pay off some years, but the herring catch is another story.
“We haven’t had a herring season in 15 of the last 17 years,” Platt said. Salmon has been a more stable population, but prices have crashed. In 1988, Platt said he was paid around $1 a pound for salmon, but the ten-year average between 1992 and 2002 was 11 cents a pound.
With such a volatile income stream, paying off his debt has been difficult for Platt. Even though he’s paid about $130,000 on the loan, the amount he owes has roughly doubled from that original $235,000. The money he expects to get from Exxon won’t even pay off his debt in full, and he’ll have to pay taxes on the damages as well.
Platt hired a bankruptcy lawyer to create a payment plan with the state. He had to sell his salmon seine boat “for pennies on the dollar” and give all the proceeds to the state.
Platt paid off both his fishing boats thanks to money he was paid to help clean up after the spill. Paying off those debts seemed like a prudent move at the time, but Platt thinks of other ways he could have used the money to his advantage.
Alaska House Bill 96, sponsored by Rep. Bill Thomas (R-Haines), would forgive the interest owed on loans that are secured by liens on money from Exxon Valdez damages claims. Platt tried to be upbeat about the bill’s prospects, but this is looking like another disappointment. He was told by a state legislative aide that the bill is good as dead due to legal issues such as equal protection.
Exxon’s bid to get out of paying interest on the $507 million might have more of a chance than the fishermen’s. Not that Exxon is in financial dire straits. At the end of January 2009, Exxon reported that it once again broke its own astonishing profit records. Last year, the company earned profits of $40.61 billion, topping its 2006 record. The $507 million they are estimated to be required to pay out in damages is a little more than 1 percent of the company’s profit last year.
While Exxon’s profits don’t seem to be much endangered, there are signs that fishing the Prince Williams Sound will continue to be difficult. While salmon has fluctuated in the past 20 years, the herring season has been canceled by the state almost every year since the spill, due to unsustainable population numbers. Not only have their numbers been down, but also the herring that do show up to spawn arrive covered in lesions, bleeding internally and swimming erratically.
Scientists hesitate to equate the disease, called viral hemorrhagic septicemia virus (VHSV), directly with the Exxon Valdez disaster, but for Platt, it was “definitely a smoking gun.” Showing up for the first time in Alaskan herring populations after the oil spill, VHSV persists today, and is one of the reasons the state has said it will once again cancel the entire herring season in 2009. (The story of the Sound’s herring population is part of the ongoing environmental debate over the oil spill, which will be addressed in our feature tomorrow).
Still, thanks to a “halfway decent season” using his remaining salmon boat, Platt said he was able to help his two boys out a little this year. But still, he describes the situation as precarious. He’s already sold his house and he’s trying to avoid bankruptcy. It’s a story you hear all the time in this tough financial environment, but Platt and the rest of Cordova have been living like this for 20 years, with no end in sight.
“This is my life.”
A BUZZFLASH NEWS ANALYSIS
Check back tomorrow and the rest of the week for more on the legacy of the Exxon Valdez disaster. We’ll be writing about the lingering environmental issues, the culture of Big Oil and much more.