Exxon's proposed $1 billion settlement of the nation's worst oil spill has been placed in doubt by a judge's ruling that a $100 million criminal fine isn't enough punishment.
Under a plan announced last month, Exxon agreed to pay fines of $50 million each to the federal and state government. The company also agreed to pay $900 million as part of a separate settlement of civil claims to clean up Alaska's shoreline.But U.S. District Judge H. Russel Holland ruled Wednesday that the $100 million in fines was not enough to deter future oil spills.
"The fines which were proposed to me were simply not adequate," said Holland who added that he had studied federal sentencing guidelines in reaching his decision. "There is no question that the Exxon Valdez oil spill was off the chart."
With Holland's rejection of the criminal fine, Exxon could withdraw from the $900 million settlement.
The company also pleaded guilty to four misdemeanor pollution charges in exchange for the dropping of felony counts as part of the agreement, and Holland gave Exxon until May 24 to decide if it would withdraw those pleas.
The Justice Department said it would go to trial on the criminal charges if the pleas are withdrawn.
Exxon spokesman Joe Tucker said Wednesday the company had no immediate comment.
"I don't think anybody suspected this would happen," said Sen. Pat Rodey, D-Anchorage, and a member of a panel that helped work out the settlement between state and federal officials and Exxon.
"Certainly, conventional wisdom was that the plea agreement would be approved," Rodey said.
"We thought it was a good plea agreement," said James Neal, lead attorney for Exxon Shipping Co.
Justice Department officials in Washington and Gov. Walter J. Hickel, who was in Los Angeles on Wednesday, also expressed disappointment at Holland's decision.
But environmentalists who had complained that the criminal fines were too low praised the ruling.
"It's about time somebody called the shots like they really are," said Riki Ott, a leader of the Oil Reform Alliance, an oil industry watchdog group formed after the spill.