Alaska's Billion-Dollar Quandary

By MICHAEL D. LEMONICK

To a casual visitor, the chill, choppy waters of Prince William Sound show little evidence of the disaster that struck on Good Friday 1989. Nearly 11 million gal. of crude oil poured from a gash in the grounded tanker Exxon Valdez that day, forming a slick that eventually reached into the Gulf of Alaska and nearly to the Shumagin Islands, about 965 km (600 miles) away. More than 1,930 km (1,200 miles) of coastline was fouled; commercial and subsistence fishing were halted; populations of bald eagles, seabirds, otters and other animals plummeted; and at least 35 archaeological sites were sullied. Now, after four summers of intensive oil scooping and shoreline scrubbing, seals, whales and bald eagles are plentiful and the fishing season is in full swing. The water, rocks and sand look pristine once more.

But looks can deceive. According to biologists, Exxon's $2.5 billion cleanup effort was by no means as effective as the company has proclaimed. Many killer whales have vanished from Prince William Sound, while the social structure of the remaining groups appears to be breaking down. Several large colonies of murres, a seabird, have not produced any chicks in the years since the spill. Harlequin ducks, black oyster catchers and other animals have been contaminated by eating oil-drenched mussels, and sea-otter populations are hemorrhaging, literally and figuratively -- a side effect of hydrocarbon poisoning.

Part of the problem is the disaster's magnitude, but scientists and environmentalists charge that Exxon squandered vast sums on paperwork, ill- conceived cleanup techniques and heroic rescues. It cost the company about $80,000 for each of the several hundred otters it cleaned, many of which died anyway. The use of scalding-hot, pressurized seawater to hose down beaches left many areas almost sterile, empty of the limpets and other intertidal creatures that dwell there.

No amount of money could ever fully compensate for the havoc wreaked by the Valdez spill, but the record $1.025 billion in fines and damages imposed on Exxon by a federal judge last October should have provided the state and federal governments with an extraordinary opportunity to take further protective measures, assess remaining problems and mollify resentful citizens. Instead, the deal has touched off a chorus of outrage from residents and environmentalists, who wanted a minimum of $2 billion, and has ignited a fierce debate over how best to spend the sum. Says biologist Rick Steiner of the University of Alaska: "The last thing we want to see out of this is a stack of studies, symposia and who knows what else."

Unfortunately for Alaska, the windfall is far less than it seems. After deducting the sums owed to federal and state governments for past cleanup, litigation expenses and damage assessment, Alaska can expect just $635 million. How to spend it is the official business of the six-member oil spill trustee council, which includes the Alaska attorney general along with representatives from two state and three federal departments. The body has already come under fire. Alaskans claim that Washington's representatives are watching out for the Bush Administration's interests and that the council is unreceptive to the views of the public. Environmentalists criticize the council for acting too slowly and for wasting money on items like excessive overhead.

But this hasn't stopped Alaskans from going aggressively after a slice of the pie. The trustee council has received nearly 450 proposals from environmentalists, scientists, government employees, tour-boat operators, fishermen and others. There are a few oddball ideas, like dismantling the trans-Alaska pipeline, but most are worthwhile projects -- expanding wildlife refuges and parks, for example, or building fish ladders and establishing a marine public-information center.

For now, the trustee council seems to be considering three broad areas of spending: land purchases to protect vital habitats, scientific studies and some type of endowment that would invest the money and finance restoration from the interest. Environmentalists contend that putting too much into an endowment would prevent the state from tackling expensive but urgent projects. Scientific study, on the other hand, has strong support from the conservationists, who advocate such efforts as long-term monitoring of wildlife and assessments of which habitats should be purchased. There is some concern, however, about the council's judgment. It has been accused of rubber- stamping projects that involve the state's powerful fishing industry and favoring scientists who work for the government agencies represented on the council. "Lots of people stand to gain personally from how this money is spent," charges Lisa Rotterman, an independent biologist.

Habitat acquisition has attracted nearly universal public support. An unlikely coalition of environmentalists, commercial fishermen, native Alaskans and state legislators wants at least 80% of the money to be used to buy and preserve 202,000 hectares (500,000 acres) of prime fish and wildlife habitat, either by purchasing the land outright or by buying up the rights to exploit its resources. The advocates argue that since little more can be done to restore areas damaged by the spill, protecting the region's ecosystem from further harm is the next best option. Much of the land is privately held old- growth forest already marked for logging -- some of it, thanks to the state's complex land-allotment system, actually inside state and national parks, including Kenai Fjords National Park, the Kodiak National Wildlife Refuge and Kachemak Bay State Park.

The advantages of habitat acquisition are manifold. Old-growth forests provide nesting sites for some of the bird species harmed by the spill. Watersheds and upland forests offer food and breeding areas for mink and river otter as well as salmon and other fish. Protecting prime habitat from logging and development will also benefit hunters, fishermen, kayakers, hikers and the growing tourist industry.

For native Alaskans, who own much of the land in question, such deals would provide needed cash. The Afognak Joint Venture, for instance, a coalition of native corporations, hopes the trustee council will purchase its 50,000 hectares (125,000 acres) on Afognak Island, a mountainous place nearly the size of Maui, brimming with salmon, elk, Kodiak bears and bald eagles. Though part of the island belongs to the Kodiak Refuge, the AJV lands are being logged and could be stripped bare within a decade. Asserts AJV chairman Howard Valley: "By selling it back, at least we will be able to preserve it."

Also competing for funds is the Kodiak Restoration Committee, a partnership of native groups, fishermen, businesses and government agencies in the Kodiak Island Borough, a 51,800-sq-km (20,000 sq. mi.) district at the southernmost point of the Valdez spill zone. While the borough's wildlife escaped serious damage, its all-important fishing industry suffered mightily. "Domestic violence and divorces soared, and visits to mental-health services almost doubled," says borough Mayor Jerome Selby. "We're never going to be able to mend the social fabric of the community." The borough wants $280 million to create nature preserves, recreation areas, a fisheries technology center, an archaeological museum and other projects.

With so many groups vying for money, some are bound to go without. Trustees say privately that they will probably devote some of the settlement to habitat protection and scientific studies but bank most of it in an endowment. A preliminary plan could be released early next year. But given the competing claims and heated emotions, it, like the Exxon Valdez spill itself, will almost certainly leave in its wake a residue of anger and disappointment.

With reporting by Andrea Dorfman/Kodiak