Unexpected millions revive the oil-spill money scramble 30 years later

Almost 30 years after the Exxon Valdez oil spill, Alaskans are again scrambling for the money it spun off, a fund of nearly $200 million that grew unexpectedly from investment returns on a legal settlement.

Nearly 30 years ago, on March 24, 1989, Exxon spilled oil in Prince William Sound that killed hundreds of thousands of birds and marine mammals over more than 1,000 miles of Alaska coastline. Government reports show that a few species still haven't recovered and maybe never will.

But while the environment continued to suffer from the poisons emitted by oil buried deep in beaches, most people forgot all about the system set up to spend spill settlement money on restoring the damaged resources.

A group of six so-call "trustees," representing three federal agencies and three state agencies, oversaw about $1 billion that Gov. Walter Hickel negotiated from Exxon in 1991. The trustees spent about half that money on scientific studies and half acquiring land or conservation rights in the spill area.

A decade ago, the Trustee Council adopted a plan to spend down the rest of the money. But rising investment markets instead grew the fund back toward $200 million.

[Exxon Valdez oil spill saga reaches anticlimactic end in federal court]

Renewed awareness of that money recently grabbed people's interest like a basketball tossed above the court.

"That's a good way to put it, a jump ball," said Sam Cotten, a Trustee Council member as commissioner of the Alaska Department of Fish and Game. "That amount of money attracts a lot of attention."

Last year, executive directors of the Prince William Sound Science Center in Cordova and the Alaska SeaLife Center in Seward contacted Diane Kaplan, CEO of the Rasmuson Foundation, with the idea of cashing out trustee funds and putting the money in private, nonprofit control, Kaplan said.

With her management of Alaska's largest philanthropy, holding more than $700 million, and her role as a gatekeeper for other charitable foundations coming into the state, Kaplan is one of Alaska's most powerful people.

She said she took the idea to Alaska's governor and lieutenant governor and all three members of the congressional delegation. She also selected an elite "Think Tank" committee to prepare a formal proposal.

The nine members of her "Think Tank" included two former lieutenant governors, Mead Treadwell and Fran Ulmer, as well as leaders of the Chugach Alaska and Koniag Native corporations, and four highly regarded former officials in science, conservation and fishing, all with spill experience, plus Kaplan herself.

Their plan, presented to the Trustee Council earlier this month, would split most of the money between Cordova's center, the SeaLife Center and two Native cultural institutions, in the Chugach and Koniag regions. The Alaska Community Foundation would hold funds for those organizations and the remainder of  the money for science and habitat projects.

Hearing that the Rasmuson proposal was coming, oil spill activist Rick Steiner advanced one of his own, calling for the court that oversees the settlement to appoint a non-political, nonprofit board to manage the funds for habitat protection.

He likened the situation to the money flood of the summer of 1989, which gripped many people, from the street people hired to wipe oily rocks to the University of Alaska's president.

"The fundamental question a lot of them were asking in this spill is, 'What's in this for me,' " he said.

I was there. I began covering these matters the weekend the tanker hit the rock. I wrote hundreds of articles and parts of two books on the subject.

Much of the spill settlement money was wasted.

Some groundbreaking science came out of the program, but for a half-billion dollars of research, pitifully little useful knowledge was gained. Thanks to poor study design in the lawyer-dominated early days of the process, the most important questions were never answered.

Steiner and the Think Tank committee agree that the Trustee Council spends too much money on overhead: 46 percent, according to the Think Tank proposal. The document says agencies dilute the impact of programs by taking cuts for administration and indirect costs as money passes through.

But it's more complicated than that, said Larry Hartig, a trustee as commissioner of the Alaska Department of Environmental Conservation. He said it makes sense for agencies that manage the resources to handle projects to study and restore them.

Hartig doesn't believe a private entity could do that work as well or save much money.

By comparison, the Rasmuson Foundation itself spent $14.6 million on operations and administration to give $28 million in grants, according to its most recent publicly filed tax return. But Kaplan said an overhead comparison is unfair, because Rasmuson's figure includes investment fees and taxes of over $9 million.

The Trustee Council members also feel their overhead figures are defensible. But Hartig and Cotten agreed it is time to look at new ideas to handle the spill money.

The Trustee Council referred the two proposals for review by lawyers and staff. Privatization would also require court approval and potentially an act of Congress.

"I don't know how you could do that kind of blank-check approach and satisfy the courts and agreements," said Deborah Williams, who was a trustee during some of the council's busiest years, representing the U.S. Department of the Interior.

After reviewing the Think Tank proposal, she said it lacks a process for involving the public in specific spending decisions, needed for the integrity of public funds.

I can see both sides. The trustees were the wrong people to handle the money from the start. Most are political appointees, changing each election, with bureaucracies to feed. True trustees would be loyal to the ecosystem, not politicians and agencies.

The Rasmuson Foundation's Think Tank produced an interesting document supporting good organizations. But it has the flaws inherent in doing this work in private, without everyone on the table. The group's proposal comes off as self-serving, taking care of its members' pet projects, and embedding political views unrelated to the intent of the money — for example, saying no more land should be put in parks.

The strongest thing the proposal has going for it is sheer political power. And that's not a good place to start.

Work remains for the damaged environment, protecting land and bringing back fisheries. The overlay of ocean warming and acidification put the coastal ecosystem at more risk than ever.

A good process would focus on those problems and then ask everyone, not only nine people, the best way to solve them.

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