Ashland Oil agreed Wednesday to pay a record $4.7 million to Pennsylvania in civil penalties and other costs arising from the nation's worst inland oil spill, in a settlement that could affect other states facing similar cleanups.
The money will cover about $660,000 in direct cleanup costs already incurred in the 1988 spill and will also provide $4 million--including $1.25 million in civil penalties--for state environmental and educational funds.
The settlement was the latest in a series of agreements under which Kentucky-based Ashland said it would pay more than $32.5 million to settle claims resulting from the spill of 750,000 gallons of diesel fuel into the Monongahela and Ohio rivers after a storage tank ruptured at Floreffe, south of Pittsburgh, in January, 1988. The spill disrupted water supplies for nearly a week for thousands of residents and businesses, and killed 11,000 fish and 2,000 birds, according to the state.
"This is also the largest single environmental payment a company has agreed to pay in Pennsylvania," Gov. Robert P. Casey said in a statement, "and it's unique because, through this agreement, the Ashland penalties will be put to sound environmental use."
Keith Welks, chief counsel for the state's Department of Environmental Resources, called the agreement "one of the biggest and most comprehensive settlements in any environmental incident in the country's history."
It remains unclear what implications the settlement may have for other states facing similar oil-spill problems, since state laws and enforcement differ greatly, and each spill has unique effects, said James Shirley, a lawyer at Haight, Gardner, Poor & Havens, a New York firm specializing in admiralty law.
But John Pendergrass, a senior attorney with the nonprofit Environmental Law Institute in Washington, viewed the settlement as "a positive sign for other states that are going to have to respond to large spills."
On the other hand, Ashland spokesman Roger Schrum denied that the settlement would set any precedent.
Rhode Island, Delaware and Texas suffered tanker oil spills last summer of a size comparable to the Ashland incident. The settlement may not apply to Alaska, which is still dealing with the fallout from the Exxon Valdez leak last March, because of that spill's magnitude and high profile.
Ashland Chairman John R. Hall said the company settled to avoid costly and lengthy litigation.
"Ashland has responsibly dealt with the claims from Pennsylvania in reaching this settlement," he said. "Of equal importance, this essentially concludes all outstanding issues associated with the spill."
Schrum itemized the $32.5 million Ashland has spent so far: $14 million to settle more than 5,000 third-party claims as well as damages, expenses and cost of the settlement announced Wednesday; $11 million for cleanup; $5.25 million in legal and administrative fees to handle class-action suits, and $2.25 million in criminal fines paid earlier this year for violations of the Federal Clean Water Act. In addition, he said, the company has set aside an additional $10 million from a class-action settlement to handle future claims.
Ashland has also spent an undisclosed sum in the cleanup effort in addition to the state's costs, Schrum said.
The cost of the Pennsylvania settlement will not affect Ashland's earnings, Schrum said. Insurance should pay most of the cost, he said, because Ashland has already met the policy's $2.5-million deductible.
Under Wednesday's settlement, Ashland agreed to pay the following by Dec. 31: $1.75 million for a comprehensive survey of the Ohio River Basin's water and recreational resources by the Ohio River Valley Sanitation Commission; $1.25 million in civil penalties to be divided among the Safe Drinking Water Fund, Solid Waste Abatement Fund and Clean Water Fund; $300,000 for environmental training in the Pittsburgh area; $215,000 for scholarships for students pursing careers in environmental protection; $250,000 to the Pennsylvania Fish Commission; $200,000 to the state Game Commission, and $35,000 for water-quality enforcement equipment, including a boat.