Office of the Governor
The recent Pathfinder accident at Bligh Reef calls into question Alaska's ability to deliver on its promise of "environmentally responsible" oil and gas development. Especially for people in Prince William Sound, this promise is meaningless unless it includes transportation, and response and restoration after the inevitable spills.
There is an opportunity for this state to demonstrate that it will act fairly and responsibly to protect its residents from oil spill impacts when the law fails to do so. Specifically, I am writing to ask you to forgive debt owed to the state, or any state banks such as CFAB, on all Prince William Sound herring seine and gillnet permits that were impacted by the Exxon Valdez oil spill--or, at a minimum, to identify and work with the hardship cases to prevent further forced bankruptcies, home or business losses, or even more suicides over spill-related debt and stress.
Let me explain why I am asking you as governor to prevent further financial and emotional harm from this spill. Recall when the Prince William Sound seiners blockaded Valdez Narrows in August 1993, fishermen made three demands: 1) ecosystem studies to determine what was ailing the Sound; 2) no fines for civil disobedience; and 3) forgiveness of debt on fishing permit loans. Interior Secretary Bruce Babbitt pledged to fulfill the first two demands - and did. Then Governor Hickel pledged to fulfill the last demand, but the state's banks later refused to make good on the governor's promise.
Federal Judge Russel Holland ruled that Exxon didn't have to pay for devalued fishing permits as long as losses weren't realized through sales. Of course, the losses were realized by the banks, which passed the ballooning debt on permits that couldn't be fished, or where the fisheries no longer supported permit payments, off to their clients. Individuals were left to bear the losses alone - and the losses mounted each year as debts went unpaid.
Salmon seine permits tumbled in PWS from the pre-spill record high prices of $300,000 to a low of around $12,000 when the pink salmon population collapsed in the mid 1990s from delayed oil spill impacts. Since then, pink salmon recovered, and the permit prices are roughly one-third of their pre-spill value, selling, and trending upward in value.
In contrast, herring seine permits also tumbled in PWS from the pre-spill record high prices of $300,000 to a low of around $10,000 after PWS herring stocks collapsed also likely from delayed oil spill impacts. (The high mortality of eggs and young fish in 1989 were realized in 1993 as poor recruitment and high mortality of adults.) Herring stocks have not recovered and the fisheries are closed indefinitely. Herring seine and gillnet permits are not selling and trending downward in value but upward in debt from unpaid loans.
The mandatory class action against Exxon was largely over last fall when Exxon was ordered to pay the outstanding interest on the greatly reduced punitive award. The full costs of Exxon's spill have finally hit home and it falls most heavily on fishermen who owned the once-prized PWS herring seine permits and other herring permits.
In some cases, the individual's long-tem debt on their herring permit exceeds their entire punitive award. Instead of assisting in such hardship cases, the state is exacerbating the problem. Not only has the state seized punitive awards to pay outstanding debts, it is also demanding more payments in cases where the debt exceeds the individual's award - and the state has left nothing for individuals to pay federal taxes owed on the award amounts.
This community may suffer a fresh wave of bankruptcies, foreclosures, and maybe even suicides from insurmountable spill debt. But there is a chance to minimize this trauma.
Governor, you could make good on the pledge of a former governor. You could forgive debt on all PWS herring permits - or you could forgive debt on the hardship cases and return to hardship individuals a portion of the seized punitive award to satisfy the individual's income taxes on the award.
There is urgency to this request: Scientists do not anticipate herring stocks to recover sufficiently to support fisheries in the foreseeable future. We can assume any outstanding debts on unfishable herring permits will only continue to accrue interest - and impact individual lives.
Governor, fishermen didn't spill the oil that caused this financial hardship. Why should fishermen be held accountable for assuming the financial risk of transporting oil? Surely protecting innocent residents from unforeseen oil spill impacts, such as the outrageous debt on unfishable and worthless permits, counts as "responsible oil and gas development." It's time for you to get creative and make good on a past promise from one of your predecessors.
Riki Ott, PhD
cc: Alaska Congressional Delegation (Sen. Murkowski, Sen. Begich, Rep. Young)
Former Governor Walter Hickel
Alaska state legislators (Sen. Albert Kookesh, Rep. Bill Thompson)
Cordova Mayor Tim Joyce
Cordova District Fishermen United
United Fishermen of Alaska