[SOLVED] Shortly after midnight on March 24, 1989,

Shortly after midnight on March 24, 1989, the oil tanker Exxon Valdez ran aground on Bligh Reef in Alaska’s Prince William Sound, spilling 11 million gallons of crude oil. Ecological systems were threatened, and the lives and livelihood of area residents were severely disrupted. For the tanker’s owner, New York–based Exxon Corporation, the effects were profound.
How did such a tragedy occur? Opinions vary considerably. One oil company executive put it this way: “It’s simple. A boat hit a rock.” On the other hand, the evidence shows a much more complex picture of human and technical errors.
At the time of the grounding, the vessel had departed from normal shipping lanes to avoid ice in the water and had failed to make a corrective turn in time to avoid the submerged reef. The ship was piloted by third mate Gregory Cousins, who did not hold a required license; the captain, Joseph Hazelwood, was in his quarters. Hazelwood, whose driver’s license was at the time suspended for driving while intoxicated, later failed a sobriety test. When the Trans-Alaska pipeline was originally opened, strict traffic lanes were established in the Sound to guarantee safe tanker pas- sage. But, in recent years, disintegration of the Columbia Glacier had filled the lanes with ice. To avoid slowing down to dodge icebergs—thereby delaying the oil’s delivery to market—tanker captains routinely moved out of the shipping lanes.
Onshore, no one was keeping watch. Although the U.S. Coast Guard was charged with monitoring vessels through Prince William Sound, in fact its outdated radar system did not reliably track vessels as far out as Bligh Reef. An earlier proposal to upgrade the radar system had been rejected as too expensive. And the Coast Guard’s oversight, to say the least, was lax: at the time of the Valdez grounding, the only radar man on duty had stepped out for a cup of coffee.
Other corners had also been cut. The Coast Guard had reduced the use of specially trained harbor pilots to guide tankers out of the Sound and had withdrawn a proposal for tugboat escorts. Rules, such as those governing the number of crew members on the bridge, were not enforced.
The response to the accident was also fraught with difficulties. Alyeska, the consortium of oil companies that built and operate the Trans-Alaska pipeline, is responsible for cleaning up oil spills that occur in Prince William Sound. At the time of the accident, Alyeska’s contingency plan promised to reach a stricken vessel within five and a half hours and to recover half of a 200,000-barrel spill within seventy-two hours, yet when the event occurred, Alyeska’s plan was revealed, as Alaska’s commissioner for energy conservation later put it, as “the greatest work of maritime fiction since Moby Dick.” The cleanup crew had no instructions, the barge was in dry dock for repairs, needed boom and skimmers were buried under tons of other equipment in a warehouse, and lightering supplies were lost under a snowdrift.
Alyeska did not even reach the Valdez until almost twelve hours after the accident and in the first three days was able to pick up only 3,000 barrels of oil—2% of what it had promised. Incredibly, a group of local fishermen, later dubbed the “mosquito fleet,” managed to retrieve more oil with their fishing boats and five-gallon buckets than did Alyeska with all its money and equipment.
When Alyeska’s cleanup collapsed, a response effort had to be hastily jury- rigged by Exxon and the federal and state governments. Federal law called for an interagency team effort in which Exxon was responsible for cleaning up the oil, and different federal agencies were responsible variously for providing scientific advice, protecting the parks, and safeguarding birds and animals. The Coast Guard and Alaska’s Department of Environmental Conservation were supposed to supervise the whole effort, yet no established pro- cedures existed for bringing these orga- nizations together into a working crisis management team under unified leadership. The result was a response effort “paralyzed by indecision, a struggle over authority, and vastly different and conflicting expectations as to which measures would work.”
The debate over the use of dispersants, detergent-like chemicals that break up oil into droplets that descend below the water’s surface, illustrates the costs for this paralysis. Exxon wanted to use dispersants and immediately flew in planes and chemicals. But under Alaskan guidelines, dispersants would be used in an oil spill only if less harmful to the environment than the crude itself. Since no one knew whether they were, the Coast Guard ordered tests, which were inconclusive. After two days of indecision, the government finally approved the dispersants—but that night the weather turned, and a spring blizzard whipped the oil into an impervious, frothy mousse. The opportunity had been lost.
The reaction of the public was predictable. A complete cleanup was demanded, which cost Exxon a reported $2 billion in 1989 and a further $200 million in 1990, with more out-of-pocket costs to come. More than 150 civil lawsuits were filed, not including those on behalf of the state and federal governments. The state and federal claims may be settled for a reported $1.2 billion.
Not surprisingly, Exxon’s profits and stock price have remained flat since the accident. Shareholder groups have, how- ever, been very active, particularly the institutional investors who as a group own 35% of Exxon’s shares. With the support of the administrators of the New York City pension funds (which own 6 million Exxon shares), the Coalition for Environmentally Responsible Economies (CERES) brought pressure to bear on the company during 1990 to accept and endorse a code of con- duct known as the Valdez Principles (see below) for dealing with the corporation’s environmental behavior.
The company resisted accepting the Valdez Principles on several grounds, including that the principles were not sufficiently developed to be workable, that they went too far, and that further study was needed. In 1990, Exxon did, however, appoint an outside environmentalist to the Board of Directors and placed a senior officer in charge of environmental matters. The tanker was rechristened the Exxon Mediterranean and will operate henceforth in the Pacific Ocean. It was not refitted with a double hull, which would have cost about $20 million. Observers have also reported that Exxon has bought back substantial amounts of its stock: a move possibly made to support the stock price and pressure investors.
The Valdez (CERES) Principles
Leading environmental organizations— including the Sierra Club, the National Audubon Society, and the National Wild- life Federation—joined with the Social In- vestment Forum to form the Coalition for Environmentally Responsible Economics (CERES), whose first act was to draft the Valdez Principles for corporations to sign. The idea is to make the Valdez Principles a litmus test of corporate behavior. Companies are being pressured to abide by the following prescripts:
1. Protection of the Biosphere
We will minimize the release of any pollutant that may cause environmental damage to the air, water, or earth. We will safeguard habitats in rivers, lakes, wetlands, coastal zones, and oceans and will minimize contributing to the greenhouse effect, depletion of the ozone layer, acid rain, or smog.
2. Sustainable Use of Natural Resources
We will make sustainable use of renewable natural resources, such as water, soils and forests. We will conserve nonrenewable natural resources through efficient use and careful planning. We will protect wildlife habitat, open spaces, and wilder- ness, while preserving biodiversity.
3. Reduction and Disposal of Waste
We will minimize waste, especially hazardous waste, and wherever possible recycle materials. We will dispose of all wastes through safe and responsible methods.
4. Wise Use of Energy
We will make every effort to use environmentally safe and sustainable energy sources to meet our needs. We will invest in improved energy efficiency and conservation in our operations. We will maximize the energy efficiency of products we produce or sell.
5. Risk Reduction
We will minimize the environmental, health, and safety risks to our employees and the communities in which we operate by employing safe technologies and operating procedures and by being constantly prepared for emergencies.
6. Marketing of Safe Products and Services
We will sell products or services that mini- mize adverse environmental impacts and that are safe as consumers commonly use them. We will inform consumers of the environmental impacts of our products or services.
7. Damage Compensation
We will take responsibility for any harm we cause to the environment by making every effort to fully restore the environment and to compensate those persons who are adversely affected.
8. Disclosure
We will disclose to our employees and to the public incidents relating to our operations that cause environmental harm or pose health or safety hazards. We will disclose potential environmental, health, or safety hazards posed by our operations and we will not take any retaliatory personnel action against any employees who report on any condition that creates a danger to the environment or poses health or safety hazards.
9. Environmental Directors and Managers
At least one member of the Board of Di- rectors will be a person qualified to rep- resent environmental interests. We will commit management resources to implement these Principles, including the funding of an office of vice president for environmental affairs or an equivalent executive position, reporting directly to the CEO, to monitor and report on our implementation efforts.
10. Assessment and Annual Audit
We will conduct and make public an annual self-evaluation of our progress in implementing these Principles and in complying with all applicable laws and regulations throughout our worldwide operations. We will work toward the timely creation of independent environmental audit procedures which we will complete annually and make available to the public.
For more information, visit http://www.cengage.com.
Questions
1. Who was responsible for the accident?
2. What were the responsibilities of the company, the government authorities, and the employees of the company, that were not properly discharged?
3. Should Exxon abide by the Valdez Principles?
4. Could a better code of conduct have pre- vented this accident?
5. If Exxon had known, before the accident, about the captain’s alcohol problem, what actions should have been taken, if any?

Question: Shortly after midnight on March 24, 1989,