ANCHORAGE, Alaska (Reuters) -- A federal judge yesterday rejected a proposed plea bargain agreement that called for Exxon Corp. to pay $100 million to settle criminal charges arising from the 1989 Valdez oil spill.
The ruling by U.S. District Judge H. Russel Holland puts in doubt a companion agreement under which Exxon was to pay up to $1 billion to settle a civil lawsuit filed by the state of Alaska.
Under the settlement, hammered out by Exxon and government officials last month, the nation's largest oil company agreed to pay the $100 million fine for misdemeanor pollution charges in exchange for the dismissal of felony criminal counts.
Judge Holland said the fine was too small to deter similar actions by other oil companies.
"The fines that were proposed to me were simply not adequate," Judge Holland said. "I'm afraid these fines send the wrong message, which suggest spills are a cost of business which can be absorbed."
Judge Holland gave Exxon until May 24 to withdraw its guilty plea, and the Justice Department said it was prepared to go to trial, although it expressed disappointment.
The Exxon Valdez ran aground March 24, 1989, dumping nearly 11 million gallons of crude oil into Prince William Sound.
Settlement of the civil suit is subject to approval by the Alaska state legislature, which must reach a decision by May 3. "I can tell you that the capital building is kind of in an uproar right now," said state Sen. Sam Cotten in Juneau.
Alaska Attorney General Charles Cole, who negotiated the civil settlement, said the agreement might have to be renegotiated.
"I think that it is necessary to make that decision after we learn whether the Exxon defendants wish to withdraw their plea," he said.