Is it true that Exxon never paid the fines that were to help the local Alaskan fishing communities that were harmed by the 1989 Valdez oil spill?
—Marcy Damon, via e-mail
The $5 billion in civil charges levied against Exxon by a federal court in 1994 to cover ecological restoration for the Valdez oil spill—at the time, the largest punitive damage award in history—is still in legal limbo in appeals court 16 years later. But the company has spent around $3.5 billion on clean-up efforts, on compensation to affected local residents, and on settlements with Alaska and the federal government to underwrite environmental studies and conservation programs in and around Prince William Sound.
Critics of Exxon charge that the company has used the appeals system to delay payment of the disputed additional $5 billion. “Exxon threw up so many obstacles after the initial $5 billion judgment that the case generated more than 7,700 docket entries,” reported journalist Andrew Gumbel in the UK-based Independent in March 2004 at the time of the 15th anniversary of the spill.
Some charge that Exxon may actually be profiting some $800 million per year from the delay, “because of the difference between the interest rate being charged by the courts and the much higher rate it enjoyed through its own internal financing systems,” said Gumbel.
“This spill continues to haunt [us] to this day in the form of socioeconomic trauma from lingering damages to our environment and fisheries, physical trauma from injured health, and emotional trauma from Exxon’s ridiculous court delays,” says Riki Ott, a former Prince William Sound commercial fisherwoman who founded the Alaska Forum for Environmental Responsibility soon after the spill. “Even $5 billion won’t bring justice, but it will go a long way toward bringing closure to this sorry event.”
For its part, the company (now ExxonMobil) insists it has paid the price for the accident and should be allowed to forego the remaining assessed damages entirely. In 2001, the Ninth Circuit Federal Court of Appeals did just that, concluding that the charges were “excessive”—but this reversal was soon overturned itself on another appeal by environmental organizations. According to a 2004 press release, the company claims that the “punitive damages suggested
are not a debt that is owed” but instead represent “a windfall in excess of the amount the jury found necessary to compensate the plaintiffs for their losses.”
Regardless of whether or not ExxonMobil ever pays the additional damages, it will continue to face the added costs of implementing safety measures—such as equipping all of its oil tankers with double hulls to prevent future accidents. Meanwhile, the U.S. Environmental Protection Agency (EPA) has worked with the company, and the industry as a whole, on coordinating and implementing expensive spill response plans to contain leaked oil and minimize ecological effects in all American waters.
CONTACTS: Alaska Forum for Environmental Responsibility, www.alaskaforum.org;EPA Oil Program, www.epa.gov/oilspill; ExxonMobil’s Valdez Oil Spill Information, www.exxonmobil.com/Corporate/Newsroom/NewsReleases/Corp_NR_Valdez.asp.