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Supreme Court Drastically Cuts Payouts for Plaintiffs in Exxon Valdez Oil Spill

June 26, 2008

By Lynda V. Mapes, The Seattle Times

Jun. 26–Hopes of fishermen throughout Washington and Alaska were sunk Wednesday when the Supreme Court slashed the amount of punitive damages that Exxon must pay for the epic Exxon Valdez oil spill nearly two decades ago.

The high court, in a 5-3 decision, found that punitive damages could not be larger than the compensatory damages for actual losses from the spill, which totaled $507.5 million.

The justices rejected the amount — $2.5 billion — that a federal appeals court had granted to be shared by 32,677 plaintiffs who had claimed damages from the worst oil spill in U.S. history, including fishermen, Alaska natives, local businesses and others.

That amount had been reduced from the $5 billion that a jury awarded in 1994.

The anxiously awaited decision, delivered on the eve of the Supreme Court’s summer recess, brings to a close one of the longest-running class-action lawsuits in the country.

But it was not the end that many had hoped for.

“Crime pays, and environmental crime pays really well,” said William Rodgers, a professor of law at the University of Washington and an expert on the Exxon Valdez case.

“I am sure they [Exxon] are sitting down and having a toast of the town. The other lesson they have taught is scorched-earth litigation pays. Just keep litigating, making up issues.”

The fight over the punitive damages reached the Ninth Circuit Court of Appeals in 1999. Since then, Exxon filed more than 60 petitions and appeals, sought 23 time extensions and filed more than 1,000 motions, briefs, requests and demands. The company requested a reduction in the damages amount, a reversal of the verdict and a new trial, claiming jury misconduct and jury tampering, according to Rodgers.

More than 3,000 claimants died waiting for an outcome in the case.

The original jury award of $5 billion was intended to be the equivalent of about a year’s average profits for the company. Last year, Exxon Mobil made $40 billion, the largest annual profit of any corporation in U.S. history.

Exxon has contended that it shouldn’t be required to pay any punitive damages because it has already paid millions to clean up after the spill, plus criminal fines and restitution, compensation paid to more than 11,000 individuals hurt by the spill, legal fees and other costs.

“Obviously this was very much a tragic accident,” said Tony Cudmore, an Exxon Mobil spokesman. “This case is not about compensation for loss, it is about whether further punishment is warranted, and in our view it is not.”

As the plaintiffs took stock of Wednesday’s ruling, some said they always figured that getting any payment out of Exxon was a longshot.

“I consider it kind of like buying a lottery ticket,” Gig Harbor fisherman Ken Manning said.

“A lot of fishermen hate Exxon. The ill feeling I have is for the court system. They have just strung everyone along for so long.”

But other Washington state fishermen said the case wasn’t about just money.

“This isn’t about repaying a bunch of victims from 19 years ago,” said Tom Copeland of Bellingham, who turned to farming bamboo after his fishing business suffered because of the spill.

“The important thing about punitive damages is telling them they have to clean up their act. It’s important to give them the punishment they deserve, and they continue to deserve it.”

The massive spill, which gushed 11 million gallons of crude into Alaska’s Prince William Sound when the single-hull tanker hit a reef, transformed lives and an entire ecosystem seemingly overnight.

But it also forever changed the way government regulates spills and the transport of oil.

Congress has mandated that by 2015, all oil tankers have to have double hulls to reduce the risk of catastrophic spills.

Washington still endures some 4,000 oil spills a year, but the number of large spills has been reduced dramatically. That’s because the Exxon Valdez disaster helped change the state’s oil-spill prevention and response programs top to bottom, said Jon Neel of the state Department of Ecology.

In 2007, 182 tankers from all over the world called at Washington ports, 137 of them with double hulls. Petroleum products are also barged around Puget Sound and up the Columbia River, and pumped into vessels of every size every day on bodies of water all over Washington.

Some 20 billion gallons of oil move through the state as cargo and fuel each year, and some 14 billion gallons of oil are transferred, according to the Ecology Department.

Today, the state has one of the most rigorous spill-prevention programs in the country, including a 2006 initiative to place oil booms around large commercial ships and docks before transferring oil or fuel, except gasoline, when conditions allow.

The state also has a dedicated fund, staff, and full-time program to prevent and respond to oil spills — a focus that didn’t exist before the Exxon Valdez spill.

Two decades later, the fragile ecosystem of Prince William Sound has yet to fully recover, especially on the hardest-hit beaches. More than 200 tons of oil remain in beach sediment. Herring — which are vital as food to 40 species of birds, mammals and fish — have never returned to pre-spill populations.

“Until herring recover, we are kind of treading water,” said Riki Ott, a scientist and author in Cordova, Alaska. “Prince William Sound is beautiful, but if you take a shovel all you have to do is dig down six inches and there is oil. It smells like a gas station, still, today.”

The legal fights over the Exxon Valdez aren’t completely over.

Still to be litigated is a claim against Exxon by the federal government and state of Alaska for $92 million in so-called “re-opener” damages, intended to help pay for environmental harm not detected at the time of the spill.

The Exxon Valdez Oil Spill Trustee Council, a division of Alaska’s Department of Fish and Game, last year said there are more species still suffering since the spill than have recovered.

Some Washington fishing families certainly put themselves in that category.

“Our life has been kind of on hold since the spill,” said Katie Dexter, whose husband still fishes Prince William Sound.

“We have been in debt since the spill. We love Prince William Sound, and to see that kind of devastation has been hard on many levels. There is no amount of money that can really undo the damage.”

Information from The Associated Press was included in this report.

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XOM,




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