High Court Cuts Exxon’s Damage Payment

The Supreme Court this week slashed the punitive damages award in the 1989 Exxon Valdez disaster from $2.5 billion to $500 million, while Exxon CEO Rex Tillerson responded by saying the company has redoubled its efforts to protect the environment ever since the incident.

The court ruled that victims of the country’s worst oil spill may collect punitive damages from Exxon Mobil Corp, but not as much as a federal appeals court determined, the Associated Press reported.

Justice David Souter wrote for the court that punitive damages may not exceed what the company already paid to compensate victims for economic losses, about $500 million compensation, the Associated Press reported, adding that Souter said a penalty should be “reasonably predictable” in its severity.

The Associated Press report continued:

Exxon asked the high court to reject the punitive damages judgment, saying it has already spent $3.4 billion in response to the 1989 accident that fouled 1,200 miles of Alaska coastline.

A jury decided Exxon should pay $5 billion in punitive damages, but a federal appeals court cut that verdict in half in 1994.

The Supreme Court divided on its decision, 5-3, with Justice Samuel Alito taking no part in the case because he owns Exxon stock.

Exxon has fought vigorously to reduce or erase the punitive damages verdict by a jury in Alaska four years ago for the accident, which dumped 11 million gallons of oil into Prince William Sound. The disaster led to the deaths of hundreds of thousands of seabirds and marine animals.

Nearly 33,000 Alaskans are in line to share in the award, about $15,000 a person. They would have collected $75,000 each under the $2.5 billion judgment.

Overall, Exxon has paid $3.4 billion in fines, penalties, cleanup costs, claims and other expenses resulting from the worst oil spill in U.S. history.

On the company’s Web site, Exxon CEO Rex Tillerson called the oil spill a “tragic accident and one which the corporation deeply regrets.”

“We know this has been a very difficult time for everyone involved,” Tillerson wrote. “We have worked hard over many years to address the impacts of the spill and to prevent such accidents from happening in our company again. We took immediate responsibility for the spill and have spent over $3.4 billion as a result of the accident, including compensatory payments, cleanup payments, settlements and fines.

He continued: “The company cleaned up the spill and voluntarily compensated more than 11,000 Alaskans and businesses. The clean-up was declared complete by the State of Alaska and the United States Coast Guard in 1992. In the aftermath of the Valdez accident, we redoubled our long-time commitment to safeguard the environment, our employees and the communities in which we operate.”

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