You are here
ExxonMobil Corp. will pay $2.5 billion in damages to victims of the Valdez oil spill, which happened almost 18 years ago -- a 44 percent decrease in damages from the original amount, Bloomberg News reported.
An appeals court in San Francisco reduced the $4.5 billion punitive award that was originally decided when the 11 million-gallon tanker spilled its contents off the coast of Alaska in March 1989. The court stated that the previous verdict exceeded U.S. Supreme Court limits on such damages and that the company's "reckless misconduct" in the accident still called for severe sanctions, the report stated. A final judgment against Exxon may add on $2 billion in interest, according to one victim's lawyer.
At the time, Exxon set aside $5.4 billion in a letter of credit to cover any award in the case, the report stated, citing company filings with the U.S. Securities and Exchange Commission. The company stated that it should pay no more than $25 million in punitive damages, considering that it had already spent $3.5 billion to clean up the 10,000-square-mile oil spill and compensate victims.
"It's still a significant amount of money, but they've got to be relieved that they're getting the whole thing put to rest," Douglas Christopher, who holds $8.5 billion in Exxon shares at Crowell Weedon & Co., told Bloomberg News. "This frees up money they can put toward the business of finding and producing oil."
However, Exxon believes that the $2.5 billion fine is excessive. The company said in a statement that the facts "do not warrant an award of this size" and that the U.S. Supreme Court must provide more guidance on damage awards. "The plaintiffs have been compensated for damages and most were compensated within one year of the spill," Exxon stated. It describes the spill as a "tragic accident that ExxonMobil deeply regrets."
A lawyer for the plaintiffs, David Oesting, told Bloomberg News that he is considering an appeal to a larger panel of the court, and noted that almost $2 billion has accrued since the original verdict in 1996.