Fri, Feb 29, 2008 - Page 7 News List

Oil spill victims may have payments slashed

AP , WASHINGTON

Alaskan residents stand outside the US Supreme Court, which is considering whether to prevent victims of the Exxon Valdez disaster from collecting a US$2.5 billion judgment, on Wednesday in Washington.

PHOTO: AFP

Almost 33,000 Alaskan victims of the disastrous Exxon Valdez oil spill could see their court-ordered payments reduced by more than half, to about US$30,000 each, if the Supreme Court hands Exxon Mobil Corp a partial victory in a long legal fight over punitive damages.

The justices reached no firm conclusions in court on Wednesday, but they appeared to agree with Exxon that the US$2.5 billion, or US$75,000 a person, ordered by a federal court is excessive punishment for the massive 1989 spill.

Two justices, who could hold the balance of power in this case, suggested a payout of about US$1 billion might be appropriate.

There was little talk in court of the plight of Alaskans who depended on the area's environment for their paychecks or of Exxon's run of record profits. Neither has much to do with the legal principles that underlie the case.

The award represents less than three weeks' worth of Exxon profit, which was US$11.7 billion in the last three months of last year.

Still, Exxon has vigorously fought to knock down or erase the punitive damages verdict by a jury in Alaska in 1994 for the accident that dumped 11 million gallons of oil into Prince William Sound. The environmental disaster fouled 1,930km of Alaskan coastline.

The verdict has been cut in half once by a federal appeals court.

The problem for the people, businesses and governments who waged the lengthy legal fight against Exxon is that the Supreme Court in recent years has become more receptive to limiting punitive damages awards. The Exxon Valdez case differs from the others in that it involves issues peculiar to laws governing accidents on the water.

But several justices said limits could be appropriate in this context too.

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

"Exxon gained nothing by what went wrong in this case and paid dearly for it," Exxon lawyer Walter Dellinger said, in urging the court to throw out the punitive damages judgment that has been upheld by the San Francisco-based 9th U.S. Circuit Court of Appeals.

Law professor Jeffrey Fisher said each of the commercial fishermen, Native Alaskans, landowners, businesses and local governments he represents has received about US$15,000 so far "for having their lives and livelihood destroyed and haven't received a dime of emotional-distress damages."

Fisher said nothing in prior Supreme Court decisions should cause the justices to overturn the US$2.5 billion award, about US$75,000 for each plaintiff.

It was less clear how the court would rule about whether the company should have to pay damages at all under the Clean Water Act and centuries-old laws governing shipping. Justice Samuel Alito, who owns Exxon stock, is not taking part in the case. A 4-4 split on that or any issue would leave the appeals court ruling in place.

The key element there is whether Exxon can be held liable at all for the acts of Exxon Valdez captain Joseph Hazelwood. Hazelwood was not on the ship's bridge when the accident occurred and had been drinking shortly before it left port, both in violation of Coast Guard rules and company policy.

"What more can the corporation do other than say, `Here is our policies'? And try to implement them?" Chief Justice John Roberts said.

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