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18 Years on Exxon Still Won't Pay $2.5 Billion for Valdez Oil Spill

by Gopalan on November 6, 2007 at 2:32 PM
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18 Years on Exxon Still Won't Pay $2.5 Billion for Valdez Oil Spill

It was perhaps the largest oil spill in history, and the Alaskan coast was devastated.

But 18 years on, oil giant Exxon Mobill whose tanker had leaked some 11 million gallons crude oil is yet to pay up the damages awarded to the communities hit by the spill.


Last week the Supreme Court agreed to consider whether maritime law allowed for the imposition of punitive damages, an issue on which lower federal courts are divided.

The oil had hit some 1,500 miles of coastline, decimating the fish and wildlife populations for years afterward. Hundreds of bald eagles and otters, scores of killer whales and thousands of birds of other species perished, as did untold numbers of salmon, herring, clams, mussels and other forms of aquatic life.

The spill caused personal tragedy and hardship as well as environmental damage. The livelihoods of Alaska fishermen were threatened, and a decade after the disaster the shoreline was still not back to its pre-spill condition.

Apparently the ship's captain, a notorious alcoholic, was mainly responsible for the disaster. Still feeling the effects of at least five double-strength whiskeys he had downed in waterfront bars, Captain Hazelwood was resting in his cabin as the tanker and its 53 million gallons of oil ran aground on March 24, 1989.

A federal court jury found in 1994 that ExxonMobil and its captain were reckless and negligent, and ordered the corporation to pay $5 billion in punitive damages. Eventually, the award was reduced on appeal to $2.5 billion by a panel of the United States Court of Appeals for the Ninth Circuit, which held that, while the oil company had committed "reckless misconduct" in placing a known relapsed alcoholic at the helm of the tanker, its misconduct was not so egregious as to warrant the higher punishment figure.

ExxonMobil says it paid $300 million immediately to more than 11,000 Alaskan individuals and businesses affected by the spill, another $2.2 billion for a cleanup from 1989 to 1992 and a further $1 billion to settle claims by the state and federal government.

The $2.5 billion was the biggest punitive damages award ever ordered by a federal appeals court, and it represented five times the estimated $500 million in economic damages suffered by the roughly 32,000 plaintiffs.

Their counsels have argued for years that the billions already paid by the company amount to just a few weeks' profits and that it takes an immense judgment to effectively punish such an immense company.

The spill hit the town of Cordova, Alaska, hard. In her new book Not One Drop: Promises, Betrayal, and Courage in the Wake of the Exxon Valdez Oil Spill, to be published next year, Riki Ott, PhD, a community activist, says, "This small coastal fishing community -- my hometown -- along with the Alaska Native villages in Prince William Sound have borne the brunt of the largest crude oil spill in America's waters; a spill that took place more than 18 years ago, but one that continues to hold the region hostage.

"To us, it's about more than an oil spill, the world's largest oil corporation, and a small fishing community in Alaska. It's about America's failed legal system that inherently cannot dispense justice in the face of corporate globalization."

U.S. corporations have outgrown America's justice system. The system won't work for any community in America that is traumatized by disaster that triggers class action lawsuits -- hurricanes like Katrina, terrorist acts like 9/11, or oil spills like the Exxon Valdez. Yet sociologists warn such disasters will be a hallmark of the 21st century, Ott says.

Three of Cordova's five fish processors (canneries) went bankrupt after the spill. The largest one never recovered, leaving the town with not enough capacity to buy and process large salmon returns like this year. Further, the town lost it's only locally owned and operated processor cooperative, leaving fishermen with fewer resources to leverage high grounds prices for their catch. The town tumbled from its ranking as one of the top ten seaports in the nation, based on harvest value, to 53rd after the delayed, spill-related pink salmon and herring population collapses in 1992 and 1993.

The salmon recovered; the herring did not. The herring fisheries are closed indefinitely. Fishermen who held $300,000 commercial fishing permits for salmon and/or herring fisheries at the time of the spill now own pieces of paper worth around 10 percent their former value -- that is, the fishers who did not go bankrupt, lose their permit in foreclosures, take a loss and sell out, die, or commit suicide. Fishermen who buy into the fisheries now pay less for the privilege and expect less in return, while the spill survivors deal with ever mounting debt on permits that the fisheries no longer supports -- and in many cases that exceeds their individual share of the punitive award at the full $5 billion.

No other country in the world has a legal system that is as adversarial, costly, formal and complex as the United States system, it is contended.

If the Exxon Valdez case is a harbinger of litigation to come, it does not bode well for people, civic society, or the environment.

The forces of aggression released and sanctioned by the American judicial system are horrific -- no one leaves the field unscathed. Psychiatrist Larry Strasburger noted, ''Although it may be that we have exchanged swords and cudgels for subpoenas and depositions, an aura of combat continues to hover about the judicial process, and combat produces casualties.''

Psychologists found that adversarial litigation emotionally ''arrests'' disaster-scarred survivors, forcing them to keep the disaster trauma alive and present. This blocks the normal progression of recovery phases from a stress response and holds disaster-litigants hostage until case closure.

Further, litigation generates new trauma, so-called ''Litigation Response Syndrome,'' with symptoms similar to Post Traumatic Stress Disorder (PTSD) and General Anxiety Disorder. For disaster-litigants, this amounts to a double helping of stress. It scars even ''successful'' litigants-those who eventually prevail.

Sociologists Drs. Steve Picou and Duane Gill have studied the evolution of disaster trauma in Cordova since the spill. They report a third of the fisher-claimants in Cordova suffer from clinical depression, nearly 40 percent from PTSD, and 60 percent hold off-season jobs to make ends meet. This is now -- 18-plus years after the spill. Further, they found the stress level attributable to litigation in fisher and Alaska Native claimants is nearly as high as the initial level from the spill.

Though dismayed by the latest turn of events, Ott and others hope some day they would get justice.

Source: Medindia


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