Exxon Valdez Oil Spill Ruling Stuns Alaska Victims

ANCHORAGE, Alaska – Mike Lytle, a third-generation fisherman from the coastal village of Cordova, said many residents there were walking around stunned, shaking their heads.

A lot of people he knows were planning their retirements with the $2.5 billion in punitive damages that Exxon Mobil Corp. was expected to pay the nearly 33,000 victims of the worst oil spill in U.S. history.

But the Supreme Court dashed their hopes Wednesday, deciding to cut the punitive damages for the 1989 Exxon Valdez disaster to $507.5 million. That translates to an average of $15,000 per victim.

"I always felt that big oil was going to win," said Lytle, 56. "But now I found out what true meaning of punitive damages is: puny."

A jury decided in 1994 that Exxon should pay $5 billion in punitive damages. In 2006, a federal appeals court cut that verdict in half.

Wednesday's decision to reduce the amount to one equal to about four days worth of Exxon Mobil's last quarter profits was hailed by the business community and decried by environmentalists and Alaskans.

"This turns America's resources to the oil industry and only the U.S. Congress can do something about it," said Jim Ayers, vice president of the advocacy group Oceana. "If the Congress doesn't act, this means that America's resources, including our marine life, are now in serious jeopardy and can be bought and destroyed for a mere pittance."

Justice David Souter wrote for the court that punitive damages may not exceed what the company already paid to compensate victims for economic losses, or $507.5 million.

The 5-3 ruling, which reduced the amount owed by 80 percent, comes almost two decades after the Exxon Valdez supertanker ran aground, spurting 11 million gallons of crude into the rich fishing waters of Prince William Sound that so many Cordova residents rely on for their livelihoods.

"I'm not too surprised," said Derek Blake, 25, who was a young child when he began fishing there with his father. "I thought we might get $1 billion, but it was always in the back of my head we could get nothing."

Robert J. Kopchak lost a quarter of his earnings when the Pacific herring fishery crashed in the early 1990s. Adding to his family's burden at the time, he still owed thousands of dollars on two herring permits that are worthless today.

"It really hurts," he said of Wednesday's ruling. "It gives big business the formula they need to calculate the cost of their actions when they destroy the environment. This gives them the formula to calculate their risk, period."

Sylvia Lange, also of Cordova, used to fish commercially for salmon and haul for the doomed herring fishery. But for her, the spill was about more than lost money.

It also was about the end of Alaska Native traditions and a subsistence lifestyle for several villages in the region. Because of the spill, many Alaska Natives were forced to stop harvesting seal, salmon and herring roe and move to urban areas, never to return, said Lange, who is part Aleut and Tlingit.

"A cultural link was definitely broken," she said.

The spill killed hundreds of thousands of birds and other marine animals, inflicting environmental injuries that have not fully recovered, according to numerous scientific studies.

Exxon Mobil maintained that many studies found the area healthy and thriving, countering findings of continuing damage. The company, which posted a $40.7 billion profit last year, had said punitive damages would be excessive punishment on top of the $3.4 billion in cleanup costs, compensatory payments and fines it already has paid.

"The Valdez oil spill was a tragic accident and one which the corporation deeply regrets," Irving, Texas-based Exxon Mobil said in a statement Wednesday. "We know this has been a very difficult time for everyone involved. 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."

On the question of whether Exxon Mobil was liable for punitive damages at all, the court split 4-4, which leaves standing the appeals court opinion saying the company was liable. Justice Samuel Alito, who owns Exxon Mobil stock, took no part in the case.

First-quarter profits at Exxon Mobil were $10.9 billion. The company's 2007 profit was $40.6 billion.