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Fall Out From "Exxon Valdez"On March 23, 1989, a tanker, "Exxon Valdez" ran aground in Alaska in Prince William Sound while trying to avoid a glacier ice field, sustaining a 650 foot long gash under water. In the resulting oil spill, the tanker lost 240,000 of its 1.3 million barrel cargo.The ensuing 15 years has been filled with worldwide attention to the cleanup, ecological damage, and litigation. A recent summary of the litigation provided some amazing findings. EXXON not only paid a fine of $150 million and settled environmental damage claims by governments for $900 million, but also spent $2.1 billion on cleanup efforts. A class action suit brought by thousands of fishermen, native Alaskans, landowners, and fish hatcheries resulted in a verdict against EXXON of $287 million in compensation. (The claim was for $900 million and the offer was $100 million.) The verdict also awarded $5 billion in punitive damages as punishment, holding EXXON responsible for the reckless conduct of its managerial employees (i.e., the Captain, etc.) In the intervening years, the U.S. Supreme Court has tightened punitive awards, and in 2002, a federal judge reduced the award by 20% to $4 billion. Further appeals are pending to the 9th U.S. Circuit Court and possibly the Supreme Court. Attorneys from 81 law firms for the 14,000 private claimants reported $20 million in costs and $85 million in billable hours through September 1994. EXXON lawyers were estimated to have spent even more on litigation. Fees from the punitive damage award, if it holds up, could reach $1.5 billion. Equally startling have been other results of the exhaustive investigation. Local authorities should have provided longer pilot coverage. The Coast Guard failed to maintain adequate radar and communication observation. These were considered contributing proximate causes of the accident, but not included in the litigation. In addition, lack of skimming barges, containment booms and lighting, trained crews and boats, all deficiencies of the oil transmission company, Alaska, state and local governments and the Coast Guard, severely aggravated the spill and handicapped the cleanup. All of this occurred in a fragile environment where the natural hazards of cold and ice were extreme. This became germane in view of the fact that 53 oil spills in the world since 1960 exceeded that of the EXXON VALDEZ, ranging from its loss of 240,000 barrels up to 1.9 million barrels in a single spill in 1983 elsewhere. In such a context, the notoriety of the EXXON VALDEZ spill is hard to understand, but a fragile environment, an American oil giant, and litigation in a U.S. jurisdiction, probably explain much of the worldwide attention and high cost. |
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