Processing Magazine

Valdez ruling hurts Alaska relationship with Exxon

June 27, 2008
Reuters is reporting that the state of Alaska vowed to tighten oversight on Exxon Mobil after the U.S. Supreme Court struck down a $2.5 billion punitive damage judgment for the 1989 Valdez disaster.

Gov. Sarah Palin said that the company will know that Alaska is extremely unhappy with the verdict and that the state is committed to stringent, responsible oversight of the oil industry.

The Exxon Valdez spill was the lowest point in Alaska''s sometimes rocky relationship with the oil industry. Oil money provides the backbone of the economy and most of the tax revenue that Alaska uses to run its operations. Yet Alaskans have chafed at what many believe is industry''s undue political influence, and there is a litany of complaints that oil development has spoiled a once-pristine environment.

The Republican governor said new oil developments will not take place in Alaska unless they meet safety and ethics standards. As word spread on the Supreme Court ruling, Alaskans expressed anger, disappointment and shock.

In Cordova, the Prince William Sound fishing town of 2,400 that was particularly hard-hit by the spill, residents said they were shocked at how little Exxon will now have to pay at a time the corporation is raking in billions in profits.

The ruling said Exxon should pay no more than $507 million in punitive fines, equal to compensatory payments made to individual plaintiffs.

Jim Ayers, a past executive director of the council that oversees the $900 million fund paid by Exxon to settle government spill damages, said the ruling reminded him of the day when, as director of the state ferry system, he arrived at the site of the spill.

In Prince William Sound, where many animal species and resources have yet to recover to pre-1989 conditions, a once-vibrant herring fishery has collapsed and pockets of buried oil are still on some beaches, physical impacts of the spill linger.

In a statement, Exxon Mobil Chairman Rex Tillerson said the company has spent over $3.4 billion in compensatory payments, cleanup payments, settlements and fines.