WASHINGTON — Nineteen years after an Exxon oil tanker hit a reef and spilled 11 million gallons of crude oil in Alaska's Prince William Sound, the U.S. Supreme Court will hear the final lawsuit lingering from one of the nation's worst environmental disasters.
On Wednesday, the court will consider Exxon Mobil's appeal, a 14-year effort that, if successful, would overturn a $2.5 billion punitive damages award considered by many to be the largest verdict ever against a U.S. corporation.
The case is superlative in many ways, most notably for the environmental havoc. An estimated 85 tons of crude have yet to be removed, according to a federal study released last year.
But the case also is notable for how it pits nearly everyone in Alaska against the world's biggest oil company — whose $40 billion net profits in 2007 broke all records for publicly traded companies.
Former governors, the current governor, supertanker captains, environmentalists, state lawmakers, Alaska natives and experts in maritime law all have joined forces with the 33,000 plaintiffs whose lawyers will ask the nation's highest court to uphold the $2.5 billion verdict.
"I've said this before, but this seems to be a case of justice delayed being justice denied," Alaska Gov. Sarah Palin said. "Nineteen years later after the spill, the ongoing tragedy is that there has not been this closure. And truly we need to see closure in this case."
Exxon has been appealing the verdict since 1994, when a jury in Anchorage returned a $5 billion punitive damages award against the company. In 2006, the 9th U.S. Circuit Court of Appeals cut the award to $2.5 billion. Exxon, which already has paid $3.5 billion in fines, compensation and settlements, appealed that decision to the Supreme Court, which agreed last year to hear the case.
The court will consider three areas of law, including whether the company can be punished under maritime law for the actions of the ship's captain, Joseph Hazelwood. Prosecutors said Hazelwood was drunk when the ship ran aground on March 24, 1989, but he denied the charge and was acquitted in criminal court.
The court also will consider whether punitive damages should be allowed when the company already has been punished under provisions of the federal Clean Water Act. And if so, whether the verdict's size is allowable under the limits of maritime law.
For Exxon and its allies, which include the U.S. Chamber of Commerce and the American Petroleum Institute, the case is an opportunity to press the Supreme Court to scale back massive punitive damage awards.
Exxon has long maintained that it took full responsibility for the spill and that the punitive damages are excessive and duplicative of the fines, compensation and settlements the company already has paid.
"It is our view that the Supreme Court has an important opportunity to provide guidance to the lower courts in relation to the application of punitive damages," said Exxon spokesman Tony Cudmore.
What also is important is that the Supreme Court consider what happened to the people of Alaska, said Andrew Wills, a former herring fisherman who now runs a bookshop and a bed and breakfast in Homer. The lucrative herring fisheries sputtered out in the years after the spill and never came back, Wills said.
"We had a beautiful paradise and a very special job and it just disappeared," he said.
The Exxon plaintiffs were joined by Thomas Schoenbaum, a law professor and expert in maritime law who filed a friend-of-the court brief. Schoenbaum, who is affiliated with the George Washington University in Washington, D.C., and International Christian University in Japan, argues that the sheer scale of the Exxon Valdez oil spill makes it a textbook case for punitive damages.
"Punitive damages are good policy for environmental disasters like this," Schoenbaum said. "They shouldn't be used for ordinary negligence, but when there's severe reckless behavior, it's good deterrence against conduct that's liable to cause environmental disaster. When the risk is great, the care should be correspondingly greater."
Exxon counters that the consequences were deterrent enough.
"We took immediate responsibility for the spill, cleaned it up and voluntarily compensated thousands of Alaskans and businesses affected by the spill," Cudmore said. "We have paid $3.5 billion in clean-up payments, settlements, compensation and fines. This is more than enough to deter anyone for anything."
On Wednesday, Exxon will be represented by Walter Dellinger, who argued nine cases in front of the Supreme Court when he served as acting U.S. solicitor general in the mid-1990s.
The plaintiffs will be represented by Jeffrey Fisher, a Stanford University professor with experience arguing complicated appeals in front of the Supreme Court. Fisher also served as a law clerk to Justice John Paul Stevens.
Eight of the nine justices will hear the case. Justice Samuel Alito, who owns Exxon stock, recused himself from the case, which legal observers see as a good sign for the plaintiffs. Without Alito, many predict that the case could be split 4-4, which wouldn't overturn the circuit court ruling.
Regardless, Alaskans have prepared for a post-verdict world, said Sen. Lisa Murkowski, who signed onto a friend-of-the-court brief with fellow Alaska Sen. Ted Stevens and Rep. Don Young. Murkowski has sponsored legislation in the farm bill that would give plaintiffs a financial break if they receive a windfall from the Exxon settlement. If the legislation passes, it would allow people to put as much as $100,000 away tax free in retirement accounts.
It's time for the case to come to an end, Murkowski said.
"This is what has just kind of eaten at Alaskans for so many years," Murkowski said. "It's not as if it's a company that has an inability to pay. It's not as if this is a company where the amount of damages would really hobble their ability to operate in the future. For many, many Alaskans, myself included, the time has expired. Nineteen years and no final resolution is very difficult to deal with."