Politics & Government

ExxonMobil balks at paying interest on oil-spill damages

WASHINGTON — ExxonMobil has balked at paying $488 million in interest on punitive damages that plaintiffs say it owes for its role in the 1989 Prince William Sound oil spill in Alaska, saying "there is no good reason" for the Supreme Court to assess interest.

Last week, the people who are owed money from the Exxon Valdez lawsuit asked the Supreme Court to make it clear that they should receive interest, even though the court cut the punitive damages award in June from $2.5 billion to $507 million.

On Tuesday, the oil giant disagreed. In its filing, the company says that "the court has held that $507.5 million is the legally correct amount necessary to deter Exxon and others from future oil spills," and not millions more in interest.

"The deterrent for future oil spills will thus be the same whether post-judgment interest is paid or not," the company wrote. "Future spills in Exxon's position will know that their punishment will be in an amount up to the extent of the damage they cause."

Also, the company adds that there's no reason to penalize it by awarding another $488 million when "the substantial delay here was not in any sense Exxon's fault," but was that of the plaintiffs, who disagreed with a lower court decision.

The company describes the court case as "far from the kind of victory that could be described as "clear-cut." The case isn't the same as those in which courts award interest, Exxon's lawyers argued, because even though the amount of the award was reduced, "it is substantially affirmed and upheld."

Lawyers for the fishermen and other plaintiffs in the case had calculated that interest would add up to about $488 million, bringing the total amount owed by Exxon from the spill to nearly $1 billion. After attorney fees, an estimated $628 million would be divided among more than 32,000 plaintiffs.

The punitive damages originally were awarded in 1994 as punishment for Exxon's role in the spill, which leaked 11 million gallons of crude oil into the fishing waters of Prince William Sound.

Lawyers for the plaintiffs think that they're entitled to interest, but after so many years of wrangling with Exxon, they filed a brief with the Supreme Court to clarify their position, said Brian O'Neill, a Minnesota lawyer who represents the plaintiffs. Last week, he described the brief they filed with the Supreme Court as "belt and suspenders."

They clearly were worried, and wrote in their brief that "if past is prologue, there is real risk that Exxon would exploit any lack of clarity concerning interest to prolong this litigation still further."

The Supreme Court issued its 5-3 opinion June 25. The court held that in maritime cases punitive damages should be no more than the compensatory, or actual, damages. That 1-to-1 ratio, a new legal standard for punitive awards, applies only to punitive damages meted out under maritime law. It was designed to address "the stark unpredictability of punitive awards," the court decided.