Amid record profits, Exxon tries to shirk interest payments in Valdez oil spill case

Introduction

At the same time that ExxonMobil was racking up the largest quarterly profit of any U.S. company in history — $14.8 billion — the oil giant was fighting in court to avoid making the interest payment in the long-running case brought by victims of the 1989 Valdez supertanker spill in Alaska. In case you were wondering, the sum the plaintiffs say Exxon owes in interest, about $500 million, is about three days’ worth of company profits.

It looked this summer as if the litigation over the worst oil spill in the nation’s history had finally come to an end when the Supreme Court ruled in Exxon’s favor, slashing a $2.5 billion punitive damages award against the company to just $500 million. But lawyers for the commercial fishermen, cannery workers, and native Alaskans who brought the case maintain that Exxon owes $500 million on top of that sum — 12 years’ worth of interest. They say payment in such cases typically accumulates at the federal discount interest rate in effect on the date of the original judgment: in this case, Sept. 24, 1996. Exxon’s protest, they said, is “a futile attempt to dodge the precedents of this and other [appeals courts].”

But Exxon argues that it should only owe interest from last June 25, the date of the Supreme Court decision, not from the time of what it calls the “original, unlawful, and now-vacated and modified judgment.”

Exxon happened to be reporting its record-shattering earnings the same week that final briefs on the interest issue were due in the 9th U.S. Circuit Court of Appeals. The earnings release shows Exxon spent $8 billion — 16 times the amount of interest in dispute in the Valdez case — just buying back its own stock, a way of returning money to its shareholders.

Those hurt by the oil spill in Prince William Sound, meanwhile, have not received a penny of the punitive damages they are owed — although, in part, that isn’t Exxon’s fault. Just as distribution was to begin this month, one plaintiff — Sea Hawk Seafoods, a Seattle-based company that ran a fish-processing plant in Valdez — challenged the formula the court has arrived at to divide up the money. So that dispute has to be battled out before a judge prior to any money being distributed.

The average amount the victims are awaiting: $15,000 each, or double that if Exxon is forced to pay interest.