Exxon agrees to pay interest on oil spill penalty

Elizabeth Bluemink

Exxon Mobil Corp. said Monday it won't appeal nearly $500 million in interest that a court recently ordered it to pay to Alaska fishermen, business owners and others harmed by the 1989 Exxon Valdez oil spill.

Exxon said it will pay $470 million in interest on the $507.5 million in punitive damages it has already begun paying out to claimants. The company has already paid out $383 million and the only sum that remains in dispute in the long-running lawsuit is $70 million in court fees, according to a company spokesman.

"We expect to make payment on the interest in the next few days," said Alan Jeffers, the Exxon spokesman.

He said he couldn't immediately provide an explanation for Exxon's decision not to challenge the court-ordered interest payment.

Exxon's decision is the latest in a series of high-profile Alaska actions this year. The company has endured two decades of infamy in the state thanks to its tanker running aground and spilling 11 million gallons of oil in Prince William Sound, and its lengthy fight over how much to pay in spill damages.

Earlier this year Exxon significantly upped its major sponsorship of the Iditarod Trail Sled Dog Race and it began drilling on its long-dormant oil and gas leases at the promising Point Thomson field. And this month it joined the competition to build a massive North Slope gas pipeline.

"Exxon's actions lately appear to be geared at generating relationships with the Alaska public, not just elected officials," said Joe Balash, a member of the Palin administration's gas pipeline team.

"As far as what their ultimate strategy is, in my experience, Exxon doesn't do anything unless they think it's good for their shareholders," he said.


The request for punitive damages was filed by Alaska Natives, fishermen and others who claimed harm to their livelihoods after the Exxon Valdez oil spill sullied 1,200 miles of Alaska coast. Since the mid-1990s, Exxon has appealed court-awarded punitive damages. The 9th U.S. Circuit Court of Appeals this month finalized the punitive damages at $507.5 million, ordered Exxon to pay interest on that amount since 1996 and set the interest rate at 5.9 percent a year.

The $470 million will roughly double the average punitive damages award to 32,000 to 35,000 claimants, said David Oesting, an attorney for the plaintiffs.

"It's a blessing for everyone involved," said Oesting, who signed Exxon's paperwork on Monday.

Each claimant still owed money will receive an award ranging from several hundred dollars to more than $100,000 in some cases, he said.

When asked if Exxon had given him a reason for not appealing the interest payment, Oesting said, "No, and I didn't ask."

He speculated, however, that Exxon decided the probability of success was "too slim" and the company wanted to end the lengthy case.

The interest money will be wired to the lawsuit's qualified settlement fund on Wednesday, Oesting said.

He said he hopes that 75 percent of the interest payment will be sent to the claimants by the end of July.

Not all plaintiffs are owed additional money under the formula set up by attorneys for an equitable distribution of the damages, he added.


Homer fisherman Frank Mullen, an Exxon claimant, said he's relieved that the Houston-based oil company isn't appealing the interest.

"It looks like the end to the whole nonsense is near," Mullen said.

Mullen said he was "disgusted" that the company contested the $5 billion in punitive damages awarded by an Alaska jury all the way to the U.S. Supreme Court. The appeals court several years ago lowered the punitive award to $2.5 billion. Last year, the U.S. Supreme Court ruled the punitive damages couldn't exceed $507.5 million and sent the case back to the appeals court.

The $70 million that Exxon is still disputing is money the company spent on fees and other costs during the appeals.

The appeals court ruled this month that the plaintiffs shouldn't have to pay Exxon's fees.

But Exxon still contends that the plaintiffs owe up to $70 million. On Monday, Exxon petitioned the 9th Circuit for a rehearing of its claim, Jeffers said.

Find Elizabeth Bluemink online at adn.com/contact/ebluemink or call 257-4317.

Exxon Valdez background