ExxonMobil wants to keep the interest

First off, let me state, for the record, that I don’t like Exxon. Nobody does, especially if you are a regulator of the oil industry or work for a competitor (I’ve done both). I spent part of 1989 in Prince William Sound, and was also involved in the final year of the cleanup in 1991. You can say all you want about how they did pony up a significant amount of money for the cleanup, but the bottom line is that they only let money leave their hands under serious duress. Even after 1989, when they should have known better, I butted heads with them at other spill sites (Arthur Van Kill comes immediately to mind) regarding taking responsibility for their spills and conducting prompt spill responses. Their modus operendi has always been “all matters are vetted through the legal department”. They don’t even respond to other oil companies about matters of common interest except through delayed legal channels. 

So now, 19 years after the T/V Exxon Valdez spill and after a decade and a half of legal obstruction, they convinced the U.S. Supreme Court that the punitive fine for the spill should be $507 million (the original judgement was over $5 billion). Now, Exxon claims that they shouldn’t have to pay interest on the fine.

From McClatchy’s Washington Bureau:

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.

I would argue that the fine should be paid in 1994 dollars (the date of the initial award before all the appeals), plus interest.  After all, Exxon gained an economic benefit by not paying the fine in 1994.  They were able to invest that money and make a profit off of it.  Conversely, the plaintiffs were not able to gain economically from the punitive fine for for 14 years.  That is the standard for Alaska courts.  If you gained economically by delaying payment, your economic gains (inflation and interest) become part of the payment.  Anything else is incentive for prevarication.

More news on this at APRN, or the Anchorage Daily News.  Exxon’s legal argument why they shouldn’t pay interest is here (warning – written by a gaggle of oily lawyers).

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One Response to ExxonMobil wants to keep the interest

  1. elizabeth says:

    We live on a 38,000 acre south texas ranch. Exxon has operated this ranch since 1935. See for yourself how they do the maintenance. All of the movies on my youtube site were made this week. The sites shown are spread out over 10,000 acres. The fresh groundwater is at 23 feet in some places.
    http://www.youtube.com/user/rancholosmalulos
    They have numerous non-compliant warnings from state and federal agencies, we filed a lawsuit for gross negligence in January of 2008…. doesn’t bother ExxonMObil a bit.
    If people think that Prince William Sound was an accident, then look at how Exxon manages their current day to day leases in 2008.

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