US Appeals Court halves original Exxon Valdez damages to $2.5 bil

New York (Platts)--22Dec2006

A US Appeals Court Friday cut to $2.5 billion the punitive award
ExxonMobil would have to pay Alaska fishermen and others for the 1989 Exxon
Valdez oil spill in Prince William Sound.

The US Ninth Circuit Court of Appeals in San Francisco decision was in
response to an appeal by ExxonMobil of a decision by a US District Court in
Alaska to penalize the major $4.5 billion. The District Court had earlier
upheld a jury-imposed penalty of $5 billion in the case.

In its 2-1 decision, the Appeals Court said it concluded "the ratio of
punitive damages to actual economic harm resulting from the spill, reflected
in the district court's award of $4.5 billion, exceeds by a material factor a
ratio that would be appropriate..."

According to a copy of the decision posted on its website, the Appeals
Court said it dropped the penalty to $2.5 billion "because, in assessing the
reprehensibility of Exxon's misconduct... there are several mitigating facts.
These include prompt action taken by Exxon both to clean up the oil and to
compensate the plaintiffs for economic losses," the court wrote.

"In addition, in considering the relationship between the size of the
award and the amount of harm, we concluded in our earlier punitive damages
opinion that the substantial costs that Exxon had already borne in clean up
and loss of cargo lessen the need for deterrence in the future," the court
wrote.

The Appeals Court, however, said it disagreed with ExxonMobil's "ultimate
contention" that it should not face punitive damages assessed at no higher
than $25 million.

An ExxonMobil spokesman did not return calls for comment regarding the
Appeals Court decision.

--Richard Rubin, richard_rubin@platts.com

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