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State: Punitive damages warranted in oil spill

Posted: Tuesday, January 22, 2008

ANCHORAGE - A brief filed with the U.S. Supreme Court says Exxon violated a social contract it had entered into with the state of Alaska when the tanker Exxon Valdez hit a reef in Prince William Sound in 1989 and spilled 11 million gallons of crude oil.

Thus the oil company should be subject to punitive damages for the environmental catastrophe, state lawmakers and four former governors said in their friend-of-the-court brief.

The high court is scheduled to hear oral arguments in Exxon's appeal on Feb. 27.

"Punitive damages are appropriate here because Exxon acted recklessly and violated its solemn vow to the people of Alaska to protect Alaska's marine ecology and marine-based economy," the brief states.

The brief, authorized in a recent meeting of the Legislative Council, cites the Trans-Alaska Pipeline Authorization Act of 1973. According to the brief, the federal law expanded the liability of oil companies in the event of a spill.

Exxon has been appealing the case since an Anchorage jury in 1994 returned a $5 billion punitive damages award against it. In 2006, the 9th U.S. Circuit Court of Appeals cut the award to $2.5 billion. That decision was appealed to the Supreme Court by Exxon.

Alaska legislators decided that court hearing will be their final opportunity to speak on behalf of fishermen, Alaska Natives and others who lost their livelihoods because of the economic effects of the oil spill, according to state Rep. John Coghill, R-North Pole. Lawmakers believed that the former governors would add historical weight to their brief.

"To me, it was a way of saying that we the people feel that the social contract was that important," Coghill said. "There are windows of opportunity, and this was one of the few opportunities we could use to make a case for so many Alaskans we represent. The Legislature felt that for the people of Alaska, it was time to speak up."

Exxon has always maintained that the punitive damages were excessive punishment on top of the $3.5 billion in compensatory payments, cleanup payments, settlements and fines it has paid. In its own brief, Exxon argues that other areas of U.S. law - including the Clean Water Act - address punitive damages, and were applied to the company.

"The Valdez oil spill was a tragic accident, and one which the corporation deeply regrets," said company spokesman Tony Cudmore. "We took immediate responsibility for the spill, cleaned it up, and voluntarily compensated thousands of Alaskans and businesses affected by the spill."

The brief submitted by Alaska legislators is among dozens of friend-of-the-court filings entered in the case. The brief was signed by the state Legislature and former governors Walter Hickel, Tony Knowles, Bill Sheffield and Steve Cowper, who was governor at the time of the spill.

Most of the other friend-of-the-court briefs have come from business groups supporting Exxon.

Since 1994, Exxon has argued that trial and appellate courts erred in blaming the company for the actions of its ship captain. Exxon's case before the Supreme Court is expected to claim that nearly two centuries of American maritime law uphold the company's argument.

"The punitive damages case has never been about compensating people for actual damages," Cudmore said. "Rather it is about whether further punishment of Exxon Mobil is warranted. The company does not believe any punitive damages are warranted in this case."

The high court has agreed to consider whether the size of the award is allowed by the limits of maritime law.

But the court decided against addressing the question of whether the $2.5 billion award violates the U.S. Constitution.

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