Alaskans call oil-spill payment 'tragic'

The Supreme Court cut Exxon's payment far more than many residents had expected.

Two decades after the Exxon Valdez supertanker veered off course, slammed into a reef in Prince William Sound, and created the nation's worst oil spill, some Alaskans say they've been hit by another disaster – a legal one.

A US Supreme Court ruling Wednesday trimmed punitive damages for the 1989 catastrophe by at least 80 percent. So, instead of the $2.5 billion that some 32,000 plaintiffs had been awarded, the court decided the damages should equal no more than the $507.5 million already paid in compensation to private plaintiffs. Reaction in Alaska was fast and furious.

"Tragic," said Gov. Sarah Palin.

"Adds insult to injury," said Alaska's congressional delegation in a statement.

"A slap on the wrist" for Exxon, said Tim Joyce, mayor of the fishing hub of Cordova, which was at the center of the disaster.

Not long ago, some Alaskans worried that the fishing hub would sprout "spillionaires" – ordinary people suddenly rich from lump-sum Exxon payouts. Now in Cordova, there is talk of giving up homes, fishing permits, and the town itself, said Riki Ott, a local fisherman, scientist, and environmentalist. "There are some people, they look like they've been shellshocked."

Some residents had already pledged anticipated punitive payments to settle debts. "We didn't spill the oil, you know, and we're the ones being injured by this. Again," said Ms. Ott, who spent much of Wednesday painting protest signs with slogans like: "Guilty Until Proven Wealthy."

Anyone looking to a big punitive award as a source of more compensation had misplaced hopes, said ExxonMobil spokesman Tony Cudmore. "This case was about punishment and whether further punishment was warranted. It was not about compensatory damages."

The company says that after spending $3.4 billion on cleanup, settlements with the Alaskan and US governments and other groups, fines, and various types of compensation, it needed no more punishment. Legitimate claims for compensation were handled swiftly and fairly, Mr. Cudmore said. "Most people who sought compensation were compensated within a year of the spill, and the court recognized that."

The court's majority found that Exxon had acted without "intentional or malicious conduct," and a 1-to-1 ratio of punitive to compensatory damages "is a fair upper limit in such maritime cases," according to the decision penned by Justice David Souter.

Plaintiffs said the court failed to take into account the damages that never were compensated in the first place, due to the quirks of maritime law and the long years it took for environmental impacts to manifest themselves.

For example, the collapse of Prince William Sound's herring population became evident only years after the spill, plaintiffs say. Cordova fisherman and community leader R.J. Kopchak calculated that the area lost $126 million through 2005 because of canceled harvests. He lost about $500,000 in earnings, he said, not to mention his now useless $18,000 worth of herring-fishing equipment that sits under a moss-covered tarp.

Also uncompensated were the lost millions of dollars of wealth held in fishing permits. That wealth vanished when values plunged to as low as 10 percent of prespill levels. Maritime law allowed compensation only when permits were sold at losses. "What we all should have done is sell each other our permits so that we would have had realized losses," Ott says.

Alaskan natives who couldn't gather fish, game, and meat from oiled waters and beaches got a $20 million settlement, the estimated cost of replacing wild foods with store-bought substitutes, not the $160 million that plaintiff economists believed reflected true cultural damages, said Lloyd Miller, an attorney for the plaintiffs.

ExxonMobil has argued that Prince William Sound recovered long ago from the spill, and that any ecological changes – including the herring collapse – are due to other factors.

For some, the spill's impact goes beyond dollars.

"The biggest thing that hurt the most that I lost were the dreams and goals that I had," said local fisherman and artist Mike Webber, sitting on a Cordova dock a month before the Supreme Court ruling.

Mr. Webber drew on his Tlingit Indian heritage last year to carve a "shame pole" ridiculing ExxonMobil's unpaid debts. "I've been wanting to do a healing pole, [but] I haven't found out anything to put on the pole to tell that we've healed," he said.