Court overturns Exxon $2.5bn fine

The oil spill triggered one of the biggest environmental disasters ever

The US Supreme Court has ruled by five to three to cut the $2.5bn (£1.25bn) in punitive damages awarded in the Exxon Valdez oil spill disaster to $500m.

Exxon Mobil last October won the right to appeal against the damages bill relating to a 1989 Alaskan oil spill.

The court said the punitive damages should be limited to an amount equal to total relevant compensatory damages.

The case has run since 1994 as the US firm, which posted $40.6bn earnings in 2007, said the damages were excessive.

In what was one of the biggest oil spills to date, 11 million gallons of crude were released into Alaska's wilderness after the Exxon tanker hit a reef.

About 1,300 miles (2,080km) of coastline was contaminated as a result of the oil spill.

"The Valdez oil spill was a tragic accident and one which the corporation deeply regrets, " said Exxon Mobil chairman and chief executive, Rex Tillerson.

"We know this has been a very difficult time for everyone involved. We have worked hard over many years to address the impacts of the spill and to prevent such accidents from happening in our company again."

Constitutional issues

The captain of the Valdez, Joseph Hazelwood, admitted drinking vodka before boarding the vessel, but was subsequently acquitted of operating a ship while intoxicated.

Exxon argued that it cannot be held responsible for the actions of Mr Hazelwood and says that the $2.5bn penalty is excessive under marine law and when compared with other federal rulings on punitive damages.

Exxon, the world's biggest listed oil firm, added that it had already paid $3.4bn in clean-up costs and other fines related to the oil disaster and damage to the natural environment.

The damages were shared between 32,000 fishermen, natives, land owners, small businessmen and municipalities in south central Alaska.

Mr Tillerson said "the clean-up was declared complete by the State of Alaska and the United States Coast Guard in 1992".

Back in 1994, a jury in Alaska ordered US giant Exxon to pay $5bn in damages, but the firm successfully appealed against the size of the award.

After a number of court cases over the intervening years, this figure was cut by federal judges until a US appeals court set the amount at $2.5bn.

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