A high-stakes appeal before a high court

The US Supreme Court moved one step closer to addressing a $2.5 billion question this term when it placed Exxon Shipping Co. vs. Baker on its docket on Feb. 1 and scheduled arguments for Feb. 27.

The case stems from the March 24, 1989 grounding of the tanker Exxon Valdez in Prince William Sound and the resulting discharge of more than 11 million gallons of crude oil into the Alaskan coastal waters.

More than 250 lawsuits by area fishermen, processors, Alaska Natives, landowners, businesses and others were consolidated into a single action. A jury awarded plaintiffs $297 million of compensatory damages and $5 billion of punitive damages following a four-month trial in 1994.

Exxon Mobil Corp. appealed the punitive damages award, which the Ninth US Circuit Court of Appeals cut to $2.5 billion on Dec. 22, 2006. The company's attorneys appealed to the Supreme Court, which agreed on Oct. 29, 2007, to hear the petition.

In a statement at the time, Exxon Mobil expressed deep regret for the spill and said that all compensatory claims have been resolved. "We have spent over $3.5 billion as a result of the accident, including compensatory payments, cleanup payments settlements and fines," it noted.

'Further punishment'

"The punitive damages case has never been about compensating people for actual damages. 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 statement continued.

Alaskan government officials disagree. In a brief that it filed with the Supreme Court on Jan. 29, it asserted that maritime law permits a court to hold what then was Exxon Corp. responsible for the conduct of its employee, Joseph J. Hazelwood, the ship's captain. It also argued that the federal Clean Water Act does not prevent injured parties from obtaining punitive damages, which the state considers a deterrent to unsafe conduct.

"Exxon's arguments, if they prevail, would not only deny Alaskans compensation to which they are due, but would reduce the incentive for those who use our coastal waters to operate in a careful and safe manner." Alaska Attorney General Talis Colberg maintained.

Alaska's congressional delegation also filed a brief. So did the state's legislature, which was joined by former governors Walter J. Hickel, Tony Knowles, Steve C. Cowper and William J. Sheffield. The high court also received briefs from 26 other groups and individuals including the International Association of Tanker Owners, American Petroleum Institute, International Association of Drilling Contractors, US Chamber of Commerce, American Institute of Marine Underwriters, Jean-Michel Cousteau and other scientists, and Maryland and 33 other states.

Three primary questions

In its docket placement notice, the Supreme Court said that Exxon Mobil indicated that Exxon Mobil's lawyers asked three primary questions:

First, may punitive damages be imposed under maritime law against a ship's owner (as the Ninth Circuit held, contrary to decisions of the First, Fifth, Sixth and Seventh Circuits) for conduct of a ship's master at sea without a finding that the owner directed, countenanced or participated in that conduct, and even when the conduct was contrary to policies established and enforced by the owner?

Second, when Congress has specified the criminal and civil penalties for maritime conduct in a controlling statute (the Clean Water Act in this case) but has not provided for punitive damages, may judge-made federal maritime law (as the Ninth Circuit held contrary to four other circuits) expand the penalties Congress provided by adding a punitive damages remedy?

Third, is this $2.5 billion punitive damages award, which Exxon Mobil's lawyers said is larger than the total of all punitive damages awards affirmed by federal appellate courts in US history, within the limits allowed by (1) federal maritime law or (2) if maritime law could permit such an award, constitutional due process?

The Supreme Court granted a writ of certiorari to all but the second part of the third question. The arguments before the court on Feb. 27 should be interesting. The court's decision later this year promises to be very significant.

Contact Nick Snow at nicks@pennwell.com.

Related Articles

Inhofe, Lankford say new BIA rules threaten Osage oil operations

07/10/2015 New US Bureau of Indian Affairs regulations that increase production expenses on tribal lands could put the Osage Nation out of business, Oklahoma’...

House panel’s crude export ban hearing weighs urgency against caution

07/10/2015 A US House Energy and Commerce subcommittee hearing on legislation to repeal the ban on exporting US-produced crude oil quickly broke along party l...

Twelve workers killed in Nigeria pipeline explosion

07/10/2015 Eni SPA reported that an explosion occurred July 9 at the repair site for the Tebidaba-Clough Creek oil pipeline in Nigeria’s onshore Niger Delta.

Gov. Tomblin forms West Virginia oil, gas safety commission

07/10/2015 West Virginia Gov. Earl Ray Tomblin (D) established the oil and gas safety commission he announced in his 2015 State of the State address. The grou...

Transco seeks FERC approval for New York Bay Expansion project

07/09/2015 Transcontinental Gas Pipe Line Co. LLC (Transco), a wholly owned subsidiary of Williams Partners LP, has filed an application with the US Federal E...

House Oversight panel subpoenas Kerry for Keystone XL documents

07/09/2015 The US House Oversight and Government Reform Committee issued a subpoena to US Sec. of State John F. Kerry for reports, recommendations, letters, a...

Ending crude export ban would help rural US areas, House panel told

07/09/2015 Rural US communities generally have benefited from the nation’s crude oil production renaissance, and potentially could be helped more if restricti...

Courts less deferential to regulatory agencies, GMU forum told

07/08/2015 US Supreme Court decisions in the recently completed term suggest that judicial deference to federal regulatory agencies is starting to recede, spe...

AER orders Apache Canada to address integrity of pipeline system

07/08/2015 Alberta Energy Regulator has directed Apache Canada Ltd. to address the integrity of its pipeline management system because of “failure to follow p...
White Papers

UAS Integration for Infrastructure: More than Just Flying

Oil and gas companies recognize the benefits that the use of drones or unmanned aerial systems (UAS) c...

Solutions to Financial Distress Resulting from a Weak Oil and Gas Price Environment

The oil and gas industry is in the midst of a prolonged worldwide downturn in commodity prices. While ...
Sponsored by

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by
Available Webcasts


Operating a Sustainable Oil & Gas Supply Chain in North America

When Wed, Oct 7, 2015

Short lead times and unpredictable conditions in the Oil & Gas industry can create costly challenges in supply chains. By implementing a LEAN culture of continuous improvement you can eliminate waste, increase productivity and gain end-to-end visibility leading to a sustainable and well-oiled supply chain.

Please join us for this webcast sponsored by Ryder System, Inc.

register:WEBCAST


The Resilient Oilfield in the Internet of Things World

When Tue, Sep 22, 2015

As we hear about the hype surrounding the Internet of Things, the oil and gas industry is questioning what is different than what is already being done. What is new?  Using sensors and connecting devices is nothing new to our mode of business and in many ways the industry exemplifies many principles of an industrial internet of things. How does the Internet of Things impact the oil and gas industry?

Prolific instrumentation and automation digitized the industry and has changed the approach to business models calling for a systems led approach.  Resilient Systems have the ability to adapt to changing circumstances while maintaining their central purpose.  A resilient system, such as Maximo, allows an asset intensive organization to leverage connected devices by merging real-time asset information with other critical asset information and using that information to create a more agile organization.  

Join this webcast, sponsored by IBM, to learn how about Internet of Things capabilities and resilient systems are impacting the landscape of the oil and gas industry.

register:WEBCAST



On Demand

Taking the Headache out of Fuel License and Exemption Certificates: How to Ensure Compliance

Tue, Aug 25, 2015

This webinar, brought to you by Avalara, will detail the challenges of tax document management, as well as recommend solutions for fuel suppliers. You will learn:

-    Why it’s critical to track business partner licenses and exemption documents
-    The four key business challenges of ensuring tax compliance through document management
-    Best practice business processes to minimize exposure to tax errors

register:WEBCAST


Driving Growth and Efficiency with Deep Insights into Operational Data

Wed, Aug 19, 2015

Capitalizing on today’s momentum in Oil & Gas requires operational excellence based on a clear view of what your business data is telling you. Which is why nearly half* of oil and gas companies have deployed SAP HANA or have it on their roadmap.

Join SAP and Red Hat to learn more about using data to drive process improvements and identify new opportunities with the SAP HANA platform running on Red Hat Enterprise Linux. This webinar will also show how your choice of infrastructure impacts the performance of core business applications and your ability to achieve data-driven insights quickly and reliably.

*48% use SAP, http://go.sap.com/solution/industry/oil-gas.html

register:WEBCAST


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected