Who gains from saving nature
Ledger 1 : 33 — For each dollar financing nature-based solutions in 2023, about $33 financed activities harmful to nature. (UNEP)
Cases / Oil spill · United States · 1989–2015

Exxon Valdez: the spill, insurance and court cases

Nature's voice · report
In 2001 I still held about 55 tonnes of oil beneath my beaches.
Did nature suffer? Yes. Harm is on record. Disputed
Recorded
  • NOAA's model, updated with 2015 data, puts 0.6% of the oil that spilled in 1989 still in my Sound. NOAA says digging it up would do more harm than leaving it. NOAA Fisheries
  • Where oil is buried it declines by 0 to 4 per cent a year, and in some places it is as toxic as in the first weeks. Cleaning of my beaches stopped in 1994. Science News
  • My Pacific herring are considered not recovering; the fishery was closed in 19 of the 25 years after the spill. Exxon Valdez Oil Spill Trustee Council
  • In 2014 my marbled murrelets, Pacific herring, pigeon guillemots and the AT1 group of killer whales were listed as not recovering. Exxon Valdez Oil Spill Trustee Council
  • About 257,000 barrels of oil entered my waters.
    About 11 million gallons (10.8m most often cited)
  • At least 2,100 km of my coastline were oiled.
    More than 1,300 miles
  • About 250,000 of my birds died. estimate
    NOAA estimate of seabirds; also about 2,800 sea otters and 300 harbor seals
What the record lacks: 11 none on record · 6 insufficient · 6 disputed · 2 unclear See the gaps
Accounts of the harm differ
Had Prince William Sound recovered?
  • Company or project Exxon: Said in April 1993 that studies it funded showed no credible evidence of long-term damage, that oil remained on 0.2% of 3,000 miles of shoreline, and that the herring population was unaffected. Oil & Gas Journal
  • Government and regulators A NOAA official (unnamed): Described Exxon's 1993 statement as a smokescreen. Oil & Gas Journal
  • Government and regulators Exxon Valdez Oil Spill Trustee Council: Lists marbled murrelets, Pacific herring, pigeon guillemots and AT1 killer whales as not recovering. Exxon Valdez Oil Spill Trustee Council
  • Government and regulators NOAA: About 0.6% of the spilled oil remained in the Sound on a model using 2015 data; it is not entering living things, and digging would do more harm. NOAA Fisheries
  • Company or project Exxon: Said in 2009 that the area was healthy, strong and vibrant.
  • Researchers Science News (reporting researchers): Buried oil declined by 0 to 4 per cent a year and in some places was as toxic as in the first weeks. Science News
Did the remaining oil justify the $92m reopener demand?
  • Government and regulators State and federal governments: Said on 14 October 2015 they would not proceed with the $92m demand; residual oil no longer met the clause's loss threshold for sea otters and harlequin ducks. Juneau Empire (AP)
  • Government and regulators Alaska deputy attorney general: Acknowledged that some resources will not recover. Alaska Dispatch News
  • Researchers A scientist quoted by the Alaska Dispatch News: Called the decision a betrayal of public trust. Alaska Dispatch News

An Exxon tanker spilled about 257,000 barrels of crude oil in Alaska in 1989. A jury awarded $5 billion in punitive damages; 19 years later the Supreme Court reduced it to $507.5 million. Exxon's excess insurers refused cover on 33 grounds and paid $780 million after a lawsuit, in addition to $400 million from a P&I club.

$5bn → $507.5mPunitive damages: jury award vs final award
Jury 1994; US Supreme Court 2008, 19 years after the spill. See Who gained.

Status As of the Trustee Council's accounts to 31 January 2020: insurance claims were settled in 1996-97 and the reinsurance dispute in 2005; punitive damages were fixed at $507.5m in 2008; the governments dropped the $92m reopener demand in October 2015; the Council's latest species list found is from 2014.

What?
On 24 March 1989 the tanker Exxon Valdez, operated by Exxon Shipping Company, ran aground in Alaska and spilled about 257,000 barrels of crude oil, affecting more than 1,300 miles of shoreline. A jury awarded $5bn in punitive damages in 1994; the US Supreme Court cut it to $507.5m in 2008. NOAA Damage Assessment, Remediation and Restoration Program
Where?
Prince William Sound, Alaska; more than 1,300 miles of coastline were affected. NOAA Damage Assessment, Remediation and Restoration Program
When?
Grounding on 24 March 1989; clean-up ran 1989–1992. Plea and $900m civil settlement in October 1991, jury verdict in 1994, Supreme Court ruling on 25 June 2008, interest paid on 1 July 2009; the governments dropped the reopener claim on 14 October 2015. US Supreme Court (Cornell LII)
Who?
Gained
  • Exxon — Recovered about $1.18bn from insurers: $400m from its P&I club and $780m from Lloyd's-led excess insurers after a lawsuit (sum is an estimate). Business Insurance
  • Exxon — The court remitted $125m of the $150m criminal fine "in recognition of Exxon's cooperation in cleaning up the spill and paying certain private claims". Exxon Valdez Oil Spill Trustee Council (archived)
  • Exxon — Could deduct part of the civil settlement from income tax, according to the Alaska Legislature; a CRS estimate cited by a law firm says more than half of the $900m was deductible. Alaska Legislature
Lost
  • Exxon — About $2.1bn on clean-up, $900m in civil damages, $100m restitution, $25m in fines, $507.5m in punitive damages and $470m in interest; it booked a $1.68bn Valdez provision in 1989. US Supreme Court (Cornell LII)
  • Exxon Shipping Company — Declared insolvent in August 1989; Exxon Corporation took over the payments. English High Court
  • More than 32,000 fishers, Alaska Natives, landowners and others — Waited 19 years for punitive damages, cut from $5bn to $507.5m; Exxon also paid $303m in voluntary settlements and Alaska Natives received a $20m class settlement. US Supreme Court (Cornell LII)
  • Herring fishers — The Pacific herring fishery was closed 19 of the 25 years after the spill. Exxon Valdez Oil Spill Trustee Council
  • Exxon's insurers — The ITIA P&I club paid $400m; Lloyd's-led excess insurers refused cover, then paid $780m after Exxon sued, and English courts held reinsurers not liable for parts of it. Business Insurance
  • United States and Alaska — A $92m reopener claim for lingering oil was dropped in 2015 and never paid. Exxon Valdez Oil Spill Trustee Council
Harmed
Why?
In 1994 a federal jury found Exxon and its captain, Joseph Hazelwood, reckless. In the state criminal case a jury convicted the captain only of negligent discharge of oil and acquitted him of operating a vessel while intoxicated. US Supreme Court (Cornell LII)
How?
The tanker grounded with about 1.26 million barrels aboard and lost about a fifth of it (estimate). Money moved through a criminal plea, a $900m civil settlement managed by a Trustee Council, voluntary payments, a class action for punitive damages, and Exxon's insurance recoveries. Exxon Valdez Oil Spill Trustee Council (archived)
In proportion The $507.5m in punitive damages equalled about four days of Exxon's 2008 net income of $45.2bn. ExxonMobil (SEC filing)
6 of 6 questions answered from the record

What happened

The record, in order.

On 24 March 1989 the tanker Exxon Valdez, operated by Exxon Shipping Company, ran aground in Prince William Sound, Alaska, loaded with 53,094,510 gallons (1,264,155 barrels) of North Slope crude. About 257,000 barrels (about 11 million gallons; 10.8 million is the figure most often cited) spilled. More than 1,300 miles (2,100 km) of shoreline were affected. NOAA estimates about 250,000 seabirds, 2,800 sea otters, 300 harbor seals, 250 bald eagles and up to 22 killer whales died.

Clean-up ran for more than four summers, with up to 10,000 workers. Exxon said it spent about $2.1 billion; Business Insurance reported in 1996 that Exxon put its total costs at $3.8 billion, of which $2.5 billion was clean-up ($1 billion government settlement, $300 million claims). The Supreme Court recorded $303 million in voluntary settlements with fishers, property owners and other private parties. Exxon Shipping's resources were exhausted and it was declared insolvent in August 1989; Exxon Corporation took over the payments.

In October 1991 the court accepted a plea agreement after rejecting an earlier one in April. Exxon Shipping pleaded guilty to Clean Water Act, Refuse Act and Migratory Bird Treaty Act misdemeanors and Exxon Corporation to a Migratory Bird Treaty Act misdemeanor. Exxon paid a $150 million criminal fine, of which $125 million was remitted, $100 million in criminal restitution, and $900 million in civil damages over ten years, with a $100 million reopener for unforeseen damage. The Department of Justice called the total "a record $1.125 billion". The governments served a $92 million reopener demand in 2006 and said on 14 October 2015 that they would not pursue it. The tanker's captain was tried separately in state court; the proceedings are set out in the legal entries.

In 1994 a jury found Exxon and its captain reckless and awarded $5 billion in punitive damages to more than 32,000 claimants. The award was cut to $2.5 billion by the Ninth Circuit in 2006 and to $507.5 million by the US Supreme Court on 25 June 2008, which set a 1:1 ratio to compensatory damages and split 4-4 on corporate liability for a managerial agent's acts. Exxon paid $470 million in interest in 2009.

Exxon's insurance had several layers. A Bermuda P&I club, ITIA, paid $400 million in pollution cover several months after the spill. Above a self-insured retention of about $200 million to $250 million sat Exxon's global corporate excess programme, placed in London with more than 150 insurers; Lloyd's syndicate 79/650 led it and AIG, CIGNA, Continental, Allianz and Scandinavian companies took part. Business Insurance reported limits of $600 million for property (Section I) and $250 million for liability. About 19 months after the spill the insurers sent a denial letter listing 33 reasons, among them the pollution exclusion on the basis that pollution was covered by the P&I club. Exxon sued in Harris County, Texas in 1993, seeking about $3 billion including $2.15 billion for bad faith, trebling and interest. A $300 million settlement was reported in 1996; a Texas jury found for Exxon in June 1996 and the liability sections settled on 23 January 1997 for $480 million. Exxon collected $780 million in total from the excess insurers, almost eight years after the spill. The insurers then lost against their own reinsurers in London: the Court of Appeal held on 16 March 1998 that the reinsurers were not liable for the $300 million settlement, and in 2004 Colman J held that oil pollution clean-up expenses are not insured by Section I. Exxon's 1989 net income was $3.51 billion after a $1.68 billion Valdez provision; in 2008 it earned $45.2 billion.

As of 31 January 2020 the Exxon Valdez Oil Spill Trustee Council had spent $245.1 million on research and monitoring and $477.6 million on habitat protection, with $188.8 million unspent. Beach clean-up stopped in 1994. The Council's latest list of injured resources (2014) names marbled murrelets, Pacific herring, pigeon guillemots and the AT1 killer whale population as not recovering. NOAA reported about 55 tonnes of oil under beaches in 2001 and, in a model updated with 2015 data, 0.6% of the spilled oil still in Prince William Sound. Exxon said in 1993 that studies it had funded showed no credible evidence of long-term damage; the disputes below set out the accounts of Exxon, NOAA, the Trustee Council and researchers.

  1. 1989Spill 24 Mar; Exxon Shipping declared insolvent (Aug); P&I club pays $400m several months after the spill; Exxon's Valdez provision lowers its 1989 net income to $3,510m
  2. 1990Exxon indicted (Feb); captain convicted of a misdemeanor (Mar); Lloyd's-led insurers deny cover with a letter listing 33 reasons, about 19 months after the spill
  3. 1991DOJ and EPA announce the settlement (13 Mar), with a reopener clause for unforeseen harm; first plea deal rejected (Apr); $900m civil settlement and $150m fine approved (Oct)
  4. 1993Apr: Exxon says there is no credible evidence of long-term damage; a NOAA official calls the statement a smokescreen. Exxon sues its Lloyd's underwriters in Texas (4 Aug)
  5. 1994Jury awards $5bn in punitive damages (Sep); shoreline clean-up stops
  6. 1996Insurers settle property section for $300m (Mar); Texas jury finds for Exxon (Jun)
  7. 1997Insurers settle liability sections for $480m (23 Jan): $780m in total; Alaska Supreme Court ruling in the captain's case (Oct)
  8. 199816 Mar: English Court of Appeal holds reinsurers not liable for the $300m settlement
  9. 2001Last civil settlement payment (Sep); Ninth Circuit vacates the $5bn award
  10. 2002Punitive award reset at $4bn
  11. 2004Punitive award set at $4.5bn; London court limits insurers' reinsurance recovery
  12. 2005English Court of Appeal ruling in the reinsurance case; Equitas v. Brandywine reinsurance dispute settled
  13. 2006Ninth Circuit cuts the award to $2.5bn; governments serve a $92m reopener demand
  14. 2008US Supreme Court caps punitive damages at $507.5m (25 Jun)
  15. 2009Exxon pays $470m in interest (1 Jul); Exxon says the area shows no long-term harm
  16. 2014Latest official list: four resources not recovering, including Pacific herring
  17. 2015Governments decide not to pursue the reopener claim (14 Oct)

What was said

Claims, in the words of those who made them.

“Exxon to Pay Record One Billion Dollars in Criminal Fines and Civil Damages”

“by far the largest single amount ever paid as a result of environmental violations”

“the largest environmental assessment ever”

“In the aftermath of the disaster, Exxon spent around $2.1 billion in cleanup efforts.”

“Exxon will be able to reduce its income tax liability by deducting a portion of the money”

“oil pollution clean-up expenses are not insured by Section I”

“forgave $125 million of that fine in recognition of Exxon's cooperation in cleaning up the spill and paying certain private claims”

“would not be proceeding”

“considered not recovering”

Where accounts differ

Each party's account, side by side, with its source. The record does not settle these points; it shows them.

Did Exxon's excess insurance respond to the spill?
Company or project
Exxon

Sought about $3bn from the insurers, including $2.15bn for bad faith, trebling and interest.

Business Insurance
Company or project
Excess insurers (Lloyd's syndicate 79/650 and others)

Sent a denial letter about 19 months after the spill listing 33 reasons, including the pollution exclusion on the basis that pollution was covered by the P&I club, and the argument that the loss resulted from wilful or reckless conduct by Exxon.

Business Insurance
Courts
Texas jury, Harris County

Found for Exxon in 1996; with settlements, Exxon collected $780m.

Business Insurance
Were the insurers' settlements recoverable from their own reinsurers?
Courts
English Court of Appeal

Held on 16 March 1998 that the reinsurers were not liable for the $300m settlement.

English High Court
Courts
Colman J, English High Court (2004)

"oil pollution clean-up expenses are not insured by Section I."

English High Court
Had Prince William Sound recovered?
Company or project
Exxon

Said in April 1993 that studies it funded showed no credible evidence of long-term damage, that oil remained on 0.2% of 3,000 miles of shoreline, and that the herring population was unaffected.

Oil & Gas Journal
Government and regulators
A NOAA official (unnamed)

Described Exxon's 1993 statement as a smokescreen.

Oil & Gas Journal
Government and regulators
Exxon Valdez Oil Spill Trustee Council

Lists marbled murrelets, Pacific herring, pigeon guillemots and AT1 killer whales as not recovering.

Exxon Valdez Oil Spill Trustee Council
Government and regulators
NOAA

About 0.6% of the spilled oil remained in the Sound on a model using 2015 data; it is not entering living things, and digging would do more harm.

NOAA Fisheries
Company or project
Exxon

Said in 2009 that the area was healthy, strong and vibrant.

Researchers
Science News (reporting researchers)

Buried oil declined by 0 to 4 per cent a year and in some places was as toxic as in the first weeks.

Science News
Did the remaining oil justify the $92m reopener demand?
Government and regulators
State and federal governments

Said on 14 October 2015 they would not proceed with the $92m demand; residual oil no longer met the clause's loss threshold for sea otters and harlequin ducks.

Juneau Empire (AP)
Government and regulators
Alaska deputy attorney general

Acknowledged that some resources will not recover.

Alaska Dispatch News
Researchers
A scientist quoted by the Alaska Dispatch News

Called the decision a betrayal of public trust.

Alaska Dispatch News
What was a fair size for the punitive award?
Courts
Federal jury, 1994

Awarded $5 billion against Exxon.

US Supreme Court (Cornell LII)
Courts
US Supreme Court, 2008

Limited punitive damages in this maritime case to $507.5 million, a 1:1 ratio to compensatory damages.

US Supreme Court (Cornell LII)
Communities and civil society
Mayor of Cordova

Described the 2008 ruling as a light slap on the wrist for Exxon.

Christian Science Monitor (Y. Rosen)
Communities and civil society
A Cordova fisherman

Calculated that Cordova lost $126 million in herring catches cancelled through 2005, and his own loss at about $500,000 in earnings and $18,000 in gear.

Christian Science Monitor (Y. Rosen)

How it looked

What was shown, beside what was recorded.

Shown

  • A record one billion dollars in criminal fines and civil damages.
    US Department of Justice and EPA, 1991 · US EPA / Department of Justice
  • By far the largest single environmental criminal recovery ever exacted.
    US Department of Justice and EPA, 1991 · US EPA / Department of Justice
  • A $5 billion punitive damages verdict.
    Federal jury, 1994 · US Supreme Court (Cornell LII)
  • Exxon said that studies it funded showed no credible evidence of long-term damage, that oil remained on 0.2% of 3,000 miles of shoreline in spring 1992, and that the herring population was unaffected.
  • Exxon spent about $2.1bn on the cleanup effort.
    Exxon, as recorded by the Trustee Council and the Supreme Court · Exxon Valdez Oil Spill Trustee Council
  • Exxon's total costs were $3.8bn, of which $2.5bn was cleanup ($1bn government settlement, $300m claims).
    Exxon, as reported by Business Insurance · Business Insurance
  • Exxon said in 2009 that there was no long-term harm, that the area was healthy, strong and vibrant, that it had paid $3.8 billion and that 13,000 people had worked on the cleanup.
    Exxon

Recorded

  • $125m of the $150m criminal fine was remitted; $25m was paid.
  • Punitive damages fell from $5bn (jury, 1994) to $507.5m (US Supreme Court, 2008), 19 years after the spill.
  • Exxon's 2008 net income was $45,220m, including $460m after tax in Valdez litigation charges.
  • Exxon collected $400m from its P&I club and $780m from its excess insurers; the civil settlement with the governments was $900m.
  • Habitat protection and restoration research received about $723m of the settlement and its interest by 2020.
  • Pacific herring: considered not recovering; the fishery was closed in 19 of the 25 years after the spill, with a crash in 1993.
  • In 2014 the Trustee Council listed marbled murrelets, Pacific herring, pigeon guillemots and the AT1 killer whale population as not recovering; it is the latest list found.
  • NOAA: about 55 tonnes of oil lay under beaches in 2001; a model updated with 2015 data puts 0.6% of the spilled oil still in Prince William Sound. NOAA says this oil is not entering living things, that digging would do more harm, and that a major storm could release it.
  • Beach clean-up stopped in 1994 on the assumption that the oil would disappear within a few years; buried oil was declining 0% to 4% a year in 2009 and in places was as toxic as in the first weeks.
  • About 23,000 gallons of oil remain on the shore.
  • The tanker was loaded with 53,094,510 gallons (1,264,155 barrels) of North Slope crude oil.
  • Exxon's 1989 net income was $3,510m after a $1,680m Valdez provision.
  • A state-funded contingent valuation study put the lost passive-use value at $2.8bn.
  • Nine land parcels appraised at $150m were bought for $234m with settlement funds (GAO, 1998).
  • Ten seafood processors (the 'Seattle Seven' settlement) settled in 1991 for $64m, agreeing to return all but $12.4m of any share of punitive damages.

Who gained

Money that reached nature, beside money that stayed elsewhere.

Reached nature or the ground

≈ $735m
Sum of the lines above. Excludes $216.4m government reimbursements, $92.8m administration and a $188.8m unspent balance (as of 31 Jan 2020).
Habitat protection and enhancement (land purchases and easements)$478m
Window: 1991–2020
Includes parcels of $412.9m; paid from the $900m settlement and its interest.
Restoration, research and monitoring$245m
Window: 1991–2020
Criminal fine to the North American Wetlands Conservation Fund$12m
Window: 1991

Gained elsewhere

Not totalled
Insurance recovered by Exxon (P&I $400m + excess policy $780m) estimate$1.2bn
Window: 1989–1997
Sum of two figures; no source states the total.
Criminal fine remitted by the court$125m
Window: 1991
Exxon net income after the $1,680m Valdez provision$3.5bn
Window: 1989
ExxonMobil net income$45.2bn
Window: 2008
Includes $460m after-tax Valdez litigation charges.
Currency: USD · Window: Mixed — see each line. Figures cover different periods and are not compared as a ratio. * Estimate built from cited figures.

Responses on record

  • Exxon (April 1993; 2008): Said in April 1993 that studies it funded showed no credible evidence of long-term damage, with oil on 0.2% of 3,000 miles of shoreline in spring 1992 and the herring population unaffected; says it spent about $2.1bn on clean-up. A NOAA official called the 1993 statement a smokescreen. · Oil & Gas Journal
  • Exxon (2009): Said in 2009 that there was no long-term harm, that the area was healthy, strong and vibrant, that it had paid $3.8 billion and that 13,000 people took part in the clean-up.
  • Exxon's excess insurers (Lloyd's syndicate 79/650 and others) (1990-1997): Denied cover after about 19 months with 33 grounds, including the pollution exclusion and the argument that the loss resulted from wilful or reckless conduct by Exxon; later settled for $300m and $480m. · Business Insurance
  • Exxon Valdez Oil Spill Trustee Council (2014 list): Lists Pacific herring, marbled murrelets, pigeon guillemots and AT1 killer whales as not recovering. · Exxon Valdez Oil Spill Trustee Council
  • State and federal governments (October 2015): Said on 14 October 2015 they would not pursue the $92m reopener demand. · Exxon Valdez Oil Spill Trustee Council

In court and with insurers

Every proceeding and every insurer decision on record.

Lawsuits and rulings

  1. 1990–1991Guilty plea$150m fine
    United States v. Exxon Corporation and Exxon Shipping (criminal)
    US District Court, D. Alaska (Judge H. Russel Holland) · Criminal · US Department of Justice → Exxon Corporation; Exxon Shipping Company

    After a $100m plea deal was rejected in April 1991, a revised plea to misdemeanor counts was accepted on 8 October 1991; the felonies were dropped, $125m of the $150m fine was remitted, and $100m restitution was ordered. Exxon Shipping pleaded guilty to Clean Water Act, Refuse Act and Migratory Bird Treaty Act misdemeanors and Exxon Corporation to a Migratory Bird Treaty Act misdemeanor. US EPA / Department of Justice

  2. 1991Settled$900m settlement
    United States and Alaska v. Exxon (civil consent decree)
    US District Court, D. Alaska · Civil · United States; State of Alaska → Exxon Corporation

    Exxon agreed to pay $900m in civil damages over ten years, with the last payment in September 2001. Of the $900m, $135m covered past costs and about $750m restoration, and $216.4m reimbursed governments' costs. A reopener allowed up to $100m for unforeseen damage. Exxon Valdez Oil Spill Trustee Council (archived)

  3. 2006–2015Dismissed$92m claimed
    Reopener claim for unforeseen damage
    US District Court, D. Alaska · Civil · United States; State of Alaska → Exxon Corporation

    The governments served a $92m demand for lingering-oil clean-up in 2006 under the $100m reopener, and said on 14 October 2015 they would not proceed; nothing was paid. Exxon Valdez Oil Spill Trustee Council

  4. 1994Claimant won$5bn awarded
    In re Exxon Valdez (punitive damages, jury verdict)
    US District Court, D. Alaska · Class action · More than 32,000 fishers, Alaska Natives, landowners and others → Exxon Corporation; Captain Joseph Hazelwood

    The jury found Exxon and Hazelwood reckless and awarded $5bn in punitive damages against Exxon and $5,000 against Hazelwood; judgment was entered on 24 September 1996. US Supreme Court (Cornell LII)

  5. 2001Overturned on appeal
    In re Exxon Valdez (Ninth Circuit, 2001)
    US Court of Appeals, Ninth Circuit · Appeal · Exxon Corporation → Plaintiff class

    The Ninth Circuit vacated the $5bn punitive award. US Supreme Court (Cornell LII)

  6. 2002Reduced on appeal$4bn reduced-to
    In re Exxon Valdez (district court, 2002)
    US District Court, D. Alaska · Civil · Plaintiff class → Exxon Corporation

    On remand the punitive award was reset at $4bn. US Supreme Court (Cornell LII)

  7. 2004Claimant won$4.5bn awarded
    In re Exxon Valdez (district court, 2004)
    US District Court, D. Alaska · Civil · Plaintiff class → Exxon Corporation

    After a further remand the district court set the punitive award at $4.5bn. US Supreme Court (Cornell LII)

  8. 2006Reduced on appeal$2.5bn reduced-to
    In re Exxon Valdez (Ninth Circuit, 2006)
    US Court of Appeals, Ninth Circuit · Appeal · Exxon Corporation → Plaintiff class

    On 22 December 2006 the Ninth Circuit cut the punitive award to $2.5bn. Fortune

  9. 2008Reduced on appeal$507.5m reduced-to
    Exxon Shipping Co. v. Baker, 554 U.S. 471
    US Supreme Court · Appeal · Exxon Shipping Co. and Exxon Corporation → Baker and plaintiff class

    On 25 June 2008 the Court, 5–3, capped punitive damages at a 1:1 ratio to compensatory damages, about $507.5m; it split 4–4 on corporate liability for a managerial agent's acts. US Supreme Court (Cornell LII)

  10. 2009Claimant won$470m paid
    In re Exxon Valdez (interest on punitive damages)
    US Court of Appeals, Ninth Circuit · Appeal · Plaintiff class → Exxon Corporation

    On 15 June 2009 the court ordered 5.9% interest from 1996; Exxon paid $470m on 1 July 2009 and $70m in appeal costs in December 2009. Faegre Drinker

  11. 1990Claimant won$0.05m restitution
    State of Alaska v. Hazelwood (trial)
    Anchorage Superior Court (Judge Karl Johnstone) · Criminal · State of Alaska → Joseph Hazelwood, captain

    The jury convicted the captain only of negligent discharge of oil, a misdemeanor, and acquitted him of criminal mischief, operating a vessel while intoxicated and reckless endangerment; sentence: 1,000 hours of community service and $50,000 restitution. Alaska Supreme Court (FindLaw)

  12. 1992Overturned on appeal
    Hazelwood v. State (Court of Appeals, 1992)
    Alaska Court of Appeals · Appeal · State of Alaska → Joseph Hazelwood

    The conviction was reversed because of federal immunity for spill reports. Alaska Supreme Court (FindLaw)

  13. 1993Claimant won
    State v. Hazelwood (Alaska Supreme Court, 1993)
    Alaska Supreme Court · Appeal · State of Alaska → Joseph Hazelwood

    The Supreme Court reversed the 1992 ruling under the inevitable-discovery doctrine. Alaska Supreme Court (FindLaw)

  14. 1996Overturned on appeal
    Hazelwood v. State (Court of Appeals, 1996)
    Alaska Court of Appeals · Appeal · State of Alaska → Joseph Hazelwood

    The conviction was reversed again, on the ground that a criminal-negligence standard was required. Alaska Supreme Court (FindLaw)

  15. 1997Claimant won
    State v. Hazelwood, 946 P.2d 875 (Alaska Supreme Court, 1997)
    Alaska Supreme Court · Appeal · State of Alaska → Joseph Hazelwood

    On 3 October 1997 the court held that "a separate showing of simple civil negligence is both necessary and sufficient" and remanded; the captain began community service in 1999. Alaska Supreme Court (FindLaw)

  16. 1993–1996Claimant won$238.47m awarded
    Exxon Corporation v. Lloyd's underwriters (Harris County, Texas)
    Harris County District Court, Texas · Civil · Exxon Corporation → Lloyd's syndicate 79/650 and more than 150 excess insurers

    A jury found for Exxon on 10 June 1996; the 3 July 1996 judgment awarded $238.47m above a $210m deductible, plus $161.1m interest and more than $10m costs. Business Insurance

  17. 1993–1997Settled$780m settlement
    Exxon Corporation v. Lloyd's underwriters (settlements)
    Harris County District Court, Texas · Civil · Exxon Corporation → Lloyd's-led excess insurers

    The property section settled for $300m on 15 March 1996 and the liability sections, including the judgment, for $480m on 23 January 1997. Exxon sought about $3bn including $2.15bn for bad faith, trebling and interest. Settling all insurer claims took almost eight years. Business Insurance

  18. 1998Defendant won$300m claimed
    Lloyd's underwriters v. reinsurers (Section I settlement)
    Court of Appeal of England and Wales · Appeal · Lloyd's underwriters → Reinsurers

    On 16 March 1998 the court held the reinsurers not liable for the $300m property-section settlement. Business Insurance

  19. 2005Defendant won
    King v. Brandywine Reassurance [2004] EWHC 1033 (Comm)
    English High Court (Colman J); Court of Appeal 2005 · Civil · King (for Lloyd's underwriters) → Brandywine Reassurance (CIGNA Re run-off) and other reinsurers

    The High Court (2004) and the Court of Appeal (2005) held reinsurers not liable for parts of what the primary insurers had paid, finding that "oil pollution clean-up expenses are not insured by Section I". A related Equitas v. Brandywine matter settled in 2005. Business Insurance

Insurers

  1. 1989Paid$400m paid (full extent of cover)
    International Tanker Indemnity Association (ITIA), Bermuda P&I club → Exxon Shipping Company

    The club paid the full $400m pollution cover several months after the spill, about half of Exxon Shipping's clean-up spending. Business Insurance reported the payment as made in full. Business Insurance

  2. 1990Refused, paid after suit$780m recovered after suit
    Lloyd's syndicate 79/650 (lead) and more than 150 insurers of Exxon's global corporate excess programme; AIG, CIGNA, Continental, Allianz and Scandinavian companies participated → Exxon Corporation
    Stated reason: 33 reasons, including the pollution exclusion and "Exxon's willful, wanton, reckless and/or intentional misconduct"

    The insurers denied cover about 19 months after the spill; Exxon sued in 1993 and collected $780m in 1996–97, almost eight years after the spill. Limits reported by Business Insurance: $600m property (Section I) and $250m liability. Exxon sought about $3bn from the insurers. Settling all claims took almost eight years. Business Insurance

  3. 1989Self-insured
    Exxon (self-insured retention) → Exxon Corporation

    The excess programme sat above a self-insured retention of about $200–250m. Business Insurance

  4. 2004Claim refused
    Reinsurers including Brandywine Reassurance (CIGNA Re run-off) → Exxon's Lloyd's-led insurers
    Stated reason: "oil pollution clean-up expenses are not insured by Section I"

    English courts in 1998, 2004 and 2005 held reinsurers not liable for parts of what the primary insurers had paid Exxon. Equitas v. Brandywine settled in 2005. English High Court

  5. 1989No policy found
    Hull insurers (not identified) → Exxon Shipping Company

    No hull-insurance payout was found; the tanker was repaired for about $30m and returned to service.

What nature saw

Outcomes measured on the ground, and nature's note.

Nature's report opens this page. Below: further outcomes measured on the ground.

Punitive damages paid
About 10%
$507.5m of the $5bn jury award
Insurance vs nature settlement
$1.18bn vs $900m
Exxon's insurance recoveries vs the 1991 civil settlement
Pacific herring
Not recovering
Official list, 2014
Oil still in Prince William Sound
0.6%
NOAA model with 2015 data; about 55 tonnes under beaches in 2001
Beach clean-up
Stopped in 1994
On the assumption that the oil would disappear within a few years (Science News)
Insurance money traced to repair
None found
No source reviewed says any of the insurance money went to restoration

What we don't know

Undisclosed, unproven, untried: recorded as data.

Nature

  • Disputed Had Prince William Sound recovered?
  • Disputed Did the remaining oil justify the $92m reopener demand?

Insurers

  • Unclear Hull insurers (not identified): no decision on record.

Figures

  • Insufficient Insurance market loss range: Reported industry estimate of the insurance market's total loss (low end shown); source not verified.

Accounts

  • Disputed Did Exxon's excess insurance respond to the spill?
  • Disputed Were the insurers' settlements recoverable from their own reinsurers?
  • Disputed What was a fair size for the punitive award?

Record

  • None on record No single audited total of money paid to private claimants exists.
  • None on record How many claimants died before payment: press reports say more than 3,000; other accounts range from 1,000 to one third of the claimants; no court-documented count was found.
  • Unclear Whether any insurance money went into the restoration funds: no source says so.
  • None on record The tax deductions Exxon actually took: a CRS estimate cited by a law firm says more than half of the $900m was deductible, and in May 1991 an economist hired by the Alaska legislature estimated "$1.3 billion in tax write-offs and insurance payments"; no IRS or Exxon filing confirms what was deducted. Fines are not deductible under current law.
  • None on record Interest Exxon earned on the unpaid punitive award while appealing (1994-2008): no figure found.
  • None on record Hull insurance payout for the tanker: not found.
  • None on record The final remand ruling in the captain's criminal case was not confirmed.
  • None on record Exxon's share of Alaska pipeline oil: all shippers moved oil worth an estimated $189bn in 1989-2008; Exxon's share was not established.
  • None on record Exxon's own spill cost: about $3.8bn by January 1996 (press) or more than $3.4bn by 2008 (Exxon).
  • Insufficient The amount of the 1996 Texas verdict: the judgment entered on 3 July 1996 was $238.47m above a $210m deductible, plus $161.1m interest and more than $10m costs; other accounts give about $250m (secondary) and a $420m judgment (a law-firm page no longer available, unverified).
  • Disputed Exxon's 1989 charge for the spill: accounts differ ($1.35bn after tax per Business Insurance; $1.38bn per Oil & Gas Journal; a $1,680m provision in the annual report).
  • None on record The total insurance market loss: an industry estimate of $1.4bn to $3.5bn is reported without a verifiable source.
  • None on record The final amount of the 'Seattle Seven' processors' cede-back after the award was cut to $507.5m.
  • None on record No record was found of criminal proceedings against Exxon executives.
  • Insufficient Reported but not independently verified: a 2006 Exxon spokesperson's statement that 350 peer-reviewed studies showed recovery; a herring closure since 1999; 14 of 22 AT1 killer whales dead with no calves since 1989.
  • Insufficient Reported but not independently verified: an Exxon spokesperson acknowledged in 2009 that whether the Sound had recovered depended on the definition used.
  • Insufficient Reported but not independently verified: at least seven suicides associated with the spill and four clean-up deaths.
  • Insufficient Reported but not independently verified: 17 of 27 monitored species had not recovered by 2009; oil at a few parts per billion has killed salmon eggs; oiled mussel beds were projected to need about 30 years to recover (Science, 2003).

Did the harm stop?

Clean-up ran from 1989 to 1992 and beach clean-up stopped in 1994. NOAA reports that buried oil remains and says it should be left in place. In 2014 Pacific herring, pigeon guillemots, marbled murrelets and the AT1 killer whale group were listed as not recovering.

Who paid?

Exxon and its insurers; more than 32,000 claimants who waited 19 years for punitive damages; Cordova fishers who lost herring catches through 2005; Alaska's wildlife and fisheries; US taxpayers for the deductible share of the civil settlement.

Sources

Voices on record: ✓ Company or project✓ Government and regulators✓ Courts✓ Press and investigations— Communities and civil society— Researchers

Company or project

  1. Exxon Corporation Form 10-K 1993
    Exxon (SEC filing) · 1994
  2. ExxonMobil fourth quarter 2008 results
    ExxonMobil (SEC filing) · 2009
  3. Historic throughput
    Alyeska Pipeline Service Company · —

Government and regulators

  1. Exxon Valdez oil spill case page
    NOAA Damage Assessment, Remediation and Restoration Program · —
  2. Settlement
    Exxon Valdez Oil Spill Trustee Council (archived) · 2024
  3. Reopener
    Exxon Valdez Oil Spill Trustee Council · —
  4. Questions and answers
    Exxon Valdez Oil Spill Trustee Council · —
  5. Status of restoration
    Exxon Valdez Oil Spill Trustee Council · 2014
  6. Pacific herring
    Exxon Valdez Oil Spill Trustee Council · —
  7. 2020 annual report
    Exxon Valdez Oil Spill Trustee Council · 2020-07
  8. House Joint Resolution 34
    Alaska Legislature · 1991
  9. Exxon Valdez settlement: status (GAO/RCED-98-236)
    US General Accounting Office · 1998
  10. Details about the accident
    Exxon Valdez Oil Spill Trustee Council (Alaska Oil Spill Commission reprint) · 1990-02
  11. Exxon Valdez Oil Spill Trustee Council: economic impacts
    Exxon Valdez Oil Spill Trustee Council · n.d.
  12. Lingering oil from the Exxon Valdez spill
    NOAA Fisheries · 2018-02-26

Courts

  1. Exxon Shipping Co. v. Baker, 554 U.S. 471
    US Supreme Court (Cornell LII) · 2008-06-25
  2. State v. Hazelwood, 946 P.2d 875
    Alaska Supreme Court (FindLaw) · 1997-10-03

Press and investigations

  1. Exxon Valdez teaches insurers a hard lesson
    Business Insurance · 1997-09-28
  2. Exxon seeks more spill cover
    Business Insurance · 1996-01-21
  3. US court slashes Exxon Valdez damages
    Mail & Guardian · 2008-06-26
  4. Court limits reinsurance recoveries on Valdez
    Business Insurance · 2005-03-13
  5. Report on Exxon settlement, tax write-offs and insurance
    Christian Science Monitor · 1991-05-01
  6. Exxon Valdez controversy revived
    Oil & Gas Journal · 1993-04-26
  7. Report on Cordova fishermen's reaction to the Supreme Court ruling
    Christian Science Monitor (Y. Rosen) · 2008-06-27

Connected cases

Related matters, and cases linked to this one through the same organisations, with the role each played in both.

Institutions

EPA
The US Environmental Protection Agency.
NOAA
The US National Oceanic and Atmospheric Administration, which leads damage assessment for coastal and marine spills.
SEC
The US Securities and Exchange Commission, which regulates securities markets and what companies tell investors.

Law and courts

Arbitration
A private dispute process in which an appointed arbitrator, instead of a court, decides the case.
Class action
A single lawsuit brought on behalf of a large group of people with similar claims.
Consent decree
A settlement with a government that a court approves and that has the force of a court order.
Negligence and gross negligence
Negligence is a failure to take reasonable care. Gross negligence is a serious, reckless failure; under US oil-spill law a finding of gross negligence raises the maximum penalty.
Plea
In a criminal case, the defendant's formal answer to a charge. A plea agreement settles a case with a guilty plea on agreed terms.
Punitive damages
Money a court orders a defendant to pay to punish especially reckless conduct, on top of compensation for losses. Mainly used in US courts.
Remitted
Of a fine: cancelled or forgiven by the court, in whole or in part.
Reopener
A clause in a settlement that lets governments claim more money later for damage that was not foreseeable when they settled.
Trustees (natural resource)
Government agencies that act on behalf of the public to recover and spend damages for harm to natural resources.

Insurance

Captive insurer, self-insurance
A company covering its own risks, either directly or through an insurance company it owns.
Deductible
The part of a loss the insured party pays itself before the insurer pays.
Hull insurance
Insurance on a ship itself, covering damage to or loss of the vessel.
P&I club
A protection and indemnity club: a mutual association of shipowners that covers members' liabilities to third parties, including oil pollution.
Pollution exclusion
A clause in a liability policy that excludes damage caused by pollution from cover.
Reinsurance
Insurance bought by insurers to pass part of their own risk to other companies.
Underwriter
An insurer, or a person at an insurer, who assesses a risk and decides whether and on what terms to insure it.

Bonds and banking

Liquidation, insolvency, bankruptcy
Legal processes that apply when a company cannot pay its debts; its assets are sold and claims against it may go unpaid.

Science and environment

PFOA (C8) and PFAS
PFAS are a large family of human-made chemicals that persist in the environment and the body; PFOA, also called C8, is one of them and was used to make Teflon.
Wetland
Land that is saturated or covered with water for long periods, such as marshes, swamps and peat bogs.