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Mobil Exxon Valdez Incident and Aftermath

Expertise in earth sciences is vitally important to many modern businesses, especially those involvedin oil production or transportation, industrial manufacturing, or different industries which release waste or by products into the surrounding airor water.

The fact that very large punitive legal damages have been imposed by courts against huge corporations such as Mobil Exxon, Union Carbide, and Pacific Gas and Electric serves notice upon organizations which their only survival may well be related upon in which way their employees deal with earth science related issues

In an effort to implicate the importance of the earth sciences to modern corporate organizations, a study of the massive 1989 oil spill in Prince William Sound and how it affected Mobil Exxon would be useful. The environmental damage was unprecedented, and initial public outrage against Exxon was at very high levels, however Exxon Mobil managed to weather the storm and kept on continuing its operations, in large part because of the efforts of its own earth sciences people.

The problems all began on March 24, 1989 at 4 minutes after midnight, when the giant oil super tanker Exxon Valdez struck a reef hidden under the pristine surface of Alaska’s spectacular Prince William Sound and began spilling massive amounts of crude oil into the sea. In the Alaskan darkness that spring night an environmental nightmare began that changed not only Prince William Sound itself, but the whole world, especially the business world.

In the first weeks right after the disaster, upon the advice of their own earth sciences people, who understood all very well how much environmental damage might ensue, Mobil Exxon volunteered to spend whateverall the money was necessary on cleanup efforts and assessments of environmental damages after the accident and before the settlement. Over two billion dollars was ultimately spent by Mobil Exxon on these efforts, and the corporation’s public relations people used every opportunity to publicize the amount being spent, and to repeatedly mention that it was voluntary, so the public would be aware of that fact and appreciate that Mobil Exxon was meeting its responsibilities to the public for the damage done to the environment.

Although all the efforts, nothing could stop the flood of lawsuits which resulted from the spill. After anightmarish 30 months of devastating negative publicity for Mobil Exxon, and extremely serious financial losses, a legal settlement agreement was finally reached on October 8, 1991 between the plaintiffs—the State of Alaska and the US government—and Mobil Exxonattorneys on both criminal charges and civil damage claims stemming from the incident.

In settlement of civil charges, Mobil Exxonagreed to pay the State of Alaska and the US government over nine-hundred million dollars over a 10 year period. This money would be spent for environmental and wildlife restoration and would be administered by six government trustees; 3 of them federal appointees, and the other 3 state appointees.

In settlement of criminal charges, it was agreed that Mobil Exxon would pay a fine of 250 million dollars. Two restitution funds of fifty million dollars each were found, one under state control and one under federal authority. Against strong opposition from many Alaskans, 100 and 25 million dollars of the balance was forgiven due to Mobil Exxon’s cooperation during the cleanup, and because of the upgraded and highly-publicized safety procedures Mobil Exxon earth sciences staff had designed to prevent a reoccurrence. The remaining 50 million dollars was divided between the Victims of Crime Act account and the North American Wetlands Conservation Fund.

But another large setback was in store for Exxon. On September 16, 1994, an angry jury in a United States Federal courtroom returned a stunning five billion dollar punitive damages verdict against the corporation. Mobil Exxon attorneys have fought this judgment in appeal after lengthy appeal over the last seven years, and on November 7, 2001 won a major victory when United States Court of Appeals justices threw out the 1994 punitive damages verdict.

But Mobil Exxon has suffered mightily since the Exxon Valdez went aground in Prince William Sound that fateful night in 1989, and it is not an exaggeration to say that the existence of the corporation has been at stake. Any business, no matter how large or small, is at the mercy of public approval, for it needs public approval to sell its product. And in Mobil Exxon’s case, public approval has been very much dependent upon what the corporation’s earth sciences people have been able to say and do to persuade the public that the environmental damage to the Alaskan coastline is nowhere close to being as bad as other earth scientists have claimed.

In the 12 years since the oil spill, Mobil Exxon has relied heavily upon their own earth sciences department’s employees, and hired outside earth sciences consultants to defend themselves against charges which they are liable for billions of dollars in environmental damage to the ecosystem of Prince William Sound.