Lawsuit offers too little, too late for those whose dreams floated on tainted waters
By Gabrielle Nomura
A toxic, glimmering surface on the water, the matted feathers of birds whose lifeless bodies had become slick with oil — these images have lived in Stan Samuelson’s memory for nearly 20 years. At 83, the retired fisherman remembers with clarity the devastation wreaked by the Exxon Valdez oil spill.
Samuelson retired from fishing at age 81 and now lives in Bellingham. But in 1989, he was fishing in Cordova, Alaska, when an Exxon single-hulled tanker ran aground on a reef, coating Prince William Sound with 11 million gallons of crude.
“We had a pristine ocean and then all of a sudden it’s grossly polluted,” Samuelson said. “A polluted product does not sell.” In addition to wildlife and natural resources, the careers of fishermen, many from Bellingham, were damaged or destroyed.
Working and retired Bellingham fishermen were outraged when the U.S. Supreme Court in June slashed the amount of punitive damages they expected to receive from Exxon. One of the most epic class-action lawsuits in history, spanning nearly 20 years and including 32,677 plaintiffs, commercial fishermen, businesses and Native Alaskans, ended in June with Exxon’s penalty being cut from $2.5 billion in punitive damages to $507.5 million. On average, each plaintiff will receive $15,000. Many of them had originally been expecting $85,000 or more.
More than 3,000 plaintiffs in the lawsuit against Exxon died waiting for the case to be resolved. Those who remain are “shocked, outraged and incredibly bitter,” said Bellingham resident Dave Mann, who has 39 years of fishing experience.
“At least 65 percent of [fishermen] are gone,” Mann said. “They’ve had to turn to somewhere else. They’re not in business. They’ve lost everything. And to add insult to injury, after losing business, losing everything and waiting 20 years, they find out it’s worth only [$15,000].”
The devastation of the spill claimed much of the marine life fishermen used to harvest. However, the spill hadn’t taken the permits and boats, leaving fishermen with useless equipment worth hundreds of thousands of dollars and permission to fish in an ecosystem that had been ravaged and emptied.
“It’s unlikely that any people involved in the litigation … they’ll never have enough money to retire on,” Mann said. “It took 20 years of just trying to survive, working their tails off. Twenty years of low-interest loans, mortgaged boats, mortgaged houses and this is the justice they get—four days worth of Exxon’s profits?”
People who had borrowed $300,000 from the State of Alaska in 1987 or 1988 to begin fishing in the sound suddenly lost the ability to fish and in doing so, the ability to repay their debt. It was just like investing time, money and energy into buying a house that suddenly became unlivable, said Whatcom County resident and former fisherman Tom Copeland.
Some fishermen who were just entering the sound at the time of spill are pushing close to $1 million in debt today, Copeland said. They were relying on the punitive damage award, both for their debts and to put toward retirement.
Money tied up in boats
In the wake of the spill, Alaska was forced to shut down fisheries in Prince William Sound and the surrounding areas: the outer Kenai coast, Kodiak, Chignik and Cook Island. The price of salmon, an important harvest for the local economy, plummeted due to consumer fear of eating tainted seafood. Scientists still debate whether oil caused the herring, an important food source for salmon, to disappear. Herring have yet to be seen again in the sound.
Copeland’s boat, which was specialized for fishing salmon in the sound, became useless after the spill. With not enough fish to harvest or enough money to be made, he accumulated debt in the transition of moving to another fishery and selling his boat for a third of its worth. Copeland now farms bamboo near Nugents Corner.
“I was essentially wiped out by the oil spill,” Copeland said. “They dumped 11 million gallons of crude on top of my fishery. Half of my income went away immediately and never came back.”
Fishermen who ply Alaska’s waters gain access by purchasing permits, which can cost thousands of dollars. In some fisheries, access is limited and fishermen may enter only through transfer from a current permit holder for prices that range from $10,000 to $300,000.
In addition, fishermen must invest in specialized boats and industry-specific gear that cost more than most of their homes. Before the spill, fishermen willing and able to make the investment stood to earn hundreds of thousands of dollars in the northern ocean. Samuelson said he made up to $200,000 every year prior to the spill.
Copeland declined to specify his earnings before 1989. However, he said he generated enough income to comfortably provide for himself, his family and to save for retirement, even after all the expenditures required for fishing.
This case was not about compensating people for what they lost in the spill, it was about punishment, determining whether or not Exxon needed to be punished, said Tony Cudmore, Exxon spokesperson.
Cudmore acknowledged the plaintiffs’ dissatisfaction. “This was a clearly tragic accident, and one we worked very hard to address,” Cudmore said in a telephone interview. “We’ve spent more than $3.4 billion on this case in terms of compensation and cleanup. We understand that people are frustrated and it’s been a very difficult time for everyone involved.”
Legal battle raged over 19 years
Many fishermen who had just started in the sound in 1989 were counting on a successful season. After all, 1987 and 1988 had been prosperous years for commercial fishing, having seen some of the highest ever per-pound price for salmon, according to the Alaska Department of Fish and Game. Expectations for 1989 were high going in.
But the night of March 24, 1989, things were going wrong aboard the Exxon Valdez. The supertanker was transporting 53 million gallons of North Slope Crude to California. Capt. John Hazelwood pointed the Valdez in the direction of Bligh Reef and left at a crucial moment, according to the Supreme Court response brief.
Hazelwood, a relapsed alcoholic, had consumed at least five double vodkas at waterfront bars the night of the spill, according to the brief. The third mate, who was put in charge, was fatigued and overworked.
As the supertanker’s hull ripped open from the force of running aground, toxic cargo poured into the sound. The spill crippled the area’s fishing industry, destroyed cultural fishing activities for Native Alaskans, contaminated more than 13,000 miles of shoreline, and, by conservative estimates, killed more than 30,000 birds and 2,662 marine mammals.
State and federal governments sought civil and criminal penalties for the spill’s environmental impact. Tens of thousands of private claimants joined a class-action lawsuit against Exxon.
Exxon spent more than $3.5 billion on cleanup and compensation for people who depended on the sound’s natural resources for their livelihood or cultural activities. The corporation recovered 14 percent of the oil, according to the Exxon Valdez Oil Spill Trustee Council, a division of the Alaska Department of Fish and Game.
“After the spill, we took a very close look at our safety, health and environmental practices, and instituted a number of measures to enhance performance,” Cudmore said. “In global environmental performance, we’re now seen as a leader. Last year, not one drop of oil spilled.”
The original punitive damage settlement of $5 billion was established in 1994 and then reduced by the courts: three times, finally, to $507.5 million.
After the case reached the Ninth Circuit Court of Appeals in 1999, Exxon filed more than 1,000 motions, 60 petitions and appeals and sought 23 time extensions.
Exxon worked diligently to compensate those in need, as well as on cleanup, which was declared complete in 1992, Cudmore said. For these reasons, the company felt no further punishment was warranted, he said.
Finally, in a 5-3 decision issued June 25, the Supreme Court decided what Exxon should have to pay in punitive damages should not exceed the $507.5 million it had already spent.
David Anderson, a Bellingham maritime law attorney, said the Supreme Court decision was not justified. This was an egregious case because damages were great and the conduct grossly negligent, he said.
“You can say $500 million is a lot of money, but to Exxon it’s not much,” Anderson said. “The function of punitive damages has not been served at all. The function is to punish wrongdoing when it’s grossly negligent, reckless or careless.”
Last year, Exxon made $40 billion. The punitive settlement of $507.5 million is worth about four days worth of Exxon’s profits.
Lingering effects of disaster
Cleanup may be declared complete, but the effects of the spill remain, said Bellingham fisherman Mann.
“I’ve been there and seen it,” Mann said. “You can go into Prince William Sound anywhere. You can kick over a couple rocks and pick it up. It’s still there. It’s still toxic, and on hot days, you can see a sheen of oil in the water.”
The disappointment of the reduced punitive damage award rests on top of Alaska’s unhappy history with Exxon, Mann said.
To understand people’s frustration, it’s necessary to go back to the very beginning, Mann said. In 1973, Congress first allowed the Trans-Alaska Pipeline to be used by Exxon and other companies to transport oil to the lower 48 states.
Alaskans may have been pessimistic when these oil companies said they wanted to drill and ship crude through the sound, but everything was fine at first, Mann said. He believes Exxon cut corners to make more money, such as using old, single-hulled tankers instead of the safer ones with double-hulls.
SeaRiver Maritime runs Exxon’s shipping operations in the United States. Chris Welberry, an Exxon media relations adviser, declined to comment on whether Exxon continues to use single-hulled tankers. However, Ray Botto, a SeaRiver Maritime spokesperson, confirmed that one of the three tankers currently used by Exxon has a single hull.
Congress is requiring all oil companies to use double-hulled vessels by 2015 in order to prevent future catastrophic spills.
Ecosystem, fishermen still struggle
After the Valdez spill, the sound’s ecosystem is still healing. Though the herring never returned, the salmon population has fully recovered, according to the trustee council.
The Exxon Valdez Oil Spill Trustee Council lists commercial fishing in the sound as recovering. It hasn’t been easy for those who relied on the sound for their livelihoods.
After the spill, the average annual income of a salmon seiner went from $176,500 to less than $88,250, according to the trustee council. In 1992 and 1993, earnings hit a new bottom, the lowest in 15 years. By 1999, average earnings had made a comeback, reaching $130,000, per the council’s figures. The presence of oil was not the only factor in earnings. Natural variability in fish returns and economic changes also played a role.
Many fishermen from Bellingham and Alaska have endured nearly 20 years of struggling to make ends meet, incurring debts and fighting with an oil company that thinks lightly of selling the environment short, Copeland said. What will these fishermen do now with a far smaller-than-hoped-for award and collection of broken hopes and disappointments?
Fishermen are used to surviving because the only thing they can count on is uncertainty: Their lives shift between home and Alaska, they can never count on taking home a fixed amount of money at the end of a season and they invest thousands of dollars into fishing with no guarantee of making the money back, Copeland said.
“Fishermen are a resilient people,” Copeland said. “We’ll recover.”
By the numbers
miles of shoreline damaged
species not recovered or still recovering
species deemed recovered
bald eagles killed
harbor seals killed
sea otters killed
plaintiffs in class-action lawsuit
plaintiffs have died since case filed
fine and 1,000 hours community service for Capt. Joseph Hazelwood
Sources: Exxon Valdez Oil Spill Trust Council, Supreme Court Response Brief, Keller Rohrback Law Offices
Congress allows oil companies to use Trans-Alaska Pipeline.
March 24, 1989
Exxon Valdez collides with Bligh Reef in Cordova, Alaska, spills 11 million gallons of crude into Prince William Sound. Alaska closes fisheries in the sound.
Fisheries begin to re-open. Salmon prices plummet.
Federal jury in Anchorage requires Exxon to pay $287 million in actual damages and $5 billion in punitive damages.
Exxon’s fight over punitive damages reaches the Ninth Circuit Court of Appeals.
U.S. District Judge Russel Holland reduces punitive damages to $4 billion. Exxon appeals again.
Ninth Circuit Court of Appeals reduces punitive damages to $2.5 billion. U.S. Supreme Court accepts review of case.
June 25, 2008
U.S. Supreme Court slashes punitive damages from $2.5 billion to $507.5 million.