Oil giant Exxon Mobil (NYSE: XOM) got some good news today as the Supreme Court has decided to hear the company's appeal against this summer's ruling over its liability from the Exxon Valdez oil spill back in 1989.Over the summer, the company was hit with a $2.5 billion fine, but it has argued that it should not have to pay up. It is estimated that with interest, the total amount could actually balloon closer to $4.5 billion.
The Exxon Valdez disaster was caused when the Valdez, loaded with 53 million gallons of oil, ran aground on a reef in Alaska's Prince William Sound. The result was 11 million gallons of oil polluting more than 1,200 miles of Alaskan shoreline, the worst oil spill in U.S. history.
At the heart of the whole debate is one man, Captain Joseph Hazelwood, who was accused to have been under the influence of alcohol at the time of the accident. Exxon Mobil contends that it should not be held responsible for the mistakes of a captain that violated all company policies, but opponents are not buying that argument. The plantiffs argue that Exxon Mobil was aware that Hazelwood had a drinking problem and still allowed him to captain the ship.
Hazelwood was ultimately cleared of charges that he was drunk at the time of the accident, but was convicted of a misdemeanor charge of negligent discharge of oil.
In its defense, Exxon Mobil is arguing that this lawsuit is not about costs to clean up from the wreck, and that it has already paid for the cleanup from the spill. The company says it's already spent $3.4 billion in clean-up costs and other penalties, and that this lawsuit is about punishing the company more than anything else.
An initial decision in the case was reached all the way back in 1994 when Exxon was hit with a $5 billion decision. The company has never paid up, and has been fighting this decision for over 10 years now. Last December, a federal appeals court reduced the payment to $2.5 billion.
The Supreme Court will probably be hearing this case (Exxon Shipping Co. v. Baker, 07-219) this spring.
Shares of Exxon Mobil (NYSE: XOM) have traded up 1.6% on the day to $93.75.
[Photo: obbino]
Michael Fowlkes has worked as a stock trader for seven years and spent the last two years working as an analyst for the online investment advisory service Investor's Observer. DISCLOSURE: Mr. Fowlkes owns and/or controls diversified portfolios of long and short stock and option positions that include holdings in XOM.
In its defense, Exxon Mobil is arguing that this lawsuit is not about costs to clean up from the wreck, and that it has already paid for the cleanup from the spill. The company says it's already spent $3.4 billion in clean-up costs and other penalties, and that this lawsuit is about punishing the company more than anything else.
An initial decision in the case was reached all the way back in 1994 when Exxon was hit with a $5 billion decision. The company has never paid up, and has been fighting this decision for over 10 years now. Last December, a federal appeals court reduced the payment to $2.5 billion.
The Supreme Court will probably be hearing this case (Exxon Shipping Co. v. Baker, 07-219) this spring.
Shares of Exxon Mobil (NYSE: XOM) have traded up 1.6% on the day to $93.75.
[Photo: obbino]
Michael Fowlkes has worked as a stock trader for seven years and spent the last two years working as an analyst for the online investment advisory service Investor's Observer. DISCLOSURE: Mr. Fowlkes owns and/or controls diversified portfolios of long and short stock and option positions that include holdings in XOM.
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