
                         THE VIRGINIAN-PILOT
                 Copyright (c) 1994, Landmark Communications, Inc.

DATE: THURSDAY, June 16, 1994                    TAG: 9406160009 
SECTION: FRONT                     PAGE: A18    EDITION: FINAL  
SOURCE: Medium 
DATELINE: 940616                                 LENGTH:

COURT INFLICTS MORE DAMAGE THAN OIL ON BEACHES

{LEAD} A jury decided Monday that the Exxon Corp. is liable for punitive damages in the grounding five years ago of the Exxon Valdez and the subsequent oil spill, America's largest. That decision puts Exxon more than ever between the rocks of Alaska's Prince William Sound - where nature has once again exhibited its remarkable resilience - and the hard place of American law, courtrooms and juries. There, the facts get lost in popular misconceptions, big-business bashing and the lure of the deep pockets of corporate America.

The grounding of the Exxon Valdez was an accident, caused by human error. It caused far less harm to Alaska's environment and economy than environmental activists, politicians and plaintiffs' lawyers claim. Jury verdicts such as those on Monday also underline the capricious nature of the American legal system, which further burdens investment and job creation.

{REST} While pictures of oil-soaked birds stirred sympathy worldwide, the oil spill in Prince William Sound has had almost no long-term negative environmental consequences. The Congressional Research Service, after studying past oil spills, has concluded the effects are ``relatively modest and, as far as can be determined, of relatively short duration.''

``The CRS review of past spills,'' according to the Political Economy Research Center, a Montana-based environmental think-tank, ``indicates that most of the ecological impact occurs at the time of the spill or within a few months. After that, most of the oil has decomposed chemically to the point where it is no longer harmful. Unfortunately, the spill is in the news during that initial period, and this period heavily influences public perceptions. . . . Given the fact that there appears to be no irrevocable environmental damage from past oil spills, reaction to the Exxon Valdez spill borders on hysteria.''

The jury was persuaded that Exxon was reckless in allowing a captain with a history of alcohol abuse to command a supertanker whose grounding damaged the livelihoods of thousands of locals. Yet the captain was found in a previous jury trial and in a Coast Guard hearing to have been unimpaired when the tanker went aground. Nor was he at the helm. But civil suits have a different - inadequate? - standards of proof.

The captain had sought treatment for alcoholism, at Exxon's expense. Yet penalizing him for his history of substance abuse would have risked a lawsuit even then (a prospect now even likelier since passage of the Americans for Disability Act). So while law and jury sentiment make it difficult to disqualify an employee for substance abuse, the employer is still responsible for his actions.

As part of its admitted responsibility, Exxon has already spent $2.2 billion to help clean up the sound, a cleanup that might even, as has been the case in other major oil spills, have retarded natural recovery. Exxon has also paid more than $1.2 billion in fines to settle federal and state charges. If, as critics contend, too much of what the company has paid did not reach real victims, then the state and federal governments involved are to blame as well.

Monday's verdict opens Exxon to a demand for $15 billion in punitive damages, in addition to $1.5 billion in compensation. The amounts demanded bear little relation to the damage inflicted. They take no account of other factors, such as the long decline of Alaskan fisheries even before this spill. This class-action suit is intended instead, as the plaintiff's lead lawyer acknowledged, to take ``a substantial bite out of (Exxon's) butt,'' to change the behavior of a company ``that thinks that it is above the law.''

How big a bite of any damages the plaintiffs' lawyers will take they have agreed among themselves - and refused to reveal.

The verdict will almost certainly be appealed and could well be reduced or overturned. An appeals court just recently overturned a huge judgment against General Motors based on the accusation that a GM pickup-truck design is inherently dangerous. If the verdict stands, however, even Exxon might not survive.

Accidents are part and parcel of the free economy that gives us our livelihood. Excessively punishing companies that experience accidents - especially those for which they have already paid dearly, both in money and tarnished image - will result in less risk taking, a less dynamic and innovative economy, and ultimately, a lower standard of living.

{KEYWORDS} OIL SPILLS

EXXON: BITE BACK

by CNB