Exxon Valdez Oil Spill Triggers Corporate Campaign to Limit Pollution Liability

On March 24, 1989, the Exxon Valdez oil tanker ran aground in Prince William Sound, Alaska, spilling 11 million gallons of crude oil and devastating 1,300 miles of coastline. Beyond the immediate environmental catastrophe, Exxon’s response established a template for corporate liability evasion that would influence pollution law for decades.

Exxon’s initial public relations focused on appearing responsive while internally preparing to minimize legal liability. The company deployed an army of lawyers to challenge scientific evidence of long-term damage, dispute the extent of harm, and delay compensation to affected communities. Many plaintiffs, including Alaska Native villages and fishing families, would wait nearly two decades for final resolution.

A 1994 jury awarded $5 billion in punitive damages, reflecting the scale of harm and Exxon’s negligence. Exxon’s legal team began a systematic campaign to reduce this judgment, appealing repeatedly and lobbying for legal changes limiting corporate liability. The company earned interest on the unpaid judgment while plaintiffs died waiting for compensation.

The oil industry mobilized to change liability law. The American Petroleum Institute and allied groups lobbied for tort reform limiting punitive damages. Industry-funded legal foundations filed amicus briefs in the Exxon case and similar litigation, arguing that large damage awards were economically harmful.

In 2008, the U.S. Supreme Court reduced the punitive damages to $507.5 million, about 10% of the original award. The 5-4 decision, in a case where Justice Samuel Alito recused himself due to Exxon stock ownership, established new limits on maritime punitive damages that effectively capped corporate liability for future spills.

The Exxon Valdez litigation demonstrated how corporations with sufficient resources could use the legal system to outlast plaintiffs, reduce accountability, and ultimately reshape the law to limit future liability. By the time compensation was finally distributed, many original plaintiffs had died, and the amount per share was a fraction of what juries had determined was just.