Business Intelligence

Expertise in earth sciences is very important to a lot of modern businesses, especially those that operatein oil production or transportation, industrial manufacturing, or various industries which release waste or by products into the surrounding airor water.

The fact that massive punitive legal damages have been enforced by courts against huge corporations such as Exxon, Union Carbide, and Pacific Gas and Electric serves notice upon businesses which their only survival can well be related upon in which way their staff respond to earth science related incidents

In an effort to emphasize the importance of the earth science studies to modern corporate businesses, an examination of the massive 1989 oil spill in Prince William Sound and how it affected Exxon would be of much use. The environmental damage was unprecedented, and initial public outrage against Exxon was at very high levels, however Exxon Mobil succeeded in weathering the storm and continue to do business, mainly because of the efforts of its own earth sciences employees.

The problems all began on March 24, 1989 at four minutes after midnight, when the very big oil super tanker Exxon Valdez struck a reef hidden under the pristine surface of Alaska’s amazing Prince William Sound and began spilling vast 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 after the disaster, upon the advice of their own earth sciences people, who understood all too well how much environmental damage might ensue, Exxon volunteered to spend whateverall the money was necessary on cleanup activities and assessments of environmental damages after the accident and before the settlement. Over 2 billion dollars was quickly spent by Exxon on these efforts, and the corporation’s PR people used every opportunity to publicize the amount being spent, and to repeatedly mention that it was voluntary, so everyone would be aware of that fact and appreciate that 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 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 federal government—and Exxonattorneys on both criminal charges and civil damage claims stemming from the incident.

In settlement of civil charges, Exxonagreed to pay the State of Alaska and the United States over 900K Million USD over a 10 year period. This money would be used for environmental and wildlife restoration and would be administered by 6 government trustees; three of them federal appointees, and the other three state appointees.

In settlement of criminal charges, it was agreed that 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, one-hundred and 25 million dollars of the balance was forgiven due to Exxon’s cooperation during the cleanup, and because of the upgraded and highly-publicized safety procedures Exxon earth sciences department 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 enormous setback was in store for Exxon. On September 16, 1994, an angry jury in a United States Federal courtroom returned a stunning 5 billion dollar punitive damages verdict against the corporation. 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 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 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 done is nowhere close to being as damaging as other earth scientists have claimed.

In the twelve years since the oil spill, Exxon has relied heavily upon their own earth sciences personnel, and hired outside earth sciences experts in order to defend themselves against charges which they are liable for billions of dollars in environmental damage to the ecosystem of Prince William Sound.

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