Among the growing list of environmental disaster which humans have caused, the oil spill from the Exxon Valdez tanker in 1989 ranks as one of the most devastating. It was the largest in United States waters for many years. It took place in Prince William Sound, when the Exxon Mobil vessel struck the Bligh Reef, and many millions of gallons of crude oil gushed out at the remote location. The oil spread over 1,300 miles of Alaska’s coastline, adversely affecting the habitats of seabirds, sea otters, seals and salmon. The location was only accessible by boat, helicopter or plane, making efforts to respond to the event severely difficult. Some estimates place the total oil spilled at 32 million gallons, based on the approximately 55 gallons the ship was carrying at the time.
In 2001, Exxon-Mobil was ordered to pay $5 billion to those adversely affected by the tanker’s spill. Years later, the payment was reduced to $500 million, negating the original federal judge’s decision. The unthinkable damage brought environmental problems to the public eye in a huge way, and Exxon Mobil as a company has been under increased scrutiny by naturalists and government officials ever since.
Exxon Mobil is currently the largest international, publicly traded gas and oil company. No other company in the world has the largest inventory of resources. The company is the industry leader in refining and marketing petroleum products and manufacturing chemicals.
Exxon Mobil’s more than 125-year history began in Titusville, Pennsylvania in 1859. Colonel Edwin Drake and Uncle Billy Smith drilled a successful oil well, triggering an oil boom. The company’s history is a timeline of oil firsts:
- 1870: Rockefeller, along with his associates, formed the Standard Oil Company with the largest refining capacity in the world.
- 1879: Standard Oil Co. purchased interest in the Vacuum Oil Company, which pioneers and introduces lubricants.
- 1882: Thomas Edison used Standard Oil lubricants for his first central generating system.
- 1903: Vacuum Oil Company lubricants are named Mobiloil, and the Wright Brothers use the product for their historic first airplane flight at Kitty Hawk.
- 1915: Ralph De Palma uses Mobil products as he wins the Indianapolis 500.
- 1927 and 1928: Amelia Earhart and Charles Lindbergh used Mobiloil on their historic solo flights.
- 1958: Pan American Airways flies a Boeing 707 on the first trans-Atlantic flight from New York to London fueled with Mobil aviation fuel.
- 1966: Mobil celebrates its first 100 years by changing its name to Mobil Oil Corporation.
- 1999: Mobil and Exxon join to form the Exxon Mobil Corporation.
Along with the reputation of being the largest oil company in the world comes responsibility. As views over environmental and humanitarian conditions have become more focused and informed, Exxon Mobil has struggled with many lawsuits involving those issues. The public has generally been fragmented in terms of what the future look like regarding the products that Exxon Mobile provides to the world. While the benefits of petroleum products have served industrialized nations, the public has increasingly become involved with learning to live in environments which have become jeopardized by the industrial chemicals which also bring benefits to life. Exxon Mobile has become the very public focal point at the crossroads of many overlapping issues.
1. Exxon Wins $1.6 Billion Settlement for Venezuela Seizure
In 2014, it was reported that Exxon Mobil was awarded $1.6 billion as compensation for the assets held illegally by the government of Venezuela in 2007. The amount was a mere token of what Exxon had originally hoped to gain. The judgment was made by World Bank’s International Center for Settlement of Investment Disputes, or the ICSID. Exxon had invested in the Cerro Negro project, and when it came to negotiations with Petroleos de Venezuela SA, Exxon refused to accept the state-owned entity’s partnership terms.
Exxon had sought approximately $14.7 billion for its assets, which were nationalized. The company goal was to be compensated for the fair market value of the expropriated assets. The company had 425 million barrels in Venezuela, with a value of $750 million, which were recorded with the U.S. Securities and Exchange Commission.
In 2005, President Hugo Chavez began to expropriate assets in telecommunications, energy and mining industries, while making claims that these were crucial to the sovereignty and development of Venezuela. Companies within these industries were given proposals for compensation terms and contracts, with the ability to accept until late in 2007. Exxon rejected these terms.
Though Exxon and many other companies were awarded significant cash awards, it is expected that Venezuela, now under the rule of Chavez’s successor, Nicolas Maduro, will attempt to delay settlements. If Venezuela does not honor the rulings of the ICSID, its sovereign bonds may default. As Venezuela struggles with limited liquidity issues, the lawsuits remain unresolved.
2. New York City Groundwater Contamination Lawsuit
In 2009, Exxon Mobile was found liable for its role in groundwater contamination in New York City. A federal jury awarded $104.7 million to the city for compensation. The city had five wells located in Queens which had been contaminated with M.T.B.E., a water soluble, yet highly potential carcinogen. The lawsuit presented by the city was one of 23 which held oil companies responsible for M.T.B.E. which was contained in fuel which had leaked from gas station storage tanks. All of the companies, except Exxon, had settled with the city. The compensation was welcomed as money which would be used to install and upgrade water treatment stations to remove M.T.B.E. from the drinking water supply.
3. Human Rights Lawsuit in Indonesia
Eleven members of an Indonesian village joined together in 2001 to file a lawsuit in federal court of the United States. They claimed that Exxon Mobile had hired Indonesian military members as security for the company, and that these security forces were guilty of human rights violations. The villagers described the suffering they had experienced, including torture, murder and rape. Their claim was that Exxon Mobile was responsible for hiring the security forces and should have known that human rights abuses were taking place.
The abuses were committed in Aceh, an Indonesian province, where the Exxon Mobile security forces were guarding a facility for extracting natural gas. They were also protecting the company’s operating pipeline. Though Exxon Mobil filed a motion to dismiss in 2006, a United States federal judge denied it. For years, various district and federal courts dealt with both the plaintiffs and Exxon Mobile, with no resolution. In July, 2015, it was ruled by a United States federal court that the Indonesian villagers’ claims may proceed in United States court, even though previous rulings had found that the Indonesians could not.
All of the plaintiffs in the case have remained anonymous, because they had suffered from months of repeated torture and beatings. One lost his eye and his hand. The Aceh area is known for its violence, due to civil war, and as the location of one of the largest natural gas fields discovered by Exxon Mobil. The company had hired increasing troops as security when attacks increased in the area. The company generated approximately a fourth of its revenues from the Aceh area, and developed its facilities and pipelines with the funds. In addition, the company used money to build roads, schools, hospitals and mosques and employed Indonesians by the thousands. Unfortunately, it is thought that the natural resources were key to the acceleration of conflict.
4. State of Illinois Anti-Gay Bias Suit
Freedom to Work, the gay rights organization filed a discrimination suit against Exxon Mobil. Though United States corporations have worked to update their policies protecting workers against discrimination, Exxon Mobil has been accused as an exception. The Human Rights Campaign, a national group focusing on gay rights, ranked Fortune 500 company policies for anti-discrimination. Many of the companies had corporate policies with scores at least 80 or even higher on a scale of zero to 100. Exxon was the first to score below zero.
Freedom to Work, with support from a law firm in Washington, filed what they considered to be a “groundbreaking discrimination complaint” against Exxon. The complaint indicated that a gay rights activist received no follow up interview, while another applicant with lesser education and grades was contacted for an interview. The applicants were fictional, and received in the Patoka Exxon office.
While attorneys handling Freedom to Work’s complaint believe that the anti-discrimination law in Illinois has been violated, Exxon countered by stating that the company’s global policies do not allow any forms of discrimination. Freedom to Work is seeking a negotiated settlement and an Exxon policy which includes protection against gender identity discrimination and training programs within Exxon to prevent bias.
5. Jacksonville, Maryland Environmental Tort Lawsuit
In 2006, an underground gasoline leak contaminated well water and will require local residents to medically monitor their health for years. The property values in the area are lowered, particularly around the gas station, which is no longer in business. Approximately 25,000 gallons of unleaded gas leaked from a line which delivered the gasoline to a dispenser. The problem was concealed for some time because Exxon Mobil put up a sign indicating that the gas station was closed for upgrading. The public was not immediately warned about the spill. In 2011, a Maryland jury awarded compensatory damages in the amount of $500 million to the families and businesses which were affected by the spill.
6. 2013 Mayflower, Arkansas Tar Sands Spill
In March of 2013, the Pegasus Pipeline belonging to ExxonMobil ruptured. The 67-year-old pipeline was filled with diluted bitumen when the 22-foot-long breach appeared, and more than 200,000 gallons rushed through the streets past homes, and a shopping plaza, to end in Lake Conway.
Though Exxon Mobil motioned to dismiss, U.S. District Arkansas Federal Judge Kristine Baker refused, indicating that the company had committed numerous violations of water, air, and hazardous materials regulations in Arkansas and the Clean Water Act. Both Arkansas and federal governments brought the lawsuit, which stated that Exxon Mobil should pay approximately $4,300 per oil barrel spilled, with a cap of $21.5 million. The suit also indicated that the company should pay civil penalties of up to $45,000 per day, post spill.
Mayflower residents struggled to retain their homes and town, but the chemicals in the crude oil have caused multiple cases of nausea, vomiting, dizziness and headaches. The stench lingered and was so overwhelming that Exxon tore down a few houses, bought 20, and offered to buy out 62 area homes.
Mayflower had experienced the second largest pipeline spill of tar sands in the history of the United States. The Arkansas class-action suit covers all property along Lake Conway, which was completely contaminated.
The bitumen blend which spewed out of the ruptured pipeline is significantly higher in acid, sulfur and viscosity than crude oil, which makes it much more dangerous. Exxon increased the number of barrels flowing through the antiquated pipeline rather than replacing with a newer, larger and safer one. The company also said the breach was only three inches and that there was no bitumen contained in the oil flow. As of August, 2016, the legal proceedings are still unresolved
7. Sierra Club and Environment Texas Air Pollution Suit
In 2010, Sierra Club and Environment Texas filed a lawsuit claiming that the Exxon oil refinery operating on the Gulf coast, the largest in the United States, has violated federal air pollution laws by emitting over 8 million pounds of air pollution during five years of time. It was the third lawsuit filed by the environmental groups. The lawsuit sought to a court order which required Exxon Mobil to end violations against the Clean Air Act. The company faces penalties of $37,000 per day for each Clean Air act violation. The Texas Sierra Club members, approximately 24,000, had joined together with the approximately 5,000 state members of Environment Texas to file suit against Exxon Mobile.
8. Exxon Mobil CEO Joins Suit Against Exxon Mobil Fracking
In 2014, USA Today reported the story of how CEO and Chairman of Exxon Mobil, Rex Tillerson, joined the lawsuit to stop his company from building a water tower near his Bartonville, Texas home. Tillerson’s home is in this wealthy area of Dallas. The water tower would facilitate fracking during the oil drilling process. Fracking is the term used to describe how rocks are fractured during a hydraulic process so that pockets of oil will be released from the rock. Tillerson’s home is a horse ranch of 83 acres and a homestead of 18 acres. Tillerson appeared before his Town Council, attended a mediation session which lasted an entire day, and sat for the lawsuit concerning the issue. His opposition to the proposed 15 story tower was dismissed by Exxon Mobile as simply a private issue.
9. The Proposed Climate Change Lawsuit
In November of 2015, the New York Times reported that the New York Attorney General had begun to investigate Exxon Mobil to learn about the possibility that the company had not been truthful to its investors or the public about climate change risks. For years, the company has conducted scientific research about how its business functions and products have either contributed, or not, to climate change. The crux of the issue is that many environmental groups view fossil fuel companies as primary contributors to climate change, and they have advocated for transparency in climate change reports issued by companies such as Exxon Mobil. At the same time, in-house scientists have supported their employers’ reports. What is proposed, is that Exxon Mobil has knowingly avoided disclosing business risks associated with climate change and warned its investors that governments might adopt policies which would force the company to leave natural energy resources alone. The question is whether or not the use of these resources by Exxon Mobil has caused significant climate change, and whether or not a lawsuit could be effectively presented to support such a claim. The speculation has expanded throughout scientific research communities, the public, and the government.
10. $8.9 Billion Pollution Case in New Jersey
The Bayway refinery became another environmental legal hotspot when the State Department of Environmental Protection in New Jersey filed suit against Exxon Mobile for the loss of use and contamination of 1,500 or more acres of marshes, wetlands, waters and meadows in the northern area of the state. The lawsuits were filed in 2004, and had been litigated since then. The suit had spanned the administrations of four governors before coming to trial. At that point, nobody was disputing Exxon’s liability, leaving the issue remaining of how much money could be recovered for damages. There had been decades of petrochemical refining and operations at the site, and the staggering amount of pollution and contamination encompassed not only the Linden and Bayonne refineries, but the land and water surrounding them. The damage had begun in the 1870s at the Bayonne site and in the 1900s at the Linden site, continuing until the present day, when the collective area became known as Bayway. Pipeline ruptures, tank overflows and failures, spills and explosions had spread petroleum waste into sediment, soil and groundwater, leaving widespread contamination.
The state originally set the amount of $8.9 billion for damages, which Exxon Mobil contested vigorously. Ultimately, settlement talks ensued, and the state settled quietly for the sum of about $250 million.
Written by Garrett Parker
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