Exxon Valdez Oil Spill: Criminal Cases, Settlement, and Recovery

The Exxon Valdez oil spill occurred just after midnight on March 24, 1989, when the tanker ran aground on Bligh Reef in Alaska’s Prince William Sound and released roughly 11 million gallons of North Slope crude. The disaster produced criminal convictions against both the company and the ship’s captain, a $900 million government environmental settlement, a private class action that the U.S. Supreme Court eventually resolved by cutting punitive damages to $507.5 million, and the Oil Pollution Act of 1990. Some species and shoreline areas still have not fully recovered.

What Happened on Bligh Reef

The tanker left the Alyeska Pipeline terminal in Valdez on the evening of March 23, 1989, loaded with crude. To avoid ice in the outbound shipping lane, Captain Joseph Hazelwood steered into the inbound lane and then left the bridge, leaving Third Mate Gregory Cousins in command. The ship hit Bligh Reef shortly after midnight, tearing open eight of eleven cargo tanks.

The National Transportation Safety Board investigation pointed to several causes working together: Hazelwood’s documented alcohol dependency, a fatigued and reduced crew, and inadequate Coast Guard traffic control. Cousins had likely slept only five to six hours in the prior twenty-four. Deck officers were working six-on, six-off watches. The Board called Exxon Shipping Company’s reduced manning practices “generally incautious” and driven by cost savings.¹

On the drinking issue, the NTSB concluded Exxon “demonstrated inadequate knowledge of and concern about the seriousness of having an alcohol-impaired master.”¹ Hazelwood had been given a ninety-day leave for treatment, but the company never monitored the recommended outpatient program or consulted alcoholism experts before returning him to duty. The Justice Department later alleged Exxon had known about his alcohol problems for nineteen months before the grounding.²

The Failed First Response

The area contingency plan assigned initial spill response to Alyeska Pipeline Service Company, a consortium of seven oil companies that included Exxon. The plan collapsed within hours. A dedicated response barge was out of service. Skimmers, containment boom, and dispersant stockpiles were all insufficient, and there were no barges to hold recovered oil.³ Booms did not reach the site for roughly ten hours, and when they did, gusting winds pushed oil over them and icebergs shredded them.⁴

The gaps were the product of years. Alyeska had disbanded its full-time oil spill response team in 1981 over Alaska’s objections. State field officers warned in 1984 that pollution equipment had been dismantled and that Alyeska could not handle a major spill. A practice drill that year was deemed a failure by federal and state officials. Even so, the Alaska Department of Environmental Conservation approved Alyeska’s contingency plan in 1987 without another drill, on the assumption that a catastrophic spill was “highly unlikely.”⁵ The plan itself modeled a worst-case spill of roughly one-third the volume that actually escaped the Exxon Valdez.⁴

Transportation Secretary Samuel K. Skinner said the response did not fully come together until three days after the accident.⁴ By then the slick covered hundreds of square miles of open water. At its peak, the cleanup involved 10,000 workers, roughly 1,000 boats, and about 100 aircraft, running for more than four summers before being called off. Only about ten percent of the spilled oil was recovered, and winter storms are widely credited with doing more shoreline cleaning than human crews.⁶ Exxon reported spending about $2.1 billion on cleanup.⁷

Criminal Cases Against Exxon and Captain Hazelwood

On February 27, 1990, a federal grand jury in Alaska indicted Exxon Corporation and Exxon Shipping Company on five counts: misdemeanor violations of the Clean Water Act, the Refuse Act, and the Migratory Bird Treaty Act, plus felony violations of the Ports and Waterways Safety Act and the Dangerous Cargo Act.⁸

Under a plea agreement approved by the U.S. District Court in Anchorage in October 1991, Exxon Shipping pleaded guilty to three misdemeanors (Clean Water Act, Refuse Act, and Migratory Bird Treaty Act), and Exxon Corporation pleaded guilty to a single Migratory Bird Treaty Act misdemeanor. The felony charges were dropped. The companies were jointly fined $25 million and ordered to pay $100 million in criminal restitution for injuries to fish, wildlife, and lands, split evenly between the federal and state governments.⁸⁷

Alaska state prosecutors charged Hazelwood with felony criminal mischief, operating a vessel while intoxicated, reckless endangerment, and the misdemeanor of negligent discharge of oil. A jury acquitted him of the first three and convicted him only of negligent discharge, finding that his conduct was a substantial factor in the spill. Alaska Superior Court Judge Karl Johnstone sentenced him to a suspended ninety-day jail term, a $1,000 fine, $50,000 in restitution, one year of probation, and 1,000 hours of community service cleaning polluted beaches in Prince William Sound.⁹ The sentence was stayed on appeal. In 1998, the Alaska Court of Appeals affirmed the conviction, ruling that errors involving immunized statements and intoxication evidence were harmless because the jury had already acquitted him on the intoxication charge and other evidence supported negligence.¹⁰ The Coast Guard suspended his maritime license for roughly nine months. He never returned to sea.¹¹

The $900 Million Government Settlement

Alongside the criminal plea, the United States and the State of Alaska resolved their civil environmental claims through a consent decree that U.S. District Judge Russel Holland approved on October 9, 1991. Exxon agreed to pay $900 million over ten years, with the last installment received in September 2001. Of that total, $135 million reimbursed past cleanup and research costs; the remaining roughly $750 million funded restoration in Prince William Sound and the Gulf of Alaska.⁸¹² Six trustee agencies administer the funds: NOAA, the U.S. Departments of Agriculture and Interior, the Alaska Department of Fish and Game, the Alaska Department of Environmental Conservation, and the Alaska Attorney General’s Office.

The settlement carried a reopener clause allowing the governments to seek up to another $100 million between September 2002 and September 2006 for substantial, unanticipated environmental losses. On August 31, 2006, the U.S. Department of Justice and the Alaska Department of Law invoked it, presenting ExxonMobil with a $92 million restoration plan aimed at lingering subsurface oil affecting harlequin ducks and sea otters.¹³ ExxonMobil declined to participate. The governments funded ongoing monitoring with existing settlement money. By 2015, both harlequin duck and sea otter populations had recovered to pre-spill levels, and on October 14, 2015, the governments filed a joint status report saying they would not pursue the reopener claim, closing that chapter permanently.¹⁴

The Class Action and the Supreme Court’s Punitive Damages Ruling

Separate from the government’s environmental case, tens of thousands of private plaintiffs sued Exxon: commercial fishermen, Alaska Natives whose subsistence fishing was disrupted, landowners, and shore-based businesses. The consolidated case, In re the Exxon Valdez (No. A89-0095-CV), was tried before Judge Holland in Anchorage.

Compensatory damages resolved in pieces. A jury awarded $287 million to commercial fishermen. Alaska Native economic claims settled for $22.6 million, and remaining federal compensatory claims for $13.4 million. Exxon separately paid $303 million through a voluntary claims program for livelihood disruptions between 1989 and 1994.⁷

The punitive damages phase, involving a class of 32,677 members, produced a $5 billion jury verdict in 1994. Fourteen years of appellate litigation followed:

In 2001, the Ninth Circuit found the $5 billion award excessive and remanded.
In 2002, Judge Holland reduced the award to $4 billion, concluding that the constitutional guideposts from BMW v. Gore supported the full $5 billion but that the Ninth Circuit had mandated a reduction.⁷
In 2004, after the Supreme Court’s State Farm v. Campbell punitive damages ruling, the Ninth Circuit vacated the $4 billion judgment and remanded. Judge Holland vacated his prior order but stated that State Farm added “no new, free-standing factor to the constitutional analysis.”⁷
In 2006, the Ninth Circuit set the award at $2.5 billion.
In 2008, the U.S. Supreme Court, in Exxon Shipping Co. v. Baker (554 U.S. 471), reduced punitive damages to $507.5 million, a one-to-one ratio with the compensatory award.¹⁵

The Supreme Court decided the case under federal maritime common law rather than constitutional due process. The majority found the unpredictability of outsized punitive awards in maritime cases in tension with the goals of retribution and deterrence, and adopted a one-to-one ratio of punitive to compensatory damages as a fair upper limit for maritime torts, citing empirical studies showing the median ratio across the broader legal system was generally less than one-to-one. The Court also held that the Clean Water Act does not preempt punitive damages in maritime spill cases.¹⁵ With interest, the total payout to the plaintiff class ultimately reached $1.515 billion.¹⁶

The Oil Pollution Act of 1990

Public outrage over the spill and the response drove Congress to pass the Oil Pollution Act of 1990 (OPA 90), signed by President George H.W. Bush that August.¹⁷ Its main provisions:

All tankers operating in U.S. waters must be built with double hulls, eliminating the single-hull design that made the Exxon Valdez vulnerable to a catastrophic breach.¹⁷
“Responsible parties,” meaning the owners and operators of vessels or facilities, face strict liability for removal costs and a broad range of damages, including natural resource injury, economic losses, and subsistence-use impacts.¹⁸
The Oil Spill Liability Trust Fund covers cleanup costs when a responsible party cannot or will not pay.¹⁷
Regional citizens’ advisory councils for Prince William Sound and Cook Inlet act as public watchdogs over terminal operations, shipping, and regulators.³
Any vessel that spilled more than one million gallons of oil after March 22, 1989, is barred from operating in Prince William Sound, which effectively banned the Exxon Valdez itself from returning to Alaskan waters.¹⁷

Operations in Prince William Sound were also reworked. The double-hull transition finished ahead of the 2015 federal deadline; the first purpose-built double-hull tanker for the route, the Endeavor, entered service in 2001.¹⁹³

Environmental Recovery and What Hasn’t Come Back

The spill killed an estimated 2,800 sea otters, 22 killer whales, and billions of salmon and herring eggs in the immediate aftermath, and oil spread along more than 1,300 miles of shoreline.²⁰ Contamination has persisted far longer than expected. Subsurface patches of oil remain along some shorelines, and some of that oil has retained its original toxicity. Research has found that long-term injury from lingering oil may equal or exceed acute harm from the spill itself, slowing wildlife recovery for up to twenty-four years.²¹

A 2007 survey estimated 23,000 gallons of oil still on beaches, about 0.2 percent of the spill, and a 2015 follow-up found no significant change. In 2026, the Alaska Department of Environmental Conservation proposed reclassifying eleven spill-affected sites from “impaired” to a category indicating water quality standards have been attained, on the finding that remaining oil at those sites is too degraded and immobile to cause further water-quality problems. Five sites, covering roughly sixteen miles of coastline, remain classified as impaired.²²

Several species remain classified as not recovering or unknown. The AT1 transient killer whale population has fallen from twenty-two individuals before the spill to seven, with no recorded births or deaths since 2010.²³ Recovery is considered unlikely because key breeding females have been lost and no remaining females are of reproductive age. The group was designated as depleted under the Marine Mammal Protection Act in 2004.²⁴ Gulf Watch Alaska scientists have said the population “may be headed toward extinction.”²⁵

Pacific herring in Prince William Sound are officially not recovering. The commercial herring fishery has been closed since 1999 because stock levels are persistently too low, and disease, particularly Ichthyophonus and viral hemorrhagic septicemia, is identified as a primary factor limiting recovery.²⁶ Researchers said in 2023 that consecutive increases in juvenile fish counts offered cautious optimism but cautioned that unusually favorable survey conditions may have inflated those numbers.²⁷ Kittlitz’s murrelets, marbled murrelets, and pigeon guillemots also remain classified as not recovering or unknown.²⁰

What Happened to the Ship

After repairs in San Diego, the tanker was renamed and continued hauling oil under a series of owners and flags, permanently barred from Prince William Sound by OPA 90. In 2008 it was sold to a Hong Kong company, renamed Dong Fang Ocean, converted from a tanker into a bulk ore carrier, and reflagged under Panama. In 2011 it was sold for scrap for $16 million and renamed Oriental Nicety. After clearing a legal challenge in India over hazardous materials, it was beached at the shipbreaking yards in Alang, Gujarat, on August 2, 2012, and dismantled.²⁸

1
NTSB. Safety Recommendations M-90-26 Through -31
2
UC Davis School of Law. Exxon Valdez and Corporate Liability
3
EVOS Trustee Council. Spill Prevention and Response
4
The Washington Post. Contingency Plan for Spill Called Inadequate
5
NOAA Office of Response and Restoration. Looking Back: What Led to the Exxon Valdez Oil Spill
6
EVOS Trustee Council. Questions and Answers About the Spill
7
Justia. In Re the Exxon Valdez, 296 F. Supp. 2d 1071
8
U.S. EPA. Exxon to Pay Record One Billion Dollars
9
UPI. Hazelwood Sentenced to Beach Cleanup Work
10
FindLaw. Hazelwood v. State, No. A-3452
11
The New York Times. Joseph Hazelwood Dies
12
EVOS Trustee Council. Settlement
13
EVOS Trustee Council. Reopener
14
U.S. Department of Justice. United States and State of Alaska Opt Not to Recover Additional Damages
15
Justia. Exxon Shipping Co. v. Baker, 554 U.S. 471
16
Lieff Cabraser Heimann & Bernstein. Exxon Valdez Oil Spill Litigation
17
NOAA Office of Response and Restoration. The Oil Pollution Act of 1990
18
GovInfo. Oil Pollution Act of 1990
19
PWSRCAC. Then and Now
20
NOAA DARRP. Exxon Valdez
21
EVOS Trustee Council. Lingering Oil
22
Alaska Beacon. Several Historic Oil Spill Sites Now Deemed Safe
23
EVOS Trustee Council. Killer Whales
24
NOAA Fisheries. Killer Whale
25
Gulf Watch Alaska. Killer Whales
26
EVOS Trustee Council. Pacific Herring
27
PWSRCAC. Researchers Cautiously Optimistic About Increase in Young Herring
28
NOAA Office of Response and Restoration. After the Big Spill: What Happened to the Ship