Dec 20, 2000
Exxon case sends strong message. Like the proverbial 2 by 4 applied to the forehead of a bulky mule, Tuesday's $3.5 billion judgment against Exxon in the Alabama natural gas royalties lawsuit no doubt got the company's attention. Just how much of that record sum Alabama will ever see is uncertain, but the verdict sent a potent message to any company even thinking about trying to dodge its fiscal obligations to the state. Exxon will appeal the case, and may even prevail. We're not about to start predicting the outcome of what likely will be a lengthy appeals process. But at the trial level, Exxon was badly damaged by the disclosure of internal documents that indicated the company thought it could get away with not paying all it owed on natural gas royalties because Alabama officials were "inexperienced" in the business. That kind of conduct plainly ought to be punished, and what other way is there to punish Exxon than through a sting in the corporate purse? Companies ought to pay what they owe in taxes or royalties, and the state clearly has a responsibility to protect its treasury from those who would cheat. Alabama has a particular interest in self-protection in these natural gas royalties, which represent payment for the removal of a finite natural resource. The size of the award will draw criticism. It may be substantially reduced at some point in the legal process. Nevertheless, the message it sends is the right one. May it be heeded everywhere.