SLAYING A GIANT: THE CASE OF ALABAMA VS. EXXON MOBIL

The Anniston Star online

The $3.5 billion verdict a jury awarded the state of Alabama against Exxon Mobil Corp. on Tuesday will be a boon to state taxpayers when and if it is collected. The jury found that the oil company defrauded the state of millions of dollars in royalties from natural gas wells in state waters.

Though Exxon Mobil has vowed to appeal the verdict, evidence presented during the trial suggests that the state will eventually reap some- if not all- of the damages rendered from the case. The record verdict also underscores the importance of the recent passage of Amendment 1, the constitutional amendment approved by Alabama voters that allows the state to use revenues from royalties from oil and gas reserves to upgrade the state's infrastructure such as roads, bridges and improvements on the state's docks.

While some tort reform zealots have labeled Tuesday's Exxon verdict excessive, in light of the evidence presented in the case against one of the nation's true petroleum giants, the record amount of damages leveled by the jury seems not so excessive at all.

Gov. Don Siegelman called the verdict against the oil company appropriate punishment for attempting to cheat the state.

"I would suspect they won't make the mistake of trying to take advantage of this state again," the governor told the Associated Press.

The jury arrived at the punitive damages amount-more than 3.42 billion- by tripling Exxon Mobil's annual production from 13 natural gas wells along the Alabama coast.

Some evidence that no doubt swayed the jurors' hard-line stand were internal company documents that showed the oil company labeled Alabama officials "inexperienced" in the natural gas business. The documents revealed that the company deliberately decided to underpay the state.