Exxon Mobil: Corporate Rap Sheet

Exxon Mobil

By Philip Mattera

Exxon Mobil is known primarily for its vast size and immense profitability (its annual net income has at times exceeded $40 billion), but it is also still associated in the public mind with the giant oil spill caused by one of its tankers off the coast of Alaska more than two decades ago. The 1999 acquisition of Mobil by Exxon brought together two of the former portions of John D. Rockefeller’s Standard Oil Trust that each had racked up a long string of environmental violations and other controversies. Environmental groups have targeted the company for supporting climate change denial, and now state attorneys general are investigating whether the company for decades deliberately concealed its knowledge of climate dangers. 

 

Environment and Product Safety

Exxon was never a particularly "green" company, but an event on March 24, 1989 gave it a prominent place in the environmental rogues gallery. On that day its supertanker Valdez went aground off the coast of Alaska and spilled 11 million gallons of crude oil into the Prince William Sound, polluting more than 700 miles of shoreline. Although much of the guilt was laid to the captain of the vessel, who was intoxicated and away from his post at the time of the accident, Exxon was also blamed. Among the charges were that the company did not act quickly enough in dealing with the spill and that it did not adequately cooperate with state and federal officials.

A coalition of environmental groups launched a boycott of Exxon and urged customers to return their credit cards to the company. They also called on the oil giant to roll back recent gasoline price increases, to pay for the clean-up, and to establish a $1 billion trust fund for protecting endangered areas of Alaska. When institutional investors pressured the company to appoint an environmentalist to its board of directors, Exxon named John H. Steele of the Woods Hole Oceanographic Institution—a choice that was not entirely satisfactory to many environmental groups. Exxon also vowed to spend some $1.3 billion for the clean-up.

Nonetheless, in February 1990 the company was indicted by a federal grand jury on criminal felony and misdemeanor charges. The following year, Exxon agreed to settle the case by pleading guilty to one charge and paying a fine of $100 million. The civil cases were another matter. An initial $900 million settlement fell apart. After several years of legal maneuvering, in September 1994 a federal jury ordered Exxon to pay $5 billion in punitive damages. There was an uproar after it came to light that Exxon had made deals with seafood processors that in effect let the company recoup some of the damages it would pay. The judge in the case, H. Russel Holland, said Exxon was engaged in “an astonishing ruse.”

Exxon delayed as long as possible in paying any of the damages by pursuing a protracted appeals process. In 2001 it got a federal appeals court to rule that the punitive damage award was punitive, prompting the judge in the case to reduce the amount to $4 billion. That amount was also rejected by the appeals court, but rather than giving in, Judge Holland hiked the damage award to $6.75 billion. In 2008 the case reached the U.S. Supreme Court, which slashed the punitive damage award to about $500 million, or about the same as the compensatory damages that had been imposed.   

While the Exxon Valdez dispute played out, Exxon faced other environmental controversies.

In December 1989 an explosion at its Baton Rouge, Louisiana refinery was so powerful that debris was spread for miles; two men were killed in the incident. On January 1, 1990 a cracked underwater pipeline at the company's Bayway Refinery in New Jersey leaked some 600,000 gallons of heating oil into part of New York harbor. That leak continued for six hours as operators doubted the validity of an alarm that had sounded. The company settled criminal and civil charges brought in connection with the leak by agreeing to fund $15 million in environmental initiatives. In 1992 the U.S. Environmental Protection Agency (EPA) fined Exxon $178,000 for reporting violations at Bayway. The following year the company agreed to pay another $1 million to New Jersey officials in connection with Bayway violations before selling the facility to Tosco Corp.

In 1996 an estimated 2,000 gallons of crude oil spilled into Santa Barbara Channel off southern California from an Exxon oil platform.

In February 1998 the U.S. Justice Department, acting on behalf of the EPA, sued Exxon USA for violations of the Clean Air Act and demanded up to $4.7 million in fines.

In August 1998 Exxon and two other oil companies agreed to pay $4.8 million to settle a lawsuit claiming that the firms had discharged unacceptable levels of toxic selenium into San Francisco Bay.

Prior to its merger with Exxon, Mobil had its own environmental compliance problems. For example, in 1989 the company was sued by the city of Torrance, California because of leaks of hydrofluoric acid and other health and safety problems at the company's refinery in that city. The suit, calling the facility a public nuisance, cited numerous instances of worker injury and death at the refinery as well as an instance in which fumes from the plant hospitalized eight students and two teachers at a nearby school. The city later filed criminal charges against the company and two of its managers in connection with a 1988 explosion at the refinery that killed one person and burned several others. In 1990 Mobil and the city reached a settlement of the public nuisance suit in which the company agreed to phase out or reformulate the use of hydrofluoric acid.

In 1989 the state of Massachusetts penalized Mobil for failing to report the discovery of a leaking gasoline tank at one of its service stations by requiring the company to take out newspaper advertisements urging other gasoline companies to comply with environmental laws and to upgrade their storage facilities. 

Also in 1989, Mobil pleaded no contest to criminal charges in California relating to pipeline ruptures the year before that had spilled more than 130,000 gallons of crude oil, much of it into the Los Angeles River and the city's sewer system.

In 1990 Mobil finally began to take action to deal with an environmental hazard that had existed for decades. The problem was a veritable underground lake of petroleum resulting from years of leaks from storage tanks and pipelines at the company's facility in the Greenpoint section of Brooklyn, New York. After years of resisting taking responsibility for the millions of gallons of oil, Mobil signed a consent order that required it to clean up the mess. 

Mobil came under criticism for its attempt to portray its Hefty plastic trash bags as friendly to the environment. In 1990 half a dozen states filed lawsuits against the company, charging it with deceptive advertising for calling the bags biodegradable. New York State Attorney General Robert Abrams called the company's claims for Hefty “green-collar fraud.” Mobil settled the suits in 1991 by agreeing to end the claims about biodegradability and to pay each of the states $25,000. 

In 1991 the U.S. Environmental Protection Agency proposed a penalty of $575,000 against Mobil's facility in Paulsboro, New Jersey for failure to report several accidental releases of hazardous substances.

Exxon and Mobil were both among the ten major oil companies cited by the EPA in 1991 for discharging contaminated fluids from service stations into or directly above underground sources for drinking water. Each agreed to pay a fine of $125,000 and to clean up the conditions by the end of 1993.

In 2001 Exxon Mobil agreed to pay $11.2 million to settle a 1990s federal case in which Mobil was accused of dumping waste with carcinogenic benzene into the Arthur Kill waterway of Staten Island in New York City—and then lying about its actions.

As concern about climate change escalated in the 1990s, Exxon was targeted for its attempts to downplay the crisis. In October 1997, for example, CEO Lee Raymond gave a speech to the 15th World Petroleum Congress in which he declared that there were no feasible alternatives to fossil fuels, so that “the use of fossil fuels is essential both for economic growth and for the elimination of poverty, which is itself the worst polluter.” Raymond went on to assert that “most of the greenhouse effect comes from natural sources, especially water vapor.”

In 2000 environmental and religious shareholder activists groups launched Campaign ExxonMobil to pressure the company to change its position on climate change. In 2005 a coalition of 12 environmental groups launched the Exxpose Exxon campaign to focus on the company’s climate denial posture and its efforts in support of exploration and drilling in the Arctic National Wildlife Refuge.

A few years later, Exxon Mobil said it would end its funding of at least some global warming denial groups and indicated a willingness to discuss greenhouse gas regulation. But critics such as the Union of Concerned Scientists remained skeptical and continued criticizing the company’s stance on the issue. In 2008 a proxy resolution calling on Exxon Mobil to take global warming more seriously was supported by a group of descendants of company founder John D. Rockefeller. The group also endorsed a resolution to create an independent chairman that did not pass but which attracted an impressive 39.5 percent of the votes.

In 2015 Inside Climate News published an exhaustive expose on Exxon's decades-long campaign of climate denial, including the suppression of its own research showing the dangers of greenhouse gases. There were subsequent moves by the New York Attorney General and his counterparts in some other states to investigate whether the company deliberately misled investors and the public on the financial risks of climate change. The effort came as more documents emerged suggesting that the company knew about climate dangers as early as the 1950s. The company began fighting back with the assistance of friendly legislators and public officials.

Recent Regulatory Violations

In 2008 Exxon Mobil agreed to pay about $6 million to resolve charges that it violated the terms of a 2005 Clean Air Act settlement concerning emissions from its refineries in Texas, Louisiana and California.

Also in 2008, Exxon Mobil agreed to pay $2.64 million to settle EPA charges that it violated the Toxic Substances Control Act by improperly handling and disposing of PCBs on an offshore oil and gas platform in the Santa Barbara Channel off the Southern California coast.

In 2009 a federal jury found Exxon Mobil liable for contaminating ground water in New York with the gasoline additive MTBE and awarded the city $104 million in compensatory damages. That same year, the company pleaded guilty to one criminal charge of violating the Clean Water Act in connection with a 2006 leak of fuel oil into the Mystic River in Massachusetts.

Also in 2009, Exxon Mobil put itself in the center of the controversy over hydraulic fracturing, or fracking, by purchasing the shale gas company XTO Energy.

In July 2011 an Exxon Mobil pipeline in Montana ruptured, sending more than 40,000 gallons of crude oil into the Yellowstone River. Gov. Brian Schweitzer accused the company of withholding key information and otherwise misleading public officials about the accident. In January 2013 the Associated Press reported that an unpublished study by U.S. Department of Transportation investigators had found that Exxon Mobil's slow response made the spill much worse than it otherwise would have been. In March 2013 the federal Pipeline and Hazardous Materials Safety Administration proposed that the company be fined $1.7 million for failing to properly address seasonal flooding risks. (The fine was later reduced to $1 million).

Only days after the proposed fine was announced, a rupture in an Exxon Mobil pipeline in Arkansas spilled about 10,000 barrels of oil in a residential area north of Little Rock. In November 2013 federal regulators proposed fining the company $2.66 million for the spill.

In 2015 Exxon reached a  settlement with New Jersey officials in a long-running legal battle over contamination caused by the company's facilities in the northern part of the state. The settlement amount, $225 million, was far less than the billions of dollars in damages the state had been seeking, prompting allegations that the administration of Gov. Chris Christie had let Exxon off too easily.

ExxonMobil Chemical

In November 1990 a federal jury in New Jersey awarded $1.4 million in damages to a former Mobil Chemical employee who charged that he had been dismissed as manager of environmental affairs for the company because he refused to cover up regulatory violations.

In 1993 Exxon Chemical agreed to pay more than $3.8 million in fines and restitutions to resolve federal charges relating to the company’s role in submitting false test reports to the U.S. Army to qualify for contracts to supply fuel additives.

A series of explosions and a major fire at Exxon Chemical’s plant in Baton Rouge, Louisiana in August 1994 was followed by the filing of lawsuits on behalf of more than more than 15,000 local residents who said they were exposed to toxic smoke from the blast. In 1995 the U.S. Occupational Safety and Health Administration fined the company $120,000 in connection with the accident, but the lawsuits dragged on in federal court for more than 15 years.

In 2007 Infineum USA, a joint venture between ExxonMobil Chemical and Shell, agreed to pay $950,000 to settle charges that it violated the Toxic Substances Control Act by using a new chemical in its auto products before the chemical had undergone a required review.

In December 2010 Environment Texas Citizen Lobby and the Sierra Club filed suit in federal court charging that ExxonMobil’s manufacturing complex in Baytown, Texas, which includes chemical production, has committed thousands of violations of the Clean Air Act. Over the past five years, ExxonMobil Chemical’s Baytown operation has paid more than $190,000 in Clean Air Act penalties.

For more than a decade, ExxonMobil Chemical has fought efforts to put stricter controls on plasticizers containing phthalates and has challenged the science indicating the risks of the chemicals, which have been linked to reproductive and development hazards, autism, endocrine disruption, and breast cancer. ExxonMobil filed an unsuccessful lawsuit to try to prevent California from including the phthalate DIDP on its Proposition 65 list of chemicals known to cause cancer or reproductive toxicity.

 

Labor

The Standard Oil trust is depicted as a villain in labor histories because of the infamous Ludlow Massacre of 1914. The dispute began in 1913, when some 9,000 miners employed by the Rockefeller-controlled Colorado Fuel and Iron Co. and other companies went on strike to demand union recognition as well as better working and living conditions. Several months into the walkout the state militia was sent in to attack the tent village of the strikers. During a battle with the workers the militiamen poured oil on the tents and set them afire. Two women and eleven children were killed in the blaze.

By the 1920s Jersey Standard was projecting a very different image for itself. It led the way in using paternalistic policies as a way of discouraging unionization. When labor organizations became more active in 1930s, Jersey Standard, like many other companies, created company unions to “represent” its workers. Those unions ostensibly became independent after company-dominated unions were outlawed. Yet while such independents at other oil companies eventually gave way to representation by the Oil, Chemical and Atomic Workers (OCAW), Jersey Standard's unions remained isolated, weak and largely under the domination of management.

Morale among both unionized and non-union workers at the company plummeted during the 1980s as Exxon eliminated tens of thousands of jobs and put the squeeze on those who remained. These policies may have had consequences outside the company. A front page article in the Wall Street Journal (March 16, 1990) suggested that accidents like that in New Jersey (see below) were the result of the company's restructuring moves. One analyst was quoted as saying Exxon's operations were “overworked and undermanned.

By the 2000s, many of the independent unions had affiliated with the Steelworkers union and were participating in industry pattern bargaining with other U.S. petroleum sector workers.   

The company has been no great friend to labor abroad. In 1990, for example, the company's International Colombia Resources subsidiary pressured the government of Colombia to crack down on a group of coal miners who had walked off the job at its facility in the country. Demands included improved housing and a shorter work week. Colombian authorities declared the strike an economic detriment to the country and ordered the miners back to work. The miners' union then reached a settlement with the company that included some of what they were seeking.

In 2003 unions representing Exxon Mobil workers in 11 countries formed a network under the auspices of the International Chemical, Energy, Mine, and General Workers’ Unions (ICEM).

 

Human Rights

In the 1990s there were allegations that Mobil’s subsidiary in Indonesia collaborated with a brutal crackdown by that country’s army against Muslim separatists in Aceh province.  In 2001 the International Labor Rights Fund filed a lawsuit against Exxon Mobil in federal court, accusing the company of complicity in human rights abuses. The case was dismissed by a federal district court in 2009 but was reinstated by an appeals court two years later.

 

Anti-Competitive Practices

In 1996 the Federal Trade Commission filed a complaint against Exxon, charging that it advertisements claiming its gasoline made engines cleaner and reduced maintenance costs were misleading. The company signed a consent order the following year.

In 2001 a federal jury in Florida ordered Exxon to pay $500 million to 10,000 service station owners around the country who claimed that the company had overcharged them for gasoline for 12 years. The company fought the case all the way to the U.S. Supreme Court, which in 2005 ruled against Exxon, forcing it to pay an award which with interest had grown to $1.3 billion.

 

Royalties and Subsidies

In 1998 Mobil paid $45 million to resolve claims that it underpaid royalties owed to the federal government for oil produced on public and Indian land in California, the Rocky Mountain States and in the Gulf of Mexico.

In 2000 a jury in Alabama ordered Exxon Mobil to pay $3.5 billion in damages after it found the company guilty of defrauding the state of royalty payments from natural gas wells in state waters. That verdict was overturned on technical grounds, and in 2003 a separate jury awarded the state $11.9 billion. The judge in the case later reduced the award back down to $3.5 billion.

Like other oil companies operating in the state, Exxon was been a major recipient of subsidies in Louisiana for decades. A March 26, 1996 article in the Baton Rouge Advocate said: “Over the years, the state of Louisiana has forgiven Exxon from paying hundreds of millions of dollars in taxes.” A 1992 report called “The Great Louisiana Tax Giveaway” published by the Louisiana Coalition for Tax Justice found that Exxon’s facilities in the state (including the ones in Baton Rouge) with a combined value of $887 million had received 282 industrial property tax exemption during the 1980s. The cost to the taxpayers was estimated at $93.3 million. Exxon’s tax breaks were the fifth highest of any company in the state during the decade. Most of Exxon’s breaks were for projects that created no new permanent jobs.

In 1994 the Coalition raised the issue of tax breaks received by the Exxon Chemical plant in Baton Rouge during the course of protests about unsafe conditions at the facility, which had resulted in several serious explosions. That same year, State Senator John Guidry introduced a resolution that would have withheld $20 million in tax breaks for expansion of the facility until a final report on the latest explosion was released. The measure failed, but the publicity caused Exxon to announce that it was postponing its request.

In June 2000 the Louisiana Environmental Action Network (LEAN) awarded its first “Corporate Hog at the Trough” award to Exxon Mobil in connection with its Baton Rouge facility. The group said that Exxon had received $286 million in tax exemptions for its Baton Rouge plants over the past decade while creating only 95 permanent jobs. LEAN said Exxon had avoided paying $103 million in local school taxes during that period. The company declined the award.

Exxon Mobil has continued receiving tax abatements in Louisiana, including a $16 million award to its Baton Rouge refinery in 2010.

 

Other Information Sources

Violation Tracker summary page

 

Watchdog Groups and Campaigns

American Friends Service Committe: Investigate

Center for Health, Environment & Justice

Exxon Secrets (Greenpeace)

Oil Change International/Price of Oil

Oil Watchdog

Safer Chemicals, Healthy Families

Union of Concerned Scientists

 

Key Books and Reports

Challenging the Giants: A History of the Oil, Chemical and Atomic Workers International Union by Ray Davidson (OCAW, 1988).

History of Oil Workers Intl. Union (CIO) by Harvey O’Connor (Oil Workers Intl. Union, 1950).

In the Wake of the Exxon Valdez: The Story of America's Most Devastating Oil Spill by Art Davidson (Sierra Club Books, 1990).

Out of the Channel: The Exxon Valdez Oil Spill in Prince William Sound by John Keeble. (HarperCollins, 1991).

Private Empire: Exxon Mobil and American Power by Steve Coll (Penguin Press, 2012).

Smoke, Mirrors & Hot Air: How ExxonMobil Uses Big Tobacco’s Tactics to Manufacture Uncertainty on Climate Science (Union of Concerned Scientists, January 2007).

The History of the Standard Oil Co. by Ida Tarbell (1904).

The Seven Sisters: The Great Oil Companies and the World They Made by Anthony Sampson (Viking Press, 1975).

 

Last updated June 30, 2016