Court Orders Exxon to Refund $2 Billion

The Supreme Court today said Exxon Corp. must repay consumers nationwide more than $2 billion in refunds and interest for overcharging on the sale of oil from a Texas field.

The court, without comment, let stand a ruling that the money be distributed to the states and spent on programs to help the needy and energy consumers.

The penalty against Exxon is the largest monetary judgment in American history to be upheld on appeal.

Last November, a state jury in Texas ordered Texaco to pay $10.53 billion to Pennzoil for improperly interfering with that company’s acquisition of Getty Oil Co. Appeals in the case are pending.

Upheld on Appeal

The overpricing judgment against Exxon, ordered by a federal judge in 1983, was upheld last July by a special federal appeals court here.

Exxon, the nation’s largest corporation, was found to have overpriced oil from the Hawkins field near Tyler, Tex., between 1975 and 1981.

The corporation, in a Supreme Court appeal supported by the U.S. Chamber of Commerce, said it was the victim of confusing federal regulations. Exxon lawyers said the corporation was penalized for expanding production at a time of heightened national concern over energy shortages.

The Supreme Court also was urged by the airline industry, other oil companies, a utility company, a trucking firm, a taxicab company and a motorist to review the case and order redistribution of the money. They said they should be reimbursed for buying overpriced oil from Exxon.

‘Old’ Oil Called New

Exxon was found to have made illegal profits of $895.5 million by classifying so-called “old” oil as “new” oil, and thus selling it at nearly twice the price.

The federal controls that created the two-tier pricing system were removed by President Reagan immediately after he took office in 1981.

The balance of the judgment against Exxon is in interest charges of approximately $500,000 a day.

Exxon said in a statement it was “extremely disappointed” in the decision not to review the case.

Exxon was ordered to pay the $2 billion to the federal government for redistribution to the states based on their energy consumption during the period of overpricing. The states must spend the money on energy conservation, such as weatherizing buildings and reducing consumption by schools and hospitals, and to aid the poor with home utility bills.

Exxon had said federal energy officials created “an uncertain, constantly shifting and incoherent crazy-quilt of regulatory prescriptions” that the corporation found impossible to obey.

But U.S. District Judge Thomas Flannery, in his 1983 ruling against the corporation, said, “Exxon was hardly an innocent abroad, interpreting in the midst of confusing babble a direction sign labeled in a foreign language.”