In the ongoing lawsuit filed by the state of Alabama against ExxonMobil Corp., a state circuit court judge on Monday reduced the $11.8 billion punitive damages award against the oil major by 75%, to $3.5 billion. The lawsuit seeks unpaid royalties on Alabama’s offshore natural gas leases.

The action by Montgomery County Circuit Judge Tracy McCooey comes two weeks after the judge declined to order a new trial after hearing arguments on whether to uphold the record multi-billion-dollar verdict won by the state last year (see Daily GPI, March 12). The initial $11.8 billion award was the largest handed down by a jury in the United States last year.

Alabama filed the lawsuit in 1999 against predecessor company Exxon Corp., alleging under-payment of royalties due from gas wells drilled in state waters around Mobile Bay. Exxon has argued that the estimated royalties in dispute are only $55 million, but Alabama has put the figure closer to $102 million, including interest.

There was no word on whether the state would appeal.

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