Aug. 12 (Bloomberg) -- The U.S. Supreme Court declined to resolve whether Exxon Mobil Corp. must pay victims of the 1989 Valdez oil spill $500 million in interest, leaving the two sides to battle over the issue in a lower court.

The justices, who last month cut punitive damages in the case from $2.5 billion to $507.5 million, today issued their formal judgment and said the question of interest should be addressed by an appeals court.

Exxon Mobil said previously in court papers that the victims are seeking $488 million in interest. That would mean an additional $15,000 apiece for tens of thousands of fishermen and other Alaskans.

``We're fine'' with the court's action, the victims' lead Supreme Court lawyer, Jeffrey Fisher, said in a telephone interview. ``The court declined Exxon's invitation to say we get no interest.'' Last month, he said in an e-mail that both sides agree the amount of interest at issue ``would be about $500 million and counting.''

For Exxon Mobil, the world's largest energy company, the sum would represent about 10 hours of sales. The company had $40.6 billion in profit in 2007, surpassing the record it set a year earlier for annual net income by a U.S. corporation. The company on July 31 said net income for the second quarter was $11.7 billion, up from $10.3 billion a year earlier.

11 Million Gallons

Exxon fell $1.28 to close at $76.88 in New York Stock Exchange composite trading.

Today's action by the Supreme Court doesn't appear to favor either side in the dispute, said Exxon spokesman Alan Jeffers. ``Neutral is probably a good'' way to describe it, he said.

The Exxon Valdez spill dumped 11 million gallons of oil into Alaska's Prince William Sound, devastating wildlife and local businesses. The lawsuit against Exxon accused the company of ignoring repeated warnings that ship captain Joseph Hazelwood had a drinking problem. The 83-day trial included evidence he was drunk the night the vessel crashed into a reef.

In its 5-3 decision on June 25, the Supreme Court reduced the punitive damages to the level of compensatory damages, or the actual harm suffered by the spill victims. The majority said a 1- 1 ratio with compensatory damages was ``a fair upper limit'' in maritime cases that don't involve intentional wrongdoing or a company effort to increase profit.

A trial judge added interest when he first issued the judgment on punitive damages in 1996, after a jury had awarded $5 billion. The San Francisco-based 9th U.S. Circuit Court of Appeals eventually reduced the award to $2.5 billion without confronting the interest question.

In issuing its judgment today, the Supreme Court said it ``declines to rule in the first instance'' on whether interest should be awarded, saying the 9th Circuit should address the matter.

The victims would receive interest of 5.9 percent dating to the original trial court judgment in September 1996. Exxon Mobil is based in Irving, Texas.

The case is Exxon Shipping Co. v. Baker, 07-219.

To contact the reporter on this story: Greg Stohr in Washington at gstohr@bloomberg.net.

Last Updated: August 12, 2008 16:11 EDT