EXXON SUES ALYESKA
SEEKS TO BLOCK DEAL SETTLING SPILL CLAIMS

By SHEILA TOOMEY
Daily News reporter

ANCHORAGE- Nearly five years after the Exxon Valdez dumped 11 million gallons of crude into Prince William Sound, the oil industry has begun fighting in public with itself over who has to pay what to people damaged by the spill. Exxon Shipping, which ran a tanker onto the rocks of Bligh Reef in 1989, has filed suit in federal court here, seeking an injunction against its colleague in the oil-moving business, Alyeska Pipeline Service Co.

A $98 million settlement between Alyeska and thousands of damage claimants hangs in the balance. Until this development, commercial fishermen, business owners and Alaska Native communities in the Sound area expected to see some money by the end of the year.

"It definitely jeopardizes the settlement," said Anchorage attorney Lloyd Miller, a spokesman for the claimants. Alyeska has a right to withdraw if any part of it gets shot down, Miller said.

Prince William Sound fishermen, shaken by a disastrous pink salmon run, say the suit means they can't use promised payments as collateral for loans needed now.

In the lawsuit, Exxon Shipping asks that the settlement be put on indefinite hold because two provisions of the agreement could hurt them even though Exxon Shipping is not a party to the deal.

One unacceptable provision says Exxon Shipping cannot go after Alyeska or any of its owner oil companies for reimbursement of any money it pays out because of the spill.

So far, Exxon has not made a public claim against any of the companies, and a spokesman for Exxon Shipping declined to "speculate" on whether it would do so in the future.

The second unacceptable provision instructs the TAPS Liability Fund not to reduce the amount of money it pays individual claimants because they may already have collected money from some other source. Such reductions are called "offsets" and are usually deducted.

Exxon cares about this because it is required by law to reimburse the fund for any payments made.

Both of these provisions are now part of the settlement, which is scheduled to be put before a state and a federal judge for approval in late October. If accepted, the settlement would resolve all spill-related legal claims against Alyeska and leave Exxon as the only big-money player that hasn't settled in the massive class-action litigation.

But Exxon says no judge can approve the unacceptable provisions because it has a 1988 contract with Alyeska requiring all "pollution" disputes be settled by binding arbitration and not in court. The proposed settlement "takes away arbitration rights that we had," said Art Stephen, a spokesman for Exxon Shipping in Houston.

Exxon first learned the details of the $98 million settlement at an Aug. 4 court hearing and raised objections then, Stephen said. The company filed suit because the provisions were not removed and not to file would have suggested acceptance, he said.

"Exxon Shipping doesn't object to the settlement agreement per se," Stephen said, an assertion Miller scoffed at.

"I think they want to torpedo the agreement," Miller said.

According to Miller, Exxon continues to deny that any money is owed for damages to anyone because of the Valdez spill. "I don't think they want a precedent set" by "a relatively small player" paying out $98 million, he said.

"After all, (Alyeska) didn't put 11 million gallons of oil in the water."

Alyeska spokeswoman Marnie Isaacs said the pipeline company will defend the settlement in court against Exxon Shipping. Exxon is one of Alyeska's owners.

Alyeska's seven owner companies presumably voted on the settlement before Alyeska agreed to it, but Isaacs declined to say if Exxon or anyone else voted against it.

The lawsuit "doesn't come as a complete surprise to Alyeska and our other owners," Isaacs said. "We believe that our settlement filing was fully legal."

Claimants in the class action litigation that would be settled by the challenged agreement are now receiving claim forms in the mail, Miller said. About 55,000 forms were mailed within the last few days, he said. Claimants also have the option of dropping out of the settlement if they don't like it.

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