INSURERS WANT OFF SPILL HOOK
COMPANIES SAY EXXON'S CLEANUP A PR PLOY, BALK AT PAYING

By RICHARD PYLE
The Associated Press

NEW YORK- Insurance companies claim in a federal lawsuit that Exxon Corp.'s cleanup after the 1989 Exxon Valdez oil spill in Alaska was a public relations ploy and they shouldn't have to reimburse the oil company for it. More than 100 insurance companies, led by Lloyds of London, sued Exxon on Tuesday in U.S. District Court in Manhattan.

Exxon said Wednesday it would press its demand that the companies pay some of the cleanup costs despite the lawsuit.

The suit charged that Exxon launched the costly cleanup and settled criminal and civil cases against it "solely for the purpose of preserving its corporate image."

The insurance companies also said Exxon knew that the tanker was unseaworthy but withheld that information at the time it signed insurance contracts. State and Coast Guard officials in Alaska said it was the first time they had heard the claim that Exxon knew the vessel was unseaworthy.

"She (the tanker) was just 21|2 years old; she was new," said Coast Guard Capt. Donald Bodron, a Juneau-based supervisor of Alaska ports including Valdez.

Bodron said an exhaustive review of the tanker grounding by the National Transportation Safety Board had not pointed to unseaworthiness.

Bodron said there were no reports that the Exxon Valdez experienced cracking to the hull or cargo tanks, as some aging

vessels in the Alaska oil tanker fleet have sustained. Those vessels have been removed or fixed, he said.

Anchorage attorney Jeff Feldman, who is familiar with maritime issues, said the lawsuit may be referring to unseaworthiness due to staffing levels. The issue also was brought up by the state and private plaintiffs during litigation connected with the spill, he said.

Plaintiffs contended the Exxon Valdez was unseaworthy because of reductions in its crew and cutbacks in training on navigational aids, Feldman said.

Exxon has estimated its costs following the 11 million-gallon spill at around $2.5 billion for cleanup and $1 billion for federal and state court settlements resulting from the disaster.

The Exxon-owned tanker ran aground on a charted reef on March 24, 1989. The spill was the largest in U.S. history.

Bodron and Michael Conway, Alaska's spill prevention and response director, on Wednesday rejected the insurance companies' claims that Exxon was under no legal obligation for cleanup.

"The state would take issue with that," Conway said from Juneau. "Under state statutes, Exxon is liable for the cleanup."

The companies claimed "there is no (insurance) coverage for losses incurred as a result of public relations incidents." They said the spill resulted from "willful, wanton, reckless and-or intentional misconduct."

Exxon said in a statement that the insurers appeared to be responding to a suit filed by the oil company in Texas state court in early August, in which Exxon is seeking to recover some of its expenses and liabilities stemming from the Valdez spill.

The statement did not mention a dollar figure, but said the claim "does not approach all of the costs Exxon has incurred due to the accident" and that its insurance "clearly covers the amounts claimed."

In a telephone interview, Exxon spokesman Doug Walt refused to comment on the insurers' claims that Exxon had conducted the cleanup voluntarily and that the tanker was not seaworthy. The suit did not say specifically what this claim meant.

"Exxon intends to pursue its case vigorously," he said.

Walt did take issue with one point in the insurers' lawsuit its reference to "intentional misconduct" by Exxon as a factor in settlements reached in federal and state courts. He said a judge had characterized the Exxon Valdez grounding as an accident, not as the result of willful or intentional misconduct.

Exxon's statement said its Texas lawsuit resulted from four years of trying unsuccessfully to settle the insurance claims outside the courts.

The insurers' lawsuit did not cite a dollar figure for the cost of the Exxon Valdez wreck.

Exxon resolved a federal criminal charge of "intentional misconduct" and Alaska state court suits through plea bargaining and consent decrees.

The plaintiffs said Exxon's legal and cleanup costs were not covered by insurance agreements, and the company had voided its right to other coverage by misrepresenting or concealing facts about Exxon Valdez and the shipping of North Slope crude through Alaska waters.

The insurers say Exxon was not legally obligated under federal or state law to clean up the Valdez spill and had made "false or fraudulent" claims concerning its decision to do so voluntarily.

The insurers said Exxon was not covered for steps taken to protect its image, so it claimed other motivations.

The plaintiffs include 110 insurance companies in 33 countries including the United States, Britain, Canada, Germany, France, Japan, Italy, Scandinavia, Australia, Brazil, Mexico, Indonesia, Spain, Zimbabwe, Finland and Abu Dhabi.

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