EXXON TRIES TO OVERTURN TANKER BAN

By DAVID WHITNEY
Daily News reporter

WASHINGTON- When Congress wrote the 1990 Oil Pollution Act a year after the nation's worst oil spill in Prince William Sound, Alaska Sen. Ted Stevens inserted a clause banning the tanker Exxon Valdez from ever sailing again in Alaska waters.

Now Exxon Corp. is fighting in court to have that provision overturned as unconstitutional. U.S. District Judge Stanley Sporkin heard arguments Thursday from the company. Exxon lawyers argued the company is unfairly being forced to lose money because the tanker -- renamed the SeaRiver Mediterranean after the Alaska spill -- is barred from hauling North Slope crude oil out of Valdez.

On the other side are lawyers for Alaska Natives affected by the spill, who say Alaskans are offended by the idea of the tanker returning to Alaska waters. The federal government also is fighting Exxon's request, arguing the company has no legal basis for challenging the banishment.

Sporkin did not issue an immediate ruling.

The company maintains that Congress cannot retroactively punish it for the spill by blocking the tanker from returning to Alaska waters.

Why is the case coming before him now, Sporkin wanted to know. The oil-pollution law is nearly 7 years old, and the settlement was reached six years ago.

''The timing is bothersome,'' the judge told Layne Kruse, the lawyer representing Exxon's shipping subsidiary, SeaRiver Maritime.

Kruse said it is a matter of profits. The Exxon Valdez, renamed after it underwent repairs for the hole Bligh Reef punched into its bottom, is now carrying crude in the Mediterranean Sea, where it's losing money.

Because the vessel is flagged in the United States and faces much higher operating costs in the Mediterranean than its foreign-flagged competitors, Exxon said in court documents that it cannot compete and may have to be scrapped unless it's let back into Alaska waters.

''At some point you've got to say enough is enough,'' Kruse told the court. Exxon wants the ship back in service in Alaska because that's the market it was built to service.

''We're losing money,'' Kruse said. ''This vessel is a loss because of this statute.''

But Michael Hausfeld, a lawyer representing Alaska Natives, said after the hearing that he thinks Exxon has decided to fight Stevens' provision now because company officials believe Alaskans are no longer preoccupied with the disaster the vessel symbolizes.

''They didn't change the name of the boat and put it in the Mediterranean for no reason,'' Hausfeld told reporters.

He said he thinks Exxon would face protests on the docks of Valdez harbor if it tried to bring the ship back to Alyeska's loading area.

''People up there are still offended by that boat,'' he said. ''There's a stigma to it.''

The lawyers for the Natives and the government claim Exxon relinquished its rights to sue over the tanker's banishment when it agreed in 1991 to settle criminal and civil claims with the state and federal governments for $1 billion.

But Sporkin raised doubts about whether Exxon Corp. knew it had bargained away its right to fight Stevens' provision when it signed thesettlement agreement binding it to no further litigation over ''any and all'' matters arising out of the 11-million-gallon oil spill.

When assistant attorney general David Bono argued that the company must have known because the settlement followed enactment of the oil pollution law by more than a year, Sporkin didn't seemed convinced.

If the settlement was intended to bar future litigation over the vessel, Sporkin said ''it seems to me this would have been spelled out.''

Sporkin also seemed bothered by the emotional claims of Natives that allowing the tanker back into Alaska waters would be, as their lawyer, Hausfeld argued, ''offensive and an insult.''

''Is there any way I can legally take that into consideration?'' Sporkin mused.

Sporkin has dealt with the Alaska oil industry before. In addition to presiding over the Natives' attempt to leverage themselves into the 1991 settlement, the judge sat for weeks through the beginning of a trial over whether Charles Hamel, one of the industry's most ardent critics in the late 1980s, should be compensated for damages caused when Alyeska Pipeline Service Co. spied on him because he had obtained internal company documents.

That case finally ended in a settlement just before Christmas in 1993. But during his lengthy deliberations over a file cabinet full of motions and cross motions, Sporkin repeatedly criticized the conduct of Alyeska and its oil-company owners, including Exxon.

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