Wednesday, April 22, 2015

More lawsuits to come on Mayflower oil spill, both public and private

Posted By on Wed, Apr 22, 2015 at 6:21 PM

DO NOT CROSS: It's admitting liability that scares Exxon, not measly millions in lawsuits. - BRIAN CHILSON
  • BRIAN CHILSON
  • DO NOT CROSS: It's admitting liability that scares Exxon, not measly millions in lawsuits.

Federal and state authorities today announced a $5.1 million settlement with ExxonMobil over the 2013 Mayflower pipeline rupture, but litigation related to the environmental disaster is nowhere near its conclusion.

In addition to the various private lawsuits proceeding against the oil giant, Exxon faces additional legal action from state and federal public agencies charged with protecting natural resources in Arkansas under what's called a Natural Resources Damages claim. Last year, on the one-year anniversary of the spill, then-Attorney General Dustin McDaniel explained that such a civil suit is intended to recoup "damages as to the broader scope of what's the long-term impact to the environment — what are the financial costs to all of this."

An NRD claim is intended to compensate the public for damages to natural resources — such as Lake Conway and the fish and waterfowl inhabiting it — and it's to be initiated by the trustees designated to safeguard those resources. In this case, that means the Arkansas Department of Environmental Quality, the Arkansas Game and Fish Commission and the U.S. Fish and Wildlife Service

In contrast, the consent decree filed this morning in federal court concerned direct violations of environmental law, both on the federal level (the U.S. Clean Water Act) and on the state level (the Arkansas Water and Air Pollution Control Act and the Arkansas Hazardous Waste Management Act). That suit was brought by the Arkansas Attorney General (then McDaniel, now Leslie Rutledge), the U.S. Department of Justice and the Environmental Protection Agency.

Ricky Chastain, a deputy director with the Game and Fish Commission, said the two lawsuits are distinct. "It is two trains running down parallel tracks. You have the criminal side, which is a violation of rules and regulations, and that's what was just settled. ... And then there's assessing the natural resource damages." 

Chastain said the agency and ADEQ are still in the process of assessing damages, but it should be finalized in the next month or two. "Then we'll approach Exxon to sit down and try to start talking," he said. "We'll see if there's a reasonable way to come to a conclusion."

If a settlement can't be reached, he said, "the alternative is to enter into litigation ... I'm hoping this is not a long, drawn out deal. I'm hoping we can lay our assessment on the table and they can lay out their data ... that saves everybody time and energy and money not to go through the full legal process."

Though it's not a lawsuit, there's also the $2.6 million fine issued by the federal Pipeline Hazardous Materials Safety Administration for operations and maintenance violations related to the pipeline itself, the Pegasus. Exxon is appealing the PHMSA fine. And of course, don't forget the private litigation against Exxon on behalf of residents of Mayflower and businesses, which Max mentioned earlier.

It's important, and unsurprising, that Exxon would pay $5.1 million to settle with Arkansas, DOJ and EPA yet continue to fight the $2.6 million PHMSA fine. The difference is admitting blame. In today's consent decree, the oil company did not admit liability for the spill itself; it merely paid the penalties incurred by its oil fouling the water and air near Mayflower. The PHMSA fine, though, comes attached to an admission of some responsibility, since the federal pipeline regulator alleges that Exxon made mistakes in inspecting the Pegasus.

Admitting liability is far more frightening to ExxonMobil than the prospect of paying a few million dollars. As I wrote on the one-year anniversary of the Pegasus spill in 2014, sums such as today's settlement — or the PHMSA fine — are microscopic for a company that made $45 billion in profit in 2013. (Yes, that's profits, not revenues — those were $438 billion that year, though both revenue and profit have fallen with the price of oil in recent months.) However, the next oil-related accident is always around the corner, and if the company admits that it did wrong this time to PHMSA or to Mayflower plaintiffs in a private lawsuit, that opens the door for even more suits down the line.

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