ExxonMobil to pay almost $5 million for central Arkansas oil spill

Oil and gas giant ExxonMobil Corp. will pay nearly $5 million in state and federal civil penalties to resolve alleged violations of the Clean Water Act and state environmental laws stemming from the 2013 crude oil spill from the Pegasus Pipeline in Mayflower, Arkansas Attorney General Leslie Rutledge and Arkansas Department of Environmental Quality (ADEQ) Director Becky Keogh announced Tuesday (April 21).

The Pegasus Pipeline, carrying Canadian heavy crude oil from Illinois to Texas, ruptured in the Northwoods neighborhood of Mayflower on May 29, 2013. Oil flowed through the neighborhood, contaminating homes and yards, before entering a creek, wetlands and a Lake Conway cove. The spill volume has been estimated at nearly 3,190 barrels, or 134,000 gallons, officials said.

According to the consent decree that was reached with ExxonMobil Pipeline Co. and Mobil Pipe Line Co., both subsidiaries of the world’s largest publicly traded integrated oil firm, ExxonMobil will pay $1 million in state civil penalties, $600,000 toward water quality-based environment projects to ADEQ and $280,000 to the Attorney General’s Office for litigation costs.

In addition, ExxonMobil will pay $3.19 million in federal civil penalties and perform measures to improve pipeline safety and spill response, officials said.

“This consent decree is a critical victory for the State and the Mayflower community. ExxonMobil was responsible for the damage to the environment and for disrupting lives of Arkansans,” Rutledge said. “Today, ExxonMobil is being held accountable for the estimated 134,000 gallons of oil that flowed out of the ruptured pipeline.”

Added ADEQ’s Keogh: “This settlement marks an important step forward. The civil penalty of $1 million will greatly supplement funds available for use to address emergency actions and to address contaminated sites across Arkansas.”

Keogh said the $600,000 for ADEQ will receive for supplemental environmental projects will go toward projects where the community will receive benefits. “The project will improve water quality in Lake Conway and its watershed under a plan approved by and overseen by ADEQ,” she said.

Under additional terms of the consent deal, ExxonMobil must comply with all requirements of the federal Pipeline and Hazardous Materials Safety Administration (PHMSA) before reactivating the Pegasus pipeline, which has been idle nearly two years since the spill.

If the pipeline is reopened, ExxonMobil must pursue additional pipeline safety measures to help prevent future ruptures. The company will also be required to improve its spill response capabilities by providing additional training to its oil spill first responders, and it will establish caches of spill response equipment and supplies at three strategically located sites near the pipeline, including one cache located near Mayflower.

The complaint in the case, filed jointly with the United States, on June 13, 2013, in the U.S. District Court for the Eastern District of Arkansas, alleges that ExxonMobil discharged crude oil in violation of Sections 301 and 311 of the Clean Water Act. The complaint also asserts State claims for civil penalties for improper storage of hazardous waste generated during the cleanup and for water and air pollution violations pursuant to the Arkansas Water and Air Pollution Control Act and the Arkansas Hazardous Waste Management Act.

The consent decree, submitted to the court, is subject to a 30-day public comment period and court review and approval.

A year ago, ExxonMobil executives submitted a pipeline remediation plan to federal regulators that included extraordinary integrity testing measures that officials then said would take more than a year to complete.

“The remediation plan that we are proposing will take some time to execute. First of all, we have to do the digs and testing in the ditch any repair that is necessary. And then, the hydrostatic testing. So we anticipate it will take a minimum of a year,” Karen Tyrone vice-president for ExxonMobil’s U.S. Pipeline Operations, told Talk Business & Politics on March 28, 2014.

The response and remediation efforts have been a coordinated effort between the federal Environment Protection Agency, ADEQ, the Arkansas Department of Health, the Arkansas Game and Fish Commission, Faulkner County, the city of Mayflower and ExxonMobil.

In an interview with Talk Business & Politics earlier this month, Keogh said ADEQ is closely reviewing the cleanup and has had inspectors conducting sampling at a number of locations in a cove of Lake Conway and the main body of the lake. The department also monitors the surface water in the impacted areas and post regular updates. Keogh said the cleanup in the Mayflower area was still progressing and the agency had recently received a report from ExxonMobil that it was reviewing.

“Our staff is currently is evaluating the completeness report that was submitted to, and we will provide comments as needed on that,” she said.

In its most recent 10K filing, ExxonMobil said it had filed a motion to extend an earlier court approved stay of discovery to allow the parties to pursue settlement discussions. The Irving, Texas-based oil conglomerate is expected to report its first quarter earnings report on April 30. In the fourth quarter, ExxonMobil reported profits of $6.6 billion as the Texas oil company saw a big decline in its worldwide exploration and production due to falling oil and gas prices.

Still, for fiscal 2014, Exxon reported full-year earnings of $32.5 billion on total revenue of $411.9 billion. Wall Street expects the oil giant to report first quarter earnings of 83 cents per share on revenue of nearly $55 billion, according to a survey of analysts by Thomson Reuters.