DOJ Files Consent Decree To Resolve Mayflower Oil Spill Claims Against ExxonMobil

The U.S. Justice Department on Tuesday asked the U.S. District Court for the Eastern District of Arkansas to accept a consent decree with oil giant ExxonMobil to resolve alleged violations of the state and federal environmental regulations stemming from the 2013 crude oil spill from the Pegasus Pipeline in Mayflower.

The proposed agreement, negotiated by the Justice Department on behalf of the federal Environmental Protection Agency and state of Arkansas, would essentially close the case against the nation’s largest oil company under terms first agreed to more than two months ago.

On April 22, Arkansas Attorney General Leslie Rutledge and Arkansas Department of Environmental Quality (ADEQ) Director Becky Keogh announced that ExxonMobil would pay nearly $5 million in state and federal civil penalties to resolve alleged violations of the Clean Water Act and state environmental laws.

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

In Tuesday’s court filing, U.S. Assistant Attorney John Cruden wrote that the proposed consent decree would resolve any remaining civil claims by the EPA and state of Arkansas against ExxonMobil.

“The Decree, lodged previously with the Court on April 22, 2015 … was negotiated by the parties in good faith and is fair, adequate, reasonable, and consistent with the goals and purposes of the Clean Water Act,” Cruden wrote in the 25-page court filing. “The Consent Decree provides that ExxonMobil will not oppose this Consent Decree and consents to its entry without further notice. “

Under terms of the settlement, ExxonMobil will pay the civil penalty 30 days after the decree is entered into the court record. The funds will be deposited in the federal Oil Spill Liability Trust Fund, which is used to pay for federal response activities and to compensate for damages when there is a discharge or substantial threat of discharge of oil or hazardous substances to U.S. waters and shorelines.

The consent decree also requires the Irving, Texas-based oil company to treat the Pegasus pipeline “as susceptible to longitudinal seam failure,” if it decides to ever restart the project.

“The need for this designation would have been a central factual issue in dispute at trial, and accepting this requirement now will impose substantial additional pipeline integrity management requirements on ExxonMobil going forward,” the court filing states.

In addition, the federal pact also requires ExxonMobil to establish for a period of three years an enhanced training program for the employees who typically serve as “first responders” in the event of a spill or emergency in the future. The training program must stage and maintain emergency response equipment at three strategically chosen locations along the Pegasus Pipeline, including one to benefit any future response efforts in Mayflower.

The federal agreement recognized ExxonMobil’s ongoing pipeline integrity and remedial efforts that are being conducted under the oversight of the federal Pipeline and Hazard Materials Safety Administration (“PHMSA”).

“These efforts will include, among other things, conducting ‘spike’ and ‘sustained-pressure’ hydrotesting, analyzing test results with a process that helps detect anomalies related to longitudinal seam failure, and otherwise complying with a Corrective Action Order issued by PHMSA,” the 25-page court filing states.

Following the late April agreement, the Justice Department provided notice of the consent decree and allowed for a 30-day comment period. According to the court filing, five sets of comments were received by from the public, including remarks from Central Arkansas Water (CAW).

“After giving careful attention to the comments, including further discussions with ExxonMobil, PHMSA, and the primary commenter, CAW, the United States has determined that none of the comments introduces new facts or arguments that warrant reconsideration of the alleged violations or the terms of the settlement, and none presents a valid basis for the United States to withhold its consent to the settlement that has been presented to the Court,” the court filing states.

In the first quarter of 2013, ExxonMobil reported net income of $4.9 billion, down 46% from $9.1 billion a year earlier. Like most oil and gas companies, the oil giant’s profits have declined year-over-year as slumping crude oil prices have cut production and capital spending. The Texas oil conglomerate is expected to report its second quarter earnings on July 31.