Decisions on Exxon were in accordance with the law – EPA

Maintaining that at all material times it acted in accordance with the law, the Environmental Protection Agency (EPA) said yesterday that during the hearing into the lawsuit which sought to have it enforce the liability clause in the permits issued to ExxonMobil Guyana for its offshore oil operations, it was still negotiating with the company.

Further, the EPA said in a press release issued yesterday, it had instructed Esso Exploration and Production Guyana Limited (EEPGL) to provide an estimate and declaration to inform the terms and conditions and amount of financial assurance in the guarantee. The estimate given was between $1.5 billion to $2 billion, to be used in the final negotiations on the agreement. On April 27, it added, negotiations concluded on the amount guaranteed, the terms and conditions for renegotiations based on increased risks, and next steps if unfulfilled obligations exceeded the $2 billion guaranteed amounts.

The ruling against the EPA was handed down on May 3, following which Attorney General Anil Nandlall immediately said it would be appealed. The EPA filed its appeal on May 8.

Advancing its reasons for appealing the ruling, the EPA said it had observed much speculation in the public domain over the ruling, but wanted to “emphasise that we take our mandate and responsibility seriously”. The agency which Justice Sandil Kissoon, who presided over the matter, described as “submissive”, swore in its release that it has at all times discharged its statutory functions “without fear or favour.”

The EPA said that its decisions are at all times based on available information, research and in accordance with the Environmental Protection Act and its approach to compliance and enforcement conforms to international standards.

Contending that its appeal has prospects for success, the EPA said at no time did it have doubts that the Permit Holder was strictly and fully liable under the Act or the Permit for any pollution or damage to the environment, including compensation of affected parties.

It said that in fact it had always maintained that the Permit Holder had “full and strict liability to clean up, restore, remediate, and compensate for any harm caused by pollution whether wilfully or by accident.”

According to the agency, it reviewed the insurance policy provided to it since 2019 against typical insurance coverage across several jurisdictions, and it was found that the coverage related to oil spill liabilities of $600 million was equivalent, and in some cases exceeded the typical coverage offered in some jurisdictions

The EPA said it had to be “diligent” and ensured that it negotiated an Affiliate Company Guarantee that fulfilled the requirement of section 31 (2) of the Act which states that a requirement for Financial Assurance shall specify the amount. The question therefore it said, became, what amount can be specified and how can this be estimated.

It said in its statement that it wanted to ensure that any amount agreed upon, was not arbitrary, and could be renegotiated based on increased risks and any circumstances that resulted in the amounts specified being exceeded.

To achieve this, the EPA said it consulted practice in several jurisdictions, institutions, and regulators such as OGUK, NOPSEMA and oil spill liability regimes in the US, UK, China, Brazil among others and found that despite the fact that there was full liability for oil spill on the part of operators, no jurisdiction had unlimited/uncapped Financial Assurance. Even the US under its Oil Pollution Act (OPA) had capped Financial Assurance requirements, the agency said.

Guidance received from OGUK and NOPSEMA Australia, the EPA said was that operators in those jurisdictions were required to provide an estimate of the reasonably credible cost of responding and cleaning up a worst-case spill, and this estimate was used to set amounts of Financial Assurance, including a declaration of financial capability/rating.

In its appeal asking for a stay of the judgement and all its orders, the EPA argued through its attorney Sanjeev Datadin that the judge’s finding that the financial assurances set out in the permit were “unlimited;” was a flawed line of reasoning.

Describing the order made by the court that the permit stands suspended for breach of the Environmental Protection Act as “coercive”, the EPA contended that this will have severe consequences.

The matter was set to be called in Chambers before the Guyana Court of Appeal yesterday morning. However, this newspaper was made to understand that it has been put off to Monday at 11 am. It is unclear why the matter was adjourned.

Background

In his ruling, Justice Kissoon said of the EPA, “It has abdicated the exclusive statutory responsibilities entrusted to it by Parliament under the Environmental Protection Act 1996 and the Environ-mental Protection Regulations 2000 to ensure due compliance by Esso Exploration and Produc-tion Guyana Limited.”

President of the Transparency Institute of Guy-ana Inc (TIGI) Fredericks Collins and another Guyanese citizen, Godfrey Whyte, had moved to the court last year to get the EPA to enforce the liability clause in the permits issued to ExxonMobil Guyana for its offshore oil operations.

The litigants had said that the resort to the court was to make sure that the company took full financial responsibility in case of harm, loss and damage to the environment. ExxonMobil’s local affiliate, EEPGL, has agreed in the permit to provide insurance and an unlimited parent company indemnity to cover all environmental loss and damage that might result from a well blowout, oil spill or other failures in the Liza 1 Development Project in Guyana’s Stabroek Block.

The duo, through their battery of attorneys led by Senior Counsel Seenath Jairam, had told the court that “…the agency, through its human minds, including its officers has failed or omitted to carry out or to show that it has carried out its legal duties and or obligations thereby amounting to misfeasance in public office by them and by failing or omitting to act, has acted unreasonably, irregularly or improperly and or has abused its power.”

Collins, in a statement, had said “I can’t even drive my car without insurance. So it is incomprehensible that the government would allow Esso to operate without any form of insurance. An oil spill would be devastating for our country and region as many Guyanese and Caribbean peoples depend on the ocean for their livelihoods. That is why we have decided that the time has come to take matters to the court for relief.”

Justice Kissoon had said that in the course of the proceedings, the court found on the evidence that EEPGL was engaged in a “disingenuous attempt which was calculated to deceive when it sought to dilute its liabilities and settled obligations stipulated and expressed in clear unambiguous terms at Condition 14 of the Environmental Permit (Renewed) while simultaneously optimising production at the Liza Phase 1 Petroleum Production Project in the Stabroek Block Offshore Guyana.”

Directly calling out the EPA, the judge said EEPGL “engaged in a course of action made permissible only by the omissions of a derelict, pliant and submissive Environmental Protection Agency.”

He said that the proceedings brought to the fore the adage, “but for the vigilance of citizens society shall perish.”

The court said it found that Esso was never in doubt as to what its liabilities were as captured under Condition 14 of the Permit, as the stipulations were neither unusual, unique or unauthorised.

Justice Kissoon went on to grant Collins and Whyte the orders they sought in the form of declarations. He also awarded them costs in the sum of $1,500,000.