EPA confident in appeal to court’s ruling for adequate insurance from Exxon’s parent company

May 12, 2023 News

…Gives reason for appeal

Kaieteur News- The Environmental Protection Agency (EPA) on Thursday issued a press release saying that it is confident of being successful in its appeal to the court’s ruling which ordered that ExxonMobil Guyana parent company cover all costs for an oil disaster at its Liza Phase One drilling project offshore Guyana.

In September 2022, President of the Transparency Institute of Guyana Inc. (TIGI) Frederick Collins and Godfrey Whyte, through their lawyers, Mr. Seenath Jairam, SC, and Ms. Melinda Janki, had approached the court to get the EPA to enforce a critical clause, Condition 14 in the Liza Phase 1 Environmental Permit (Renewed) issued on May 31, 2022.

That provision says ExxonMobil Corporation, the parent company for Esso Exploration Production Guyana Limited (EEPGL), must cover costs for all environmental loss and damage that might result from a well blowout, oil spill or other failure in the Liza Phase One Development Project in Guyana’s Stabroek Block.

The court ordered the EPA to issue an Enforcement Notice on or before May 9, 2023, directed to EEPGL to perform its obligations under Condition 14 of the renewed environmental permit and to ensure that the oil company provide adequate insurance for the project within 30 days (on or before June 10, 2023) as required by the said permit.

In the statement, the regulatory body clarified their position on why it will be appealing Justice Sandil Kissoon’s May 3 ruling on the Liza Phase One Financial Assurance.

The EPA and the oil company lost the case, with the court finding that EEPGL failed to provide sufficient insurance for its Liza One field project and that the EPA had breached its statutory duty leaving “the nation and its people in grave potential danger of calamitous disaster”.

EPA Executive Director, Kemraj Parsram

EPA said they have observed much speculation in the public domain on the ruling. “We wish to emphasise that we take our mandate and responsibility seriously and have at all times discharged our statutory functions without fear or favour,” EPA’s statement stated.

The agency said that it ensure to make decisions informed by available information, research and in accordance with the Environmental Protection Act Cap 20:05, adding that their approach to compliance and enforcement is in keeping with international standards.

“We respectfully do not agree with the ruling and sought counsel, and have since filed an appeal against the decision through Attorney-at-Law, Sanjeev Datadin,” EPA said.

To this end it was stated, “We believe we have excellent prospects for success.” The agency then listed their reasons for appealing the court’s decision.

“The EPA at no time had any doubts that the Permit Holder was strictly and fully liable under the Environmental Protection Act Cap 20:05 (EP Act) and the Permit for any pollution or damage to the environment, including compensation of affected parties. The EPA 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 willfully or by accident,” the EPA explained.

Further, it was underscored that they have 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 agency explained that it had to be diligent and ensured that it negotiated an Affiliate Company Guarantee that fulfilled the requirement of section 31 (2) of the EPA Act which states that a requirement for Financial Assurance shall specify the amount.

“The question therefore became, what amount can be specified and how can this be estimated?” the agency questioned.

Further, the EPA said 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.

It was explained that to achieve this, the EPA consulted practice in several jurisdictions, institutions, and regulators and oil spill liability regimes in the United States, United Kingdom, China, and Brazil, 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.

The EPA said guidance received found 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.

As such, the EPA said it then instructed EEPGL to provide this estimate and declaration so that it can be used to inform the terms and conditions and amount of Financial Assurance in the Guarantee.

“At the time of the hearing of this matter, the EPA had received the estimate to the tune of 1.5 to 2 billion dollars and had several engagements discussing results and using same to inform its final negotiations on the agreement,” the EPA said, adding, “Negotiations concluded on April 27, 2023 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.”

To this end, the EPA said it maintains that at all material times it acted in accordance with the law, and executed its statutory functions diligently and to the best of its abilities.

>>>>>>>>>>>>>>>>>>> 

Pic saved as: EPA (no caption needed)

Pic saved as: Kemraj

Pic saved as:

>>>>>>>>>>>>>>>>>> 

Tags:

Key focus: The Environmental Protection Agency (EPA) on Thursday issued a press release saying that it is confident of being successful in its appeal to the court’s ruling which ordered that ExxonMobil Guyana parent company cover all costs for an oil disaster at its Liza Phase One drilling project offshore Guyana.

• EPA, Exxon, Insurance, Justice Kissoon, parent company