‘Troubling flaws in oil spill law’

May 19, 2025 News

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—Chris Ram says: Clause 21 renders parent company guarantee invalid 

—Exxon can cite Stability Clause in PSA to dodge responsibilities

—Board to be dominated by Govt. appointees

Kaieteur News- A thorough analysis of the newly passed Oil Pollution Prevention, Preparedness, Response and Responsibility Law by prominent Attorney-at-Law, Christopher Ram, has unearthed deeply troubling flaws that could potentially leave Guyana at the mercy of petroleum companies.

In his two-part column on the law, published by the Stabroek News, the Attorney delved into the specifics of the legislation, approved without the support of the Parliamentary opposition on May 16.

Ram explained, “At first glance, the unsuspecting reader and observer may believe that the law set out in the 56-page, 39-clause Bill, arranged over eleven parts from Preliminary to Miscellaneous, is progress and development. They would be dangerously mistaken.”

Beyond the technical jargon and smooth veneer lies a troubling reality that this legislation may weaken the very protections it purports to strengthen, according to him.

In his 155^th column, ‘Every Man, Woman and Child in Guyana Must Become Oil-Minded’, Ram highlights a “particularly galling” sellout which reverses the need for unlimited protection from an oil spill. The Attorney explained, “The oil giant (ExxonMobil) has operated for years, knowing it needed unlimited liability coverage – that was the deal from the start. Justice Kissoon insisted on the enforcement of existing obligations. Clause 22, in plain terms, removed that obligation and placed it on a motley group of ill-defined entities known as the responsible party. In contrast, Clause 21 can be read to render a parent company’s guarantee invalid.”

Clause 21 states, “An indemnification or any like agreement shall be invalid for the purposes of transferring the liability of a responsible party under this Act.” This means that the company operating or the “responsible party” shall pay costs associated with a spill rather than transfer this liability to its parent company.

Pursuing the Bill through Parliament, according to Ram, was equivalent to “legislative malpractice” and “another egregious abandonment of the national interest”.

Gov’t appointed Boards

Meanwhile, the Attorney shifted his readers’ attention to the boards mandated by the law. Ram said, “The legislation creates at least five major bodies: the Civil Defence Commission (as the “Competent National Authority”), its six-member Governing Board, a National Oil Spill Committee with over 20 agency representatives, ad hoc Oil Spill Incident Boards of Inquiry, and a National Emergency Operations Centre.”

He was keen to note that 95% of all these positions are to be directly appointed by the Minister, with the remaining 5% being ex-officio appointments of officials who were politically appointed.

The Attorney believes this creates a system where political loyalty takes precedence over technical expertise. He therefore mocked, “This legislative masterpiece is worthy of a special case study at Harvard Business School under ‘Advanced Organisational Dysfunction: A Masterclass in Bureaucratic Architecture’.

He added that the maze of institutions, all operating under vague mandates with unclear lines of authority, virtually guarantees bureaucratic paralysis when swift action is needed. Ram reasoned, “Rather than streamlining response capability, the Bill spreads functions and responsibilities across multiple layers of bureaucracy, creating enough regulatory confusion to allow oil companies to operate with even greater abandon. At the same time, appointees can always point to some other body as being responsible for enforcement. When a spill occurs, who exactly is in charge?”

Oil Spill Law and the Stability Clause

In his 156^th Column, the Attorney digs deeper into the law, pointing to a series of other flaws.  For instance, Ram noted that Clause 10 of the Bill requires oil companies (the “responsible party”) to submit their contingency plans, which must align with or be incorporated into the National Oil Spill Contingency Plan. He, however, reminded that the 2016 Agreement has its own provisions dealing with environmental disasters, including oil spills.

Ram argued that the Law conspicuously avoids directly addressing how it interacts with the existing 2016 Petroleum Agreement between Guyana and the ExxonMobil consortium, particularly the Agreement’s powerful stability clause in Article 32.

He warned, “Oil companies will therefore have two obligations and two options. They can point to either the Agreement or the Bill, whichever is more favourable, while taxpayers fund the oversight system.”

The Prosecution Puzzle

The Lawyer pointed out that another feature of the Law is the bewildering array of offences – from failing to submit plans to refusing to respond to spills – with penalties ranging from fines to mandatory three-year prison terms. Ram was keen to note that the Law still fails remarkably to specify who will bring these criminal charges or which courts will hear them. According to him, “The legislation simply states that responsible parties “commit an offence” and “shall be liable on summary conviction” or “on conviction on indictment,” leaving prosecutors, defendants, and courts to guess whether the Director of Public Prosecutions, the CDC, the EPA or some other authority has the power to initiate proceedings.”

Following a four-hour-long debate at the Arthur Chung Conference Center, Lilliendaal, Georgetown, last Friday, the government, with its one-seat majority, managed to push the Bill through despite calls from the opposition for the Bill to be sent to the Special Select Committee for refining.

Leading the debate on the opposition side, Shadow Minister of Natural Resources, Shurwayne Holder, pointed to the fact that the new law protects the ‘parent’ of oil companies from costs associated with a spill. He cited Part VI (6) of the new law, which addresses liability or what he described as “the backbone of PPP’s deceit.” He quoted Clause 17 of the Law, which states, “A responsible party is liable for all damages caused by an oil spill incident, removal and removal costs, and restoration of environment as far as practicable, and for any costs arising therefrom or connected therewith.”

Holder pointed out that while this section sounds brilliant, the government waged war in and out of the courtroom against the people of Guyana for an unlimited Parent Company Guarantee. With elections now nearing, the Opposition MP said the government seems to have awakened from their slumber to champion full liability coverage. However, this is no more than a “hoax”.

Holder explained that the law establishes that the “responsible party” has full responsibility for any spill, even as he went on to describe who the responsible party is. “In the case of the oil rigs, the responsible party, as established by this bill on page 9, is the operator of the facility or the holder of the exploration and production licence. In other words, Mr. Speaker, it is the subsidiary of Exxon, a “Limited Liability Company” formerly called EEPGL, renamed ExxonMobil Guyana. It is a limited Liability Company with no real assets except those in its possession that are already owned by Guyana through the petroleum contract.”

Attorney General and Legal Affairs Minister, Anil Nandlall, addressed concerns previously raised by the Opposition MPs with regard to liability and the timeline to make a claim. He explained that the broad term ‘responsible party’ includes any person owning, operating or chartering a vessel; for offshore or onshore facilities, it includes the operators or licencees; and even for abandoned or decommissioned facilities or vessels, it includes those who were responsible immediately prior to abandonment or decommissioning. As such, Nandlall argued, “These are not ordinary provisions, but we made sure we inserted them there to ensure that there is a catchment of liability and liability is not eluded in a quick way.”

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• Law, liability, oil spill, Parent Company Guarantee, Ram, stability clause

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