A town in Arkansas may have become a black mark against the Keystone pipeline project. The recent ExxonMobil Pegasus pipeline rupture and oil spill in Mayflower, Arkansas involved several thousand barrels of oil spilling into a residential neighborhood and potentially into the local water supply via a storm drain. Keystone opponents are pointing to this incident as a small-scale example of what can be expected if the project moves forward. Keystone allies, meanwhile, point out that the Pegasus pipeline is sixty-five years old and does not contain many standard safeguards in more modern pipeline designs that would be included in the Keystone construction.
Archive for the ‘Oil Spills’ Category
You may recall that last week the possibility of Hurricane Isaac stirring up oil from the BP Deepwater Horizon disaster was being debated. Unfortunately, it looks like the debate is over and the pessimists have won. The Associated Press reports that oil and tar balls have been reported in Louisiana, Missisippi, and Alabama as the storm surges and floodwaters from Isaac have receded. In Louisiana, 13 miles of beach were closed due to the presence of oil and fishing was restricted around the closed area. Samples of oil from both Louisiana and Alabama are being tested to determine whether they are a match to the oil from the BP spill. The Huffington Post noted that areas of Florida and Texas are also reporting the presence of oil. While the origins of all the reported oil have yet to be determined, things are not looking good for BP. Incidentally, the company moved last week to donate $1 million to the areas of Louisiana and Missisippi that were damaged by Hurricane Isaac. But if the new oil is found to have originated with the Deepwater Horizon, BP may have to pull out its wallet yet again.
Because of the long weekend, we haven’t yet had a chance to offer up our own take on the Yellowstone spill story. For those of you who also took a three day weekend off from energy and environmental news, allow us to offer a primer:
Late on Friday, July 1st, an oil pipeline ruptured along the Yellowstone River outside of Billings, Montana, spilling 1,000 barrels (or 42,000 gallons) of oil into the river and along the banks. The 20-year old Silvertip pipeline is owned by ExxonMobil and transports 40,000 barrels of oil a day.
So far, response to the spill has been widespread, even with the distraction of a holiday weekend. 150 volunteers were on the scene by Sunday helping with clean-up, who were aided on Tuesday with crews from Exxon’s Regional Response Team and other emergency response organizations. Montana Senator Max Baucus sent a letter to Exxon CEO REx Tillerson, asking for specifics on the accident and for a record of past safety inspections of the pipeline, and also insisted that Exxon set up a claims process to ensure that all property owners affected by the spill be reimbursed. Senator Jon Tester, meanwhile, said in a public release that he would hold ExxonMobil financially responsible for the clean up and recovery process.
Meanwhile, the PHMSA (Pipelines and Hazardous Materials Safety Administration) has initiated its own investigation into the spill, and the EPA is also looking into the spill, conducting water and air quality tests in the surrounding area. Obviously this is all-around unfortunate news, and could be seen as something of a warning sign for increased pipeline safety and accountability as plans for new national pipelines appear on the books. If it makes any of us feel any better (I’m sure it doesn’t), the Wall Street Journal reported today that while most energy stocks rose over the weekend, ExxonMobil stocks are flat at $82 a share. Hopefully on a larger level spills like these will have a net-positive effect in holding corporations more accountable for their safety procedures, and maybe even in reversing our positions on building new pipelines. Hopefully.
Though much of the world seems to have moved on from the 2010 Deepwater Horizon oil spill, the struggle continues along the Gulf of Mexico. Last week, the Gulf Coast Claims Facility (GCCF) announced its final rules governing payment options and final payment methodology after receiving more than 1,440 comments from individuals and businesses. These comments range from pleas to move forward quickly to a 24-page comment from BP PLC itself, saying that Kenneth Feinberg’s allocation of the $20 billion damages fund has been overly generous.
In a recent press release, the Gulf Coast Restoration and Protection Foundation announced that qualified workers will have a second opportunity to apply for financial assistance this spring, stating that “up to 9,000 people might qualify for awards ranging from $3,000-30,000.”
There is another mammalian population that seems to be suffering from the fallout of the spill that cannot even apply for restitution. The Institute for Marine Mammal Studies (IMMS) announced this week that dead baby dolphins have been washing ashore at ten times the normal rate. Some 26 dolphins, many aborted before they reached maturity, have been found along the Mississippi and Alabama coastlines in recent weeks.
Though experts have not officially linked the spike in death rates to the oil spill, this is the first birthing season for dolphins since the oil spill last year. As institute director Moby Solangi told reporters, “this is more than just a coincidence.”
Mortality rates in the Gulf Coast dolphin population tripled last year; with a gestation period of 11 to 12 months, the baby dolphins now being found were conceived at least two months before the Deepwater Horizon exploded.
Meanwhile, in light of the continued unrest in Libya (the world’s 17th-largest oil producer) and the surrounding area, key House Republicans are urging the Obama Administration to move forward with the issuing of offshore oil-and-gas drilling permits. BP has announced this week that it will pay $7.2 billion for a stake in India’s rapidly expanding oil industry; the historic partnership with Reliance Industries Limited is slated to combine Reliance’s project management expertise “with BP’s world-class deepwater exploration and development capabilities.”
On Tuesday, Chevron Corporation was ordered by Ecuadorian courts to pay $9 billion in damages for massive environmental contamination of the Amazon rainforest. The lawsuit was filed in 2003 by Ecuadorian citizens, many of whom are representatives of multiple indigenous groups from northeastern Ecuador. The litigation was originally brought against Texaco Petroleum Company in a Manhattan court some 18 years ago, and was inherited by Chevron when it acquired Texaco in 2001.
Critics like Amazon Watch and Rainforest Action Network say that Texaco “dumped 18.5 billion gallons of toxic wastewater into streams and rivers, spilled some 17 million gallons of crude oil, and left behind more than 1000 waste pits that continue to leech toxins into surrounding soil and water. The pollution has caused a spike in cancer rates and decimated the cultures of various indigenous groups in the area.”
But Chevron denies these allegations. In the company’s most recent quarterly report, it states that Texaco Petroleum subsidiary Texpet carried out a $40 million remediation program, after which the Ecuadorian government granted “a full release from any and all environmental liability arising from the consortium operations.” Disclosure of this litigation is qualified with the claim that “Chevron believes that this lawsuit lacks legal or factual merit.”
In a recent press release, Chevron states that much of the evidence provided in this suit “shows an elaborate criminal scheme involving fraud, extortion, collusion, forgery and witness tampering,” and is already taking steps to prevent enforcement of the ruling: the company was granted a temporary restraining order against the plaintiffs, barring them from taking enforcement action. Chevron has also filed a racketeering suit against the plaintiffs’ legal team.
In the history of environmental damage cases, this judgment is second only to the $20 billion BP Gulf spill settlement; it is also the first time a foreign court has held an American corporation accountable for its environmental impact abroad. Chevron will appeal the decision; the Ecuadorian judge who issued the verdict says that Chevron has 15 days to issue a public apology after which the fine will be doubled.
The Hill’s E2-Wire blog reported yesterday on updated payment options available to Deepwater Horizon claimants.
The Gulf Coast Claims Facility (GCCF) is a facility that manages claims for costs and damages incurred as a result of the Deepwater Horizon oil spill. BP contributes funds to an account that are then distributed by an independent claims administrator.
Emergency payments, which were advance payments to individuals or businesses having financial hardship resulting from the spill, ended November 23, 2010. However, the GCCF just recently indicated that they will soon begin accepting claims for Interim and Final payments. There are three payment options available at this time, which are summarized here.
And what are the payment options?
- VOLUNTARY QUICK PAYMENT FINAL CLAIM
This claim option provides an automatic payment of $5,000 for Individuals or $25,000 for Businesses, with no further review or requirement for additional supporting documentation. However, this option requires claimants to sign a release of liability that prevents them from seeking further compensation from GCCF or in court.
- VOLUNTARY FULL REVIEW FINAL PAYMENT CLAIM
A Full Review Final Payment Claim will be paid in a lump sum single payment for all documented losses and damages, both past and future. A Full Review Final Payment Claim requires complete substantiation and documentation of all damages sustained in the past. This option also requires claimants to sign a release of liability that prevents them from seeking further compensation from GCCF or in court.
- VOLUNTARY INTERIM PAYMENT CLAIM
An Interim Payment Claim may be submitted for past losses and damages incurred as a result of the Spill – and ONLY past damages. For future losses or damages to be evaluated and paid, one must submit a Full Review Final Payment Claim. However, those submitting an Interim claim will not be required to sign a release of liability.
According to E2-Wire, the claims administrator “has encouraged oil spill victims to seek compensation through the GCCF, warning that legal battles could last for years.” As we discussed yesterday, in the case of Exxon Valdez, “years” is no exaggeration. Even BP admits in a 6-K filed last month that “claims and litigation settlements are likely to be paid out over many years to come.”
Considering the 20-plus-year battle of Everyone v. Exxon, one can only envision what lies ahead for BP. Though the Valdez spill occurred in 1989 and Exxon settled just two years later, the case was again in the news last week as a “longtime Alaska activist” urged the government to compel Exxon to pay additional claims that were filed in 2006.
In the 1991 civil settlement, Exxon agreed to pay $900 million over a 10-year period. The consent decree, however, included a “reopener” (see item 17) that required Exxon to pay the government up to an additional $100 million for restoration of “presently-unknown and unanticipated injury to populations, species or habitats.” The window for claims filed under this reopener was between September 1, 2002 and September 1, 2006, and any demand for payment was to be preceded by a detailed plan for all such restoration projects.
On June 1, 2006, the U.S. Department of Justice and the State of Alaska Department of Law announced that, based on studies showing significant lingering oil and subsequent unanticipated impacts to natural resources, they were moving forward with a $92 million claim against Exxon. You can read their Comprehensive Plan for Habitat Restoration Projects Pursuant to Reopener for Unknown Injury here.
But four years has passed and Exxon hasn’t paid up. According to the press, Exxon doesn’t believe that wildlife is still being harmed by residual oil on the beaches, despite the information to the contrary presented in the restoration proposals. Enter aforementioned activist Rick Steiner, who just recently filed a court motion asking the government for help in forcing Exxon’s hand.
Neither the state nor the federal government have responded to Steiner’s plea.
You can keep up-to-date on the reopener on the Exxon Valdez Oil Spill Trustee Council’s website. The Council administers Exxon’s settlement funds, and keeps tabs on the status of restoration in the area.
As we reported last week, GAO released a report Friday morning assessing both financial risks to the federal government as a result of the Deepwater Horizon oil spill as well as policies surrounding cost reimbursement by (ir)responsible parties. Their conclusion? Yes, there are financial risks to the government, but their extent is unknown, as total costs of the disaster are still unknown. GAO also recommended that some applicable reimbursement policies be updated or amended.
In environmental emergencies, often the government will step in to cover immediate response costs. These funds come from the Oil Spill Liability Trust Fund, which was established by the Oil Pollution Act of 1990 (OPA) (enacted, appropriately, after the 1989 Exxon Valdez spill). Revenue for the fund comes from past fees on barrels of oil, interest on the fund, money collected from the responsible parties, plus any fines or penalties collected. At this time, the fund has $1 billion per incident cap.
The fund is administered by the U.S. Coast Guard’s National Pollution Funds Center (NPFC), who has designated two BP subsidiaries as “Responsible Parties” and subsequently billed them for expenses initially covered by nine different federal agencies, as well as some state agencies. These agencies will be reimbursed with the money collected from BP. So far, NPFC has received $518.4 million of the $581 million billed to the responsible parties.
GAO’s primary concern is that costs associated with the spill could skyrocket past the $1 billion cap (GAO reports current estimates in the tens of billions of dollars). While BP has voluntarily established a $20 billion trust to pay claims against them, it remains to be seen whether BP’s ability to cover costs will be compromised by numerous lawsuits or otherwise poor financial conditions.
The uncertainty surrounding reimbursements is compounded by holes in the relevant reimbursement policies. GAO found that the NPFC’s policies and procedures for obtaining reimbursement “did not always reflect current practices and were not sufficiently detailed to ensure they could be followed consistently.” For instance, “NPFC’s procedures for identifying and notifying Responsible Parties are dated 1996, when the Coast Guard was part of Department of Transportation, and are marked ‘draft.’”
Because of all the financial risks riding on this uncertainty, the GAO reinforces that it is “imperative that the federal government take prompt action to ensure that its policies and procedures are up-to-date, clear, and sufficiently detailed.” GAO also recommends that Congress eliminate OPA’s $1 billion per incident expenditure cap.
In conclusion: “Financial risks exist for the federal government as a result of the Deepwater Horizon oil spill.”
Read the full report – in much, much more detail – here.
Today the USDA announced the launch of a pilot initiative that will make up to $3 million in assistance available to agricultural producers complying with EPA’s Spill Prevention Control and Countermeasure (SPCC) program.
The SPCC program (the rules of which are codified at 40 CFR 112) is intended to prevent and mitigate the discharge of oil into US waters and adjoining shorelines. The rule requires farms and other facilities to prepare and implement SPCC plans detailing preventative measures and response plans for oil spills. The funds of the pilot program are earmarked for helping farms develop and execute these plans.
Of course, not every single farm is subject to SPCC regulations. According to an EPA fact sheet for farmers, only farms that store “more than 1,320 US gallons [of oil] in aboveground containers or more than 42,000 US gallons in completely buried containers,” and “could reasonably be expected to discharge oil to waters of the US” are covered by SPCC. A covered farm is responsible for preparing and implementing a plan, if it doesn’t already have one. Farms with a greater oil storage capacity (or those with a history of oil spills!) may need their plan to be certified by a professional, while other farmers may be eligible to “self-certify” plans online. Earlier this year, NRCS jointly published guidance to help farmers determine if they need an SPCC plan and whether or not they can self-certify those plans.
Those eligible for self-certification can also use the EPA’s SPCC plan template, intended to help the owner of a qualified facility develop a self-certified plan. (The completed template may be used to comply with the SPCC regulation.) SPCC plans must be in place no later than November 10, 2011 (the compliance date was extended one year by the EPA earlier this month).
Currently, only eight states – Idaho, Louisiana, Nevada, New York, North Dakota, Oklahoma, Texas, Utah and the Caribbean area – are eligible for the pilot program’s funds, which will be administrated by the USDA’s Natural Resources Conservation Service (NRCS). Farmers interested in participating should contact the NRCS at the appropriate service center.