In filing, Exxon rips regulators; it says accusations ‘undeserved,’ post-spill order ‘unlawful’

A federal regulatory agency has zealously pursued "undeserved accusations" that Exxon Mobil was "cavalier" about pipeline safety before the Pegasus pipeline ruptured in Mayflower more than three years ago, the oil company said in a newly filed court document.

Exxon Mobil Pipeline Co., a subsidiary of Exxon Mobil Corp., has appealed findings by the federal Pipeline and Hazardous Materials Safety Administration that the subsidiary violated safety regulations before the March 29, 2013, oil spill in Mayflower. The safety administration ordered the company to take several safety measures and fined it $2.6 million.

"Resorting to misdirection, [the safety administration] makes the undeserved accusations that [Exxon Mobil] has been cavalier about pipeline integrity," the company wrote in a document placed online Monday by the 5th U.S. Circuit Court of Appeals in New Orleans.

Exxon Mobil "finds itself the subject of a zealous enforcement action, a multi-million-dollar fine, and an onerous and unlawful compliance order," it argued in a document filed with the court over the weekend. "[The safety administration] incorrectly claims, for example, that [Exxon Mobil] ignored or disregarded risk factors," among other things.

[DOCUMENT: Read Exxon Mobil's response]

Exxon Mobil argued that the spill occurred despite its compliance with safety regulations and guidance.

"No matter how diligent or regulatory-compliant a company is, all defects cannot be identified before a release occurs," it wrote. "While there have been substantial advancements in inspection technologies, there is clearly room for technological improvements to achieve industry's goal of zero incidents." And the safety administration knows this, Exxon Mobil said.

Exxon Mobil is especially opposed to an agency order requiring it to revise its process for determining a pipeline's susceptibility to seam failure on all of the company's lines that use pre-1970 electric-resistance-welded pipe, not just the Pegasus.

Such pipe is no longer made, and industry experts have known for decades that it is prone to manufacturing defects, or hook cracks.

Exxon Mobil has said it operates more than 1,000 miles of pipeline that's in similar condition to the Pegasus, built in 1947-48, and is subject to the federal agency's safety regulations. The same kind of pipe is used in 25 percent of the nation's oil pipelines, the company has said.

Such cracks caused the Pegasus to break open in Mayflower's Northwoods subdivision and send tens of thousands of gallons of thick crude flowing through the neighborhood and into a cove of Lake Conway.

Exxon Mobil said in the latest filing that the federal government has reinterpreted its regulations after the fact and without giving the company "fair notice" beforehand.

The company said federal regulations could have prescribed that all such pre-1970 pipe be "presumed susceptible to seam failure, unless demonstrated otherwise." But the regulations "contain no such presumption," it said.

The regulations don't even "actually direct operators to consider 'susceptibility to seam failure,'" Exxon Mobil said.

The term "'prone to seam-failure susceptibility' ... is in reality just [the safety administration's] latest post-failure invention to justify its enforcement actions," the company argued.

Exxon Mobil also said the Pegasus does not have an extensive history of seam failures despite the government's statement otherwise. That's especially true considering the pipeline's 850-mile length, its number of 50-foot joints and its 65-year lifespan, the company said.

An appeals court panel is to hear oral arguments in the case on Oct. 31 in New Orleans.

A Section on 10/04/2016

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