Post-spill safety can't be put off, court tells Exxon

Appeal on pipeline fixes fails

A federal appeals court ruled Thursday that Exxon Mobil cannot temporarily delay compliance with government pipeline-safety directives, in part because of the danger of an accident, similar to one in Mayflower, on another pipeline also owned by the oil giant.

Exxon Mobil Pipeline Co., a subsidiary of Exxon Mobil Corp., had asked the 5th U.S. Circuit Court of Appeals in New Orleans to let it hold off on the upgrades while the court reviews Exxon Mobil's appeal of an October 2015 compliance order issued by the federal Pipeline and Hazardous Materials Safety Administration.

The order resulted from the agency's investigation of a March 29, 2013, accident in Mayflower's Northwoods subdivision. The Pegasus pipeline, built in 1947-48, cracked open between two houses, spilling tens of thousands of gallons of heavy crude into the neighborhood and a cove of Lake Conway.

In requesting a delay, Exxon Mobil said there would be no safety threat because its older, roughly 650-mile stretch of the Pegasus remained shut down and the company had no plans to restart it. The newer, 211-mile section, all in Texas, has resumed service.

[DOCUMENT: Click here to read the court's ruling.]

But the appeals court noted that the federal agency had said its investigation had found "significant flaws in the company's compliance policies."

"Even though the Pegasus pipeline is offline, not implementing these policies and procedures could result in a similar accident at another location on the same scale as what occurred in Mayflower," the court wrote.

Among other things, the safety administration ordered the company to modify its integrity-management program to ensure that risks are adequately identified, especially those common to pre-1970 pipe made with electric resistance welding. The industry has known for decades that such pipe -- which no longer is made -- is prone to the same kind of seam cracks that ruptured in Mayflower.

Exxon Mobil spokesman Ashley Alemayehu said the company disagrees with the court's decision.

"We look forward to the merits phase, which will give us the opportunity to argue that [the safety administration's] application of the regulations was improper," she said in an email.

The court also found that Exxon Mobil had not "demonstrated a likelihood of success on the merits" of the appeal.

First, Exxon Mobil already has fully complied with or submitted responses regarding more than half of the directives in the safety administration's order, the court wrote.

"[Exxon Mobil's] argument that a stay will put them at a competitive disadvantage, is similarly unpersuasive because the company provided no demonstrative evidence that other pipeline operators are not already in compliance with [the safety administration's] regulations," the court said.

The company's argument that full compliance would moot the appeal "is also flawed," the court said, because "at the very least [Exxon Mobil] can still recover the civil penalty that it paid if it succeeds on the [case's] merits." In April, Exxon Mobil paid a $2.63 million fine.

State Desk on 08/12/2016