Siding with Exxon Mobil, the U.S. Chamber of Commerce has told a court that after-the-fact revision of federal regulations, if left to stand, threatens to shut down "important existing pipeline infrastructure."
Two pipeline-safety consultants countered Friday that the federal Pipeline and Hazardous Materials Safety Administration did not revise its safety regulations after the fact, as attorneys for the chamber and Exxon Mobil contend.
The pipeline safety administration is "not rewriting the orders. That's some attorneys trying to skew the issue," said Richard Kuprewicz, who has been advising Central Arkansas Water on the pipeline matter. "They've always been obligated to identify whatever risk was on their pipelines."
The chamber filed a friend-of-the-court brief earlier this week with the 5th U.S. Circuit Court of Appeals in New Orleans. The filing came in the oil giant's almost three-year battle against monetary penalties and safety measures ordered by a federal regulatory agency after the Pegasus pipeline cracked open in a Mayflower subdivision March 29, 2013.
[DOCUMENT: Read the U.S. Chamber of Commerce brief supporting Exxon]
The Pegasus, built in 1947-48, ruptured between two houses in the Northwoods subdivision, spilling tens of thousands of gallons of thick crude into the neighborhood and a cove of Lake Conway. A laboratory hired by Exxon Mobil blamed the accident on manufacturing defects, specifically hook cracks that likely worsened over time.
The 300,000-member chamber cited an "ever-growing morass of federal regulations" and said the pipeline-safety agency "has engaged in a significant, post hoc revision of important regulations governing pipelines."
"Such a shift, if left to stand, threatens to shutter important existing pipeline infrastructure," the chamber argued. "Pipeline companies will think twice about further investments in pipeline infrastructure if they believe the courts will afford deference to pipeline regulators' dramatic, post hoc changes in pipeline policy under the guise of interpretation of purportedly ambiguous regulations."
Given pipelines' "significant role" in transporting energy resources, such actions would adversely affect the nation's "entire economy," the chamber said.
Exxon Mobil is especially concerned about a requirement in the compliance order that the company revise its seam-failure susceptibility process for all pre-1970 electric-resistance-welded pipe in all of the pipelines it operates. Such pipe is no longer made, and industry experts have known for decades that it is prone to hook cracks.
Exxon Mobil Pipeline Co., a subsidiary of Exxon Mobil Corp., has said it operates more than 1,000 miles of pipeline that is in similar condition to the Pegasus and that is subject to federal safety regulations. The same kind of pipe is used in 25 percent of the nation's oil pipelines, the company said.
Rebecca Craven, program director of the Bellingham, Wash.,-based Pipeline Safety Trust, said Friday that she also doesn't believe the federal agency's order is "an after-the-fact interpretation" of its regulations.
"[Exxon Mobil attorneys have] strung together an argument, but I don't agree with it," Craven said.
Neither Craven nor Kuprewicz said they believe Exxon Mobil's primary worry is the $2,630,400 in total fines. In July, Exxon Mobil, which already has paid the fine, reported second-quarter earnings of $1.7 billion.
"The greater cost to them is going to be the work [Pipeline and Hazardous Materials Safety Administration] is requiring them to do" on all of the company's pre-1970 pipelines, Craven said.
Kuprewicz agreed.
"They could have a real problem on a lot of their [pipeline] systems. ... They've already used that [the $2.6 million] up in attorney fees," he said. "So, there's a bigger issue here."
"I'm not unsympathetic to Exxon," Kuprewicz said. "But they need to start doing the right thing or they're going to have more in-service pipeline failures."
Central Arkansas Water hired Kuprewicz, a consultant based in Redmond, Wash., after the 2013 accident. The utility oversees Lake Maumelle, which provides drinking water to more than 400,000 central Arkansans. The underground pipeline runs through about 13.5 miles of the lake's watershed.
In a court document filed in July, Exxon Mobil said the government's order "will cost millions of dollars to implement what amounts to agency policy changes ... imposed on one company, and not currently required of all pipeline operators."
The order "departed from the regulations' unambiguous text and abandoned its prior interpretation," the company said.
The pipeline accident on a Good Friday afternoon forced residents of 22 homes to evacuate on a long-term basis. Many never moved back.
Exxon Mobil has since bought more than half of the subdivision's 62 homes, demolished two because of oil beneath them, and sold more than 20 of the homes it bought.
Government attorneys have said the accident caused more than $57 million in property damage.
The roughly 650-mile section of the Pegasus, running from Patoka, Ill., to Corsicana, Texas, has been shut down since the accident. Only the remaining 211-mile section in Texas has resumed service.
A Section on 09/10/2016