Exxon’s Fine For Massive Tar Sands Spill Is A Mere 1/3000th Of Its Third-Quarter Profits

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"Exxon’s Fine For Massive Tar Sands Spill Is A Mere 1/3000th Of Its Third-Quarter Profits"

A worker cleans up oil in Mayflower, AR days after the Exxon pipeline ruptured and spewed oil over lawns and roadways.

A worker cleans up oil in Mayflower, AR days after the Exxon pipeline ruptured and spewed oil over lawns and roadways.

CREDIT: AP Photo/Jeannie Nuss

Federal pipeline safety regulators announced on Thursday that they are proposing a $2.6 million fine against ExxonMobil after a ruptured pipeline spilled thousands of barrels of oil in Mayflower, Arkansas this past March.

Pipeline and Hazardous Materials Safety Administration said in a letter to Exxon that the company had violated pipeline safety regulations and failed to notify the agency that the pipe, built before 1970, was susceptible to rupture.

“The really disconcerting thing about the violations listed is how they fly in the face of what the industry keeps saying about their efforts to make pipelines safe through their integrity management plans,” said Carl Weimer, Executive Director of the watchdog group Pipeline Safety Trust, via email. “This type of ERW pipe has been known for years to have serious problems and this Notice of Violation makes it clear that Exxon did not recognize the risk or prioritize their testing program correctly to protect people or the environment.”

The fine is a drop in the bucket for Exxon, which earned $7.8 billion in the third quarter of 2013 alone, and whose profits through September top $24 billion.

The spill has taken a tremendous toll on the people of Mayflower and cleanup is far from complete. The ruptured pipeline gushed 210,000 gallons of heavy Canadian crude into a residential street and forced the evacuation of 22 homes. In July, Exxon told homeowners it was ending temporary housing payments before residents felt it was safe to move back.

“It’s horrible,” resident Amber Bartlett told Inside Climate News. “They want us to go back now. We’re not comfortable with that, because no one really knows if long-term health effects are linked to exposure to this.”

Exxon only reversed the decision after sustained outcry from residents and politicians and agreed to continue payments indefinitely. In October, the company tore down two homes in the subdivision to reach oil under the foundation. As the Arkansas Times reported, “even Exxon says it’s the only way in the case of these two houses to be sure the cleanup is complete near ground zero of the spill.”

And the long-term health impacts of the spill continue to cause concern for Mayflower residents. In the months following the spill, families reported a range of alarming health problems. According to the Arkansas Times, a lawsuit filed against Exxon by a group of Mayflower residents cited symptoms such as: sore throat, nausea, burning eyes, nosebleeds, “vomiting for several hours after the initial exposure,” severe headaches, insomnia, aggravated asthma, rashes, dizziness, and pneumonia.

As of August, an Exxon spokesman told the New York Times the company “has spent $2 million on temporary housing for residents and more than $44 million on the cleanup.”

As long as the bulk of the responsibility for testing and maintaining the rapidly expanding network of oil and gas pipelines across the U.S. remains with the companies themselves, observers fear there may be more Mayflowers in store. “It has become clear from a series of significant failures over the past few years that trusting the industry with this level of responsibility has not worked, and it is time for the regulators to step in with stronger oversight,” said Weimer.

In addition, PHMSA’s hands are tied by a cap, set by Congress, on the size of penalties it can administer. Earlier this year, Jeffrey Weise, who heads the agency’s Office of Pipeline Safety, spoke candidly about his agency’s difficulty in enforcing regulations. “Do I think I can hurt a major international corporation with a $2 million civil penalty?,” he asked a crowd of oil and gas pipeline compliance officers. “No.”

As a case in point, Exxon was hit with a $1.7 million fine just days before the Mayflower spill. The fine was the result of a 2011 pipeline failure that spilled 42,000 gallons of oil into the Yellowstone River.

Weimer said fining a company like Exxon, which routinely accrues tens of billions in profits, just $2.6 million “is like fining a motorist that drives in a manner that recklessly endangers the public $2.50. No one thinks that level of fine for reckless driving would change anyone’s behavior, so why would anyone think $2.6 million would change Exxon’s behavior?”

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