Court overturns Exxon’s fines for major pipeline spill, calling it ‘regrettable’

Pipeline safety laws don't always keep communities safe.

This April 2013 file photo shows crews working to clean up oil in a Mayflower, Ark., neighborhood after an oil pipeline ruptured and spewed oil over lawns and roadways. CREDIT: AP Photo/Jeannie Nuss, File
This April 2013 file photo shows crews working to clean up oil in a Mayflower, Ark., neighborhood after an oil pipeline ruptured and spewed oil over lawns and roadways. CREDIT: AP Photo/Jeannie Nuss, File

Earlier this week, a federal appeals court overturned a federal agency’s ruling — and more than $2 million in fines — against ExxonMobil for a 2013 pipeline spill, arguing that the company had fulfilled all its obligations under federal pipeline safety law.

The incident, which took place in Mayflower, Arkansas, spilled more than 200,000 gallons of Canadian tar sands oil into a nearby neighborhood, sickening residents and forcing homeowners to evacuate. The pipeline, owned by ExxonMobil, had been built in the 1940s, and was known to be prone to cracking down along the lengthwise seams. Independent laboratory tests conducted after the spill found that the pipeline had been defective since it had first been laid more than 70 years before the incident.

In 2015, the Environmental Protection Agency fined Exxon $3.19 million in federal civil penalties, due to Clean Water Act violations stemming from the pipeline spill. Exxon also agreed to pay $1 million in state civil penalties, as well as an additional $600,000 to a project aimed at restoring water health in Lake Conway, which had been impacted by the spill.

Separately, the Pipeline and Hazardous Materials Safety Administration (PHMSA) fined Exxon $2.6 million for nine probable violations of safety rules that lead to the spill, including failing to adequately account for risks posed by the pipeline.


In reversing the PHMSA’s decision, the Fifth Circuit Court found that Exxon had not failed under the federal law to ensure, to the best of its ability, the safety of the pipeline. The court argued that Exxon had “conducted a lengthy, repeated and in-depth analysis” of risks posed by the pipeline, and found that the PHMSA’s decision was “arbitrary and capricious.”

“The fact that the Mayflower release occurred, while regrettable, does not necessarily mean that ExxonMobil failed to abide by the pipeline integrity regulations in considering the appropriate risk factors,” the court wrote. “The unfortunate fact of the matter is that, despite adherence to safety guidelines and regulations, oil spills still do occur.”

Pipeline spills, while less common than spills from other types of fossil fuel transportation like oil trains, occur with stunning frequency throughout the United States. According to PHMSA, between 2008 and 2012, U.S. pipelines spilled over 3.1 million gallons; and while pipeline spills occur less frequently than oil train spills, pipelines often release much more oil into the surrounding environment when they do spill. Data from the Center for Biological Diversity shows that North Dakota alone has averaged four pipeline spills a year since 1996, which in turn has cost the state some $40 million in property damage.

Canadian tar sands oil, the type of oil spilled by Exxon in Mayflower, is especially pernicious when released into the environment. Tar sands oil is extremely thick, so to get it to flow through pipelines, oil companies have to dilute it with natural gas liquids to create something called diluted bitumen, or dilbit. When dilbit spills, the natural gas — a volatile compound — vaporizes, drifting into nearby neighborhoods and causing the kinds of health problems that forced the residential evacuation in Mayflower. The tar sands bitumen, however, once again becomes incredibly thick and heavy, almost instantly sinking to the bottom of any body of water in which it has been released. As a result, traditional methods of cleaning waterways after oil spills, like skimming the top of water to remove the fuel, don’t work for oil spill cleanup.


Dilbit is the same kind of oil that was released during Enbridge’s 2010 pipeline spill in Michigan, which resulted in some 1 million gallons of tar sands being released into the Kalamazoo River. And dilbit is the same kind of fuel that would flow through the Keystone XL pipeline, which is currently under consideration by Nebraska state regulators after being given the green light by the Trump administration.

From Mayflower, Arkansas to Kalamazoo, Michigan, it’s not hard to find examples of pipelines carrying Canadian tar sands rupturing, with devastating consequences for the communities and ecosystems nearby. But as the Nebraska Public Service Commission weighs its final decision on whether to allow Keystone to move forward, Nebraska law explicitly prohibits the commission from considering safety risks posed by the pipeline, including the potential for spills.

That’s because while state regulatory bodies, like the Nebraska Public Utilities Commission, have a fair amount of say regarding if and where a pipeline is built, pipelines that cross state borders generally fall within the regulatory purview of federal law and PHMSA.

PHMSA sets the minimum safety standard for pipelines, and then allows states to enact stricter regulations if they so desire; as such, federal law is inherently crafted to represent the least-common-denominator of safety requirements among pipelines. That, in turn, creates a vague patchwork of federal and state standards which make it difficult not only to preempt spills from happening, but also to hold companies accountable when those spills take place — putting communities near pipelines in a precarious situation where both regulators and courts are legally bound to give deference to pipeline operators over health and safety.