Pegasus Spill Leads to a Disappointing $5 Million Exxon Settlement

Back in 2013, Arkansas was hit with a catastrophic pipeline leak—one of many in recent years. Exxon’s Pegasus spill served to further eat away at the oil and gas industry’s credibility, exposing more issues with regulations and violations. Despite the serious damage done to the environment surrounding the Pegasus pipeline, the settlement offer agreed upon by state and federal government offices seemed to come up short for local authorities. At just $5 million, many believe that this was too weak to provide any real penalty for Exxon and enforce protection for residents and their water sources.

While local authorities tried to fight to get an increased amount, the U.S. District Judge recently ruled that the agreement with Exxon was not just fair, but “reasonable and adequate” for the damage that occurred.

Settlement Upheld Despite Water Agencies Petitioning

The Pegasus rupture resulted in 210,000 gallons of toxic tar sands oil to be released into a residential area and a nearby lake. Some even accused Exxon of violating the Clean Water Act and other Arkansas laws; however, the federal judge overseeing the case resolved these allegations.

This incident also shed more light on the environmental dangers tied to the spilled diluted bitumen—a sludge-like oil that sinks in water and can pollute the air. Not only is it extremely hazardous in spills, but diluted bitumen (dilbit) also emits more greenhouse gases, resulting in higher carbon emissions.

A pipeline safety consultant and advisor to Central Arkansas Water (CAW) feels that the finalized settlement “doesn’t really instill a lot of confidence,” in the promise that Exxon will make appropriate changes to avoid a pipeline leak in the future. CAW had asked the judge to declare that the settlement was inadequate or wait until a similar complaint case was resolved for a guideline to go off of. On top of that, an even larger group of water agencies petitioned to the U.S. Justice Department to have the deal renegotiated and add in safety measures.

Is $5 Million Enough to Protect Arkansas’s Waterways?

In response to the devastating Pegasus pipeline spill, the federal Clean Water Act was created to better protect the nation’s waterways. The pipeline that was carrying the high carbon emission dilbit was originally constructed back in the 1940s. The pipe materials used were known to have manufacturing flaws that made it susceptible to splitting. The pipe itself was tested and determined to be at-risk by Exxon as far back as 2006.

A majority of the settlement will go to the U.S. government, with $3.19 million being paid in civil penalties. The remaining $1.88 million will go to the state of Arkansas, which will be broken down into a $1 million penalty and $600,000 funds for improving water quality in Lake Conway (the affected lake). The remaining $280,000 will cover litigation costs. Under the Clean Water Act, standard penalties for violations include $1,000 a barrel or $4,300 in cases where negligence is involved. Under those standards, Exxon should have been hit with a civil penalty fine of $13.7 million to $21.5 million, rather than $3.5 million agreed to by the government.

While Exxon will be required to label the northern pipeline as at-risk and provide spill response training, many believe the agreement is just too dependent on pipeline regulators to truly prevent a future spill.

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