President of the Transparency Institute of Guyana Inc (TIGI) Frederick Collins, says that the appeal filed by the Environmental Protection Agency (EPA) to the High Court ruling ordering it to enforce the liability clause in permits it issued to ExxonMobil Guyana for its offshore oil operations lacks merit.
Collins said that should there be an oil spill, the environment would be in peril, as would the citizens of Guyana and its neighbouring territories; which will all “suffer irreparable damage.”
Against this background, Collins in a responding affidavit to the appeal says that the risk of injustice in granting the EPA the stay it is seeking to the High Court judgement, will be way greater, than in refusing it.
Collins, together with another concerned citizen—Godfrey Whyte—had moved to the court last year to get the EPA to enforce the liability clause in the permits it had issued to ExxonMobil.
The litigants had said that the resort to the court was their bid to ensure that the company take full financial responsibility for possible resulting harm, loss and/or damage to the environment.
ExxonMobil’s local affiliate, Esso Exploration and Production Guyana Limited (EEPGL) (Esso), has agreed in the permit to provide insurance and an unlimited parent company indemnity to cover all environmental loss and damage that might result from a well blowout, oil spill or other failures in the Liza 1 Development Project in Guyana’s Stabroek Block.
High court Judge Sandil Kissoon in delivering his judgment last Wednesday, said that in the course of the proceedings, the Court found on the evidence that EEPGL was engaged in a “disingenuous attempt which was calculated to deceive, when it sought to dilute its liabilities,” while simultaneously optimising production.
Referencing the ruling, Collins opined that the appeal could have no good prospects of succeeding since the judgment was based on what he said was the “clear and simple wording” of the Esso Permit—that Esso is responsible for “all” costs, and that Esso must provide financial assurance to cover those costs through insurance and parent company guarantees/indemnities.
Collins sought to emphasize the Judge’s finding that the amount of financial assurance required is “all” the costs for clean-up and everything associated therewith as is required in the Permit.
“Nothing could be plainer,” Collins said; while going on to add that he had read the Esso Permit and has not seen any financial limit on the amount of the costs which Esso agreed to bear.
On Thursday, the EPA in a press statement that it had at all times acted in accordance with the law.
Advancing its reasons for appealing the ruling, in response to what it said was much public speculation, the EPA said that during the hearing into the lawsuit, it was still negotiating with ExxonMobil.
According to the EPA, it had instructed Esso to provide an estimate and declaration to inform the terms and conditions and amount of financial assurance in the guarantee. The estimate given the agency said, was between $1.5 billion to $2 billion, to be used in the final negotiations on the agreement.
On April 27th, it added, negotiations concluded on the amount guaranteed, the terms and conditions for renegotiations based on increased risks; and next steps if unfulfilled obligations exceeded the $2 billion guaranteed amounts.
Noting that Esso would have signed the Permit on May 31st of last year; and that Justice Kissoon would have “generously” given it until June 10th to comply with its obligations, Collins contends that the errant Esso would have in effect had more than one year in which to produce the financial assurance which it undertook to provide, in return for carrying out its operations.
“There is no reason why Esso should be allowed to continue to break the law and put the whole of Guyana at risk,” Collins said; before going on to add, “it is obvious to the ordinary person that if Esso complies with its obligations” then its Permit will not be suspended as has been ordered by Justice Kissoon.
“Therefore, all Esso has to do is provide the financial assurance that it undertook to provide,” Collins said.
He emphasized that Condition 14.1 of the Permit says states that the Permit Holder—Esso—is liable for all costs associated with clean up, restoration and compensation for any damages caused by any discharge of any contaminant, including the cost of all investigations into pollution incidents or discharges of contaminants, conducted at the instance of the Agency.
Condition 14.10 Collins then points out, states that Esso must provide from the parent company or affiliate companies; one or more binding agreements to the agency, in which the parent company or affiliate company undertake to pay or satisfy their respective environmental obligations regarding the Stabroek Block and to indemnify and keep indemnified the agency and the Government against all environmental obligations.
Collins said it is time for Esso to produce the insurance and parent company guarantees by which it is bound under the Permit instead of “dodging the legal obligations which it agreed to meet.
Collins contends on his affidavit that “every day that Esso operates without the financial assurance being in place, is a day in which Guyana could be liable for billions of US dollars.”
Against this background, Collins submits to the appellate court that it should be “deeply concerned at the risk to Guyana from Esso’s operations.”
Noting Justice Kissoon’s finding that Esso has not been compliant with Condition 14 of the Permit, though the EPA sought to contend that it was, Collins said that the agency cannot be trusted.
Stating that he had filed the case in the public’s interest, Collins said that the ruling delivered by Justice Kissoon, is one which protects all Guyana from potential liability of billions of US dollars.
Collins argues through his battery of attorneys led by Senior Counsel Seenath Jairam, that the EPA has no basis to justify its application for a stay of the orders made by Justice Kissoon, since it is trite law that that a declaration made by a court cannot be stayed.
He further goes on to argue that in order to obtain a stay pending an appeal, and applicant must satisfy the court that the appeal has a good prospect of success; that there are special circumstances “which would exceptionally justify” a stay in a matter such as the present, where the issue is not about a money judgment, but in the national interest as well as the justice of the case.
Contending that its appeal has prospects for success, the EPA has said that at no time did it have doubts that the Permit Holder was strictly and fully liable under the Act or the Permit for any pollution or damage to the environment, including compensation of affected parties.
It said that in fact it had always maintained that the Permit Holder had “full and strict liability to clean up, restore, remediate, and compensate for any harm caused by pollution whether wilfully or by accident.”
According to the agency, it reviewed the insurance policy provided to it since 2019 against typical insurance coverage across several jurisdictions, and it was found that the coverage related to oil spill liabilities of $600 million was equivalent, and in some cases exceeded the typical coverage offered in some jurisdictions.
The EPA said it had to be “diligent” and ensured that it negotiated an Affiliate Company Guarantee that fulfilled the requirement of section 31 (2) of the Act which states that a requirement for Financial Assurance shall specify the amount. The question therefore it said, became, what amount can be specified and how can this be estimated.
It said in its statement that it wanted to ensure that any amount agreed upon, was not arbitrary, and could be renegotiated based on increased risks and any circumstances that resulted in the amounts specified being exceeded.
In its appeal asking for a stay of the judgement and all its orders, the EPA argued through its attorney Sanjeev Datadin that the judge’s finding that the financial assurances set out in the permit were “unlimited;” was a flawed line of reasoning.
Describing the order made by the court that the permit stands suspended for breach of the Environmental Protection Act as “coercive”, the EPA contended that this will have severe economic consequences for the country.
Background
In his ruling, Justice Kissoon said of the EPA, “It has abdicated the exclusive statutory responsibilities entrusted to it by Parliament under the Environmental Protection Act 1996 and the Environ-mental Protection Regulations 2000 to ensure due compliance by Esso Exploration and Production Guyana Limited.”
Colins and Whyte had argued through their attorneys that “…the agency, through its human minds, including its officers has failed or omitted to carry out or to show that it has carried out its legal duties and or obligations thereby amounting to misfeasance in public office by them and by failing or omitting to act, has acted unreasonably, irregularly or improperly and or has abused its power.”
Collins, in a statement, had said “I can’t even drive my car without insurance. So it is incomprehensible that the government would allow Esso to operate without any form of insurance. An oil spill would be devastating for our country and region as many Guyanese and Caribbean peoples depend on the ocean for their livelihoods. That is why we have decided that the time has come to take matters to the court for relief.”
Justice Kissoon had said that in the course of the proceedings, the court found on the evidence that EEPGL was engaged in a “disingenuous attempt which was calculated to deceive when it sought to dilute its liabilities and settled obligations stipulated and expressed in clear unambiguous terms at Condition 14 of the Environment-al Permit (Renewed) while simultaneously optimising production at the Liza Phase 1 Petroleum Production Project in the Stabroek Block Offshore Guyana.”
Directly calling out the EPA, the judge said EEPGL “engaged in a course of action made permissible only by the omissions of a derelict, pliant and submissive Environmental Protection Agency.”
He said that the proceedings brought to the fore the adage, “but for the vigilance of citizens society shall perish.”
The court said it found that Esso was never in doubt as to what its liabilities were as captured under Condition 14 of the Permit, as the stipulations were neither unusual, unique or unauthorised.
Justice Kissoon went on to grant Collins and Whyte the orders they sought in the form of declarations. He also awarded them costs in the sum of $1,500,000.
