August 2017

ExxonMobil Pipeline Company Wins Precedent-Setting Appeal of PHSMA Final Order in Fifth Circuit Court of Appeals

North America - United States

ExxonMobil Pipeline Company won a major decision in the Fifth Circuit Court of Appeals, sustaining its challenge to five alleged violations of Pipeline and Hazardous Material Safety Administration (PHMSA) regulations following a 2013 pipeline leak in Mayflower, Arkansas. The vacatur eliminates substantial portions of a compliance order and an associated $1.8 million penalty.

PHMSA’s orders are rarely overturned, particularly on appeal. The Court refused to give PHMSA’s interpretation of the regulations at issue deference, ruling that the regulations were not ambiguous, and that PHMSA had not provided ExxonMobil “fair notice” of its interpretations. 

“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 noted in its opinion. “If it did, then an operator that experiences a seam-related pipeline leak on its pipeline system could never escape liability under pipeline integrity regulations, thus nullifying the regulations and creating a strict-liability regime that Congress has not authorized.” The court stated that the “unfortunate fact of the matter is that, despite adherence to safety guidelines and regulations, oil spills still do occur.” 

Faegre Baker Daniels partner Colin Harris represented ExxonMobil in the litigation, serving as co-appellate counsel with the Yetter Coleman firm in Houston. 

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