Exxon wins appeal in environmental permit case

GEORGETOWN (CMC):

The Court of Appeal has ruled in favour of ExxonMobil Guyana Limited and the Environmental Protection Agency (EPA), overturning a 2023 High Court decision on financial assurance requirements tied to ExxonMobil’s offshore environmental permit.

In the original ruling, Justice Sandil Kissoon found that ExxonMobil had breached its permit by failing to provide adequate financial assurance for potential environmental damage. He also held that the EPA had failed in its statutory duties by accepting what he considered insufficient coverage.

The judge concluded that ExxonMobil’s liability for environmental harm was unlimited and that the financial guarantee required under the permit should therefore also be uncapped. He ruled that the company was in breach for proposing a US$2 billion guarantee instead, and ordered the EPA to issue an enforcement notice. The ruling further stated that ExxonMobil’s permit could be suspended if an unlimited guarantee was not provided within 30 days.

ExxonMobil and the EPA appealed. The Court of Appeal stayed the High Court’s orders pending the outcome of the case, which was heard in February 2026.

In a unanimous decision, the appellate court overturned Justice Kissoon’s ruling, finding that, while ExxonMobil remains fully liable for any environmental damage arising from its offshore operations, liability and financial assurance are distinct legal concepts. The court held that the High Court had erred in treating unlimited liability as requiring unlimited financial security under the permit.

The Court of Appeal further ruled that the EPA, under the Environmental Protection Act and the terms of the permit, has the discretion to determine and accept an appropriate level of financial guarantee. It found that Justice Kissoon had improperly substituted his judgment for that of the regulator, which Parliament had empowered to make such determinations.

The appellate court also found no evidence to support the High Court’s conclusion that ExxonMobil’s insurance arrangements, accepted by the EPA, were inconsistent with international petroleum industry standards. It ruled that neither the EPA nor ExxonMobil had acted improperly in agreeing to a US$2 billion guarantee.

All orders issued by Justice Kissoon in 2023 were therefore set aside.