Ruling on oil-spill insurance coverage: Judge’s reasoning flawed, erred in interpretation of law – EPA to Appeal Court

…says cancellation of permits will have catastrophic effect on Guyana’s economy

Days after the High Court ruled that the Environmental Protection Agency (EPA) had to require an unlimited Parent Company Guarantee and/or Affiliate Company Guarantee Agreement from ExxonMobil for its operations in the Stabroek Block, the agency has filed an appeal and applied for a stay in execution of the judgement.

In the Notice of Appeal, EPA Executive Director Kemraj Parsaram is seeking a stay of Justice Sandil Kissoon’s order, until the appeal to overturn the ruling can be heard. Parsaram, who is represented by Attorney-at-Law Sanjeev Datadin, argued in his appeal that the court’s reasoning was flawed and that the permit is in keeping with the law.
“The trial court erred in law in its interpretation, consideration and application of the combined effect of Clause 14 of the Environmental Permit… and erroneously concluded that the financial assurance to be provided by the third respondent herein, EEPGL, in relation to the said permit was unlimited.”
“The trial court erred in law and misconstrued the Environmental Protection Act and its regulations to determine that the appellant, a statutory body had specific statutory powers which in fact it did not have,” he contended in the appeal.
Other contentions of the EPA Executive are that the court wrongly ascribed a meaning to the Environmental Protection Act that was contrary to specific provisions in that very Act. It was also noted that the court “in effect substituted its own discretion as the decision of the appellant when the appellant, at all material times, had exercised its discretion and acted well within its statutory and regulatory powers.”

He further noted that the court orders are coercive and entirely removes the EPA’s discretion, which will have severe consequences. According to the Executive Director in the filing, there would be severe disruption to the national economy if the order is allowed to stand.

Catastrophic consequences
It was pointed out that the very permit at the heart of the case, is critically important to Guyana’s economic growth. It was argued that should the permit, which pertains to the Liza 1 and 2 fields, be cancelled, this would therefore have catastrophic consequences on the economy.
“Guyana as a nation now earns billions of dollars annually from the petroleum activities conducted on the Liza 1 and Liza 2 fields, both of which are subject to the permit. The suspension or cancellation will have a catastrophic effect on national funds for development and also the private sector which supports the activities on the said Liza 1 and 2 fields,” the EPA noted in the appeal.
In his ruling, Justice Kissoon had ordered EPA to issue ExxonMobil with an enforcement notice on or before May 9 to provide the Parent Company Guarantee. In that ruling, he had said that failure to do so would result in the Environmental Permit being suspended. It is expected that EPA will be granted an expedited hearing on the matter, ensuring the permit is preserved until the case is heard.
Attorney General and Legal Affairs Minister Anil Nandlall, SC, had pointed out after the ruling that the Environmental Permit imposes no obligation on the Permit Holder to provide an unlimited Parent Company Guarantee Agreement and/or Affiliate Company Guarantee Agreement.

Hence, Nandlall had contended the Judge erred in his findings. The AG, too, pointed out that this ruling can have profound ramifications and grave economic as well as other impacts on the public interest and national development.
In September 2022, the President of the Transparency Institute of Guyana Inc (TIGI), Fredericks Collins, and Guyanese citizen Godfrey Whyte had moved to the court to get the EPA to implement the liability clause in the permit issued to ExxonMobil (Guyana) for its operations.
They wanted the court to ensure Esso Exploration and Production Guyana Limited (EEPGL) takes full financial accountability in the case of harm, loss, and damage to the environment from a well blowout, oil spill, or other failures in the Stabroek Block.
On the issue of whether the EPA acted in breach of its statutory duty and unreasonably permitted Esso to carry out petroleum production operations in the absence of compliance with the terms of the permit, Justice Sandil Kissoon ruled that the EPA has committed an illegality, acted unlawfully, ultra vires, unreasonably, in defiance of logic, irrationally, and without any jurisdiction.
Hence, the court ordered that the agency issues the Enforcement Notice to EEPGL on or before May 9 to provide an unlimited Parent Company Guarantee Agreement and/or unlimited liability Affiliate Company Guarantee, and failure to do so would result in the suspension of its Environmental Permit. (G3)