Fifth Circuit Declines to Stay of Compliance Order Flowing from Spill But Directs Expedited Briefing Schedule


On August 11, the U.S. Court of Appeals for the Fifth Circuit issued an opinion rejecting the ExxonMobil Pipeline Company’s request for a stay pending appeal of a Compliance Order issued by the Pipeline and Hazardous Materials Safety Administration (PHMSA) of the Department of Transportation. The case is ExxonMobil Pipeline Company v. U.S. Department of Transportation, et al. The Court of Appeals, applying its standard criteria for evaluating such stays requests, held that the pipeline has not established that it can prevail on the merits, and otherwise seems to express serious misgivings about ExxonMobil’s line of defense at this time. In any case, the parties have been ordered to follow an expedited briefing schedule.

In March 2013, ExxonMobil’s Pegasus pipeline released 5000 barrels of crude oil near Mayflower, Arkansas. So far, the release has resulted in more than $57 million in property damages and the forced evacuation of 22 homes. Following this spill, PHMSA issued a Notice of Violation and conducted a hearing, resulting in a fine of $2,630,500 million and an order to the pipeline to initiate several series of actions to bring this old pipeline into compliance with the pipeline integrity management procedures to ensure proper testing and assessment of its pipelines.

In its petition for review filed with the Fifth Circuit, Exxon argues that PHMSA has not demonstrated that the operation of the pipeline was in violation of the existing rules and procedures and, to the contrary, PHMSA re-writes the existing rules and standards to hold ExxonMobil liable for nine alleged violations of the pipeline safety regulations. ExxonMobil earlier requested reconsideration of the Compliance, which PHMSA ultimately denied. PHMSA also denied ExxonMobil ’s request to postpone the effective date of its order pending judicial review.

The Court of Appeals considered four factors:

“(1) [W]hether the stay applicant has made a strong showing that he is likely to succeed on the merits;

(2) [W]whether the applicant will be irreparably injured absent a stay;

(3) [W]hether issuance of the stay will substantially injure the other parties interested in the proceeding; and

(4) [W]here the public interest lies,” citing Nken v. Holder.

The Court of Appeals confirmed that the first two factors are the most critical. The Court of Appeals did not find ExxonMobil’s arguments persuasive. Even so, the Court of Appeals directed the clerk’s office to issue an expedited briefing schedule, for briefing to conclude on October 25, 2016, and for the case to proceed directly to the oral argument calendar. Stay tuned.