No welcome back to Drilled. I'm Amy Westerveldt. This week there was some huge news related to our most recent season in Guyana. A verdict came through on one of the cases that we covered, the one that Melinda Jenkie filed that had to do with insurance and particularly with
something called financial assurance. The case argued that Guyana's Environmental Protection Agency it's EPA, had failed to require proof from SOO Exon subsidiary in Guyana and from Exon Mobile itself of the sort of liability coverage needed for a risky offshore oil project like the one that's happening offshore Guyana
right now. The law asks not only for an insurance policy from the local operator, but also for an unlimited guarantee from the parent company, in this case Exon Mobile, that it will cover any damages related to the particular activity that's being permitted, in this case, oil drilling. Part of the argument was that an oil spill offshore Guyana would not only impact Guyana, but could potentially impact multiple
other countries nearby. In fact, Exon's own environmental impact assessment for its most recent well indicated that a massive oil spill offshore Guyana could impact up to fourteen Caribbean countries. Those are all countries that depend on fishing and tourism
for their economies. What this case argued was that the government was allowing Exon to ramp up production quickly to get around certain permitting requirements, while also not requiring that it had this level of liability coverage, opening up the country Guyana to enormous financial risk because imagine if there was a deep water offshore blowout and it did impact fourteen Caribbean countries, where would those countries go looking to
cover those damages. If there was no policy in place requiring Exxon to pay for those damages, those countries would be coming to the government of Guyana. The judge in this case issued an absolutely blistering ruling against Exxon and the Guyanese EPA. He called what's been happening in egregious state of affairs that has engulfed the Environmental Protection Agency
in a quagmire of its own making. He also wrote that quote in the course of these proceedings, the court found on the evidence before it that So Exploration and Production Guyana Limited 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 while simultaneously optimizing production at the Eliza Phase IE
petroleum production project in the Stopwrich Block offshore Guyana. He goes on to write so Exploration and Production Guyana Limited engaged in a course of action made permissible only by the omissions of a derelict client and submissive Environmental Protection Agency.
Elsewhere in the ruling, he writes these matters were not unknown to SOO or the EPA, and consistent with the benefits of its petroleum production activities to which SOO is entitled comes the burden of fulfilling its obligations under the permit, and the agency sought refuge in silence, avoidance, concealment, and secrecy, notwithstanding the grave potential danger and consequences to the state and citizens if an event occurred at the Eliza Phase
I petroleum production facilities in the Stabwrich Bloc offshore Guyana in absence of such financial assurances. He concludes that the Environmental Protection Agency is in breach of its statutory duty by its failure and or omissions to enforce compliance by SO Exploration and Production Guyana Limited of its financial assurance obligations.
He orders the Environmental Protection Agency to issue an enforcement notice on or before May ninth, less than a week from the date of the ruling directed to SO Exploration
and Production Guyana Limited to perform its obligations. First to provide within thirty days the unlimited liability parent company Guarantee agreement and or an unlimited liability Affiliate company guarantee to indemnify and keep and debat the Government of Guyana and the Agency against all such environmental obligations of so SO
and its co venturers within the stopwrit bloc. They also have to provide proof of environmental liability insurance, as is customary in international petroleum industry, in accordance with the conditions of its permit. It says, if they fail to provide both of these things, its permit stands suspended. The judge also tackled the question of standing in this case, which
is really really interesting. SO had argued that the particular plaintiffs bringing this case to individual citizens, one of whom we actually heard from this season, Frederick Collins, the President of Transparency Guyana International. However, the organization that he works for was not a party to this case. He was a plaintiff in this case as an individual, as was mister Godfrey.
White also argued that these two men had no standing that Guyanese citizens can't bring a case like this because it has to do with the regulatory structure and the company, and they referred to these plaintiffs as meddlesome, meddlesome busybodies. The judge said, yeah, no, Actually, citizens need to be able to bring cases that are in the public interest, especially in situations like this where there are major environmental implications.
So that's a huge precedent to set too. I caught up with Melinda Jenki the day after the ruling came out to hear what she thought about it and to hear what kind of message this sends, what kind of precedent it sets, both in Guyana and beyond. That conversation has come up after this quick break. So first I'd love to get just your initial reaction to the ruling when it first first came out.
I think it's an excellent ruling. I mean, the judge said that the EPA's lax behavior had put this nation and its people in grave danger of calamitous disaster. And so immediately what you have is a very strong statement of the situation as it is. Remember Exxon, so the Exxon subsidiary has admitted in court that they've been using faulty equipment, and they've admitted in public that they're operating above the safety limits. So that's very dangerous for Guyana.
And it means that if there's any kind of oil spill, disaster, to blow out, whatever God forbid, any of that should happen, Guyana would be liable for all of that because the insurance is not in place and the parent company guarantee is not in place. And the judge has corrected that
by ordering the EPA to enforce the environmental permit. I mean, where else in the world would you have such dangerous deep water operations going on without proper insurance and without having the finance in place to protect the home country.
Yeah, yeah, I'm curious. I know that the government has said that they plan to appeal and whatnot, but I'm assuming that the ruling is the ruling in the meantime, and they are under pressure to correct this fairly quickly.
Let's just be clear the government cannot appeal this ruling. They're not a party to the case.
Interesting, it's the EPA that would have to appeal.
So only the EPA or so can appeal. Yeah, and the EPA is not the government. The EPA is an independent statutory authority. Now, if the government is instructing the EPA to appeal, then that's clearly unlawful. And that and if the EPR were to then act on the basis of instructions from the politicians, that action would be unlawful and it would be open to judicial review on the grounds that the EPO was carrying out instructions that were not part of its mandate.
Right right.
So that's well, it's a very foolish course of action for any government to take, is to say publicly that they're going to appeal a case that they're not a party to, and therefore implying that they have some control over an independent statutory authority.
Yeah, that's interesting. That's very interesting.
It's an independent statutory authority. I mean, I wrote the legislation that set this thing up.
Yeah, yeah, I thought that was really interesting actually too that at several points in the ruling the judge mentioned how SOO had tried to sort of tell the court what some of these laws meant, and I wanted to get your take on that that approach that they have taken in this case.
Look, the I mean SO obviously has to be advised by its own lawyers, and I can't comment on that. We put in our submissions, and clearly the judge has ruled on the basis that he thinks he agrees with our submissions, and he's given a judgment that is based on law and legal principle. So's views on what the law says are completely irrelevant. I mean, so, these are business people. The business model depends on polluting the atmosphere
and the ocean with greenhouse gases. They make them money out of destroying the climate and making the ocean more acid. I mean, that's what they do. Law is not their concern. They take advice from their lawyers.
I'm curious to hear what you think, like, what kind of message this sends, both in Guyana and beyond to all of the countries that oil majors are operating in. What kind of precedent does this sad and sort of message does it sound?
Well? I think there's some really significant messages here, I mean the top line. Two ordinary citizens in this little country which most people can't find on the map. Two of them have gone to court and they've beaten the EPA. But they've also beaten Exxon Mobile. And this is really a victory for the people by the people. I think we have to give full CDOs to his honor Justice Sandil Kisun. He put the rule of law above the interests of Exxon Mobile. That's massive. That's what every judge,
every country should be doing. And I think this decision sets the standard for judges everywhere, not just in Guyana, but across the world.
Is there any sense that the judges ruling will be politicized in some way that you know, it will get the sort of oh, he's just against the PPP or whatever, that kind of reaction from folks.
This is a decision that puts the interests to Guyana and the nation foremost. It's a decision that upholds the rule of law. It's a decision that says you s so took a business decision to accept this permit, and you signed for it, and you agreed to provide the insurance, and you agreed to provide the parent company, the unlimited parent company guarantee, and you, the EPA, have a job to enforce that permit, so you will need to provide
that insurance and that unlimited parent company guarantee. Now, if anybody tries to politicize that decision, they are going to look extremely foolish. The government is already looking silly by saying that it's going to appeel the decision, and people are asked, why is the government taking this attitude and appearing to be on the side of ess rather than
on the side of the country. This ruling, once the insurance and the guarantee are in place, means that Guyana is no longer potentially liable for billions of US dollars. So who would actually question that? Why would anybody question a decision by the judge which says, enforce the permit, comply with your obligations, and make sure that this country does not suffer as a result of your default or bad behavior. I mean, he didn't use those exact words, That's what I'm saying.
Yeah, I mean, I thought that was really interesting about this case in general, just the extent to which SO SO and the EPA were really partners. You know, talking about this stuff, and I'm curious for your thoughts on that too, just just the extent to which the EPA seemed to be very much, I don't know, just sort of complying with the way that so slash Axon wanted to handle things.
Oh, I think it's clear from the decision that the relationship between the EPA and SO has not been the relationship that you would expect from the regulator and the entity being regulated. The EPA has been far too compliant, hasn't done its job, and so SO has been allowed to get away with breaching its permit. And the result of that, the judge says that lack of vigilance by the EPA and its lack of enforcement has put the quoting now put this nation and its people in grave
potential danger of calamitous disaster. So the EPA has been completely irresponsible. The judge has corrected that situation, and everybody in the country should be cheering this decision. Every politician, every business person, every activist, academic student, everybody should be cheering this decision because it's protecting Guyana. It's protecting every single one of us.
Yeah. Well, it also really seems like a good proof point that the court is not being influenced by either the government or corporate interests, which should make anyone in any country feel like, Okay, we have a functional court system. This is good. Yeah.
I think this judge deserves a real recognition and praise from around the world for taking this position. This is a country that is very new to oil and gas, and he says that we've seen politicians across the divide, whether it's the PPP or the ATNEU or the AFC or whoever, all completely pro oil irresponsibly, So throwing caution to the winds over excited about Guyana becoming an oil producer.
And now you've got the voice of reason coming in and saying, wait a minute, there is something called the rule of law, and we're going to uphold it. There are rules here to protect the people of Guyana and the environment of Guyana and the Caribbean, and this judge is going to uphold those rules.
Yeah.
Yeah, I thought that his stance on standing was also really important. You know this idea that look, especially when it comes to things like environmental regulation, it's important to protect the ability of citizens to bring public interest suits. And I'm curious what you thought about that that part as well.
I've impressed you really have read the decision.
Yes, I've highlighted many parts.
Yeah, so I think what you have there is a really good statement of judicial review.
Judicial review is basically the rule of law in action. We depend on citizens to go to court and say, look, there isn't there is abuse of power by this public authority, and you, the court, do want you to step in
and put a stop to this abuse. And by ruling on standing in this suaity, the judge is basically saying, in the modern era, everybody has a right now, every citizen has a right to go to court to protect the public interest, and the traditional rules on standing are inappropriate for the situation that we are in now, and that actually we have to have these rules of standing. This is a really good modern decision based on the legal principles.
Good. Well, I was just saying someone this morning like that, I would love to see a ruling like this from the US Supreme Court, and it feels like totally wishful thinking. So so yeah, it was. It was. It was a good read. Okay, excellent, I guess yeah, what are just the next steps for you on this case? Are you sort of waiting to see if if anything gets filed and then and then you know, proceed from there. Are
you looking at okay? If if the government you know, is making public statements about this, then possibly that could be a case as well. I know there might be things you can't discuss, but to the extent that you can share, what's what's next on this for you?
Well, to be honest, I think the most important thing right now is to get people in Guyana to understand the immense significance of this case. The judge has put the root of law above the interests of Excelmobile. So all of those people who've been running around saying, oh, you can't do anything, you can't do anything, now they
don't have an excuse. Red Thread, which is a group of activists women, were out on Wednesday protesting and campaigning in order to get the insurance in place, and people were saying to them that they support Red Thread, but they don't think they'll get anywhere on the insurance. And of course this ruling comes out saying that ESSO has to provide the insurance. And I think that sense a really important message to people, and it says stop giving
way to despair, stop looking for excuses. Actually, you have the power to act, so act because it brings results. And again this is two people to ordinary citizens who went to court. There's no CSO involved in this sign up. The Bloomberg article says it's Transparency Institute Guyana Inc. But it's not. It's Fred Collins and God free weight to individuals.
Yeah.
So the next step, I think the really important thing is to get people to understand that they have this power and that they have an obligation to protect democracy in Guyana, that they have the power to stand up instead of just complaining about things not being right have they can act and they will get.
Right, and that the court will actually hear them and rule accordingly. That is it's so important for people to feel like it's not a lost cause to take a case like this to court.
Yeah. I think this also sends a message to the judiciary because we have we have had a case, the gains Skin case before the Chief Justice where the Chief Justice took over a year to give a decision and that's in breach of national law, specifically in breach of the time limit for Judicial Decisions Act and in breach of the cases in the Caribbean Court of Justice, which is our highest court of appeal. This case, Justice Casson, took from start to finish in eight months.
Yeah, I was shocked at how quickly the ruling came out.
This is what you want in a judicial review case, because every day in which you're waiting for a decision is a day in which a public authority, and in this case so is acting on lawfully. So judicial review is always urgent. The judges are expected to move swiftly, and the judge in this case has shown that it is possible to do that, so that sends a very clear message to the rest of the judiciary. We have another case before the Chief Justice in which the hearing
ended in May last year. It's again May, and we still have not heard a decision from the Chief Justice, even though we've written several letters. So I think looking ahead, I would hope to see decisions coming a lot faster on these judicial review decisions. Now it's not acceptable, I think, to be waiting for a year for a decision, and it's it's certainly contrary to national law and contrary to
the rulings of the Caribbean Court of Justice. So it's a most unfortunate situation in these other in the other cases that I mentioned.
I also thought it was really interesting how many times the judge emphasized that the issue of you know, whether or not the law requires financial assurance and this this parent company guarantee, Like he said sort of over and over again, like it's not complicated because because you know s O and the kind of message that like, well, the law is really complicated, it's open to interpretition and I don't know that seemed really important to me too,
that like he sort of repeated over and over again, like, look, this is not actually that complicated of an issue with the loss as this. It's very clear both sides understood it.
Yes, I agree completely with the judge. I have no idea why you thought it was complicated, and if it was. If they did think it was complicated, surely they would have obtained a competent legal advice before signing a document that they thought was complicated. So if they didn't, So if they thought it was complicated and they didn't get
proper legal advice, what's going on there? If it was complicated and they got proper legal advice, why are you coming back and saying you don't understand it or it's complicated, you know, yeah, it just doesn't make sense.
I know, it almost it seemed to me more like something they wanted to convince the public of that like this, Oh, actually the problem is that this law is complicated and open to interpretation. I don't know, it was Oh yeah,
I don't know. That's what it seemed like to me, because they mentioned it in a lot of their marketing videos too, that like, you know, it's it's a complex issue, but don't worry, we have the right insurance in place, and and and like I you know, it was interesting to me that this so far, of all the court cases, this is the only one that I've seen sort of multiple Exon videos about.
So On is of course entitled to say whatever they want. The question is whether people believe them. The question is whether people trust what Exon Mobil says. And I think perhaps a more important question is whether they're investors and the market have confidence in Exon Mobil and its business plan and the things that it's saying. I don't know the answer to that.
Yeah, that should be because actually the main group that they have messaged to about how great it is that they're moving so quickly is shareholders. So it'll be interesting to see if that tune changes.
Yes, I mean I wonder whether they thought this went through because to be operating above the safety levels of your fbso your floating production storage, offloading vessels, and to be using Faulter equipment, those are not items that would fill a shareholder with confidence, particularly when you think that
this is dangerous deep water drilling. This is one hundred and twenty miles off shore, the oil is about a mile below, the ocean is about a mile deep, and the oil is you know, I think about another mile below the seabed. This is extremely dangerous. And then when you add to that, clearly a lax regulator. In fact, the message to shareholders is not, look, it's wonderful, we're
moving so fast. It seems to me that one could reasonably conclude from the operations and the lax regulation that this is a very risky operation, and in fact, shareholders might want to think about the implications.
Yeah, but again, you know, that's why it's important to have a judge that reminds the EPA of its job.
Yes, I think this also has implications for business, because what business requires above what else is a level playing field, rules that apply to everybody and that are enforced equally against all of this entities in the sector. Now, if you've got one one operator think they have a collaborative relationship with the regulator, that's actually really bad for business and really bad for the country.
Right.
Yeah, you want to attract investment, and yet you're boasting that there's a collaborative relationship between the regulator and one of the entities, and the government is saying they want to attract investment that they want to develop, and yet they can't even meet the very basic standards that you require for business, which is which is a level playing field, a market in which everybody, everybody knows what the rules are, and all the entities in that market about the rules,
and they know that the rules are going to be enforced equally against all of them, no favors for anybody. Otherwise you're distorting competition.
That's it for this bonus episode. Thanks for listening. We will have a more detailed story on this ruling on our website at Drilled podcast dot com. I'll also have a story in the Intercept coming this week. We might have something in the Guardian as well, So keep an eye out. There's a lot more coming on this story. Thanks for listening, and we'll see you next time.