XTO Energy, a subsidiary of Exxon Mobil, sued Energy Transfer LLC on Monday in a Texas state court for breach of contract involving disputed fines related to the Dakota Access Pipeline (DAPL).
The lawsuit claims that Energy Transfer pipeline operators charged XTO unnecessary fines and revoked production volume credits when a series of events outside of XTO’s control forced them to divert oil meant for the pipeline in August.
In July 2020, a district court judge shut the pipeline down for environmental review amidst months of protests from the Standing Rock Sioux Tribe concerning the pipeline’s damage to their water source. The court ordered operators to empty the DAPL within 30 days. This meant oil producers had to ship and store their supply elsewhere, quickly, or risk violating the court’s order. The decision was reversed shortly after, but not before XTO had rerouted 40 percent of their DAPL-designated shipments to other suppliers.
Simultaneously, Hurricane Laura took Exxon’s Beaumont refinery offline for four days. Because of a mandatory evacuation order in Beaumont’s Jefferson County, XTO did not have time to provide an alternative facility for DAPL to store the supply intended for their plant. The XTO refinery is a major processing center for DAPL’s fuel supply, so this shutdown further limited DAPL’s fuel storage alternatives. Exxon attempted to invoke a force majeure clause, but Energy Transfer rejected the claim.
Exxon requested $1 million in damages and the restoration of revoked credits, plus attorneys fees. They are also requesting reimbursement for fines they complied with. There is a federal court hearing scheduled for Friday to determine whether the pipeline can continue to operate without a permit while the environmental review is completed.