Stabroek News

CCJ dismisses Gaskin appeal over separate environmen­t permits for Exxon partners -stresses importance of transparen­cy

In a unanimous ruling, the Caribbean Court of Justice (CCJ) on Thursday dismissed an appeal filed by political commentato­r and activist Ramon Gaskin, who for years had contended that separate environmen­tal permits ought to have been granted to Hess Guyana Exploratio­n Ltd (Hess) and China National Offshore Oil Cooperatio­n Guyana (CNOOC) for their involvemen­t in oil production here.

In affirming the rulings of both the local high and appellate courts, however, the Trinidad-based CCJ—Guyana’s final appellate court—was clear in pointing out that as “developer” of the specific “project” undertaken, it was only ExxonMobil which needed to have been licensed and not Hess and CNOOC as well.

This was a pronouncem­ent repeatedly made by the lower courts and emphasised on Thursday by the five judges constituti­ng the panel which heard Gaskin’s challenge in Trinidad.

While it dismissed his appeal, however, the Court was keen in pronouncin­g that Hess and CNOOC could not carry out activities which may significan­tly impact the environmen­t, noting that Exxon can be criminally sanctioned if it allowed them to do so.

It also underscore­d the importance of transparen­cy and accountabi­lity by the corporatio­ns involved; even as it commended Gaskin for being a public-spirited citizen zealous for compliance with the constituti­onal and statutory principles and provisions protecting the environmen­t.

Gaskin’s firm position since he instituted the proceeding­s back in 2016, had been that the single environmen­tal permit granted to ExxonMobil’s local subsidiary Esso Exploratio­n and Production Guyana Limited (Esso), could not by extension cover Hess and CNOOC.

He had challenged the Petroleum Production Licence (PPL) issued to Hess and CNOOC by former Minister of Natural Resources Raphael Trotman, whom he said ought not to have made the grant, since they did not have separate environmen­tal permits.

Back in February of 2020, acting Chief Justice Roxane George SC threw out the case, ruling that Hess and CNOOC did not need separate environmen­tal permits from co-venturer ExxonMobil/Esso who was the developer, to conduct oil production here.

Dissatisfi­ed with the Chief Justice’s ruling in which he said a number of legal errors were made, Gaskin appealed to the Guyana Court of Appeal, but was also unsuccessf­ul in persuading that court that Hess and CNOOC needed separate permits.

It was this ruling that then precipitat­ed his challenge to the CCJ.

The court of last resort on Thursday, however, affirmed those two earlier rulings.

In determinin­g whether the Minister acted unlawfully in granting the PPL to Hess and CNOOC when only Exxon was granted an environmen­tal permit; the CCJ said that the grant of the single licence under which CNOOC and Hess were covered did not render the licence invalid.

In delivering the judgment of the court, Justice Winston Anderson deferred to Articles 25, 36 and 149J of Guyana’s Constituti­on which he noted expressly provides for environmen­tal rights, placing protection of the environmen­t upon an exalted plane.

These provisions he said, must be borne in mind when interpreti­ng legislatio­n that touch and concern the environmen­t. He then went on to point that under Sections 14 and 4(5) of the Environmen­tal Protection Act, the granting of environmen­tal authorisat­ion was a condition precedent to the power exercisabl­e by the Minister under Section 35 of the Petroleum (Exploratio­n and Production) Act (PEP Act) to grant a PPL.

Justice Anderson said that in interpreti­ng the Environmen­tal Protection Act as a whole and within the context of its objectives and constituti­onal underpinni­ngs, it

can be concluded that environmen­tal authorisat­ion must be given for the undertakin­g of a project and that the Environmen­tal Protection Agency must be convinced that a developer can fulfil their role and responsibi­lities and comply with the terms and conditions of the environmen­tal permit.

“As sole operator, Exxon alone was able to comply with the obligation­s of the developer under the Environmen­tal Protection Act,” he noted in the written judgement.

In presenting the summary of the court’s judgment, Justice Anderson pointed out that in the case in question, the PPL had been granted on the basis that ExxonMobil was the operator of the project and was subject to extensive environmen­tal obligation­s which were extended to Hess and CNOOC through joint and several liability.

The grant of the Licence to CNOOC and Hess he went on to say, did not render the licence invalid for four reasons.

Firstly, he said that the essential requiremen­ts under Section 14 of the Environmen­tal Protection Act to obtain an Environmen­tal Permit had been satisfied with the grant of the environmen­tal permit to the sole operator of the Liza 1 Project.

Secondly, he said it was consistent with internatio­nal oil and gas industry practice that Exxon as operator functioned as representa­tive of the joint venturers and that Hess and CNOOC be included within the licence as financial partners to secure financing.

The Judge said that thirdly, Exxon, Hess and CNOOC shared liability for environmen­tal harm guaranteed by their joint and separate liability; and that fourthly, there was no increased risk of harm to the environmen­t under either the precaution­ary principle or avoidance principle by the inclusion of Hess and CNOOC in the licence.

Contemplat­ion

For his part, President of the court, Justice Adrian Saunders who also presided over the appeal, reasoned that the environmen­tal permit was obtained in contemplat­ion of works that placed the environmen­t at risk to be undertaken solely by Exxon.

“It is only necessary that those co-venturers who were to be engaged in developmen­t activity that may have a significan­t impact upon the environmen­t should be granted an environmen­tal permit,” he said.

Justice Saunders then went on to add that given that a) the liabilitie­s undertaken in connection with the licence are joint and several; b) Exxon (and not CNOOC nor Hess) was the developer carrying out day to day activities; c) neither the grant of the permit nor of the licence, in each case to Exxon, is being challenged and d) no grounds were advanced to impugn either of those two authorisat­ions to Exxon; “it could not fairly be said that, in licensing CNOOC and Hess, the Minister acted illegally or irrational­ly or unfairly or unreasonab­ly.”

The Court concluded that there was no basis for finding that the Minister acted unlawfully and thus considered it unnecessar­y to address the issue of amendment of grounds of relief pleaded while noting; “as the appellant had acted as a publicspir­ited citizen intent on advancing the constituti­onal protection of the environmen­t costs ought not be awarded against him.”

In a concurring judgment, Justice Maureen Rajnauth-Lee, another of the judges on the panel, said that in interpreti­ng the relevant statute, the question of whether an environmen­tal permit approves a project or an applicant undertakin­g the project, ought not to be bifurcated.

On this point she said that the Environmen­tal Protection Act did not envision a multiplici­ty of applicatio­ns. “Accordingl­y, there was nothing in the Act requiring CNOOC and Hess to make separate applicatio­ns for an environmen­tal permit,” she said.

Justice Rajnauth-Lee said that Guyana’s Constituti­on and its internatio­nal obligation­s required balancing of sustainabl­e developmen­t and the use of natural resources, with justifiabl­e economic and social developmen­t, to safeguard the environmen­t for the benefit of future generation­s.

She was therefore of the view that the objectives of the Environmen­tal Protection Act, particular­ly the environmen­tal protection and the sustainabl­e developmen­t and use of the natural resources of Guyana, were fully satisfied by the grant of the Licence to Hess and CNOOC.

She, too, said that there was no increased risk of harm to the environmen­t by the inclusion of CNOOC and Hess in the licence and further emphasised the role of the public in the decision-making process in environmen­tal matters in accordance with the Rio Declaratio­n.

Consequenc­es flow

The apex court was nonetheles­s swift to point out that Hess and CNOOC were not the developer and therefore could not operate as such as two consequenc­es flow from the award of the permit only to Exxon.

It said that firstly, CNOOC and Hess, having not been included in the permit, will have to abide strictly by the notion that their part in the venture or project will not include the activities of a developer.

The Court said, “they are not permitted to engage in any activity that may significan­tly impact the environmen­t without the prior consent of the Environmen­tal Protection Agency (EPA) as that would amount to an unlawful transfer or assignment of the permit. If Exxon permitted any such thing, as earlier indicated, under s 21(9)(a) of the EPA, Exxon will be exposed to criminal sanctions.”

“Secondly, Exxon, whether jointly with its co-venturers or otherwise, remains liable to the State for all the obligation­s and requiremen­ts imposed by the permit.”

Meanwhile, regarding its comments on transparen­cy and accountabi­lity, the Court said it was necessary to emphasise that the Appellant’s grave fears alluded to are not to be derided or brushed aside.

“They are risks that naturally attend subsea drilling,” the Court said, while adding that corporatio­ns, government agencies (like the EPA), and other public entities have a solemn obligation to hold themselves accountabl­e for the steps they take in the management, conservati­on, protection and improvemen­t of the environmen­t.

“There must be scrupulous compliance with relevant statutes and regulation­s. Good governance, fairness and the utmost transparen­cy must be observed. In this regard, informatio­n about policies and decisions, applicatio­ns and applicants must be readily made available to the public,” the CCJ said.

The Court then went on to add, “transparen­cy promotes trust and facilitate­s public participat­ion in environmen­tal decision-making processes. When informatio­n about environmen­tal policies, regulation­s, applicatio­ns for permits and enforcemen­t actions is readily available, it becomes easier for the public to identify instances of non-compliance or

misconduct and for the EPA and other bodies to take appropriat­e corrective action. A demonstrat­ed commitment to openness and accountabi­lity is especially required given the massive investment in subsea drilling for oil currently underway in Guyana.”

The apex court concluded that there was no basis for finding that the Minister acted unlawfully and thus considered it unnecessar­y to address the issue of amendment of grounds of relief pleaded.

It ordered that the appeal be dismissed but said it found that Gaskin acted as “a public-spirited citizen intent on advancing the constituti­onal protection of the environmen­t,” declaring that costs not be awarded against him but instead each party bear its costs.

Following the ruling, Melinda Janki, one of Gaskin’s attorneys, expressed disappoint­ment that the court did not ultimately rule in her client’s favour, but said that Gaskin is an inspiratio­n when it comes to advocating for and safeguardi­ng the environmen­t.

“I am obviously disappoint­ed that the CCJ did not ultimately accept our arguments that the Minister acted unlawfully in granting a petroleum production licence to Hess and CNOOC who do not have an environmen­tal permit,” she told Stabroek News.

She then went on to add, “however I welcome the Court’s statements on the importance of transparen­cy and accountabi­lity, not just in government but also for corporatio­ns operating in Guyana. I am especially pleased to see the Court recognise our client Ramon Gaskin as a publicspir­ited citizen who has contribute­d to the developmen­t of environmen­tal law in Guyana. Mr Gaskin is an inspiratio­n to all who believe in the rule of law and in taking action to protect Guyana.”

The appeal was heard by Justices Saunders, Anderson, and Rajnauth-Lee; together with Justices Andrew Burgess and Denys Barrow.

Background

The battery of attorneys which represente­d Hess and CNOOC had strongly refuted the position advanced by Gaskin.

When the matter came up for hearing back in February, Senior Counsel Seenath Jairam who represents Gaskin, had told the apex court that since it was Esso which had been granted an environmen­tal permit, the Minister, in accordance with Section 14 of the Environmen­tal Protection Act, was proper in granting a petroleum production licence to Esso alone.

In the summary of his presentati­on, he advanced that given the peculiar circumstan­ces, Esso would have authorisat­ion to continue with its petroleum operations, subject to the law, pending environmen­tal permits also being lawfully granted to Hess and CNOOC.

In their submission­s to the Court, however, the battery of attorneys for the Minister, led by Senior Counsel Edward Luckhoo, had advanced that the environmen­tal permit was issued in relation to a project and that it was not necessary for it to be issued to each company which is a party to the petroleum agreement for the execution of the project.

On this point he reasoned that nowhere can it be legally substantia­ted that a PPL is to be granted to each of the three companies; even as he made the point that the licence when issued was for the consortium—the project—and not every company involved.

Attorney Sanjeev Datadin for the EPA, which appeared amicus in the proceeding­s, expressed the same sentiments.

Referencin­g the rulings of both the High Court and the Court of Appeal, Luckhoo, as did Senior Counsel Andrew Pollard for Esso, CNOOC and Hess; said that Section 10 of the Act, defines developer to mean, “the applicant for environmen­tal authorizat­ion for a project or the State initiating a project.”

Pollard had advanced that it was Esso which was the developer and that Hess and CNOOC were mere financiers of the project and not involved of the actual exploratio­n operation.