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A Texas appellate court has overturned a $2.5 million verdict against ExxonMobil Pipeline Co., ruling that the successive owners of the Sand Flat Pipeline were not responsible for the cleanup costs of an oil spill.

In a brief opinion issued Friday, the Texas Twelfth District Court of Appeals found that the purchase and sale agreements governing ownership of the 11-mile pipeline prohibited the assignment of interests without written consent, effectively voiding transfers to later owners.

Contract Terms Shield Successive Owners

The legal battle stemmed from a 2017 crude oil leak discovered on a 126.7-acre easement that had been granted in 1944. While ExxonMobil once owned the Sand Flat Pipeline, the company sold it to Salter Creek Resources LLC in 2000. The pipeline was later transferred through multiple entities, including Coffeyville Resources Crude Transportation LLC, Rose Rock Midstream Crude LLC, and its current owner, SemGreen LLP.

ExxonMobil sued these entities—collectively referred to as the SemGreen parties—arguing that under the 2000 purchase and sale agreement, they were obligated to assume responsibility for environmental remediation.

A jury trial on damages awarded $529,989.85 for past cleanup expenses, $1,494,693.24 for anticipated future costs, and $554,421 in attorney fees, bringing the total verdict to over $2.5 million.

Appeals Court Voids Liability

However, the appellate panel ruled Friday that Coffeyville never had a valid interest in the pipeline because its acquisition of the Birdwell easement violated the contractual consent-to-assign clause. Since Coffeyville’s ownership was "void and of no effect," it could not legally pass the pipeline to Rose Rock or SemGreen.

As a result, the appellate court granted summary judgment in favor of Coffeyville and SemGreen, reversing the $2.5 million award and ordering that ExxonMobil "take nothing."

Legal Teams Decline Comment

Counsel for SemGreen declined to comment on the ruling, and representatives for ExxonMobil and Coffeyville also did not provide statements.

Impact of the Decision

The appellate court's ruling underscores the importance of contractual provisions restricting assignments and shifts the financial burden of the 2017 oil spill cleanup back to ExxonMobil. The decision marks a major legal victory for the SemGreen parties while leaving ExxonMobil with limited options for recouping its environmental remediation expenses.

Whether ExxonMobil will seek further appeals remains uncertain, but for now, the company faces the reality of absorbing the cleanup costs it sought to recover.