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Law360, New York (November 22, 2016, 4:29 PM EST) -- Exxon Mobil Corp. and environmentalists crossed swords Monday over what the oil giant's liability and civil penalties for alleged pollution at a Baytown, Texas, refinery should be, in a Clean Air Act citizen suit that was recently revived.
The Fifth Circuit in May had revived the long-running suit brought by Environment Texas Citizen Lobby Inc. and the Sierra Club, which contended that ExxonMobil should have to pay penalties for environmental law violations stemming from the Baytown refinery's emissions. The appellate panel found that the Texas federal judge unevenly analyzed the groups’ claims.
Both sides last month submitted proposed findings of fact and conclusions of law that were consistent with the circuit ruling, which among other things ordered the lower court to calculate penalties to match the 94 actionable violations it found. Both sides bashed the other's proposal in dueling briefs Monday.
ExxonMobil accused the environmental groups of “asserting unsupported and redundant 'gotcha' theories” over all the Baytown refinery's reports and records for an eight-year period. The company said the groups have not shown how imposing $40 million in civil penalties — down from the $641 million the groups proposed when originally filing their suit — would serve the CAA's goals.
“Under the circumstances of this case, imposing a civil penalty on the Baytown complex despite its history of good faith, its consistently improving compliance record, and the absence of any pattern of recurring emissions from a common cause or of any risk of harm to human health or the environment — and in the face of enforcement decisions by the government regulators — would disserve the purposes of the CAA,” ExxonMobil argued in its brief.
But the environmental groups said that the plain meaning of the refinery's permits and the refinery's compliance records, as well as ExxonMobil's court admissions, firmly establish liability. To accept ExxonMobil's proposed findings is to make words mean only what the company says they should mean, a view straight out of Lewis Carroll's “Through the Looking-Glass,” they argued in their brief.
“Exxon argues that the refinery permit does not mean what it plainly says; that Texas regulations contain provisions that do not exist; and that Exxon’s own statements, made in its noncompliance reports and in open court in this case, are not to be taken at face value,” the groups' brief stated. “But Exxon cannot 'make words mean so many different things; without stepping 'through the looking-glass' and stretching its permits, its compliance reports, and its own binding admissions beyond the point of credulity.”
The groups had filed suit in December 2010, claiming that the Baytown facility — an integrated refinery, olefins and chemicals plant — emitted millions of pounds of pollutants into the air over the past several years, well in excess of legal limits. The groups alleged more than 18,000 actionable violations of environmental laws and sought $641 million in penalties.
U.S. District Judge David Hittner in December 2014 ruled for ExxonMobil after a 13-day bench trial, finding that even though the refinery's emissions went above the permitted limit at times, they were not enough to warrant a penalty.
On appeal, the environmentalists said Judge Hittner erred by not finding that the company’s own reports proved more than 18,000 days of actionable violations. Moreover, he did not order any remedy for 94 violations of the law that he did find actionable, the groups said. They said the judge wrongly used a larger number of smaller violations as grounds to discount more-serious violations.
For its part, ExxonMobil argued that even though its massive Baytown refinery will never be able to operate completely pollution-free, it remains a "leader in environmental compliance." The Clean Air Act takes that inevitability into account by allowing industrial facilities like the Baytown complex to emit a certain level of pollutants during their normal operations, the company argued.
The appeals court sided with the environmental groups, concluding that Judge Hittner had ruled on one aspect of the environmentalists’ case that the violations listed in ExxonMobil’s own reports were undisputed but in another portion of his ruling found them to be “uncorroborated.”
The Fifth Circuit also took exception with Judge Hittner's finding that though there were 94 actionable violations by his count in the record, no penalty was warranted. The appeals court ordered the court on remand to tally up penalties to match the actionable violations found.
The appeals court subsequently denied ExxonMobil's en banc rehearing request in August.
The environmental groups are represented by Philip H. Hilder of Hilder & Associates PC, Charles C. Caldart and Joshua R. Kratka of the National Environmental Law Center, and David A. Nicholas.
ExxonMobil is represented by Eric J.R. Nichols, Fields Alexander and Bryon A. Rice of Beck Redden LLP.
The case is Environment Texas Citizen Lobby Inc. et al. v. Exxon Mobil Corp. et al., case number 4:10-cv-04969, in the U.S. District Court for the Southern District of Texas.
--Additional reporting by Y. Peter Kang and Kat Greene. Editing by Edrienne Su.