Env't Tex. Citizen Lobby, Inc. v. ExxonMobil Corp.

• Decision Date: 17 December 2014
• Docket Number: Civil Action No. H–10–4969.
• Citation: 66 F.Supp.3d 875
• Parties: ENVIRONMENT TEXAS CITIZEN LOBBY, INC. and Sierra Club, Plaintiffs, v. EXXONMOBIL CORPORATION, ExxonMobil Chemical Company, and ExxonMobil Refining and Supply Company, Defendants.
• Court: U.S. District Court — Southern District of Texas

66 F.Supp.3d 875

ENVIRONMENT TEXAS CITIZEN LOBBY, INC. and Sierra Club, Plaintiffs

v.EXXONMOBIL CORPORATION, ExxonMobil Chemical Company, and ExxonMobil Refining and Supply Company, Defendants.

Civil Action No. H–10–4969.

United States District Court, S.D. Texas, Houston Division.

Filed Dec. 17, 2014.

Heather Govern, Joshua R. Kratka, Boston, MA, David A. Nicholas, Attorney at Law, Newton, MA, Philip Harlan Hilder, Hilder & Associates, P.C., Houston, TX, for Plaintiffs.

Eric J.R. Nichols, Beck Redden LLP, Keith A. Courtney, Winstead PC, Austin, TX, Fields Alexander, Bryon A. Rice, William Bradley Coffey, Beck Redden LLP, Houston, TX, for Defendants.

FINDINGS OF FACT & CONCLUSIONS OF LAW

DAVID HITTNER, District Judge.

On February 10, 2014, this Court commenced a non-jury trial in the above-entitled matter. During the course of the thirteen-day proceeding, the Court received evidence and heard sworn testimony.¹ Having considered the evidence, testimony, and oral arguments presented during the trial, along with post-trial submissions² and the applicable law, the Court now enters the following findings of fact and conclusions of law pursuant to Federal Rule of Civil Procedure 52(a). Any finding of fact that should be construed as a conclusion of law is hereby adopted as such. Any conclusion of law that should be construed as a finding of fact is hereby adopted as such.

I. BACKGROUND

On December 13, 2010, Plaintiffs Environment Texas Citizen Lobby, Inc. (“Environment Texas”) and Sierra Club (“Sierra Club”) (collectively, “Plaintiffs”) brought suit under the citizen suit provision of the federal Clean Air Act (the “CAA”), 42 U.S.C. § 7604, against Defendants ExxonMobil Corporation, ExxonMobil Chemical Company, and ExxonMobil Refining and Supply Company (collectively, “Exxon”). The case concerns Exxon's operation of a refinery, olefins plant, and chemical plant located in Baytown, Texas (the “Complex”), which is a suburb of Houston and within Harris County. Plaintiffs seek a declaratory judgment, penalties,³ injunctive relief, and appointment of a special master for events at the Complex involving unauthorized air emissions or deviations from one of the Complex's air permits, during a period spanning from October 14, 2005, to September 3, 2013.

II. FINDINGS OF FACT

The following facts have been established by a preponderance of the evidence:

A. Exxon and the Complex

1. ExxonMobil Chemical Company and ExxonMobil Refining and Supply Company are wholly owned subsidiaries of ExxonMobil Corporation.⁴ ExxonMobil Corporation is the largest publicly traded oil company in the world as measured by market evaluation.⁵ In addition, it is one of the largest publicly traded companies in the world measured by both revenue and market capitalization.⁶ Total after-tax profits of ExxonMobil Corporation were $41 billion in 2011 and $44 billion in 2012.⁷

2. Exxon owns and operates the Complex, which consists of a refinery, olefins plant, and chemical plant.⁸ The Complex is one of the largest and most complex industrial sites in the United States.⁹ Specifically, it is the largest petroleum and petrochemical complex in the United States.¹⁰ It sits on approximately 3,400 acres, with a circumference of approximately 13.6 miles.¹¹ It has the capacity to process more than 550,000 barrels of crude oil per day and to produce about 13 billion pounds of petrochemical products each year.¹² These products range from jet fuel to plastic.¹³ The Complex has a vast array of equipment, including roughly 10 thousand miles of pipe, 1 million valves, 2,500 pumps, 146 compressors, and 26 flares.¹⁴ It employs over 5,000 people.¹⁵

3. The Complex is located in Baytown, Texas, which is a suburb of Houston. The nearby area in which the Complex operates is populated with numerous other refineries, petrochemical plants, and industrial facilities.¹⁶

B. Title v. Permits

4. The Complex is governed, in part, by operating permits issued by the Texas Commission on Environmental Quality (the “TCEQ”) pursuant to Title V of the CAA.¹⁷ The Title V permits incorporate—typically by reference—numerous regulatory requirements, such as United States Environmental Protection Agency (“EPA”) air pollution regulations and State of Texas air pollution regulations, as well as other permits, such as New Source Review permits and Prevention of Significant Deterioration permits.¹⁸ Taking all permit conditions together, the Complex is regulated by over 120,000 permit conditions related to air quality, each of which is tracked by the Complex for compliance purposes.¹⁹

C. Reportable Events, Recordable Events, and Deviations

5. Exxon documents noncompliance and indications of noncompliance with its Title V permits in three ways.²⁰ First, the TCEQ requires Exxon to document and submit to the TCEQ—via a State of Texas Environmental Electronic Reporting System (“STEERS”) report—information about “emissions events” that release greater than a certain threshold quantity of pollutants, called “reportable emissions events.”²¹ Second, the TCEQ requires Exxon to document information about “emissions events” that release less than the aforementioned threshold quantity of pollutants, called “recordable emissions events;” documentation of recordable emissions events are kept on-site at the Complex and are not submitted to the TCEQ via a STEERS report.²² Third, the TCEQ requires Exxon to document and submit to the TCEQ information about Title V “deviations” in semiannual Title V “deviation reports.”²³ It is undisputed Exxon complied with the TCEQ's aforementioned reporting and recording requirements. Plaintiffs and Exxon stipulated to the contents of Exxon's STEERS reports of reportable emissions events, records of recordable emissions events, and Title V deviation reports covering the time period at issue in this case, which is October 14, 2005, to September 3, 2013.²⁴ These stipulations are contained in Excel spreadsheets spanning hundreds of pages, admitted at trial as Plaintiffs' Exhibits 1A through 7E. Specifically, at issue are 241 reportable emissions events (the “Reportable Events”), 3,735 recordable emissions events (the “Recordable Events”), and 901 Title V deviations (the “Deviations”) (collectively, the “Events and Deviations” or the “Events or Deviations”).²⁵

D. Investigation, Enforcement, and Corrective Actions

6. The TCEQ investigates each reportable emissions event.²⁶ Following an investigation, the TCEQ determines whether it will initiate enforcement based, in part, on whether the event was “excessive” and whether the applicable statutory affirmative defense criteria were met.²⁷ Similarly, the TCEQ reviews the records of recordable emissions events and takes enforcement action should it determine the records reflect an inappropriate trend.²⁸

7. In addition to the TCEQ's investigation, for each of the Reportable Events, Exxon conducted an extensive internal investigation, evaluated the root cause of the event, and implemented corrective actions to try to prevent recurrence.²⁹ Similarly, for the Recordable Events and Deviations, Exxon analyzed the records for trends and ways to improve, identified root causes, and implemented corrective actions.³⁰ A root cause analysis requires consideration of a number of factors, including the type of equipment involved, the component of the equipment that may have failed, and human interaction with the equipment.³¹ A root cause analysis is necessary—as a factual matter in this case—to determine whether the Events and Deviations resulted from a recurring pattern, and to determine whether improvements could have been made to prevent recurrence.³² The number of events involving a certain type of equipment, a certain unit, or a certain type of issue (such as leaks) does not alone mean that any of the Events or Deviations resulted from a recurring pattern or were preventable.³³

8. After investigating, the TCEQ assessed $1,146,132 in penalties against Exxon for some of the Events and Deviations.³⁴ In addition, Harris County assessed $277,500 in penalties for some of the Events and Deviations.³⁵ Thus, in total, Exxon has paid $1,423,632 in monetary penalties for Events and Deviations at issue in this case.³⁶ Along with those penalties, the TCEQ required Exxon to take certain corrective actions or document the corrective actions already taken.³⁷

9. Moreover, after investigating, the TCEQ elected not to pursue enforcement on 97 Reportable Events because the TCEQ determined the applicable affirmative defense criteria were met.³⁸ Such applicable affirmative defense criteria include finding that the unauthorized emissions could not have been prevented, were not part of a recurring pattern, and did not contribute to a condition of air pollution.³⁹ Also, after investigating, the TCEQ elected to pursue enforcement but not impose penalties or require further action on 55 Reportable Events because Exxon either agreed to take certain corrective actions or had already taken corrective actions.⁴⁰ An example of one such Reportable Event occurred on August 30, 2006, at the Butadiene Unit due to operator error.⁴¹ Exxon's root cause analysis determined the event occurred because a technician misunderstood a request via radio from a computer console operator and opened the wrong valve.⁴² The incorrect action was corrected within 12 minutes, and Exxon used the event as an example to its employees to reinforce the importance of effectively communicating via radio and repeating field expectations before performing action.⁴³ Another example of one such Reportable Event occurred on April 11, 2007, at the BOP–X Expansion Flare when the methanator shut down resulting in flaring.⁴⁴ Exxon's root cause analysis determined the methanator shut down because of a high temperature swing in the furnace crossover temperature during the feed-in of steam shortly after the furnace completed a routine decoke cycle.⁴⁵ That event was the first time in the 10 years the methanator had been in service that such an...