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

• Citation: 824 F.3d 507
• Decision Date: 27 May 2016
• Docket Number: No. 15–20030,15–20030
• Parties: Environment Texas Citizen Lobby, Incorporated; Sierra Club, Plaintiffs–Appellants, v. ExxonMobil Corporation; ExxonMobil Chemical Company; ExxonMobil Refining & Supply Company, Defendants–Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

824 F.3d 507

Environment Texas Citizen Lobby, Incorporated; Sierra Club, Plaintiffs–Appellants

v.ExxonMobil Corporation; ExxonMobil Chemical Company; ExxonMobil Refining & Supply Company, Defendants–Appellees.

No. 15–20030

United States Court of Appeals, Fifth Circuit.

Filed May 27, 2016

Philip Harlan Hilder, Hilder & Associates, P.C., Houston, TX, Charles Craig Caldart, Esq., National Environmental Law Center, Seattle, WA, Heather A. Govern, Joshua Robert Kratka, National Environmental Law Center, Boston, MA, David A. Nicholas, Newton, MA, for Plaintiffs–Appellants.

Russell S. Post, Fields Alexander, Robert David Daniel, David M. Gunn, William R. Peterson, Bryon A. Rice, Beck Redden, L.L.P., Jefferson Gregory Copeland, Baker Botts, L.L.P., Houston, TX, Albert R. Axe, Jr., Keith Alan Courtney, Winstead, P.C., Eric J. R. Nichols, Beck Redden, L.L.P., Austin, TX, for Defendants–Appellees.

Kathleen Hopkins Alsina, Mary Elizabeth Stevenson, City of Houston Legal Department, Houston, TX, Emma C. Cheuse, Earthjustice, Washington, DC, for Amicus Curiae City of Houston.

Elizabeth Sterling, Assistant Attorney General, Office of the Attorney General for the State of Texas, Austin, TX, for Amicus Curiae State of Texas.

Michael Robert Hull, Assistant County Attorney, County Attorney's Office for the County of Harris, Houston, TX, Emma C. Cheuse, Earthjustice, Washington, DC, for Amicus Curiae Harris County Attorney.

Kelly Leigh Haragan, Esq., University of Texas School of Law Environmental Law Clinic, Austin, TX, Emma C. Cheuse, Earthjustice, Washington, DC, for Amicus Curiae Air Alliance Houston.

Ignacio Ramirez, Sr., Baytown, TX, for Amicus Curiae City of Baytown.

Aaron Michael Streett, Baker Botts, L.L.P., Houston, TX, for Amici Curiae BCCA Appeal Group, Texas Oil & Gas Association, Texas Chemical Council, Chamber of Commerce of the United States of America, and National Association of Manufacturers.

Before BENAVIDES, DENNIS, and SOUTHWICK, Circuit Judges.

FORTUNATO P. BENAVIDES

, Circuit Judge:

This appeal concerns a Clean Air Act (“CAA”) citizen suit brought by Plaintiffs–Appellants Environment Texas Citizen Lobby Incorporated and Sierra Club (“Plaintiffs”) against ExxonMobil Corporation, ExxonMobil Chemical Company, and ExxonMobil Refining & Supply Company (collectively, “Exxon”). Exxon owns and operates an industrial complex (which includes a refinery and two petrochemical plants) in Baytown, Texas, and Plaintiffs allege that Exxon violated the federal permits governing operations at the complex thousands of times over a nearly eight year period. Specifically, and as relevant to this appeal, Plaintiffs allege that Exxon (1) repeatedly violated a permit condition “stating that emissions from ‘upset’ events are not authorized under any circumstances,” (2) repeatedly emitted pollutants at rates in excess of the hourly emission limits set forth in permit emission rate tables, (3) repeatedly emitted highly reactive volatile organic compounds (“HRVOCs”) at rates in excess of a 1,200 lbs./hr. emission limit, (4) repeatedly violated a prohibition on visible emissions from flares lasting more than five minutes during any two consecutive hours, and (5) repeatedly violated a number of other permit requirements, some emissions-related and some non-emissions-related, as reflected in “deviation reports” filed with the Texas Commission on Environmental Quality.

Plaintiffs sued Exxon for these and other alleged violations in the United States District Court for the Southern District of Texas. The district court conducted a thirteen-day bench trial and issued findings of fact and conclusions of law denying most of Plaintiffs' claims and declining to order any relief. On appeal, Plaintiffs contend generally that (1) the district court erred in finding a total of only 94 actionable violations of Exxon's permits, and (2) the district court abused its discretion in declining to impose any penalties, issue a declaratory judgment, or grant injunctive relief in remediation of the violations at issue. We now VACATE the district court's judgment and REMAND for further proceedings.

I. BACKGROUND

Exxon's Baytown industrial complex—the subject of the instant lawsuit—is comprised of a refinery, an olefins plant, and a chemical plant. Overall, the complex is governed by five federal operating permits issued pursuant to Title V of the CAA. See 42 U.S.C. §§ 7661a

–7661d. These federal permits (“Title V Permits”) incorporate various federal and state regulatory requirements and also incorporate by reference state permits issued pursuant to State Implementation Plan (“SIP”) programs. Each permit at issue in this suit contains a Maximum Allowable Emission Rate Table (“MAERT”), which sets the maximum rates at which specific pollutants may be emitted from specific sources (or, in the case of “flexible” permits, groups of sources). It is also undisputed on appeal that (1) “[t]he permits for all three plants incorporate the Texas ‘HRVOC Rule,’ which limits facility-wide emissions of highly reactive volatile organic compounds to no more than 1,200 pounds per hour,” and (2) “[t]he permits for all three plants incorporate federal regulations prohibiting visible” plant flare emissions “for periods exceeding five minutes during any two-hour period.” Finally, each incorporated permit involved in this case contains a series of additional “special conditions.” For example, and as relevant to the present appeal, a permit governing operations at the Baytown refinery provides under special conditions 38 and 39 that “[t]his permit does not authorize upset emissions, emissions from maintenance activities that occur as a result of upsets, or any unscheduled/unplanned emissions associated with an upset. Upset emissions are not authorized, including situations where that upset is within the flexible permit emission cap or an individual emission limit.”

The state regulatory agency charged with enforcing these permit provisions in conjunction with the EPA is the Texas Commission on Environmental Quality (“TCEQ”). In order to facilitate TCEQ oversight and enforcement, state regulations require regulated entities to document “noncompliance and indications of noncompliance” with their permits in certain ways. Env't Tex. Citizen Lobby, Inc. v. ExxonMobil Corp. , 66 F.Supp.3d 875, 882 (S.D.Tex.2014)

. First, regulated entities must submit State of Texas Environmental Electronic Reporting System (“STEERS”) reports to the TCEQ documenting “emissions events”¹ that result in the release of pollutants at or above a threshold quantity. See 30 Tex. Admin. Code § 101.201(a) ; id. § 101.1(88)-(89). Second, regulated entities must maintain on-site records of “emissions events” that result in the release of pollutants below the relevant threshold quantity. Id. § 101.201(b). Third, regulated entities must submit semi-annual reports to the TCEQ documenting any “deviations”² from Title V permit requirements. Id. § 122.145(2). The TCEQ investigates each “reportable” event reflected in a STEERS report, reviews the on-site records of all “recordable” events, and has the authority to take enforcement action on any event should it deem such action necessary. In the present case, the record reflects that the TCEQ pursued enforcement and ultimately assessed over $1 million in penalties against Exxon based on a number of the “events” set out in its reports and records for the period relevant to this appeal. Furthermore, in 2012, the TCEQ and Exxon entered an “agreed enforcement order” which, among other things, requires Exxon to implement four “environmental improvement projects” in order to “reduce emissions at the Baytown Complex, including emissions from emissions events....”

As a supplement to the enforcement authority vested in the EPA and state regulatory agencies like the TCEQ, the CAA also authorizes “any person [to] commence a civil action on his own behalf” against “any person ... who is alleged to have violated (if there is evidence that the alleged violation has been repeated) or to be in violation of ... an emission standard or limitation under [the CAA].” 42 U.S.C. § 7604(a)(1)

. The definition of “emission standard or limitation” includes any “standard,” “limitation,” “schedule,” “term,” or “condition” in a Title V permit. Id. § 7604(f)(4). Thus, any person may bring a so-called “citizen suit” under the CAA against a regulated entity that has violated a provision of its Title V permit, so long as the violation has been “repeated” or is “ongoing.” See

id. § 7604(a)(1).

In December of 2010, Plaintiffs in the present case sued Exxon under the CAA's citizen suit provision, alleging thousands of violations of Exxon's permits over a period spanning from October of 2005 through the date of suit.³ Plaintiffs raised seven counts in their complaint, five of which are at issue in this appeal. Specifically, Plaintiffs alleged (among other things) that Exxon (1) committed thousands of violations of the refinery permit condition providing that “upset emissions” are “not authorize[d]” (Count I); (2) committed thousands of violations of the MAERT emission limits for various pollutants in the complex's permits (Count II); (3) committed 18 days of violations of the incorporated 1,200 pounds per hour permit limits on emissions of HRVOCs (Count III); (4) committed 44 days of violations of the incorporated permit prohibitions on visible emissions from flares for periods exceeding five minutes during any two-hour period (Count IV); and (5) committed over 4,000 days of additional violations of sundry regulatory requirements reflected in “deviation reports” that Exxon submitted to the TCEQ (Count VII). Plaintiffs sought the maximum statutory penalties for each of the violations, a declaratory judgment that Exxon violated its permits (and thus the CAA), a permanent injunction barring Exxon from further permit violations, attorneys' fees and costs, and appointment of a “special master” to monitor implementation of relief.

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