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The ExxonMobile industrial complex in Baytown, Texas is a sprawling place. Stretching over nearly 2,500 acres over five square miles, the complex, the second largest oil refinery in the country, is capable of processing more than half a million barrels of oil a day -- along with significant amounts of air pollution. And according to Texas environmental groups, Exxon's plant regularly violated the terms of its operating permits, belching far more pollution into the air than what was permitted.
Six years ago, those groups brought suit under the Clean Air Act, accusing Exxon of thousands of violations at its Baytown plant. A district court found only 94 of the thousands of alleged violations to be "actionable" and refused to impose any penalties against the world's largest oil company. But those groups received some vindication from the Fifth Circuit last week, when that court ruled the district court had abused its discretion by "declining to impose any penalties, issue a declaratory judgment or grant injunctive relief in remediation of the violations at issue."
Exxon's Baytown complex operates in accordance to five federal permits issued under the Clean Air Act, which limit the emissions the plant can release. At least, that's the idea. Exxon's own records show that those emission regulations are regularly violated. And it is those enforcement records that caused by the state and environmental nonprofits to bring actions against Exxon.
According to the lawsuit filed by Environment Texas and the Sierra Club, Exxon violated the Clean Air Act thousands of times between 2005 and 2010. Those violations included going over hourly emissions limits, releasing highly reactive collative organic compounds at a rate of over 1,200 pounds per hour, and regularly deviating from the requirements of the plant's permits. After a 13-day bench trial, District Judge David Hittner tossed out most of those violations, finding only 94 "actionable" violations and refusing to take any action on them.
The Fifth Circuit reversed Hittner on three grounds. First, the court had erred in finding only 94 violations. It also erred in weighing "less lengthy/less serious violations against more lengthy/more serious violations" when assessing penalties and when it refused to consider evidence that Exxon had profited from noncompliance.
In several ways, the Fifth Circuit's ruling was a major win for environmentalists. First, the court rejected Exxon's argument that "upset emissions" weren't governed by the CAA permits. Upset emissions are those which occur because of an "unplanned and unavoidable breakdown or excursion of a process or operation that results in unauthorized emissions."
Similarly, the court adopted a broader reading of ongoing violations. Ongoing violations encompass standards and limitations that may change over time due to amendments or renewals and that courts should focus on the pollutants themselves, not the individual limits exceeded.
But it wasn't all a clear win. The court also found that deviation reports, which the plaintiffs had relied upon, do not constitute evidence of violations in and of themselves. It also found that the staggering number of CAA violations "does not alone mean Exxon did not make a good faith effort to comply."
The case will now go back to district court, where Judge Hittner will decide what penalties are appropriate. Our guess is that he'll come up with something a bit better than "none."
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