Split 5th Circuit Backs Landmark Air Penalty Amid Confusion on Standing
A starkly divided 5th Circuit has upheld a landmark civil penalty imposed on oil giant ExxonMobil for Clean Air Act (CAA) violations, in a profoundly divided opinion that otherwise fails to resolve key questions over citizens’ standing to sue, amid a dispute over whether the court should even have heard the long-running case again.
Given the judges’ often-rancorous divisions, the case appears to be a good candidate for appeal to the Supreme Court on the question of when citizens have standing to sue in such cases.
In a lengthy Dec. 11 per curiam opinion in Environment Texas Citizen Lobby, Inc. v. ExxonMobil Corp., 17 judges from the U.S. Court of Appeals for the 5th Circuit sitting en banc say that their long-running effort to resolve the litigation has denied the parties the justice they have long sought.
“[The] parties in this case have already endured multiple appeals and remands back to the district court, over the course of nine years. Another remand would mean that the appellate proceedings in this matter will have delayed resolution of this case by over a decade. Justice delayed is justice denied.”
“Had we known that it would take a year and a half after en banc oral argument to issue an opinion, we would not have granted en banc rehearing. We accordingly AFFIRM the judgment of the district court, dated March 2, 2021,” the court holds.
The ruling therefore upholds the most recent finding of a district court on remand from the 5th Circuit in a series of cases known at the appellate level as Exxon I, II and III, confirming a civil penalty of over $14 million, payable to the U.S. Treasury, for numerous violations of air permit emissions limits at Exxon’s combined refinery and chemical plant in Baytown, TX -- the largest such facility in the country.
The case is seen as a key test of air act citizen enforcement powers, and specifically of standing in the wake of the Supreme Court’s 2021 ruling in TransUnion v. Ramirez, a credit reporting case, that took a narrow view of plaintiffs’ ability to trace injuries to the alleged actions of a defendant, and therefore of their standing to sue.
EPA, acting as an amicus in the Exxon suit, argued that Exxon’s invocation of TransUnion to argue against citizens’ right to sue was misplaced. Exxon argues that plaintiffs lack standing to sue over their many alleged violations of air permits because they cannot trace their injuries to the company’s emissions, but EPA argued this relies on an incorrectly retrospective view of air law penalties.
Such penalties should instead be seen as prospective and designed to deter future violations, and not tied closely to individual instances of past violations, EPA said.
But in its en banc decision, the 5th Circuit divides into different camps with different views on that logic. Seven judges agree with EPA’s reasoning and in a concurring opinion say they would have reinstated an earlier judgement of the courts that imposed a larger penalty on Exxon of around $20 million.
Chief Judge Jennifer Walker Elrod concurs with the latest version of the penalty -- making her the only judge to explicitly agree with the current version of the penalty decision now being upheld -- because District Judge David Hittner “got it right” when he reduced the penalty award. “So too did the panel majority opinion in Exxon III, which affirmed Judge Hittner. I would accordingly support reinstating the Exxon III panel majority opinion, which explains far more eloquently than I could why the district court was correct,” Elrod writes.
‘Splintered Dissents’
Meanwhile, a group of eight judges including Trump appointee Andrew Oldham joined a dissent that disagrees with EPA’s view and would deny standing to the plaintiffs, alleging that the decision now being upheld allows standing to be “dispensed in gross,” contradicting TransUnion.
And Judge James Ho, although inclined to side with Exxon, writes a separate concurrence, saying, “I would have voted to vacate and remand. I recognize, however, that I have been unable to garner an en banc majority for my views. Nor has any other member of the court, as today’s splintered vote amply demonstrates.”
He writes, “Rather than engage my sincere concern that splintered decisions disserve the public and warrant dismissal as improvidently granted, the dissenters respond by issuing a series of -- splintered dissents.”
Ho would have supported a finding that en banc review was “improvidently granted,” but the judges disagree with one another on the ramifications of such a decision, and even the court’s ability to take this step.
“Judge Oldham is unable to cite any actual case law or authority in response. What he offers instead is an extended discourse on the ‘ancient writ’ of certiorari,” with respect to the Supreme Court’s practices when deciding it granted cert in error, Ho writes.
“After all, without a majority opinion announcing the law of the circuit, all we’re left with here is a parochial disagreement over how much one company must pay in civil penalties,” he says.
“The dissenters deny that they’re favoring corporate litigants over ordinary citizens. But they find it ‘strange’ that we would not grant en banc review just to protect ‘one company’ from paying civil penalties. What I find ‘strange’ is the notion that our legal system should never penalize a corporation,” Ho continues.
Much of the discussion in the opinion revolves around the Supreme Court’s 2000 ruling on standing issues in Friends of the Earth, Inc. v. Laidlaw Environmental Services, a Clean Water Act (CWA) citizen suit, where the justices found citizens had standing to bring their case over water pollution. The court found penalties were permissible to prevent ongoing unlawful discharges of pollution.
Laidlaw and other relevant cases “make clear the following: (1) citizen suit plaintiffs may only pursue prospective forms of relief; (2) civil penalties are a form of prospective relief because they deter future violations; and (3) the standing analysis for suits seeking injunctive relief applies equally to suits seeking civil penalties,” writes Judge W. Eugene Davis for seven concurring judges backing EPA’s position.
“In light of the above precedent, both this Court and our sister circuits have consistently applied Laidlaw’s prospective standing analysis to citizen-suit cases seeking injunctive relief and civil penalties alike,” Davis writes.
“Exxon recognizes that neither Laidlaw nor other circuit court CAA and CWA cases have applied a violation-by-violation approach to standing,” he says.
“We see no reason why the unprecedented number and variety of violations at issue here require the application of a novel approach to standing focused on each past violation. Further, the number of violations and pollutants does nothing to change the fact that civil penalties are a prospective form of relief that requires a forward-looking approach to standing. And to adopt Exxon’s violation-by-violation approach would amount to making standing impossible to establish in cases involving sprawling industrial complexes that regularly emit an array of dangerous pollutants.”
‘Truncated View’
But Judge Edith Jones in her dissent on behalf of the eight judges who would dismiss the case for lack of standing says, “Judge Davis’s (non-majority) truncated view of standing is dangerous because it authorized Plaintiffs to seek civil penalties for every single emission exceedance reported by ExxonMobil, no matter how small, no matter whether it could have or did affect a plaintiff, and no matter how inconsequential in proportion to the complex’s legally permitted emissions. This position effectively usurps federal, state, and local environmental enforcement decisions.”
Jones says the case is “far more complex than any that has been decided in the Supreme Court or this court.”
She adds, “Plaintiffs were required to demonstrate by a preponderance of the evidence that each violation for which they seek a civil penalty was a cause-in-fact of their injuries. The evidence offered at trial, however, supports standing for only a handful of violations.”
And “The U.S. government’s theory of ‘prospective standing,’ adopted by the plaintiffs and Judge Davis, essentially eliminates traceability,” Jones says.
“We reject this novel argument for a number of reasons. First, no case law supports this novel theory. We are aware of none. Laidlaw does not endorse ‘prospective’ tracing,” Jones writes.
Davis’s opinion “posits standing simply because of the total volume of past emissions, from whatever source at whatever time, due to violations of any permit terms or conditions. If these global assertions are not tantamount to ‘standing in gross,’ it is hard to imagine what might be,” Jones says.
Meanwhile, Oldham in a separate dissent on behalf of six judges says, “fundamentally, Laidlaw provides no help to today’s majority because it did not address traceability at all.”
He continues, “The Laidlaw Court presumably saw no need to discuss traceability because all the plaintiffs’ injuries were easily traceable to one ongoing wrongful act -- the discharge of mercury into the North Tyger River.”
Oldham says, “rather than completing the task and choosing a legal rule (any legal rule), today’s en banc majority throws up its hands and announces a non sequitur: ‘We have taken too long trying to make up our minds, so, oh well -- affirmed.’”