2020 Environmental Real Estate Issues

On August 30, 2022, the US Court of Appeals for the 5th Circuit issued its third opinion in Environment Texas v. ExxonMobil, upholding the assessment of a $14.5 million penalty for Clean Air Act (CAA) violations at ExxonMobil’s massive refining and chemical complex in Baytown, Texas.

Multiple Violations and an Issue of Standing
In 2014, the district (trial level) court dismissed the case and Environment Texas appealed.  In 2016, the 5th Circuit reversed the dismissal, stating the district court had too narrowly construed the CAA.  Following a new trial, the district court assessed penalties of almost $20 million based on 16,386 days of CAA violations.  ExxonMobil appealed; one of its arguments was Environment Texas had not established standing. If standing is not established, the court lacks jurisdiction.
In 2020, the 5th Circuit ruled that Environment Texas needed to establish standing by showing “traceability” as to each violation. It acknowledged the evidence probably established standing for some violations, but for others the standing evidence was questionable.  The 5th Circuit remanded the case to the district court to determine the number of violations for which standing was established and the appropriate penalty based on that determination. (See Alert August 3, 2020, 5th Circuit Seeks to Clarify Standing in Citizen’s Suits.)

Reduced Days of Violation and Lower Penalty
In 2021, the district court determined Environment Texas established standing for 3,651 of the 16,386 violation days and reduced the penalty to $14.25 million; ExxonMobil again appealed.

In this third opinion, the 5th Circuit said, “This time, the district court got it right.” Environment Texas showed “traceability” for each of the 3,651 violations and the court did not err in calculating the penalty.

Dissent Suggests En Banc Hearing
As in the 2020 opinion, one member of the three-judge 5th Circuit panel dissented, calling the case a “jurisdictional mess.” The dissent called for a seldomly used “en banc” hearing, where all active 5th Circuit judges consider the case, to resolve the jurisdictional issues.

To see the 5th Circuit opinion, including the dissent https://www.ca5.uscourts.gov/opinions/pub/17/17-20545-CV1.pdf