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

968 F.3d 357

ENVIRONMENT TEXAS CITIZEN LOBBY, INCORPORATED; Sierra Club, Plaintiffs-Appellees

v.EXXONMOBIL CORPORATION; ExxonMobil Chemical Company; ExxonMobil Refining; Supply Company, Defendants-Appellants

No. 17-20545

United States Court of Appeals, Fifth Circuit.

FILED July 29, 2020

REVISED August 3, 2020

Philip Harlan Hilder, Hilder & Associates, P.C., Houston, TX, Charles Craig Caldart, Esq., Joshua Robert Kratka, National Environmental Law Center, Boston, MA, David A. Nicholas, Newton, MA, for Plaintiffs-Appellees

Russell S. Post, Fields Alexander, Beck Redden, L.L.P., Houston, TX, Albert R. Axe, Jr., Keith Alan Courtney, McGinnis Lochridge, L.L.P., Austin, TX, Eric J. R. Nichols, Butler Snow, L.L.P., Austin, TX, Bryon A. Rice, Hicks, Davis & Wynn, P.C., Houston, TX, for Defendants-Appellants

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

Fernando De Leon, Ronald Charles Lewis, Judith Lee Ramsey, Esq., Senior Attorney, City of Houston, Legal Department, Houston, TX, for Amicus Curiae City of Houston

Michael Robert Hull, Senior Assistant County Attorney, County Attorney's Office for the County of Harris, Houston, TX, for Amicus Curiae Harris County Attorney Vince Ryan

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

Before DAVIS, COSTA, and OLDHAM, Circuit Judges.

GREGG COSTA, Circuit Judge:

The Clean Air Act authorizes "any person" to sue polluters. 42 U.S.C. § 7604(a). Any recovery goes to the government. This citizen suit provision harkens back to pre-Founding English law that allowed private individuals, through various writs, to enforce laws on behalf of the government. See Steven L. Winter, The Metaphor of Standing and the Problem of Self-Governance , 40 STAN. L. REV. 1371, 1396–99 (1988) ; Raoul Berger, Standing to Sue in Public Actions: Is It a Constitutional Requirement , 78 YALE L. J. 816, 827 (1969). But modern citizen suits present challenges for the Article III "cases" or "controversies" requirement under which a plaintiff must suffer an injury from the defendant's conduct. See generally RICHARD FALLON ET AL, HART & WECHSLER'S THE FEDERAL COURTS AND FEDERAL SYSTEM 151–54 (5th ed. 2003). Indeed, citizen suits under two other environmental statutes—the Clean Water Act and Endangered Species Act—resulted in leading Supreme Court standing decisions. Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., Inc. , 528 U.S. 167, 180–81, 120 S.Ct. 693, 145 L.Ed.2d 610 (2000) ; Lujan v. Defenders of Wildlife , 504 U.S. 555, 560–61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992).

This citizen suit seeking to recover for Clean Air Act violations at the largest petroleum and petrochemical complex in the nation again raises this tension between citizen suits and Article III. The principal issue in this second appeal of the case is whether plaintiffs have standing to recover for more than 16,000 violations of emission standards.

I.

The ExxonMobil complex in Baytown, Texas is massive. It includes refinery, a chemical plant, and an olefins plant.

Emissions from the complex are regulated in part by permits. The Texas Commission on Environmental Quality issues the permits under Title V of the Clean Air Act. The Commission, along with the EPA, enforces the permits.

To monitor compliance, the Commission requires polluters to document unauthorized "emissions events"—that is, unplanned or unscheduled emissions. If the event produces pollutants in excess of thresholds, the polluter must report it to the Commission. See 30 TEX. ADMIN CODE § 101.201(a) ; see also id. 101.1(88), (89) (setting "reportable quantit[ies]" of emissions). We will call these "reported events." If the event produces pollutants below reportable levels, polluters must nevertheless maintain records documenting the emission. Id. § 101.201(b). We will call these "recorded events."

In addition to the powers it gives regulators, the Clean Air Act gives citizens a role in enforcing its requirements. A citizen may seek civil penalties, payable to the government, for each day of repeated or ongoing violations of an emissions standard. 42 U.S.C. §§ 7604(a)(1), 7413(e)(2). Environment Texas Citizen Lobby and Sierra Club brought such a suit for each of Exxon's reported and recorded emissions events from October 2005 through September 2013 in total, 241 reported events and 3,735 recorded events. By Plaintiffs’ calculations, which Exxon does not challenge,¹ the nearly 4,000 emissions events resulted in 16,386 days of violations.

The thousands of violations fell into the following buckets:

• Count I alleged violations of a permit condition prohibiting "upset emissions." An upset emission is an "unplanned and unavoidable breakdown or excursion of a process or operation that results in unauthorized emissions." 30 TEX. ADMIN CODE § 101.1(110). Plaintiffs calculated 10,583 days of upset-emission violations, spanning 24 different pollutants, at the Baytown refinery.

• Count II alleged violations of the Maximum Allowable Emission Rate Tables—permit conditions setting hourly emissions limits for specific pollutants. Plaintiffs calculated 5,709 days of these violations, spanning more than a dozen pollutants, at the olefins plant and chemical plant.

• Count III alleged 18 days of violations of a 1,200 pound/hour limit on emissions of highly reactive volatile organic compounds.

• Count IV alleged 44 days of violations of an EPA rule limiting visible emissions from flares (which are used to burn waste gases) to no more than 5 minutes during any 2-hour period.

• Count V alleged 32 days of violations of a rule requiring flares to operate with a pilot flame.

Our court has already grappled with this case. Following a bench trial, the district court initially found that only a small fraction of the violations were "actionable" because the Clean Air Act limits citizen suits to violations that were repeated in the past or ongoing at the time of the complaint. 66 F. Supp. 3d 875, 895–902 (S.D. Tex. 2014) ; see also 42 U.S.C. § 7604(a)(1) (allowing suit if defendant caused "repeated" violations or is "in violation"). It went on to rule that even if every alleged violation were actionable, it would decline to assess a civil penalty against Exxon. 66 F. Supp. 3d at 904. A panel of this court vacated and remanded, concluding that the district court had too narrowly analyzed actionability and three of the factors (duration, seriousness, and the economic benefit of noncompliance) courts must consider in assessing a civil penalty. 824 F.3d 507, 514 (5th Cir. 2016) ; see also 42 U.S.C. § 7413(e)(1) (enumerating penalty factors).

On remand, the district court determined that the 16,386 days of violations alleged in Counts I–V were actionable. And after reconsidering the penalty factors, the district court imposed a $19.95 million civil penalty. Exxon appeals, attacking the judgment on three fronts: standing, affirmative defenses, and penalty factors.

II.

Congress granted "any person" the right to sue under the Clean Air Act. 42 U.S.C. § 7604(a). But that does not mean that any person can always bring such a suit. The Constitution limits congressional grants of federal court jurisdiction. Hodgson v. Bowerbank , 9 U.S. (5 Cranch) 303, 304, 3 L.Ed. 108 (1809) ("Turn to the article of the constitution of the United States, for the statute cannot extend the jurisdiction beyond the limits of the constitution."). Those limits include Article III's case-or-controversy requirement, which, among other things, requires that the plaintiff have standing. Lujan, 504 U.S. at 560–61, 112 S.Ct. 2130. And unlike qui tam relators bringing False Claims Act cases, who have standing via the government's injury because their entitlement to a bounty is a partial assignment of the claim to the relator, Vt. Agency of Nat. Res. v. United States ex rel. Stevens , 529 U.S. 765, 773–74, 120 S.Ct. 1858, 146 L.Ed.2d 836 (2000), citizens suing under the bountyless environmental statutes must meet the standing requirement in their own right, Laidlaw, 528 U.S. at 180–81, 120 S.Ct. 693 (explaining in Clean Water Act citizen suit that "the relevant showing for purposes of Article III standing ... is not injury to the environment but injury to the plaintiff"). Plaintiffs thus must show an injury, traceable to the defendant's challenged conduct, that will be redressed by a favorable decision. Lujan , 504 U.S. at 560–61, 112 S.Ct. 2130.

A.

As a threshold matter, Plaintiffs argue that because the prior panel reached the merits, it must have determined it had jurisdiction. If that is the case, then Plaintiffs’ standing is the binding law of the case. See Todd Shipyards Corp. v. Auto Transp., S.A. , 763 F.2d 745, 750 (5th Cir. 1985) ("The law of the case doctrine ... generally precludes reexamination of issues of law or fact decided on appeal, either by the district court on remand or by the appellate court itself on a subsequent appeal.").

But we cannot assume that the prior panel implicitly decided standing. Because Article III standing goes to our subject matter jurisdiction, broad applications of the law of the case doctrine are inappropriate. See Propes v. Quarterman, 573 F.3d 225, 228 (5th Cir. 2009) (quoting 18B CHARLES ALAN WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE § 4478.5, at 790 (2d ed. 2002) ). For that reason, a later panel cannot "defer to the prior panel's exercise of jurisdiction as correct where the issue was neither raised by the parties nor addressed by the court." USPPS, Ltd. v. Avery Dennison Corp. , 647 F.3d 274, 284 (5th Cir. 2011). Exxon's brief to the original panel did include a footnote disputing that Plaintiff...