Texas Citizen Suit Developments


Environmental Essentials for In-House Counsel Webinar Series

Presented by: Whit Swift June 6, 2017

TEXAS CITIZEN SUIT DEVELOPMENTS • Background and context • Case history ‒ District Court judgment 1 ‒ Court of Appeals ‒ District Court judgment 2 • Observations and takeaways • Questions?


BACKGROUND AND CONTEXT • Federal Clean Air Act section 304 [42 U.S.C. 7604] • Plaintiffs’ prior lawsuits and settlements ‒ 2008-2009: Shell (Deer Park) ‒ 2009-2010: Chevron Phillips Chemical Co. (Cedar Bayou) • Significant settlement values and injunctive relief


ENVIRONMENT TEXAS AND SIERRA CLUB V. EXXONMOBIL • 2010: Suit filed • December 2014: District Court judgment 1 ‒ Only 94 actionable violations o No violations based on self-reported Title V deviations (“indications of noncompliance”) o Narrow interpretation of repeat/continuing violations ‒ No penalty ‒ No injunctive relief • Environment Texas and Sierra Club appeal


ENVIRONMENT TEXAS AND SIERRA CLUB V. EXXONMOBIL • May 2016: U.S. Court of Appeals for the 5 th Circuit • 5 th Circuit vacates the District Court judgment ‒ Error in counting actionable violations ‒ Error in assessing penalty (economic benefit of noncompliance) ‒ Remand for assessment of penalty based on correct violation count • Additional key 5 th Circuit findings ‒ Title V deviation report, without more, does not establish a violation

‒ No useful purpose for the requested injunctive relief ‒ District court discretion in assessing penalty amount


ENVIRONMENT TEXAS AND SIERRA CLUB V. EXXONMOBIL • April 2017: District Court judgment 2 ‒ STEERS report of upset event = violation(s)

‒ High violation count (speciation) ‒ To claim an affirmative defense: o It must be in the SIP o Must prove all 11 elements o TCEQ granting the affirmative defense is not determinative ‒ Deny all injunctive relief ‒ Penalty: $19.9 million o Economic Benefit of Noncompliance with 50% enhancement

o TCEQ Administrative Penalty deduction ‒ Awarded fees and costs to Plaintiffs


OBSERVATIONS / TAKEAWAYS • Operations and Reporting ‒ Avoid over-reporting ‒ Affirmative Defense demonstration in STEERS reports/records ‒ Incentive to drive down emissions events • Permitting ‒ Outcome not based on unique permit language ‒ Opportunity to reduce STEERS reporting via permitting?


OBSERVATIONS / TAKEAWAYS • Enforcement Exposure ‒ Title V Deviations vs. Emissions Events ‒ Exposure exists, despite active TCEQ enforcement ‒ Burden to demonstrate all 11 affirmative defense criteria ‒ Significant discretion afforded District Court judge in assessing penalty QUESTIONS?



WHIT SWIFT +1.512. 494.3658 whit.swift@bracewell.com bracewell.com/swift

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