Journey's End? Fifth Circuit Issues Splintered Decision in Important Clean Air Act Citizen Suit Case

The judges appeared exasperated by their inability to decide this matter cleanly and establish workable Fifth Circuit precedents on standing, causation and traceability in environmental cases, and the reach and effectiveness of two important Supreme Court precedents—Friends of the Earth, Inc. v. Laidlaw Environmental Services, decided in 2000, and TransUnion LLC v. Ramirez, decided in 2021. The judges agreed this case raises some very difficult and contentious issues, and they have written at length about them. Indeed, Judge Jones observed that “this case is far more complex than any that has been decided in the Supreme Court or this Court.”

Background
Both the trial Judge, U.S. District Judge Hittner, and Circuit Judge Jones provided comprehensive description of Exxon’s Baytown, Texas plant and its ongoing permit requirements. It is a very large industrial facility, which occupies 3,400 acres of land, on which Exxon operates a crude oil refinery and chemical plant. It is subject to many federal and state permitting and enforcement authorities, and the District Court stated that the complex is regulated by over 120,000 permit conditions specifically related only to air quality. Exxon is subject to extensive record keeping and reporting requirements, and these records were the basis for many of the alleged permit violations that occurred in the time frame identified by the Plaintiffs (October 2005 to September 2013). Judge Davis described Exxon’s permit spreadsheets as documenting thousands of permit violations during this period. However, in February 2014, Judge Hittner conducted a 13-day bench trial, and determined that the plaintiffs were only able to establish that a few days’ violations were “actionable” and refused to impose any civil penalties. A Fifth Circuit panel reversed Judge Hittner’s judgment and directed him to reanalyze these alleged violations in accordance with the directives of the panel. On remand, Judge Hittner determined that over 16,000 days of violations occurred and imposed a civil penalty of $19.95 million. Exxon then appealed, arguing that the Trial Court misconstrued standing, affirmative defenses and civil penalty factors. The panel granted a limited remand, confined to the “fairly traceable” requirement of Article III standing. On remand, the civil penalty award was reduced to $14.25 million. Exxon again appealed, but the panel affirmed, and the Court ordered a rehearing en banc and vacated the second and third panel decisions. The 17 judges serving on the en banc panel spent two years finding consensus, but this eluded them.

Holdings of Judges on the En Banc Court

• Chief Judge Elrod, in her concurrence to the per curiam order, would reinstate the Exxon III panel opinion released in 2022.
• The per curiam order, expressing regret at the time it took the Court to issue an opinion, would affirm the District Court’s judgment of March 2, 2021.
• Judge Davis held that an earlier panel decision holding that the plaintiffs had to establish standing for each violation was erroneous and cannot be followed.
• Judge Davis held that the Supreme Court’s recent standing decision in Ramirez can be distinguished and cannot be applied to the plaintiffs in this case.
• Judge Ho stated that Exxon never had a fair opportunity to rebut any presumptions of traceability under Fifth Circuit precedents.
• Judge Jones wrote that the Supreme Court’s standing decision in Laidlaw has been widely criticized, and that Exxon was bizarrely penalized for building four new projects to control emissions at the facility.

Issues Raised by the En Banc Ruling
Lawyers are familiar with the adage, “hard cases make bad law.” The judges on this en banc Court who had to cope with these complex procedural and substantive matters must know this better than most. Here are some of the lingering issues created by the unique disposition of this case:

• The nine judges that finally coalesced over the decision of affirmance voted for two inconsistent judgments and provided no explanation for this result.
• The judges held that, under Laidlaw, civil penalties which must be paid into the U.S. Treasury can redress certain kinds of environmental harm.
• It appears that the majority agreed that a harm’s “traceability” must be established in accordance with Article III, but the burden of proof is not fully explained.
• As the appointment of an en banc Court resulted in the automatic vacature of three separate panel decisions, can this en banc opinion provide any useful guidance to litigants in the Fifth Circuit?
• Did Judge Davis reject the disfavored concept of “standing in gross” as described by the Supreme Court?
• The calculation of the amount of Exxon’s civil penalty appeared to discount Exxon’s substantial investment in new plant facilities to reduce air emissions.
• Clearly the judges were concerned with the time needed to decide this case; however, is this a legitimate issue when activating or terminating an en banc Court?