Last Friday, the 5th Circuit Court of Appeals vacated a District Court decision which had refused to impose penalties on ExxonMobil for various violations of the Clean Air Act at ExxonMobil’s Baytown refinery. While the trade press has focused on the remand, I think that this is largely a win for ExxonMobil and, on balance, helpful to the regulated community. Here’s why:
- The Court agreed that “deviation reports”, without more, do not constitute evidence of violations by a facility.
- The Court agreed that no declaratory judgment was necessary, because it served no “useful purpose”.
- The Court agreed that the number of emissions events “does not alone mean Exxon did not make a good faith effort to comply.”
- The Court agreed that ExxonMobil’s settlement with the state after the plaintiffs gave notice of intent to sue could still be evidence of a good faith effort to comply. This is particularly noteworthy since such settlements are a frequent component of a strategy in response to such notices.
- While the Court remanded on the economic benefit of noncompliance issue, because the District Court failed to consider the benefit of delaying implementation of projects ExxonMobil agreed to implement under the state settlement, it rejected the plaintiffs’ expert’s opinions about other necessary projects.
- The Court refused to enter an injunction prohibiting future violations, deferring to the District Court’s conclusion that an injunction would be “excessively intrusive.”
I’m sure that the plaintiffs will be declaring victory, but I’ll bet ExxonMobil is breathing a sigh of relief. And other members of the regulated community might reasonably do so as well.