OUTLOOK ’11: US ‘citizen suits’ against producers may continue

29 December 2010 21:00  [Source: ICIS news]

By Brian Ford

HOUSTON (ICIS)--An $81.25m (€61.75m) lawsuit against ExxonMobil is the latest in a series of “citizen suits” over alleged pollution violations in Texas, but it may not be the last.

The Sierra Club and Environment Texas filed suit against ExxonMobil in December, alleging that the company's Baytown complex was violating the US Clean Air Act.

“We have proven the validity of our legal strategy and that companies can do better to control their emissions,” said Luke Metzger, director of Environment Texas.

He noted two earlier legal settlements with petrochemicals producers over air emissions. “Our hope is that it will have a ripple effect in the industry.”

The environmental groups alleged that the ExxonMobil complex emitted more than 8m lb (3,600 tonnes) of pollutants into the air over the last five years. The groups accused the producer of 2,500 clean air violations at the Baytown facility.

ExxonMobil’s Baytown refinery is the largest in the US with 560,640 bbl/day of capacity, according to the US Energy Information Administration (EIA). Its downstream plants produce chemicals including benzene, butadiene (BD), butyl rubber, ethylene, orthoxylene (OX), paraxylene (PX), polypropylene (PP), propylene and toluene.

ExxonMobil said it would fight the allegations. The company said that since 2001, it had reduced upset/maintenance emissions by 89%, total emissions by 58%, and reportable air incidents by 62%.

The court action against ExxonMobil was the latest in a series of litigation using a “citizen suit” provision in the US Clean Air Act. The provision allows private citizens affected by violations to sue the producers.

Citizens can seek a court order requiring compliance with the law and a monetary penalty of up to $37,500/day for each violation of the act.

In April 2009, Shell reached a $5.8m settlement and agreed to reduce upset emissions by 80% within three years.

The $5.8m civil penalty was believed to be the largest in an environmental citizen suit in Texas history, and nationally one of the largest ever against a single facility, the groups said.

More recently, Chevron Phillips Chemical in November announced a settlement in which it would give $2m to a local college and cap upset emissions by 85%.

In each case, the environmental groups said Texas state regulators failed to enforce the law, hence the need for citizen lawsuits.

The environmental groups have worked with the National Environmental Law Center (NELC), which was founded in 1990.

“When the government doesn't take legal action, NELC does, winning court orders that stop illegal discharges and that impose monetary penalties for past pollution,” the law centre said on its website.

Environment Texas’s Metzger said, “We have been working for years to try to improve the enforcement programme at TCEQ [Texas Commission on Environmental Quality].”

“We participated in a review effort with TCEQ. We got nowhere with that,” he added said. “We tried legislative remedies. We got nowhere with that. Litigation was our last resort.”

Metzger said his group plans to continue looking at potential legal remedies for environmental violations.

“Shell and Chevron Phillips were pretty forthright in recognising problems at their facilities,” Metzger said. “We applaud them for being willing to own up to their mistakes.”

He added, “Clearly, our cases showed if the state had been tougher enforcers of these facilities, we could have gotten these reductions a long time ago.”

Refineries and petrochemical refineries are required to make reports to state authorities when there are operational “upsets” that result in air emissions. Groups such as the Sierra Club and Environment Texas have found those reports to contain treasure troves of emissions information that can be used in citizen suits.

Metzger said the US Environmental Protection Agency (EPA) under President Barack Obama’s administration has taken a tougher stance on air emissions.

Even so, he said, the local EPA enforcement office “has relatively few resources to take on these fights. Our participation is a vital complement”.

He added that the Texas regulatory authority also seems to have increased its enforcement actions. Enforcement actions by the TCEQ in fiscal year 2009 resulted in a record 1,756 administrative orders, up from 1,624 the previous year.

Responding to the ExxonMobil lawsuit, the TCEQ said it issued about 50 administrative orders for violations at the Baytown complex, and said it took issue with assertions that it failed to enforce environmental regulations.

However, the state agency was still not doing enough, according to Metzger.

“We’d like to see the agency push for the kinds of agreements we have been able to secure,” Metzger said. He maintained the penalties were often far less than the profits made by the violators through non-compliance.

Environmental groups were seeking an increase in the caps on penalties that can be levied by the TCEQ.

Generally, the TCEQ has a cap of $10,000 per day, per air quality violation, for the most serious violations.  The Texas Sunset Advisory Commission, which reviews the performance of state agencies, recently recommended raising that cap to $25,000. Such an increase would require the approval of the state legislature.

The agencies penalties for fiscal year 2009 averaged $8,271 per administrative order.

($1 = €0.76)

 (Additional reporting by Ben DuBose and Al Greenwood)

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