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Louisiana Environmental Action Network v. Exxon Mobil Corp.

United States District Court, M.D. Louisiana

December 17, 2018




         This matter is before the Court on the Motion for Summary Judgment on the Unpleaded Affirmative Defense of “Upset”[1] filed by Plaintiffs, Louisiana Environmental Action Network (“LEAN”) and Stephanie Anthony (“Anthony”) or (“collectively LEAN”). Defendant Exxon Mobil Corp. d/b/a ExxonMobil Chemical Co. (“Defendant” or “EMC”) has filed an Opposition[2] to the motion, to which Plaintiffs filed a Reply.[3] For the following reasons, Plaintiffs' motion shall be DENIED.

         I. BACKGROUND

         The factual background in this matter has been set forth in the Court's previous Ruling[4] and will not be repeated here. In short, LEAN brings this citizens suit under the Clean Air Act (CAA)[5] LEAN claims that EMC violated the Clean Air Act (CAA) 142 times by violating operating permits issued by the Louisiana Department of Environmental Quality (“LDEQ”) pursuant to Title V of the CAA and Louisiana's Part 70 permitting program.

         As one defense to liability, EMC has asserted the affirmative defense of “upset.” As a general rule, the Federal Rules of Civil Procedure require a defendant to plead any affirmative defenses it may have.[6] LEAN argues that EMC waived its affirmative defense of upset by failing to assert the defense in its Answer or file an amended answer to include it.[7] LEAN further contends that EMC explicitly waived the defense in its Reponses to Interrogatory Number 10, wherein EMC stated that the defense of upset was “beyond the scope of permissible discovery.”[8] Thus, LEAN-up to the deadline to compel discovery- was unable to further compel discovery.[9] LEAN claims that allowing the affirmative defense “would prejudice LEAN, which would have to guess as to what legal theory, witnesses, and documentary evidence [EMC] plans to use to support this defense.”[10] The Parties dispute when LEAN obtained notice of EMC's intent to assert this affirmative defense: LEAN claims it received notice of the affirmative defense on December 22, 2017; EMC claims LEAN obtained notice no later than December 19, 2016.

         Not only does LEAN dispute the timeliness of EMC's assertion of this affirmative defense, but LEAN also challenges the availability of the defense in a federal lawsuit. Specifically, LEAN contends that the affirmative defense in La. Admin. Code Pt. III § 507(J) cannot be used in federal court since it is not part of Louisiana's state implementation plan (SIP).


         A. Summary Judgment Standard

         “The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”[11] “When assessing whether a dispute to any material fact exists, we consider all of the evidence in the record but refrain from making credibility determinations or weighing the evidence.”[12] A party moving for summary judgment “must ‘demonstrate the absence of a genuine issue of material fact,' but need not negate the elements of the nonmovant's case.”[13] If the moving party satisfies its burden, “the non-moving party must show that summary judgment is inappropriate by setting ‘forth specific facts showing the existence of a genuine issue concerning every essential component of its case.'”[14] However, the non-moving party's burden “is not satisfied with some metaphysical doubt as to the material facts, by conclusory allegations, by unsubstantiated assertions, or by only a scintilla of evidence.”[15]

         Notably, “[a] genuine issue of material fact exists, ‘if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.'”[16] All reasonable factual inferences are drawn in favor of the nonmoving party.[17] However, “[t]he Court has no duty to search the record for material fact issues. Rather, the party opposing the summary judgment is required to identify specific evidence in the record and to articulate precisely how this evidence supports his claim.”[18] “Conclusory allegations unsupported by specific facts … will not prevent the award of summary judgment; ‘the plaintiff [can]not rest on his allegations … to get to a jury without any “significant probative evidence tending to support the complaint.”'”[19]

         B. Waiver of the Affirmative Defense of Upset

          The Federal Rules of Civil Procedure require a party responding to a pleading to “affirmatively state any avoidance or affirmative defense….”[20] Under the Louisiana Administrative Code and the Clean Air Act, the defense of upset is an affirmative defense.[21] However, EMC did not raise the defense of upset in its initial Answer.[22]

         Generally, a party's failure to raise affirmative defenses in its answer constitutes a waiver of those defenses.[23] This addresses the concern that “[a] defendant should not be permitted to ‘lie behind a log' and ambush a plaintiff with an unexpected defense.”[24] The primary purpose, then, is to provide fair notice to the opposing party such that they are not unfairly surprised.[25] However, the technical failure to assert an affirmative defense is not alone dispositive within the Fifth Circuit: “where [an affirmative defense] is raised in the trial court in a manner that does not result in unfair surprise, […] technical failure to comply with Rule 8(c) is not fatal.”[26] Instead, the responding party waives an affirmative defense only if (1) the defendant fails to raise the affirmative defense “at a pragmatically sufficient time, ” or (2) the plaintiff is “prejudiced in its ability to respond.”[27]

         There is no set time to determine when asserting an unpleaded affirmative defense is de facto raised at a pragmatically sufficient time. This determination depends on the context of the litigation as a whole.[28] For example, in Pasco v. Knoblauch and Turner v. Cain-both cases involving a similar issue of unpleaded affirmative defenses-both the Eastern District of Louisiana and the Fifth Circuit held that raising the defense more than four years after the commencement of litigation does not, by itself, constitute a pragmatically insufficient time.[29] In Kemp v. CTL Distribution, Inc., [30] this Court held that raising an affirmative defense seven years after the litigation's commencement was not a pragmatically sufficient time when the failure to raise the defense earlier had subjected the plaintiff to years of protracted litigation.[31] In Kemp, a great deal of litigation could have been avoided if the defense had “been timely pled and accepted.”[32] Instead, the plaintiff was subjected to years of unnecessary litigation, and the Court found that this circumstance rendered the failure to raise the defense more than a mere technical failure.[33] Thus, the amount of time between litigation's commencement and raising the affirmative defense is not alone dispositive.

         A plaintiff's ability to mount an effective defense is also not dispositive. In Kemp, the Court noted that the plaintiffs had a sufficient amount of time to prepare a defense to the unpleaded affirmative defense such that the plaintiffs “cannot be said to have been prejudiced in their ability to respond.”[34] The Court nonetheless found the defense to be waived because it was not raised at a pragmatically sufficient time, and the plaintiffs were prejudiced by protracted and unnecessary litigation “because of its tardy entrance.”[35]

         Turning to the present case, LEAN contends it was not given notice of EMC's intent to raise the affirmative defense of upset until December 22, 2017, when it was argued in EMC's Opposition to LEAN's Motion for Summary Judgment on Liability.[36] In contrast, EMC claims that LEAN has been on notice of this defense since, at the very latest, December 19, 2016, [37] when EMC responded to LEAN's interrogatories that specifically requested EMC's response to issues of upset.[38] As noted above, time alone is not dispositive as to the waiver of an affirmative defense. It is relevant, however, as the issue of prejudice alleged by LEAN is the close of expert discovery in September 2017. LEAN's timeframe places the affirmative defense more than 21 months after the commencement of suit while EMC's is under ten months;[39] notably, LEAN's timeframe places notice of the defense subsequent to the close of expert discovery whereas EMC's timeframe assigns notice before the close of discovery.

         LEAN argues it would have to guess as to the theory, facts, evidence related to an upset defense; thus, it has not been raised at a pragmatically sufficient time. Further, LEAN contends the timing is insufficient because it is too late for LEAN to obtain an expert witness on the issue of upset. Conversely, EMC contends the defense was raised in a pragmatically sufficient time, even accepting LEAN's timeline of notice on December 2017, because LEAN had ample opportunity to respond to the defense, and LEAN did, in fact, file three briefs on the defense.[40] However, as noted above, “ample opportunity to respond” does not, by itself, resolve the issue; rather, timing must be considered in light of the prejudice imposed.

         Addressing LEAN's concern regarding its ability to hire an expert prior to trial, the Court must consider whether LEAN had notice of EMC's intent to use the upset defense prior to the close of expert discovery (September 22, 2017). EMC claims, with good authority, that LEAN was on notice of this defense since 2016.[41] Nonetheless, even accepting LEAN's timeframe, the Court finds that LEAN still had sufficient notice of the defense to adequately prepare for trial.

LEAN's, second set of discovery, Interrogatory number 10 asked:
INTERROGATORY NO. 10: To the extent [EMC] claims that any unauthorized release of air pollutants at the Baton Rouge Chemical Plant was not preventable, please explain why each such release was not preventable.[42]

         EMC answered LEAN's second set of discovery on December 19, 2016, responding as follows:

ANSWER: Objection. ExxonMobil objects to this Interrogatory as overly broad and unduly burdensome because it is not limited in time or scope to the matters or incidents at issue in this lawsuit, as such information is not relevant nor proportional to the needs of the case, and is thus beyond the scope of permissible discovery… [Without waiving these objections] ExxonMobil declines to give a narrative answer to this Interrogatory because it seeks information that is available from ExxonMobil's records, and the burden of deriving the answer is substantially the same for both parties. Instead, see EMC-LEAN000004-000640, EMCLEAN004053-004132, and EMC-LEAN004137-004149. ExxonMobil will produce additional responsive, non-privileged documents upon execution of a confidentiality agreement.[43]

         Although EMC objected to the request as overly broad and unduly burdensome, the response refers to a defined and specifically narrow field of documents. LEAN claims this answer is insufficient because EMC allegedly claimed that the upset defense was irrelevant to the case and thus beyond the scope of permissible discovery, [44] and that the answer was ambiguous because the same referenced documents were also used in answers to other interrogatories. Notably, however LEAN does not argue that the specific documents referenced do not hold the answer to the Interrogatory.

         While the Court acknowledges that EMC's answer to the interrogatory does not strictly comply with Rule 33(b)(3) by failing to provide a “narrative” in connection with the responsive documents, [45] this technical failure is not fatal because EMC did give LEAN notice that the defense would be used, and LEAN had the opportunity to investigate further, as discussed below.

         A reasonable reading of LEAN's Interrogatory number 10 asks for suit-related claims of unpreventable discharge. To this, EMC responded that the answer is irrelevant and beyond the scope of permissible discovery. However, the fact that the answer and supporting documents are specifically located in an answer to an interrogatory question about upset should have signaled to LEAN that this defense was contemplated. The response provided reasonable notice that EMC would pursue an upset defense. Based on this response, LEAN had the opportunity to question Bliss Higgins, EMC's designated employee to testify “regarding compliance with environmental; statutes, regulations, and permits, ” or EMC's corporate representative, about which releases EMC considers subject to the upset defense.[46] In any event, LEAN should have known following these responses it might require an expert on this issue.[47]

         The Court also finds that LEAN has had ample notice of the defense in advance of trial. In opposition to LEAN's Motion for Summary Judgment on Liability, EMC argued the affirmative defense of upset with respect to certain discharges. LEAN was granted leave to file a reply, and later a sur-sur-reply on the upset defense.[48] LEAN was clearly apprised of which incidents EMC considered to be an upset because they are “easily identifiable in the UADs and/or NFAs, ”[49] which LEAN “actually received.”[50] Indeed, EMC's Opposition stated which specific releases EMC considered to be an upset.[51]

         Thus, the Court finds that LEAN has not been prejudiced because it had notice of the use of the upset defense by the documents identified in response to Interrogatory number 10 in December 2016. Considering all of the relevant factors and circumstances surrounding this defense, LEAN's Motion for Summary Judgment is DENIED as to its claim that the defense has been waived.

         C. Availability of Defense in Federal Court under the CAA

          Alternatively, LEAN moves for summary judgment arguing that EMC has asserted an upset defense under 33 La. Admin. Code Pt. III, § 507(J), a state law, in this federal action brought pursuant to the CAA, a federal law.[52] LEAN contends EMC must rely only on federal law in this matter, which provides no legal basis for an affirmative defense of upset.[53]

         Congress created the CAA to “protect and enhance the quality of the Nation's air resources so as to promote the public health and welfare.”[54] The CAA authorizes the EPA to establish and promulgate air pollution requirements and limitations as a national ambient air quality standard (“NAAQS”).[55] In turn, states must adopt air quality standards that are at least as protective as the NAAQS requires, [56] and must establish a state implementation plan (“SIP”) that conforms to EPA's standards.[57] A state's SIP becomes federally enforceable once the EPA approves it.[58] Thus, EMC may assert any defense in Louisiana's SIP if the EPA has approved the SIP.

         Neither party disputes that the EPA approved Louisiana's SIP, and the same view is clear in this Court's jurisprudence.[59] Nevertheless, LEAN contends that Section 507(J) cannot be used in a federal suit because it is outside the SIP-but rather in Louisiana's state operating permit program-and is thus not federally enforceable.[60] EMC responds that the EPA's approval of a state operating permit renders the state operating permit program federally enforceable in conjunction with the already-enforceable SIP.[61] The Court finds support for this rationale.

         A state's permitting program-or “Title V” program-is not the same as its SIP. As the name suggests, a state's Title V program stems from Title V of the CAA, which specifies EPA standards for air pollution enforcement. States utilize CAA Title V in developing a state permit program that complies with the EPA's requirements. In contrast, SIPs are based on Title 1 of the CAA, and state the mechanism by which a state will ensure compliance with the NAAQS established by the EPA. Both require EPA approval.[62]

         Title V permits may not alter or modify SIP requirements. Rather, Title V “houses” existing SIP requirements.[63] That is, Title V is broad, and includes, inter alia, a state's SIP.[64] Title V required the EPA to create regulations under which states would develop operating permit programs combining all enforceable requirements applicable to a source of air pollutants.[65] Permits issued under SIP-approved permit programs, such as Louisiana's, are also enforceable under the terms and conditions of a state's Title V program.[66] These Title V “terms and conditions” are “applicable requirements” that must be incorporated into title V.[67] The letter concludes: “Thus, if a State does not want a SIP provision or SIP-approved permit condition to be listed on the Federal side of the title V permit, it must take appropriate steps to delete those conditions from its SIP or SIP-approved permit.”

         The EPA gave full approval of Louisiana's Title V Operating Permits program on September 12, 1995.[68] 40 C.F.R. § 52.970 “sets forth the applicable [SIP] for Louisiana under section 110 of the Clean Air Act….”[69] This section, among other things, states that “[m]aterial listed in paragraphs (c), (d), and (e) of this section with an EPA approval date prior to July 1, 1998, was approved for incorporation by reference ….”[70] Louisiana's Section 507 is included in paragraph (c), and within the timeframe, and is therefore incorporated by reference into the SIP and subject to federal enforcement.

         Section 507(J) of Louisiana's Title V program is federally enforceable.[71] 40 C.F.R. 52.23 makes any EPA-approved program that is incorporated into a SIP “subject to enforcement action under … the CAA.”[72] As noted above, the EPA incorporated Section 507(J). This incorporation makes Section 507(J) federally enforceable according to 40 C.F.R. 52.23. The distinction of the regulation's enforcement language should not bar its applicability in an affirmative defense context because an enforcement action of a Title V permit is a condition precedent to the use of an affirmative defense. If a plaintiff may rely on federally incorporated provisions of Title V to bring a federal suit, it reasonably follows that a defendant may also rely on Title V to defend that suit. Further, whether a plaintiff actually relies on incorporated provisions of Title V is not the issue. If the right is available to a plaintiff, it should also be available to a defendant, and a defendant's reliance on such regulations should not be conditioned upon a plaintiff's.

         Although Section 52.23 allows enforcement pursuant to Section 113 of the CAA, EPA guidance suggests that being “federally enforceable” includes federal government enforcement under Sections 113 and 167 and citizen enforcement under Section 304 of the CAA.[73] This view is strengthened by the showing that the citizen suit provides a mechanism to bring an action against “any person” for violations of any “emission standard or limitation under this chapter.”[74] “This chapter” is later defined in the section to include emission limitations, “any” condition or requirement of a permit under parts C and D of subchapter III, Sections 7419, 7491, 7411, and 7412 of the CAA.[75] It also allows suit for violation of “any other standard, limitation, or schedule established under any permit issued pursuant to subchapter V or under any applicable State implementation plan approved by the Administrator, any permit term or condition, and any requirement to obtain a permit as a condition of operations.”[76] Section 113 similarly allows suit, albeit for the Administrator, when “any person has violated … any requirement or prohibition of an applicable implementation plan or permit….”[77] At least to the extent that Title V permits are concerned, the EPA and citizens share the ability to sue, and both have very broad capacities to bring suit. Accordingly, the Court finds that the term “federally enforceable” must mean the same thing in context of an action alleging a Title V violation by either the EPA or through a citizen suit.

         Even without such an interpretation, the Court finds that Section 507(J) is federally enforceable in its own right. The citizen suit provision allows any citizen to bring an action for any violation of any EPA-approved SIP, any permit term or condition, and any requirement to obtain a permit as a condition of operations.[78] Clearly, LEAN may bring suit for violation of any permit term or condition-even if distinguished from the SIP. EMC must also be allowed to use the same sources of law to defend a suit as LEAN used to commence the suit. Again, in the Court's view, no distinction should be made between LEAN's use of the law and EMC's ability to use the same law. Because LEAN has the ability to bring suit for violation of a permit term or condition, EMC should likewise be able to defend itself on the basis of those same terms or conditions.

         Section 507(J) is a part of Louisiana's Title V program, which has been approved by the EPA.[79] It is as much of a “term” to a permit as a maximum emissions standard is a “condition” to the same. The latter is a “condition” to the permit because the permit is issued on condition that the permit-holder will not exceed the established standard. But permits are not unilateral obligations. A source may not accept a permit if its conditions are too stringent with which to comply. Thus, the “upset” defense under Section 507(J) is a condition that likely induced EMC here, and other CAA-regulated entities all around. It is a condition, then, in the same way as above: the permit is sought and accepted on condition that 507(J) allows a defense to noncompliance for certain “sudden and reasonably unforeseeable events beyond the control of the owner or operator, including acts of God….”[80] Indeed, obligations are not unilateral. Much of the CAA's language focuses on enforcement, which is the purpose of the CAA. Nevertheless, it should not be read to overlook the nature of administrative law and its cost-benefit analytical model.

         The EPA more recently proposed disapproval of Louisiana's SIP revision to a different section of Louisiana's Admin. Code.[81] The proposed disapproval was based on the section's reference to “upset” in Section 507(J). The EPA found that, while “upset” is in Louisiana's Title V program, its definition is identical to that of “emergency” in 40 C.F.R. 70.6, which the EPA had commenced rulemaking to remove. “If finalized, that rulemaking would require the LDEQ to also remove the affirmative defense language from its Title V rules, including the language at [Section 507(J)] which is part of Louisiana's approved Title V program.”[82] The EPA, however, did not issue such a final rule but rather withdrew the rulemaking in February of 2018.[83] A brief discussion of the rulemaking is set forth below.

         The CAA provides two identical provisions for claiming an upset defense: 40 C.F.R. 71.6(g), which applies to EPA-issued permits, and 40 C.F.R. 70.6(g), which applies to state permits.[84] Part 70.6(g) establishes an EPA-approved minimum standard that states may adopt in their SIP. As noted above, a SIP becomes federally enforceable-and thus enforceable in this Court-only after the EPA approves it.[85]

         In 2016, the EPA commenced rulemaking to remove both Parts 70.6(g) and 71.6(g).[86] The EPA maintains that this rulemaking is consistent with the EPA's current interpretation of the CAA's enforcement structure and recent decisions from the D.C. Circuit.[87] In short, the EPA amendments promulgated during the 1990s established, among other things, a standard for upset defenses which, in NRDC v. EPA, the D.C. Circuit found to exceed the EPA's authority.[88] Although NRDC v. EPA did not involve Part 70.6(g), [89] the EPA has determined that the D.C. Circuit's reasoning in NRDC would dictate a similar result in such a suit.[90] The EPA released a supporting document listing state regulations and statutes that may be affected by the proposed rule, and Louisiana's Section 507(J) is listed.[91] LEAN contends this proposed rule makes Part 70.6 an invalid basis for an upset defense.[92] However, a proposed rule lacks the authority of law. EMC argues that the “Court's role is not to rule based on regulations that an agency may finalize in the future.”[93] The Court agrees. Moreover, this proposed rule was withdrawn by the EPA prior to LEAN submitting this argument to this Court.[94] Finding that Section 70.6(g) affirmative defenses are not categorically precluded by the EPA, Section 507(J) remains unaltered until any final actions dictate otherwise. That is, Section 507(J) remains a valid part of Louisiana's Title V program and continues to have the EPA's approval. Accordingly, LEAN is not entitled to summary judgment on the availability of upset as an affirmative defense.

         D. Alternative Relief Requested

         LEAN argues in the alternative that the Court should limit EMC's use of upset in this proceeding to what the CAA allows, which would only allow defense as to penalties- not liability, declaratory judgment, or injunctive relief. Further, LEAN asks the Court to limit EMC's use of upset ...

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