USA v. Citgo Petroleum Corporation

Jul 17: In the U.S. Court of Appeals, Fifth Circuit, Case No. 11-31117. Appealed from the United States District Court for the Western District of Louisiana. The Appeals Court summarizes saying the United States brought suit against Citgo Petroleum Corporation, seeking civil penalties and injunctive relief under the Clean Water Act (CWA). After a bench trial, the district court imposed a $6 million penalty against Citgo and ordered injunctive relief. The United States appeals, arguing the amount of the penalty is inadequate. Citgo cross-appeals, arguing the district court lacked jurisdiction.

 

    The Appeals Court rules, "There is jurisdiction, but we conclude the district court erred in failing to provide a reasonable approximation of economic benefit as required under the CWA and our caselaw. We vacate the civil penalty award and remand for further proceedings."

 

    Significantly, the Appeals Court indicates that, ". . .the district court concluded in less than one page of analysis that Citgo was not grossly negligent." Citing that a district courts' "finding that a party is negligent or grossly negligent is a finding of fact and must stand unless clearly erroneous." Houston Exploration Co. v. Halliburton Energy Servs., Inc., 269 F.3d 528, 531 (5th Cir. 2001). "And saying, "A finding of fact is 'clearly erroneous' when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." The Appeals Court said, "In our view, though, almost winning a highly risky gamble with the environment does not much affect the egregiousness of having been gambling in the first place."

 

    The Appeals Court rules, "We have acknowledged the need to uphold the district court's findings unless clearly erroneous. We make no ruling on this question now. The category of negligence into which Citgo's conduct is placed is part of the overall analysis underlying the setting of the appropriate penalty. Because of the conclusions we have already set out, the district court will have the obligation on remand to re-analyze the civil penalty award. At that time, the district court should reconsider all its findings with respect to Citgo's conduct, giving special attention to what Citgo knew prior to the oil spill and its delays in addressing recognized deficiencies."

 

    Another issue is that the government contends that district court used of Citgo's estimate of the amount of oil spilled in calculating the penalty. On the question of how much oil was spilled, the district court accepted Citgo's estimation. After evaluating the methods of calculation used by the parties' experts, the court found Citgo's estimate of 54,000 barrels "more reasonable and credible" than the government's higher estimate of 76,800 barrels. The government's argument on this issue is essentially that the court credited the wrong expert.

 

    The Appeals Court cites, "Where there are two permissible views of the evidence, the factfinder's choice between them cannot be clearly erroneous." Bertucci Contracting Corp. v. M/V ANTWERPEN, 465 F.3d 254, 258 (5th Cir. 2006); and says, "Consequently, we reject the government's argument that the district court erred with respect to its findings on the amount of oil spilled.

 

    "The district court's civil penalty is vacated and this case is remanded for further consideration of the statutory penalty factors and its finding of negligence consistent with this opinion."

 

    Access the complete opinion (click here). [#Water, #Remed, #CA5]