Texas Court Orders Sierra Club to Pay $6.4 Million to Bankrupt Energy Future Holdings/Luminant Generation to Cover Costs Incurred “in discovery and expert witness fees”

United States: Yes, Virginia, It Is Possible To Win A Fee Award Against An Environmental NGO by Seth D. Jaffe, September 10, 2014, Mondaq

Last week, Judge Walter Smith, Jr., ordered the Sierra Club to pay more than six million dollars – yes, you read that correctly – to Energy Future Holdings and Luminant Generation, after finding that the Sierra Club’s Clean Air Act citizen suit against them concerning the Big Brown (great name for a coal-fired facility!) plant was “frivolous, unreasonable, or groundless.”

The Sierra Club had avoided a motion to dismiss, which in the long run was a disaster, because the defendants incurred millions of dollars in discovery and expert witness fees. What were the key factors leading to the fee award?

  • Sierra Club could not make out a prima facie case of a particulate matter emissions violation 
  • Sierra Club knew that the Big Brown permit exempted it from PM deviations during maintenance, startup, or shutdown 
  • Sierra Club had one standing witness, who could not demonstrate any causation or injury.
  • Sierra Club refuse to dismiss Energy Future Holdings from the case, even though it knew that EFH had no role in the ownership or operations of Big Brown.
  • The Texas Commission on Environmental Quality found no violations at Big Brown. I doubt if, on its own, that would provide a basis for a fee award against an NGO. After all, the point of the citizen suit provisions is to allow citizens to supplement agency enforcement. However, Sierra Club apparently admitted that it did not analyze or investigate the TCEQ reports.

Ultimately, the court gave the defendants 100% of their fees, other than denying a conditional request for appellate fees. Notably, the Court agreed that the CAA is complex and requires expert counsel, thus justifying use of counsel outside the “home market.” [Emphasis added]

Judge calls Sierra Club air pollution suit “frivolous” by James Osborne, September 2, 2014, Dallas News
A federal judge in Waco has ruled a Sierra Club lawsuit against power generator Luminant was “frivolous” and ordered the group to repay $6.4 million in attorneys’ fees. The ruling Friday comes two years after the Sierra Club alleged Luminant had broken federal air pollution laws by emitting more soot and other particulates into the atmosphere than what permits at one of their power plants allowed.

In February Judge Walter S. Smith. Jr. ruled that the Big Brown power plant in Fairfield had stayed within the limits of its permit. Luminant, a subsidiary of bankrupt Energy Future Holdings, then filed a motion requesting $6.8 million for the cost of its attorneys and expert witnesses during the trial.

The Sierra Club plans to appeal the ruling.

“Luminant’s own reports indicated that its plants were emitting pollution that exceeded Clean Air Act limits. We presented substantial amounts of evidence at trial showing that this pollution could have been prevented by the company, and brought this case in the interest of safeguarding downwind communities. We are confident the court of appeals will reverse this decision,” Al Armendariz, a former regional administrator with the U.S. Environmental Protection Agency, who now heads the Sierra Club’s Beyond Coal campaign in Texas, said in a prepared statement.

The environmental group has been targeting Luminant’s East Texas coal plants for closure through the courts and public relations campaigns. Big Brown burns a lignite-type coal and is routinely ranked by government regulators as one of the state’s most polluting power plants.

Last year Big Brown emitted more sulfur dioxide into the atmosphere than all but one other Texas power plant, according to the U.S. Environmental Protection Agency.

Luminant announced Friday it would close Big Brown’s adjacent coal mine by 2018, citing cheaper costs in transporting coal from Montana and Wyoming.

Smith was appointed by President Ronald Reagan in 1984. [Emphasis added]

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