Environmental groups are claiming a victory in a battle with ExxonMobil over pollution from its refinery in Baytown.

Six years ago, two groups, the Sierra Club and Environment Texas, filed a citizens' lawsuit against ExxonMobil's huge refinery in Baytown, one of the biggest in the country. The groups said they had to take action because government regulatory agency had not.

Two years ago, after a civil trial, a federal judge in Houston said despite evidence of thousands of pollution violations, the company was not liable for any penalties.

ExxonMobil had won.

But then, the Fifth Circuit federal appeals court reviewed the case and late last week it said the judge was wrong.

"This is huge news. We took on the world's biggest energy company," said Luke Metzger with Environment Texas, talking with reporters in front of the federal courthouse in downtown Houston. "We think this is great news for anyone downwind of polluting facilities."

The case will now go back to the trial court with orders that the judge re-think assessing penalties, penalties which could be in the many of millions of dollars.

In an email to News 88.7, ExxonMobil says it's still considering its options but said it's confident it can resolve the dispute consistent with "the court's findings that the Baytown Complex has operated reasonably and in good faith."

One issue the appeals court addressed was whether ExxonMobil had tried to manufacture "good faith" by working with state environmental regulators on a deal to do four, environmental improvement projects. The agreement with the Texas Commission on Environmental Quality (TCEQ) apparently was sought by ExxonMobil after the environmental groups filed suit in 2010.

"After we had filed suit, Exxon tried to do an end-run and went to TCEQ and got a marginal fine," says Philip Hilder, a Houston attorney representing the environmental groups.

The appellate judges said in their opinion:

"We think it is possible that the agreement between Exxon and the TCEQ is a sterling example of regulatory capture at its worst; however, it is also entirely possible that Exxon's explanation for pursuing the agreement—that it wanted more "certainty" in enforcement—is valid and that the company did want to take good-faith steps towards reducing future compliance issues."

The term "regulatory capture" refers to when a regulatory agency of the government acts to advance the interests of the industry instead of the public.

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