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D.C. Circuit Weighs Chevron Dispute Over Oil Platform Permitting

April 8, 2022, 4:37 PM

Chevron USA and the EPA faced questioning by a panel of D.C. Circuit judges Friday, concerning whether the company can sue the agency over its finding that an offshore oil platform that’s being decommissioned is still subject to air pollution regulation.

Chevron sued the agency after it reversed a Trump-era finding that once a platform stops emitting air pollution, it’s no longer an Outer Continental Shelf source subject to Clean Air Act regulation. Chevron is responsible for decommissioning the Gail and Grace drilling platforms in federal waters off the coast of Ventura County, Calif.

Judge David S. Tatel asked Chevron to respond to the Environmental Protection Agency’s argument that the permitting authority is Ventura County. The agency says the company’s challenge is premature because the county hasn’t decided whether Chevron’s platforms need permits for decommissioning.

Catherine Stetson, of Hogan Lovells US LLP, representing Chevron, said the legal question here isn’t whether the company is entitled to a permit. It’s whether Chevron “needs to get a permit at all for this activity,” she said.

Ventura County has the authority to enforce and issue permits, according to Stetson, but it doesn’t have the ability to interpret the law. The EPA argues its April 2021 letter isn’t a “final agency action” subject to judicial review. But the agency’s letter wasn’t simply a recommendation, Stetson said.

The agency gave a “definitive definition” of the CAA where a platform that no longer emits can be treated as a source, she said.

Judge Cornelia T.L. Pillard asked whether Chevron needed to go to the county at all to terminate the permits it already had. Under the Trump administration’s January 2021 letter, once Chevron reached the point of decommissioning when the platform no longer emits pollutants, it could surrender its CAA Title V permits and not go through additional permitting, Stetson said.

The merits question brought by Stetson isn’t properly before the court because it hasn’t been answered either way by the agency or the county, according to Justice Department attorney Phillip R. Dupre, who represented the EPA. The agency believes that more details are needed before it makes a factual determination, he said.

From Chevron’s point of view, the agency’s April letter was a “dramatic change” from its January findings, Tatel told Dupre. The attorney said it’s not clear that the January letter altered the company’s legal obligations.

The April letter “makes it clear that the EPA hasn’t consummated its decision-making process,” he said.

Venue Question

The agency also argues Chevron filed its challenge in the wrong court. Its claims instead belong in the Ninth Circuit because the EPA’s letters aren’t “nationally applicable,” the agency says.

Even if parts of the EPA’s letters could have implications for issues that could arise elsewhere, there’s also aspects that are tethered to the particular circumstances in question, according to Chief Judge Sri Srinivasan.

“That tends to shift, in my mind, the balance and pushes it to the west coast,” he said.

It would be odd for the court to declare the EPA’s decision a final agency action, and then direct the case to the Ninth Circuit, Srinivasan said. Tatel also said it would be odd if the court decides whether it was an agency action first if it thinks the case belongs in the Ninth Circuit.

The court is “well empowered to simply look at the venue issue,” Dupre said.

Stetson said that the agency’s decision is nationally applicable. The agency’s January letter said Chevron didn’t need to seek a permit once it reaches a point where its platform no longer emits. That’s “nationally applicable to any platform that reaches that point,” she said.

The case is Chevron U.S.A. v. EPA, D.C. Cir., No. 21-01140, 4/8/22.

To contact the reporter on this story: Maya Earls in Washington at mearls@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Patrick L. Gregory at pgregory@bloomberglaw.com

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