U.S. appeals court judges on Wednesday appeared skeptical of the U.S. Environmental Protection Agency’s claim that it can require an idled oil refinery in the U.S. Virgin Islands to obtain a costly new pollution permit before restarting operations.
During oral arguments in St. Croix, a three-judge panel of the 3rd U.S. Circuit Court of Appeals questioned whether the federal Clean Air Act allows the agency to require Port Hamilton Refining and Transportation LLLP, the refinery’s owner, to obtain the permit, since they are typically only necessary for new projects.
The permit — which the law requires before a new major source of emissions is built or a major modification to an existing source is proposed — could take years to obtain and cost the refiner hundreds of millions of dollars. Port Hamilton sued the EPA in January after the agency said the decades-old refinery would need a new source permit, because the EPA interprets “new source” to include new operations at “long-dormant” and shuttered facilities.
“I’m trying to get you to help me understand how something that you’re not even arguing is new construction is nevertheless new construction,” Circuit Judge Theodore McKee asked U.S. Department of Justice attorney Heather Gange, who represented the EPA.
Gange said the facility, which has been shuttered for years, most recently after the refinery sprayed a petroleum mist on nearby neighborhoods, qualifies as a new source after being indefinitely idled.
The permit requires detailed air-quality analyses and the use of the best available air pollution control technology.
Attorney Andrew Simpson, representing Port Hamilton, told the court the EPA has other tools available to ensure existing refineries don’t violate emissions limits, making the costly new permit unnecessary.
“The EPA doesn’t need this hammer, it has lots of other hammers,” Simpson said, noting the agency can audit facilities and enforce violations of operating permits.
The refinery was previously owned by Hovensa, which shuttered refining operations at the plant in 2012 following pollution violations.
Private equity investors purchased the refinery assets in 2016 through a venture called Limetree Bay, and poured $4.1 billion into reviving the aging plant. The facility was restarted in early 2021 but shut down months later.
The refinery was then sold to Port Hamilton in December 2021 for $62 million, and the EPA said it would require the permit in November 2022.
The case is Port Hamilton Refining and Transportation LLLP v. U.S. Environmental Protection Agency, 3rd U.S. Circuit Court of Appeals, No. 23-1094
For the EPA: Heather Gange of the U.S. Department of Justice
For Port Hamilton: Julie Domike and Gary Steinbauer of Babst Calland; Matthew Morrison of Pillsbury Winthrop Shaw Pittman; and Andrew Simpson of the Law Offices of Andrew Simpson