[00:00:00] Speaker 05:
Good morning, and may it please the court. Jeremy Frankel on behalf of the NGO petitioners.

[00:00:07] Speaker 05:
Ten years ago, these pipelines caused one of the worst environmental disasters in California history.

[00:00:13] Speaker 05:
Afterwards, the Pipeline and Hazardous Materials Safety Administration, PHMSA, found that the pipelines were hazardous and defective. It has now authorized restart of those lines, not because those defects were remediated, but in spite of them, and under a claim of jurisdiction that it doesn't have. So the NGO petitioners challenged two approvals that facilitated that restart.

[00:00:36] Speaker 02:
Counsel, are you taking the position that there was no federal jurisdiction before this bill in 2015?

[00:00:44] Speaker 05:
No, Your Honor, but if you would allow me just a moment, I was about to explain how the state is going to handle the core jurisdictional dispute here and the federalization order.

[00:00:52] Speaker 04:
Can I interrupt your question? So we'll give people enough time to make their arguments. This is obviously a complicated case. So one of the issues is the United States' motion to dismiss. Yes. And I know you guys are going to get to it. but I have a couple of preliminary questions. Sure. Do the petitioners plan to petition for review of the recent orders?

[00:01:19] Speaker 05:
We are considering it, as well as I believe other groups that aren't involved in this litigation. The state obviously has their own calculus, so it's on the table. It's possible if another group were to bring a petition, it might not be in the circuit. It could be in the D.C. circuit or another circuit where that group is headquartered.

[00:01:39] Speaker 04:
But it's possible there could be a petition or petitions in the Ninth Circuit. There could be. And what would the deadline be? 89 days from June 25th. So basically, September-ish, those petitions might theoretically be before us. That's correct, Your Honor.

[00:02:02] Speaker 06:
Could you file a supplemental petition in this case?

[00:02:06] Speaker 05:
I think that's one possibility, yes, or some sort of amended petition as well.

[00:02:11] Speaker 04:
But I think what your honors are perhaps getting at is why are we deciding this when... Well, I mean, I think that the mootness issues have some complexities to them. I think that, I mean, the timing we all know about about when the new orders came down. And I think we all are grateful that both of you were able to file oppositions, although shortly before argument, raising a number of claims as to why the case isn't moot.

[00:02:52] Speaker 04:
I think it's conceivable, the United States can correct me, but I think it's conceivable there might be a reply or two.

[00:03:02] Speaker 04:
And I just, assuming you were to choose to file a supplemental petition, as Judge Paez has suggested, or new petitions here, and assuming even if it were new petitions that hypothetically the panel decided the cases were connected and to take them together, what kind of harm would there be in dealing in the same case. And I'm going to give you your whole five minutes.

[00:03:33] Speaker 04:
Okay. So when we get done with my questions, we'll give you your whole five minutes. I'm here to answer your question. No, no, no, no, no. We're going to give you your whole five minutes. But if that were to happen, if you were to file an amended petition or a new petition and the cases were, say, to the same panel and consolidated, would you have any harm, would any harms, would you suffer any harm from having them all considered together?

[00:04:01] Speaker 05:
So let me emphasize again that we may or may not file a petition, and other petitions could be filed in a separate circuit. So the harm really for us would come down not to whether those are heard together, but the delay that that potentially would cause in issuing an opinion. And this goes to the continued effects of operating the pipelines in our view in its defective state. Is the oil flowing through the pipelines? The oil is flowing through the pipelines as of March 13th.

[00:04:27] Speaker 05:
So that has been going on for several months now. We're continuing to, you know, every day that the pipelines are operating, in our view, is they become more and more dangerous as they continue to corrode.

[00:04:38] Speaker 04:
But one of your arguments, if I'm... I can't sort through the two in my mind right now, but in the two oppositions, I believe one of the thoughts was...

[00:04:52] Speaker 04:
the issues here are very similar in all the orders, right? The jurisdictional issue is the same. On jurisdiction regardless is your argument. More or less, yes. So as a theoretical matter, to ameliorate harm again theoretically and hypothetically you could file a new petition or an amended petition you could incorporate by reference uh prior arguments and you could either move for having it decided on the basis of this argument or move for expedited briefing and argument uh to ameliorate the harm from the time but it would allow everything to get decided at once if that were the route you chose.

[00:05:39] Speaker 04:
Is that correct?

[00:05:40] Speaker 05:
I would acknowledge that as absolutely a possibility, but what I would... Okay, so let's put five minutes on the clock.

[00:05:47] Speaker 02:
Before you... Let's put that on hold a minute. Let me extend and revise my question. Sure. I just want you to understand that It appears to me I've spent a lot of time studying this case and all your briefs. I've read them all.

[00:06:04] Speaker 02:
And it seems to me that this case really turns on the jurisdictional question. Yeah. If the commission didn't have jurisdiction, then all of the orders were issued without authority. They were all Taviris. And they will all fall. Agreed. On the other hand, if there is jurisdiction, then we have to look at the merits of these claims. So I think we have to address the jurisdictional question first. And it would be most productive from my standpoint, and however you want to do it, and I guess maybe it will be from the state.

[00:06:40] Speaker 02:
I'd really like to talk with you about the jurisdictional question because I just think it is the heart of the case.

[00:06:48] Speaker 05:
I absolutely agree.

[00:06:49] Speaker 04:
Let me just offer one observation. Well, before you do that. Okay. Let me just say on this jurisdictional issue, which I agree with you and my colleague that it is seminal.

[00:07:03] Speaker 04:
it certainly would, I think, be conducive to the due administration of justice if it weren't muddied by mootness issues. So why don't you go ahead, and then we'll still put your five minutes back.

[00:07:18] Speaker 05:
Okay, and just really quickly following up on that, we don't think that there's a reason to wait to hear a separate petition from the special permit. The jurisdictional question, which Mr. Dorsey will get into, it's a question of law. And you have before you, between what you've judicially noticed now and the administrative record as it is supplemented, either the complete set of facts of what happens at these facilities by which you can reach a determination on that question. And there is this new jurisdictional determination issued in support of the special permit.

[00:07:51] Speaker 05:
And while it might add some additional expounds on legal theories presented, it's They had every opportunity to raise these in their answer brief.

[00:07:59] Speaker 04:
Although, as a fact, the United States has said that that is moot. Whether they're right or not is a different question, but they've said it was moot. And if it is, if the petition for some reason were moot, then we wouldn't have jurisdiction to decide it.

[00:08:17] Speaker 05:
Correct. And I think that might be a great segue to jump into some of those threshold issues.

[00:08:21] Speaker 04:
So let's put five on the clock and I'm going to stop for the moment.

[00:08:25] Speaker 05:
Okay.

[00:08:29] Speaker 05:
All right. So let me start with mootness, and I'm going to start with the restart approval, okay? And so the NGO petitioners, we've raised two challenges to the restart approval. The first is the jurisdictional challenge, and the second is a NEPA claim, and I'm going to take both of these in turn here. So the government, as of course you know, bears the burden to show that it's impossible to grant any effectual relief, whatever. And neither the new special permit nor any of the determinations made in support of it, supersede the restart approval or obviate it.

[00:09:03] Speaker 05:
And in fact, respondents don't contend as much. So it remains operative. Sable has now restarted the pipelines based on that approval, and its resumption of operations remains tethered to its validity. So should the court agree that it was issued in excess of jurisdiction, the necessary result would be vacatur, the loss of entitlement to operate,

[00:09:24] Speaker 06:
And the return to the state of- How does the restart relate to the underlying consent decree?

[00:09:34] Speaker 05:
So that's a good question. The restart approval was- So the restart approval originated as a requirement in a corrective action order that PHMSA issued after the spill in 2015. It was later merged into or made part of the consent decree But it was and always has been a function of PHMSA's Pipeline Safety Act authority. So now it is embedded in the consent decree.

[00:10:00] Speaker 02:
And all of the conditions that are appended to the restart order are the response to the corrective action order that the commission had previously issued. Is that correct?

[00:10:16] Speaker 05:
Yes, so the consent decree included those corrective actions and incorporated those corrective actions that hadn't yet been fulfilled.

[00:10:24] Speaker 02:
There are also conditions to the continued operation of the pipeline under the regular permit that now authorizes.

[00:10:34] Speaker 06:
Has there been any claim in the district court on the consent decree that FIMS is not abiding by the consent decree?

[00:10:41] Speaker 05:
So there is protracted litigation right now in the district court. It's somewhat complex. There's a lot of different cases. One of those cases is an enforcement action from the state to try to enforce the consent decree. Probably better left for Mr. Dorsey to address. We're not a party to that case. And there's a cross motion from the federal respondents to terminate the consent decree pointing to the federalization order. and the restart approval as part of the basis that should be terminated.

[00:11:08] Speaker 02:
So conditions are essentially the same. Then even if the district court's consent decree is vacated, the operation of the pipeline will continue to have to comply with those conditions for pipeline safety, right?

[00:11:27] Speaker 05:
Yes, that's correct. But the, the consent decree would only be terminated if in fact the,

[00:11:33] Speaker 02:
They properly exercise their authority here to issue the restart approval and this emergency special violation of those conditions then and assuming that the Commission has just continuing jurisdiction, then the remedy to enforce the violation would rest with the Commission.

[00:11:53] Speaker 05:
Yes, in that circumstance, that would be the case. If you were to wade through the jurisdictional challenge... And the commission has the authority, does it not, to... To continue to supervise the... Yes.

[00:12:04] Speaker 02:
If it's an interstate pipeline. If the violation of the condition is egregious enough, it can vacate the new permit.

[00:12:13] Speaker 05:
Well, it actually imposed limitations on what it can and can't do in this new permit. And this is a little bit kind of in the weeds here, but they did restrict themselves from being able to just revoke it for any reason they can pursuant to certain enforcement authority.

[00:12:27] Speaker 06:
But if I could just... But you don't place your mootness argument, or non-mootness argument, I guess, I don't know how you would phrase it, on the consent decree.

[00:12:40] Speaker 05:
No. No, and in fact, I think, again, just returning to what I initially said, I think it's really a simple question. The restart approval remains operative, and by holding it unlawful, setting it aside, that provides petitioners with effective relief. There is also a NEPA challenge, and I just want to point out that there has been no environmental review of the restart approval.

[00:13:03] Speaker 02:
There was an environmental assessment which made a FONSI determination, correct?

[00:13:08] Speaker 05:
That's correct, but it was expressly limited to the special permit and the emergency special permit. It did not include the restart approval. What they did was shoehorned the restart approval into the FONSI report, for the special permit. But this court's precedent is unmistakably clear that you can't do that. You have to do the environmental review. You can't just issue a FONSI for it. I see that I'm out of time. Unless there are any other questions, I'll pass it over for the main course here, the jurisdictional dispute. Thank you.

[00:13:38] Speaker 05:
Thank you.

[00:13:53] Speaker 01:
Good morning, Your Honors. I'm Deputy Attorney General Michael Dorsey for California and its state fire marshal. I'd like to save five minutes for rebuttal. I'll keep my eye on the clock.

[00:14:02] Speaker 01:
California asks this court to vacate the orders issued by the Pipeline and Hazardous Materials Safety Administration, PHMSA, notably the December 17th order that asserts federal jurisdiction over the pipeline and the December 22nd restart authorization order that both gave rise in part to restart in fact, and is a predicate for the federal government's currently pending under submission motion to terminate or modify the consent decree.

[00:14:29] Speaker 02:
So same question I opened with.

[00:14:33] Speaker 02:
You are not challenging the fact that prior to 2015, the commission had jurisdiction over these pipelines.

[00:14:41] Speaker 01:
I'm not conceding that it was the correct determination, but we did not make a challenge at that time.

[00:14:46] Speaker 02:
Well, it was never challenged, right?

[00:14:47] Speaker 01:
There was no challenge prior to 2016. The original plan was for these pipelines to extend to Texas in what we call the upstream and downstream directions. And I understand this could be a little bit counterintuitive because you think of streams flowing from inland to the coast, but this is actually the opposite. Upstream is where the oil comes from. Offshore, downstream is where the oil goes inland.

[00:15:08] Speaker 01:
So the original plan and the reason that there was a federal EIS on the pipeline was that the pipeline project was to cross the Colorado River. And so that was the original basis for federal jurisdiction over this pipeline.

[00:15:24] Speaker 02:
The record's a little bit... But why wouldn't it be proper if the oil originates offshore and then enters California jurisdiction crossing...

[00:15:35] Speaker 01:
Sure.

[00:15:35] Speaker 02:
What is it, the 12-mile limit or the three-mile limit?

[00:15:39] Speaker 01:
As relevant here, it's a three-mile limit.

[00:15:42] Speaker 02:
The platforms are like seven and nine miles off the coast in the Channel Islands, right?

[00:15:46] Speaker 01:
Right. So California has never asserted, the fire marshal has never asserted regulatory jurisdiction over the emulsion pipeline that runs from the offshore platforms to the onshore facility.

[00:15:58] Speaker 02:
So the commission regulates the platforms and the emulsion, the sub... the sea level emulsion pipeline that carries crude oil from the platforms to the coast.

[00:16:11] Speaker 01:
Did you say the commission, I call it the agency, but PHMSA is what you mean? Yeah. Yeah. Yes. Okay. What do you want?

[00:16:16] Speaker 02:
What, what, what term do you want to use? Agency is PHMSA.

[00:16:22] Speaker 02:
So you're not challenging. There's federal jurisdiction there. Right. That has never been challenged. California didn't challenge jurisdiction until the spill, until after the spill occurred.

[00:16:33] Speaker 02:
Actually, there wasn't a challenge because the pipeline was – the two pipelines, 324 and 325, were shut down.

[00:16:40] Speaker 01:
If I can be a little bit more specific, there's three pieces to what they're now calling – A and B and 325. No, no, no, no. Okay.

[00:16:51] Speaker 01:
There's three pieces, and then there's three pieces of a piece. So the three pieces I'm talking about are the undersea emulsion pipeline. That runs from the offshore platform to the facility onshore.

[00:17:01] Speaker 02:
That clearly originates outside of California.

[00:17:03] Speaker 01:
That originates outside of California. California, the fire marshal has never asserted jurisdiction over that pipeline. I don't want to.

[00:17:12] Speaker 01:
I want to be clear, there's like a state lands commission lease and other issues that are not an issue in this case, but the fire marshal has never asserted pipeline safety regulation jurisdiction over the undersea emulsion pipeline.

[00:17:22] Speaker 02:
And we don't have the coastal commission in front of us, so they're not objecting here.

[00:17:27] Speaker 01:
They have a whole different set of issues. You only have a small piece of the pie here, Your Honor.

[00:17:31] Speaker 02:
I'm beginning to understand that.

[00:17:36] Speaker 01:
So the middle piece is this processing. They call it the Las Flores Canyon Processing Facility. And that facility has been under the county, under state jurisdiction, delegated from the state to the county. And so that piece is not, in our view, not a pipeline, not a pipeline facility, not subject to federal jurisdiction, full stop.

[00:17:58] Speaker 02:
But there are certain aspects of Flores Canyon that are specifically called out in the regulations, are they not? The storage tanks, for example? Yes.

[00:18:09] Speaker 01:
So if it was just storage tanks, I think this would be a much harder case for us. But I think you could think of this for the old example of no vehicles in the park where people fight about whether a bicycle is a vehicle. If you put a basket on the front of the bicycle, everyone will agree the basket is not a vehicle. But that doesn't change anything about whether the bicycle is a vehicle.

[00:18:31] Speaker 01:
So the storage tank, the storage tank doesn't change the nature of the other pieces of the facility.

[00:18:36] Speaker 02:
You're asking us to make the jurisdictional determination on the basis of whether or not that's a manufacturing facility because of the fact that there is some processing of the crude oil. And it comes in as, I'll call it really crude crude oil. And then it goes out as sweetened crude oil because certain ingredients have been removed, right? Like propane and butane and gunk, for want of a better term.

[00:19:09] Speaker 01:
You have a rough approximation of what goes on at the facility. And our view is that that

[00:19:14] Speaker 02:
facility is not pipeline transportation and so the doesn't it make the oil flow better through the pipeline when it is heated and then injected into 325 a and b and 324 so it it probably does make it easier

[00:19:33] Speaker 01:
The phrase that is used in the government's brief is incidental to, but incidental is used in the statute in a totally different way and not used in the way that that argument would require it.

[00:19:43] Speaker 02:
Some of that actually starts at the platform, as I understand it, right? They remove certain gunk, maybe some gases and some water at the platform before it even goes into the emulsion pipeline.

[00:19:57] Speaker 01:
So to answer that specific question, and then I have a second part of the answer to your prior question. What happens at the platform is called primary separation, and so they separate some of the gas from the emulsion. So then you have a gas pipeline. You actually have three pipelines.

[00:20:13] Speaker 02:
So there's a separate pipeline that we're not even going to talk about.

[00:20:16] Speaker 01:
There's another pipeline, Your Honor. A gas pipeline. There's a gas pipeline that connects from the offshore facility to a gas plant, which is kind of across the ravine from the processing plant. Okay. That's the primary separation offshore. Then you have two pipelines that go onshore and then a return pipeline for water.

[00:20:37] Speaker 01:
And then you have the two different plants onshore. But I want to bring another thing to the court's attention that I think is really relevant here.

[00:20:44] Speaker 01:
When you're talking about being incidental to transportation, is that the original environmental reviews and the original plans for this onshore facility were not to connect to pipeline transportation. And that's in the petitioner's supplemental record documents that the court has granted judicial notice of, that the original plan was to connect these. So initially, one of the platforms started only connected by marine transportation, that is by large ships.

[00:21:11] Speaker 01:
The plan that was submitted was to build the onshore facility and do this processing and then connect it back out to a marine terminal to having done the processing of this plant, then connect it to a ship. So it was not originally intended for pipeline transportation. It now is connected to 324, which is the beginning of what I'm calling the third piece.

[00:21:35] Speaker 02:
And that starts at Las Flores Canyon.

[00:21:38] Speaker 01:
Right. And so our position is... These are three different facilities. For purposes of this case, I think whether 324, 325A, 325B are different, they're just different segments. That's not our argument. Our argument is that those run from Los Flores Canyon, which is a point in California, to the Pentland Station, which is a point in California.

[00:21:59] Speaker 04:
I want to go back, go to a minute for the statute. And the statute 601018 defines interstate or foreign commerce related to hazardous liquid means commerce between a place in a state and a place outside that state.

[00:22:22] Speaker 04:
So isn't what is moving regardless of whether you want to separate the facility into three segments or perhaps three artificial segments or regardless, isn't the hazardous liquid here?

[00:22:41] Speaker 04:
Isn't that interstate or foreign commerce? Isn't the whole thing interstate or foreign commerce? Because interstate or foreign commerce related to hazardous liquid means commerce between a place in a state and a place outside that state. Aren't we talking really here about commerce?

[00:23:00] Speaker 04:
And all of this liquid is in commerce and thus in interstate and foreign commerce because it's commerce ultimately between a state and a place outside a state and a place in a state.

[00:23:15] Speaker 01:
Sure. So this is the same position that was taken by Southern Pacific Pipelines in the Southern Pacific Pipelines versus Department of Transportation case that As long as the oil is coming from somewhere in another state, then that's different. But the definitions then defended by the federal government, by PHMSA's predecessor agency, was that you look to the endpoints of the pipeline. And particularly in that case, it was referring to lateral pipelines. So even if the oil was coming through an interstate line, Once it then hit a different pipeline, if that pipeline's beginning and end were inside the state, the case was about pipelines that are in California, Arizona, and Nevada, those lateral lines are entirely within one state.

[00:24:00] Speaker 01:
So you evaluate based on the endpoints, not based on the full journey that the oil travels.

[00:24:05] Speaker 04:
Notwithstanding the fact that the statute uses the word commerce.

[00:24:11] Speaker 01:
So I see that I'm running into my rebuttal time, so I'll try to answer your questions, but I would like to preserve that time. The statute does use the word commerce, but I think here we're talking about the commerce that occurs within a particular pipeline facility. That is, that pipeline, you have to string the definitions together, right? The interstate hazardous pipeline facility is whether it is doing the interstate transportation itself. And the reason the Southern Pacific case reaches this conclusion is if you take the contrary conclusion, you're going to read interest state pipelines out of the statute because you have so many pipelines that have the oil is coming from the Gulf Coast or from offshore in California.

[00:24:56] Speaker 01:
20 states have negligible oil production on their own. So there would be no interest state pipelines. And we know that that's the wrong interpretation of the statute because there's this whole process set up in the statute for the determination of interstate pipelines.

[00:25:11] Speaker 02:
Isn't this situation, though, similar to the appendix in the regulation that talks about oil from offshore platforms? And I'm going to call it the Gulf of Mexico. That may not be the politically correct terminology these days. But Gulf of Mexico into, I guess, the interior of Texas.

[00:25:33] Speaker 01:
So I don't think example seven, you're talking about example seven in the appendix. That's the only example in the appendix that's been discussed in any of the briefing. I don't think example seven is particularly useful here because it doesn't tell you how far inland is the same pipeline. So it has a point B. which if I'm looking at the map, it's kind of around the woodlands near Houston. I can't quite tell how far into the state that's supposed to be.

[00:25:57] Speaker 02:
So how do you know?

[00:25:58] Speaker 01:
We don't know what happens at point B. We don't know what happens at point B. We don't know what happens between point A and point B. I think you can probably take the example to mean the undersea pipeline that this fire marshal has never asserted jurisdiction over would be an interstate pipeline. That's the situation that existed from 2016 to December of 2025, that the undersea pipeline was understood to be an interstate pipeline, like example seven.

[00:26:28] Speaker 01:
Then it was understood that the LFC facilities whatever they do, you know, we've had our colloquy about that, we've discussed it extensively in the brief, are something else. And that's a, when you get to the other side of that facility, it's something different. And no court has ever ruled that you can have the same pipeline on both sides of a facility. The only authority that PHMSA cites for that proposition is their own decision, where PHMSA took a question to PHMSA and PHMSA won.

[00:26:59] Speaker 01:
So...

[00:27:01] Speaker 01:
It's not really an authority.

[00:27:03] Speaker 01:
I see that I'm running out of time.

[00:27:05] Speaker 02:
Prior to 2016, did the Office of the State Fire Marshal have any regulatory role over 324 and 325?

[00:27:18] Speaker 01:
No. So prior to 2016, originally it was intended to connect on the downstream end. At a certain point, PHMSA relied on a FERC tariff, which is neither here nor there because it doesn't exist anymore. And then at some point, the fire marshal was just outside the statute of limitations and couldn't have challenged it anyway.

[00:27:37] Speaker 02:
As I understand the tariff, though...

[00:27:40] Speaker 02:
Pacific Pipeline was the prior owner of these lines.

[00:27:44] Speaker 02:
It was Plains All-American Pipeline. I'm sorry, Plains Pipeline. When the spill occurred and the lines were shut down, it took some kind of action to sort of get out from under the FERC designation because there was no product flowing through the lines, right?

[00:28:02] Speaker 01:
It did cancel its FERC tariffs. The other relevant piece is that time period where the pipelines were shut off. was when the consent decree was entered to. And if your honors would permit me, I would like to address that briefly, is that the consent decree is a legal rule. It remains unchanged. I checked my ECF notifications this morning. The district court has not issued any orders on that.

[00:28:25] Speaker 02:
And it's- Is the district court waiting for us to rule on this case? Is that what happened? Do we know?

[00:28:32] Speaker 01:
Oh, I did tell Judge Wilson, please don't wait for the Ninth Circuit because you could end up with a chicken and egg problem. So I'm going to tell you the same thing.

[00:28:39] Speaker 06:
When was their argument? When did Judge Wilson submit the case?

[00:28:44] Speaker 01:
That was heard on June 8th, and then there were subsequent motions in two related cases that were set for June 29th. He took the argument off calendar and took it under submission.

[00:28:55] Speaker 02:
So what's pending before him?

[00:28:59] Speaker 01:
I'm going to go over time for this.

[00:29:02] Speaker 02:
So what we need to know. Yeah, I don't want to step on Judge Wilson's toes. On the other hand, he may be waiting for us to rule to give him some guidance on what he should be doing.

[00:29:13] Speaker 01:
Bear with me.

[00:29:15] Speaker 01:
In the consent decree case, there are two pending motions. the United States has moved to modify or terminate the consent decree and has pointed to the orders that are being litigated here as a basis for that and notably has argued that we, California, are not allowed to collaterally attack those orders in that court. We've argued that that's wrong, but I feel a little precarious in that position.

[00:29:40] Speaker 01:
At the same cross-motions briefing, California has moved to enforce the consent decree on the basis that restarting the pipeline violated the consent decree because Appendix D says that the pipeline operator is required to get approval from the state fire marshal and that if they wanted to modify the consent decree, they had to go do that first, allow us to present our opposition. There's a related case, Center for Biological Diversity versus CAL FIRE. That's where my co-petitioners here are my adverse.

[00:30:12] Speaker 02:
In that case... What's the name of the other part? Center for Biological Diversity versus who?

[00:30:16] Speaker 01:
Versus CAL FIRE. CAL FIRE is the parent agency under which the fire marshal is located. In that case, there's a preliminary injunction that prohibits restart of the pipelines unless Sable gives a 10-day notice that they have all their permits in order. No such 10-day notice was ever given. About a month and a half ago, Sable in the United States removed that case to federal court. There are two pending motions to remand that case, and there is a motion to dissolve that preliminary injunction.

[00:30:47] Speaker 02:
Was it pending before?

[00:30:48] Speaker 01:
Wilson. Judge Wilson. Yes. Related.

[00:30:52] Speaker 01:
Yes. Yeah. Then there are two cases, one brought by the California Department of Parks and Recreation and one brought by Sable against the Department of Parks and Recreation about the transit through Gaviota State Park.

[00:31:08] Speaker 01:
Then there's a case in the Eastern District of California where Sable originally filed in state court challenging a related piece of state legislation, that case has been removed. And my recollection, and Sable will correct me if I'm wrong, is that their motion to amend their complaint, now that they're in federal court, is currently under submission.

[00:31:27] Speaker 06:
With Judge Wilson?

[00:31:29] Speaker 01:
No, that's with Judge Sheriff in the Eastern District. It was filed in Kern County, so you remove to the district court in which the county is located.

[00:31:37] Speaker 01:
So it hasn't been placed in the same place.

[00:31:40] Speaker 01:
If I can...

[00:31:42] Speaker 04:
If I can get back to wrapping up on the... Yeah, why don't you do that, and we'll give you your five minutes for rebuttal.

[00:31:48] Speaker 01:
Thank you. Just to wrap up on the consent decree, it is a legal rule. It remains unchanged. This court's en banc decision in Taylor v. United States explains that consent decrees are final and binding judgments, and this is that order.

[00:32:05] Speaker 01:
The United States lacks the power to contravene a consent decree, and this court can easily reach a a simple conclusion that would not require anything to deal with all of the other complicated matters in front of you to just say, this order contravenes the consent decree, or these orders contravene the consent decree. They are therefore unlawful. We set these orders aside and go make your motion in the district court. But absent the benefit, not being able to claim this order.

[00:32:36] Speaker 02:
But if we find that the commission had jurisdiction to...

[00:32:42] Speaker 02:
I'll call it re-enter the regulatory scheme in issuing the orders that are challenged before us, wouldn't that – I don't know if preempt is the right word, but wouldn't that trump – these cases that are pending before the district court?

[00:33:02] Speaker 01:
No, you might get the case back to hear the same argument, but it is clear law in this circuit that you cannot simply violate a consent decree and then say, well, my violation is a reason why you should change it. and it even goes so far in the Nehmer v. Veterans Affairs case to say the federal government cannot issue an order and then use that order as a basis to modify a consent decree. So FSMA is a party to that case, right? The United States is a party to that case.

[00:33:31] Speaker 06:
I thought they signed off on the consent decree.

[00:33:33] Speaker 01:
The signatory on behalf of the United States is the General Counsel of PHMSA in 2020. That person happens to be the director of PHMSA today, so...

[00:33:44] Speaker 01:
you know, to the extent that we have to name officials in their official capacity, it's Roberti.

[00:33:49] Speaker 06:
So I think the consent... No, I guess my only point was that that consent decree is in full force.

[00:33:56] Speaker 01:
Yes, the consent decree is in full force at this time. It's their obligation to go and make that change before anything else. It's an easy off-ramp for this court to decide this case and not have to get into all the other things. It also...

[00:34:09] Speaker 01:
gets around the mootness problem because their argument, their collateral consequence, is that the restart approval is an order that gives them a reason to get out from under the consent decree. So if you cut one of the arguments out from under them, that's a collateral consequence, which this court has recognized means that a case is not moot. All right. We'll give you your five minutes. Thank you, Your Honor.

[00:34:46] Speaker 03:
Good morning, Your Honors, and may it please the Court. Robert Stander here on behalf of PHMSA. I'd like to focus on the issue of PHMSA's exclusive jurisdiction over the onshore pipeline segments. And I'll start with our motion to dismiss and then turn to the merits. On the merits, I'll focus on the commerce question that you raised, Judge Bennett.

[00:35:08] Speaker 03:
On the motion to dismiss.

[00:35:11] Speaker 03:
Petitioners challenge an emergency special permit, a 60-day permit that PHMSA issued last December, along with a jurisdictional determination they issued at the same time. That permit expired months ago in February. Two weeks ago, PHMSA issued a new 10-year special permit under different statutory authority. And at the same time, it issued a new jurisdictional determination.

[00:35:35] Speaker 06:
Did it identify any factual changes or any new factual developments?

[00:35:42] Speaker 06:
When they issued that new jurisdictional determination?

[00:35:45] Speaker 03:
Well, Your Honor, it relied on new factual documents.

[00:35:50] Speaker 03:
It added new reasoning.

[00:35:53] Speaker 06:
New facts relating to either the facilities or to the pipelines? What new facts did they rely upon?

[00:36:03] Speaker 06:
You said documents. So what are the facts identified in the documents that they relied upon?

[00:36:09] Speaker 03:
Yeah, so there's a handful of documents that are new documents. They have manuals from the facility when it was commissioned in 1991 that discussed the processes that the facility was designed to do. They have a purchase agreement summarized.

[00:36:24] Speaker 06:
That's been there all along.

[00:36:27] Speaker 03:
New facts. Well, of course, the facts on the ground, the processing is still the same. The analysis that the agency used, the record that it built, the reasoning for its decision is different.

[00:36:41] Speaker 06:
Okay, so that's more of a legal analysis.

[00:36:44] Speaker 03:
Well, Your Honor, all of the— That just changed its legal reasoning is what it did. Well, the reasoning for an agency's decision is the basis, one of the basements of the challenge. Well, no, wait a minute.

[00:36:57] Speaker 06:
It's just like what we do, right? I mean, there are facts that we have, and from those facts, we conduct legal reasoning. We don't make facts. There are facts. I want to know, the agency could identify new facts that occurred. You know, they moved the pipes. They did this. They did that. None of that happened here, correct?

[00:37:16] Speaker 03:
That's correct, Your Honor. And, of course, the facts haven't changed on the ground. Right. And I can walk through the reasons why I think this jurisdictional determination is moot. The first is that the new determination supersedes the old one. The old one is no longer in effect. Right.

[00:37:31] Speaker 06:
Same basic, but we're talking about this. That's what I want to know. It's the same basic facts, though.

[00:37:35] Speaker 03:
Well, the facts are the same, Your Honor. The factual analysis is different.

[00:37:38] Speaker 06:
You just added a few more legal reasons as to why the feds have jurisdiction, why this is an interstate pipeline.

[00:37:45] Speaker 03:
So at very minimum, all of the petitioner's Record-based challenges, their challenges to the agency's reasoning, which occupy much of their brief, are moot. The remedy for when an agency fails to supply adequate reasoning is ordinarily to remand for the agency to supply that reasoning. The agency has supplied additional reasoning already, and so that remedy is ineffective. And so even if the court were to vacate, you know, vacating the old determinations, is an ineffective remedy here because the old determination is no longer in effect.

[00:38:21] Speaker 02:
When you talk about the old determination, we're talking about the emergency special permit, right? That has expired, and now we have, what, a 10-year permit that has issued?

[00:38:34] Speaker 02:
And that had not been determined when this challenge was initially filed.

[00:38:42] Speaker 03:
So, Your Honor, what I'm actually talking about is a separate thing. It's a jurisdictional determination. So the agency did two things at both times. In December, it issued the permit, and then it also made a jurisdictional determination.

[00:38:55] Speaker 02:
Right.

[00:38:55] Speaker 03:
And those are separate things that have been challenged separately.

[00:38:57] Speaker 02:
In about a two-page letter or whatever it was. Right. That's right. Now we have a much more thorough reason. A 10-page justification. That's right. For the permit that replaced the emergency permit that expired by its terms.

[00:39:11] Speaker 03:
So I just want to be clear, it's not a justification for the permit. It's a justification for exclusive jurisdiction over the pipelines. So there's a jurisdictional determination, and that asserts jurisdiction. there's a separate thing that is issuing the permit.

[00:39:25] Speaker 02:
And those are two separate things. Judge Piazza's question, the facts haven't changed from the facts that supported the original jurisdictional determination. They're just more fully explicated.

[00:39:38] Speaker 02:
Is that correct?

[00:39:40] Speaker 03:
It's correct that the facts on the ground have not changed. But to the extent, but there are new factual documents in the record and there's new reasoning. So to the extent that we're talking about challenges to the agency's reasoning, or the facts that it relied on, that is certainly, because there's no determination.

[00:39:55] Speaker 02:
And are those the documents that sort of came out in response to our prior order saying, Commission, we have concerns that we don't have the full administrative record, and then they began producing another, what, 5,000 or 6,000 documents?

[00:40:10] Speaker 02:
documents in response to our order?

[00:40:12] Speaker 03:
No, Your Honor, that's not correct. The new documents that they're reviewing, that they've added to the administrative record, are not part of that. They weren't relied on in the first decision back in December.

[00:40:23] Speaker 02:
So they're not part of the administrative record that supported the first decision, but they are with regard to the most recent one. That's right.

[00:40:30] Speaker 06:
So just to make sure I understand your argument, your argument is, okay, we had this sort of hastily prepared whatever, shortly jurisdictional determination for the emergency permit. Two pages.

[00:40:45] Speaker 06:
Right? That's the first part. That emergency permit expired, and we've now recognized the facts haven't changed, but we have elaborated in more detail a more robust assessment of why there's federal jurisdiction. Is that correct?

[00:41:06] Speaker 03:
Interstate. I would characterize it differently than the way you did, but it's correct. Where was I wrong? I don't think that the first one was...

[00:41:16] Speaker 06:
I don't care.

[00:41:18] Speaker 03:
The first termination was two pages. The second one is much more thorough. I will say that there are also good prudential reasons to defer ruling on the jurisdictional issue. First, it's a crucial issue that extends far beyond this pipeline. This is an issue of first impression in the Ninth Circuit and nationwide. And so it's far more important to get this issue decided correctly than it is to get it decided immediately.

[00:41:48] Speaker 06:
Given that, what you just said, should we just wait to see what happens with this? You know, whether they file a new petition for review or ask leave to amend the current petition?

[00:42:00] Speaker 03:
That's one option that you have before you is just to hold the petitions until they do file, and I have to believe that they will file to challenge these.

[00:42:07] Speaker 02:
It seems to me that we need to have the full record before us, and if we're going to make an intelligent decision on jurisdiction – So we ought to make sure that we've got a complete administrative record before we can make a ruling on the jurisdictional determination that was issued, what, two weeks ago, three weeks ago?

[00:42:32] Speaker 03:
So I think that's absolutely correct, Your Honor. I'll just add a point that On the merits, the Supreme Court also issued a new decision that we submit as dispositive, and that's Flowers Foods. And it was decided after the opening briefs and after we submitted our reply briefs, and it hasn't been briefed other than in the 28J letter.

[00:42:52] Speaker 02:
So we should call for a supplemental briefing on the jurisdictional question so everybody has an opportunity to talk about that case and these new documents that were just recently produced.

[00:43:03] Speaker 03:
So that's absolutely one way to do this. If you're not inclined to dismiss as moot, to consolidate, to hold this and wait for new petitions and supplement everything.

[00:43:12] Speaker 02:
As Ben pointed out, the mootness issue is a little bit thorny because of the fact that the restart order, I assume, is still in effect because the pipeline is still operating, right?

[00:43:25] Speaker 02:
There was a period of time when when there was no operative permit but sable as i understand it agreed to continue operating subject to the earlier conditions while the commission finalized its decision on the replacement permit have i got that right uh so the the pipeline is the pipeline was never operating under the old

[00:43:48] Speaker 03:
The emergency permit, it never started until after that permit expired. So that was never at issue.

[00:43:52] Speaker 02:
It only has been operating under... But the new permit, there was a... I'll call it a dark period. Maybe I shouldn't use the word dark, but there was a time period during which there was no permit in operation that applied, but the pipeline continued in operation. Correct. Okay. Now we have this new permit. We have a new jurisdictional determination, but the restart approval... is and has continued to be in effect since it was issued in December.

[00:44:26] Speaker 03:
The restart plan has a separate jurisdictional problem.

[00:44:32] Speaker 03:
The jurisdictional problem with that is that the restart plan is not in order under the Pipeline Safety Act for purpose of the judicial review provision here.

[00:44:38] Speaker 02:
So it's not final agency action?

[00:44:41] Speaker 03:
So it is, whether it's final agency action or not, It's not an order under this chapter for purposes of the judicial review provision. It's an implementation of a consent decree, and the challenge to that belongs in district court, where it is actually being litigated in the district court.

[00:44:55] Speaker 04:
So, counsel, with regard to, why don't you give us the United States' short version, since you don't have a lot of time, of your jurisdictional issue, why the agency had jurisdiction as informed by the Supreme Court case?

[00:45:12] Speaker 03:
Thank you your honor so on that question the rule from flowers foods is dispositive and the key statutory provision is definition 7 that's interstate hazardous liquid pipeline facility. The key fact is that oil begins out of state in federal waters crosses state lines and is transported through the onshore pipeline segments all the way to Pentland.

[00:45:38] Speaker 03:
To be clear this is a different argument from The separate argument we made in our briefs about midstream processing and whether midstream processing is within the scope of definition 22. This Flowers Foods argument is a development of the argument that Sable made in its briefs at page 28 and 30 to 31. And you don't actually need to decide the midstream processing question to resolve this case.

[00:46:02] Speaker 03:
And that's because the disputed issue here is not about jurisdiction over the Las Flores Canyon facility itself. The disputed issue is jurisdiction over the onshore pipeline segments. Those are different questions. Whether an activity is within the scope of definition 22 and is therefore regulated by PHMSA is different than whether that activity breaks the flow of interstate commerce. And I'll just walk through this textual analysis here.

[00:46:28] Speaker 02:
Don't we have to decide whether or not what happens in Las Flores Canyon terminates the PIPELINE FROM THE OFFSHORE SOURCE. YES, YOUR HONOR. BUT THAT QUESTION. A NEW PIPELINE AT LAS FLORES CANYON WHICH CLEARLY IS IN TRUST STATE GEOGRAPHICALLY.

[00:46:48] Speaker 03:
SO THAT IS NOT THE RIGHT SO YOU DO NEED TO DECIDE WHETHER IT BREAKS THE FLOW OF INTERSTATE COMMERCE.

[00:46:54] Speaker 01:
RIGHT.

[00:46:54] Speaker 03:
BUT THAT IS NOT THAT DOESN'T TURN ON WHETHER IT'S WITHIN THE SCOPE OF DEFINITION 22. IT TURNS ON WHETHER IT'S A CONTINUATION OF COMMERCE UNDER INTERSTATE COMMERCE UNDER DEFINITION 7. AND THE TEST IS NOT WHETHER A is the physically intrastate. The test is whether the oil flows from out of state. And I can demonstrate that with Flowers Foods and with a hypothetical about a tanker truck. So in Flowers Foods, a delivery driver picked up butterscotch crimpets from a warehouse in Colorado and delivered them to a store in Colorado.

[00:47:26] Speaker 03:
And that driver was engaged in interstate commerce because he transported the butterscotch crimpets on an intrastate leg of their interstate journey. It didn't matter that the driver crossed state lines. He didn't. The butterscotch crimpets crossed state lines. And the same is true here. It doesn't matter if the pipeline crosses state lines. It's the oil that has to cross state lines.

[00:47:44] Speaker 04:
So in your view, we would be looking at the combination of 7 and 8B.

[00:47:50] Speaker 03:
Yes, that's exactly right. And the textual analysis in Flowers Foods is on all fours with that language. In Flowers Foods, it's engaged interstate commerce. In definition 7 and 8, 7 is used to transport in interstate commerce.

[00:48:05] Speaker 03:
The court explained that when statutes use that language, interstate commerce, it imports that background rule. The rule from Flowers Foods is that once goods cross state lines, they remain in interstate commerce all the way to the destination.

[00:48:16] Speaker 04:
And we're looking at, in your view, commerce between.

[00:48:19] Speaker 03:
That's right. That's exactly right. Interstate commerce. The definition Flowers Foods uses for interstate commerce. It gets from Black's Law Dictionary, and that definition is materially identical to definition eight in the Pipeline Safety Act.

[00:48:31] Speaker 04:
But putting aside for a minute your mootness contention, the United States believes, as I believe you answered Judge Talman's question, that it would be beneficial that even if we decided to ask for it on an expedited basis, that we have briefing on the effect, if any, of the recent Supreme Court decision.

[00:48:54] Speaker 03:
I wholeheartedly agree with that, Your Honor. If I could make just one more point about why that matters. Yeah, we're giving everybody extra time.

[00:49:01] Speaker 03:
About why that matters. So the petitioner's theory of the statute here is that a pipeline facility has to be physically located in the state. So here's the environmental petitioner's reply brief at page 17. They say, whether a pipeline facility is interstate, quote, turns purely on its physical location. If it begins and ends within state boundaries, it is by definition intrastate. That's wrong, and a hypothetical involving a tanker truck demonstrates why.

[00:49:35] Speaker 03:
So trucks and trucking transportation are not within the scope of definition 22. They're not pipelines. They're not regulated. Trucks are not regulated by PHMSA under the statute, under the Pipeline Safety Act. Now suppose a pipeline starts in Nevada and it crosses state lines and ends across the border in California. A separate company with a truck, a tanker truck, drives up, loads up the oil, drives it 50 miles down the road, inserts it into another pipeline. That pipeline transports it from a place in California all the way to Pentland.

[00:50:06] Speaker 03:
That second pipeline is transporting the oil in interstate commerce. The reason is because the oil crossed state lines. Like the butterscotch crimpets crossed state lines, the oil crossed the state lines. And so it doesn't matter whether the pipeline segment or any pipeline at all across the state lines. What matters is there's commerce, and it's the oil that has to be used.

[00:50:24] Speaker 06:
Well, nonetheless, it's traveling through pipes within California. It can only move through the pipes.

[00:50:33] Speaker 03:
That's correct, Your Honor. So the definition says an interstate pipeline is something that is used to transport oil in interstate commerce. And if the oil is in interstate commerce, it's transporting oil in interstate commerce. That is the rule from Flowers Foods in 150 years of Supreme Court precedent.

[00:50:50] Speaker 06:
Let me ask you this before you sit down, and I hope Judge Bennett will allow this. Of course. Explain why you might disagree with the state's argument regarding the consent decree. The state just argued, well, you could decide this case really quite simply and narrowly. by looking at the consent decree. Now, PHMSA was party to that consent decree, if I'm not mistaken. Is that correct? Your Honor, the consent decree is clearly in force today.

[00:51:19] Speaker 03:
Your Honor, the challenge to a consent decree needs to be brought in the court that entered the consent decree.

[00:51:24] Speaker 06:
And in fact, Why can't I look at it and say this doesn't comply? This just violates the consent decree wholesale.

[00:51:32] Speaker 03:
It's unlawful. So, Your Honor, that argument If I think something, an activity violates a consent decree, the thing I need to do is go to the district court who entered the consent decree and challenge that. And in fact, California has done exactly that, and we have done exactly that. We have cross-moved. You didn't do that.

[00:51:48] Speaker 06:
Did you do that before you issued any of these orders?

[00:51:51] Speaker 03:
No, we issued the order, we went to the district court, and we moved to vacate the consent decree or modify the consent decree.

[00:51:56] Speaker 06:
But you didn't go to the district court and say, this is what we want to do, modify the consent decree so we can do it. You went ahead and just did what you thought you were going to do, and then you went to the district court and said, this is what we did.

[00:52:07] Speaker 03:
So, Your Honor, you are correct on the order of operations, and what I would say is if that's an issue and if that's a problem, then Judge Wilson has that before him. It's his consent decree. He is the one who can enforce that, and he is deciding that as we speak. We have litigated it. We've crossed swords in the district court on multiple issues, and Judge Wilson is perfectly capable of handling his own consent.

[00:52:30] Speaker 04:
Was there a request for an injunction?

[00:52:33] Speaker 03:
There is. There are multiple requests for injunction on various issues.

[00:52:39] Speaker 06:
So in your view, anything to do with the consent decree belongs in the district court?

[00:52:48] Speaker 03:
Well, enforcing a consent decree, resolving issues under a consent decree, the meaning of a consent decree goes first to the district court.

[00:52:53] Speaker 06:
One of the arguments that they've raised, the state in particular, is that this just all violates the consent decree.

[00:53:01] Speaker 03:
That is one of the arguments.

[00:53:02] Speaker 06:
Hands down.

[00:53:04] Speaker 03:
That's right. And they raised that argument to Judge Wilson, and we are fully briefed that. Judge Wilson is the one who needs to decide that. And then it will come on appeal to the Court of Appeals, and they can review Judge Wilson's interpretation of his own consent decree and enforcement of his own consent decree.

[00:53:17] Speaker 06:
Well, I mean, we could say it violates the consent decree, but that still wouldn't stop Judge Wilson from modifying the consent decree or vacating the consent decree.

[00:53:26] Speaker 03:
Well, I can't speak to that. I don't know what the effect of that would be or what the scope of the court's ruling would be, but I

[00:53:32] Speaker 04:
Or we could say there is or there isn't jurisdiction.

[00:53:35] Speaker 03:
Correct.

[00:53:36] Speaker 04:
Correct. All right.

[00:53:38] Speaker 03:
If there are no further questions, I'll submit. Thank you.

[00:53:59] Speaker 00:
Good afternoon. May it please the court. Nick McDaniel for Sable Offshore. I think I should just jump right in to the merits of this interstate question, I think. And we're really focusing in at this point on what is the key statutory question. And I don't want to be repetitive, but I do want to just quickly underscore one statutory point in 60101, 7, and 8B.

[00:54:26] Speaker 00:
And then I'll talk a little bit about the midstream processing that happens at the LFC and what happens there if this court is interested in that issue.

[00:54:36] Speaker 00:
So, segment 324 and 325, those are the segments that are at issue in this case.

[00:54:45] Speaker 00:
Number seven, definition number seven defines interstate hazardous liquid pipeline facility as a hazardous liquid pipeline facility used to transport hazardous liquid in interstate or foreign commerce. The state and petitioners don't dispute that it's a pipeline.

[00:55:00] Speaker 00:
They don't dispute that it's transporting hazardous liquid. The only disputed issue is whether it is transporting hazardous liquid in interstate commerce. That is it. That is the question. Is it transporting liquid in interstate commerce? And there's been no argument even on the other side about why there's a break in the chain of interstate commerce such that these pipelines, which are transporting hazardous liquid, are no longer transporting them in interstate commerce. And that question is the same regardless of whether this is one pipeline, two pipelines, three pipelines, a thousand pipelines.

[00:55:34] Speaker 00:
The question is still the same. Is this segment of pipeline, which the state agrees it's a pipeline, is it transporting oil in interstate commerce?

[00:55:41] Speaker 02:
What happens to the pipeline at Pentland Station? Does the oil enter other pipelines? Is it kind of a distribution center?

[00:55:50] Speaker 00:
That's exactly right, Your Honor. It connects with other pipelines. And so it connects with other pipelines that are coming in from different places.

[00:55:58] Speaker 00:
And then, you know, Sable's pipeline For commerce purposes, Sable sells its oil at Pimpland, and then it mixes with the other oil, which then makes- Some of those pipelines go to refineries, and other pipelines go where?

[00:56:12] Speaker 02:
Outside of California?

[00:56:15] Speaker 00:
I believe they- I don't know the answer on this one for sure. I believe that they all stay within California.

[00:56:21] Speaker 02:
They go to California refineries.

[00:56:25] Speaker 00:
Well, it would depend on whether those pipelines are transporting liquid in interstate commerce.

[00:56:31] Speaker 04:
Well, I mean, your friend has basically said, I mean, that doesn't mean we shouldn't read the statute that way, but your friend has essentially said that with this broad definition of interstate, commerce, essentially, that writes out of the statute subsection 10, intrastate or whatever precedes 10, intrastate hazardous liquid pipeline facility means a hazardous liquid pipeline facility that is not an interstate hazardous liquid pipeline facility.

[00:57:01] Speaker 04:
And so if what we're looking at is the very broad traditional hundred-plus-year-old definition of intrastate commerce, there may not be any that are in that category. And I think your friend was saying, how can that be the way the statute works? But I don't want to put words in his mouth.

[00:57:19] Speaker 00:
Sure. And I would say that that's simply not the case that reading the statute in the way the United States and Sable have put forward. It's not the case that that would eliminate intrastate pipelines.

[00:57:31] Speaker 04:
Give me some examples.

[00:57:32] Speaker 00:
There's a really easy example here in this case. If Sable didn't have offshore wells, there are plenty of onshore wells in California. If Sable had onshore wells instead of offshore wells, and then it transported that hazardous liquid to Pentland where it sold it, that would be an intrastate problem.

[00:57:50] Speaker 04:
So it might well get rid of anything that was later transporting the hazardous liquid if it originally came from offshore, no matter how it got there.

[00:58:06] Speaker 00:
If the hazardous liquid originally came from offshore, if it's being transported in interstate commerce because it's coming from offshore, then there has to be some factor, something that breaks the chain of interstate commerce.

[00:58:22] Speaker 04:
And what's your view of what, if anything, could break the chain?

[00:58:26] Speaker 00:
Well, the cases that Sable in the United States point to like Flowers Foods and Maryland v. Louisiana and there are others that we point to in FERC contexts. They discuss the types of things that the types of factors that courts look at to determine whether the chain of interstate commerce has been broken. And so those are things like. What's the underlying contractual arrangement here?

[00:58:51] Speaker 00:
What's the nature and duration of the stops along the way?

[00:58:59] Speaker 00:
What's the delivery point? Where is the delivery point where this good is supposed to ultimately get to? So those are the types of factors that the court would look at to determine whether the chain of interstate commerce has been broken. And it's a really easy question here in this case.

[00:59:16] Speaker 04:
And I take it your position is no matter what adjective one uses to characterize the facility here, it's not something that breaks the chain.

[00:59:27] Speaker 00:
That's correct. And I don't think there's been any arguments put forward for what the you know, what are the factors that the courts look to for breaking interstate commerce? There hasn't been an argument for those factors being present.

[00:59:40] Speaker 04:
No, I think the argument is based on this manufacturing facility issue.

[00:59:45] Speaker 00:
And the point is that's beside the point.

[00:59:48] Speaker 04:
It's your position that it's beside the point. It's their position, obviously, that it's not.

[00:59:52] Speaker 00:
Correct. And with my little bit of time left, I can talk a little bit about why the processing happens.

[00:59:58] Speaker 04:
That would be fun. We'll give you an extra couple of minutes.

[01:00:00] Speaker 00:
Okay. Thank you, Your Honor. So I do think It's probably worth talking a little bit about what happens at the LFC facility because our position is both that it doesn't break the chain of interstate commerce, and that's an easy answer in our view, but also that PHMSA properly has jurisdiction over what's happening there. And the reason for that is PHMSA has jurisdiction under the Pipeline Safety Act over the movement of hazardous liquid. And what's happening at the LFC facility is that the oil is moving through processing that takes place at the facility.

[01:00:36] Speaker 00:
It goes through free water knockout tanks. It moves through an electrostatic treater. It's all in service of removing water. You're trying to remove water so the crude oil can flow more easily and efficiently.

[01:00:49] Speaker 02:
And separate gas, right?

[01:00:51] Speaker 00:
And some gas as well. You mentioned earlier, Your Honor, which is true, that the initial separation, most of the gas is separated at the platforms, and then it goes through this processing train at the facility. And under the Pipeline Safety Act, transporting hazardous liquid is defined as the movement of hazardous liquid by pipeline. And so when hazardous liquid is moving through the LFC facility, it is within PHMSA's jurisdiction under the Pipeline Safety Act. It's very broad. Movement of hazardous liquid.

[01:01:22] Speaker 06:
Does it continue right through the pipelines or just keep moving? And it goes through this process or is it diverted to tanks?

[01:01:30] Speaker 00:
The there are there only 2 sets of tanks that at the facilities moving through this process. There are storage tanks there that are breakout tanks where you can hold oil if there's some operational reason or surge or some of the reason and then there are also rerun tanks but that's just if you move it through the processing that happens at the LFC and it needs a little bit more you need to remove some extra water. There are rerun tanks, but the sole purpose of the rerun tanks is just to run them through the process again. So it's continually and physically moving through the system.

[01:02:03] Speaker 00:
And we discussed in our briefs, I'm over my time, we discussed in our briefs why it's not manufacturing or refining or production. I think common sense is important for that. I mean, we know what refineries are and what oil refineries do, and that's not what the facility is doing.

[01:02:24] Speaker 00:
So with that, Your Honor, unless you have more questions.

[01:02:28] Speaker 00:
Thank you. Thank you.

[01:02:34] Speaker 01:
Thank you, Your Honors. Again, Deputy Attorney General Michael Dorsey. I want to start with that last point about we know what oil refineries are. We know what oil refineries do. But the hazardous liquid provisions in the Pipeline Safety Act are not only about oil. They are about any hazardous liquid. And this argument mostly plays out between the environmental petitioner's brief and Sable and PHMSA. But when defining manufacturing and refining, you need to use definitions that will apply to all hazardous liquids, because otherwise you'd be having different meanings for the same word across different industries.

[01:03:07] Speaker 01:
And that's why the dictionary definition of refining is the better definition there. Mr. Stander said, that this is a question of first impression nationwide, and that's wrong. The Southern Pacific case addresses the question of where a pipeline ends and begins, how we define interstate commerce. The U.S. was a party. California and Texas were interveners. It was a fully well-briefed case, and it reaches the conclusion that you look at the start and end points of the pipeline, not some broader definition of commerce that would obliterate the possibility of state regulation.

[01:03:38] Speaker 04:
Would California...

[01:03:42] Speaker 04:
I think it's a good idea that we have supplemental briefing on the recent Supreme court case.

[01:03:47] Speaker 01:
We'd be fine with it. If you are going to order supplemental briefing, we'd prefer an order that requests a little bit, you know, sets the question. This would be the fourth time we've had supplemental briefing in these sets of stable cases. And, uh, they've generally just been open-ended. I think it would be better if you gave us a little direction.

[01:04:02] Speaker 01:
Um, so we have no objection to supplemental briefing. Uh, Even if you're not accepting the endpoints view, it is still a different product. It is an emulsion that comes in and treated and stabilized crude that goes out. And at some point, you need to determine that the product itself is different.

[01:04:17] Speaker 02:
But you're not disputing that there is still essentially crude oil that's moving through these pipes and that eventually they're going to get to a refinery that is going to separate out and produce different grades, different types of products. byproducts, I guess I'll use that term.

[01:04:36] Speaker 01:
It will be further refined, yes, if that's your question.

[01:04:40] Speaker 02:
And that's not happening at Las Flores Canyon.

[01:04:42] Speaker 01:
No, it changes it from the emulsion into treated and stabilized crude, which is sort of a recognized product that has a standardized price. It makes it easier to buy and sell.

[01:04:51] Speaker 02:
It's more viscous, right, so that it heats a little better?

[01:04:55] Speaker 01:
I think the term is less viscous. More viscous makes it harder to go, but I could be exactly backwards on that.

[01:04:59] Speaker 02:
That's why I didn't go into science.

[01:05:02] Speaker 01:
Yeah.

[01:05:04] Speaker 01:
Let's skip from science to something that courts are familiar with, which is reviewability. On the reviewability of the restart plan, the restart plan comes from the corrective action order. That's a PHMSA action. It's a follow-on action from that. I also want to note that in the United States' brief in the district court, they say, and I'll quote, California is already challenging PHMSA's decision in the Ninth Circuit and then another order in another case. It cites this case by name and number. And then it says those are the proper venues to litigate those decisions, not here.

[01:05:36] Speaker 01:
So the United States is telling the district court that we have to bring the case to the Ninth Circuit and telling the Ninth Circuit that we have to bring the challenge to the restart plan to the district court. So we think we can challenge it here because it's an order of the agency. If you disagree, please say so clearly so that the district court has a precedent of this circuit that we can bring that challenge in the district court and shoot down this argument by the United States.

[01:06:02] Speaker 01:
I want to go to a final point.

[01:06:04] Speaker 02:
Council, let me ask you a practical question. What difference does it make if there's a new permit that permits the pipeline to operate? Yes, it had to be restarted, but that's already happened. So what role does the restart order play in the continuing operation of the pipeline?

[01:06:24] Speaker 01:
Sure. It plays a role in the consent decree termination. Their argument in the district court is that the court should terminate the consent decree. And one of the things, and it's a little messy about whether it's a necessary condition, a sufficient condition, or just something in the mix, but that the restart approval is something that's required in Appendix D of the consent decree. And now Sable has it. Therefore, the court should terminate the consent decree. And so if you vacate the restart approval, that vacates what we think is a necessary condition,

[01:06:54] Speaker 02:
But aren't the conditions basically the same, whether appended to the restart order or the permit in terms of maintaining pipeline safety?

[01:07:02] Speaker 01:
So the conditions in Appendix D include getting approval from the state fire marshal. Sable doesn't have approval from the state fire marshal.

[01:07:10] Speaker 02:
I understand, but I'm looking at the commission's determination that whatever those conditions are, and I'm not... I'm not a chemical engineer, so I didn't understand, frankly, what all of those conditions address, but it looked to me like it's pretty specific in terms of how the, how the oil is to be moved through the pipeline to avoid another spill.

[01:07:33] Speaker 01:
Yeah. So there's a, there's a concern we all have. There's a material difference in the views, uh, in the rules between, and I see them over time and I'll try to answer your question. I did want to get to one final point. Um, There's a material difference between the rules the state had imposed and the rules that the federal government had imposed. And there's a number of places along the pipeline where there's a certain amount of decay that has been observed. And the state rule required you remediate these things before you start.

[01:08:01] Speaker 02:
And the federal rule... When you say remediate, basically you mean replace those sections of the pipeline?

[01:08:06] Speaker 01:
Actually, you don't have to replace... My understanding is you don't have to replace the whole thing. You dig down and you actually fix... Because it's... Let me explain it. It's corroding from the outside in, not from the inside out. So what you can do is you can dig down and actually repair the pipeline without taking a piece out and putting a new piece back in. So that means you can actually do remediation while the pipeline is running. But the California position was, we think that's too risky. This pipeline already burst. We want you to make it ship shape before you start.

[01:08:38] Speaker 01:
Right.

[01:08:38] Speaker 02:
So there shouldn't be any product in the line when you do this.

[01:08:42] Speaker 01:
at least for these immediate ones, we want the pipeline to be ship-shaped before it starts. And that's a reasonable justification that's entrusted to the agency that has jurisdiction. So if the state is the agency with jurisdiction, that's the answer. And if I can get to the last point I wanted to make.

[01:08:57] Speaker 01:
Judge Bennett, your questions seem to suggest that you think there's at least the possibility of some ambiguity as to what the definitions mean for interstate or foreign commerce. And There's no Chevron anymore. There's no deference to the agency. So you look to the statute. And if the particular provision isn't giving you the answer, I think you have another really – You take a hard look at the agency's decision, and then you use the tools of statutory interpretation.

[01:09:28] Speaker 04:
I'm sure an opportunity will come at some point in the future to quote California as saying no deference.

[01:09:37] Speaker 01:
The inversion of positions in this case is quite amusing, but I think you have another really good tool of statutory interpretation here, which is comparison to the gas provisions. They're in the same statute. They were enacted in light of each other, and the gas provisions refer to transporting hazardous liquid that affects interstate commerce, and they include treatment of gas. And so that tells you, if you use the Rosello canon here, that tells you two things about the oil statute. That should you see any ambiguity there, you would construe those two things that are in the gas statute as not being in the oil statute.

[01:10:11] Speaker 02:
But aren't there some differences in the definitions between transporting gas as a hazardous liquid and transporting crude oil?

[01:10:28] Speaker 01:
I don't have the definition of transporting gas in front of me. I believe we addressed this in our opening brief.

[01:10:34] Speaker 02:
I thought there was some discussion of that. I wasn't sure how relevant it was because I thought, well, Congress created two different statutory schemes depending on the type of product we were talking about.

[01:10:47] Speaker 01:
So there are two different statutory schemes, but they are in the same statute. And this court's precedent in Yusuf says that when they're in the same statute or even in related statutes, that's a useful tool. Unless they're defined differently.

[01:10:59] Speaker 01:
Well, the fact that they are defined differently is useful for you in doing statutory interpretation, right? That you have. It's sort of the list that has A, B, and C for one thing and only A and B for the other.

[01:11:11] Speaker 04:
All right. Well, we thank all counsel for their helpful arguments. The case just argued is submitted. And with that, we are adjourned for the day.

[01:11:19] Speaker 01:
Thank you, Your Honor.