## Facts

- EPA issued Clean Water Act permits regulating pollutant discharges from offshore drilling operations in Alaskan waters.
- Drilling operations use “mud” to lubricate equipment and carry cuttings; the mud system is typically discharged overboard under permit limits.
- At times operators use an additional lubricant “pill,” consisting of mud plus a substantial quantity of diesel oil or mineral oil.
- EPA determined diesel-oil pills posed heightened environmental risk and concluded the “best available technology economically achievable” (BAT) for limiting diesel discharges was product substitution: using mineral oil instead of diesel oil in pills.
- Under EPA’s permitting scheme, operators using mineral-oil pills could discharge the mud system as permitted; operators using diesel-oil pills had to transport the entire mud system to shore for disposal.
- In earlier litigation, the Fifth Circuit upheld EPA’s permitting criteria but remanded for better support for the pill-substitution regulations; EPA then issued a revised justification supporting BAT-level control of diesel oil.
- American Petroleum Institute and several oil companies petitioned for review, largely accepting EPA’s authority but challenging EPA’s BAT selection and its technical and economic support.

## Issues

1. Whether EPA reasonably and adequately supported its BAT determination requiring mineral-oil substitution (with shore-disposal consequences for continued diesel use) for offshore drilling pills under the Clean Water Act.
2. Whether EPA’s interpretation of its regulations and reliance on surveys and technical data were arbitrary or capricious.

## Decision

- The Fifth Circuit denied the petition for review and upheld EPA’s pill-substitution requirements.
- The court held EPA adequately substantiated its BAT determination after remand.
- The court deferred to EPA’s technical judgments and policy choices in interpreting data and selecting among BAT-level control options.
- The court rejected arguments that the regulation was unlawful because it was burdensome or coercive, concluding EPA’s feasibility and cost analysis satisfied BAT.

## Legal Principles

- Under the Clean Water Act, EPA may impose BAT-based effluent controls that require product substitution when supported by the administrative record and shown to be technologically and economically achievable on an industry-wide basis.
- Judicial review of EPA’s technical, scientific, and policy determinations under technology-based standards is highly deferential and proceeds under the arbitrary-and-capricious framework.
- EPA is not required to select the least burdensome control method; it may choose among reasonable BAT alternatives consistent with statutory criteria.
- When a court remands for additional explanation, the agency’s revised rationale will be upheld if it reasonably addresses the remand concerns and is supported by record evidence.

## Conclusion

The Fifth Circuit upheld EPA’s Clean Water Act permitting approach treating mineral-oil substitution as BAT for controlling diesel-oil drilling-pill discharges (with shore disposal required for continued diesel use), finding EPA’s post-remand justification reasonable and supported by the record.


Am. Petroleum Inst. v. U.S. Env’t Prot. Agency, 858 F.2d 261 (5th Cir. 1988)