Apr 23: In the U.S. Court of Appeals, Ninth Circuit, Case No. 12-70518. On Petition for Review of an Order of the EPA Environmental Appeals Board. In summary, the panel denied a petition for review by Resisting Environmental. Destruction on Indigenous Lands (REDOIL), and upheld a decision of EPA granting two air permits authorizing exploratory drilling operations in the Arctic Ocean by a drillship and its associated fleet of support vessels. The panel upheld the EPA's statutory and regulatory interpretations. The case involves Shell Gulf of Mexico, Inc. and Shell Offshore, Inc. (collectively Shell) who purchased lease blocks in the Chukchi and Beaufort Seas off the North Slope of Alaska for oil and gas exploration which has now been suspended by the company.
The Appeals Court explains that since 1990, EPA has been responsible for regulating air pollution from offshore sources on the Outer Continental Shelf (OCS) under the Clean Air Act (the Act). "We consider here whether the EPA's Environmental Appeals Board (EAB) properly upheld two air permits authorizing exploratory drilling operations in the Arctic Ocean by a drillship and its associated fleet of support vessels. The petition for review challenges two aspects of the permits: (1) the determination that support vessels, unlike the drillship itself, do not require the best available control technology (BACT) to control emissions; and (2) the exemption of the area within a 500-meter radius of the drillship from ambient air quality standards.
"The application of BACT to support vessels requires us to reconcile conflicting provisions of the Act. In doing so, under Chevron U.S.A., Inc. v. NRDC, Inc., we defer to the EAB's reasonable interpretation of those provisions and related regulations. 467 U.S. 837 (1984). Likewise, we evaluate whether the EAB's decision on the ambient air boundary is a permissible application of the EPA's regulations. In both cases, we uphold the EPA's statutory and regulatory interpretations, and we deny the petition."
Two permits are at issue, one for operation in the Chukchi Sea and the other for the Beaufort Sea. The permits allow Shell, subject to conditions, to construct and operate its Discoverer drillship and use its associated fleet for exploratory drilling activities between July 1 and November 30 each year. The Chukchi permit underwent two rounds of notice-and-comment before it was issued in March 2010. The Beaufort permit underwent one round of notice-and-comment before it was issued in April 2010. The EAB addressed the two permits together in the administrative proceedings that followed.
The Appeals Court ruled in part, "The EPA's regulations in turn define 'marine engine' as 'a nonroad engine that is installed or intended to be installed on a marine vessel.'. . Reading § 7627 within the context of the PSD provisions points to the conclusion that PSD requirements should apply to stationary sources on the OCS, but not mobile marine vessels. We agree with the EAB ruling that this distinction between stationary and mobile sources is consistent with application of BACT to installations attached to the seabed but not to vessels, such as those in the associated fleet, moving freely in the waters above the OCS. . . Whether Congress expressed an intention that BACT were to apply to associated vessels that are not attached to an OCS source is, at the very least, ambiguous. . . In sum, we conclude that while the BACT requirement clearly applies to an OCS source, the statute is ambiguous as to application of BACT to associated vessels within 25 miles of an OCS source. We defer to the EPA's reasonable construction of the statute, as adopted by the EAB, that BACT does not apply to mobile support vessels unattached to the drillship."
Additionally on the other matter, of the 500-meter radius "ambient air" exemption, the Appeals Court ruled, "The EAB's assessment that the agency 'requires some leeway' in determining how to apply 'the regulation and the interpretive letter to an "overwater" situation' is just common sense. Id. Constructing a fence in the Arctic Ocean would make little sense, and the EPA has previously recognized a safety zone established by the Coast Guard as evidence of sufficient ownership or control over open water areas to qualify as a boundary for defining ambient air. Here, as in that precedent, the EPA imposed conditions that approximated the criteria in the Costle letter -- control of property and limited public access -- for a marine environment. We conclude that the EPA's grant of an ambient air exemption to Shell conditioned on an effective safety zone excluding the public is a permissible interpretation of its ambient air regulation and earlier letter ruling."
Access the complete opinion (click here). [#Energy/OCS, #Air, #CA9]
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