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August 30, 2013
Court upholds Arctic drilling permit

The legality of a federal air quality permit allowing Shell Offshore’s Kulluk drilling rig to operate in the Beaufort Sea off Alaska’s North Slope was upheld by a three-judge panel of the U.S. Court of Appeals for the 9th Circuit (Alaska Wilderness League et al. v. EPA). 

At least eight environmental groups had requested that the 9th Circuit overrule a decision by EPA’s Environmental Appeals Board (EAB), which said the permit was based on the Agency’s reasonable interpretation of a section of the Clean Air Act (CAA).  But the 9th Circuit agreed with the EAB and denied the plaintiffs’ challenge to the permit.  The case and the outcome are similar to those resulting from previous petitions brought to the 9th Circuit by environmental groups objecting to an EPA permit allowing Shell Offshore’s Discovery drillship to operate off the North Slope (REDOIL v. EPA).  

Increment requirements

In Alaska Wilderness League et al. v. EPA, the plaintiffs claimed that CAA Section 7661c(e) requires that Shell be subject to Prevention of Significant Deterioration (PSD) increment standards.  These standards require that sources of air pollution in areas that are in attainment with the National Ambient Air Quality Standards (NAAQS) maintain air quality by preventing total pollution from exceeding a certain level over an established baseline for the given region. 

The petitioners also argued that the EPA illegally exempted Shell from complying with the NAAQS in any area within 500 meters of the Kulluk.  This exemption is tied to EPA’s interpretation of a CAA provision that exempts from the NAAQS the atmosphere over land owned or controlled by the source and to which public access is precluded by a fence or other physical barriers.

According to the “geography”-based argument of the petitioners, increment requirements apply to all sources of air pollution, including temporary sources such as drilling vessels, any time such requirements are established for a geographic area.  The petitioners also argued that the  500-meter exemption could not apply in this case because Shell did not own and could not, by physical barrier, exclude the public from accessing the space.

Kulluk–a minor source

First, the 9th Circuit held that the increment requirement is dependent on the nature of the facility as well as geography.  Here, the court notes, the determining factor is that the Kulluk is not a major source of air pollution.  Section 7661c(e) is ambiguous regarding how increment requirements should apply to minor, temporary sources, says the court.  When environmental law is ambiguous, the U.S. Supreme Court held in Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc. that the EPA should be accorded considerable deference based on its permissible construction of the statute.  In this case, the 9th Circuit concluded that EPA’s interpretation of Section 7661c(e) is indeed permissible and therefore entitled to the Chevron deference.

Coast Guard’s safety zone

Regarding, the 500-meter exemption, the 9th Circuit said its decision was directly controlled by its REDOIL opinion.  In REDOIL, the court had no objection to the exemption allowed by the EPA provided the U.S. Coast Guard established a safety zone precluding public access to the area and Shell developed and implemented a public access program.

Thus, as in REDOIL, we conclude that the EPA’s exemption of a 500-meter radius surrounding the Kulluk from ambient air quality standards was a ‘permissible interpretation of its ambient air regulation…,’” said the 9th Circuit.

Alaska Wilderness League et al v. EPA .

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