Redoil v. Epa

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

RESISTING ENVIRONMENTAL No. 12-70518

DESTRUCTION ON INDIGENOUS

LANDS, REDOIL; ALASKA

WILDERNESS LEAGUE; CENTER FOR OPINION

BIOLOGICAL DIVERSITY ; NATURAL

RESOURCES DEFENSE COUNCIL;

NORTHERN ALASKA

ENVIRONMENTAL CENTER ; OCEANA ;

PACIFIC ENVIRONMENT ; SIERRA

CLUB; THE WILDERNESS SOCIETY ,

Petitioners,

v.

UNITED STATES ENVIRONMENTAL

PROTECTION AGENCY ,

Respondent,

SHELL GULF OF MEXICO INC.; SHELL

OFFSHORE INC.,

Respondents-Intervenors.

On Petition for Review of an Order of the

Environmental Protection Agency

Environmental Appeals Board

Argued and Submitted

August 28, 2012—Anchorage, Alaska

2 REDOIL V . EPA

Filed December 26, 2012

Before: Michael Daly Hawkins, M. Margaret McKeown,

and Carlos T. Bea, Circuit Judges.

Opinion by Judge McKeown

SUMMARY*

Environmental Law

The panel denied a petition for review, and upheld a

decision of the Environmental Protection Agency 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. Specifically, the panel held that the Clean Air

Act is ambiguous as to the applicability of the best available

control emissions to support vessels not attached to an Outer

Continental Shelf source, and concluded under Chevron

U.S.A., Inc. v. NRDC, Inc., 467 U.S. 837 (1984), deference

that the EPA’s construction of the statute was permissible and

reasonable. The panel also held that the EPA’s grant of a 500

meter ambient air exemption was not plainly erroneous or

inconsistent with the EPA’s regulations.

*

This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

REDOIL V . EPA 3

COUNSEL

Colin C. O’Brien (argued), Earthjustice, Anchorage, Alaska;

Eric P. Jorgensen, Earthjustice, Juneau, Alaska, for

Petitioners.

Ignacio S. Moreno, Daniel Pinkston (argued), Alan D.

Greenberg, United States Department of Justice, Denver,

Colorado, for Respondent.

Kathleen M. Sullivan (argued), William B. Adams, David S.

Mader, Quinn Emanuel Urquhart & Sullivan LLP, New York,

New York; Duane A. Siler, Sarah C. Bordelon, Tony G.

Mendoza, Crowell & Moring LLP, Washington, D.C., for

Intervenors-Respondents.

Lisa E. Jones, Samuel B. Boxerman, and James R. Wedeking,

Sidley Austin, LLP, Washington, D.C., Mara E. Zimmerman,

Washington, D.C., for Amicus Curiae American Petroleum

Institute.

Cameron M. Leonard, Office of the Attorney General,

Fairbanks, Alaska, for Amicus Curiae State of Alaska.

OPINION

McKEOWN, Circuit Judge:

Since 1990, the Environmental Protection Agency

(“EPA”) has been responsible for regulating air pollution

from offshore sources on the Outer Continental Shelf

(“OCS”) under the Clean Air Act (“the Act”). 42 U.S.C.

§ 7627. We consider here whether the EPA’s Environmental

4 REDOIL V . EPA

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.

I. BACKGROUND

Shell Gulf of Mexico, Inc. and Shell Offshore, Inc.

(collectively “Shell”) purchased lease blocks1 in the Chukchi

and Beaufort Seas off the North Slope of Alaska for oil and

gas exploration. Shell plans to conduct this exploration via

its drillship, the Discoverer, along with an associated fleet of

support vessels, including icebreakers, oil spill response

vessels, and a supply ship. As required by the Act, Shell

applied for permits to emit pollutants in connection with its

1

Outer Continental Shelf lease blocks are defined geographic areas over

the outer continental shelf that identify federal land ownership and

facilitate the management of offshore resources.

REDOIL V . EPA 5

exploration activities. The EPA granted the permits, which

were upheld in two administrative appeals to the EAB.

Petitioners, Resisting Environmental Destruction on

Indigenous Lands, an environmental organization, and other

environmental groups (collectively “REDOIL”), challenge

the permits on the basis that they do not satisfy the Act’s air

permit requirements. Shell intervened to oppose REDOIL’s

petitions.

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.

Under the permits, Shell must apply BACT—consisting

of specific technologies selected by the EPA, such as good

combustion practices, a particular ventilation system, or a

type of fuel—to limit the emissions of specific pollutants

subject to regulation under the Act. Central to this appeal, the

EPA determined that BACT applies to the Discoverer when

it is attached to the seabed at a drill site by at least one

anchor, and to any vessel that is tied to the Discoverer under

that condition. In short, the permits require Shell to comply

with technological requirements for the Discoverer and the

supply vessel whenever it is tied to the Discoverer. However,

the permits do not prescribe technological requirements for

6 REDOIL V . EPA

the remaining vessels in the associated fleet because they will

not be physically attached to the Discoverer.

REDOIL appealed the approval of the permits to the

EAB, seeking to have BACT applied to the entire associated

fleet whenever it is operating within 25 miles of the

Discoverer, regardless of whether the vessels are tied to the

drillship. REDOIL argued that § 7627 establishes an

“unambiguous mandate” requiring the EPA to do so. Citing

ambiguity in § 7627’s requirements, the EAB denied review

in December 2010, but remanded for reasons not at issue

here. In re Shell Gulf of Mexico, Inc., OCS Appeal Nos. 10-

01 through 10-04, 15 E.A.D. ___ , (Dec. 30, 2010).

On remand, the EPA issued revised air permits in

September 2011. The revised permits allow the Discoverer

an area with a 500-meter radius, measured from the center of

the drillship, that is exempt from “ambient air” standards.

The exemption is conditioned on the United States Coast

Guard’s establishment of an effective safety zone that

prohibits members of the public from entering the area. Shell

must also develop and implement a public access control

program to (1) notify the general public of the prohibition on

entering the safety zone, and (2) communicate to North Slope

communities relevant information about exploration

operations, such as timing and location.

REDOIL appealed the revised permits to the EAB, this

time targeting the ambient air exemption. REDOIL urged

that the exemption contravened both the definition of

“ambient air” in the EPA’s regulations and the agency’s

longstanding interpretation of those regulations. The EAB

dismissed this second round of appeals in a January 2012

order, noting that ambient air exemptions are determined on

REDOIL V . EPA 7

a case-by-case basis. In re Shell Gulf of Mexico, Inc., OCS

Appeal Nos. 11-02, 11-03, 11-04 & 11-08, 15 E.A.D. ___ ,

(Jan. 12, 2012). The permits became effective on January 27,

2012. Notice of Approval of Clean Air Act Outer

Continental Shelf Permits Issued to Shell Gulf of Mexico,

Inc., and Shell Offshore, Inc. for the Discoverer Drillship, 77

Fed. Reg. 7148, 7148 (Feb. 10, 2012).

REDOIL now seeks review of both the December 2010

EAB ruling declining to apply BACT to the entire associated

fleet and the January 2012 EAB ruling on the 500-meter

ambient air exemption.

II. APPLICATION OF BACT TO THE ASSOCIATED FLEET

A. STATUTORY FRAMEWORK

Enacted in 1970, the Clean Air Act established a

comprehensive program to protect and enhance air quality by

limiting emissions from both stationary industrial sources and

mobile sources. 42 U.S.C. § 7401 et seq. Central to this

legislation are national air standards, known as “National

Ambient Air Quality Standards” (“NAAQS”), set by the EPA

for pollutants considered harmful to public health and the

environment. 42 U.S.C. §§ 7408–10. The Act has been

significantly amended twice, in 1977 and 1990. Clean Air

Act Amendments of 1977, Pub. L. No. 95-95, 91 Stat. 685

(1977); Clean Air Act Amendments of 1990, Pub. L. No.

101-549, 104 Stat. 2399 (1990). The Prevention of

Significant Deterioration (“PSD”) program and its related

BACT requirement were first included in the 1977

amendment, which dealt with onshore sources of air

pollution. 42 U.S.C. §§ 7470–7492. The PSD program was

later applied to offshore sources on the OCS through the 1990

8 REDOIL V . EPA

amendment. 42 U.S.C. § 7627. The extent to which BACT

applies to an associated fleet turns on the interaction between

the two amendments.

The 1977 amendment directed that major new stationary

sources of pollution and major existing stationary sources that

are being significantly modified must obtain preconstruction

permits through a process called New Source Review. PSD

is the New Source Review program for areas with relatively

clean air—those areas that the EPA designates as in

“attainment” with NAAQS or as “unclassifiable” due to

insufficient data. 42 U.S.C. § 7471. The program’s purpose

is to protect the public from any adverse health or welfare

effects of air pollution that may occur despite achievement of

NAAQS, and to require careful evaluation of all

consequences of new industrial development. 42 U.S.C.

§ 7470(1), (5).

Under the PSD program, “[n]o major emitting facility”

“may be constructed” without a conforming permit.

42 U.S.C. § 7475(a)(1). “Major emitting facility” is defined,

in part, as a “stationary source[] of air pollutants” with the

potential to emit certain threshold levels of specified air

pollutants subject to regulation. 42 U.S.C. § 7479(1). To

obtain a PSD permit, such a facility must, among other

things, satisfy two independent requirements. The first

requirement concerns emissions: the owner or operator of the

major emitting facility must conduct air quality analyses

demonstrating that emissions from the facility will not cause

or contribute to air pollution in violation of various air quality

standards. 42 U.S.C. § 7475(a)(3). The second requirement,

and the one at issue here, concerns technology: “the proposed

facility is subject to the best available control technology for

each pollutant subject to regulation” emitted from such

REDOIL V . EPA 9

facility. 42 U.S.C. § 7475(a)(4). The obligation to apply

BACT requires the EPA to select emission control

technologies that result in the maximum reduction of

specified pollutants in view of “energy, environmental, and

economic impacts and other costs.” 42 U.S.C. § 7479(3).

The 1990 amendment extended the applicability of the

PSD requirements beyond major onshore stationary sources

of air pollution. As a result of the 1990 amendment, the EPA,

for the first time, was given jurisdiction to regulate OCS

sources “located offshore of the States along the Pacific,

Arctic and Atlantic Coasts” and certain areas of the Gulf

Coast. 42 U.S.C. § 7627(a)(1). To achieve the goals of the

PSD program, Congress directed the EPA to “establish

requirements” so that OCS sources would attain and maintain

ambient air quality standards and comply with the PSD

program. Id.

A key provision of § 7627 is the definition of the term

“Outer Continental Shelf source,” which means “any

equipment, activity, or facility” that “(i) emits or has the

potential to emit any air pollutant, (ii) is regulated or

authorized under the Outer Continental Shelf Lands Act

[(“OCSLA”), 43 U.S.C. § 1331 et seq.], and (iii) is located on

the Outer Continental Shelf or in or on waters above the

Outer Continental Shelf.” 42 U.S.C. § 7627(a)(4)(C).

Significantly, jurisdiction under OCSLA extends only to “the

subsoil and seabed of the outer Continental Shelf and . . . all

installations and other devices permanently or temporarily

attached to the seabed.” 43 U.S.C. § 1333(a)(1). The

statutory definition of “OCS source” additionally directs that,

“[f]or purposes of this subsection, emissions from any vessel

servicing or associated with an OCS source, including

emissions while at the OCS source or en route to or from the

10 REDOIL V . EPA

OCS source within 25 miles of the OCS source, shall be

considered direct emissions from the OCS source.”

42 U.S.C. § 7627(a)(4)(C)(iii).

In follow-on regulations adopted in 1992, the EPA

incorporated sections (i), (ii) and (iii) of the statutory

definition of “OCS source” and added that it would include

vessels only when “(1) [p]ermanently or temporarily attached

to the seabed,” or “(2) [p]hysically attached to an OCS

facility, in which case only the stationary sources aspects of

the vessels will be regulated.” 40 C.F.R. § 55.2.

B. THE CLEAN AIR ACT IS AMBIGUOUS AS TO BACT’S

APPLICATION TO ASSOCIATED VESSELS NOT

ATTACHED TO AN OCS SOURCE

We next consider whether the Act clearly and

unambiguously requires the application of all aspects of the

PSD program, including BACT, to associated vessels

operating within 25 miles of the OCS source, regardless of

whether they are tied to the OCS source, as urged by

REDOIL. In contrast, the EPA and Shell argue that the

statute is ambiguous and that we owe deference to the EPA’s

permissible construction that BACT applies to the

Discoverer, which is a stationary OCS source, but not to

mobile support vessels unattached to the drillship.

To interpret the statute, we look first to the statute’s

“language itself [and] the specific context in which that

language is used.” McNeill v. United States, 131 S. Ct. 2218,

2221 (2011) (quoting Robinson v. Shell Oil Co., 519 U.S.

337, 341 (1997) (internal quotation marks omitted)). If “the

[expressed] intent of Congress is clear,” then the court and

the agency “must give effect to [that] unambiguously

REDOIL V . EPA 11

expressed intent.” Chevron, 467 U.S. at 842–43. If,

however, “Congress has not directly addressed the precise

question at issue,” then we must not “simply impose [our]

construction on the statute, as would be necessary in the

absence of an administrative interpretation,” but rather ask

“whether the agency’s answer is based on a permissible

construction of the statute.” Id. at 843.

An additional question is whether the EAB’s

interpretation deserves Chevron deference. Congress

explicitly granted to the EPA the authority to promulgate

regulations and grant air permits for activities on the OCS.

The EPA exercised that authority through a formal process

that included multiple rounds of public notice and comment,

various petitions for administrative review, and two reasoned

EAB decisions upholding the air permits at issue. We join

our sister circuits in concluding that the EAB proceeding is a

formal adjudication that warrants Chevron deference. See In

re Lyon Cnty. Landfill, 406 F.3d 981, 984 (8th Cir. 2005)

(“EAB decisions . . . are formal adjudications consistent with

the Administrative Procedure Act . . . , and due Chevron

deference.”) (citing United States v. Mead Corp., 533 U.S.

218, 228 (2001)); Sultan Chemists, Inc. v. EPA, 281 F.3d 73,

79 (3d Cir. 2002) (holding that an EAB proceeding is a

formal adjudication to which courts should defer under Mead

if the statutory language is ambiguous); Piney Run Pres.

Ass’n v. Cnty. Com’rs of Carroll Cnty., 268 F.3d 255, 267–68

(4th Cir. 2001) (noting that an earlier EAB decision

articulating a reasonable statutory interpretation is entitled to

Chevron deference). Chevron deference also extends to the

EAB’s interpretation of the Clean Air Act, administered by

the EPA.

12 REDOIL V . EPA

It is useful to begin with what is clear and undisputed,

both in the statute and by the parties. Under a plain reading

of the statute, the PSD program and the BACT requirement

apply to an “Outer Continental Shelf source.” 42 U.S.C.

§ 7627(a)(1) (The EPA is required to “control air pollution

from Outer Continental Shelf sources” by establishing

requirements to ensure that such sources “comply with the

provisions of part C of subchapter I of this chapter [the PSD

program].”). The Discoverer, when it is attached to the

seabed by an anchor, is an OCS source. Additionally, an

associated vessel that is tied to the Discoverer while it is

anchored to the seabed also becomes an OCS source because

it is “[p]hysically attached to an OCS facility,” an alternative

way to qualify as an OCS source under the EPA’s regulatory

definition. 40 C.F.R. § 55.2. However, support vessels that

are not “[p]ermanently or temporarily attached to the seabed,”

or “[p]hysically attached to an OCS facility,” are not

“regulated or authorized under the Outer Continental Shelf

Lands Act” and thus cannot be an OCS source under the

statute or under the EPA’s regulatory definition. See 40

C.F.R. § 55.2; 43 U.S.C. § 1333(a)(1); 42 U.S.C.

§ 7627(a)(4)(C)(ii). Congress therefore did not express an

intention to regulate associated vessels as OCS sources, or to

apply BACT to associated vessels on that basis.

Here is the rub. Section 7627 also provides that “[f]or

purposes of this subsection, emissions from any vessel

servicing or associated with an OCS source, including

emissions while at the OCS source or en route to or from the

OCS source within 25 miles of the OCS source, shall be

considered direct emissions from the OCS source.”

42 U.S.C. § 7627(a)(4)(C)(iii). REDOIL elliptically argues,

based on this “direct emissions” clause, that Congress

intended to apply all PSD requirements, including BACT, to

REDOIL V . EPA 13

support vessels operating within 25 miles of the OCS source,

thereby effectively turning such support vessels into “OCS

sources.” However, that conclusion does not follow

unambiguously from the statutory language because the direct

emissions clause does not redefine “OCS source.”

The statute does not instruct that “any vessel servicing or

associated with an OCS source” “while at the OCS source or

en route to or from the OCS source within 25 miles of the

OCS source” shall be considered an OCS source. Rather, the

direct emissions clause maintains a distinction between an

OCS source, to which all PSD requirements apply, and

vessels servicing an OCS source, to which unspecified

requirements apply because their emissions must be

considered direct emissions from the OCS source. As noted

in the EAB decision, § 7627 provides no further explanation

as to why emissions from associated vessels should be

considered direct emissions from the OCS source or to what

effect. See In re Shell Gulf of Mexico, Inc., 15 E.A.D. ___ ,

26 (Dec. 30, 2010). Thus, Congress gave conflicting signals

by clearly and unambiguously excluding the associated fleet

from the definition of “OCS source” and yet including the

associated fleet’s emissions as direct emissions of the OCS

source.

The Act’s structure provides a further wrinkle suggesting

that associated vessels may be treated differently from an

OCS source. The PSD program is found in Title I of the Act,

which governs major stationary sources such as industrial

plants, while mobile sources such as motor vehicles are

regulated separately by Title II. 42 U.S.C. §§ 7401–7515; id.

at §§ 7521–7590. By definition, a “stationary source”

excludes any source of “emissions resulting directly from an

internal combustion engine for transportation purposes or

14 REDOIL V . EPA

from a nonroad engine or nonroad vehicle.” 42 U.S.C.

§ 7602(z). 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.” 40 C.F.R. § 89.2. 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. In re Shell Gulf of Mexico, Inc.,

15 E.A.D. ___ , 28 (Dec. 30, 2010). 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.

REDOIL ironically resorts to legislative history in an

effort to avoid ambiguity. According to REDOIL, that

history reflects congressional intent that § 7627 regulate all

associated vessels in the same manner and to the same degree

as an OCS source itself. However, were the statutory

language clear, reference to the legislative history would be

both unnecessary and inappropriate to illuminate

unambiguous text. Ratzlaf v. United States, 510 U.S. 135,

147–48 (1994) (“[W]e do not resort to legislative history to

cloud a statutory text that is clear.”); Barnhill v. Johnson,

503 U.S. 393, 401 (1992) (“[A]ppeals to statutory history are

well taken only to resolve statutory ambiguity.”) (internal

quotation marks omitted). Neither does the fact that Congress

enacted § 7627 after the D.C. Circuit’s decision in NRDC,

Inc. v. EPA resolve the provision’s ambiguity, as REDOIL

posits. 725 F.2d 761 (D.C. Cir. 1984). In that case, the D.C.

Circuit upheld the EPA’s revocation of regulations treating

REDOIL V . EPA 15

emissions produced by ships moving to or from a marine

terminal as “secondary emissions” of the terminal itself,

meaning that such emissions would be counted toward the

marine terminal for various purposes, including the PSD

program’s air quality impact analysis. Id. at 766, 772–73.

However, the court’s acceptance of the EPA’s revocation of

the “secondary emissions” regulation, which the agency

lacked authority to promulgate in the first place, sheds little

light on Congress’s intent in later employing the term “direct

emissions” in the OCS provisions. It hardly follows that

Congress’s use of “direct emissions” as opposed to

“secondary emissions” manifested a clear intent to subject

“direct emissions” to the full suite of PSD requirements.

C. EPA’S INTERPRETATION OF 42 U.S.C. § 7627 IS

REASONABLE

Because the Clean Air Act is ambiguous as to the

applicability of BACT to support vessels not attached to an

OCS source, our task is to assess whether the agency’s

construction of the statute is “permissible” or “reasonable.”

Chevron, 467 U.S. at 843–44. In its December 2010 ruling,

the EAB concluded that it is permissible to apply BACT to

support vessels only insofar as they are attached to the

Discoverer because § 7627 “simply does not contain any

words expressly, or by implication, explaining why the statute

distinguishes between the OCS source and vessels servicing

the OCS source when directing that such vessels’ emissions

shall be considered direct emissions from the OCS source.”

In re Shell Gulf of Mexico, Inc., 15 E.A.D. ___ , 26 (Dec. 30,

2010). We agree with the EAB’s characterization of the

ambiguity.

16 REDOIL V . EPA

The EAB reconciled this ambiguity in two ways. First,

the associated fleet’s emissions provide a baseline for

triggering PSD requirements. Emissions from the entire

associated fleet and the Discoverer were used to determine

whether the drillship met the threshold of having the potential

to emit two hundred and fifty tons or more of regulated air

pollutants, thereby subjecting the drillship to PSD

requirements. This approach followed the EPA’s rationale in

its OCS rulemaking. Having determined that, under OCSLA,

it could not regulate vessels other than drillships and vessels

attached to the drillship as “OCS sources,” the EPA explained

that emissions from the associated fleet are “accounted for by

including vessel emissions in the ‘potential to emit.’” Outer

Continental Shelf Air Regulations, 56 Fed. Reg. 63,774,

63,777 (Dec. 5, 1991). This interpretation gives meaning to

the “direct emissions” language—by including the associated

fleet’s emissions “while at the OCS source or en route to or

from the OCS source within 25 miles of the OCS source”

toward the drillship itself—while respecting the limitations

imposed by the definition of OCS source.

The emissions from the entire fleet were also attributed to

the OCS source in a second way—in assessing whether the

Discoverer would cause a violation of various air quality

standards, one of the PSD requirements. In granting the PSD

permits, the EAB thus imposed conditions that incorporated

the emissions of the associated fleet but found that “the

Associated Fleet [except for a supply vessel] will not be

physically attached to the Discoverer and therefore will not

be part of the OSC source and not subject to the BACT

requirements.”

The EAB’s approach is consistent with the D.C. Circuit’s

decision in Santa Barbara Cnty. Air Pollution Control Dist.

REDOIL V . EPA 17

v. EPA, which upheld EPA regulations refusing to regulate

in-transit maritime vessels as OCS sources. 31 F.3d 1179

(D.C. Cir. 1994). The court held that “it was reasonable for

the EPA to conclude that OCS sources did not include vessels

that were merely traveling over the OCS.” Id. at 1181.

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.

III. EPA’S GRANT OF A 500 METER AMBIENT AIR

EXEMPTION IS NOT PLAINLY ERRONEOUS OR

INCONSISTENT WITH THE AGENCY ’S REGULATIONS

In the revised air permits issued in September 2011, the

EPA granted Shell’s request for a 500-meter radius “ambient

air” exemption. The EAB, in its January 12, 2012 decision,

upheld this exemption, which allows Shell to assess

compliance with air quality standards at a distance of 500

meters from the center of the drillship. Air quality impacts

within the 500-meter radius are not subject to analysis or

regulation. The exemption is contingent on the Coast

Guard’s establishment of an effective safety zone precluding

public access to the area, and Shell’s development and

implementation of a public access program.

According to the Supreme Court, “‘ambient air’ [] is the

statute’s term for the outdoor air used by the general public.”

Train v. NRDC, Inc., 421 U.S. 60, 65 (1975). Curiously, the

Clean Air Act does not define “ambient air,” but the EPA’s

18 REDOIL V . EPA

regulations define the term as “that portion of the atmosphere,

external to buildings, to which the general public has access.”

40 C.F.R. § 50.1(e). The agency has occasionally exempted

certain areas from being labeled ambient air. The parties

agree that the agency’s “longstanding interpretation” of this

exemption is described in a 1980 letter from former EPA

Administrator Douglas Costle. That letter states that an

“exemption from ambient air is available only for the

atmosphere over land owned or controlled by the source and

to which public access is precluded by a fence or other

physical barriers.”

The Supreme Court instructs that an agency’s

interpretation of its own regulations is “controlling unless

‘plainly erroneous or inconsistent with the regulation.’” Auer

v. Robbins, 519 U.S. 452, 461 (1997) (quoting Robertson v.

Methow Valley Citizens Council, 490 U.S. 332, 359 (1989)).

The relevant inquiry is whether the EPA’s grant of the

ambient air exemption to Shell is plainly erroneous or

inconsistent with its regulatory definition of ambient air.

It is obvious that the exemption here is not “for the

atmosphere over land owned or controlled by the source and

to which public access is precluded by a fence or other

physical barriers” (emphasis added). However, neither is the

exemption inconsistent with the EPA’s regulatory definition

of ambient air or clearly erroneous. The essence of the EPA’s

regulatory definition links ambient air to public access.

Because the EPA conditioned Shell’s permit and ambient air

exemption on the establishment of an effective safety zone

that precludes public access, the grant is consistent with the

regulation.

REDOIL V . EPA 19

Further, the EPA has not impermissibly departed from its

longstanding regulatory interpretation of “ambient air”

without explanation or justification, as REDOIL claims. We

are persuaded by the EAB’s reasonable explanation that

Costle’s 1980 letter prescribing a fence or other physical

barrier to preclude public access was “clearly written with

overland situations in mind.” In re Shell Gulf of Mexico, Inc.,

15 E.A.D. ___ , 60 (Jan. 12, 2012). The agency did not have

the occasion to consider how it might apply the exemption in

the context of open waters until ten years later, when

Congress first gave the EPA jurisdiction to regulate air

pollution from OCS sources. 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. In re Shell Gulf of Mexico,

Inc., 15 E.A.D. ___ , 61 (Jan. 12, 2012). 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.

PETITION DENIED.