[House Report 112-108]
[From the U.S. Government Publishing Office]
112th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 112-108
======================================================================
JOBS AND ENERGY PERMITTING ACT OF 2011
_______
June 16, 2011.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Upton, from the Committee on Energy and Commerce,
submitted the following
R E P O R T
together with
DISSENTING VIEWS
[To accompany H.R. 2021]
[Including cost estimate of the Congressional Budget Office]
The Committee on Energy and Commerce, to whom was referred
the bill (H.R. 2021) to amend the Clean Air Act regarding air
pollution from Outer Continental Shelf activities, having
considered the same, report favorably thereon without amendment
and recommend that the bill do pass.
CONTENTS
Page
Purpose and Summary.............................................. 2
Background and Need for Legislation.............................. 2
Hearings......................................................... 4
Committee Consideration.......................................... 4
Committee Votes.................................................. 5
Committee Oversight Findings..................................... 12
Statement of General Performance Goals and Objectives............ 12
New Budget Authority, Entitlement Authority, and Tax Expenditures 12
Earmarks......................................................... 12
Committee Cost Estimate.......................................... 12
Congressional Budget Office Estimate............................. 12
Federal Mandates Statement....................................... 13
Advisory Committee Statement..................................... 13
Applicability to Legislative Branch.............................. 13
Section-by-Section Analysis of Legislation....................... 13
Changes in Existing Law Made by the Bill, as Reported............ 14
Dissenting Views................................................. 17
Purpose and Summary
H.R. 2021, the ``Jobs and Energy Permitting Act of 2011,''
was introduced by Rep. Cory Gardner (together with Reps.
Burgess, Green, Griffith, Kinzinger, McMorris Rogers, Olson,
Pitts, Pompeo, Scalise, Shimkus, and Terry) on May 26, 2011.
The legislation prevents lengthy and unnecessary air permitting
delays of energy exploration in the Outer Continental Shelf
(OCS). It achieves this by clarifying and modifying the
relevant Clean Air Act (CAA) provisions as currently
implemented by the Environmental Protection Agency (EPA). Key
provisions of this bill:
Clarify that the air permitting provisions were
designed to focus on air quality impacts onshore, and not at an
offshore site.
Clarify when drilling equipment and vessels are to
be regulated as stationary sources, and when they are regulated
as mobile sources.
Create a deadline for final agency action by the
EPA and clarify judicial review.
Background and Need for Legislation
The nation faces high petroleum and motor fuels prices,
continued instability and anti-American hostility among several
oil exporting countries, unemployment in excess of nine
percent, and a rapidly growing budget deficit. Increased
domestic oil production could help address all of these
concerns, but only if the federal government were to allow it.
America's untapped oil potential--in the Gulf of Mexico, the
Pacific, the Atlantic, and numerous onshore locations--is
substantial. Access to some of this oil is restricted outright,
but even energy not explicitly off-limits is frequently
subjected to onerous regulatory provisions that effectively
make it so. Nowhere is the potential to expand American oil
production--and the cost of not doing so--any greater than in
the waters off Alaska's North Slope.
Congress has enacted numerous statutes designed to ensure
that energy exploration and production is conducted in a manner
protective of public health and the environment. However, in
many instances reasonable laws have been interpreted
unreasonably by federal agencies or environmental extremists so
as to block the expansion of domestic drilling. This is
especially the case with regard to the EPA in its
implementation of air permitting provisions under section 328
of the CAA as applied to the Alaska OCS.
EPA'S NARROWLY DEFINED ROLE IN THE OCS
Energy exploration in the OCS is extensively regulated by
the Department of the Interior (DOI), other federal agencies,
and impacted state and local governments. Congress added
section 328 to the CAA for the specific purpose of ensuring
that attainment and maintenance of National Ambient Air Quality
Standards (NAAQS)--the key public health standards in the law--
are not affected by these activities. The CAA was never
intended to empower EPA or environmental extremists to impose a
backdoor drilling ban by precluding energy exploration that had
already been approved by DOI and other agencies.
EPA could do no better than to follow its own advice when
it promulgated the regulations carrying out section 328. The
agency stated that ``[i]n implementing, enforcing, and revising
this rule and in delegating authority hereunder, the
Administrator will ensure that there is a rational relationship
to the attainment and maintenance of Federal and State ambient
air quality standards and that requirements of Part C of Title
I (the PSD program), and that the rule is not used for the
purpose of preventing exploration and development of the OCS.''
AN AGENCY OFF-COURSE FROM STATUTORY INTENT
Unfortunately, EPA and environmental extremists have
strayed from the narrow public health intent of the law. For
example, in deciding whether to grant an air permit, the agency
has chosen to focus on offshore emissions rather than the
onshore impact. However, it is onshore where the public resides
(any on-site occupational concerns are addressed by other
agencies such as OSHA) and thus is where compliance with the
NAAQS is measured. In addition, environmental extremists have
attempted to apply the lengthier stationary source requirements
to the ships that come and go from the drilling ship. From a
public health standpoint, there is little to be gained in doing
so, as these vessels are already regulated as mobile sources.
In both of these instances, the process is being complicated,
and for reasons divorced from the legitimate public health
purpose embodied in section 328.
EPA has also increased permitting delays by creating
additional layers of bureaucracy within the agency, namely
through its Environmental Appeals Board (EAB). Although the EAB
is part of EPA, the agency asserts that it is not responsible
for EAB delays in granting usable permits that would allow
exploration to proceed. Such intra-agency delays were never
intended under section 328.
The fact that section 328 is now being used to prevent
exploration is clearly seen in the years-long history of
Shell's leases in the Alaska OCS. Unlike other parts of the OCS
that are statutorily closed to leasing, DOI has issued leases
to Shell Oil for the Beaufort and Chukchi Seas. Some of these
leases date back to 2005, and Shell has complied with the many
requirements imposed by DOI and others, including 35 permits.
Yet, Shell has failed to obtain the necessary air permit from
EPA, after five years of trying, and the project has been
brought to a halt as a result.
EPA's heightened concern about Alaska's air quality is out
of place. The state has some of the nation's most pristine air
and is in attainment, by a wide margin, with all of the CAA's
NAAQS. In the context of the vast onshore and offshore expanses
in the northern part of the state, where there are very few
inhabitants and sources of emissions, it is not plausible to
argue that transient emissions from offshore drilling
activities pose so serious a threat that the requirements of
section 328 still cannot be met. It should be noted that
Alaska's entire Congressional delegation, as well as its state
government, testified in favor of granting the air permits and
allowing Alaska OCS exploration to proceed.
THE BENEFITS OF EXPLORING THE ALASKA OCS
Alaska's OCS is estimated to contain 27 billion barrels of
recoverable oil. According to testimony of Oliver Goldsmith of
the University of Alaska Anchorage, pursuit of this energy
could create an average of 35,000 permanent jobs in Alaska as
well as 28,500 jobs elsewhere. The potential royalty and tax
revenues that would accrue to the federal government could
reach well into the hundreds of billions of dollars. The state
of Alaska's share could be $17 billion over 50 years.
Hearings
The Subcommittee on Energy and Power on April 13, 2011 held
a legislative hearing on a discussion draft of the ``Energy and
Jobs Permitting Act of 2011'' and received testimony from:
The Honorable Lisa Murkowski, U.S. Senator,
Ranking Member, Committee on Energy and Natural
Resources
The Honorable Mark Begich, U.S. Senator
The Honorable Don Young, Member of Congress
The Honorable Dan Sullivan, Commissioner,
Alaska Department of Natural Resources
Dr. Scott Goldsmith, Ph.D., Professor,
Institute for Social and Economic Studies, University
of Alaska Anchorage
Mr. Richard Glenn, Executive Vice President,
Arctic Slope Regional Corporation
Mr. David Lawrence, Executive Vice
President, Exploration and Commercial, Shell
Mr. Robert Meyers, Senior Counsel, Crowell &
Moring, LLP
Ms. Rosemary Ahtuangaruak, Former Mayor,
Nuiqsut, Alaska and
Mr. Erik Grafe, Staff Attorney, Earthjustice
The Subcommittee on Energy and Power on May 13, 2011 held a
second legislative hearing on the discussion draft of the
``Energy and Jobs Permitting Act of 2011'' and received
testimony from:
Ms. Gina McCarthy, Assistant Administrator,
Office of Air and Radiation, U.S. Environmental
Protection Agency
Mr. Lynn Westfall, Executive Vice President,
Turner, Mason & Company
Mr. Ali Mirzakhalili, Director, Division of
Air Quality, Delaware Department of Natural Resources
and Environmental Control
Mr. Brian T. Turner, Assistant Executive
Officer for Federal Climate Policy, California Air
Resources Board, and
Mr. Robert Meyers, Senior Counsel, Crowell &
Moring, LLP.
Committee Consideration
On April 6, 2011, Representative Gardner released a
discussion draft of the ``Jobs and Energy Permitting Act of
2011'' (``JEPA'').
On May 24, 2011, the Subcommittee on Energy and Power
reported JEPA and favorably recommended it to the full
committee by a voice vote. During the markup, three amendments
were offered, of which none were adopted.
On May 26, 2011, Mr. Gardner and Mr. Green, together with
other members, introduced JEPA, with amendment, as H.R. 2021.
On June 1, 2011 and June 2, 2011, the Committee on Energy
and Commerce met in open markup session. During the markup,
five amendments were offered, of which none were adopted. On
June 2, 2011, the Committee ordered H.R. 2021 favorably
reported to the House.
Committee Votes
Clause 3(b) of rule XII of the Rules of the House of
Representatives requires the Committee to list the record votes
on the motion to report legislation and amendments thereto. A
motion by Mr. Upton to order H.R. 2021 reported to the House,
as amended, was agreed to by a record vote of 34 yeas and 14
nays. The following reflects the recorded votes taken during
the Committee consideration, including the names of those
Members voting for and against.
Committee Oversight Findings
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the Committee made findings that are
reflected in this report.
Statement of General Performance Goals and Objectives
H.R. 2021 amends the Clean Air Act regarding air pollution
from Outer Continental Shelf activities.
New Budget Authority, Entitlement Authority and Tax Expenditures
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee finds that H.R.
2021, the Jobs and Energy Permitting Act of 2011, would result
in no new or increased budget authority, entitlement authority,
or tax expenditures or revenues.
Earmarks
In compliance with clause 9(e), 9(f), and 9(g) of rule XXI,
the Committee finds that H.R. 2021, the Jobs and Energy
Permitting Act of 2011, contains no earmarks, limited tax
benefits, or limited tariff benefits.
Committee Cost Estimate
The Committee adopts as its own the cost estimate prepared
by the Director of the Congressional Budget Office pursuant to
section 402 of the Congressional Budget Act of 1974.
Congressional Budget Office Estimate
Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
provided by the Congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974:
June 8, 2011.
Hon. Fred Upton,
Chairman, Committee on Energy and Commerce,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 2021, the Jobs and
Energy Permitting Act of 2011.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Susanne S.
Mehlman.
Sincerely,
Douglas W. Elmendorf.
Enclosure.
H.R. 2021--Jobs and Energy Permitting Act of 2011
H.R. 2021 would make several amendments to the Clean Air
Act related to air pollution stemming from oil exploration in
the Outer Continental Shelf (OCS). Those amendments include
specifying that air emission impacts are to be measured onshore
and clarifying that any drilling vessel must be regulated as a
stationary source once drilling starts. (A stationary source is
a fixed-site producer of air pollution that is regulated by the
Clean Air Act.) In addition, H.R. 2021 would clarify that the
Environmental Appeals Board of the Environmental Protection
Agency (EPA) does not have the authority to consider permits
for OCS exploration; rather, under the bill EPA would be
required to take final action related to granting or denying a
permit within six months after a completed application is
filed.
Based on information from EPA, CBO expects that
implementing this legislation would have no significant impact
on the federal budget. Pay-as-you-go procedures do not apply
because the bill would not affect direct spending or revenues.
H.R. 2021 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would impose no costs on state, local, or tribal governments.
The CBO staff contact for this estimate is Susanne S.
Mehlman. This estimate was approved by Theresa Gullo, Deputy
Assistant Director for Budget Analysis.
Federal Mandates Statement
The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates Reform
Act.
Advisory Committee Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Applicability to Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
Section-by-Section Analysis of Legislation
Section 1: Short title
Section 1 provides the short title for the legislation, the
``Jobs and Energy Permitting Act of 2011.''
Section 2: Air Quality Measurement
Section 2 amends section 328(a)(1) of the Clean Air Act
(``CAA'') to clarify that the air quality impacts of any Outer
Continental Shelf source (``OCS Source'') are to be measured
solely with respect to the impacts in the corresponding onshore
area.
Section 3: OCS Source
Section 3 amends section 328(a)(4)(C) of the CAA to clarify
that while the emissions from any vessel servicing or
associated with an OCS Source are to be considered direct
emissions from such source, such vessels are not subject to
emissions control requirements under the CAA's Prevention of
Significant Deterioration of Air Quality Program. Also, section
3 makes clear that an OCS Source is established at the time
when drilling commences and ceases to exist when drilling
activity ends.
Section 4: Permits
Section 4 amends section 328 of the CAA by adding a new
subsection that requires final agency action be taken on
platform or drill ship exploration OCS Source permits no later
than 6 months after a completed application is filed, with no
administrative stay of the permit after such time period. In
addition, the new subsection states expressly that the
Environmental Appeals Board of the Environmental Protection
Agency does not have authority to consider platform or drill
ship exploration OCS Source permits. Final agency action is to
be considered nationally applicable under section 307(b) of the
CAA without additional administrative review except for
reconsideration filed by the applicant under section
307(d)(7)(B) of the CAA.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
CLEAN AIR ACT
* * * * * * *
TITLE III--GENERAL
* * * * * * *
SEC. 328. AIR POLLUTION FROM OUTER CONTINENTAL SHELF ACTIVITIES.
(a)(1) Applicable Requirements for Certain Areas.--Not later
than 12 months after the enactment of the Clean Air Act
Amendments of 1990, following consultation with the Secretary
of the Interior and the Commandant of the United States Coast
Guard, the Administrator, by rule, shall establish requirements
to control air pollution from Outer Continental Shelf sources
located offshore of the States along the Pacific, Arctic and
Atlantic Coasts, and along the United States Gulf Coast off the
State of Florida eastward of longitude 87 degrees and 30
minutes (``OCS sources'') to attain and maintain Federal and
State ambient air quality standards and to comply with the
provisions of part C of title I. For such sources located
within 25 miles of the seaward boundary of such States, such
requirements shall be the same as would be applicable if the
source were located in the corresponding onshore area, and
shall include, but not be limited to, State and local
requirements for emission controls, emission limitations,
offsets, permitting, monitoring, testing, and reporting, except
that any air quality impact of any OCS source shall be measured
or modeled, as appropriate, and determined solely with respect
to the impacts in the corresponding onshore area. New OCS
sources shall comply with such requirements on the date of
promulgation and existing OCS sources shall comply on the date
24 months thereafter. The Administrator shall update such
requirements as necessary to maintain consistency with onshore
regulations. The authority of this subsection shall supersede
section 5(a)(8) of the Outer Continental Shelf Lands Act but
shall not repeal or modify any other Federal, State, or local
authorities with respect to air quality. Each requirement
established under this section shall be treated, for purposes
of sections 113, 114, 116, 120, and 304, as a standard under
section 111 and a violation of any such requirement shall be
considered a violation of section 111(e).
* * * * * * *
(4) Definitions.--[For purposes of subsections (a) and (b)]
For purposes of subsections (a), (b), and (d)--
(A) * * *
* * * * * * *
(C) Outer continental shelf source.--The terms
``Outer Continental Shelf source'' and ``OCS source''
include any equipment, activity, or facility which--
(i) * * *
* * * * * * *
Such activities include, but are not limited to,
platform and drill ship exploration, construction,
development, production, processing, and
transportation. For 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] shall be considered
direct emissions from the OCS source but shall not be
subject to any emission control requirement applicable
to the source under subpart 1 of part C of title I of
this Act. For platform or drill ship exploration, an
OCS source is established at the point in time when
drilling commences at a location and ceases to exist
when drilling activity ends at such location or is
temporarily interrupted because the platform or drill
ship relocates for weather or other reasons.
* * * * * * *
(d) Permit Application.--In the case of a completed
application for a permit under this Act for platform or drill
ship exploration for an OCS source--
(1) final agency action (including any
reconsideration of the issuance or denial of such
permit) shall be taken not later than 6 months after
the date of filing such completed application;
(2) the Environmental Appeals Board of the
Environmental Protection Agency shall have no authority
to consider any matter regarding the consideration,
issuance, or denial of such permit;
(3) no administrative stay of the effectiveness of
such permit may extend beyond the date that is 6 months
after the date of filing such completed application;
(4) such final agency action shall be considered to
be nationally applicable under section 307(b); and
(5) judicial review of such final agency action shall
be available only in accordance with such section
307(b) without additional administrative review or
adjudication.
* * * * * * *
DISSENTING VIEWS ON H.R. 2021
Under Section 328 of the Clean Air Act, companies that want
to conduct new exploratory drilling operations in the U.S.
Outer Continental Shelf (OCS) must obtain permits under the
Clean Air Act prevention of significant deterioration (PSD)
program if the operations will emit more than 250 tons of an
air pollutant. The ``Jobs and Energy Permitting Act of 2011,''
as reported by the Committee on Energy and Commerce, would make
several changes to how EPA and state authorities operating
delegated programs can issue PSD permits for offshore
exploratory drilling operations and restrict how concerned
stakeholders can challenge those permits.
This bill was drafted to facilitate the permitting process
for Shell in the Arctic waters off the coast of Alaska. The
bill, however, would affect the regulatory structure relating
to more than 20 states and territories and could affect air
quality in coastal states other than Alaska. Representatives of
the states of California and Delaware testified to their
concerns about the potential impact of this bill within their
borders. Brian Turner from the California Air Resources Board
testified that the bill ``could have far-reaching unintended
consequences on existing effective protections for public
health in California.''\1\ Ali Mirzakhalili from the Delaware
Department of Natural Resources and Environmental Control's
Office of Air Quality stated that the ``proposed constraints
placed on states'' rights and authorities will adversely affect
our state's ability to protect public health and welfare from
harmful effects of air pollution.''\2\
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\1\Testimony of Brian Turner, California Air Resources Board,
before the Subcommittee on Energy and Power, Committee on Energy and
Commerce, Hearing on the American Energy Initiative: Discussion Draft
of H.R. __, the Jobs and Energy Permitting Act of 2011, 112th Cong.
(May 13, 2011) (hereinafter ``CARB Testimony'').
\2\Testimony of Ali Mirzakhalili, Director, Office of Air Quality,
Delaware Department of Natural Resources and Environmental Control,
before the Subcommittee on Energy and Power, Committee on Energy and
Commerce, Hearing on the American Energy Initiative: Discussion Draft
of H.R. __, the Jobs and Energy Permitting Act of 2011, 112th Cong.
(May 13, 2011) (hereinafter ``Delaware Testimony'').
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I. Purpose of H.R. 2021
This bill's supporters have stated that Shell has tried for
five years to obtain the necessary air permits from EPA for its
proposed Arctic drilling operation. Congressman Gardner, the
bill's lead sponsor, and others have cited this five-year delay
as a justification for the proposed legislation.\3\
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\3\See, e.g., Committee on Energy and Commerce, Subcommittee on
Energy and Power, The American Energy Initiative: H.R. __, the Jobs and
Energy Permitting Act of 2011, 112th Cong. (May 13, 2011).
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However, on May 13, 2011, EPA Assistant Administrator Gina
McCarthy testified before the Subcommittee on Energy and Power
about the legislation. She noted in response to questions that
``every time Shell has applied for a permit, a permit has been
issued by the agency within 3 to 6 months of that permit
application being complete.'' She also noted that Shell ``has
consistently revised the request, changed the project, changed
what sea they want to drill in.''\4\
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\4\Testimony of Regina McCarthy, Assistant Administrator for Air
and Radiation, U.S. Environmental Protection Agency, before the
Subcommittee on Energy and Power, Committee on Energy and Commerce,
112th Cong. (May 13, 2011) (hereinafter ``McCarthy Testimony'').
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Hearing that testimony, Ranking Member Waxman and Ranking
Member Rush wrote to Assistant Administrator McCarthy and asked
her to document the timeline surrounding Shell's application
for a Clean Air Act permit in the Arctic. Her response
demonstrates the following and casts doubt on the need for this
legislation:\5\
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\5\Letter from Assistant Administrator Gina McCarthy, U.S. EPA, to
Ranking Member Henry A. Waxman (June 1, 2011).
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EPA has finalized Shell's permits quickly. The two
Shell permits at issue--major source permits for the Discoverer
drillship in the Chukchi and Beaufort Seas--were proposed and
finalized within 3-4 months of receiving completed
applications. Both went from submission of a completed
application to a decision by the Environmental Appeals Board
within approximately one year.
Shell pulled its application to drill with the
Discoverer in the Beaufort Sea for two years. Shell first
proposed drilling with the Discoverer in the Beaufort Sea in
December 2006 but decided to defer action on this application
in late 2007. Shell did not file a new permit application to
use this drillship in the Beaufort Sea until January 18, 2010.
EPA finalized this permit shortly thereafter on April 9, 2010.
Shell delayed final agency action on a permit for
the Discoverer in the Chukchi Sea by submitting insufficient
permit applications. Shell initially filed a permit application
for the Discoverer in the Chukchi Sea in December 2008 but had
to re-file the application in September 2009 when data showed
that the operation would violate air quality standards for fine
particles. This new permit application was both incomplete and
requested substantial changes to the company's operations.
Shell did not provide all necessary information until the end
of December 2009. EPA finalized the permit shortly thereafter
on March 31, 2010.
For these and other reasons outlined in EPA's response, it
is misleading to suggest that Shell submitted an application to
drill in the Beaufort and Chukchi Seas five years ago and has
been waiting ever since. Rather, Shell has apparently pulled
applications, modified its proposed operations, and changed its
target drilling sites on numerous occasions in this time
period. Every time Shell changed its plans, EPA had to adjust
its assessment of the potential impacts on air quality and
public health.
These facts cast doubt on the stated purpose of and need
for the proposed legislation.
II. Section-by-Section Analysis
A. SECTION 2: AIR QUALITY MEASUREMENT
Section 2 amends section 328(a)(1) of the Clean Air Act to
clarify that the air quality impacts of any Outer Continental
Shelf source (``OCS source'') are to be measured solely with
respect to the impacts in the corresponding onshore area.
This new language would allow a drillship, for example, to
emit pollution at relatively high levels, while the need for
pollution controls would be determined based only on the
diluted quantity of pollution assumed to reach the shore. This
language removes air quality protections for near-shore areas
that have extensive human activity. For example, in Alaska,
native populations spend significant time offshore engaging in
subsistence whaling and fishing, and the Santa Barbara Channel
is full of recreational boaters and fishermen. As the
California Air Resources Board stated in testimony before the
Subcommittee, this ``procedural change does not remove any of
the pollution from actually reaching California and the
associated decrement to our ambient air quality, but it does
remove the Districts' ability to protect recreational, fishing,
and other ocean users from OCS emissions.''\6\ EPA also noted
in testimony that ``not requiring compliance with health-based
air quality standards at any point off the shore line . . .
could result in significant human exposure to air pollution
from OCS sources, including nitrogen dioxide, particles, sulfur
dioxide, and pollution that causes ozone.''\7\
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\6\CARB Testimony.
\7\McCarthy Testimony.
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In his response to questions for the record, Ali
Mirzakhalili of the Delaware Department of Natural Resources
noted that measuring impacts at the ``corresponding onshore
area'' could be particularly confusing along the Atlantic
coast, where numerous states lay in close proximity. He stated
that an OCS source off the coast of Delaware could have the
greatest air quality impact in New Jersey or Maryland, but, as
written, the bill could prevent these affected states from
requiring emissions controls.\8\
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\8\Ali Mirzakhalili, Director, Office of Air Quality, Delaware
Department of Natural Resources and Environmental Control, responding
to Ranking Member Henry Waxman's Questions for the Record (June 15,
2011).
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Section 2 also has the effect of applying more lenient
standards to offshore sources than onshore sources. In issuing
its permits to Shell, EPA Region 10 required Shell to show
compliance with ambient air quality standards at the rail of
the drillship. This is consistent with how EPA permits onshore
facilities, which have to demonstrate compliance at the
fenceline. The California Air Resources Board testified that
when ``the rules for OCS sources are more lenient that those
within the State, California's experience is that the tension
between better-controlled onshore industry and stakeholders and
the more lax federal OCS regulation will lead to increased
disputes, project delays and expense, and permit denials.''\9\
Similarly, EPA noted that if OCS sources are not required to
use pollution controls, ``any resulting degradation of air
quality could result in the need for more stringent controls
for onshore sources.''\10\
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\9\CARB Testimony.
\10\Testimony of Regina McCarthy, Assistant Administrator for Air
and Radiation, U.S. Environmental Protection Agency, before the
Subcommittee on Energy and Power, Committee on Energy and Commerce,
112th Cong. (May 13, 2011).
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EPA disagrees that the statute, legislative history, and
rulemaking record establish that OCS sources only have to
comply with the NAAQS and PSD increments onshore. EPA stated
the following in response to an assertion that EPA erroneously
required Shell to demonstrate the air quality impact of its
operations at the rail of the drillship rather than solely
onshore:\11\
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\11\``U.S. EPA, Region 10, Response to Comments for Outer
Continental Shelf PSD Permit No. R10OCS/PSD-AK-09-01 (Mar. 31, 2010).
While EPA agrees that the legislative history
evidences Congress' concern for protection of onshore
air quality, the actual enacted statutory language
never uses the term ``onshore'' but rather simply
requires EPA to promulgate regulations to attain and
maintain ambient standards and comply with the
provisions of Part C of Title I of the CAA (the
provisions for prevention of significant deterioration
of air quality). Nothing in the statute precludes or
limits EPA's discretion in how it structures the
required regulations to comply with the statutory
directive. EPA believes that it has the authority to
adopt regulations, and has adopted regulations, that
require compliance with the NAAQS and increments at all
locations, both offshore and onshore.
B. SECTION 3: OCS SOURCE
Section 3 makes two significant changes to how Clean Air
Act Section 328 applies to offshore drilling operations.
1. Definition of OCS Source
Under current law, an ``OCS source'' includes vessels that
are ``permanently or temporarily attached to the seabed and
erected thereon and used for the purposes of exploring,
developing or producing resources therefrom'' or ``physically
attached to an OCS facility.''\12\
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\12\40 C.F.R. Sec. 55.2.
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Section 3 of the bill amends section 328 of the CAA to
specify that an OCS source is established at the time when
drilling commences and ceases to exist when drilling activity
ends. The California Air Resources Board testified that
changing the definition of OCS source could ``artificially
limit'' the timeframe for considering emissions from a project
and could ``result in some entire projects falling beneath
regulatory applicability thresholds, thus avoiding control
requirements and significantly increasing air pollution.''\13\
The Delaware Department of Natural Resources and Environmental
Control testified that it is a ``misconception that sources
that operate for a short duration of time do not significantly
affect air quality,'' noting that ``uncontrolled sources
operating for a single day can cause or contribute to
exceedances of health based air quality standards.''\14\
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\13\CARB Testimony.
\14\Delaware Testimony.
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2. Application of Emissions Controls to Support Vessels
In addition, the bill specifies that vessels servicing or
associated with a drillship or drilling platform, such as ice
breakers and the oil spill response vessels, would not be
subject to best available control technology (BACT) emission
reduction requirements or other requirements adopted under the
PSD program. The applicant would have to factor in the
emissions from the associated vessels when determining whether
the drilling operation is subject to the PSD program and if it
meets state and national air quality standards. The permitting
authority, however, could not require the applicant to apply
BACT to reduce pollution from these vessels.
These associated vessels often comprise the bulk of a
drilling operation's pollution. For example, Shell's proposed
Arctic operations include two ice breakers, an oil spill
response fleet of four or five vessels, and a supply ship.
Shell estimated that its Chukchi operations would emit 1,188
tons per year of nitrogen oxides;\15\ Shell's Beaufort
operations would emit an estimated 1,371 tons per year of
nitrogen oxides.\16\ The associated vessels would contribute
96% of the total emissions from these drilling operations.\17\
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\15\U.S. EPA Region 10, Statement of Basis for Proposed Outer
Continental Shelf Prevention of Significant Deterioration, Permit No.
R10OCS/PSD-AK-09-01, Appendix A (Jan. 8, 2010).
\16\U.S. EPA Region 10, Statement of Basis for Proposed Outer
Continental Shelf Prevention of Significant Deterioration, Permit No.
R10OCS/PSD-AK-2010-01, Appendix A (Feb. 17, 2010).
\17\See supra notes 15 and 16.
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The California Air Resources Board is concerned that this
language could exempt many non-motive engines from emissions
controls. For example, crane engines on marine vessels are
regulated as stationary engines under Santa Barbara County Air
Pollution Control District Rule 333 and the CARB Stationary
Internal Combustion Engine Air Toxics Control Measure. Such
engines are subject to permit requirements under PSD and are
therefore subject to BACT if their potential to emit exceeds
certain thresholds.\18\ This bill could prevent states and
localities from applying such emission control standards on
vessels servicing a drilling operation. In his response to
questions for the record, Ali Mirzakhalili of the Delaware
Department of Natural Resources wrote that excluding these
vessels from emissions controls ``could force a state like
Delaware to meet its air quality obligations by offsetting the
vessel's emissions on the backs of its already tightly
regulated stationary sources. This will have an adverse and
unfair economic impact on Delaware and other coastal
states.''\19\
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\18\CARB Testimony.
\19\Ali Mirzakhalili, Director, Office of Air Quality, Delaware
Department of Natural Resources and Environmental Control, responding
to Ranking Member Henry Waxman's Questions for the Record (June 15,
2011).
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This language also could bar the application of other rules
adopted under subpart 1 of part C of Title I of the Clean Air
Act. For example, the California Air Resources Board has
promulgated a harbor craft rule that is designed to help
coastal areas come into attainment with the ozone and
particulate matter air quality standards.\20\ The bill could
prevent California's air quality districts from incorporating
CARB's statewide maritime rules, such as the commercial harbor
craft and ocean-going vessel regulations, into PSD permits.\21\
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\20\California Air Resources Board, Regulations to Reduce Emissions
from Diesel Engines on Commercial Harbor Craft Operated Within
California Waters and 24 Nautical Miles of the California Baseline
(Oct. 20, 2008) (online at www.arb.ca.gov/regact/2007/chc07/chc07.htm).
\21\CARB Testimony.
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The bill's supporters have stated that Title II is adequate
to control emissions from these sources. During Subcommittee
hearings on this bill, one of the witnesses, Robert Meyers,
noted that vessels servicing the OCS source--such as supply
ships and ice breakers--are regulated under Title II of the
Clean Air Act and therefore require no additional emissions
controls as part of the OCS source. Ranking Member Waxman and
Ranking Member Rush wrote to Assistant Administrator McCarthy
and asked her to clarify how Title II applies to the permitting
of OCS drilling activities. She stated the following in her
written response:\22\
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\22\Letter from Assistant Administrator Gina McCarthy, U.S. EPA, to
Ranking Member Henry A. Waxman (June 1, 2011).
While it is true that Title II regulations apply to
certain vessels which may be used in OCS activities, it
is not an accurate representation to say that, in the
absence of the OCS permitting process, these vessels
would still be regulated under the Clean Air Act. The
OCS permitting process for Shell's operations has
resulted in permit requirements for the support and
service vessels that are, in some instances, more
protective of public health than EPA can require under
Title II of the Clean Air Act.
Shell's operations include support and service
vessels, such as icebreakers, that have not been
regulated under Title II of the Clean Air Act. Many of
the large vessels, such as icebreakers, are foreign-
flagged vessels. Title II engine requirements/
regulations do not apply to foreign-flagged vessels.
Instead, as part of our comprehensive marine program,
we have relied on similar MarPol Annex VI engine
standards through the International Maritime
Organization (IMO). Those standards, like our Title II
CAA standards, apply primarily to new vessels. . . .
Shell's actions in response to the [Environmental
Appeals Board's] remand of the Discoverer permits are
illustrative of the additional environmental protection
provided by the OCS permit process compared to Title
II. Since the remand, Shell has agreed to add controls
to one icebreaker to reduce both NOX and
PM2.5 emissions. These additional controls will reduce
NOX emissions from the icebreaker by 96% and
PM2.5 emissions by 82%. Additional restrictions
requested by Shell for emissions from the Discoverer
and other support vessels will further reduce all
emissions from the project (for example, total
NOX emissions will be reduced by 72%).
As a result of the OCS permitting process, Shell is
using cleaner fuel than is required under Title II of
the Clean Air Act or international law. When the
Discoverer drill ship is an OCS source, the permit
requires all of the engines on the Discoverer and all
of the engines on the service and support vessels to
use diesel fuel that contains no more than 15 ppm
sulfur. Absent the OCS permit process, vessels in the
Arctic using diesel fuel bought outside the United
States legally could have fuel sulfur levels as high as
35,000 ppm until 2020 and 5,000 ppm thereafter under
international law. Absent the OCS permit process, for
vessels that buy diesel in the United States, the fuel
could contain up to 500 ppm sulfur until 2014, at which
time it can contain no more than 15 ppm.
Essentially, Title II alone may not be adequate to achieve
necessary emissions reductions from the vessels servicing and
associated with offshore drilling operations.
C. SECTION 4: PERMITS
Section 4 of the bill would make significant changes to the
process for reviewing and permitting offshore exploratory
drilling operations.
1. Six Month Deadline for Final Agency Action
Section 4 requires final agency action be taken on platform
or drill ship exploration OCS source permits no later than six
months after a completed application is filed, with no
administrative stay of the permit after such time period.
Responding to questions before the Subcommittee, Assistant
Administrator Gina McCarthy stated that ``it is not possible''
for EPA to evaluate a permit application, set source-specific
air pollution limits, allow for public comment, and provide for
administrative review within a six-month timeframe.\23\ Given
these time constraints, Ms. McCarthy stated that the agency
could issue a permit without adequate support, thereby reducing
the permit's defensibility in court and increasing the
likelihood that EPA and the applicant will have to ``start
again at square one.''\24\ This short timeline also would limit
public participation. Currently, EPA generally provides 30 to
60 days for public comment on a proposed permit action,
depending on the complexity of the issues and the degree of
public interest. The timing required by the proposed
legislation would effectively preclude providing any more than
30 days for public comments.
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\23\McCarthy Testimony.
\24\Id.
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While this provision does not bar review of state permit
decisions by state or local hearing boards, the six-month
deadline may effectively limit or eliminate such administrative
appeals at the state level as well. In Delaware, the state
generally issues stationary source permits within six months of
filing of a complete application, but review times vary based
on the complexity of the pollution source. According to the
Delaware Department of Natural Resources and Environmental
Control, this six-month timeframe does not guarantee adequate
time for permit drafting, review with sources, public
participation, and administrative review.\25\ Administrative
appeals of California permits are brought to the local air
pollution district's hearing board, which typically hears and
resolves appeals within 30 days or a few months, depending on
the district and complexity of the application.\26\ In
addition, for state authorities operating delegated programs,
this timing may be too short to allow compliance with state
mandates, such as the California Environmental Quality Act.
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\25\Delaware Testimony.
\26\Briefing by the Santa Barbara County Air Pollution Control
District and South Coast Air Quality Management District to Energy and
Commerce Committee Democratic Staff (Apr. 11, 2011).
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2. Administrative and Judicial Review
Since 1980, permit applicants and others have been allowed
to appeal a permit decision administratively within EPA, prior
to any judicial review. This promotes consistency across the
national permitting program and provides a faster and more
affordable alternative to litigation. In 1992, President George
H.W. Bush Administration's EPA established the Environmental
Appeals Board (the Board) to hear all administrative appeals to
EPA. This replaced the prior approach of making administrative
appeals directly to the Administrator.\27\
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\27\U.S. EPA, Changes to Regulations to Reflect the Role of the New
Environmental Appeals Board in Agency Adjudications: Final Rule, 57
Fed. Reg. 5320 (Feb. 13, 1992).
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Section 4 states expressly that the Environmental Appeals
Board does not have authority to consider platform or drill
ship exploration OCS source permits. This would prevent
stakeholders with concerns about a Clean Air Act permit for an
OCS source from raising those concerns before the Board, which
has 20 years of experience in the highly technical area of PSD
permitting. The Board also is more accessible to citizens than
a court of law. Under current law, if a community of
subsistence fisherman in Alaska wanted to appeal a permit
decision before the Board, they could do so without hiring a
lawyer, and they could attend oral arguments via video
conference.
During her testimony before the Subcommittee, Assistant
Administrator Gina McCarthy described other benefits of the
Environmental Appeals Board. She stated that the Board's review
process ``expedites the process of obtaining a final, valid
permit by facilitating a process that is faster and more
certain for the applicant in the event of an appeal.''\28\ She
clarified that rather than adding an extra step that prolongs
the permit process, the Board ``usually serves as a cheaper,
faster, more expert substitute for judicial review.''\29\ On
average, the Board decides PSD appeals in just over five months
from the filing of the appeal, much faster than judicial cases
are resolved.\30\ Furthermore, according to Ms. McCarthy, in
almost all cases, the ``Board's decision resolves the disputes
and concludes litigation, avoiding protracted federal court
review.''\31\ Since 1992, only four of the Board's PSD permit
decisions have been reviewed by a federal court, and no Board
PSD decision has ever been overturned.\32\
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\28\McCarthy Testimony.
\29\Id.
\30\Id.
\31\Id.
\32\Id.
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Section 4 also specifies that final agency action is to be
considered nationally applicable under section 307(b) of the
Clean Air Act. This would direct all permit challenges directly
to the DC Circuit Court of Appeals, rather than following long-
standing rules and practice on judicial venue, which direct
litigation to the appropriate regional court of appeals.
The shift of judicial venue from the appropriate regional
court of appeals to the DC Circuit Court of Appeals would
require stakeholders with concerns about the purely local air
quality impacts of a permit decision to come to Washington, DC
to raise those concerns. California state courts would no
longer have jurisdiction over judicial appeals to air quality
permits issued by local agencies. The California Air Resources
Board testified that forcing ``cash-strapped state and local
governments to travel 3,000 miles to defend their federally-
delegated permitting decisions is a serious unfunded federal
imposition. It impairs the ability of these governments to
conduct the people's business, increases the burden on
taxpayers, and takes precious resources from other pressing
priorities.''\33\
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\33\CARB Testimony.
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For the reasons stated above, we dissent from the views
contained in the Committee's report.
Henry A. Waxman,
Ranking Member.
Jan Schakowsky.
Bobby L. Rush.
Edward J. Markey.
Tammy Baldwin.
Anna G. Eshoo.
John D. Dingell.
Diana DeGette.
Edolphus Towns.
Lois Capps.
Mike Doyle.
Doris O. Matsui.
Frank Pallone, Jr.