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 AMENDED
BIOLOGICAL DIVERSITY ; NATURAL OPINION
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
Amended April 23, 2013

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.

Ignacia 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. & Shell Offshore, Inc.,
2010 WL 5478647 (E.P.A. 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. & Shell
Offshore, Inc., 2012 WL 119962, at *27 (E.P.A. 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, which is
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, 2010 WL 5478647, at
*12. 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
from a nonroad engine or nonroad vehicle.” 42 U.S.C.
14 REDOIL V . EPA

§ 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, 2010
WL 5478647, at *14. 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. However, were the statutory
language clear, as REDOIL posits, 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).

Of course, in the case of an ambiguous statute, we may
consider legislative history. See, e.g., N. Cal. River Watch v.
Wilcox, 633 F.3d 766, 773 (9th Cir. 2011) (“If the proper
interpretation is not clear from this textual analysis, the
legislative history offers valuable guidance and insight into
Congressional intent.”) (internal quotation marks and citation
omitted). But in this case, the legislative history of § 7627
 REDOIL V . EPA 15

offers no useful guidance as to congressional intent. A report
submitted during the floor debate in the House of
Representatives stated that “[m]arine vessels emissions . . .
which are associated with an OCS activity, will be included
as part of the OCS facility emissions for the purposes of
regulation,” so as to “ensure that the cruising emissions from
marine vessels are controlled and offset as if they were part
of the OCS facility’s emissions.” 136 Cong. Rec. H12,848
(daily ed. Oct. 26, 1990) (report submitted by Rep. Robert
Lagomarsino); see also 136 Cong. Rec. S16,895 (daily ed.
Oct. 27, 1990) (conference report submitted by Senator Max
Baucus). Without referencing BACT or explaining what it
means to be regulated “as part of the OCS facility emissions,”
it is impossible to discern if Congress specifically considered
the question of whether BACT applies to associated vessels
in the same manner and to the same degree as an OCS source
itself. We agree with the EAB that the legislative history
merely “shows that Congress intended vessel emissions to be
‘controlled,’ ‘offset,’ ‘mitigated,’ or subject to ‘regulation,’
all of which are accomplished to some degree” by the EPA’s
interpretation of § 7627. In re: Shell Gulf of Mexico, 2010
WL 5478647, at *15.

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 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
16 REDOIL V . EPA

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, 2010 WL 5478647, at *2. We
agree with the EAB’s characterization of the ambiguity.

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
 REDOIL V . EPA 17

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.
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
18 REDOIL V . EPA

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 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. In re: Shell Gulf of
Mexico, 2012 WL 119962. 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
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
 REDOIL V . EPA 19

“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.

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,
2012 WL 119962, at *29. The agency did not have the
20 REDOIL V . EPA

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. 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.

PETITION DENIED.