## Facts

- Shell Gulf of Mexico Inc. and Shell Offshore Inc. sought Prevention of Significant Deterioration (PSD) permits for Outer Continental Shelf (OCS) exploratory drilling operations in the Chukchi and Beaufort Seas off Alaska’s North Slope using the *Frontier Discoverer* drilling unit and related emission sources.
- EPA Region 10 issued final OCS PSD permits under Clean Air Act OCS air regulations (40 C.F.R. pt. 55) after notice and comment.
- Environmental and Indigenous-rights organizations and the Alaska Eskimo Whaling Commission petitioned the Environmental Appeals Board (EAB) for review, asserting harms to Alaska Native communities and flaws in the air-quality analysis.
- Petitioners challenged, among other matters, Region 10’s environmental justice (EJ) determination that the project would not cause disproportionately high and adverse effects on minority or low-income populations.
- Petitioners also challenged technical aspects of the air-quality analysis, including treatment of the then-new 1-hour NO₂ National Ambient Air Quality Standard (NAAQS) and the definition of “ambient air” near the drilling unit (including a 500-meter zone).
- Region 10 and Shell opposed review, arguing the permits complied with applicable requirements and the petitions failed to show review was warranted under the EAB’s standard.

## Issues

1. Whether the petitions demonstrated clear error or an important policy issue warranting EAB review under 40 C.F.R. § 124.19.
2. Whether Region 10 adequately explained and supported its EJ analysis and public-involvement record for affected Alaska Native communities.
3. Whether the permits’ air-quality impact analysis sufficiently addressed NO₂ (including the 1-hour NO₂ NAAQS) and properly supported the “ambient air” boundary and modeling assumptions.
4. Whether Region 10 adequately responded to significant comments and justified contested technical conditions and analyses.

## Decision

- The EAB granted review only on a subset of issues and denied review on many challenges.
- The EAB largely upheld the permits, deferring to Region 10’s technical judgments where the record showed reasoned decisionmaking.
- The EAB remanded discrete aspects of the permits to Region 10 for further explanation and, where needed, supplemental support in the administrative record.
- The remand focused principally on targeted components of the EJ analysis and limited aspects of the NO₂/ambient-air analysis and related documentation.
- The EAB did not vacate the permits in full.

## Legal Principles

- EAB review under 40 C.F.R. § 124.19 is discretionary and generally requires a showing of (1) clear factual or legal error or (2) an important policy consideration; petitioners bear the burden and may not merely restate prior comments.
- In PSD/OCS permitting, EPA must ensure the permitted source will not cause or contribute to NAAQS violations, and the permitting record must explain how the Region reached that conclusion.
- EJ considerations in permitting require meaningful community involvement and a reasoned, record-supported explanation of conclusions about disproportionate impacts, consistent with EPA EJ policies and Executive Order 12,898 as applied by the Agency.
- The EAB generally defers to regional technical expertise if the Region examines relevant data, responds to significant comments, and articulates a rational connection between facts found and choices made.
- Where the record or explanation is insufficient to permit informed review, the EAB may remand for clarification or supplemental analysis without vacating the permit as a whole.

## Conclusion

The EAB sustained EPA Region 10’s issuance of OCS PSD permits for Shell’s *Frontier Discoverer* exploratory drilling operations in most respects, but remanded limited permit components for a clearer, better-supported explanation of the environmental justice analysis and certain NO₂/ambient-air impact determinations and record documentation.


In re Shell Gulf of Mex., Inc., 2010 WL 5478647 (E.P.A. Envtl. Appeals Bd. Dec. 30, 2010)