May 31, 2020
Federal Docket Management System
(FDMS) http://www.regulations.gov
Docket Number: MARAD-2019-0011
Attention: Ms. Yvette Fields; Mr. William Nabach
Subject: Deepwater Port License Application: Spot Terminal Services LLC
The Blueprint 2025 (“BP2025”) initiative was established in late 2015 as a collaboration among infrastructure professionals, leading infrastructure development companies and public sector project managers, to advance and support plans and policies to restore the U.S. position as the country with the world’s best, most efficient and most productive infrastructure. A critical premise of our effort has been that the U.S. approach to permitting and regulation of critical infrastructure projects locks us in to the infrastructure of the past and prevents or delays the economic and environmental/public safety benefits attainable through infrastructure modernization. To that end, we have submitted extensive comments on the Administration’s proposals to modernize the NEPA process and also submitted early comments (attached) in this proceeding regarding the critical environmentally protective effects of Deepwater Ports could have in the Central and Western Gulf and the need to properly understand and apply applicable laws in assessing the environmental impacts of the MARAD/Coast Guard action in issuing or denying a license for the SPOT Deepwater Port and others proposed to be constructed and operated in the Central and Western Gulf.
Unfortunately the DEIS in the SPOT proceeding appears to ignore our earlier comments. Perhaps more unfortunately, its length is far in excess of that suggested by applicable guidelines, unnecessarily addresses issues which are properly within the purview of Coast Guard regulatory discretion, thus both confusing the issues and making public comment difficult and unproductive, misstates applicable law and fails to succinctly characterize the impacts of license issuance or denial.
As noted in the DEIS, “MARAD’s authority under the DWPA is limited to approval or denial of the DWP license application…” As there is no authority to impose conditions on license issuance other than the requirement to comply with applicable law , the DEIS’ extensive discussion of port design alternatives and alternative means of performing the functions envisioned by the port developer in constructing and operating the port are unnecessary, inappropriate and confusing. Although the DEIS clearly needs to consider localized impacts such as effects on marine resources, wetlands and historic and cultural amenities, the broad national issue is clear and simple. Do we, or do we not want to manage the safety risks and adverse environmental and economic impacts of loading multiple small vessels on shore and “reverse lightering” the oil on such vessels onto VLCC’s and ULCC’s in near shore international waters. The DEIS, though it provides answers to that critical question in an obscure and convoluted way, never quantifies these positive impacts nor acknowledges their significance. Our impression, in reviewing the DEIS, is that there is a “thumb on the scale” in favor of the status quo and a resistance to positive change which protects the environment and promotes public safety. Our further impression is that there is no reason that consideration of the relevant issues could not have been completed within the recommended page limits and the statutorily mandated time frame.
Although we regarded this sort of problems with NEPA environmental review attitudes to be a matter of some urgency at the time our earlier comments were submitted, those concerns are much more emphatic during this time of national emergency. We have emphatically and often advanced the position that infrastructure projects are the key to economic recovery. An environmental review policy, such as that evidenced by the SPOT DEIS, which protects the status quo at the expense of environmental and economic progress cannot be allowed to stand. It seems clear to us that the final investment decision on the first of these new crude oil deepwater ports has already been delayed by some years as a result of delays and inappropriate requirements resulting from the environmental review process. At a time when the nation is focusing on the need to become self-sufficient in the supply chain for critical needs such as energy resources, this sort of problem needs to be addressed on an emergency basis.
Please feel free to contact us if further information is needed.
Thank You.
Best Regards,
Norman F. Anderson Chief Executive Officer CG/LA Infrastructure Founder, Blueprint 2025
Attachments: February 27, 2019 MARAD-2018-0114. Request for inclusion in the public record and comments regarding EPA Proposed Procedures; Blueprint 2025 Position Paper
February 27, 2019
Federal Docket Management System (FDMS) http://www.regulations.gov
Docket Number: MARAD-2018-0114
Attention: Mr. Roddy C. Bachman, USCG, Roddy.C.Bachman@uscg.mil Mr. Wade Morefield, MARAD, Wade.Morefield@dot.gov
Subject: MARAD-2018-0114. Request for inclusion in the public record and comments regarding EPA Proposed Procedures
Dear Sirs:
The Blueprint 2025 coalition recently became aware of the attached correspondence between the United States Environmental Protection Agency (EPA), Region 6, and the United States Coast Guard pertaining to the procedures and legal analyses that EPA Region 6 proposes to follow in its participation in the licensing process for the Texas Gulf Coast Terminals, Inc.
Deepwater Port Project. We believe the regulatory approach described by the EPA Region 6 in this letter is unsupported by any grant of authority in the Deepwater Port Act, the Clean Air Act or the outer Continental Shelf Lands Act and is directly contrary to the clearly announced policy of this Administration as well as our Country’s national interest and the public interests of adjacent coastal States. For that reason, as well as to provide a minimal level of transparency and administrative due process, we are requesting that this letter be included in the docket and made available for public comment.
Regarding the basis for this outreach and by way of background, Blueprint 2025 is a collaboration among infrastructure professionals, leading infrastructure development companies and public sector project managers, which advances and supports plans and policies to restore the U.S. position as the country with the world’s best, most efficient and most productive infrastructure. Over the past few years, Blueprint 2025 has commented on a number of executive branch regulatory reform initiatives, presented related congressional testimony, hosted major leadership conferences addressing infrastructure and related regulatory reform issues, produced independent studies evaluating the worthiness of, and existing impediments to, large scale nationally-significant projects, and published detailed suggestions for improvement of the permitting process. 1 In this regard, Blueprint 2025 takes
1 CGLA Infrastructure/Blueprint 2025 hosts annual events both in Washington, D.C. and in major cities throughout North America, attended by high-level government officials and top infrastructure/major project professionals to
great, non-partisan interest in assuring that the permitting process being applied to projects of major domestic and global significance, such as this Deepwater Port Project, will conform to applicable legal requirements and this Administration’s clearly enunciated policies, which are forward looking and encourage thorough but expeditious consideration of major projects.
Permitting or licensing processes should never hinder infrastructure development by duplicative and unnecessary review that falls outside of statutory authority.
The benefits and importance of this and similar Deep Water Port Projects in the Gulf of Mexico cannot be overstated. This project is one of a number of gulf coast deepwater port infrastructure initiatives critical to the development of oil and gas infrastructure opportunities in the region and the nation as a whole. In short, these gulf projects:
Reduce overall VOC emissions by displacing uncontrolled emissions from onshore terminals loading at levels less than the 100 million bpd threshold, emissions beyond limits of control technology for large onshore sources and emissions from reverse lightering operations in the Gulf;
Reduce fuel use and stack emissions from reverse lightering operations;
Further reduce prospects for exceedances of NAAQS and health based limits by moving the reduced emissions offshore;
Reduce risks of accidents and spills from near shore traffic congestion;
Provide the most cost-effective and safe access to VLCC and ULCC tankers capable of carrying up to two million barrels per trip and enabling effective competition with exporters in Russia and the Middle East;
Support tens of thousands of very high quality jobs;
Maintain oil and gas export competitiveness and domestic economic growth by providing VLCC and ULCC loading capacity estimated to exceed six million barrels per day within the next five years;
Directly address the need for efficient access to VLCC’s and ULCC’s without the major dredging required at alternative onshore ports;
Allow the U.S.-based oil and gas industry to compete effectively in a highly competitive international marketplace.
Blueprint 2025 is concerned that the licensing approach outlined in the above-referenced EPA correspondence, in a number of respects, appears to be based on both erroneous interpretations of the applicable law and disregard of Executive Order 1383 that clearly articulates this Administrations’ intent “to promote clean and safe development of our Nation’s
encourage public/private sector dialogue and to share real-world data with those responsible for approving and overseeing such development.
vast energy resources, while at the same time avoiding regulatory burdens that unnecessarily encumber energy production, constrain economic growth, and prevent job creation.”
Addressing Administration policy and Executive Order 1383 first, it is important to note that Region 6’s seven-page letter references dozens of federal statutes and regulations, more than a half dozen overlapping federal jurisdictional entities, and a host of proposed new actions it is pursuing regarding exercise of jurisdictional oversight, yet gives no consideration to the questions of whether these unilateral actions create an “undue burden,” or unduly “encumber energy production, constrain economic growth, and prevent job creation.” In fact, nothing in the overall docket suggests directly, or even indirectly, that the burdens created by a new independent federal agency role in this project have been considered by any federal regulator as part of the design of their licensing approach. Furthermore, the Region’s justification for adding new layers of regulatory burden and considerable expense, does not mention or recognize the primary role of state law and state regulators in addressing the potential impacts of the project.2
Just as important, the process outlined in the Region 6 letter deviates, in important respects, from the procedure mandated by the Deepwater Port Act and, further, relies on erroneous legal conclusions regarding the scope and applicability of EPA regulatory authority in the Central and Western Gulf of Mexico. These issues are briefly discussed below:
The Region 6 proposed procedures are a departure from the “one window” process mandated by the DWPA. The DWPA was enacted contemporaneously with the groundbreaking legislation which continues to serve as the foundation for our Nation’s system of environmental regulation—NEPA, the Clean Air Act, the Clean Water Act and others. It was drafted and enacted by the same Members of Congress that passed these landmark environmental laws and, as a result, is effectively harmonized and coordinated within that body of law. Since the ports were to be located beyond territorial jurisdiction, the enactors were completely free to determine the extent to which domestic law would be applicable3 and the manner in which domestic regulatory authority would apply. They exercised this freedom through the establishment of a “one window” licensing process in which concerned agencies4
2 In addition to the U.S. Coast Guard, five other federal agencies are copied on the EPA correspondence but no state law entity has been afforded a copy of the letter which would, in effect, take away their authority to oversee critical aspects of the project.
3 An exception to this is the Clean Water Act, pursuant to which EPA has jurisdiction to issue permits from sources
subject to U.S. jurisdiction into the Ocean. The NPDES permit for an ocean discharge is the only environmental permit issued in the licensing process for the one existing port.
4 Agencies having “expertise concerning or jurisdiction over any aspect of the construction or operation of
deepwater ports….” (33 U.S.C. 1504 (e)
were required to participate, rather than conducting their own procedures. At the conclusion of this process, the participating agencies, rather than issuing their own permits or authorizations, were required to make recommendations, based on legal considerations within their areas of responsibility, regarding any conditions necessary to bring the port into compliance with any applicable laws and regulations. EPA participated in this process and submitted recommendations that appear to be reflected in the conditions of the only crude oil deepwater port license that has been issued to date. DWPA licenses, unlike permits under the Clean Air and Clean Water Acts or other comparable laws, require both continuous monitoring of environmental effects and continuous technology assessment to assure continuous upgrades in the “best available technology” standards which the ports are required to have in place. The DWPA thus provides superior environmental protection while avoiding redundant and potentially conflicting procedures which could unduly burden the development of critical energy resources. Both the law and this Administration’s clearly enunciated policy would thus appear to require rigorous adherence to, rather than departure from, the DWPA’s “one window” process.
EPA has no direct Clean Air Act authority in the Central and Western Gulf and the Clean Air Act is not the federal law applicable to air emissions from deepwater ports. Contrary to Region 6’s assertion, neither the DWPA nor OCSLA make the Clean Air Act directly applicable to deepwater ports but, instead, designate the law of the nearest adjacent coastal state as the “federal law” applicable to the deepwater port.5 Further, consistent with international treaty requirements, neither law asserts jurisdiction over the “superjacent airspace” of ports or OCS structures but limits the clean air related regulatory scope to that which is necessary to protect ambient air quality in the adjacent coastal areas.6 Thus, the Court of Appeals’ Kleppe7 decision made clear that, at that time, the Secretary of Interior’s Clean Air Act related authority on the outer Continental Shelf was exclusive and EPA had no jurisdiction.
The Secretary of Interior’s exclusive jurisdiction regarding air emissions on the OCS continued until 1990, at which time the Congress, at the instigation of East Coast, Eastern Gulf and West Coast states, passed section 328 of the Clean Air Act8 which essentially reversed Kleppe for the East Coast, Eastern Gulf and West Coast by providing EPA with clear authority to establish regulations and permitting procedures, and otherwise control emissions from “OCS sources” in those areas. With respect to the Central and Western Gulf, however, Interior’s authority remains essentially unchanged; it remains the exclusive Clean Air Act authority for OCS emissions and is to consult with EPA and potentially affected states to coordinate regulation of
5 43 U.S.C.1333 (a) (2); 33 U.S.C. 1518 (b)
6 33 U.S.C. 1501 (b) 1518; 33 U.S.C. 1518; 43 U.S.C. 1333.
777 9 ELR 20661 (9th Cir. 1979).
8 Id
offshore and onshore emissions. EPA’s authority in the Central and Western Gulf is limited to consultation with the Secretary of Interior in connection with the exercise of the Secretary’s authority to assure coordination of air control regulation for outer Continental Shelf emissions and for emissions in adjacent onshore areas.9
This conclusion is given further weight by the Supreme Court’s ruling in RJR Nabisco, Inc. v. European Community, which held that “Absent clearly expressed congressional intent to the contrary, federal laws will be construed to have only domestic application.” 10 While Section 328 does establish such a clear intent with respect to the East Coast, Eastern Gulf and West Coast, its carve out of the Central and Western Gulf clearly enunciates exactly the opposite intent with respect to that geographic area. The Region 6 assertion of jurisdiction to support its proposed regulatory approach in the Central and Western Gulf is contrary to applicable law.
A deepwater port is not a “new source” as defined in the Clean Water Act.
As noted above, the Clean Water Act, unlike the Clean Air Act, is supported by a clear expression of intention that the NPDES permit program is extraterritorially applicable to discharges to the ocean from sources, other than vessels, which are otherwise subject to U.S. jurisdiction. Thus EPA’s jurisdiction to issue permits for the largely inconsequential point source discharges into the oceans from deepwater ports is not in question. In its letter, however, Region 6 takes the position that, because Section 1506 (9) (d) of the DWPA provides that a deepwater port “shall be considered a ‘new source’ for purposes of the … Federal Pollution Control Act…” the issuance or reissuance of such permits will always be subject to NEPA. While this may seem to be an issue of little consequence, it will put this and future EPAs in the position of deciding, based on environmental factors, whether or not a facility may continue to operate, unless it can eliminate water discharges to the ocean. The contingency created by this interpretation, while perhaps remote, could significantly affect the financing of some projects. Such a result would not be in the national interest nor can it be supported by any reasonable interpretation of either the DWPA or the Federal Pollution Control Act
At the time the DWPA was enacted, the CWA, in 33 U.S.C. section 1316, defined “new source” as follows:
The term “new source” means any source, the construction of which is commenced after the publication of proposed regulations prescribing a standard of performance under this section which will be applicable to such source, if such standard is thereafter promulgated in accordance with this section [emphasis added].
9 42 U.S.C 7627
10 579 U.S. (2016); 136 S. Ct. 2090 (June 20, 2016.)
And provided, in section 33 U.S. C. 1376 that:
Except for …I issuance of a permit under section 1342 of this title for the discharge of any pollutant by a new source as defined in section 1316 of this title, no action of the Administrator taken pursuant to this chapter shall be deemed a major Federal action significantly affecting the quality of the human environment within the meaning of the National Environmental Policy Act of 1969 [emphasis added].
Obviously, since no standards of performance for deepwater ports were proposed at that time (nor have they been at any time since), a deepwater port could never have been a “new source” as defined in the FWPCA, and the issuance of a permit for a port could have never been deemed a major federal action significantly affecting the quality of the human environment.
The DWPA language suggesting that deepwater ports should be “considered” a new source for purposes of the FWPCA must be read, at most, as a suggestion to consider adoption of new source performance standards. EPA, over a period of forty plus years, has consistently taken the position that water discharges from deepwater ports are not sufficiently significant to merit the adoption of new source performance standards. In this context, it would clearly be unfair and contrary to common sense to subject a deepwater port, which is clearly “existing” in every commonly understood sense of the word, to the consequences of retroactive designation as “new”. The agency cannot be allowed to leverage a simple expression of congressional concern into an every five year life or death decision over projects which will cost in the billions. The distinction between “shall be considered “and “defined as” must be recognized, taken into account and fully implemented. The idea that somehow the renewal of permits for these insignificant discharges triggers a need for a facility wide environmental review every five years is counterproductive and detrimental to both our economy and the environment.
A central tenet of Blueprint 2025’s policy is the recognition that reform of the permitting process for major infrastructure projects is absolutely essential if the U.S. is to modernize its infrastructure in time to allow development of the new technologies which will enable us to keep pace with the modernization programs of our major global competitors.
The deepwater port projects provide case studies for evaluation of the success of national regulatory reform efforts. We assume that there will be agreement that all stakeholders are entitled to permitting processes which are efficient, realistic, transparent and consistent, and also which conform to applicable laws and provide reasonable certainty. Efficiency and fairness of the federal permitting process are critical for realization of critical Gulf Coast infrastructure projects and all critical infrastructure projects throughout the United States.
This experience with the DWPA demonstrates that, absent strong policy leadership and a strong sense of direction, even the most efficient permitting process will have a tendency to lose its way and fall into disrepair. We strongly urge restoration of the consultative processes which led to the early successes of the DWPA program and, we would hope, to broader application of key elements of that process, such as the “one window” approach and firm time limitations, which made it successful.
We appreciate your consideration of these comments. Our intention is to continue monitoring this and similar proceedings and to participate as necessary to assure efficiency and fairness.
Thank You.
Best Regards,
Norman F. Anderson Chief Executive Officer CG/LA Infrastructure Founder, Blueprint 2025
ATTACHMENTS: Letter from Mr. Robert D. Lawrence, Senior Policy Advisor, Energy Issues; EPA Region 6 to Mr. Roddy C. Bachman, USCG regarding EPA Authority Over Construction and Operation Texas Gulf Terminals Inc. Deepwater Port Act Project
BLUEPRINT 2025 POSITION PAPER
CRUDE OIL EXPORT TERMINALS
CENTRAL AND WESTERN GULF OF MEXICO
Since the very early days of his Administration, President Trump has placed a high priority on the promotion of oil and gas exports and the development of the infrastructure which is essential to efficient and economic export operations. The President has often confirmed these initiatives, most recently in visits to the IUOE Training Center in Crosby, Texas, where the Union announced a commitment to train 250,000 workers to participate in the construction and operation of pipelines and ports, and to the recent commissioning of the Sempra natural gas export terminal in Hackberry Louisiana.
As with natural gas, crude oil production in the United States is increasing at an unprecedented rate and, like LNG, crude oil exports have the potential to radically improve U.S. trade balances and enhance the U.S.’ ability to achieve its global objectives. The ability to compete effectively in global crude markets depends, in major part, on ability to fully realize the very substantial savings in transportation costs achievable through optimal use of Very Large and Ultra Large Crude Carriers.
ECONOMIC EFFECTS – Current crude oil loading capacity at U.S. ports is around 5 million barrels per day. Only about 500,000 barrels per day of this capacity consists of ports that can fully load VLCCs and ULCCs. Other ports must either use small tankers or partially load onshore and “reverse lighter” through offshore vessel to vessel transfers. These alternative approaches are expensive, cumbersome and uncompetitive.
To resolve this problem, energy sector companies have applied for authority to construct an additional seven offshore deepwater ports, capable of fully loading ULCCs, with a total capacity approaching 10 MMbpd. Two to three of these facilities need to be built in the near term in order for the U.S. to compete with Saudi Arabia and similar competitors. The planned offshore terminals have capacities of 500,000 to 2 million barrels per day each and require capital investments in the $3 billion range for each facility. If constructed, the terminals could facilitate exports valued at somewhere around $100 billion per year and could create tens and perhaps hundreds of thousands of extremely high quality jobs. Timely processing of the pending applications could result in Mid-2020 license awards.
NEED FOR ACTION: As enacted in 1974, the Deepwater Port Act provided an extremely efficient “one window” approach for coordinating reviews and approvals by all cognizant federal agencies, designating a single lead regulatory agency, providing a single consolidated time limited license proceeding and relying heavily on adjacent coastal states to provide the applicable law. Subsequent streamlining amendments made the DWPA even more efficient without sacrificing environmental and safety protections and made clear that “regulation of deepwater ports is not to be more burdensome or stringent than necessary in comparison to other modes of importing or transporting oil…”
Unfortunately, after the Act was amended in 2002 to extend to LNG ports, the participating Agencies adopted new non-conforming procedures, which departed from the “one window” process mandated by the Act, supplanted the States’ role in establishing the law of the Ports, allowed overlapping and inconsistent requirements, increased licensees’ administrative burdens and diminished the Marad/Coast Guard role as lead and coordinating agencies. Since that change in policy, a number of applications have been submitted but none has been timely processed. Only one terminal licensed since 2002 is currently in operation. Others have surrendered their licenses.
RECOMMENDATION: The Administration should designate these facilities as “Critical National Interest Infrastructure” and direct Marad, the Coast Guard, EPA and other participating agencies to rigorously conform to the “one window” process mandated by the DWPA, refrain from asserting extraterritorial jurisdiction not specifically authorized by law, accept the Marad/Coast Guard lead role, acknowledge the appropriate role of the States, conform to the Act’s policy proscribing regulation more burdensome than that applicable to alternative transportation modes and meet the deadlines mandated by the Act.
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