On May 19, 2021, the United States Environmental Protection Agency (“EPA”) issued a final Outer Continental Shelf Clean Air Act Air Permit to Vineyard Wind 1, LLC (“Vineyard Wind”) , removing a major obstacle to obtaining permits before starting construction of an 800 megawatt wind farm that will be the country’s first major offshore wind project.

The project represents an important step for the country to achieve the Biden administration’s goal of generating 30 gigawatts of power from offshore wind by 2030. While Europe has a grid of more of 5,300 offshore wind turbines, the United States currently has only seven, and President Biden wants to catch up. Vineyard Wind is the first of seven Outer Continental Shelf (“OCSâ€) wind farms that EPA Region 1 is currently evaluating for combined construction and operating permits.

Given the Biden administration’s goal of fostering the rapid development of offshore wind development, it may be surprising that the EPA has determined that Vineyard Wind is a major source of air pollution and therefore subject the Strict Prevention of Significant Deterioration (“PSDâ€) of the Clean Air Act. New Source of Non-Breach (“NNSRâ€) Examination Permit Requirements. In determining the potential emissions from the project, the EPA did not limit itself to counting emissions from engines physically on wind turbines (such as back-up generators). These emissions alone would not have made the project a major source. Instead, in accordance with a specific OCS provision of the Clean Air Act, the EPA has also counted certain emissions from ships used for construction and operation, including when those ships are en route to or from the turbine construction area and within 25 miles of the project area. .

As a result, having considered the project to be a major source of air pollution, the permit imposes strict emission limits for the equipment and vessels used to build and operate the wind farm. In addition, after triggering the NNSR, Vineyard Wind must obtain costly emissions offsets for nitrogen oxides (“NO_X“) And volatile organic compounds (” VOCs “).

Developers and investors of OCS wind projects should be aware of the Vineyard Wind air permit. The EPA permit confirms that in addition to having to overcome the permit challenge with more than a dozen other agencies, OCS wind projects will also be subject to the significant costs and uncertainty of PSD permits and NNSR.

Regulatory context

Under the Clean Air Act, no facility that may emit certain threshold levels of specified air pollutants (called “major sourcesâ€) may be constructed without a permit. The proposed source must obtain a PSD permit if it is located in an area that meets air quality standards, or an NNSR permit if it is located in an area that does not meet these standards. PSD permits require the source to apply “best available control technology” (“BACT”), and NNSR permits require the even more stringent “lowest possible emission rate” (“LAER”).

In the 1990 Amendments to the Clean Air Act, Congress extended the applicability of the PSD and NNSR requirements beyond major land-based stationary sources. By creating Section 328, Congress gave the EPA jurisdiction to regulate OCS sources “located off states along the Pacific, Arctic and Atlantic coasts” and in the eastern Gulf of Mexico. 42 USC § 7627 (a) (1).

A key provision of Article 328 is the definition of the term “source of the outer continental shelf”, which means “any equipment, activity or facility” which “(i) emits or has the potential to emit an air pollutant, (ii ) is regulated or authorized under the Outer Continental Shelf Lands Act, and (iii) is located on the outer continental shelf or in or on the waters above the outer continental shelf. 42 USC § 7627 (a) (4) (C). It is important to note that the definition goes on to state:

These activities include, but are not limited to, the exploration, construction, development, production, processing and transportation of rigs and drilling vessels. For the purposes of this paragraph, emissions from any vessel in service or associated with an OCS source, including emissions at the OCS source or en route to or from the OCS source within 25 miles of the OCS source, must be considered direct emissions from the OCS source.

Identifier. (emphasis added). EPA regulations incorporate the legal definition and further specify that a vessel will only be a source of OCS when: “(1) [p]permanently or temporarily attached to and erected on the seabed and used for the purpose of exploring, developing or producing resources therefrom “or” (2) [p]physically attached to an OCS installation. 40 CFR § 55.2.

Thus, while people have long debated whether to account for emissions from support vessels moored to a source onshore or in transit to or from a source onshore to determine the emission potential from a source onshore , Congress has spoken for OCS sources: they matter.

However, neither the statutory nor regulatory definitions of the source of OCS make it clear whether and to what extent support vessels – whose emissions are to be considered as direct emissions from the source of OCS in the calculation of the potential for OCS. source emission – are themselves subject to BACT or LAER pollution controls. . The EPA recognized this ambiguity and took the position that support vessels are generally do not submitted to BACT or LAER. See Envtl resistant. Destruction of Indigenous Lands, REDOIL v. USEPA, 716 F.3d 1155, 1163–64 (9th Cir. 2013). A support vessel will only be subject to BACT or LAER during operations that make it an OCS source according to the EPA regulatory definition (that is to say., when attached to the seabed for construction purposes or physically attached to an OCS source). See 40 CFR § 55.2.

The Vent Vineyard Permit

As per the above, the Vineyard Wind permit requires BACT or LAER for the following OCS sources:

1. Motors on wind turbines (e.g., emergency generators), and
2. Ship engines, but only while ships are operating as OCS sources.

The permit generally requires that vessel engines for the project meet emission standards at a more stringent “level” than what is otherwise required by regulations (for example., the permit requires certain classes of engines to meet Tier 4 standards, although these engines might otherwise only have to meet less stringent Tier 3 standards depending on the model year). However, the permit includes some flexibility. Namely, Vineyard Wind may use engines meeting the following lower tier if:

1. A vessel with a higher level engine is not available within two hours of when the vessel is to be deployed; or
2. The total emissions associated with the use of a vessel with the next lower level engine (including emissions in transit to the construction site) would be greater than the total emissions associated with the use of the vessel with the following lower level engines .

Such flexibility is crucial. Offshore wind is still nascent in the United States and the country lacks the necessary fleet of vessels capable of building today’s huge turbines. For example, during the construction of the two pilot turbines off Virginia Beach, the necessary heavy vessels were imported from Europe. And due to the Jones Act requirement that shipping between U.S. ports be conducted by U.S. flagged vessels, ships serving the Virginia Beach project had to be operated from a port in Canada and travel over 800 miles each way to the project site. Thus, an installation which would have taken a few weeks in Europe took a year.

Finally, as also required by section 328, the permit requires Vineyard Wind to purchase emission offsets for NO._X and VOCs, as the nearest coastal area is classified as unreached for these pollutants. Notably, although the license does not require a BACT or LAER for vessels en route to or from the turbines, it Is count these round-trip emissions when calculating the offsets Vineyard Wind must earn. Neither the Clean Air Act nor EPA regulations clearly address the appropriateness of requiring offsets for round-trip emissions.

Outlook

With more than 90,000 miles of coastline, the United States has plenty of real estate to implement the Biden administration’s goal of 30 gigawatts of offshore wind by 2030. Yet the wind projects of OCS still face significant legal, economic and political obstacles. The EPA’s permit for Vineyard Wind highlights a significant hurdle: the PSD and NNSR permits. So, whether a proposed OCS project is an offshore crude export terminal or a conspicuously zero-emission project like a wind farm, developers and investors need to anticipate the additional costs, multi-year lead times and uncertainty of costs. PSD and NNSR permits. In addition, even after a project has obtained a PSD or NNSR permit, the permit is still subject to direct control (that is to say., calls for pre-construction permits) and indirect (that is to say., Title V operating permit applications for review) public challenges by those seeking to slow down or kill the project.