1 ALASKA WILDERNESS LEAGUE—CEN TER FOR BIOLOGICAL DIVERSITY
DEFENDERS OF WILDLIFE—EARTHJUSTICE
GREENPEACE—NATIVE VILLAGE OF POINT HOPE
NATURAL RESOURCES DEFENSE COUNCIL
NORTHERN ALASKA ENVIRONMEN TAL CENTER—OCE AN CONSERVANCY
OCEANA—PACIFIC ENVIRONMENT—REDOIL—SIERRA CLUB

May 18, 2011

VIA EMAIL

Ms. Hanh Shaw
Team Lead NPDES Permit Unit, OWW-130 U.S. Environmental Protection Agency 1200 Sixth Avenue, Suite 900 Seattle, WA 98101 E: shaw.hanh@epa.gov

Re: Shell Offshore Inc., Statoil USA E&P, and ConocoPhillips Notices of Intent for Coverage under General Permit No. AKG280000

Dear Ms. Shaw:

The undersigned groups hereby submit the following comments to Shell Offshore Inc. (Shell)’s, Statoil USA E&P (Stato il)’s, and ConocoPhillips (Conoco)’s notices of intent (NOIs) for coverage under General Permit No. AKG280000 (General Permit). These companies have
submitted a total of 34 NOIs under the current Ge neral Permit for activities that would not commence until over a year from now at the earliest, well after the General Permit is due to expire. Shell intends to conduct exploration dr illing in the Beaufort and Chukchi seas in 2012 and beyond; Conoco and Statoil intend to conduc t exploration operations in the Chukchi Sea beginning in 2013. Each expects to discharge pollution at rates we ll above those analyzed by the Environmental Protection Agency (EPA) in the General Permit.

As the deluge of NOIs indicates, the Arctic Ocean may face in the coming years a largescale expansion of industrial activ ity never before seen in the re gion. In particular, the proposed expansion of exploration drilling in the relatively pristine waters of the Arctic Ocean threatens to introduce large amounts of pollution into the ocean, includ ing risking a large oil spill. These discharges endanger the ocean and its wildlife an d local residents. Discharges of toxic and bioaccumulating waste—especially from drilli ng muds—could harm residents of the North Slope, who depend on subsistence harvests of o cean mammals and fish. Bioaccumulating wastes are already collecting rapidly in th e tissue of Arctic marine fauna, and there remain large gaps in the scientific understanding of why this is occurring. 1 High mercury levels in particular are a

1 See Arctic Monitoring and Assessment Programme, Arctic Pollution 2011 at v (2011) (Arctic Pollution 2011),
available at http://www.amap.no/.2 problem in the Arctic, with the pollutant found in alarmingly high levels in the region’s people, marine mammals, and fish. 2

This is not the first time EPA has been c onfronted with these i ssues. In 2009, Shell submitted 7 NOIs for discharges into the Arctic Ocean related to its proposed 2010 exploration drilling. 3 Some of those discharges would have far exceeded the levels EPA considered in promulgating the General Permit. 4 At the time, many of the undersigned groups petitioned EPA to require Shell to apply for individual permits. 5 EPA is currently c onsidering that petition. 6 Again in 2010, Shell submitted an NOI for proposed 2011 drilling. Many of the undersigned groups submitted comments to the NOI asking EPA to require Shell to apply for an individual permit because some of the disc harges would occur af ter the expiration of the General Permit and would far exceed the levels analyzed by EPA in connection w ith the General Permit. 7 As described below, the 34 NOIs currently under co nsideration suffer from many of the same problems as Shell’s earlier NOIs.

It is critical that EPA anal yze and respond to this increa sed industrial activity in a comprehensive and coherent manner. Accordi ngly, EPA must carefully decide, seeking public input as appropriate, whether and how to permit ocean discharges into the Arctic Ocean. It
would not be consistent with existing law or the current General Permit for the agency to approve Shell’s, Statoil’s, and Conoco’s future operations under the General Permit, which expires this summer, more than a year before these companies’ proposed discharges would even commence. Moreover, EPA has broad discretion to require an individual permit when, for example, a company’s discharges will be a significant contributor of pollutants. 8 It should
exercise that discretion and require individual permit applica tions for the future activities for which the companies have submitted NOIs. This is especially important here because many of the discharges described in the NOIs exceed the levels EPA considered in promulgating the General Permit. EPA must analyze these discharg e levels to ensure they will not harm water quality before permitting the companies to operate.

EPA should not permit Shell, Statoil, or Conoco to operate under the General Permit because the General Permit will expire befo re the companies plan to drill.

EPA should not permit Shell, Statoil, or Conoco to operate under the General Permit because the General Permit will have expired by the time the companies plans to operate, and EPA cannot extend the General Permit beyond its five -year term. Shell plans for its exploration

2 Id.

3 Shell Offshore Inc., Notice of Intent under Genera l Permit AKG-28-0000, Drillship M/V Discoverer, Lease Number OCS-Y-1805, Lease Block 6658 (Oct. 12, 2010).

4 Id. at 9.

5 Audubon Alaska, et al ., Petition Pursuant to 40 C.F.R. § 122.28(b)(3) to Require Individual Permitting Processes for Ocean Discharges from Shell’s Beaufort and Chukchi Sea Explora tion Drilling Plans (Jan. 19. 2010).

6 US Environmental Protection Agency (EPA), Region 10 , Re: Petition to Require Shell Exploration & Production Company to Obtain an Individual National Pollutant Discharge Elimination System (NPDES) Permit for its Proposed Exploration Activities in the Chukchi and Beaufort Seas, Alaska (May 18, 2010).

7 Alaska Wilderness League, et al. , Re: Shell Offshore Inc. Notice of Intent for Coverage under General Permit No. AKG280000 (Jan. 24, 2011).

8 40 C.F.R. § 122.28(b)(3); Arctic General Permit at 10.3 drilling operations to start in 2012, 9 and Conoco and Statoil plan for their operations to start in 2013, 10 but the General Permit expires on June 26, 2011. 11 When the General Permit expires, it will have been in effect for five years. The Clean Water Act (CWA) and the EPA’s implementing regulations preclude general ex tension of the General Permit beyond June 26,
2011. The CWA mandates that National Pollutant Discharge Elimination System (NPDES) permits are limited to fixed terms not exceeding five years. 12 In accordance with this provision, EPA has promulgated a regulation that provides th at “the term of a permit shall not be extended by modification beyond the maximu m duration” of five years. 13 This limitation on a permit’s duration is important as it helps “ensure that pe rmits evolve to reflect advances in technology.” 14 EPA therefore should require Sh ell, Statoil, and Conoco to apply for individual permits.

Under some circumstances, the terms of an expired permit can continue in force for particular dischargers pursuant to 5 U.S.C. § 558(c) pending the agency’s processing of a permit renewal application. 15 However, none of those circumst ances exist here. Section 558(c) provides that for a “license with reference to an activity of a continuing nature ” an expiring permit can remain in effect during the pendency of the agency’s consideration of a timely and sufficient application for a renewal or a new license. 16 Although offshore drilling does not per se fall outside the definition of an activ ity that is of a continuing nature, 17 the drilling for which Shell, Statoil, and Conoco seek approval here does. First, none of the companies seek “to continue [an] existing operation.” 18 The discharges described in the NOIs have not yet commenced, nor are they scheduled to commence un til at least one year after the General Permit expires. These operations thus fall well outside the ambit of what Section 558(c) is intended to protect, namely prejudice to licensees from agency delays in the issuance of permits. 19 No

9 See Shell Offshore Inc., Revised Outer Continental Shelf Lease Exploration Plan, Camden Bay, Beaufort Sea, Alaska (May 2011).

10 ConocoPhillips, Filing of Notices of Intent-REVISED-NPDES General Permit AK280000 ConocoPhillips, Chukchi Sea Exploration Plan (Apr. 14, 2011) (Conoco NOIs Filing); Statoil USA E& P, Filing of Notices of Intent—NPDES General Permit AK280000, Statoil USA E&P, Chukchi Sea Exploration Program (Apr. 13, 2011) (Statoil NOIs Filing).

11 EPA, Region 10, Authorization to Discharge under the National Pollutant Discharge Elimination System (NPDES) for Oil and Gas Exploration F acilities on the Outer Continental Shelf and Contiguous State Waters, Permit No. AKG280000 at 1 (May 16, 2006) (Arctic General Permit).

12 33 U.S.C. § 1342(a)(3), (b)(1)(B); see also 40 C.F.R. § 122.46(a)..

13 40 C.F.R. § 122.46(b).

14 NW Envtl. Advocates v. U.S. EPA , not reported in F. Supp. 2d, 2006 WL 2669042, *12 (N.D. Cal. 2006) (citing 33 U.S.C. § 1342(b)(1)(A) (NPDES permits must apply the “b est available technology” re quirement of 33 U.S.C. § 1311)); see also 45 Fed. Reg. 33,290, 33,308 (May 19, 1980) (stating “permit expiration and reissuance is an important mechanism for providing regular scrutiny of permit compliance and updating of permit conditions.”).

15 See 40 C.F.R. §§ 122.6, .28(b)(2)(i), .46(b).

16 5 U.S.C. § 558(c)(“When the licensee ha s made timely and sufficient applicatio n for a renewal or a new license in accordance with agency rules, a license with reference to an activity of a continuing nature do es not expire until the application has been finally determined by the agency.”) (emphasis added); see Miami MDS Co. v. FCC , 14 F.3d 658, 660 (D.C. Cir. 1994) (describing an activity of a continuing nature as “an activity that is normally carried on indefinitely under licenses that as a regular matter are re newed or replaced with new licenses issued to the current holder”).

17 See Natural Resources Def. Council, Inc. v. U.S. EPA , 859 F.2d 156, 212-14 (D.C. Cir. 1988)

18 See Pan-Atlantic Steamship Corp. v. Atlantic Coast Line R.R. , 353 U.S. 436, 439 (1957).

19 Section 558(c) is aimed at “protecting those persons who already have regularly issued licenses from the serious hardships occasioned both to them and to the public by expiration of a license before the agency finds time to pass upon its renewal.” County of Sullivan v. Civil Aeronautics Board , 436 F.2d 1096, 1099 (2d Cir. 1971).4 ongoing, authorized activity would be disrupted in this instance if the companies are not granted
authorization under the General Pe rmit. The companies are aware of the term of the General Permit and have plenty of time to apply for an in dividual discharge permit fo r their drilling rather than seeking the shortcut of coverage under th e expiring General Permit. Second, the drilling operations the companies propose are once-off ac tivities that are of limited duration and will
last—at most—a few months and ha ve defined starting and ending poi nts. These are not the sort
of activities that are considered activities of a continuing nature. 20 Finally, requiring an individual permit here, rather than extending an expired general permit that is currently undergoing agency revision and reco nsideration, would also meet th e CWA’s directive to ensure that permitting evolves to refl ect advances in technology.

The terms of the General Permit further support the need for Shell, Statoil, and Conoco to seek individual permits for their future discharges. 21 The General Permit provides that “[i]f the permittee intends to continue an activity regulated by this gene ral permit after the expiration date of this permit, the permittee must either apply for and obtain an individu al permit or submit an NOI to be covered under a new general permit.” 22 The Fact Sheet further reiterates that “the permittee must submit a new complete notice of inte nt prior to the expiration date of the general permit should the operator choose to continue operations under this general permit in the event
of administrative extensi on of the general permit.” 23 Shell, Statoil, and Conoco do not seek to

continue an activity under the General Permit as the General Permit requires. Rather they all intend to begin new operations. Accordingly, EPA should not approve the companies’ NOIs pursuant to the terms of the General Permit.

EPA should require Shell, Statoil, and Conoco to obtain individual permits to ensure the proposed discharges, which are far larger than those contemplated by the General Permit, do not result in unreasonable degradation.

Even if the General Permit could extend to cover the oil companies’ NOIs, EPA should still require Shell, Statoil, and Conoco to appl y for individual permits, be cause the oil companies will discharge pollutants in amounts far in excess of the amounts that EPA considered under the General Permit. EPA may permit discharges only if they will not cause unreasonable degradation of the marine environment. 24 In issuing the General Permit, EPA produced the Ocean Discharge Criteria Evaluation (ODCE) to determine whether discharges under the
General Permit could result in unreasonable degradation of the marine environment. 25 EPA
based its conclusion that discha rges would not cause unreasona ble degradation on assumptions about the volumes and rates at which pollutants would be discharged. 26 As described below, the

20 See Miami MDS Co. , 14 F.3d at 660 (one-time activity is not of continuing duration for purposes of Section 558(c) extension); see also Bankers Life & Cas. Co. v. Callaway , 530 F.2d 625, 633-34 n.13 (5th Cir. 1976) (noting that dredge-and-fill project is not an activity of a continuing nature becau se it ends when the hole is filled).

21 EPA’s regulations state that continuance may occur only under the terms of the general permit. See 40 C.F.R. §§ 122.6, .28(b)(2)(i).

22 Arctic General Permit at 53.

23 EPA, Region 10, Fact Sheet for Arctic General Permit at 9-10 (2004) (emphasis added).

24 40 C.F.R. § 125.123(a).

25 EPA, Final Ocean Discharge Criteria Evaluation of the Arctic NPDES General Permit for Oil and Gas Exploration (Jan. 24, 2006) (ODCE).

26 See, e.g. , ODCE at 2-1 – 2-17.5 companies’ proposed discharges would greatly exceed some of these assumptions, severely undermining EPA’s conclusion that discharges under the General Permit would not cause unreasonable degradation of marine waters. To date, EPA has nowhere conducted an analysis of the potential degradation that could result from th e volumes of pollution that Shell, Statoil, and Conoco propose to discharge, and it cannot rationally conclude that the di scharges will not cause unreasonable degradation.

Of particular concern are Shell’s, Statoi l’s, and Conoco’s proposal s to discharge large volumes of drilling muds, far in excess of the amounts EPA analyzed in connection with issuing the General Permit. Additionally, Shell, Stat oil, and Conoco would discharge much more noncontact cooling water than EPA analyzed in c onnection with issuing the General Permit, and Shell and Conoco would discharge more sanitary and domestic waste than EPA analyzed. These potential discharges are cause for concern because they will c ontain toxic components that can harm aquatic life and degrade the aquatic environment, and because EPA has not considered their discharge in these amounts.

1. Drilling Muds

Notwithstanding the fact that Shell, Stato il, and Conoco are capable of transporting and disposing of their spent drilling muds offsite—ind eed Shell itself has proposed doing so for some of its Beaufort Sea wells—the companies propose to dump toxic drilling m uds directly into the ocean for the vast majority of their operations. 27 In total, the volume of the muds the companies intend to dump in the ocean far exceeds the amount EPA considered in the ODCE. At a single prospect in the Chukchi Sea, for example, She ll seeks to discharge more than double the amount of drilling mud that EPA analyzed in total for all Chukchi Sea l eases under the five-year General
Permit. 28 In the Beaufort Sea, in drilling 5 wells, Shell intends to discharge more than 3 times
EPA’s total estimate. 29 Similarly, it appears that Statoi l and Conoco will discharge well over EPA’s estimate for drilling muds in the Chukchi Sea. 30

Because Shell’s, Statoil’s, and Conoco’s disc harges of drilling muds will greatly exceed the volumes underlying EPA’s degr adation analysis, EPA should require these companies to apply for individual permits. This is particularly important because drilling muds are toxic. In addition to liquid, the muds usually contain bentonite clay that in creases the viscosity and alters the density of the drilling fluid. 31 Drilling muds also contain other additives that change the

27 See, e.g. , Shell, Notice of Intent (NOI) fo r Lease Number OCS-Y-1936, Block Number 6559 (Torpedo) at Table 1 (Dec. 16, 2010).

28 Compare Shell, NOI for Lease Number OCS- Y-2040, Block Number Karo 6514 (Bluefoot B) at Table 1 (Dec. 16, 2010) (estimating 4,937 bbls/well) with ODCE at 2-9 (estimating 2,260 bbls for Minerals Management Service (MMS) leases in the Chukchi Sea).

29 See, e.g. , Shell, NOI for Lease Block OCS-Y-1704, Block Nu mber 6352 (Mauya A) at Table 1 (Dec. 16, 2010) (Shell Mauya A NOI) (estimating 3,526 bbl/well); ODCE at 2-9 (estimating 5,610 bbl for MMS leases in the Beaufort Sea).

30 Statoil estimates that it will discharge approximately 4,000 bbl of drilling muds per well. Statoil NOIs Filing,
Table 1 at 1. The exact amount of drilling muds Conoco will discharge remains unclear because the company does not provide this number. However, Conoco will discharg e 8,585 bbls/well of drilled formation rock mixed with drilling muds and 800 bbls/well of drilling muds al one. Conoco NOIs Filing, Table 1 at 1.

31 ODCE at 2-2.6 properties of the fluids. 32 The ODCE states that some of the most significant of these additives

are:

 Weighting materials, primarily barite (bariu m sulfate), may be used to increase the density of the mud in order to equilibr ate the pressure between the wellbore and formation when drilling through particular ly pressurized zones. Hematite (Fe2O3) sometimes is used as a weighting agent in oil-based muds;

 Corrosion inhibitors such as iron oxide, alum inum bisulfate, zinc carbonate, and zinc chromate protect pipes and other metall ic components from acidic compounds encountered in the formation;

 Dispersants, including iron lignosulfonates, brea k up solid clusters into small particles so they can be carried by the fluid;

 Flocculants, primarily acrylic polymers, cause suspended particles to group together so they can be removed from the fluid at the surface;

 Surfactants, like fatty acids and soaps, defoam and emulsify the mud;

 Biocides, typically organic amines, chloropheno ls, or formaldehydes, kill bacteria that may produce toxic hydrogen sulfide gas; and

 Fluid loss reducers include star ch and organic polymers and limit the loss of drilling mud to under-pressurized or high-permeability formations. 33

These substances can be toxic and can bioaccumulate. For example, the weighting material barite is a mineral composed of bari um sulfate and is known to contain several toxic heavy metals, including mercury, cadmium, arseni c, chromium, copper, lead, nickel, and zinc. 34 Mercury pollution has become a large problem for the Arctic. Despite effo rts to control mercury contamination in the area, levels are continuing to rise in Arctic species , including polar bears, beluga whales, and seals. 35 For some of the region’s top predators, concentrations have exceeded the threshold for biological effects. 36 For polar bears, high merc ury levels can lead to a
chemical imbalance in the brain that affects all aspects of the animal’s behavior, survival, and reproduction. 37 The high mercury levels in the Arc tic food web are a tremendous problem for the Arctic’s indigenous peoples who are often exposed to mercur y through their diets. These peoples subsist in large part on fish and marine mammals that are high on the food chain that as a result have accumulated significant levels of me rcury in their tissue. A study on Inuit preschool children in Nunavut, Canada, found that 59 percent of the children surveyed had a methylmercury intake that exceeded th e acceptable intake level for children. 38 For humans, mercury exposure can affect the nervous system , hindering brain development, the reproductive system, the immune system, and perhaps even the cardiovascular system. 39

32 Id.

33 Id. at 2-3.

34 See ODCE at 2-6.

35 Arctic Pollution 2011.

36 Id.

37 Id. at 25.

38 Id. at 30.

39 Id. at 28-30.7 Drilling mud and barite can blanket the seafloor, negatively affecting the benthos. 40 Laboratory studies on recruitment and developmen t of benthic communities suggest that drilling
mud and barite can affect recruitment and al ter benthic communities or depress abundances. 41 This could cause harm to other Arctic organism s, like the walrus in the Chukchi, that rely on benthos for food. Harming walrus would affect human communities, as walrus are an important subsistence resource for many communities, includi ng some outside of Arctic, like Gambell and Savoonga on St. Lawrence Island.

2. Other Discharges

Other discharges identified in Shell’s, St atoil’s, and Conoco’s NOIs will add additional harmful substances or pollution to the marine e nvironment. The companies propose to discharge these pollutants at volumes and ra te above those analyzed by EPA in connection with issuing the General Permit. All three companies would ex ceed EPA’s estimates for non-contact cooling

water. 42 Also, Shell and Conoco would exceed EPA’s estimate for sanitary and domestic

waste. 43 These discharges run the risk of unreasonabl y degrading marine waters. Having not yet analyzed these levels of pollution in connecti on with the General Perm it, EPA cannot determine based on that review whether discharges at this level pursuant to the General Permit will result in unreasonable degradation and, therefore, EPA s hould analyze them through individual permit applications.

Cooling water discharges can pose threats to the marine environment. The damage temperature changes can cause to aquatic life is well documented and recognized. For aquatic organisms, water temperature regulates metabolism and affects an organism’s ability to survive and reproduce effectively. 44 For fish, temperature shifts can kill adults or fry, affect activity levels, or limit reproduction. 45 Also particularly important to note here is that temperature changes are even less well tolerated by organisms stressed by toxic materials. 46 Because the companies’ operations will discharge other toxic pollutants, those operations potentially could expose Arctic organisms to a lethal combina tion temperature changes and toxic pollution .

Sanitary and domestic waste discharges also have the potential to cause adverse impacts. They include substances causing a biochemi cal oxygen demand (BOD), total suspended solids (TSS), coliform, and chlorine. 47 BOD depletes oxygen av ailability, making less oxygen available to higher forms of aquatic life. 48 High BOD can cause aquatic organisms to become

40 See ODCE at 3-2.

41 Id. at 3-21.

42 ODCE at 2-15 (estimating that discharges of non-cont act cooling water will be less than 210,000 gallons per day(gpd)); see, e.g. , Shell Mauya A NOI at Table 1 (estimating a discharge of up to 1,890,000 gpd of non-contact cooling water); Statoil NOIs Filing, Table 1 at 4-5 (estimating a discharge of 4,704,000 gpd of non-contact cooling water); Conoco NOIs Filing, Table 1 at 3 (estimating up to 4,746,000 gpd of non-contact cooling water).

43 ODCE at 2-13 (estimating that discharges of sanitary and domestic waste would be less than 6,000 gpd per drillrig); Shell Mauya A NOI at Table 1 (estimating 15,2 46 gpd of sanitary and domestic waste); Conoco NOIs Filing, Table 1 at 2 (estimating 6,636 gpd of sanitary and domestic waste).

44 EPA, Quality Criteria for Water 1986 at 276 (May 1, 1986).

45 Id. at 279.

46 Id.

47 ODCE at 2-12.

48 EPA, Water: Monitoring & Assessment, available at http://water.epa.gov/type/rsl/monitoring/vms52.cfm.8 stressed, suffocate, and die. 49 TSS can harm fish, particularly young fish. 50 At lower concentrations, the negative effects “are la rgely behavioral (avoidance, reduced feeding, coughing, seeking refuge) which can lead to re duced growth if exposure is frequent or persistent.” 51 At higher concentrations, TSS can result in mortality. 52 Also, chlorine can cause significant changes to aquatic habitats. 53 It can act as an irritant to marine mammals and be highly toxic to fish.

*******

For the reasons stated above, EPA should not permit Shell, Statoil, or Conoco to conduct their future operate under the e xpiring General Permit, but should require the companies to apply for individual permits for their proposed activitie s, with full public re view and participation.

Respectfully submitted,

Leah Donahey
Western Arctic and Oc eans Program Director
ALASKA WILDERNESS LEAGUE Rebecca Noblin
Alaska Director
CENTER FOR BIOLOGICAL DIVERSITY

Sandra Purohit
Government Relations Associate
DEFENDERS OF WILDLIFE David Hobstetter Associate Attorney
EARTHJUSTICE

Melanie Duchin Arctic Program Director
GREENPEACE Caroline Cannon
President
NATIVE VILLAGE OF POINT HOPE

Charles M. Clusen Alaska Project Director
NATURAL RESOURCES DEFENSE
COUNCIL Pamela A. Miller Arctic Program Director
NORTHERN ALASKA ENVIRONMENTAL
CENTER

Andrew Hartsig Director, Arctic Program
OCEAN CONSERVANCY Susan Murray Director, Pacific
OCEANA

49 Id.

50 Rowe, M., Essig, D., Jessup, B., Guide to Selection of Sediment Targets for Use in Idaho TMDLs at 21 (Jun. 2003), available at http://water.epa.gov/scitech/swguidance/ standards/criteria/aqlife/pollutants/sediment/upload/2004_08_17_criteria_s ediment_appendix5.pdf.

51 Id.

52 Id.

53 Auckland Council, Common Pollutants and Effects, available at http://www.northshorecity.govt.nz/O urCommunity/EnvironmentalEducation/PollutionPrevention/Pages/CommonPo llutantsAndEffects.aspx9 Carole Holley Alaska Program Co-Director
PACIFIC ENVIRONMENT Faith Gemmill
Executive Director
REDOIL

Dan Ritzman Alaska Program Director
SIERRA CLUB