EPA Chided on Offsets for LNG Project

By Published On: March 9, 2007

Representative Henry Waxman (D-CA) is pressing the federal Environmental Protection Agency to require emissions offsets for BHP Billiton’s proposed liquefied natural gas terminal off the coast of Ventura County. He requested that the agency provide Congress with documents showing the legal basis for reversing itself on the offset requirements for BHP Billiton no later than March 16. In a March 5 letter, Waxman claimed that the agency’s San Francisco regional office originally was set to require pollution offsets for the BHP Cabrillo Project but reversed course following pressure from a key political appointee. “EPA assured the public that its decision was based on sound analysis,” wrote Waxman to agency administrator Stephen Johnson. However, the agency “has been unable to produce documents that support this claim,” Waxman noted. Waxman, chair of the House Committee on Oversight and Government Reform, said that the documents obtained by his committee show that the EPA assistant administrator for air and radiation, Jeff Holmstead, intervened with regional agency officials in San Francisco after meeting with BHP Billiton representatives in 2005. Later that year, the EPA reversed its stance and issued a draft permit for the project that eliminated offset requirements. Offsets are required in areas with polluted air under the Clean Air Act’s New Source Review policy. Companies can offset their new emissions either by cutting pollution more than required from a plant they own in the same area or by purchasing offset credits from another company that has done so. While the terminal would have pollution controls, it would not be emissions-free. According to the draft environmental analysis for the project, each year the terminal would emit 67 tons of nitrogen oxides, 12 tons of fine particulates, and 25 tons of reactive organic compounds. In addition, each year ships calling on the terminal would emit 164 tons of nitrogen oxides, 2 tons of fine particulates, and 23 tons of reactive organic compounds. Although the facility would be in federal waters about 14 miles offshore, the emissions would blow toward Ventura or Los Angeles County, which are known for their polluted skies. Reacting to the committee chair’s letter, Brent Meyer, EPA congressional liaison in San Francisco, said the agency is committed to protecting public health, but also to increasing the nation’s energy supply. That includes making LNG available. The EPA, he said, is reviewing the letter and plans to respond. “This is an issue between a legislator and a regulator, and we were neither addressed nor copied in the letter,” said Kathi Hann, BHP Billiton environmental adviser. The company will mitigate the air-quality impacts of the plant and “verify that the region’s air quality will improve as a result of Cabrillo Port,” she added. A final environmental impact report on the project is expected any day. Hearings on project permits are slated by the Coast Guard and the State Lands Commission for April. However, if the EPA reconsiders its position in response to Waxman’s investigation, the schedule could slip. “EPA’s reversal is illegal, and nothing short of full compliance with the Clean Air Act is acceptable,” said Susan Jordan, California Coastal Protection Network director. She said BHP Billiton either could not or would not purchase offset credits and so went “behind the public’s back to use its political connections to pressure EPA to reverse course and drop the requirements.” The company has said that once built, the terminal would meet 15 percent of California daily natural gas demand. The gas would come by tanker ship from Australia, where the company is based.

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