DC Circuit Strikes Down EPA “Aggregation” Policy for Regions Outside the Sixth Circuit

by Buchanan Ingersoll & Rooney PC
Contact

On May 30, 2014, the U.S. Court of Appeals for the District of Columbia Circuit nullified an EPA Directive that attempted to reassert its “functional interrelationship” standard for aggregating air pollution sources. This EPA policy allowed for treating geographically disparate sources as one source, making that source, in many cases, a major source subject to Title V permitting. The case is National Environmental Development Association’s Clean Air Project v. EPA, _____ F.3d ______ (C.A.D.C. 2014) 2014 WL 2219065 (No. 13-1035, decided May 30, 2014). The EPA policy struck down by the Court was EPA’s attempt to reassert its functional relatedness criteria in all areas except in those four states within the jurisdiction of the Sixth Circuit Court of Appeals (Ohio, Tennessee, Kentucky and Michigan). This EPA policy was an attempt to limit the effect of the Sixth Circuit’s 2012 Opinion in Summit Petroleum v. EPA, 690 F.3d 733 (6th Cir. 2012), which had previously struck down the EPA “functional relatedness” criteria.

Who is Affected?

All oil and gas owners and operators, not just those located in the Sixth Circuit states, applying for permits to operate production sources (e.g. wells, compressor stations, dehydrators, etc.) are affected by this ruling. If these sources are geographically distant from each other, they can no longer be aggregated together by EPA or the delegated state agencies based on functional interrelatedness.

What This Means

EPA and the delegated state agencies adopting the federal regulation in this area, may not lawfully aggregate commonly owned sources which are not geographically “contiguous or adjacent” to each other, i.e., sharing property boundary lines or otherwise located in close proximity to each other. Such sources will, therefore, in many cases, not constitute major sources subject to the more stringent, time-consuming and expensive process of obtaining a Title V permit. State only permits may still be necessary for such individual sources.

More Information

The federal regulation implementing the Title V permit program lists three criteria in the definition of “major source.” They are:

“Major source means any stationary source (or any group of stationary sources that are located on one or more contiguous or adjacent properties, and are under common control of the same person (or persons under common control)), belonging to a single major industrial grouping and that are described in paragraph (1), (2) or (3) of this definition.” [40 CFR §71.2; emphasis added]

EPA’s policy of aggregating geographically distant air emission sources, considering them as a single source, resulted, in many cases, in unreasonably making the aggregated sources a “major” source and, therefore, subject to Title V permitting requirements. The EPA policy mandated that states consider the “functional relationship” of the sources, so that multiple sources, which may have been located miles apart from each other, were nevertheless grouped together into a single source for permitting.

This EPA policy was definitively struck down by the Sixth Circuit in 2012 in the Summit Petroleum case. In Summit, pollutants from a natural gas sweetening plant and several commonly owned sour gas production wells were added together by EPA as a single source, and thereby made subject to Title V permitting requirements. The wells that were connected to the plant were located in a 43-square-mile area, with some wells located as far as eight miles distant from the plant. If the plant were to be considered individually, it would not have qualified as a major source. The Summit Opinion held that the term “adjacent” as used in the regulation related only to a sources’ geographic location, and not to the functional relationship of the sources.

The Court in National Environmental Development ruled that the EPA action, in establishing two different criteria – one for the Sixth Circuit states and another for everywhere else – violated EPA’s own regulations requiring national uniformity in setting air emission standards.1

States approved to administer the Title V permitting requirement may have standards and criteria that are more stringent than those imposed by the Federal regulation. As such, individual state regulations on this issue should be checked to determine whether a different standard has been adopted. To the extent the federal regulation is incorporated by reference into the state program, the D.C. Circuit Courts interpretation would apply.

Pennsylvania’s Rule

In Pennsylvania, the federal regulation in this area is adopted by reference as the state regulation.2 In an Opinion of the Pennsylvania Environmental Hearing Board dealing with this issue, the Board cited the Summit Petroleum Opinion, and, while stating that the Board wasn’t bound by the decision, it stated also that the Board found it to be persuasive.3 This Opinion was in response to a Motion for Summary Judgment filed by the permittee, Laurel Mountain Midstream, via its counsel, a team of our attorneys headed by Brian Clark. The Opinion did not resolve the Motion because the Board decided it required more evidence to establish all the relevant facts in the case. Its ruling on the legal interpretation of the term “adjacent,” however, accepting the Summit Petroleum holding as being “persuasive,” was followed by the appellant withdrawing the appeal. The National Environmental Development Opinion reinforces the Summit rule and makes it applicable in Pennsylvania, as well as other jurisdictions.

Conclusion

The EPA directive that was overturned had attempted an end run around the Sixth Circuit’s clear 2012 holding in Summit Petroleum.

That attempt was blocked by the D.C. Circuit’s affirmation of the Summit holding that the word “adjacent” unambiguously refers to geographic proximity only. As a result, the Summit interpretation now applies in every jurisdiction of the United States where the federal regulation applies directly or has been adopted by the relevant state.

1 See, eg, 40 CFR §56.3(a), (b)

2 25 Pa. Code §§127.81 and 127.83

3 GASP v. DEP and Laurel Mt. Midstream, 2012 EHB ____; 2012 WL 3564017, issued August 14, 2012

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Buchanan Ingersoll & Rooney PC | Attorney Advertising

Written by:

Buchanan Ingersoll & Rooney PC
Contact
more
less

Buchanan Ingersoll & Rooney PC on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.