Steptoe & Johnson PLLC: Court Reverses EPA Decision to Aggregate Air Sources from Natural Gas Operations

By Armando Benincasa

In an important decision on August 7th related to the aggregation of air emissions in the oil and gas industry, the 6th Circuit Court of Appeals reversed a decision by the United States Environmental Protection Agency [EPA] which would have required Summit Petroleum Corporation to aggregate all air emission sources from various wells, pipelines, and a processing facility located in a 43 square mile area as a single source. The appeals court ruled that the EPA's contention that the company's natural gas sweetening plant and various sour gas production wells which fed into the plant together formed a single source of air emissions was "contrary to the plain meaning of the term adjacent."

The Clean Air Act only allows multiple sources to be aggregated as a single source if, among other factors, the sources are adjacent in space to one another. EPA has taken a very broad view of the definition of "adjacent" to state that sources that are highly interdependent or functionally related to one another, such as the well and plant in this instance, are in fact adjacent and may be aggregated despite the substantial distance between them. This definition opened the door to the possibility that sources located potentially miles from each other, such as wells, pipelines, and other processing facilities, could be declared a single source and subject those source to potential major source permitting requirements.

In a clear rebuke of this policy, the court stated, "Whether the distance between two facilities enables a given relationship to exist between them is immaterial to the concept of adjacency." The court ruled that the unambiguous nature of the term "adjacent" meant that the agency would be afforded no deference with regard to the interpretation of the term and that the plain meaning of the term would prevail. The court found that the distance between the sources in this case was substantial and could not meet a reasonable definition of adjacent. The case is Summit Petroleum Corp. v. United States Environmental Protection Agency, Case Nos. 09-4348 and 10-4572.  

Armando Benincasa concentrates his practice in the areas of energy law, environmental law, environmental litigation, and administrative law.

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