Aggregation: Common Sense Prevails & EPA Loses Major Clean Air Act Decision
On August 7, 2012, the United States Court of Appeals for the Sixth Circuit in Summit Petroleum Corp. v. United States EPA, et al.
, Case Nos. 09-4348/10-4572, dealt the United States Environmental Protection Agency ("EPA") a major setback in its efforts to aggregate multiple, often disperse, emitting units in the oil and natural gas industry as a single stationary source - thus subjecting them to more stringent controls under the Clean Air Act ("CAA"). EPA had concluded that Summit Petroleum Corporation's ("Summit") natural gas sweetening plant and approximately 100 production wells spread out over approximately forty-three square miles should be "aggregated" to constitute a single stationary source subject to the CAA Title V permitting program as a "major source." Despite the physical separation of multiple emission sources, EPA concluded that Summit's activities were "adjacent" based on a theory of functional relatedness - relying on factors such as the "nature of the relationship between the facilities" and the "degree of interdependence between them." The Sixth Circuit agreed with Summit that EPA's reliance on functional relationship to define the term "adjacent" was unreasonable and contrary to the plain meaning of the term and remanded the matter to "EPA to determine whether Summit's sweetening plant and sour gas wells are sufficiently physically proximate to be considered 'adjacent' within the ordinary, i.e., physical and geographical, meaning of that requirement."
The CAA regulations relevant to the "aggregation" determination cite the following factors to consider in determining what emission units should be aggregated as a single stationary source: (1) whether the activities belong to the same industrial grouping; (2) whether the activities are under common control of the same person or entity; and (3) whether the activities are located on one or more contiguous or adjacent properties. 40 C.F.R. § 52.21(b)(6). The first two factors do not usually generate much debate. However, EPA's reliance on evaluating the functional relationship to determine "continuous" or "adjacent" has pushed the limits of common sense - and at least in this case, EPA pushed too far.
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