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Focus on Regulation

EPA Response to Sixth Circuit Denial of Petition to Rehear Earlier Rejection of CAA Aggregation Policy Creates Geographic Confusion

The National Environmental Development Association’s Clean Air Project (NEDA/CAP) recently filed a petition for review for review in the D.C. Circuit challenging a December 21, 2012 EPA Memorandum, which provides policy guidance on the applicability of the Sixth Circuit’s decision in Summit Petroleum Corp. v. EPA (No. 09-4348/10-4572) to Clean Air Act (CAA) Title V and NSR source determinations. EPA issued the Memorandum following the Sixth Circuit’s denial of EPA’s petition for a rehearing in Summit Petroleum Corp. v. EPA.

In the Sixth Circuit case, Summit had contested EPA’s long-standing interpretation of the term “adjacent” in its air permitting regulations, under which EPA concluded that Summit’s natural gas processing plant and one hundred related gas wells situated over forty-three square miles constituted a single, major source requiring a Title V operating permit. EPA concluded that though the facilities were physically independent, they were “truly interrelated,” and thus “adjacent” under the CAA. As described in a previous post, the Sixth Circuit disagreed with EPA and held:

that the physical requirement of adjacency can be established through mere functional relatedness is unreasonable and contrary to the plain meaning of the term ‘adjacent’.”

The Sixth Circuit vacated EPA’s permitting determination and remanded the case for reassessment by EPA.

EPA’s Memorandum specifies that in areas within the Sixth Circuit’s jurisdiction (Michigan, Ohio, Tennessee and Kentucky), the Agency may no longer consider interrelatedness in determining adjacency when making Title V or NSR permitting decisions, in accordance with the Summit decision. According to the Memorandum, however, outside of the Sixth Circuit jurisdiction, “EPA does not intend to change its longstanding practice of considering interrelatedness” to determine adjacency in Title V or NSR permitting decisions. At this early stage in the lawsuit, the bases on which NEDA/CAP will challenge the Memorandum are unclear. The implications for EPA are particularly significant because the aggregation of emissions from multiple related sources triggers rigorous air permitting requirements for major sources under the CAA.