D.C. Circuit Tells EPA Its Policy On Aggregating Sources For Clean Air Act Permitting Violates EPA’s Own Regulations

Following a ruling by the D.C. Circuit, EPA may no longer consider interrelatedness in determining adjacency when making source determination decisions in its Title V or New Source Review permitting decisions under the Clean Air Act. The decision, which vacates EPA's policy directive Applicability of the Summit Decision to EPA Title V and NSR Source Determinations (Dec. 21, 2012) (the "Summit Directive"), is National Environmental Development Association's Clean Air Project v. EPA, No. 13-1035 (D.C. Cir. May 30, 2014). The ruling is significant to the oil and gas industry because EPA has been trying to aggregate well fields and processing facilities together for permitting purposes.

Pursuant to EPA's Clean Air Act regulations, multiple pollutant-emitting facilities are considered to be a single stationary source if they are, among other things, "adjacent." See 40 C.F.R. §§ 71.2, 52.21(b)(5)-(6). EPA made adjacency determinations based not only on the physical distance between two or more facilities, but also on the functional interrelationships of the facilities. This policy was rejected by the Sixth Circuit in Summit Petroleum Corp. v. EPA, 690 F.3d 733 (6th Cir. 2012), which held that a natural gas plant and associated wells could not be considered one source under Title V purely based on functional relatedness.

In response to the Sixth Circuit's ruling, EPA issued the Summit Directive, stating that it would not follow the Sixth Circuit's ruling in states outside the Sixth Circuit's jurisdiction. The Summit Directive was subsequently challenged in the D.C. Circuit, where the Petitioner argued EPA put facilities outside of the Sixth Circuit at a competitive disadvantage by establishing inconsistent permit criteria applicable to different parts of the country. The EPA argued that neither the Clean Air Act nor EPA regulations require it to ensure national uniformity in response to a judicial decision.

The D.C. Circuit vacated the Summit Directive. In doing...