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Judges Consider Uniformity Requirement For EPA Regions in Air Permitting Case

Friday, January 24, 2014

By Jessica Coomes

Jan. 17 --Federal appeals court judges indicated Jan. 17 that the Environmental Protection Agency may have overstepped its authority when it required regional offices to apply different air permitting requirements in different states (Nat'l Envtl. Dev. Ass'n's Clean Air Project v. EPA, D.C. Cir., No. 13-1035, oral arguments 1/17/14).

A three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit seemed to agree during oral arguments with a trade group's argument that EPA regulations require the agency to apply its policies uniformly across its regional offices.

However, the judges questioned whether the petitioner, the National Environmental Development Association's Clean Air Project--which represents manufacturers including BP America, Georgia-Pacific LLC and Exxon Mobil Corp.--has brought a case that is ripe for review by the court. The EPA has argued that industry hasn't been harmed by the agency's action.

Competitive Advantage Alleged

Gregory Garre, an attorney with Latham & Watkins LLP representing the trade group, told the court that applying standards differently across the country creates a competitive advantage for companies in the Sixth Circuit, where permitting requirements now are less difficult.

The judges will consider the arguments before issuing a decision in the case in the coming months.

At issue in the case is a Dec. 21, 2012, memorandum to the agency's regional air division directors, which said the EPA will continue in most states its policy of considering whether emissions sources are functionally interrelated when determining whether they are subject to permitting requirements.

However, the memo said the EPA will not continue the policy in Kentucky, Michigan, Ohio, and Tennessee, which are in the jurisdiction of the U.S. Court of Appeals for the Sixth Circuit, in response to a court ruling over the aggregation of emissions from a natural gas plant and wells for permitting purposes .

The NEDA's Clean Air Project has said Section 301(a)(2) of the Clean Air Act and EPA regulations at 40 C.F.R. pt. 56.3 require the agency to ensure uniformity and consistency across regions when implementing the law.

Judge Harry Edwards seemed to agree with that interpretation. “That's what the regulations say,” he said during oral arguments.

Long-Standing Policy Noted

Kim Smaczniak, a Justice Department attorney representing the EPA, told the court the memo simply said the agency will continue to apply its long-standing permitting policy, except in the Sixth Circuit.

However, Judge David Tatel challenged Smaczniak on that statement, saying the long-standing policy doesn't carve out certain states; the policy historically had been a national one.

Smaczniak also said the memo, which was sent shortly after the Sixth Circuit's decision, was meant to inform the regional offices and the regulated community of the legal development. She argued there can be no legal consequences from such an informative memo.

Edwards said the memo was not merely an example of the EPA headquarters conferring with its regional offices. The memo announced to the world, including the regulated industry, that the EPA would have two separate standards going forward, he said.

Court Vacated EPA Interpretation

The Sixth Circuit on Aug. 7, 2012, vacated the EPA's determination that Summit Petroleum Corp.'s natural gas plant and production wells in Michigan are adjacent to one another and constitute a single major source (Summit Petroleum Corp. v. EPA, 690 F.3d 733, 75 ERC 1129, 2012 BL 198736 (6th Cir. 2012)).

The EPA had issued a determination that production wells for the Summit plant are adjacent, in part because they are functionally interrelated, even though the wells are not next to the natural gas plant. Once sources are considered to be adjacent, their operations could be considered to be one major source and therefore subject to permitting requirements under Title V of the Clean Air Act.

The Sixth Circuit's opinion said EPA's determination is contrary to the plain meaning of the word “adjacent.” Summit's plant and wells sat on various parcels in a 43-square-mile area. The wells were located between 500 feet and eight miles from the plant, and Summit did not own the property between the wells and the plant.

Tatel said the EPA could initiate a notice-and-comment rulemaking to allow sources that are functionally interrelated to be considered adjacent, which would both address the Sixth Circuit's decision and have the standard apply nationally.

To contact the reporter on this story: Jessica Coomes in Washington at jcoomes@bna.com.

To contact the editor responsible for this story: Larry Pearl at lpearl@bna.com

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