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A federal appeals court Aug. 7 vacated the Environmental Protection Agency's determination that a Michigan natural gas operation's plant and production wells constitute a single major source, remanding the case to the agency (Summit Petroleum Corp. v. EPA, 6th Cir., Nos. 09-4348, 10-4572, 8/7/12).
EPA had determined that Summit Petroleum Corp.'s plant and wells, which sit on various parcels in a 43-square-mile area, are “adjacent” to one another, in part because they are functionally interrelated. Adjacent sources may be considered to be one major source and therefore subject to permitting requirements under Title V of the Clean Air Act.
However, the U.S. Court of Appeals for the Sixth Circuit said EPA's determination is contrary to the plain meaning of the word “adjacent.”
“Summit argues that the term 'adjacent' is unambiguous, and that EPA's interpretation of it defies its plain and ordinary meaning,” the court said. “We agree. … We conclude that both the dictionary definition and etymological history of the term 'adjacent,' as well as applicable case law, support Summit's position.”
Howard Feldman, director of regulatory and scientific affairs at the American Petroleum Institute, told BNA Aug. 7 that the court pushed back on EPA's interpretation of what constitutes adjacent facilities.
“Whether it has any ramifications for other cases is unknown, but we think this should recalibrate EPA's aggregation policy and make sure it is on a correct, firm basis,” Feldman said. API participated in the case with a friend-of-the-court brief on the side of the company.
In remanding the case, the court said EPA must reassess whether Summit's operations in Rosebush, Mich., are close enough physically to be considered to be “adjacent.”
The wells are located between 500 feet and eight miles from the plant, and Summit does not own the property between the wells and the plant.
S. Lee Johnson, an attorney with Honigman Miller Schwartz and Cohn LLP representing Summit, told BNA Aug. 7 the court gave EPA clear guidance: “If something is not truly adjacent and contiguous to the main plant, then it is not a single stationary source.”
Judges Richard Suhrheinrich and Eric Clay joined in the court's opinion. Judge Karen Nelson Moore wrote a dissenting opinion.
In the dissent, Moore said that upon remand, EPA may reach the same conclusion as it did previously. She said EPA's original interpretation was reasonable and deserved deference from the court.
“[F]unctional interrelatedness can inform the determination of whether two objects that are a given distance apart are adjacent,” she wrote. “If two properties are close enough to each other to house stationary sources that contribute to the same interrelated operation, and only to that operation, those properties are more likely to be close enough reasonably to be considered adjacent.”
Summit's plant itself has the potential to emit just under 100 tons of pollutants per year, which is just under the threshold for being considered a major source and subject to Title V operating permit requirements, the court said.
However, if the plant and wells are considered to be one source, the pollution exceeds 100 tons, making the operation a major source.
The Aug. 7 decision and dissent in Summit Petroleum Corp. v. EPA is available at http://www.ca6.uscourts.gov/opinions.pdf/12a0248p-06.pdf.
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