Aug 7: In the U.S. Court of Appeals, Sixth Circuit, Case Nos. 09-4348 & 10-4572. On Petition for Review of Final Action of the U.S. EPA. The Appeals Court explains that the case arises from a final action of EPA determining that a natural gas sweetening plant and various sour gas production wells, commonly owned by Petitioner Summit Petroleum Corporation (Summit) and separately located within an area of approximately forty-three square miles, constitute a single stationary source under the EPA's Clean Air Act Title V permitting program.
Specifically at issue is the EPA's conclusion that Summit's facilities satisfy the regulatory requirement of being "located on . . . adjacent properties" because, although physically independent, they are "truly interrelated." Summit, together with Amici American Petroleum Institute and American Exploration and Production Counsel, argues that the EPA's determination 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 majority Appeals Court agreed and ruled, ". . .we vacate the EPA's final determination and remand this case to the 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 case involves Summit, a producer of natural gas that owns and operates a natural gas sweetening plant in Rosebush, Michigan. Summit's plant "sweetens" the "sour" gas from approximately one hundred sour gas production wells by removing hydrogen sulfide so that the gas can be used. Summit owns all of the production wells and the subsurface pipelines that connect each of the wells to the sweetening plant. The wells themselves are located over an area of approximately forty-three square miles at varying distances from the plant -- from five hundred feet to eight miles away -- and Summit does not own the property between the individual well sites or the property between the wells and the plant. None of the well sites share a common boundary with each other, nor do any of the well sites share a common boundary with Summit's production plant. Flares work as part of the plant operations by burning off natural gas waste to relieve pressure on the gas collection equipment. The closest flare is located approximately one half-mile from the plant, while the remaining flares are each over one mile away.
The Appeals Court said, "Together with the ordinary and dictionary definitions of the term 'adjacent,' the Rapanos decision, and similar case law, points clearly toward the conclusion that the regulatory requirement that aggregated activities be 'located on contiguous or adjacent properties' is unambiguous in the context in which it is here considered. . ."
EPA claims that because it has an established a history of supplementing the traditional definition of adjacency with the concept of "activities' functional relatedness, we must review its interpretation with heightened deference." The Appeals Court disagrees and saying, "Though the EPA has previously considered the functional relationship between activities in assessing whether they lie on 'contiguous or adjacent properties,' its request of increased deference to this interpretation rests on the premise that some measure of deference is in fact owed to the EPA's interpretation in the first instance -- a premise we reject in light of the unambiguousness of the regulation at issue."
In a dissenting opinion, one Justice indicates, "Congress passed the Clean Air Act (CAA) 'to protect and enhance the quality of the Nation's air resources so as to promote the public health and welfare and the productive capacity of its population.' 42 U.S.C. § 7401(b)(1). Because the majority hamstrings the Environmental Protection Agency's (EPA) ability to pursue this mission by refusing to defer to the agency's reasonable interpretation of its own regulation, I respectfully dissent."
The dissenting Justice said, "The majority's adoption of Summit's position raises its own policy concerns. Primarily, today's ruling frees the oil and gas industry to gerrymander its way out of Title V regulation. So long as sufficient distance exists between each well (so that they are not 'adjacent' as the majority defines that term), or someone other than the drilling company owns parcels of land in between each well (so that they are not 'contiguous'), the drilling operation cannot be classified as a major source through aggregation. Unlike the CAA provisions governing hazardous air pollutant emissions, see 42 U.S.C. § 7412(n)(4), Title V does not grant the oil and gas industry immunity from aggregation; this court should not effectively create such a provision when Congress has not done so."
Access the complete opinion and dissent (click here). [#Air, #Energy/OilGas, #CA6, #MIAir]
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