On August 7, 2012, the U.S. Court of Appeals for the Sixth Circuit in Cincinnati vacated a USEPA determination that a natural gas sweetening plant and gas wells supplying it constituted a single “major source” for Title V permitting purposes. The decision focuses solely on the meaning of “adjacent” in the 3-part “major source” definition, which requires:
- common control;
- contiguous or adjacent property; and
- SIC code commonality.
The case involved approximately 100 sour gas production wells spread over a 43 square mile area on separate parcels located 500 feet to eight miles from a natural gas processing plant. All of the output of the wells is pipelined to the plant. Neither the wells alone nor the plant alone have enough emissions to be classified as a Title V “major source.” However, the combined emissions of both the wells and the plant together exceed the “major source” threshold (100 tons per year of actual or potential emissions of a regulated air pollutant, such as nitrogen oxides, sulfur dioxide, or carbon monoxide). There was no dispute that the wells and the plant had common ownership and control, that they belonged to the same two-digit SIC code major industrial grouping, and that they were not on “contiguous” property. The only disagreement was whether the term “adjacent” in the Title V definition of a “major source” refers to physical proximity, or to functional relationship.
The Court’s 2-judge majority relied upon the dictionary definition, etymology, and case law meanings of “adjacent” to conclude that “adjacency is purely physical and geographical,” and not an ambiguous term. The Court rejected EPA’s argument that activities can be adjacent so long as they are “functionally related,” irrespective of the distance that separates them.
An interesting aspect of the decision is the Court’s refusal to grant deference to the Agency’s interpretation of its own regulation. The Court wrote:
Continue Reading Gas Plant and Gas Wells Are Not Collectively a “Major Source” Due to Being “Functionally Related,” Absent Physical “Adjacency”