Pennsylvania Court Limits NSR Permit Aggregation

In February, the Middle District of Pennsylvania struck down an environmental group’s challenge that Ultra Resources should have aggregated eight compressor stations into a single source. Ultra Resources individually permitted each of its eight stations that are located at gas fracking wells in Pennsylvania. If aggregated as petitioners contend is appropriate, the eight stations would constitute a major source and should have obtained a New Source Review (NSR) pre-construction permit.  

Ultra’s eight compression stations are located within an area less than five square miles, but the lands are not contiguous. No station has the individual capacity to emit more than 100 tons per year of NOx, but collectively the eight stations could potentially emit over 100 tons per year of NOx. The key question the court had to resolve was whether the eight compressor stations are “adjacent” and should be aggregated into a single source.

The court’s analysis was guided by the Sixth Circuit’s decision in Summit Petroleum v. EPA and guidance issued by the Pennsylvania Department of Environmental Protection (PADEP). In Summit Petroleum, the Sixth Circuit held that for facilities to be “adjacent,” the only appropriate consideration is whether they are sufficiently physically proximate to one another. Whether there is a functional relationship between the facilities was not deemed a relevant consideration. After Summit Petroleum, the PADEP issued guidance that set out a framework for evaluating whether sources are adjacent and should be aggregated as a single source. PADEP stated that sources within a quarter mile of one another are adjacent, but sources located outside a quarter mile may be considered adjacent on a case-by-case basis. PADEP also stated that facilities should not be daisy-chained together to establish a single aggregated source. The shortest linear distance between any of Ultra Resources’ two compressor stations that could be considered adjacent is 0.78 miles and the greatest is 4.43 miles. The court determined that the facilities are not adjacent either under Summit Petroleum or under the PADEP guidance. Departing from the analysis in Summit Petroleum, the Pennsylvania court conceded that interrelatedness is an appropriate consideration for the case-by-case analysis if facilities are greater than a quarter mile apart, but rejected the petitioner’s argument that the compressor stations are interdependent. Gas from the compressor stations flows in only one direction to a single metering and regulation station, but each station operates independently and is not otherwise connected. Petitioners have until March 25, 2015 to appeal the decision.

Oklahoma Court Dismissed EPA Challenge to Utility’s NSR Emissions Projections Claiming Lack of Jurisdiction

A district court in Oklahoma has limited the U.S. Environmental Protection Agency’s (EPA’s) ability to challenge pre-construction emissions analysis. In the wake of the DTE Energy case, in 2013 EPA (and intervenor plaintiff Sierra Club, collectively Plaintiffs) sued Oklahoma Gas & Electric (OG&E), challenging the adequacy of their Prevention of Significant Deterioration (PSD) pre-construction projections. The court dismissed the case finding there was no case or controversy, explaining, “[a]lthough Plaintiffs fault OG&E for failing to make ‘legally sufficient’ projections, they do not allege facts to either identify the method by which those projections should have been made or how OG&E’s Project Notifications are legally insufficient.” The court repeatedly noted that the Plaintiffs did not allege that the modifications constituted major modifications that required a PSD permit.  

In addition to finding that the case lacked jurisdiction because Plaintiffs failed to allege facts demonstrating an actual case or controversy, the court also declined to grant the declaratory relief sought. In analyzing the lack of case or controversy, the court observed that Plaintiffs merely seek a declaratory judgment on the adequacy of OG&E’s projections, in anticipation of bringing an enforcement action. However, the U.S. Supreme Court previously held that Article III’s case or controversy requirement bars the use of the Declaratory Judgment Act for anticipatory purposes. The court ruled that “the piecemeal adjudication which Plaintiffs seek in this litigation is prohibited.” Without a simultaneous allegation that a PSD permit should have been obtained, the court found that it lacked jurisdiction over the suit.  

The court also declined to grant the declaratory relief sought, citing that Plaintiffs sought declaratory relief in response to past conduct. The court rejected EPA’s invitation to issue a judicial declaration that OG&E previously engaged in unlawful conduct. EPA also sought an order from the court requiring OG&E to properly assess whether its projects were likely to result in a significant emissions increase or a significant net emissions increase and to submit that assessment to EPA. Because the Clean Air Act does not require submission of NSR projections to EPA, the court directed the EPA to take this issue up with Congress, not the court. The appeal deadline expired on March 16, 2015, with no party seeking review of this decision.