Under EPA’s revised Regional Consistency regulations (codified in 40 C.F.R. Part 56) , sources located in different parts of the country may be subject to a different “single source” aggregation test or other Clean Air Act policies based on decisions of the federal courts with local jurisdiction.

Background

EPA’s revisions to the Regional Consistency regulations was prompted by the Sixth Circuit’s decision in Summit Petroleum Corp. v. EPA, 690 F.3d 733 (6th Cir. 2012). In that case, the court considered whether individual gas production wells should be aggregated with a sweetening plant and counted as a single source for the purpose of determining emission levels for air permitting. Under the Title V regulations, multiple sources must be aggregated and considered a single stationary source only if they: (1) are under common control; (2) “are located on one or more contiguous or adjacent properties”; and (3) belong to the same major industrial grouping. 40 C.F.R. § 71.2. As part of the second consideration, EPA’s policy has been that determinations as to whether two or more facilities are “adjacent” should be based on the “functional interrelationships” of the facilities, and not simply the physical distance between the facilities. As such, EPA determined that the wells and sweetening plant were “functionally interrelated” and thus adjacent notwithstanding that they were up to eight miles apart. The Sixth Circuit disagreed and held that “adjacent” requires physical proximity.

In response, EPA released a memorandum, “Applicability of the Summit Decision to EPA Title V and New Source Determinations” (Dec. 21, 2012) (“Summit Directive”) that limited the applicability of the Sixth Circuit’s decision to facilities located in the states within the Sixth Circuit’s jurisdiction. An industry association petitioned the D.C. Circuit to vacate the Summit Directive and the D.C. Circuit agreed, holding that it “is plainly contrary to EPA’s own [Regional Consistency] regulations, which require EPA to maintain national uniformity in measures implementing the CAA, and to ‘identify[] and correct[]’ regional inconsistencies by ‘standardizing criteria, procedures, and policies.’” National Environmental Development Ass’n’s Clean Air Project v. EPA, 752 F.3d 999, 1003 (D.C. Cir. 2014). The court also noted that the Summit Directive gives facilities located in the Sixth Circuit a competitive advantage and therefore causes competitive injury to the industry association’s members located outside of the Sixth Circuit.

In response to the D.C. Circuit decision, EPA proposed to revise its Regional Consistency regulations to allow EPA to accomplish the original intent of the Summit Directive — to make the D.C. Circuit decision essentially moot. The final rule makes three changes to the Regional Consistency regulations; it::

  1. adds a provision to acknowledge an exception to the “policy” of uniformity to provide that a decision of a federal court that arises from a challenge to locally or regionally applicable actions will not automatically apply uniformly nationwide;
  2. adds a provision to clarify that EPA Headquarters employees will not be required to issue new mechanisms or revise existing mechanisms developed under 40 CFR 56.4(a) to address federal court decisions arising from challenges to locally or regionally applicable actions; and
  3. clarifies that EPA Regional office employees will not be required to seek EPA Headquarters’s concurrence to diverge from EPAl policy if such action is required by a federal court decision arising from challenges to locally or regionally applicable actions.

What This Means To You

As a result of EPA’s adoption of the new Regional Consistency regulations, federal court decisions in one jurisdiction may not be applied consistently by EPA nationwide or from region to region. The “adjacency” component of the aggregation test is just one example of this. Companies will need to consider EPA’s regional and local application of Clean Air Act rules and policies before undertaking projects that may require permitting. In addition, EPA’s regional and local application could result in a competitive advantage or disadvantage for a project, depending on the location.