On May 30, 2014, the US Court of Appeals for the D.C. Circuit rejected US EPA’s ”SummitDirective“ regarding the aggregation of air pollutant sources as single sources under the Clean Air Act (CAA).  Current CAA regulations provide that contaminant levels from “adjacent properties” may be aggregated so as to constitute a single source.  Until recently, US EPA considered the “functional interrelationship” rather than the “physical distance” in determining whether two pollution sources should be considered adjacent.  By this logic, two facilities could be considered a single source of air pollution subject to “major source” permitting requirements even if their property boundaries did not touch.

On August 7, 2012, however, in Summit Petroleum Corp. v. EPA, the Sixth Circuit Court of Appeals reversed a US EPA determination that a natural gas plant and its nearby (but non-adjacent) wells constituted a single source for permitting purposes, holding that the US EPA’s interpretation of “adjacent” was arbitrary, capricious, and contrary to the plain meaning of the word.  Subsequently, US EPA released the Summit Directive, which stated that US EPA would continue its practice of considering the functional interrelationship between sources if those sources were located outside of the jurisdiction of the Sixth Circuit.  Within the Sixth Circuit, however, only sources physically adjacent could be viewed as a single source.

In its 2014 opinion, the D.C. Circuit expressly rejected US EPA’s attempt to so limit theSummit Petroleum Corp v. EPA case through its directive.  Instead, the Court held that theSummit Directive violated US EPA’s own rule that it must “assure that actions taken under the [Clean Air] act . . . [a]re as consistent as reasonably possible with the activities of other Regional Offices” by “providing mechanisms for identifying and correcting inconsistencies by standardizing criteria . . . being employed by Regional Office employees in implementing and enforcing the act.”  According to the Court, facilities outside the Sixth Circuit will suffer an “additional regulatory burden . . . because they must undergo EPA’s case-specific assessment of whether they are functionally interrelated,” while “similar facilities within the Sixth Circuit will not be so burdened because emissions from these facilities will not be aggregated unless they are physically adjacent.” 

The Court’s holding helps level the playing field for businesses outside the jurisdiction of Sixth Circuit.  However, the D.C. Circuit did not go as far as to say that US EPA must use only physical distance in determining adjacency – it merely rejected a directive requiring US EPA Regional Offices to disregard the Sixth Circuit decision.  Conceivably, US EPA could still engage in its “functional interrelationship” analysis outside the Sixth Circuit.  Thus, the true effects of the D.C. Circuit’s ruling will be better known once companies outside the Sixth Circuit challenge their own major source determinations, allowing additional circuit courts to weigh in on the proper definition of “adjacent.”