POWER May 2013 - 24
EPA Not Backing Down on
Title V Source Rules
By Thomas W. Overton, JD
I
f you were hoping that the U.S. Environmental Protection
Agency's (EPA's) defeat last summer on aggregating small
emissions sources under Title V of the Clean Air Act (CAA)
meant a less-aggressive stance going forward, the agency has
some bad news for you.
Last August, critics of the EPA were heartened when the Sixth
Circuit Court of Appeals rejected the agency's determination that
a natural gas sweetening plant in Michigan and its associated
wells and flares constituted a single pollution source under Title
V of the CAA (see " EPA's Title V Source Policy Takes a Hit " in the
November 2012 issue of POWER). Aggregating the total emissions
allowed the agency to define the plant as a major source under
Title V, thus requiring an emissions permit.
Splitting Hairs
The Sixth Circuit ruling in Summit Petroleum Corp. v. EPA turned
on the definition of " adjacent " in the EPA regulations enforcing
Title V. The regulations allow multiple pollution-emitting
activities to be treated as a single source if they are under
common control, part of the same industrial activity, and " are
located on one or more contiguous or adjacent properties. "
Summit's activities did not take place on contiguous properties
but were spread over an area of 43 square miles, with the various
wells and flares being located anywhere from 500 feet to 8
miles away from the sweetening plant. Thus, the question was
whether these rather widely spread operations were " adjacent "
to one another for the purposes of Title V.
It's important to keep in mind here that the court was
construing regulations written by the EPA itself. As might be
expected, federal courts give fairly large deference to an agency's
interpretation of its own rules. However, the boundaries
of that deference can be unpredictable. The federal Administrative
Procedure Act bars a court from interfering unless the
interpretation is plainly erroneous or inconsistent with the
regulation.
But-and this is a very large but-no deference is in order if
the language of the regulation is plain and unambiguous. The
rationale behind this rule is that allowing an agency to interpret
a regulation beyond its plain meaning is tantamount to allowing
it to create a new de facto regulation outside the official rulemaking
process.
Naturally, Summit argued that " adjacent " was unambiguous,
while the EPA argued that it was not. The agency based its argument
on the fact that it had never defined a specific distance for
this section of the regulations. It wanted to consider both physical
proximity and " functional interrelatedness " in determining
whether two sources were adjacent, something it insisted it has
been doing for decades. The court, looking simply to the dictionary,
agreed with Summit. Thus, it held that Summit's facility,
24
spread over 40-plus square miles, was not " adjacent " within the
plain meaning of the word.
The EPA sought a rehearing en banc, but this was denied.
Not So Fast
Federal circuit court rulings are binding precedent only within
that circuit, and merely persuasive authority outside it. Still,
it's not unusual for a decision like this to prompt an agency
to change its approach in the interest of maintaining consistency
nationwide.
Those hoping for such a response from the EPA, however, got
an early lump of coal in their Christmas stockings when the agency
announced on Dec. 21 that it was limiting its compliance with
the Summit ruling to the boundaries of the Sixth Circuit (Kentucky,
Tennessee, Michigan, and Ohio). Elsewhere, said the memo
from Stephen Page, director of the Office of Air Quality Planning
and Standards, " the EPA does not intend to change its longstanding
practice of considering interrelatedness in the EPA permitting
actions. " Further, the EPA " is still assessing how to implement
this decision in its permitting actions in the 6th Circuit. "
The memo is a clear shot across the bow of anyone hoping the
EPA would drop the " functional interrelatedness " standard. Until
another court says otherwise, it intends to stick to the same approach
that was rejected in Summit in permitting actions outside
the Sixth Circuit.
As worrisome as that may sound, there may be a more significant
response on the way.
Remember that Summit was based on regulations written by
the EPA. Folks I've talked to with an ear on the ground in Washington
believe the EPA is in the process of rewriting those regulations
to include the functional interrelatedness standard, in
effect reversing the decision on its own. And there's little anyone
outside the administration can do to stop it. Once the new rule is
in place (a process that can take several years), the Summit decision
becomes obsolete. While agency rulemaking can be-and
frequently is-challenged in court, opponents will be starting
from scratch and under a different standard of review. Congress
could revise the CAA to include the Summit rule, of course, but
the likelihood of that happening is probably nil.
What all this means is that Summit will likely serve as more of a
speed bump than a change in course for the EPA. Those hoping the
decision would herald a less-aggressive stance against small emission
sources would probably be best served by continuing to follow
the existing rules until more is known. And those in the Sixth
Circuit would be advised not to make any major changes as a result
of the Summit decision, lest it be drafted out of existence.
Final resolution of this dispute, it appears, is still a long
way away. ■
-Thomas W. Overton, JD is POWER's gas technology editor.
www.powermag.com
POWER | May 2013
http://www.powermag.com
POWER May 2013
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