4 The record articles

Air Permitting Gets Less Complicated Each Year…Said No One Ever: How the Aggregation Test Just Got More Complicated

Posted: January 14th, 2013

Author: All4 Staff 

For those involved in Title V or New Source Review (NSR) permitting, the concept of aggregation and the three-pronged litmus test to define a “single source” has long (over 30 years) been based on the following three (3) concepts:

  1. Whether emission units are under the common control of the same person;
  2. Whether emission units are in a single major industrial grouping (i.e., the same two-digit SIC Code); and
  3. Whether the emission units are located on one (1) or more contiguous or adjacent (emphasis added) properties.

You can look up “adjacent” in Merriam-Webster (www.m-w.com) and find definitions such as “not distant,” or “having a common endpoint or border.”  For the most part I’m confident that we would agree these definitions seem fairly straight-forward and self-explanatory. However, for over 30 years, U.S. EPA has produced numerous applicability determinations and issued guidance around the concept of “adjacent,” which included not only a physical distance criterion, but also a “functional interrelatedness,” or dependency on criterion when evaluating if two (2) (or more) sources (or entire facilities) are one (1) source.

Flashback to August 2012, when the 6th Circuit Court of Appeals (comprising Michigan, Ohio, Tennessee, and Kentucky) vacated and remanded U.S. EPA’s historical approach for “adjacent” in the Summit Petroleum Corp. v EPA et al. decision. Note that in this case, Summit’s wells and sweetening plant were deemed by U.S. EPA to be a single source (thus triggering the need to apply for a Title V operating permit) due to their functional interrelatedness despite the wells being approximately seven (7) miles away from the sweetening plant.  By the vacatur and remand, the Court unqualifiedly rejected U.S. EPA’s functional interrelatedness test for determining whether facilities are “adjacent” for air aggregation purposes (See a 4 The Record Guest Article regarding the decision here).

In a December 21, 2012 memo (available here) from U.S. EPA’s Office of Air Quality Planning Standards to its Regional Air Division Directors, U.S. EPA has decided it will no longer consider interrelatedness as a factor for adjacency when making single source determinations in Michigan, Ohio, Tennessee, and Kentucky. Outside of these states (i.e., outside of the jurisdiction of the 6th Circuit Court of Appeals), U.S. EPA will continue to consider interrelatedness in permitting actions. 

Aggregation has received a lot of attention in the oil and gas sector, particularly in the Northeast and Midwest U.S.  However, the concepts are the same regardless of industry, and are becoming more common as projects related to energy savings, such as the co-location of co-generation plants at industrial sites, or Facility A providing a waste or off-spec product to its neighbor Facility B for its use a raw material in its process (i.e., the concept of interrelatedness, including an economic dependency) receive more consideration in this economic climate. Consider the single-source factors as part of your planning process and use resources such as your state agency or ALL4 for guidance. 


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