On February 23, 2015, the natural gas industry scored a win in the ongoing debate over single source determinations under the Clean Air Act (“CAA”). The Middle District of Pennsylvania resolved a dispute over whether eight compressor stations in Tioga and Potter Counties operate as one single facility under the CAA or as eight separate facilities. The court ruled that these compressor stations were eight separate facilities and thus fell under a less restrictive permitting structure.
The case began in 2011, when Citizens for Pennsylvania’s Future (“PennFuture”), a nonprofit advocacy group, filed a suit against Ultra Resources (“Ultra”) claiming that Ultra did not obtain the appropriate permit before building their eight compressor stations and thus violated the CAA. Ultra did obtain individual authorizations from the Department of Environmental Protection (“DEP”) to use the GP-5 (shorthand for the General Plan Approval and/or General Operating Permit). However, PennFuture alleged that the eight compressor stations constitute a major source of nitrogen oxides and thus require a New Source Review (“NSR”) permit. An NSR permit is required of any single facility with a potential nitrogen oxide emission in excess of 100 tons per year. While none of the individual facilities meet this threshold, if they were to be considered one facility, they would.
The Court granted summary judgment to Ultra finding that the eight facilities failed the “on one or more contiguous or adjacent properties” standard required of a single source facility. The two parties presented differing definitions of the term “adjacent” – PennFuture argued that interrelatedness of the facilities should be considered, while Ultra argued for the plain meaning of the term. Looking at DEP guidance and precedent from other Circuits, the Court found that the eight facilities were not close enough to be ruled “adjacent.” They did not blatantly reject PennFuture’s proposed definition, writing “solely because independently functioning compressors ultimately deposit gas from the individual wells each separately services into a common pipeline for transmission in the market does not establish functional interrelatedness.”
This ruling came after PennFuture won an initial effort by Ultra to throw the case out for lack of jurisdiction in 2012. In that case, the Court found that the CAA permitted for citizen suits in response to DEP actions.
Bottom line: this ruling is great news for the pipeline and infrastructure development industry.
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