In early August, a panel of the 6th Circuit Court of Appeals gave the oil and gas industry – and perhaps many other sectors — an unexpected victory by remanding for reconsideration EPA’s Clean Air Act “single source” determination for Summit Petroleum Corporation. The Court held that based on a plain reading of the regulatory language a natural gas sweetening plant and various sour gas production wells commonly owned by Summit, but scattered over 43 square miles, were not “contiguous or adjacent” and therefore not collectively subject to “major source” Clean Air Act permitting. While this conclusion might seem obvious to most of us, the 6th Circuit’s ruling runs contrary to decades of USEPA interpretation that “adjacency” can be determined based on the functional relationship of the emission units – something akin to a process flow chart notion of adjacency – rather than physical location.
Will USEPA change its approach in light of the 6th Circuit’s decision in Summit? Don’t count on it. The strong dissent in Summit is an indicator that this 6th Circuit panel decision may not withstand a USEPA petition for en banc consideration by the 6th Circuit as a whole. The dissent is correct that courts generally defer to agencies on the interpretation of their own rules. Furthermore, the longevity and wide application of this interpretation makes it hard to characterize as “arbitrary and capricious.” Bottom line: USEPA is wed to this policy and it is not going to abandon it without a fight.