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EPA Narrows Guidance on Grouping Manufacturers for Air Permits

Nov. 26, 2019, 11:02 PM

Chemical plants, paper mills, and mining operations that are located side by side will be treated as a single major source subject to stringent air pollution controls—but anything beyond this basic definition will no longer be—according to final EPA guidance released Nov. 26.

The guidance marks the end of EPA’s practice of grouping more widely spaced sources of related industrial operations as a single “major” facility. Instead, the EPA or states will only assess whether these facilities are located in physical proximity to each other.

The move will result in fewer classifications of “major” sources, which trigger the Clean Air Act permitting requirements and accompanying stricter pollution controls.

The Environmental Protection Agency, however, stopped short of defining what it means by “physical proximity,” a bright line that the National Association of Manufacturers requested in comments on the draft version of this guidance, which came out last year.

Under the law, any facilities or plants emitting 100 tons or more of pollution annually, located on adjacent or contiguous properties, and under common ownership are deemed major sources that must install the best available pollution controls to obtain a permit for operations, or a new source review permit for expansion or new construction.

The agency’s final adjacency guidance is the EPA’s latest effort to ease permitting requirements for refineries, power plants, and factories, especially those constructing or expanding in a way that increases emissions and triggers the need for New Source Review permits.

Change Driven by Ruling

The EPA is reverting to its 1980 reading of the Clean Air Act, when it focused exclusively on physical proximity when considering whether two operations should be considered adjacent for permitting purposes, EPA Acting Assistant Administrator for the Office of Air and Radiation Anne L. Idsal wrote in the memo.

The guidance won’t apply retroactively, she added.

Idsal said the agency was responding to a 2012 federal appeals court decision and moving away from the Obama EPA’s reading that allowed industrial facilities with similar functions— though several miles apart—to be treated as adjacent, and thereby a major source for permitting.

She said the agency’s change in direction is driven by the U.S. Court of Appeals for the Sixth Circuit’s 2012 decision in Summit Petroleum Corp. v. EPA.

In this case, the court held that the EPA unreasonably treated Summit Petroleum’s natural gas sweetening plant and its gas production wells as a single major source, although they were anywhere from 500 feet to eight miles apart from each other. Gas sweetening is a process using solutions to remove hydrogen sulfide from gases.

The court instructed the EPA to consider the plain meaning of adjacent when deciding how to lump together facilities for Clean Air Act permitting purposes.

In response, the EPA declared oil and gas facilities half a mile apart as separate sources for permitting purposes, but it stopped short of applying this interpretation to other manufacturing facilities.

‘Two-Edged Sword’

Eric Boyd, an environmental attorney with the Chicago office of Thompson Coburn LLP, described grouping activities as a “two-edged sword” when the EPA first proposed to clarify its meaning of adjacency.

“On one hand, de-grouping facilities means that such sources are less likely to be considered ‘major’” for new source review and operations permitting purposes. But on the other hand, de-grouped sources cannot avoid Clean Air Act permits for changes made to their equipment and operations if they cause an increase in air pollution, Boyd wrote.

Environmental attorneys expected the EPA would pursue a narrower reading of adjacency.

“The EPA has confirmed they are applying a physical proximity test for adjacency and they will not be reopening previous determinations unless there is a change in facts,” such as a change in ownership or a different industrial classification, said Eric Hiser, an environmental attorney with Phoenix-based law firm Jorden Hiser & Joy, PLC.

And most state permitting authorities, or states that have their own approved plans to issue New Source Review permits, won’t be bound to follow this interpretation, he said, noting the guidance applies only where EPA is the permitting authority or where states are issuing permits on EPA’s behalf.

John Walke, who heads the Natural Resources Defense Council clean air program, said: “The EPA is breaking apart polluting activities that long have been considered part of one polluting activity, making it much easier to pollute more and avoid controlling those pollution increases.”

The EPA also released a proposed rule that makes corrections to typographical errors and outdated references. The agency said these corrections don’t change any underlying rules or guidance.

To contact the reporter on this story: Amena H. Saiyid in Washington at asaiyid@bloombergenvironment.com

To contact the editors responsible for this story: Gregory Henderson at ghenderson@bloombergenvironment.com; Renee Schoof at rschoof@bloombergenvironment.com