Pennsylvania Environmental Hearing Board Decision Could Impact Air Permits Throughout State

This post was written by Mark Mustian.

A November 26, 2012 decision by the Pennsylvania Environmental Hearing Board (EHB) in Berks County v. Pennsylvania Department of Environmental Protection (DEP) (EHB Docket No. 2010-166-L) could have a significant impact on air permitting for industrial facilities across the state. The case involved DEP’s issuance of a Title V permit for a secondary lead smelter operated by Exide Corporation in Berks County. The County challenged DEP’s issuance of the permit on the grounds that the Department had failed to consider the impact of fugitive emissions from the facility and, therefore, had not properly evaluated the potential air quality impacts from the facility. The EHB agreed and remanded the permit back to DEP to address the fugitive emissions.

Pennsylvania regulations (25 Pa. Code 123.1) prohibit the emission of fugitive air contaminants subject to certain specific identified exceptions, or if the DEP makes a determination that the emissions in question are of minor significance with respect to causing air pollution and do not interfere with the attainment or maintenance of an ambient air quality standard. In the Berks County case, the permittee did not request that DEP perform a significance evaluation of fugitive sources, and the DEP did not evaluate, and in fact admitted, that they did not know whether the emissions were significant. In fact, the only determination DEP made was that fugitive emissions from the facility were not visible beyond the property boundary. The EHB determined that the DEP cannot simply ignore the requirement of the regulation and assume that the fugitive emissions are not significant. The EHB remanded the permit in question with instructions to “determine what combination of estimating, modeling, and/or monitoring is necessary and appropriate to support a determination that fugitive emissions at the facility are of minor significance and not interfering with attainment.” The EHB also stated that if the fugitive emissions could not be quantified or estimated so that the Department could make a significance determination “then it follows that Section 123.1 cannot be met and it follows that the source cannot be permitted”.

This decision could potentially have far reaching impacts on future air permitting efforts for industrial facilities. The DEP has not, as a general rule, required permittees to obtain and submit information regarding fugitive emissions throughout a facility in order to obtain an air permit. The ruling by the EHB would seem to indicate that this will be required in the future. Parties seeking an air permit may be required to collect monitoring data, prepare computer models, or submit other information sufficient to allow the DEP to make a significance determination. This requirement could greatly increase the cost of permitting and possibly result in a requirement that the facility install control systems for fugitive emissions in order to reduce releases below a “significant” level.

USEPA Comments on Pennsylvania's Draft Aggregation Policy

This post was written by Luke Liben and Nicolle Bagnell.

As we've discussed, the Pennsylvania Department of Environmental Protection (PADEP) issued a draft policy regarding limitations on aggregating emissions from Marcellus shale gas facilities on October 12, 2011. The draft policy utilizes a distance of 1/4 mile as the main criteria for determining if plants in proximity to one another should be viewed as individual minor sources of emissions, or one major source of emissions. In a letter dated November 21, 2011, Diana Esher of the Environmental Protection Agency (EPA), Region III Air Protection Division, reportedly said the new draft policy “appears to alter the conventional way in which aggregation determinations have been made federally and by PADEP.” Ms. Esher also reportedly indicated that the draft policy could be interpreted to allow emissions sources to escape otherwise strict emission standards by shaking the designation of a “major” source. However, as noted by Kathryn Klaber, head of the Marcellus Shale Coalition, the bright line 1/4 mile test provides an easy to understand, easy to enforce, and predictable rule. The public comment period for PADEP’s draft policy closed on November 21, 2011.

Analysis of Pennsylvania's Proposed Aggregation Guidance

This post was written by Larry Demase, Lou Naugle and Jennifer Smokelin.

Yesterday, we reported on the Pennsylvania Department of Environmental Protection’s (DEP) announcement of a proposed technical guidance for single stationary source determinations for oil and gas operations (the Single Source Guidance). Here’s our analysis of the proposal, including some background information, a discussion of the guidance and our thoughts on its potential impact.

Background

First, you should know that aggregation is the process of determining whether emissions from multiple operations should be aggregated into a single source for air permitting purposes. A significant issue related to oil and gas operations is whether emissions from individual operations such as wells, processing plants and compressor stations should be combined so that they become major sources for permitting purposes, subject to Title V requirements and New Source Review. When aggregation is at issue, individually the operations are not considered “major” for any contaminant.

The aggregation concept derives from the U.S. Environmental Protection Agency’s (EPA’s) original definition of a “source” in its Prevention of Significant Deterioration (PSD) regulations, a subsequent court decision (Alabama Power v. Castle, 636 F.2d 323 (D.C. Cir. 1979) and EPA’s current definition of stationary source (found at 40 CFR 52.21(b)(5)). EPA’s definition of “stationary source” under the PSD regulations is “a building, structure, facility or installation which emits or may emit a regulated pollutant.” A building, structure, facility or installation must meet three criteria:

i. under common control of the same person (or persons under common control);

ii. belong to same industrial grouping (activities will be considered as part of the same industrial grouping if they use the same two-digit major or Standard Industrial Classification (SIC) code identification); and

iii. located on one or more contiguous or adjacent properties.

See 40 C.F.R. § 52.21(b)(6).

Pennsylvania DEP’s Proposed Single Source Guidance

The DEP announced yesterday an interim technical Guidance for Performing Single Stationary Source Determinations for Oil and Gas Industries, (the 'Single Source Guidance") effective October 12, 2011. The Single Source Guidance addresses all three prongs of the definition of stationary source mentioned above, as follows:

Sources under the Common Control of the Same Person

Under the Single Source Guidance, common control is established when both facilities are owned by the same parent company or a subsidiary of the parent company. Further, the Single Source Guidance clarifies that common control may also be established if an entity has decision-making authority over the operation of a second entity through a contractual agreement or voting interest.

Same Industrial Groupings

Under the PSD and Title V permitting programs, pollutant-emitting activities are considered to be part of the same industrial grouping if they have the same first two-digit SIC code. The Single Source Guidance clarifies that, in addition, a support facility is considered to be part of the same industrial grouping as that of the primary facility it supports even if the support facility has a different two digit SIC code, as defined in 40 CFR Part 52.21(b)(6). Support facilities under the Single Source Guidance are typically those that “convey, store or otherwise assist in the production of the principal product."

In addition to PSD permits, the Single Source Guidance would also apply to Non-Attainment New Source Review (NSR) permits. For Non-Attainment NSR permits, the SIC code requirement would not apply.

Contiguous or Adjacent Properties

The Single Source Guidance makes it clear that “contiguous” or “adjacent” means the distance or spatial relationship between locations. The DEP guidance states that spatial distance, not interdependence, is the overarching factor in determining whether sources shall be aggregated. This concept is true to EPA regulations and rejects certain EPA letters and informal opinions that have impermissibly transformed the concept of “contiguous” and “adjacent” to mean “interdependent.”

The Single Source Guidance takes the extra and necessary step by adding a “rule of thumb” to this “spatial” notion that properties located a quarter mile or less apart “are considered” contiguous or adjacent properties for PSD, nonattainment NSR and Title V applicability determinations. Single source determinations for properties located beyond this quarter-mile range will be considered on a case-by-case basis.

Potential Impact of DEP’s Proposed Single Source Guidance

Because the Single Source Guidance is a policy and not a regulation, even when finalized its effect will only be to assist DEP permit writers in conducting their case-by-case aggregation analysis, but it will not be a formal mandate. Existing appeals pending before the Environmental Hearing Board, including Group Against Smog and Pollution v. DEP and Laurel Mountain Midstream Operations LLC (EHB Docket No. 2011-065-R) and Clean Air Council v DEP and MarkWest Liberty Midstream and Resources (EHB Docket No. 2011-072-R) will likely have to include an evaluation of whether the challenged DEP determination would have been different if the proposed policy were used as guidance.

DEP will accept public comment on this guidance until November 21, 2011. 

Second of Three Teleseminars on Marcellus Shale Clean Air Permits Examined Greenhouse Gas Issues

This post was written by David Wagner.

This week, Reed Smith teamed up with AECOM to present its second seminar on clean air permit issues related to oil and gas development in the Marcellus Shale. At the event, we discussed greenhouse gas (GHG) emission sources, GHG reporting requirements, the federal Tailoring Rule (including Prevention of Significant Deterioration and Title V issues), New Source Performance Standards, and single stationary source determinations for the oil and gas industry. If you missed it, here are the slides and audio. The event featured Jennifer Smokelin and David Wagner of Reed Smith and Tom Bianca of AECOM.

At the first teleseminar, we discussed the Pennsylvania Department of Environmental Protection’s (DEP) air permitting process, focusing on the general permits applicable to oil and gas activities (GP-5, GP-9, GP-11), requests for determinations, and the permit exemption list, as well as DEP’s proposals to narrow the oil and gas permit exemption list and modify GP-5. Check back for details on the remaining teleseminar that will address aggregation issues.

Your Invitation to an April 12 Teleseminar on Marcellus Shale and Greenhouse Gas Reporting

This post was written by David Wagner.

Please join us for the second of three teleseminars on air quality issues affecting oil and gas development in Marcellus Shale On Tuesday, April 12, 2011 from 12 p.m. - 1 p.m., Reed Smith and AECOM will discuss the Pennsylvania Department of Environmental Protection’s issues related to greenhouse gases in the Marcellus Shale. In particular, we will cover (1) sources of greenhouse gases, (2) reporting, and (3) Title V implications. This event will feature Jennifer Smokelin and David Wagner of Reed Smith and Tom Bianca of AECOM. To participate, please contact Sandy Petrakis by April 11.