United States: Evolution Of Source Determination For Certain Emission Units In The Oil And Natural Gas Sector

Last Updated: August 10 2016
Article by Charles T. Wehland and Jennifer M. Hayes

On August 2, 2016, the Environmental Protection Agency's ("EPA") final rule regarding the aggregation of physically separate emitting surface sites into a single source for permit determinations in the oil and natural gas industry took effect.1 This Source Determination for Certain Emission Units in the Oil and Natural Gas Sector rule came alongside updates to New Source Performance Standards ("NSPS").2 These rules are part of President Obama's Climate Action Plan: Strategy to Reduce Methane Emissions and the Clean Air Act ("CAA"). Through this rulemaking, EPA has set out to clarify the term "adjacent" as applied to the determination of whether or not physically separate emitting sites in the onshore oil and gas sector should be aggregated into a single "stationary source" for the purposes of the Prevention of Significant Deterioration ("PSD") and Nonattainment New Source Review ("NNSR") programs and "major source" permitting under Title V of the CAA.3

Prior to this new rule, individual policy interpretations, the Summit litigation,4 and resulting guidance have created uncertainty over the correct interpretation of "adjacent" as applied to determining whether individual sources should be aggregated as a single source for purposes of air permitting. The final EPA source determination rule states that EPA will consider pollutant-emitting activities adjacent when they are: (i) located on the same surface site or (ii) located within a quarter mile from each other (as measured from the center of the emitting equipment) and share equipment.5 EPA asserts that this new definition of "adjacent" will allow permit applicants and permitting authorities in the oil and natural gas industry to make source determinations with greater ease and clarity.

Existing Legal Framework

Consistent with the term's use in § 111(a)(3) of the CAA, EPA defines a "stationary source" as "any building, structure, facility, or installation which emits or may emit a regulated NSR pollutant."6 EPA promulgated an earlier stationary source determination regulation7 that outlined three factors to aid permitting authorities in making these single source determinations:

  1. Same industrial grouping per Standard Industrial Classification ("SIC") codes,
  2. Location on contiguous or adjacent properties, and
  3. Common control of the same person or persons.

If these three factors are present, EPA aggregates the separate emitting activities into a single stationary source. Initially, permitting authorities made these determinations on a case-by-case basis without a clear indication of the meaning of "adjacent" or how each factor should be judged or weighed against one another.

When interpreting the meaning of "adjacent" within individual policy determinations, EPA focused generally on determining whether or not emitting activities met the "common sense notion of a plant"8 until EPA Acting Assistant Administrator William Wehrum issued the Wehrum Memo in 2007.9 The memorandum directed permitting authorities to focus on the location and proximity of each surface site, rather than the operational dependency of each site, to determine if two separate properties were adjacent. In 2009, the McCarthy Memo withdrew the Wehrum Memo.10 The McCarthy Memo instructed permitting authorities to refocus on all three factors in the regulation, noting that permitting authorities must justify aggregation conclusions by reviewing all the factors, not just physical proximity.

The confusion continued following the Sixth Circuit's decision in the Summit Petroleum case.11 In 2010, focusing on the interdependent nature of the operations, EPA aggregated Summit Petroleum's physically separate sweetening plant facilities into a single source for permitting purposes. In making this determination, EPA focused on the fact that all of Summit's wells were located within an eight-mile radius of its sweetening plant that processed all of the oil and gas from the connected wells. Upon review, the Sixth Circuit disagreed with the aggregation of these dispersed wells and plant, and it held that EPA's determination that these facilities were "adjacent" was unreasonable and contrary to the plain meaning of the unambiguous term.12

EPA responded to this decision by issuing the Summit Directive.13 This directive instructed regional offices outside of the Sixth Circuit to disregard the Summit decision and to continue considering interrelatedness in the "adjacency" factor of the single source determination. The D.C. Circuit Court invalidated the Summit Directive because it violated EPA's "Regional Consistency" regulations and gave facilities located within the Sixth Circuit a competitive advantage.14 The "Regional Consistency" regulations require EPA officials to "assure fair and uniform application by Regional offices of the criteria, procedures, and policies employed in implementing and enforcing the [Clean Air Act]."15 The court saw the Summit Directive as placing companies and producers outside of the Sixth Circuit at a competitive disadvantage as they were more likely to have their operations aggregated into a single source for permitting purposes.16 Following this decision, permitting authorities and applicants in the oil and gas industry were left without any definitive interpretation of the meaning of "adjacent" in source determinations.

Download - Evolution of Source Determination for Certain Emission Units in the Oil and Natural Gas Sector


1 40 C.F.R. §§ 51, 52, 70, 71.

2 40 C.F.R.§ 60.

3 80 Fed. Reg. 56,579, 56,579 (Sept. 18, 2015).

4 Summit Petroleum Corp. v. EPA, 690 F.3d 733 (6th Circ. 2012), reh'g en banc denied, No. 09-4348/10-4572, 2012 U.S. App. LEXIS 23988 at *1 (6th Cir. Oct. 29, 2012). (Explaining that the term "adjacent" is unambiguous and implies physical proximity in geographic location rather than functional interrelatedness).

5 40 C.F.R. §§ 51.165(a)(i)(ii)(B), 51.166(b)(6)(ii), 52.21(b)(6)(ii), 70.2, 71.2.

6 40 C.F.R. §§ 52.21(b)(5), 51.165(a)(1)(i), 51.166(b)(5).

7 40 C.F.R. § 51.166(b)(6).

8 45 Fed. Reg. 52,676 (Aug. 7, 1980).

9 Memorandum from William L. Wehrum, Office of Air and Radiation, to EPA Regional Admin. I-X, Source Determinations for the Oil and Gas Industries (Jan. 12, 2007).

10 Memorandum from Gina McCarthy, Office of Air and Radiation, to EPA Regional Admin., Regions I-X. Withdrawal of Source Determinations for Oil and Gas Industries (Sept. 22, 2009).

11 Summit Petroleum Corp., 690 F.3d at 751.

12 Summit Petroleum Corp, 690 F.3d at 741-44. ("The dictionary definition of 'adjacent' implies physical proximity ... The EPA's interpretation of the term 'adjacent,' to which no deference is owed, runs contrary to its plain meaning.").

13 Memorandum from Stephen D. Page, Office of Air Quality Planning Standards, to Regional Air Division Directors I-X, Applicability of the Summit Decision to EPA Title V and NSR Determinations (Dec. 21, 2012).

14 Nat'l Envtl. Dev. Ass'ns Clean Air Project v. EPA, 752 F.3d 999, 1003 (D.C. Cir. 2014).

15 Id. at 1004 (citing 40 C.F.R. § 56.3(a)).

16 Id. at 1005.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Charles T. Wehland
Jennifer M. Hayes
Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions