EPA suffered a major loss on May 30 when the D.C. Circuit refused to uphold EPA's attempt to narrow the ruling in the Summit aggregation case to only the states in the 6th Cir. Reversing more than 20 years of EPA practice, the Summit case directed EPA to refrain from using interdependency or the functional interrelatedness of various sources when making a determination regarding whether to aggregate the emissions from those sources for NSR and Title V permitting purposes.
In December 2012 after the Summit decision was final, EPA issued a memo that said the Agency would only apply the Sixth Circuit's Summit decision in the states of Kentucky, Tennessee, Ohio, and Michigan. The memo was challenged by an industry trade association, the National Environmental Development Association (NEDA).
The D.C. Circuit concluded this uneven application of the law would be inconsistent with EPA's regulations which require the Clean Air Act to be applied in a fair and uniform manner. Therefore, the NEDA Court vacated EPA's memo. In doing so, the court's holding in Summit became applicable nationwide. One of the main findings of the D.C. Circuit's recent decision was that limiting the Summit court's ruling to only the states in the 6th Cir. would disadvantage operations in other States.
While the NEDA decision will impact many industrial sectors, it is a big win for the oil and gas industry because the entire industry is arguably interdependent given that it is mostly connected by pipelines. The practical impact of this decision is that if sources are not contiguous and adjacent, their emissions cannot be aggregated in determining whether a permit is necessary. Additionally, the decision may provide an opportunity for sources that were aggregated using the faulty interrelatedness test to call that determination into question. EPA might seek reconsideration of the decision because the Agency now runs the risk that if it loses in a Federal Circuit Court, that decision could create a national rule.
Whether EPA or the Solicitor General would appeal this decision to the U.S. Supreme Court remains to be seen, but our initial impression is that an appeal is unlikely. Rather, EPA might try to limit the impact of this case through guidance or by modifying its practices, such as refraining from issuing memos in the future that document the agency's policy regarding unfavorable judicial decisions.