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Pennsylvania Natural Gas Operator Prevails in Air Aggregation Case

Earlier this week, the U.S. District Court for the Middle District of Pennsylvania granted a motion for summary judgment in favor of a natural gas operator in a closely-watched case involving air aggregation issues.  In 2011, Citizens for Pennsylvania’s Future (PennFuture) filed suit alleging that Ultra Resources, Inc. (Ultra) constructed a major source of nitrogen oxides (NOx) without the appropriate New Source Review (NSR) permit.  The case involved eight compressor stations in Tioga and Potter counties for which Ultra had obtained separate authorizations from the Pennsylvania Department of Environmental Protection (DEP) to use the General Plan Approval/General Operating Permit known as “GP-5”.  PennFuture viewed the compressor stations as functionally interrelated, operating in concert with a metering station as a single facility with potential NOx emissions in excess of the NSR major source threshold, thereby subjecting Ultra to heightened permitting requirements.

In granting Ultra’s motion for summary judgment, the District Court concluded that Ultra’s compressor stations did not constitute a single facility.  The regulatory definition of a single facility requires, in relevant part, that sources be “located on one or more contiguous or adjacent properties” in order to be aggregated into a single facility.  The central issue in this case was whether Ultra’s compressor stations are on “adjacent” properties.

The District Court found that Ultra’s compressor stations are not on “adjacent” properties under either the distance-based, plain meaning approach advocated by Ultra, or the functional relationship theory put forth by PennFuture.  According to the District Court, the stipulated facts showed that the compressor stations are not “sufficiently close to, or near enough, each other to be considered adjacent.”  Also, with respect to functional relationship, the District Court found no unique facts suggesting that Ultra’s emission sources were “unusual or outside of the normal oil and gas configurations and arrangements contemplated by [DEP].”

Although the District Court concluded that “the plain meaning of ‘contiguous’ and ‘adjacent’ should control a determination of whether two or more facilities should be aggregated,” it specifically “decline[d] to hold that functional interrelatedness can never lead to, or contribute to, a finding of contiguousness or adjacency.”  Read our Administrative Watch for additional information regarding the District Court decision in Citizens for Pennsylvania’s Future v. Ultra Resources, Inc.