Air Permit Issues for Oil and 

Gas Operations: 

Unresolved EPA Rules and Recent 

Court Cases Affecting Air Permits 

Clara Poffenberger

May 14, 2014
Overview of Permit Issues

• Aggregation

• Fugitive Emissions

• Enforcement

• Statute of Limitations

• New Owners

• Challenge to NOVs

• Minor NSR – State rules

• GHG Permits

• Indian Lands – FIP jurisdiction and minor NSR

• Start-up, Shutdown and Malfunction exemptions in State permits
Aggregation of Emissions: Definition 

of Source

• NEDA/CAP v. EPA – December 2012 Summit Directive

• 2012 Summit decision by 6th Circuit; EPA directive limits its application

• Challenged as final agency action creating inconsistencies between 

EPA Regions in violation of the CAA

• Oral argument January 2014

• Implications of a ruling against EPA is broad: SOL and new owners 

• If EPA wins, EPA could look for Circuit court split to raise issue to 

Supreme Court or gain support for its policy across the country.

• Nucor GHG Permits – LDEQ v. EPA: Aggregation brought up in Title 

V permit stage

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Fugitive Emissions

• EPA 2002 NSR Reform Rule 

• Changed (or clarified) how fugitive emissions are included for 

modifications at major sources.

• Only affects existing major sources.

• Outcome of aggregation determinations could make this issue more 

important for oil and gas operations.

• In 2008, EPA issued a final rule rescinding the 2002 rule change; EPA 

stayed the rescission indefinitely pending additional rulemaking.

• The stay applies automatically in some states and on Indian lands but not 

all states

• Companies must review state rules to determine how to treat fugitive 

emissions at major sources for calculating whether a modification is 

major.

• EPA’s treatment of GHG fugitive emissions – December 2013 

Guidance

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Enforcement

• If EPA prevails on aggregation, permit enforcement can be 

retroactive. Both citizen suits and EPA action are possible.

• EME Homer City (NSR case) (12/2013 en banc review denied) and 

Midwest Generation: 

• Statute of Limitations: 3rd, 7th, 8th and 11th Circuits v. 6th Circuit

• New Owners v. Old Owners: 

• PA, et. al v. Allegheny Power, February 2014 – no difference.

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Federal Court Circuits

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Enforcement

• Challenges to Notices of Violation

• Sackett v. EPA (2012 U.S. Supreme Court) cited in Luminant

Generation Co v. EPA currently before the 5th Circuit.

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Minor NSR/State Rules

• Texas SIP cases – 2012 wins for State discretion.

• Flex Permit; Pollution Control Projects; MSS

• SSM affirmative defense

• Sierra Club v. Energy Future Holdings Corp (Luminant), 

2/26/2014

• Court dismissed action upholding SSM defense for all claimed 

violations ($470 million potential penalty) 

• EPA v. Luminant – filed August 2013 in District Court: 

• minor NSR, Flex permit, other state minor NSR

• Recall Luminant v. EPA is a 5th Circuit challenge to the 

NOV

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GHG Permits

• Over 140 PSD permits for GHG emissions. 

• Sierra Club interest in projects involving natural gas – Appeals 

to US EAB.

• U.S. Supreme Court GHG PSD Case: Oral Arguments 

2/24/14

• Louisiana DEQ v EPA

• Nucor Permits – Title V Objection by EPA (based on petition by competitor)

• Objection based on failure to aggregate PSD sources – for GHGs?

• Dismissed 9/2013 – not final agency action; Rehearing requested 10/2013 – citing to 

Sackett

• Fugitive Emissions – EPA’s December 2013 guidance

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Indian Lands

• Oklahoma v. EPA – January 17, 2014 D.C. Circuit

• EPA must make a determination about jurisdiction before 

imposing a FIP: Indian country vs. Indian land.

• New Rules – General Permits and Permits-By-Rule

• Methods to reduce burden of minor NSR permitting

SSM State Permit Exemptions

• EPA proposed a SIP call for SSM Exemptions in 

December 2013 – not published in FR yet

• Replace exemptions with affirmative defense

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