# 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 6 th 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: 3 rd , 7 th , 8 th and 11 th Circuits v. 6 th 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 5 th 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
• C ourt 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 5 th 

### 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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