Should two refineries be considered one?
That’s the question raised by a lawsuit filed last week by the Clean Air Council against the state Department of Environmental Protection.
The case has to do with a couple of refineries in southeast Pennsylvania, one in Philadelphia and the other near the Delaware border in Marcus Hook. The Philadelphia plant was threatened with closure, but Sunoco entered into a joint venture with The Carlyle Group, which has rebranded the facility as Philadelphia Energy Solutions. The Marcus Hook plant, still owned by Sunoco, is largely dormant.
Although the two plants sit 17 miles apart, Sunoco asked the DEP that for the purpose of measuring air pollutants, the two refineries should be considered a single source. In July, DEP agreed to the request.
Combining multiple pollution sources — known as “aggregation” — is allowed under the federal Clean Air Act. Typically, it’s a tool that industry doesn’t like. That’s because when smaller sources of air pollution become regulated as one large source of air emissions, they can be subject to stricter regulatory standards. So aggregation tends to force facilities to install more pollution controls than would be the case otherwise.
In this case, however, the Clean Air Council says something else is going on. According to the Philadelphia-based environmental group, lumping a working plant together with an idle one will result in more regional air pollution than if it were considered on its own.
The council also says the DEP is applying a double standard to emissions aggregation because the agency has been reluctant to apply the same approach to wellheads, compressor stations and processing plants associated with Marcellus Shale gas production.
“DEP is not applying the law consistently,” Clean Air Council attorney Jay Duffy told StateImpact. “And in our opinion, not correctly in both cases.”
DEP Secretary Michael Krancer vigorously disagrees. In a statement Friday, he criticized the Clean Air Council’s lawsuit as “baseless,” and said that “Ultimately, overall emissions will be lower.” Citing the hundreds of jobs saved by the deal to get the Philadelphia plant running again, he said: “It is shameful that this out-of-touch, extreme organization would for no reason jeopardize the livelihoods and way of life of so many people.”
The Clean Air Act relies on two methods to reduce pollution. It can require plants to install pollution controls. But if the controls don’t adequately reduce emissions, the law also forces companies to buy “offsets.” In that case, the polluter has to pay other plants to pollute less, thereby improving overall air quality in the region. No matter what happens at the Philadelphia plant, the company will have to install new pollution controls. But the Clean Air Council says by aggregating with the Marcus Hook plant, Sunoco is trying to get out of buying offsets, should it need to do so.
The details of the case are complicated. Pennsylvania enforces the Clean Air Act under guidance from the U.S. Environmental Protection Agency. But the feds defer to the state regulators. Still, the two publicly disagree on how to determine aggregation of pollution sources in the Marcellus Shale gas fields.
Aggregation has to meet a three-tiered test that sounds simple but can become complex. The three criteria are:
- Whether the activity is within the same industry
- Whether the facilities are located on one or more adjacent or contiguous properties, and
- Whether they are under control of the same entity, or company. The EPA has interpreted adjacent or contiguous property to include an analysis of “interdependence.”
A year ago, the DEP issued new guidelines to permit-writers, which downplay all other factors in favor of adjacency, defined as proximity. The EPA submitted public comments opposing much of the DEP’s new guidelines. In a letter to DEP, Diana Esher, EPA’s director of Region III’s Air Protection Division, summarized the federal agency’s objections.
“We disagree with the policy pronouncements in the PADEP guidance which differ from established federal law and the Commonwealth’s own State Implementation Plan (SIP) and regulations by attempting to emphasize proximity and “common sense notion of a plant” above other factors including conducting case-by-case analysis,” wrote Esher.
In EPA’s comments, the agency specifically took issue with DEP’s “bright line” guidance of not aggregating oil and gas operations that are separated by more than a quarter of a mile.
The Clean Air Council has also challenged the DEP’s determination not to aggregate a natural gas processing plant in southwest Pennsylvania with nearby compressor stations run by the same company, MarkWest.
“With the Sunoco decision [DEP] is basing [aggregation] on interdependence,” the Council’s Duffy told StateImpact Pennsylvania. “Up until the Sunoco decision [DEP] said it was just proximity and now they’ve changed course.”
If DEP were to treat the MarkWest operations within its gas field as one single source of emissions, those facilities could be lumped together as a major source of air pollution, and therefore, could come under more stringent air quality regulations. Duffy says the DEP is operating under a double standard. He says the refinery case illustrates that if aggregation benefits industry, companies get it, but if not, DEP won’t force it upon them.
Court Ruling Supports DEP Case
Secretary Krancer disagrees. He says the three criteria are the same whether they are applied to the refineries in question or facilities in the Marcellus Shale gas fields. Krancer says the decision to combine the two refineries into a single source of air pollution under the Clean Air Act was based on fact.
“It’s technical, it’s legal and it’s [done through] a case by case analysis,” Krancer told StateImpact Pennsylvania. “And this one went through the same painstaking analysis.”
Krancer says when it comes to aggregation among oil and gas wells, the courts are on his side. A recent decision by the 6th U.S. Circuit Court of Appeals rejected the EPA’s practice of aggregating oil and gas facilities based on interdependence, or “functional interrelationship.” The 6th Circuit decided that the company Summit Petroleum should not have had its gas field operations aggregated by the EPA. The court said simply that the dictionary definition of adjacent does not include interdependence.
The Summit case is not legally binding in Pennsylvania. But it could be persuasive to a court, such as the Environmental Hearing Board, which will hear Clean Air Council’s lawsuit. In the meantime, Secretary Krancer says the EPA has got it wrong, not him.