A three-judge panel of the U.S. Court of Appeals for the Sixth Circuit* in Summit Petroleum Corporation v. U.S. Environmental Protection Agency (Nos. 09-4348; 10-4572) vacated EPA’s order aggregating Summit’s sour gas wells and sweetening plant into a single major source.

The Court agreed with American Petroleum Institute and American Exploration and Production Counsel that EPA’s determination that the physical requirement of “adjacency” in an aggregation determination can be established through mere functional relatedness is unreasonable and contrary to the plain meaning of the term “adjacent.”

The court remanded the case to EPA for a reassessment of Summit’s Title V source determination in light of the proper, plain-meaning application of the requirement that Summit’s activities be aggregated only if they are located on physical contiguous properties.

Judge Moore dissented from the opinion, stating that EPA’s consideration of functional interrelatedness was “both reasonable (and thus worthy of deference) and correct,” and that she would have affirmed the agency’s decision to aggregate Summit’s stationary sources.

It is not yet known whether EPA will seek a rehearing en banc or a petition for certiorari from the U.S. Supreme Court.

* The states within the geographic boundaries of the Sixth Circuit are Ohio, Kentucky, Michigan, and Tennessee.

This article was prepared by Barclay Nicholson (bnicholson@fulbright.com / 713 651 3662) from Fulbright’s Energy Law Practice.