Earlier this week, on April 30, 2018, the U.S. Environmental Protection Agency (EPA) quietly modified its source determination test that is used to determine whether emissions from nearby and closely related sources should be grouped together for New Source Review (NSR) and Title V permitting programs. The decision paves the way for the Pennsylvania Department of Environmental Protection to treat a biogas processing facility and an adjacent landfill as separate sources and escape regulation under NSR or Title V. According to EPA, because the two sources would be owned by separate entities, and each entity would lack direct control of the other, there was no “common control” of the sources. EPA emphasized that its “narrower interpretation,” focusing on “the power or authority of one entity to dictate decisions of the other that could affect the applicability of, or compliance with, relevant air pollution regulatory requirements,” will promote clarity, consistency and more practical outcomes in source determinations.
Pursuant to EPA’s NSR and Title V regulations, air permitting authorities must consider three factors–industrial grouping, location on contiguous or adjacent property, and common control–in assessing whether air emission sources are treated as a single stationary source or a major source. Traditionally, EPA considered a number of factors in determining whether two entities were under common control, including shared workforces, shared management or administrative functions, shared equipment and shared pollution control responsibilities. EPA also relied upon the presence of support or dependency relationships between two or more entities that resulted in one entity either directing or influencing the operations of another entity. These situations often involved a primary facility that was wholly or partially dependent on a support facility. EPA now claims that this historically broad view of common control relationships resulted in the potential for inconsistent outcomes and an overall lack of clarity and certainty for sources and permitting authorities.
EPA’s updated interpretation focuses exclusively on the power to control–that is, whether one entity can expressly or effectively force another entity to take a specific course of action, which the other entity cannot avoid through its own independent decision-making. EPA’s decision may have significant ramifications for interdependent air emission sources–if they are owned by separate entities, EPA’s updated source determination test opens the door for them to be treated as separate sources and be subject to less stringent air-permitting requirements.
