On November 26, 2019, USEPA published a guidance memorandum “Interpreting ‘Adjacent’ for New Source Review and Title V Source Determinations in All Industries Other Than Oil and Gas” (the November 26 Guidance).  In the November 26 Guidance, USEPA updated its interpretation of the regulations governing the scope of a “stationary source” under the NSR and Title V Clean Air Act programs.[1]

Those regulations generally define a stationary source as “all of the pollutant-emitting activities which belong to the same industrial grouping, are located on one or more contiguous or adjacent properties, and are under the control of the same person (or persons under common control)….”  See e.g. 40 CFR 52.21(b)(5)-(6) (emphasis added).

Previously, USEPA had interpreted “adjacent” to include not only physical proximity, but also the functional interrelatedness of different facilities, regardless of physical proximity.  In the November 26 Guidance, USEPA determined that it will no longer use the existence of some functional interrelationship to establish “adjacency”.

As USEPA summarized its decision:

[F]or purposes of making source determinations for NSR and title V, EPA interprets the term “adjacent” to entail physical proximity between properties. From this point forward, EPA will consider properties that do not share a common boundary or border, or are otherwise not physically touching each other, to be “adjacent” only if the properties are nevertheless nearby, side-by-side, or neighboring (with allowance being made for some limited separation by, for example, a right of way). This is inherently a case-specific inquiry where determining the appropriate distance at which two properties are proximate enough to reasonably be considered “adjacent” may vary depending on the nature of the industry involved.  Therefore, EPA is not here establishing or recommending a “bright line,” or specifying a fixed distance, within which two or more properties will be deemed (or presumed) by EPA to be in close enough physical proximity to be considered “adjacent.”  In each case, this determination should ultimately approximate the “common sense notion of a plant.”

November 26 Guidance at pg. 8 (emphasis added).

Despite the fact that USEPA did not establish a bright-line distance within which properties will be considered adjacent, adjacency may be narrowly determined, given the language USEPA uses in the November 26 Guidance (“allowance being made for some limited separation by, for example, a right of way”).  This means that the November 26 Guidance may result in fewer major stationary source determinations (because fewer facilities will be considered a single stationary source and have their emissions aggregated for major source determinations).

That said, the November 26 Guidance makes clear that it only applies prospectively, and that adjacency determinations will continue to be made on a case by case basis.  In addition, permitting authorities with USEPA-approved permitting programs (including Ohio EPA) are not required to apply the November 26 Guidance.

For example, Ohio EPA Engineering Guide #58 (still active from March 1995, supplementing Ohio EPA’s Title V regulations) still evaluates the functional interrelationship between facilities in determining adjacency (and uses five miles as a potential threshold for adjacency).  In light of the November 26 Guidance, Engineering Guide #58, which seemingly relies on USEPA determinations that existed at that time, may be out of date, but as of this writing is still Ohio EPA’s guidance on the adjacency question.

The November 26 Guidance should be considered going forward when locating a new facility in proximity to an existing facility to determine if emissions would be aggregated together for NSR and Title V purposes.  Even though many permitting authorities are not required to apply the November 26 Guidance, it will likely be persuasive authority that a permitting authority should consider in making a case-by-case adjacency determination.

[1] In a previous rulemaking, USEPA established a bright-line definition of adjacency for the oil and gas extraction industry only: “Pollutant emitting activities shall be considered adjacent if they are located on the same surface site; or if they are located on surface sites that are located within 14 mile of one another (measured from the center of the equipment on the surface site) and they share equipment. Shared equipment includes, but is not limited to, produced fluids storage tanks, phase separators, natural gas dehydrators or emissions control devices.”  See e.g. 40 CFR 52.21(b)(6)(ii).  The November 26 Guidance does not apply to this definition.