On October 12, 2011, the Pennsylvania Department of Environmental Protection (“DEP”) issued its interim guidance on single stationary source determinations for oil and gas industries. This issue, also referred to as the air aggregation issue, is not a regulation but a non-binding guidance document to assist the department’s technical staff in determining when and whether to aggregate sources related to oil and gas production as a single source for permitting purposes, or as separate sources. The air aggregation issue is of great importance and concern to the oil and gas industry because aggregation can qualify sources as major sources and be subject to the more stringent approval requirements for Prevention of Significant Deterioration or Nonattainment New Source Review. The guidance is now in effect, although the department will be seeking public comments.

The most significant aspect of the policy document is its new approach to determining whether or not sources should be considered “contiguous” or “adjacent” for purposes of the air aggregation issue. In a press release on the new guidance, DEP Secretary Krancer stated that the new policy takes issue with the Environmental Protection Agency (EPA) policy statements tending to broaden the scope of the terms “contiguous” or “adjacent.” The EPA’s use of the interdependence criteria as a determining factor in deciding whether sources were contiguous or adjacent to each other is discounted by the DEP, and instead the state policy considers the physical distance between two separate properties or structures as being the primary factor.

In order to help quantify the meaning of “contiguous” and “adjacent,” the guidance adopts a rule of thumb: if two sources are within a quarter mile of each other, then, assuming the other criteria are met, those sources would be considered contiguous and adjacent. Sources more distant will be evaluated on a case-by-case basis, but their proximity would be the most important consideration. The department policy reserves the right to vary from this quarter mile rule of thumb based on particular circumstances. The EPA has previously taken the position that it will only become involved in air aggregation issues at the request of the state. EPA Region 3 has not responded to the DEP guidance at this time.

The technical guidance document has been published on the DEP website, and will also be published in the Pennsylvania Bulletin. The public comment period will close on November 21, 2011.