This matter concerns the Marcus Hook Industrial Complex operated by Sunoco, and its conversion from a crude oil refinery to a facility for storing, shipping, and processing natural gas liquids. The conversion required construction of new air emissions sources, controls, and other infrastructure, and therefore required necessary air permitting. Sunoco pursued this permitting through a series of plan approvals and Requests for Determination (RFD). DEP issued plan approvals and RFDs, “linking” some of them for aggregation purposes.
What is project aggregation?
Project aggregation, the aggregation concept in play, is not a question of whether there is one facility, but rather whether physical and operational changes should be considered as a single project when determining whether NSR or PSD is triggered. Project aggregation can have a significant impact on the calculation of total emissions to determine whether the requirements of NSR or PSD apply.
Legal issues raised in Council appeal
The Council focused its case on two main objections: that DEP should have considered the construction work under the appealed plan approval as part of a larger project, and that DEP was incorrect in determining which emissions units for the appealed plan approval should have been considered to have been “modified,” pursuant to the regulations.
The Board concluded that DEP’s determination was neither reasonable nor supported by the evidence, that the series of permitting decisions was part of a single project, and that their emissions should have been aggregated. On the issue of what emissions units were modified, the Board remanded that determination for reconsideration by the DEP in light of its decision on the aggregation issue. Further, the Board required on remand that the DEP consider if projects that came after the appealed plan approval should also be aggregated.
The clearest takeaways from this adjudication are the factors the Board highlighted as supporting its decision to require project aggregation. Although the Board caveats that: “No one factor is dispositive, and the list is not intended to be exclusive,” and it discusses other relevant factors, it focused on the following. Adjudication at 52.
- Temporal proximity
- Temporal proximity was the first of two factors the Board noted as being “particularly significant” in its analysis, stating that “Where, as here, a facility submits multiple plan approval applications within a relatively short period, it is strong evidence that there is a single project...” Adjudication at 55. Thus, this factor weighed in favor of aggregation.
- Functional interdependence
- Functional interdependence was the second factor noted as particularly significant—where individually submitted projects are “operationally, technically, and economically interdependent,” it is strong evidence of a single project. Adjudication at 56. The Board found this factor weighed in favor of aggregation in this matter where its examination found one overall project for aggregation purposes. It also considered that where, as in this case, multiple plan approvals involved the same emissions units and relate to the same processes, there is further evidence in favor of aggregation.
- Physical proximity
- The board found that physical proximity in this matter was demonstrated by an aerial photograph that showed all the ‘components’ of the project physically close to one another. The Board emphasized that this close physical proximity was not surprising based on the functional interdependence factor in this case, and this factor weighed in favor of aggregation.
- Common plan and shared objective
- The Board noted that, although more subjective than other factors, the evidence of a common plan and shared objective on the part of a developer who constructed the projects is evidence of a single large project in phases, rather than individual projects.
Whether or not DEP or Sunoco, or both, will appeal this adjudication remains to be seen. The Board’s language in its adjudication certainly implies that it is confident of its decision in this matter. However, there are some potential issues that could be raised in an appeal.
For example, Sunoco could argue that there was improper remand: the Board has de novo review, but there is an argument that it improperly applied its de novo authority not only to the review but also to DEP actions that were not, and could not be, appealed. There is also an argument that the Board conflated the overall purpose of the facility conversion with the individual purposes of the projects – appearing to assume that where there is a facility conversion, all projects done for that conversion must be aggregated. Or, perhaps one could argue that the Council did not adequately carry its burden to prove its case by a preponderance of the evidence – as the Board states: “The Council’s evidence must be greater…” Adjudication at 48.
Whether this decision is appealed or a remand is fully undertaken by DEP, those developing large projects in phases should be aware that, in the wake of Clean Air Council v. DEP and Sunoco Partners Marketing & Terminals, L.P, there are considerations necessary to planning and permitting
Client Alert 2019-015