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Federal district court allows an action to proceed against a Marcellus Gas operator even though DEP had issued permits and the facilities had been constructed

Posted: 10/01/2012

Summary 
A federal court ruled that an environmental advocacy organization could ignore and bypass state administrative agency environmental permit review procedures and file an action directly in federal court challenging the construction of seven compressor stations that had been permitted and constructed by the defendant.

A federal district court opinion points the way to strategies that may be utilized by anti-development forces to circumvent state permitting procedures. Citizens for Pennsylvania’s Future v. Ultra Resources, Inc., No. 4:11-CV-1360, 2012 WestLaw 4434465 (M.D. Pa., Sept. 24, 2012) (Mariani, J.). The court ruled that an environmental advocacy organization could ignore and bypass state administrative agency environmental permit review procedures and file an action directly in federal court challenging the construction of seven compressor stations that had been permitted and constructed by the defendant. This decision offers environmental groups an end-run around traditional administrative finality concepts based on the court’s interpretation of language in the Federal Clean Air Act (“CAA”).

In Ultra Resources, the plaintiff, Citizens for Pennsylvania’s Future (“PennFuture”), contended that the compressor stations built by the defendant, Ultra, constitute a major air pollution emission facility. Although the defendant had applied to the Pennsylvania Department of Environmental Protection (“DEP”) and had received from DEP general permits (called “GP-5 permits”) for the facilities, PennFuture argued that the defendant should have obtained a nonattainment New Source Review (“NNSR”) permit under Pennsylvania regulations. 25 Pa. Code § 127(e). In short, although the defendant had obtained a permit, PennFuture argued that it was not the correct permit. In its single-count complaint, PennFuture claimed that Ultra constructed the facilities without a permit.

The court acknowledged that PennFuture had the opportunity to challenge the issuance of the GP-5 permits before the Pennsylvania Environmental Hearing Board (“EHB”) but did not do so. Rather than filing appeals to the EHB, plaintiff filed its complaint in federal district court after Ultra constructed its facilities. PennFuture’s suit was filed under Section 304 of the CAA which provides:

[A]ny person may commence a civil action on his own behalf— ... (3) against any person who proposes to construct or constructs any new or modified major emitting facility without a permit under ... part D of subchapter I of this chapter (relating to nonattainment) or who is alleged to have violated (if there is evidence that the alleged violation has been repeated) or to be in violation of any condition of such permit.

42 U.S.C. § 7604(a)(3) (emphasis by the court).

Ultra argued that if the court were to recognize PennFuture’s ability to bring this citizen suit, it would allow plaintiffs to circumvent the established processes and procedures under Pennsylvania law for challenging DEP’s permitting decisions. In other words, if PennFuture felt that DEP’s issuance of the GP-5 permits was inappropriate, it should have filed an appeal with the EHB objecting to them. PennFuture argued that the seven compressor stations should have been aggregated as a single source, rendering the GP-5 for Ultra’s facilities inappropriate, and that the CAA authorizes citizens’ suits in situations where facilities are built without a permit.

The defendant filed a motion to dismiss attacking the subject matter jurisdiction of the federal district court. The court denied the motion in its September 24, 2012 opinion, concluding that it had jurisdiction to hear this case based on a plain reading of Section 304, as well as case law interpreting that section of the CAA. The court noted that “if the emissions from multiple sources are aggregated as a single source and those emissions reach major source thresholds, they would be considered a ‘single source’ subject to part D permit requirements under NNSR and therefore ineligible for a GP-5.”