On June 3, 2016, the U.S. Environmental Protection Agency (EPA) issued a rule entitled “Source Determination for Certain Emission Units in the Oil and Natural Gas Sector.” The rule defines the term “adjacent” used to determine major source applicability under the Title V (Part 70) operating permit program and other federal permitting programs. Previously, no such clarification existed and state environmental agencies were left to make their own policies regarding the adjacency of oil and gas sites.

The new definition states that facilities operating under the standard industrial classification (SIC) major group 13 code are categorized as adjacent if they are located on the same surface site. They are also considered adjacent if they are located on separate surface sites that are within a quarter (¼) mile of one another (measured from the center of the equipment onsite) and share equipment.

The EPA gave the following example on the application of the rule:

“An owner or operator proposing to construct a new well site should draw a ¼ mile circle from the center of the proposed new well site. If there is commonly-controlled emitting equipment located within that ¼ mile circle and within major SIC code 13, and that equipment is used to process or store the oil, natural gas or the byproducts of production that will come from the new well site, then the emissions from that equipment should be included in determining whether the new well site is a major source.”

Figure 1 below shows two typical oil and gas sites that are within one-quarter mile. These sites do not share equipment and would not be considered adjacent under the EPA’s Source Determination Rule. Hence, in states adopting EPA’s revised definition of adjacency, the owner or operator of these sites would not have to aggregate emissions when determining a single stationary source.


The EPA has deferred to individual state regulatory agencies in deciding if and how to adopt the rule change. One example of a state’s adoption of the new definition is in Louisiana. On July 20, 2016, the Louisiana Department of Environmental Quality (LDEQ) updated its contiguity policy to mirror the EPA’s new definition 1.

Worth noting is the EPA’s avoidance of a requirement to include “daisy-chained” equipment as part of a single source. Daisy-chaining occurs in a series of surface sites that are under common control. An individual surface site may be located within a quarter mile of another surface site, but the last surface site in the grouping is separated by a distance greater than a quarter mile.

This new rule has the potential to make a significant impact on air permitting in the oil and gas sector. Contact our experts today to ensure your facilities are in compliance with the new rule making.

For more information regarding the Source Determination Rule, visit https://www.regulations.gov/document?D=EPA-HQ-OAR-2013-0685-0226

1 See http://www.deq.louisiana.gov/portal/portals/0/planning/regs/pdf/1607Pot2.docx“]



About the author – Rusty Jack

Environmental Specialist Rusty Jack has air permitting and environmental compliance experience in the manufacturing and petrochemical industries. For 8 years, Jack was an Environmental Chemical Specialist with the Louisiana Department of Environmental Quality (LA DEQ) in the agency’s Air Permits Division. This experience with the inner workings of the agency give Jack a unique qualification for handling complex compliance issues for Fenstermaker’s client base. Jack holds a Bachelor of Science degree in Chemical Engineering. While at LA DEQ, Jack reviewed permit applications and related source emission calculations by applying his comprehensive knowledge of engineering principles and federal and state regulatory standards, completing permitting projects for various types of facilities. His expertise includes 40 CFR 70 (Title V) permit renewals and major modifications, Prevention of Significant Deterioration (PSD) initial permits and modifications, synthetic minor permits, minor source/Minor Source Oil and Gas (MSOG) permits, variances, and exemptions to test.