The U.S. District Court for the Middle District of Pennsylvania has ruled in favor of Ultra Resources Inc. after a long-running case in which an environmental advocacy group challenged state permits for eight of the company's compressor stations and said they failed to meet federal pollution standards.
Citizens for Pennsylvania's Future, more commonly known as PennFuture, filed the suit in federal district court in 2011. The group alleged that Ultra violated permitting requirements included in the federal Clean Air Act. PennFuture said the compressor stations in Tioga and Potter counties were a major new source of nitrogen oxides that should be aggregated or treated as a single source of pollution, subject to tighter regulatory standards that require a more stringent permit. The ruling provides more clarity on the subject as environmental groups in the state have maintained that state regulators should aggregate natural gas facilities.
Ultra, a subsidiary of Ultra Petroleum Corp., received separate authorizations from the Pennsylvania Department of Environmental Protection (DEP) to use general operating permits for the compressor stations. At issue in the case was whether Ultra's facilities are located on adjacent properties that would subject them to aggregate permitting requirements. Attorneys at Babst Calland, who represented Ultra, however, said the federal law does not set forth or make clear a proper definition of "adjacent."
Ultra filed for summary judgement in the case last year, arguing that the compressor stations should not be treated as a single facility because they are not "located on one or more contiguous or adjacent properties" as the law requires. Ultra argued that the term "adjacent" has a physical or geographical meaning in the law. PennFuture fired back and argued that the definition of "adjacent" includes operational or functional interrelatedness.
In its ruling, the court sided with Ultra and upheld the DEP's permits. U.S. District Judge Robert Mariani wrote that the stations are not "sufficiently close to, or near enough, each other to be considered adjacent." The court also said that PennFuture did not provide facts to show that Ultra's compressors were any different from other oil and gas operations or configurations in a way that would warrant stricter permitting requirements.
Attorneys for Babst Calland did note, however, that the ruling left some room for future consideration of the operational relationships between such equipment and the pollutants they emit.
"The court recognizes the risk that a strict application of the plain meaning of the terms 'adjacent' and 'contiguous' may allow oil and gas exploration and production companies to manipulate or structure their wells and compressors in such a technical way as to avoid being deemed a 'major' source, including by avoiding the aggregation of their wells and compressors," Mariani wrote.