On Tuesday, in Citizens for Pennsylvania’s Future v. Ultra Resources, Inc., No. 4:11-CV-1360 (M.D.PA. Sept. 24, 2012) — a case watched closely by natural gas stakeholders in Pennsylvania — Judge Mariani of the U.S. District Court for the Middle District of Pennsylvania refused to dismiss a citizen suit brought by an environmental group challenging the validity of state air permits issued to the operator of a series of natural gas compressor stations, potentially opening the door for similar Federal court challenges to air permits previously issued by state regulators in Pennsylvania and elsewhere.  Approximately three years ago, the Pennsylvania Department of Environmental Protection (“PADEP”) issued separate authorizations for Ultra Resources, Inc. (“Ultra”) to construct seven compressor stations pursuant to a state general permit generally known as “GP-5.”  In issuing these authorizations, PADEP considered each of the compressor stations as a separate “facility.” If PADEP had considered the compressor stations to be a single “major” facility, then Ultra would have been required to obtain a more stringent non-attainment new source review (“NNSR”) permit before commencing construction.

More than two years after PADEP issued the authorizations, and after Ultra completed construction of the compressor stations pursuant to those authorizations, Citizens for Pennsylvania’s Future (“PennFuture”) filed suit in federal court against Ultra, alleging that Ultra violated the Clean Air Act by constructing a facility without obtaining a NNSR permit.  Ultra responded with a Motion to Dismiss, contending, first, that the suit constituted an improper collateral attack on the issuance of the individual permits and, second, that even if subject matter jurisdiction existed, the federal court should abstain from hearing the matter in accordance with the U.S. Supreme Court 1943 holding in Burford v. Sun Oil Co., 319 U.S. 315 (1943), as to do so would interfere with the DEP’s interests in establishing a coherent policy with respect to aggregation of sources. 

On September 24, 2012,, Judge Mariani denied Ultra’s Motion, although not without some hesitation with respect to jurisdiction.  First, the Court found that the allegations of the Complaint fit squarely within the plain language of the  Section 304(a)(3) of the CAA permitting private parties to bring suit against any entity that fails to obtain a major source permit in violation of the CAA.  While “the Court [was] disturbed by PennFuture’s inaction during the state administrative appeals period, especially in light of Ultra’s representation that it has completed construction of its seven compressor stations,” it nevertheless felt compelled to find that the Court had jurisdiction over the matter based on the express terms of the statute, legislative history and two cases cited by PennFuture.  The Court further declined to read in any requirement for PennFuture to have exhausted all administrative remedies before filing the citizen suit.    

Next, the Court turned its attention to the argument that the federal court should abstain because to decide the aggregation issue would be “disruptive of state efforts to establish a coherent policy with respect to a matter of substantial public concern.”New Orleans Public Service, Inc. v. Council of City of New Orleans, 491 U.S. 350, 361 (1989).  Ironically, the Court found that no concern over disrupting a coherent state policy existed because—as announced by PADEP in its most recent policy guidance on this issue–PADEP makes these “aggregation” decisions on a case-by-case basis.  While noting that the case law on abstention “is difficult to harmonize,” it nevertheless held that “it would be improper [for the Court] to abstain from exercising jurisdiction when Congress has clearly established a cause of action for citizen suits in Section 304 of the CAA.” 

Judge Mariani’s opinion follows the Sixth Circuit’s recent decision in Summit Petroleum Corp. v. USEPA   , Nos. 09-4348;10-4572 (6^th Cir. Aug. 7, 2012), where a split panel rejected US EPA’s decision to aggregate the emissions of a group of natural gas compressor stations and wells.  In addition, PADEP is scheduled to publish its final “aggregation guidance” which is virtually certain to be consistent with the principles announced in the Summit case.  By allowing this case to go forward, Judge Marinari has ensured that this case will be added to the growing mix of decisions and guidance (which currently include two matters currently pending before the Pennsylvania Environmental Hearing Board) concerning under what circumstances air contamination sources are to be aggregated for air permitting purposes.  Perhaps more importantly, the decision provides another avenue for environmental groups and individuals to challenge air permits issued to the natural gas industry—or other industries—even if these potential plaintiffs chose not to participate any of the administrative process in the initial permitting decision.

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