A quarter mile is a common distance used for horse racing, drag racing, and track and field sprints. It is now also the farthest distance at which U.S. Environmental Protection Agency (EPA) will consider two emission sources to be “adjacent” for purposes of major source air permitting. Under a new EPA final rule applicable to upstream and midstream emission sources in the oil and gas sector, new or modified equipment or activities are “adjacent” if they are on the same surface site or on sites1 that share equipment and are within one quarter mile of each other.

This definition of “adjacent” is critical because the adjacency of oil and gas equipment and activities is a key factor in determining whether they must be deemed a single “stationary source”2 for purposes of the Prevention of Significant Deterioration (PSD) and Nonattainment New Source Review (NNSR) programs or a “major source”3 for purposes of the Clean Air Act Title V operating permit program. Oil and natural gas production fields often cover large areas, and unlike many other industries, the expanse of land on which these commonly controlled operations are situated frequently is not owned or controlled by the owner/operator of the production activity. The aggregated emissions of these single or major sources can result in greater regulatory obligations. Under this final “Source Determination Rule” adopted on May 12, 2016, onshore oil and gas equipment and activities must be treated as a single source if they share the same industry grouping, are under common control, and are located on the same site or on sites that share equipment and are within a one quarter mile of each other. The one quarter-mile boundary is measured from the center of the equipment at the new or modified source for construction permits.

EPA’s proposed source determination rule in September 2015 put forward two options for defining “adjacent”; the second option threatened to implement a case-by-case evaluation of the functional interrelatedness between emitting equipment that was on separate, nearby sites. See Source Determination for Certain Emission Units in the Oil and Natural Gas Sector, 80 Fed. Reg. 56579 (Sept. 18, 2015). Industry opposed this option as without statutory support, inconsistent with the plain meaning of the term “adjacent,” and overly subjective. EPA ultimately determined in this final rule that one quarter mile was a reasonable bright-line distance within which sources in oil and natural gas operations are likely to be interconnected. Thus, EPA will not consider any source more than one quarter mile distant from another “adjacent” for purposes of determining the source.

However, not all emitting equipment located on separate surface sites within one quarter mile of each other will be considered “adjacent” automatically. Instead, there must also be shared equipment necessary to process or store oil or natural gas in order for the separate surface sites within one quarter mile of each other to be aggregated as a single stationary source. Fortunately for industry, in adopting the “shared equipment” test, EPA rejected as overly vague its previously proposed generalized notion of “functional interrelatedness.” According to EPA, examples of shared equipment include produced fluids storage tanks, phase separators, natural gas dehydrators, or emissions control devices. In addition, two well sites that feed to a common pipeline are not part of the same stationary source if there is no commonly shared processing or storage equipment between them. Separate surface sites within one quarter mile of each other that do not include shared emitting equipment will not be aggregated.

By replacing its previous policy interpretation and guidance with a somewhat more bright line rule, EPA hopes the clarity of the term “adjacent” for permitting authorities and industry will result in more consistent determinations of the scope of a source.

Download: EPA Charts Middle Path for Making “Stationary Source” and “Major Source” Determinations


  1. 40 CFR §63.761 defines surface sites as “any combination of one or more graded pad sites, gravel pad sites, foundations, platforms, or the immediate physical location upon which equipment is physically affixed.”
  2. The term “stationary source” is defined to mean ‘‘any building, structure, facility, or installation which emits or may emit a regulated NSR pollutant.’’ 40 CFR §§52.21(b)(5), 51.165(a)(1)(i), 51.166(b)(5). A “building, structure, facility, or installation” is defined as “all of the pollutant-emitting activities” that satisfy the following three elements: they “belong to the same industrial grouping”; “are located on one or more contiguous or adjacent properties”; and “are under the control of the same person (or persons under common control).” 40 CFR §§51.165(a)(1)(ii); 51.166(b)(6).
  3. 40 CFR §§70.2 and 71.2 define “major source” as ‘‘any stationary source (or group of stationary sources that are located on one or more contiguous or adjacent properties, and are under common control of the same person (or persons under common control)) belonging to a single major industrial grouping….’’
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