Petitioners Reply Brief — Chevron USA Inc. v. Natural Resources Defense Council, Inc.

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| Office-Supreme Court, U.S.

faa FILED

AUE 31 1983

Nos. 82-1005, 82-1247 and 82-1591 |

IN THE

Supreme Court of the United States

OCTOBER TERM, 1983

CHEVRON U.S.A. INC., a corporation,

Petitioner,

NATURAL RESOURCES DEFENSE COUNCIL, INC., et al.,

Respondents.

AMERICAN IRON AND STEEL INSTITUTE, et al.,

Petitioners,

NATURAL RESOURCES DEFENSE COUNCIL, INC., et al.,

Respondents.

ADMINISTRATOR,

ENVIRONMENTAL PROTECTION AGENCY,

Petitioner,

Vv.

NATURAL-RESOURCES DEFENSE COUNCIL, INC., et al.,

Respondents.

ON WRITS OF CERTIORARI TO

THE UNITED STATES COURT OFAPPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

BRIEF OF PETITIONERS

AMERICAN IRON AND STEEL INSTITUTE, et al.,

AMERICAN PETROLEUM INSTITUTE, et al.,

CHEMICAL MANUFACTURERS ASSOCIATION,

GENERAL Motors CorRPORATION, and

RUBBER MANUFACTURERS ASSOCIATION

August 31, 1983

{Counsel listed on inside cover]

RoBertT A. EMMETT Louis E. Tos!

(Attorney of Record) WILLIAM L. PATBERG

DAVID FERBER FULLER & HENRY

REED SMITH SHAW & McCLay 300 Madison Avenue

1150 Connecticut Avenue, N.W. Toledo, Ohio 43603

Suite 900

Washington, D.C. 20036 Attorneys for General

(202) 457-6144 Motors Corporation

BLAIR S. MCMILLIN

REED SMITH SHAW & McCLay CHARLES F. Letrow

747 Union Trust Building CLEARY, GOTTLIEB,

Pittsburgh, Pennsylvania 15219 STEEN & HAMILTON

(412) 288-3228 1752 N Street, N.W.

Washington, D.C. 20036

Attorneys for Petitioners

American ge Steel Attorney for the Rubber

Institute, et al Manufacturers Association

STARK RITCHIE

Davip ™. DEAL

AMERICAN PETROLEUM INSTITUTE

2101 L Street, N.W.

Washington, D.C. 20037

Of Counsel:

Attorneys for the American BARTON C. GREEN

Petroleum Institute, et al. General Counsel and

Secretary

THEODORE L. GARRETT American Iron and Steel

PaTRIcIA A. BARALD Institute

CovINGTON & BURLING

1201 Pennsylvania Avenue, N.W.

P.O. Box 7566

Washington, D.C. 20044

wv A

QUESTIONS PRESENTED

. Whether the court below impermissibly intruded upon the

discretion vested in the states by the Clean Air Act when

that court deprived the states of the authority to define

the term “source” as an industrial plant for their new

source review programs in nonattainment areas, even

where such a definition is demonstrated to be consistent

with reasonable further progress toward, and timely at-

tainment of, national ambient air quality standards.

. Whether the court below wrongfully substituted its policy

judgment for that of EPA, when it determined, without

support in the language or legislative history of the Clean

Air Act or in the record before it, that EPA had no

authority to define “source” as an industrial plant or to

allow the states to adopt a similar definition of “source”

for the purposes of new source review programs in non-

attainment areas.

. Whether the court below erred in vacating EPA’s rescis-

sion of “reconstruction,” a regulatory definition not found

in the Clean Air Act which hac imposed new source-related

preconstruction review requirements upon modifications

of industrial facilities.

. Whether the court below imposed on EPA an unduly high

burden to justify rescission of a portion of its rules

implementing Part D of the Clean Air Act.

LIST OF PARTIES BELOW

The Natural Resources Defense Council, Inc. (NRDC),

Citizens For A Better Environment, Inc., and the North-

western Ohio Lung Association, Inc. were petitioners in the

proceedings below. Respondents below were the Environ-

mental Protection Agency (EPA) and Anne M. Gorsuch,

Administrator of EPA.' The American Iron and Steel Institute

and seven of its member companies,” the American Petroieum

Institute and thirteen of its member companies,’ the Chemical

Manufacturers Association, General Motors Corporation, the

Rubber Manufacturers Association and a group of 81 electric

power generating companies and two electric utility trade

associations‘ were intervenor-respondents below.°

' William D. Ruckelshaus has since replaced Ms. Gorsuch as

Administrator of EPA.

2 Allegheny Ludlum Steel Corporation, Armco Inc., Bethlehem

Steel Corporation, Carpenter Technology Corporation, Inland Steel

Company, Jones & Laughlin Steel Corporation, Republic Steel

Corporation, and United States Steel Corporation.

Atlantic Richfield Company, Chevron U.S.A. Inc., Continental

Oil Company, Exxon Corporation, Gulf Oil Corporation, Marathon

Oil Company, Mobil Oil Corporation, Phillips Petroleum Company,

Shell Oil Company, Standard Oil Company (Indiana), Texaco Inc.,

The Standard Oil Company (Ohio), and Union Oil Company of

California.

* Alabama Power Company, Appalachian Power Company, Ari-

zona Public Service Company, Baltimore Gas and Electric Company,

Boston Edison Company, Carolina Power & Light Company, Central

and South West Corporation, Central Power and Light Company,

Public Service Company of Oklahoma, Southwestern Electric Power

Company, West Texas Utilities Company, Central Hudson Gas &

Electric Corporation, Central Illinois Light Company, Central

Illinois Public Service Company, Central Maine Power Company,

The Cincinnati Gas & Electric Company, Columbus and Southern

Ohio Electric Company, Commonwealth Edison Company, Consol-

idated Edison Company of New York, Inc., Consumers Power

Company, The Dayton Power and Light Company, Delmarva Power

& Light Company, The Detroit Edison Company, Duke Power

iii

Company, Florida Power Corporation, Florida Power & Light

Company, Georgia Power Company, Gulf Power Company, Gulf

States Utilities Company, Houston Lighting & Power Company,

Illinois Power Company, Indiana & Michigan Electric Company,

Indianapolis Power & Light Company, Iowa-Illinois Gas and Electric

Company, Iowa Power and Light Company, Iowa Public Service

Company, Kansas City Power & Light Company, Kentucky Power

Company, Kentucky Utilities Company, Madison Gas and Electric

Company, Arkansas Power & Light Company, Louisiana Power &

Light Company, Mississippi Power & Light Company, New Orleans

Public Service Inc., Mississippi Power Company, Monongahela

Power Company, Nevada Power Company, New England Power

Company, New York State Electric & Gas Corporation, Niagara

Mohawk Power Corporation, Northeast Utilities Service Company,

The Connecticut Light and Power Company, The Hartford Electric

Light Company, Holyoke Water Power Company, Western Mas-

sachusetts Electric Company, Northern Indiana Public Service

Company, Ohio Edison Company, Pennsylvania Power Company,

Ohio Power Company, Ohio Valley Electric Corporation, Oklahoma

Gas and Electric Company, Pacific Gas and Electric Company,

Pennsylvania Power & Light Company, The Potomac Edison

Company, Potomac Electric Power Company, Public Service Com-

pany of Indiana, Inc., Public Service Electric and Gas Company,

Rochester Gas and Electric Corporation, Salt River Project, San

Diego Gas & Electric Company, Southern California Edison Com-

pany, Tampa Electric Company, Texas Utilities Generating Com-

pany, Toledo Edison Company, Tucson Electric Power Company,

Union Electric Company, Virginia Electric and Power Company,

West Penn Power Company, Wisconsin Electric Power Company,

Wisconsin Power and Light Company, Wisconsin Public Service

Corporation, the Edison Electric Institute, and the National Rural

Electric Cooperative Association.

5 In accordance with Rule 28.1 of the Rules of the Supreme Court,

the parent companies of, and the non-wholly owned subsidiaries

and affiliates of each corporate party upon whose behalf this Brief

is filed are set forth in the Appendix to the Petition for a Writ of

Certiorari in I'». 82-1247 at 34a-61la. Corrections of and additions

and deletions to the list of non-wholly owned subsidiaries and

affiliates of three of the American Petroleum Institute’s member

companies, Phillips Petroleum Company, Gulf Oil Corporation, and

Mobil Oil Corporation, are set forth in Appendix C hereto.

TABLE OF CONTENTS

QUESTIONS PRESENTED .................0000.

LIST OF PARTIES BELOW .....................

TABLE OF CONTENTS ............... cece cece

TABLE OF AUTHORITIES...................45.

OPINIONS BELOW ......cccccccccccccccccccccee

STURISDICTION ...ccccccccccccccccccccccccccccce

STATUTES AND REGULATIONS INVOLVED ...

STATEMENT OF THE CASE ..................5.

A. The Statutory Framework...............00000:

B. EPA’s Regulations Defining the Term “Source”. .

1. EPA’s Pre-1980 Regulatory Treatment of the

Term “Source” in Nonattainment Areas ....

2. EPA’s 1980 Imposition of a “Dual” Definition of

“Source” in Nonattainment Areas..........

3. EPA’s 1981 Return to a Plantwide Definition of

ewe tI pak ih hos seacdaleceeccoes

C. EPA’s Deletion of the “Reconstruction” Provision

SUMMARY OF ARGUMENT................0005.

ahs 0) Sv don age wes whale nneee de e's

I. THE DECISION BELOW CONTRAVENES THE

CLEAN AIR ACT AND DECISIONS OF

THIS COURT BY DENYING EACH STATE

THE RIGHT TO SELECT ITS PREFERRED

MIX OF REMEDIAL MEASURES FOR AT-

TAINING AMBIENT AIR STANDARDS....

II. THE COURT BELOW IMPERMISSIBLY SUB-

STITUTED ITS JUDGMENT FOR EPA'S

REASONABLE CONSTRUCTION OF THE

Cee ME MER TE Sis beehndnddceéed vécccces

A. The Plantwide Definition of “Source” Allows

and Encourages Reasonable Economic Growth

Consistent with Reasonable Further Prog-

ress toward Attainment ..................

B. The Plantwide Definition of “Source” Gives

States the Flexibility to Manage their Emis-

sions in the Most Efficient and Cost-Effective

III. EPA’S DELETION OF THE RECONSTRUC-

TION PROVISION WAS PROPER AND

SHOULD NOT HAVE BEEN VACATED BY

pe en og APPT

IV. THE COURT BELOW IMPOSED ON EPA AN

UNDULY HIGH BURDEN OF JUSTIFICA-

TION FOR RESCISSION OF A RULE......

CAREY ea esccecsccvcccateccccccccccccces

APPENDIX

A. STATUTORY PROVISIONS................-.

B. GLOSSARY OF CERTAIN ABBREVIATIONS

AND TECHNICAL TERMS ................

C. REVISIONS TO THE LIST OF CORPORATE

PETITIONERS’ PARENT COMPANIES,

SUBSIDIARIES AND AFFILIATES SET

FORTH, PURSUANT TO SUPREME COURT

RULE 28.1, IN APPENDIX C TO THE PE-

TITION FOR A WRIT OF CERTIORARI IN

Page

vii

TABLE OF AUTHORITIES

Page

CASES:

Alabama Power Co. v. Costle, 636 F.2d 323 (D.C. Cir.

DP Nites tebnscavaoednqunaneecas 9, 10, 14, 15, 27, 32

ASARCO, Inc. v. EPA, 578 F.2d 319 (D.C. Cir.

SN tiehadhsds chibdivenictsovubsumegs <ilckubens 14, 15

Chemical Manufacturers Association v. EPA, No. 79-

ge | Peepers ere oe 12, 16, 28, 32

FCC v. National Citizens Committee for Broadcasting,

MP Crh, RTE Cnne'kccae cbs chiauaneadert sane 35

FCC v. WNCN Listeners Guild, 450 U.S. 582 (1981) 35

FPC v. Transcontinental Gas Pipeline Corp., 365 U.S.

ERG ia kao bteda Jam wetins eénesbinessrinn ss 35

Motor Vehicle Manufacturers Association v. State Farm

Mutual Automobile Insurance Co., U.S.

, 51 U.S.L.W. 4953 (1983)......... 18, 34, 35, 36

Small Refiner Lead Phasedown Task Force v. EPA,

F.2d , 18 Ex.vt. Rep. Cas. (BNA) 1681

Nee Se PPT rita hee 15

Train v. NRDC, 421 U.S. 60 (1975)...... 4, 14, 17, 19, 20,

22, 23

Union Electric Co. v. EPA, 427 U.S. 246 (1976) ... 17, 19,

20, 22

Vermont Yankee Nuclear Power Corp. v. NRDC, 435

Le Pe eknadvepske code cccoaenepeaabee 18, 36

STATUTES:

ase SED aca <a nbs vances Uke hecabawncouse 3

Clean Air Act of 1970, Pub. L. No. 91-604, 84 Stat.

1676 (formerly 42 U.S.C. § 1857 et seq.) .......... 3

Clean Air Act, as amended by 1977 Amendments, Pub.

L. No. 95-95, 91 Stat. 685, 42 U.S.C. §§ 7401 et seq.

GN Pe ice artnitolnebcins sdebcatndscecscaes 4

Section 101, 42 U.S.C. § 7401.............cceeees 3

Section 101(a)(3), 42 U.S.C. § 7401(aX(3)....... 3, 14, 19

viii

Page

Section 101(b), 42 U.S.C. § 7401(b)..... 6.0. ee eee 14

Section 107, 48 U.S.C. 6 FEB «oc ccc cccvcscccsvees 3

Section 107(a), 42 U.S.C. § 7407(a) ...........005- 19

Section 100, 48 U.S.C. § T4OB.. .ccccccccccccccces 3

Section 110, 42 U.S.C. § 7410... ..ccccccccccccces 3

Section 110(a)(1), 42 U.S.C. § 7410(a)(1) .......... 4

Section 110(a)(2), 42 U.S.C. § 7410(a)(2)....... 3, 4, 20,

21, 22

Section 110(a)(2)(I), 42 U.S.C. § 7410(ay(2)(T)...... 6

Section 110(a)(3), 42 U.S.C. § 7410(a)(3) .......... 22

Section 110(c), 42 U.S.C. § 7410(c) ...... 6. cece 4

Section 111, 48 U.S.C. § T411 ....ccccccceee 3, 7, 13, 24

Section 111(a), 42 U.S.C. § 7411(a) ...... 6. cece 7

Section 111(a)(2), 42 U.S.C. § 7411(a)(2) .......... 7

Section 111(a)(4), 42 U.S.C. § 7411(a)(4) .......... (a

Part C, 42 U.S.C. §§ 7470-7479A ... 5, 9, 10, 12, 16, 25,

27, 30, 33

Part D, 42 U.S.C. §§ 7501-7508 ............... passim

Section 171,:48 U.S.C. §. TGOL wc ccccicccccwccccnes 3

Section 171(1), 42 U.S.C. § 7501(1) ............06. 5

Section 171(4), 42 U.S.C. § 7501(4) .........0e eee 7, 32

Section 178, 48 U.S.C..§ THB... cccccccccccccecs 3, 5

Section 172(b)(2), 42 U.S.C. § 7502(b)(2) .......... 5

Section 172(b)(3), 42 U.S.C. § 7502(b)(3) .......... 5

Section 172(b)(6), 42 U.S.C. § 7502(b)(6) .......... 5

Section 178, 48 U.S.C. § TEOB wc ciccccccccccccccses 3, 9

Section 173(1)-(4), 42 U.S.C. § 7503(1)-(4) ......... 6

Section SOR, 46° U.S.C. 8 FORB . ccccscccccccncccsas 3, 7

Section 302(j), 42 U.S.C. § 7602(j)............eees 5

REGULATIONS:

GO Ce Be ED boo viéseccntccdccsetséecns 3

COEF is WD Sade bons si'esesccnsnanded 4

40 C.F.R. § 51.18(j)(1)(v)(1982) 0... eee eee eee es 5

40 C.F.R. § 51. 18(j)(L)(ix)(1981). 2... eee 15, 32

Page

40 C.F.R. § 51. 18(j)(1)(xili)(1982). 0... eee eee es 6

40 C.F.R. § 51.24(b)(5)(1981) occ cece cece eee eee 10

40 C.F.R. Part 51, Appendix S (1982) ...........05. 4, 6

NG ELENDD bvcccccescccsosccssccsvesecere 6

LEGISLATIVE MATERIALS:

S. Rep. No. 8, 77th Cong., Ist Sess. (1941) ......... 35

H.R. Rep. No. 95-294, 95th Cong., Ist Sess. (1977).... 20,

21, 23, 24, 29

S. Rep. No. 95-127, 95th Cong., lst Sess. (1977)..... 14, 21

H.R. Rep. No. 95-564, 95th Cong., Ist Sess. (1977).. 21

FEDERAL REGISTER:

36 Fed. Reg. 8186 (April 30, 1971) ........0cceeeues 3

41 Fed. Reg. 55524 (December 21, 1976)............ 4, 15

43 Fed. Reg. 26380 (June 19, 1978) ........ccceeeuee i)

44 Fed. Reg. 3274 (January 16, 1979) ......... 8, 9, 12, 16

44 Fed. Reg. 51924 (September 5, 1979)...... 9, 10, 11, 16

45 Fed. Reg. 52676 (August 7, 1980)........ 10, 11, 15, 32

46 Fed. Reg. 16280 (March 12, 1981)..... 7, 12, 18, 16, 30

46 Fed. Reg. 50766 (October 14, 1981) ... 2, 13, 14, 16, 17,

33, 34, 35

MISCELLANEOUS:

EPA and Industry Pursue Regulatory Options, Sci-

EE UE, EOD a ccccccccccscsessocccnccs 25

National Commission on Air Quality, To Breathe Clean

TPT Gis v5 bib ccs speces ctebacesesesses 25

New Ways to Short Cut Costly Rules, Dun’s Review,

Ce vchsnsadeacesssertcessedecser 25

New York Times, December 6, 1979...........00005 25

Washington Post, December 10, 1979............44. 25

IN THE

Supreme Court of the United States

OcTOBER TERM, 1983

No. 82-1005

CHEVRON U.S.A. INC., a corporation,

Petitioner,

Vv.

NATURAL RESOURCES DEFENSE COUNCIL, INC., et al.,

Respondents.

No, 82-1247

AMERICAN IRON AND STEEL INSTITUTE, et al.,

Petitioners,

Vv.

NATURAL RESOURCES DEFENSE COUNCIL, INC., et al.,

Respondents.

No, 82-1591

ADMINISTRATOR,

ENVIRONMENTAL PROTECTION AGENCY,

Petitioner,

Vv.

NATURAL RESOURCES DEFENSE COUNCIL, INC., et al.,

Respondents.

ON WRITS OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

BRIEF OF PETITIONERS

AMERICAN IRON AND STEEL INSTITUTE, et al.,

AMERICAN PETROLEUM INSTITUTE, et al.,

CHEMICAL MANUFACTURERS ASSOCIATION,

GENERAL MOTORS CORPORATION, and

RUBBER MANUFACTURERS ASSOCIATION

OPINIONS BELOW

The opinion of the court of appeals is reported at 685

F.2d 718 and is reprinted in the appendix to Chevron U.S.A.

Inc.'s petition for a writ of certiorari, No. 82-1005 (“Chev.

Pet. App.”), at A-l to A-20. The Environmental Protection

Agency’s final regulations and statement of basis and purpose

are published at 46 Fed. Reg. 50766 (October 14, 1981) and

are reprinted in the Joint Appendix at J.A. 97-117.

JURISDICTION

The opinion and judgment of the court of appeals were

entered on August 17, 1982. See Chev. Pet. App., A-1 to A-

20. Timely petitions for rehearing and suggestions for re-

hearing en banc were denied by orders of the court of appeals

entered on October 27, 1982. See Chev. Pet. App., B-22 to

B-25. The petition for a writ of certiorari in No, 82-1005 was

filed on December 15, 1982; the petition in No. 82-1247 was

filed on January 25, 1983. On January 21, 1983 the Chief

Justice extended the time for filing a petition for a writ of

certiorari in No. 82-1591 to and including March 26, 1983; the

petition was filed on March 25, 1983. The three petitions were

granted and consolidated on May 31, 1983. Jurisdiction to

review the decision below is vested in this Court by 28 U.S.C.

§ 1254(1).

STATUTES AND REGULATIONS INVOLVED

This case involves sections 101, 107, 110, 111, 171, 172,

173, and 302 of the Clean Air Act, as amended, 42 U.S.C. §§

7401, 7407, 7410, 7411, 7501, 7502, 7503, and 7602 (Supp.

IV). The pertinent portions of these statutory provisions are

set forth in Appendix A to this brief. The regulations at issue

are reprinted in the Joint Appendix at J.A. 97-117.

STATEMENT OF THE CASE

A. The Statutory Framework

The 1970 Clean Air Act! established a joint federal/state

framework for protecting and enhancing air quality through-

out the country. It directed the Environmental Protection

Agency (“EPA”) to establish national ambient air quality

standards (“NAAQS”) limiting the concentration of pollutants

that would be permitted in the atmosphere.’ Primary re-

sponsibility for attaining and maintaining those standards,

however, was assigned to the states.’ Within nine months

after promulgation of a NAAQS, each state was required to

develop and adopt a State Implementation Plan (“SIP” or

' Clean Air Act of 1970, Pub. L. No. 91-604, 84 Stat. 1676, then

codified at 42 U.S.C. § 1857 et seq. In 1977 the Act was further

amended and, as amended, was recodified at 42 U.S.C. $§ 7401 et

seq. (Supp. IV).

* Section 109, 42 U.S.C. § 7409. The original NAAQS for sulfur

oxides (sulfur dioxide), particulate matter, carbon monoxide, pho-

tochemical oxidants, hydrocarbons and nitrogen dioxide were pro-

mulgated on April 30, 1971. 36 Fed. Reg. 8186. Ambient air

standards are now in effect for six pollutants: sulfur oxides,

matter, carbon monoxide, nitrogen oxides, photochem-

ical oxidants (expressed as ozone), and lead. See 40 C.F.R. Part 50

(1982).

* Section 101(aX3) and 110(aX(2), 42 U.S.C. §§ 7401(aX3) and

7410(aX(2).

“state plan”) incorporating such programs, measures and

means as the state found necessary and sufficient to achieve

compliance with the NAAQS by the statutory deadlines.‘

EFA was required te review these SIPs and to determine

whether they met the requirements of section 110(a)(2), 42

U.S.C. § 7410(a)(2),° but as this Court made clear, the scope

of that review was limited: so long as a plan, in its entirety,

provided for timely attainment of the NAAQS, EPA had no

authority to second-guess the mix of emission limits and other

requirements by which the state chose to achieve that result.

Train v. NRDC, 421 U.S. 60, 79-80 (1975).

Notwithstanding the adoption and implementation of SIPs

by all of the states, not all areas of the country were in

compliance with the NAAQS by the statutory attainment

dates. To address the question whether industrial plants could

be constructed or modified in such areas, EPA published in

1976 an “Emission Offset Interpretative Ruling” (“Offset

Ruling”) which required the states to conduct preconstruction

review of, and to impose certain conditions upon, any major

new “stationary sources” and any major modifications to

existing “stationary sources” proposed to be constructed in

an area exceeding a national ambient air quality standard.*®

In addressing industrial growth issues in the 1977 Amend-

ments to the Clean Air Act,’ Congress preserved the Act’s

basic federal/state framework but required the states to

incorporate several new elements in their SIPs both for those

* Section 110(aX(1), 42 U.S.C. § 7410(a)(1).

5 If a state failed to satisfy any of the requirements of section

11a\(2), EPA could promulgate the necessary requirements in its

own plan under section 110(c), 42 U.S.C. § 741Mc).

* 41 Fed. Reg. 55524 (December 21, 1976). Codified as Appendix

S to 40 C.F.R. Part 51 (1982), interpreting new source review

provisions set forth in 40 C.F.R. § 51.18 (1982).

7 Pub. L. No. 95-95, 91 Stat. 685, 42 U.S.C. $§ 7401 et seq. (Supp.

IV).

areas meeting NAAQS (attainment areas) and those not

meeting NAAQS (nonattainment areas). For attainment areas,

Congress added a new Part C to Title I (Sections 160-169A,

42 U.S.C. §§ 7470-7479A), which provided for the prevention

of significant deterioration (“PSD”) of ambient air quality in

those areas through preconstruction review and oversight of

new industrial growth. The counterpart for nonattainment

areas was a new Part D of Title I (Sections 170-178, 42 U.S.C.

$§ 7501-7508), which Congress fashioned after EPA’s 1976

Offset Ruling.

Part D requires the states, for each nonattainment area

within their borders, to amend their SIPs to provide for

attainment by new deadlines and for “reasonable further

progress” toward attainment in the interim.* This goal is to

be achieved (1) by implementation of all reasonably available

control measures for existing sources, and (2) by adoption of

such other requirements as are necessary to demonstrate

reasonable further progress and attainment. Section 172(b)(2)

and (3), 42 U.S.C. § 7502 (b)(2) and (3). In addition, each

state must require a permit of any new “major stationary

source” or any alteration to an existing “major stationary

source” that would result in a net increase in emissions from

that “source,” before allowing construction to comménce.’®

® Section 172, 42 U.S.C. § 7502. The Act defines “reasonable

further progress” as “annual incremental reductions in emissions of

the applicable air pollutant . . .” Section 171(1), 42 U.S.C. § 7501(1).

This requirement precludes the states from deferring necessary

emission reductions to the end of the statutory compliance period.

* Section 172(b\(6), 42 U.S.C. § 7502(b\6). A “major stationary

source” is any stationary facility or source of air pollutants which

emits, or has the potential to emit, one hundred tons per year or

more of any air pollutant. Section 302(j), 42 U.S.C. § 7602(j). The

Act does not define what constitutes a “major” modification. EPA

by regulation has defined as “major” those modifications which

result in a “significant net emissions increase” of any pollutant. 40

C.F.R. § 51.18(j1)(v) (1982). EPA has specified the levels at which

The state may issue such a permit only upon a showing that:

(1) the increase in emissions from the new or modified

major source will be more than offset by corresponding

emission decreases in the area, or have already been

accounted for by a growth allowance built into the state

plan;

(2) the new or modified major source installs control

technology to achieve the lowest achievable emission rate

(“LAER”) for such category of sources;

(3) the new source owner certifies that the other major

sources it owns in the state are in compliance with the Act;

and

(4) the state is carrying out its revised Part D state plan.

Section 173(1)-(4), 42 U.S.C. § 7503(1)-(4).

Following designation of an area as nonattainment, during

the period the states are completing the required revisions

to their SIPs, new source construction is governed by EPA’s

Offset Ruling, which imposes permit conditions similar to

those that must be imposed under a Part D SIP. See 40

C.F.R. § 52.24(b) (1982); 40 C.F.R. Part 51, Appendix S

(1982). If a state’s Part D SIP has not been approved by

EPA within the time allotted by the Act, section 110(a)(2)(D,

42 U.S.C. § 7410(a(2)(D, precludes the construction or

modification of any major “source” that will cause or contribute

to a violation of the NAAQS in a nonattainment area.’ This

an increase is “significant” on a pollutant-by-pollutant basis. The

“significance levels” currently in force are:

Carbon monoxide: 100 tons per year (tpy)

Nitrogen oxides: 40 tpy

Sulfur dioxide: 40 tpy

Particulate matter: 25 tpy

Ozone: 40 tpy of volatile organic compounds

Lead: 0.6 tpy

40 C.F.R. § 51.18(j)(1)(xiii) (1982).

'* Section 110(aX2\1), 42 U.S.C. § 7410(aX2X(1).

prohibition is sometimes referred to as the “construction

moratorium.”"!

B. EPA’s Regulations Defining the Term “Source”

The Clean Air Act does not include a generally applicable

definition of “source” in section 302, 42 U.S.C. § 7602, which

sets forth definitions for use throughout the Act, or a specif-

ically applicable definition in Part D for purposes of nonat-

tainment review." The principal issue in this case is whether

EPA, in the absence of an applicable statutory definition, has

discretion to define, and to allow the states to define, the

term “source” as an industrial plant for purposes of precon-

struction review under Part D of the Clean Air Act. This

term is critical, for while the construction moratorium and

permit programs apply both to new “sources” and modifica-

tions of existing “sources,” a “modification” occurs only if

there is a net increase in emissions from the “source” as a

whole. Sections 111(a)(4) and 171(4), 42 U.S.C. §§ 7411(a)(4)

and 7501(4). Thus, if “source” is defined as an industrial plant,

process modifications or equipment changes within the plant

will constitute neither new sources nor modifications so long

as there is no significant net emission increase from the plant

as a whole.

A plantwide definition of “source” allows plants to offset

increased emissions from one unit or piece of equipment in

the plant with an equal or greater contemporaneous decrease

" See, e.g., 46 Fed. Reg. 16280 (March 12, 1981).

2 Subsection (a)(2) of section 111, 42 U.S.C. § 7411, relating to

standards of performance for new sources, defines “stationary

source” as a “building, structure, facility, or installation,” but

neither the Act nor its legislative history provides any firm guidance

as to how those four component terms should be defined. Moreover,

that definition by its terms applies only to that one section. See

introductory language of section 111(a), 42 U.S.C. § 7411(a).

in emissions elsewhere in the plant,'* and thereby to retain

necessary flexibility to make process changes or plant im-

provements quickly with no threat to ambient air quality. In

areas where EPA has imposed, or will impose, a new source

construction ban, this definition will permit the modernization

of our nation’s industrial base by the replacement of obsolete

facilities with modern and efficient facilities which have fewer

emissions. If, on the other hand, “source” is defined as a

piece of equipment, any addition or replacement of a piece of

equipment with emissions in excess of 100 tons per year will

be subject to review or prohibited, as will any alteration to

such a piece of equipment which increases its emissions, even

if plantwide emissions do not increase or actually decline.

1. EPA’s Pre-1980 Regulatory Treatment of the Term

“Source” in Nonattainment Areas

EPA's original 1976 Offset Ruling, upon which the new

source review aspects of Part D are based, did not explicitly

define “stationary source” or “source.” EPA addressed this

issue directly for the first time, in the wake of the 1977

Amendments to the Act, in January 1979 revisions to the

Offset Ruling. 44 Fed. Reg. 3274 (January 16, 1979). In the

preamble to the revised 1979 Offset Ruling, EPA employed

the term “source” to refer to an entire plant, 44 Fed. Reg.

3276, but did not allow the netting of intra-plant emission

increases and decreases in those states lacking approved Part

D SIPs. Significantly, however, in those states with acceptable

Part D SIPs, modifications of major sources in nonattainment

'S The netting of internal emission increases against internal

emission decreases is an example of what is sometimes referred to

as the “bubble concept.” A source is treated as if it were under a

“bubble” for purposes of determining its net emissions.

areas were not required to be subject to preconstruction

review where there was no net emission increase from the

plant as a whole. /d. at 3276-77. As EPA stated:

Congress intended under Section 173 of the Act that States

would have some latitude to depart from the strict requirements

of this Ruling when the State plan is revised and is being carried

out in accordance with Part D. Under a Part D plan, therefore,

there is less need to subject a modification of an existing facility

to LAER [lowest achieveable ernission rate) and other stringent

requirements if the modification is accompanied by sufficient

intrasource offsets so that there is no net increase in emissions.

Consequently, for a plan approved and implemented under Part

D, it is acceptable for the State to include the above exemption

for intrasource offsets in its new source construction under the

State plan...

Id. at 3277.

2. EPA’s 1980 Imposition of a “Dual” Definition of “Source”

in Nonattainment Areas

In 1979 the court below, in Alabama Power Co. v. Costle,

636 F.2d 323 (D.C. Cir. 1979), vacated, inter alia, EPA

regulations prohibiting the netting of emission increases and

decreases for purposes of the PSD program under Part C of

the Act." Thereafter, EPA proposed new—and different—

definitions of the term “source,” one definition to be used for

the Part C PSD program and also for approved Part D state

pians and another definition to be used for the construction

moratorium, the Offset Ruling and state plans not approved

as meeting the requirements of Part D. 44 Fed. Reg. 51924

“4 43 Fed. Reg. 26380 (June 19, 1978).

(September 5, 1979). For purposes of Part C, EPA, at the

direction of the Alabama Power decision, proposed to define

a “source” for purposes of Part C as an industrial plant.

EPA indicated that it would also permit the states to adopt

a similar definition of “source” where the overall state plan

had been approved as meeting the requirements of Part D.

Where a state Part D plan had not been approved, however,

EPA proposed to define a “source” both as the industrial

plant and as an individual piece of process equipment within

the plant. 44 Fed. Reg. at 51956, 51958. EPA subsequently

labelled this the “dual” definition of “source.”'®

As EPA's preamble discussion of its proposal made clear,

the “dual” definition of “source” represented a substantial

departure from EPA's prior policy of looking to the entire

plant, and not to individual pieces of equipment within a

plant, in determining whether or not a source must undergo

preconstruction review. See, e.g., 44 Fed. Reg. at 51931-2.

EPA gave the following explanation for proposing two op-

posite definitions for the same statutory term:

To assure adequate review of new plants, a large grouping

must be subject to nonattainment NSR [new source review]. . .

To do otherwise would allow a new plant that is divided into

separate process units, each below the potential emission thresh-

old, to escape review. New emissions could thus be added to the

existing violation, without review, making attainment virtually

impossible. Therefore, EPA believes that nonattainment pro-

grams, like PSD programs, must apply NSR to entire plants.

EPA believes that pieces of process equipment within plants

should also be subject to NSR under nonattainment programs.

This would prevent use of plant-wide offsets for increases from

construction or modification of major pieces of process equipment.

'S See 44 Fed. Reg. 51947-48 (proposed 40 C.F.R. § 51.24(b)(5))

and 44 Fed. Reg. 51931-32.

6 See, e.g., 45 Fed. Reg. 52696 (August 7, 1980).

Id. at 51932. EPA stated that, in determining whether

preconstruction review would be required, the Agency would

look to emission increases from each major piece of process

equipment without considering contemporaneous emission

reductions within the plant as a whole. Jd.

Despite this policy change, EPA recognized that the states

should have a voice in the matter and proposed to apply the

“dual” definition of “source” only where a state had failed to

submit an approvable Part D SIP. See 44 Fed. Reg. at 51933.

States with approved Part D SIPs were permitted—and

even encouraged—to employ a plantwide “source” definition

if the SIP as a whole provided for reasonable further progress

toward and attainment of the NAAQS. As noted by EPA:

Use of only a plant-wide definition of source will permit plant-

wide offsets . . . [which is] appropriate once a SIP is adopted

that will assure the reductions in existing emissions necessary

for attainment .. . . If the level of emissions allowed in the SIP

is low enough to assure reasonable further progress and attain-

ment, new construction or modifications with enough offset credit

to prevent an emission increase should not jeopardize attainment.

44 Fed. Reg. at 51933.

When EPA promulgated final PSD and nonattainment

regulations on August 7, 1980 (45 Fed. Reg. 52676), the

Agency dropped its proposal to allow states with approved

Part D SIPs to adopt a plantwide definition of “source” and

instead required all states to adopt the “dual” definition,

regardless of whether the “dual” definition was necessary for

the particular state to achieve attainment. EPA's sole justi-

fication was that its regulation would subject the maximum

number of “sources” and internal modifications at major

“sources” to new source review and to the permit require-

ments of Part D. 45 Fed. Reg. 52676, 52697 (August 7, 1980).

EPA’s August 7, 1980 PSD and nonattainment regulations

were challenged immediately in the court below and consol-

idated with Chemical Manufacturers Association v. EPA,

No. 79-1112 and consolidated cases (D.C. Cir. 1979) (“CMA

v. EPA”),""

3. EPA’s Return to a Plantwide Definition of “Source” .

On March 12, 1981 EPA proposed to replace its “dual”

definition of “source” with a plantwide “source” definition

identical to the Part C “source” definition. 46 Fed. Reg.

16280. '*

At 46 Fed. Reg. 16281, EPA gave seven reasons for its

return to a plantwide “source” definition:

1. The “dual” definition, which makes it costly and time

consuming to undergo an equipment or process change, “can

act as a disincentive to new investment and modernization

by discouraging modifications to existing facilities.”

2. The “dual” definition prohibits the construction or mod-

ification of major pieces of process equipment in a “substantial

number” of areas where the construction moratorium had

taken effect (because no Part D SIP had been approved),

'’ The CMA v. EPA case commenced with challenges to EPA’s

1979 revised Offset Ruling, 44 Fed. Reg. 3274 (January 16, 1979).

Briefs challenging the legality of certain provisions in the August

1980 regulations, including the “dual” definition of “source,” were

filed on February 12, 1981. Shortly thereafter, EPA requested and

was granted a deferral of further briefing pending the outcome of

settlement discussions. The negotiations resulted in a settlement

agreement which was filed with the court below on February 22,

1982. Further proceedings in CMA v. EPA have been deferred

pending implementation of the settlement agreement. Neither the

negotiations nor the settlement agreement addressed the “dual”

source definition, which was the subject of further rulemaking

proceedings commencing with EPA's March 12, 1981 Federal

‘® EPA also proposed to delete its requirement that “recon-

structed” facilities in nonattainment areas undergo new source

review as if they were new sources. 46 Fed. Reg. at 16281. See

discussion infra at 15-17.

even though no overall increase in emissions at the plant

would result.

3. For the above reasons, the dual definition can “actually

retard progress in air pollution control by discouraging re-

placement of older, dirtier processes or pieces of equipment

with new, cleaner ones.”

4. The plantwide definition would simplify EPA’s rules by

utilizing a uniform definition of “source” for the PSD, non-

attainment, and construction moratorium programs and,

thereby, would reduce “confusion and inconsistency.”

5. Since the states remain subject to the requirement that

they demonstrate attainment of the NAAQS for all nonat-

tainment areas as expeditiously as practicable and show

reasonable further progress towards attainment, deletion of

the mandatory “dual” “source” definition “should not interfere

with the fundamental purpose of Part D of the Act.”

6. Under Section 111 of the Act, 42 U.S.C. § 7411, new

source performance standards “will continue to apply to many

new or modified facilities and will assure use of the most up-

to-date pollution control techniques regardless of the applic-

ability of nonattainment area new source review.”

7. Review would continue to be required where overall

emissions from the plant increase above de minimis levels,

thereby protecting air quality.

EPA concluded that, in light of the above considerations,

the “dual” definition was “excessively and unnecessarily

burdensome,” 46 Fed. Reg. at 16281, and proposed to delete

it. As stressed by EPA, and as pointed out in number 5

above, EPA would carefully scrutinize any state’s deletion of

the “dual” definition of “source” to determine that the state’s

Part D SIP would still ensure reasonable further progress

and attainment of the NAAQS.

On October 14, 1981 EPA announced its decision to adopt

the plantwide definition of “source” as proposed and reported

that of the 81 comments it had received, “the majority . . .

favored deletion of the dual definition.” 46 Fed. Reg. 50767.

Having evaluated these comments, EPA concluded that two

principal concerns warranted this approach to Part D new

source review:

First, today’s action means that both the PSD and nonattain-

ment programs will use the same definition of “source.” This

alone will reduce regulatory complexity. Sources will no longer

have to figure out what an “installation” is, which should lessen

any confusion engendered by EPA's August 7 rules.

Second, and more important, by removing the requirement

that states adopt a dual definition, EPA is acting consistently

with the purposes of Part D of the Act. Congress expressly

provided that states are to play the primary role in pollution

control. Sections 101(a)(3), 101(b). It also intended that states

retain the maximum possible flexibility to balance environmental

and economic concerns in designing plans to clean up nonattain-

ment areas. See, ¢e.g., Sen. Rep. 95-127 at pp. 10-11; ef. NRDC

v. Train, 421 U.S. 60 (1975). Today's action follows this mandate

by allewing states much greater flexibility in developing their

nonattainment NSR [new source review) programs and attain-

ment demonstrations. Since demonstration of attainment and

maintenance of the NAAQS continues to be required, deletion

of the dual definition increases state flexibility without interfering

with timely attainment of the ambient standards, and so is

consistent with Part D.

Id. at 50767 (October 14, 1981) (emphasis added).

NRDC challenged the revised regulations in the court

below in NRDC v. Gorsuch, 685 F.2d 718 (D.C. Cir. 1982).

The court of appeals concluded that neither the Act nor its

legislative history determined the scope of the term “source,”

685 F.2d at 723, Chev. Pet. App. at A-8, but held itself

“compelled” to strike down EPA's definition of “source” as

per se invalid on the sole basis of an alleged “bright line”

drawn, in its view, by other panels of that court in two prior

cases involving air quality. 685 F.2d at 726-27, Chev. Pet.

App. at A-16 to A-17. The court held that ASARCO, Inc. v.

EPA, 578 F.2d 319 (1978), and Alabama Power Co. v. Costle,

636 F.2d 323 (1979), together drew an uncrossable line

between programs designed to “improve” air quality, for

which a single plantwide “source” definition is precluded, and

programs that only “maintain” air quality, for which a single

plantwide “source” definition is required.'® 685 F.2d at 720,

725-6, Chev. Pet. App. at A-2 to A-3, A-14 to A-15.

The court below did not remand, but vacated EPA’s October

14, 1981 regulations deleting the “dual” “source” definition.

The court also denied petitioners’ timely petition for rehearing

and suggestion for rehearing en banc. Chev. Pet. App. at B-

24, B-25. In a subsequent case, the court cited the decision

below as “implicitly assuming that EPA will return to its

previous regulation defining ‘source’ under the Clean Air

Act.” See Small Refiner Lead Phasedown Task Force v.

EPA, F.2d , 18 Env’t Rep. Cas. (BNA) 1681, 1682

(D.C. Cir. 1983).

C. EPA's Deletion of the “Reconstruction” Provision

EPA's August 7, 1980 regulations adopting the “dual”

“source” definition also included a provision which subjected

“reconstructions” of existing sources in nonattainment areas

to the Part D preconstruction requirements and the construc-

tion moratorium. A “reconstruction” was deemed to occur

when components of a source worth more than 50% of the

capital cost of the source were replaced, regardless of whether

this caused a net increase (or decrease) in emissions.”

The 1976 Offset Ruling had not mentioned or provided for

special treatment of “reconstructions.”"* EPA first applied

the reconstruction concept to new source review in nonat-

tainment areas in the January, 1979 amendments to the 1976

'® As the court below stated, “We express no view on the decision

we would reach if the line drawn in Alabama Power and ASARCO

did not control our judgment.” 685 F.2d at 720 n.7, Chev. Pet.

App. at A-4 n.7.

*” See 45 Fed. Reg. 52742 (August 7, 1980) (former 40 C.F.R. §

51.18(j 1 ix) (1981)).

* The 1976 Offset Ruling defined the terms “major source” and

“major modification” but not “reconstruction.” See 41 Fed. Reg. at

55528.

Offset Ruling. 44 Fed. Reg. 3274, 3282 (January 16, 1979).

EPA provided no justification in the preamble for inclusion

of a “reconstruction” provision.“ On September 5, 1979, EPA

proposed to include the “reconstruction” definition in its

regulations implementing both Parts C and D, 44 Fed. Reg.

51924, and, again, offered scant justification. See, e.g., 44

Fed. Reg. at 51933, 51933 n.8. In its final August 7, 1980

rules, EPA deleted the reconstruction provision from the

Part C PSD regulations but included it in the Part D

regulations. The reconstruction provision was also challenged

and briefed by the industry petitioners in the CMA v. EPA

case (see pp. 11-12, supra).

In its Federal Register notice proposing to delete the “dual”

definition of “source,” EPA also proposed to delete the

“reconstruction” requirement. 46 Fed. Reg. 16280 (March 12,

1981). As noted by EPA, in light of the proposal to adopt a

plantwide definition of “source”:

(Tyhere is good reason to abandon the “reconstruction” test for

nonattainment area new source review. That test by itself only

requires review in cases where there is reconstruction, but a

“significant” increase in emissions is absent. With a plant-wide

definition of source, the reconstruction provision would only

trigger review in cases of plant-wide reconstructicn. Few in-

stances of plant-wide reconstruction are expected. Thus, there

is little justification for the added complexity this provision

entails. Moreover, this change will further reduce inconsistency

with the PSD rules which do not have a reconstruction provision.

46 Fed. Reg. 16281.

After it received and considered public comments, EPA

took final action deleting the “reconstruction” provision, 46

Fed. Reg. 50766 (October 14, 1981), citing the same rationale

“ EPA merely explained how the provision would work, stating

that reconstructions would not be defined using the “net increase”

calculation required by the Act’s definition of “modification,” but

instead would be defined by a “50% cost test,” for which it cited no

statutory basis. See 44 Fed. Reg. 3277.

it had provided in its proposal. See 46 Fed. Reg. at 50767.

NRDC also challenged this EPA action in the court below.

The court below vacated EPA's deletion of the reconstruction

rule as “ancillary” to the vacated plantwide “source” definition.

685 F.2d at 728, Chev. Pet. App. at A-19 to A-20.

SUMMARY OF ARGUMENT

1. As this Court has made clear in Train v. NRDC, 421

. U.S. 60, 70-90, 86-87 (1975), and Union Electric Co. v. EPA,

427 U.S. 246, 266 (1976), the Clean Air Act places the primary

responsibility for determining the mix of controls necessary

to attain and maintain national ambient air standards with

the states. The decision below severely limits state flexibility

to choose the most efficient and cost-effective mix of controls

necessary to achieve reasonable further progress and attain-

ment. This intrusion into an area of discretion Congress

reserved to the states also contravenes Congress’s intent in

the 1977 Amendments to increase the states’ flexibility in

tailoring implementation plans to their particular circum-

stances.

2. The court below concluded that neither the Clean Air

Act nor its legislative history clearly indicates how Congress

intended the term “source” to be defined for ; urposes of Part

D. Given that conclusion, EPA's judgment tnat a plantwide

definition best serves the various purposes underlying Part

D was entitled to substantial deference. The court did not

accord this deference to EPA, but instead invalidated EPA's

judgment on the basis of a simplistic characterization of both

the Act and the purposes of Part D. This Court held in Train

v. NRDC, 421 U.S. at 87, that EPA’s interpretations of the

Act, if reasonable, “preclude the Court of Appeals from

substituting its judgment for that of the Agency.” The

plantwide definition of “source” admirably balances Con-

gress’s three primary purposes in enacting Part D: (1) to

ensure that reasonable further progress and timely attainment

be achieved, (2) to ensure reasonable economic growth in

nonattainment areas, and (3) to provide the states with

flexibility for developing their strategies for nonattainment

areas. EPA's adoption of a single, administratively feasible

definition of “source” consistent with the goals of the Act was

reasonable, and should not have been overturned.

%. The court below also erred in vacating EPA's deletion

of the provisions of its 1980 regulations which treated a

“reconstruction” of an existing source as a new stationary

“source” when “the fixed capital cost of the new components

exceeded 50 percent of the fixed capital cost of a comparable

entirely new statutory source.” This “reconstruction” concept

is nowhere to be found in the Clean Air Act. Moreover, since

“reconstructions” typically result in an air quality improve-

ment, and make existing sources cleaner, more economical

to operate, and more energy-efficient, EPA acted reasonably

in removing the obstacles to those activities.

4. By emphasizing the absence of any “study, survey, or

support” demonstrating aggregate air quality benefits re-

sulting from application of the plantwide definition of “source,”

the court below incorrectly imposed on EPA an unduly high

burden of justification for rescission of the “dual” definition

of “source.” This emphasis was particularly improper because

EPA had produced no “study, survey, or support” for the

“dual” definition. By imposing this burden, the court below

unduly limited the range of factors that EPA could consider,

and, in so doing, disregarded virtually all of the administrative

record that supported the rescission. The court’s interference

with EPA's exercise of its statutory discretion hinders that

agency’s ability to change rules under changing circumstances

and impermissibly expands the standard of judicial review

applicable to informal rulemaking, contrary to this Court’s

decision in Motor Vehicle Manufacturers Association v. State

Farm Mutual Automobile Insurance Co., U.S.

, 51 U.S.L.W. 4953 (1983), and earlier decisions,

notably Vermont Yankee Nuclear Power Corp v. NRDC, 435

U.S. 519 (1978).

ARGUMENT

I, THE DECISION BELOW CONTRAVENES THE CLEAN

AIR ACT AND DECISIONS OF THIS COURT BY

DENYING EACH STATE THE RIGHT TO SELECT

ITS PREFERRED MIX OF REMEDIAL MEASURES

‘FOR ATTAINING AMBIENT AIR STANDARDS

EPA's October 14, 1981 regulations did nothing more than

allow the states to use a plantwide “source” definition in the

new source review program that each state is required to

include in its Part D plan, if the overall Part D plan, including

that definition, would ensure timely attainment of the national

ambient air quality standards and reasonable further progress

in the interim. In striking down this provision of the regu-

lations, the court below precluded a plantwide definition in

any state plan. This holding is inconsistent with the Congres-

sional determination that states, not EPA (and certainly not

the courts of appeals), should have primary responsibility for

determining how air quality standards should be achieved.”

It also conflicts with the decisions of this Court in Train v.

NRDC, 421 U.S. 60, 79-80, 86-87 (1975) and Union Electric

Co. v. EPA, 427 U.S. 246, 266 (1976). In both of those cases,

this Court held that EPA must approve the mix of emission

strategies selected by a state so long as the state plan as a

whole provides for timely attainment of the standards. Fi-

nally, the decision below is contrary to Congress’s expressed

intent, with regard to Part D, that:

the State may choose whatever mix of continuous emission

reduction measures and strategies it wants to meet the

requirements of this section.

* See section 101(a)(3), 42 U.S.C. § 7401(aX3) (“Each State shall

have the primary responsibility for assuring air quality within the

entire geographic area comprising such State. .. .”), and section

107(a), 42 U.S.C. § 7407(a) (“[T]he prevention and control of air

pollution at its source is the primary responsibility of States and

local governments”).

H.R. Rep. No. 95-294, 95th Cong., lst Sess. 213 (1977),

reprinted in A Legislative History of the Clean Air Act

Amendments of 1977, at 2680 (hereinafter referred to as

“1977 Legislative History”).

The statutory requirements governing the contents of SIPs

are set forth at section 110(a)(2), 42 U.S.C. § 7410(a)(2). This

provision “quite clearly mandates approval of any plan which

satisfies its minimum conditions.” Train v. NRDC, 421 U.S.

at 71 n.11. Elaborating on EPA's limited review authority

and the states’ considerable discretion to fashion specific SIP

requirements, this Court described the Act’s “division of

responsibilities” as follows:

(EPA) is relegated by the Act to a secondary role in the process

of determining and enforcing the specific, source-by-source emis-

sion limitations which are necessary if the national standards it

has set are to be met. [Footnote omitted.}] Under § 110(a)(2), the

Agency is required to approve a state plan which provides for

the timely attainment and subsequent maintenance of ambient

air standards, and which also satisfies that section’s other general

requirements. . . . Thus, so long as the ultimate effect of a State’s

choice of emission limitations is compliance with the national

standards for ambient air, the State is at liberty to adopt whatever

mix of emission limitations it deems best suited to its particular

situation.

Id. at 79. (emphasis in original).

In Union Electric, this Court reaffirmed its view that EPA

lacked authority to disapprove SIPs, other than as explicitly

provided in section 110(aX2):

The provision (§ 110(a\(2)] sets out eight criteria that an imple-

states’ flexibility to tailor implementation plans to their

particular circumstances so long as attainment and reasonable

further progress toward attainment was assured. As stated

in the House Report, one of the two main purposes of Part

D was “to allow States greater flexibility (in allowing reason-

able economic growth in nonattainment areas while assuring

attainment of the NAAQS] than EPA’s present interpretative

regulations afford.”

The 1977 Senate Report reflects Congress’s recognition

that NAAQS attainment decisions must be made at the state

and local level:

The authority of States and localities to implement air pollution

control programs within the framework of a national policy must

be encouraged. The framework proposed in this bill is flexible in

terms of the discretion in choosing methods for attaining firm

national goals. States and localities are given broad discretion

to make decisions, while maintaining the minimum national

air quality baselines designed to protect health and welfare,

prevent discrimination among States, protect national resources

within States, and provide guidance on the technical and the

economic implications of various national policies.

The problem of air pollution exists at the State and local level.

That is where the public understands the problem. That is where

the resources must be directed. The Federal Government has a

responsibility to provide support for those regulatory activities,

but it need not have a actual presence in all regulatory activities.

S. Rep. No. 95-127, 95th Cong., Ist Sess. 10 (1977), reprinted

in 1977 Legislative History, at 1384 (emphasis added).

ments of that section and Part D. Nowhere in section 110(a)(2).

or Part D is there a command that the states adopt a particular

definition of “source” in their permit programs. Nor do these

provisions require review of alterations to existing plants

which result in no net increase in plantwide emissions, if a

state’s chosen definition of “source” does not prevent its Part

D SIP from achieving reasonabie further progress and at-

tainment. The “how” of achieving attainment or reasonable

further progress is left to the states, and the states’ choices

are not to be second-guessed by EPA or the courts. The

decision of the court below, however, reimposes the “dual”

definition, without regard to whether it is necessary for

attainment of ambient air standards and denies the states

the flexibility this Court in Train and Union Electric has

found that Congress intended them to have.

II. THE COURT BELOW IMPERMISSIBLY SUBSTI-

TUTED ITS JUDGMENT FOR EPA’S REASONABLE

CONSTRUCTION OF THE CLEAN AIR ACT

After reviewing the language and legislative history of

Part D, the court below concluded:

Part D, dense as it is, does not explicitly define what Congress

envisioned as a “stationary source” to which the permit process

and construction moratorium should apply. Nor is the issue

squarely addressed in the legislative history.

conclusion, as well as the facts that the Agency is charged with

administration of the Act, and that there has undoubtedly been

reliance upon its interpretation by the States and other parties

affected by the Act, we have no doubt whatever that its

construction was sufficiently reasonable to preclude the Court

of Appeals from substituting its judgment for that of the Agency.

[Citation omitted. }

Train v. NRDC, 421 U.S. at 87 (emphasis added).

The question Congress faced in developing the nonattain-

ment sections of the 1977 Amendments to the Clean Air Act

was not simply how to reduce emissions in nonattainment

areas, but how to do so without crippling economic growth

and vitality. As was stated in the House Report,

{T]he fact that a substantial number of regions did not attain

one or more of the standards on time posed a dilemma for the

committee. On the one hand, protection of the public health

remains the predominant goal of the Clean Air Act and the

committee. ... On the other hand, a complete prohibition on

new growth or expansion in nonattainment regions would pose

very serious problems. . . . In order to reconcile these conflicting

concerns, the committee adopted section 117 of the bill. The

purpose of the provision is to permit States to allow continued

growth or expansion in nonattainment areas, so long as this

growth or expansion is undertaken in a manner consistent with

the goals and objectives of the Clean Air Act.

H.R, Rep. 95-294, 95th Cong., 1st Sess. at 208-210 (1977),

reprinted in 1977 Legislative History, at 2675-77 (emphasis

added).

The multiplicity of purposes underlying Part D was reaf-

firmed later in thc same report.

The section has two main purposes: (1) to allow reasonable

economic growth to continue while making reasonable further

progress to assure attainment of the standards by a fixed date;

and (2) to allow states greater flexibility for the former purpose

than EPA's present interpretative regulations afford.

Id. at.211. Judged against these purposes, each of which is

discussed in more detail in the next two sections, the plantwide

definition of “source” is plainly a reasonable interpretation of

the Act.

A. The Plantwide Definition of “Source” Allows and

Encourages Reasonable Economic Growth Consist-

eni with Reasonable Further Progress toward At-

tainment

The major advantage of the plantwide definition of “source”

is precisely that it does implement Congress’s intent to allow

growth and modernization in nonattainment areas consistent

with reasonable further progress toward and attainment of

ambient air standards. EPA's decision to adopt and to allow

the states to adopt the plantwide definition, and thereby to

allow a bubble-type netting of intra-plant emission increases

and decreases,* is more than “sufficiently reasonable” to be

sustained.

The bubble concept is widely recognized as one of the most

efficient cost-effective and anti-inflationary means of control-

ling air pollution.* Netting intra-plant emissions gives plant

*% The plantwide definition would allow a plant owner or operator

to replace an obsolete, energy-intensive boiler which emits 120 tons

of particulate matter per year with a new energy-efficient boiler

which emits 105 tons of particulate matter per year without first

obtaining a permit. Under EPA's prior “dual” definition of “source”

the new boiler would be deemed a new source for which a permit

is required, even though emissions from the overall plant would

decrease by 15 tons per year. The new boiler, in any event, is

subject to stringent emission controls specified in new source

standards of performance applicable under section 111 of the Act.

See 42 U.S.C. § 7411. What is especially ironic under the “dual”

definition is that, in areas in which the new source construction ban

is in effect, the older boiler could not be replaced and would continue

to add 15 tons of avoidable emissions to the atmosphere.

* In an editorial commenting upon EPA's first adoption of an air

pollution bubble policy, one aimed at giving existing plants greater

operators the flexibility to install tighter controls where costs

are lowest and lesser controls where costs are highest.

Consequently, netting encourages plant owners and operators

to apply their know-how and ingenuity to develop improved

methods for controlling air pollution so that, for any given

commitment of resources, more pollution control can be

accomplished.

Imposition of the “dual” definition, on the other hand,

seriously dampens industry’s incentive and ability to mod-

ernize existing plants and to upgrade process equipment in

flexibility in meeting clean air requirements in state plans, the

Washington Post stated: “EPA deserves congratulations for that

governmental rarity—a creative and practical new idea.” WASH-

INGTON POST, Dec. 10, 1979, at A26. Similarly, the New York

Times stated: “The bubble is so se ible an idea that one wonders

why it took so long to surface.” NEW YORK TIMES, Dec. 6, 1979,

at A30. See also EPA and Industry Pursue Regulatory Options,

SCIENCE, Feb. 20, 1981, at 796-98. Another commentator cited

the following example of how the “bubble” would work at an existing

plant:

Until recently, E.I. du Pont de Nemours & Co. was slated to

spend a staggering $26 million to meet clean air standards at its

Chambers, N.J., chemical plant. But under a new regulatory

scheme developed by the Environmental Protection Agency, du

Pont’s compliance bill could be pared to just $6.5 million, and still

total plant emissions would be reduced a full 89%, five percentage

points more than under the costlier plan.

New Ways to Short Cut Costly Rules, DUN’S REVIEW, Feb.,

1980, 62 (emphasis added). See generally National Commission on

Air Quality, To Breathe Clean Air, 2.1-84, 4.1-36-37 (1981). The

National Commission on Air Quality later stated with regard to use

of the bubble concept in the Part C program:

The bubble policy offers companies a strong incentive to reduce

emissions from existing facilities in order to modernize without

triggering [prevention of significant deterioration] review. While

there are not sufficient data to quantify the influence of the bubble

policy on total emission levels, the consensus of regulators and

industry is that it has led to significant reductions. . . .

Id, at 3.5-48 (citation omitted).

nonattainment areas.” It takes months, sometimes years, to

secure a permit to construct, and the combined direct costs

and indirect costs (through delay of undergoing review) may

well be prohibitive. These problems are particularly acute in

the steel, chemical, automobile and petroleum industries in

which the plants are often complex, integrated facilities which

undergo constant modifications in response to market de-

mands for their products. A basic chemical manufacturing

plant, for example, typically has numerous processes and may

manufacture up to fifty separate products.”

* Petitioner United States Steel Corporation reported the follow-

ing experience with the application of the “dual” definition to its

Fairfield, Alabama integrated steel-making facilities:

The Fairfield plant was “modernized” by installation of clean iron,

steel and coke-making facilities and retirement of old facilities at

a cost of over $350 million, including $20 million for pollution

control facilities. The modernization project demonstrably re-

duced overall plant emissions from 60,876 tons per year to 3,962

tons per year, a reduction of 93%. Air quality, as measured at

the nearest monitor point, improved dramatically. Nevertheless,

EPA applied the “dual” definition of “source” to the modernization

project, and, two years after construction began, required the

installation of additional control facilities to meet lowest achieve-

able emission rate (LAER) requirements. Resolution of this issue

delayed startup of the facilities for six months. An additional $33

million was spent on the LAER controls and other controls on

existing facilities which were required by EPA. There was no

measurable air quality improvement as a result of these additional

controls. The plant could have installed controls on the existing

facilities in lieu of modernization and avoided these new source

problems. However, the emission reduction which would have

resulted from this approach would have been only 80%, and the

old facilities, with the attendant problems of age, would have

remained. In effect, as a result of the “dual” definition of “source,”

the plant was penalized for improving its facilities and achieving

greater reductions.

* Even plants that manufacture one basic type of chemical

product, ¢.g., synthetic rubber or transportation and heating fuels,

require numerous processes to produce different grades of that

product for widely varying uses or consumer specifications.

Process changes at such plants must occur frequently if

the plant is to respond to market demands and technological

developments and remain competitive in domestic and inter-

national markets. Products are constantly being modified and

improved. New uses and markets for existing products are

sought, and new products are introduced. As a result, at any

given time a plant might shut down one or more processes

due to slack demand, while modifying or adding new processes

to increase production capacity for existing products or to

manufacture new products. In addition, processes are changed

to produce products more economically, to conserve energy

and other resources, or to reduce pollution.”

A definition of “source” which requires preconstruction

review of (or, if the construction moratorium applies, pro-

hibits) any construction or alteration of any major piece of

process equipment within the plant whether or not emissions

increase destroys a plant’s flexibility to respond quickly and

*® As recognized by the court below in Alabama Power:

It is important first to recognize that alterations of almost any

plant occur continuously; whether to replace depreciated capital

goods, to keep pace with technological advances, or to respond

to changing consumer demands. This dynamic aspect of American

industry was not disputed by the parties. To apply the second

construction [precluding application of the "bubble” concept to

the Part C PSD program], however, would require PSD review

for many such routine alterations of a plant; a new unit would

contribute additional pollutants, these increases could not be set

off against the decrease resulting from abandonment of the old

unit, and thus the change would become a “modification” subject

to PSD review. Not only would this result be extremely burden-

some, it was never intended by Congress in enacting the Clean

Air Act Amendments.

636 F.2d at 401 (emphasis added). This “dynamic aspect of

. American industry” does not change merely because a plant is

located in a nonattainment area. Nor is it any less burdensome for

such sources to undergo preconstruction review for the hundreds

of routine modifications that keep a plant productive and competi-

tive.

effectively to market demands.” It also impairs the incentive

to upgrade older, dirtier equipment.” In other cases plants

can be precluded from using more economical, readily avail-

able domestic energy sources.™ This not only forces up costs,

but substantially increases the risk that the market demand

prompting the modification will have disappeared or have

been satisfied by domestic or foreign competitors.

® See, e.g., Comments of Merck Chemical Manufacturing Division,

contained in the Appendix filed below (C.A. App.) as part of the

certified record in CMA v. EPA, C.A. App. 90, which pointed out

that delays in the pharmaceutical industry in obtaining permits not

only can result in losing business abroad, but also can result in

substantial delays in making necessary new drugs available in the

American market.

3! See, e.g., Comments of Crown Zellerbach, J.A. 131, which

pointed out that the bubble concept would make it possible to add

a flexographic printing press without using expensive and energy-

App. 153; Chevron U.S.A., C.A. App. 162 (inability to “bubble”

emissions results in inability to build major new refinery project

energy consumption and

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B. The Plantwide Definition of “Source” Gives States

the Flexibility to Manage their Emissions in the Most

Efficient and Cost-Effective Manner

The final purpose which Congress sought to further in the

programs for nonattainment areas was to increase state

flexibility. It cannot be reasonably disputed that the regula-

tions at issue here further that purpose. They permit the

states to use a plantwide “source” definition and to obtain

the substantial administrative and economic benefits which

flow from that definition where attainment and reasonable

further progress can be demonstrated. The court below

deprived the states entirely of this flexibility.

Numerous commenters, including a number of the states,

pointed out that a plantwide definition of “source” was not

inconsistent with the purposes of Part D.™ These states

demonstrated that the “dual” definition of “source” will do

nothing to expedite reasonable further progress toward at-

tainment. To force these and similarly situated states to adopt

a “source” definition inconsistent with their internal emission

management needs would contradict the Congressional dec-

laration, in enacting Part D, that “the State may choose

whatever mix of continuous emission reduction measures and

strategies it wants to meet the requirements of this section."™

Moreover, as various states commented to EPA, the “dual”

definition has substantial practical and administrative disad-

vantages.” In contrast, the plantwide definition is easily

™ See Comments of the Arizona Department of Health Services,

J.A. 136, Comments of the New York State Department of Envi-

understood and administered. In virtually every case, common

sense notions of what constitutes a “plant” will correspond to

the Agency’s definition of “source.” The “dual” definition,

however, which in part employs an equipment-based ap-

proach, requires the reviewing authority and the source to

make difficult, and at times meaningless, distinctions among

pieces of equipment of different sizes.* The plantwide defi-

nition thus provides far more certainty and can be understood

and acted upon by plant-level personnel without having to

obtain concurrences from various agencies or legal counsel.

The plantwide definition of “source” also brings a measure

of uniformity to the Clean Air Act’s two major air quality-

based new source review programs. A plantwide definition

is used in the PSD program, which applies in attainment

areas. Utilization of a single definition for both the Part C

and Part D programs will, as EPA has noted, reduce “con-

fusion and inconsistency.” 46 Fed. Reg. 16281 (March 12, -

1981).

The plantwide definition spares the states from having

to review changes that have no significant impact on air

quality. Under the “dual” definition, the state and the source

owner or operator must go through a permit proceeding even

if overall emissions from the plant as a whole decrease. By

allowing states to focus only on changes which are important

from an air quality perspective (i.e., those which result in a

air quality. C.A. App. 73-78.

“ For example, in a household appliance or automobile paint shop

is each painting booth a “source,” or are groups of booths painting

significant increase in emissions), the plantwide definition

assures that a permit program is not overburdened with

meaningless reviews of permit applications that drain industry

and state resources without benefitting air quality.

Under the challenged regulations, the states are not re-

quired to adopt the plantwide definition of “source,” but they

have the discretion to do so. The great majority of states,

which do not rely on or need a “dual” definition of the term

“source” to demonstrate reasonable further progress or at-

tainment, should not be precluded from adopting the plant-

wide definition for new source review.”

The primary goal of Part D is the attainment of NAAQS

by specified dates. Congress intended that the states have

flexibility in meeting this goal. The only inflexible requirement

is that a state must be able to demonstrate that its Part D

plan will attain this goal. The plantwide definition of “source”

is neither required nor prohibited—and is acceptable where

its use does not prevent attainment of the NAAQS. EPA's

decision in October, 1981 to cut the “red tape” and to allow

states to make their own emission management decisions,

consistent with reasonable further progress and attainment,

was a reasonable exercise of its discretion under Part D. The

court below wrongfully deprived EPA of that discretion and

impermissibly substituted its policy judgment for that of

EPA.

* Given the opportunity, many states embraced the additional

flexibility provided by EPA's plantwide definition of “source.” As

EPA pointed out in its motion in the court below to stay issuance

of the mandate, within one year of the promulgation of the plantwide

definition (i.e., by Oct. 14, 1982) eighteen states had adopted new

source review programs based upon the amended rules. Respond-

ent’s Motion to Stay Issuance of the Mandate, at 2, NRDC v.

Gorsuch, No. 81-2208 (D.C. Cir. motion filed November 2, 1982).

Thirteen more states were in the process of revising their new

source review programs in accordance with the regulations struck

down by the court below. /d. n.1.

III. EPA’S DELETION OF THE RECONSTRUCTION

PROVISION WAS PROPER AND SHOULD NOT

HAVE BEEN VACATED BY THE COURT BELOW

EPA's August 7, 1980 regulations had imposed a “recon-

struction” requirement upon the states for nonattainment

areas but not for PSD areas. Those regulations deemed a

“reconstruction” to have taken place when “the fixed capital

cost of the new components exceed[ed] 50 percent of the fixed

capital cost of a comparable entirely new stationary source.”

See, e.g., 45 Fed. Reg. 52744 (formerly 40 C.F .R. § 51.18(j)(1)(ix)

(1981)). Although plants normally undertake reconstructions

or rehabilitations of existing sources to maintain existing

capacity, not to expand capacity, EPA deemed reconstructed

stationary sources to be subject to nonattainment area

preconstruction review and to the necessity of obtaining a

permit in the same manner as a new stationary source. /d.

Petitioners challenged these provisions in CMA v. EPA

(see pp. 11-12, supra) because they treat existing source

modifications the same as the construction of new sources.

The “reconstruction” concept is nowhere to be found in the

Clean Air Act. Part D does not define “reconstruction” and

defines modifications in terms of emissions, not dollars. A

“modification” triggering new source review, as defined in

section 111(a)(4) of the Act, 42 U.S.C. § 7411(a)(4), and

expressly incorporated for purposes of Part D of the Act by

section 171(4), 42 U.S.C. § 7501(4), occurs only where (1)

there is a physical or operational change in an existing source,

and (2) that change results in a net increase in emissions.™

The “reconstruction” provision imposed by EPA's August

7, 1980 regulations subjected to new source review modifi-

cations categorized by EPA as “reconstructions” even though

a net emission decrease, not an increase, may have resulted.

In effect, EPA substituted a 50% replacement cost test—a

concept foreign to Part D and unrelated to air quality—for

the second prong of the “modification” definition. EPA lacks

* See, e.g., Alabama Power, 636 F.2d at 399-403.

authority to extend the coverage of the Act or to redefine

statutory terms to eliminate the statutory requirement that

a physical change must cause an increase in emissions before

it can be subjected to the nonattainment area review require-

ments as a “modification.” |

As EPA pointed out in withdrawing the reconstruction test

for modifications, that test would be virtually meaningless

following adoption of a plantwide definition of “source” be-

cause, practically speaking, few whole plants will be recon-

structed. The court below vacated EPA's deletion of the

reconstruction rule on this ground, stating that it was “an-

cillary” to EPA’s adoption of the plantwide definition of

“source,” which the court also had vacated. 685 F.2d at 728,

Chev. Pet. App. at A-19 to A-20. Petitioners submit that the

court below should have upheld EPA’s decision to delete the

reconstruction rule, whether or not the court upheld the

plantwide definition, because, as noted above, there is no

statutory basis for the rule. If the validity of EPA's action

deleting the reconstruction rule is tied to the plantwide

definition of “source,” however, as the court below asserted,

this Court’s validation of the plantwide “source” definition

will also validate EPA's decision to delete the reconstruction

rule. See, e.g., 46 Fed. Reg. 50767.

EPA also gave as a basis for its October, 1981 action the

need to make the PSD and nonattainment regulations the

same with regard to “recohstruction.” See 46 Fed. Reg. 50767.

The lack of uniformity between the treatment of “reconstruc-

tion” in the Part C and Part D new source review programs

had resulted in confusion, unwarranted complexity, needless

delay and unnecessary compliance and regulatory costs in the

result in an air quality improvement, and generally make

existing sources cleaner, more economical to operate, and

more energy-efficient, EPA acted reasonably to remove the

new source review requirements. In light of these legitimate

concerns, EPA properly exercised its discretion by deleting

the “reconstruction” provision.

IV. THE COURT BELOW IMPOSED ON EPA AN

UNDULY HIGH BURDEN OF JUSTIFICATION

FOR RESCISSION OF A RULE

The court below faulted EPA for failing to cite “any study,

survey, or support” for its position that the “dual” definition

would retard improvement of air quality in the aggregate,

noting that EPA had taken the very opposite position in

adopting the “dual” definition in August 1980. 685 F.2d at

727 n.41, Chev. Pet. App. at A-18 n.41.

In emphasizing the absence of any “study” or “survey” to

support the plantwide definition, the court below ignored the

fact that there is no “study, or survey, or support” for the

“dual” definition. More fundamentally, in so doing, the court

below unduly narrowed the range of factors EPA could

consider and intruded on EPA's discretion under the Clean

Air Act. This led the court below to disregard the great

majority of the eighty-one public and state comments that

presented strong support for EPA’s proposals to rescind the

“dual” definition of “source.” See 46 Fed. Reg. at 50766,

50767-68.

By thus limiting the administrative record upon which EPA

could rely and suggesting that EPA must produce a “study”

or “survey” not required for the original rule, the court below

expanded the scope of its judicial review in a way that this

Court has recently rejected. In Motor Vehicle Manufacturers

Association v. State Farm Mutual Automobile Insurance

Co., U.S. 51 U.S.L. W. 4963 (1983), (“MV MA"),

this Court overruled a similar attempt of the court below to

require an agency te provide more clear and convincing

reasons for rescinding a rule than those upon which it relied

when it originally promulgated the rule.

Recognizing that “an agency must be given ample latitude

to ‘adapt their rules and policies to the demands of changing

circumstances’,” 51 U.S.L.W. at 4956, MVMA holds that an

agency rescinding a rule must supply the same reasoned

analysis applicable to the issuance of the rule. See 51 U.S.L.W.

at 4956-57. In this case, however, by deeming only a “study,

survey, or support” to be an adequate justification for EPA’s

rescission, that was not required for the original rule, the

court below imposed on EPA a heavier burden than that

required for the original rule. This result is inconsistent with

one of the reasons for the development of the administrative

process—to eliminate the “constant danger of harmful rigidity

"40

In rescinding its “dual” definition EPA fully met the

standard decision-making elements prescribed in MVMA. Its

decision-making path was clear: on consideration of the totality

of the record before it, EPA decided on balance that its 1980

“dual” definition of souree had proved inappropriate. See 46

Fed. Reg. at 50766, 50767-68.

This Court has recognized in other cases that an agency

may make and rely upon reasoned policy judgments and that

any such judgment “ ‘necessarily involves deductions based

on the expert knowledge of the Agency’.” FCC v. WNCN

Listeners Guild, 450 U.S. 582, 595 (1981) (footnote omitted),

(quoting, FCC v. National Citizens Committee for Broad-

casting, 436 U.S. 775, 814 (1978), quoting, FPC v. Transcon-

tinental Gas Pipeline Corp. 365 U.S. 1, 29 (1961)). In re-

scinding the “dual” definition of “source,” EPA has, with a

full explanation based on the administrative record, rationally

a ee mamaria da care

“ “Administrative Procedure in Government Agencies”: Report

of the Attorney General's Committee on Administrative Procedure.

S. Rep. No. 8, 77th Cong., Ist Sess. 14 (1941).

In vacating EPA's action, the court below exceeded the

scope of judicial review articulated in MVMA and a host of

earlier decisions, notably Vermont Yankee Nuclear Power

Corp. v. NRDC, 435 U.S. 519, 543-549 (1978), and cases

therein cited.

CONCLUSION “!

For the foregoing reasons, the decision below should be

reversed.

Of Counsel:

BARTON C. GREEN

General Counsel and

Secretary

American Iron and

Steel Institute

August 31, 1983

Respectfully submitted,

RoBert A. EMMETT

(Attorney of Record)

DAVID FERBER

REED SMITH SHAW & McCLay

1150 Connecticut Avenue, N.W.

Suite 900

Washington, D.C. 20036

(202) 457-6144

Barr S. McMILLIN

REED SMITH SHAW & McCLay

747 Union Trust Building

Pittsburgh, Pennsylvania 15219

(412) 288-3228

Attorneys for Petitioners

American Iron and Steel

Institute, et al.

STARK RITCHIE

Davip T. DEAL

AMERICAN PETROLEUM

, INSTITUTE

2101 L Street, N.W.

Washington, D.C. 20037

Attorneys for the American

Petroleum Institute, et al.

THEODORE L. GARRETT

PATRICIA A. BARALD

COVINGTON & BUKLING

1201 Pennsylvania Avenue, N.W.

P.O. Box 7566

Washington, D.C. 20044

Attorneys for the Chemical

Manufacturers Association

Louis E. Tost

WILLIAM L. PATBERG

FULLER & HENRY

300 Madison Avenue

Toledo, Ohio 43603

Attorneys for General

Motors Corporation

CHARLES.F. Letrow

CLEARY, GOTTLIEB, STEEN

& HAMILTON

1752 N Street, N.W.

Washington, D.C. 20036

Attorney for the Rubber

Manufacturers Association —

INDEX TO APPENDIX :

A. STATUTORY PROVISIONS .............00005 Al

GLOSSARY OF CERTAIN ABBREVIATIONS

AND TECHNICAL TERMS......i........+05. Bl

REVISIONS TO THE LIST OF CORPORATE

PETITIONERS’ PARENT COMPANIES, SUB-

SIDIARIES AND AFFILIATES SET FORTH,

PURSUANT TO SUPREME COURT RULE 28.1,

IN APPENDIX C TO THE PETITION FOR A

WRIT OF CERTIORARI IN NO. 82-1247....... Cl

A. STATUTORY PROVISIONS: PERTINENT SECTIONS

OF THE CLEAN AIR ACT

« & Air Pollution Prevention and Control

Part A—Air Quality and Emission Limitations

Section 101 (42 U.S.C. § 7461). Findings and Purposes

(a) The Congress finds—

. .

(3) that the prevention and control of air pollution at its

source is the primary responsibility of States and local

governments;

* . *

Section 107 (42 U.S.C. § 7407). Air Quality Control Regions

(a) Each State shall have the primary responsibility for

assuring air quality within the entire geographic area com-

prising such State by submitting an implementation plan for

such State which will specify the manner in which national

primary and secondary ambient air quality standards will be

achieved and maintained within each air quality control region

in such State.

. - .

(d)(1) For the purpose of transportation control planning,

part D of this subchapter (relating to nonattainment), part C

of this subchapter (relating to prevention of significant de-

terioration of air quality), and for other purposes, each State,

within one hundred and twenty days after August 7, 1977,

shall submit to the Administrator a list, together with a

summary of the available information, identifying those air

quality control regions, or portions thereof, established pur-

suant to this section in such State which on August 7, 1977—

(A) do not meet a national primary ambient air quality

standard for any air pollutant other than sulfur dioxide or

particulate matter;

(B) do not meet, or in the judgment of the State may not in

the time period required by an applicable implementation

plan attain or maintain, any national primary ambient air

quality standard for sulfur dioxide or particulate matter;

standard;

(D) cannot be classified under subparagraph (B) or (C) of this

paragraph on the basis of available information, for ambient

air quality levels for sulfur oxides or particulate matter; or

(E) have ambient air quality levels better than any national .

primary or secondary air quality standard other than for

sulfur dioxide or particulate matter, or for which there is not

sufficient data to be classified under subparagraph (A) or (C)

of this paragraph.

(2) Not later than sixty days after submittal of the list under

paragraph (1) of this subsection the Administrator shall

promulgate each such list with such modifications as he deems

necessary.

” * .

(4) 'Any region or portion thereof which is not classified under

subparagraph (B) or (C) of paragraph (1) of this subsection

for sulfur dioxide or particulate matter within one hundred

and eighty days after August 7, 1977, shall be deemed to be

a region classified under subparagraph (D) of paragraph (1)

of this subsection...

. . ”

Section 110 (42 U:S.C. § 7410). Implementation Plans

(a)(1) Each State shall, after reasonable notice and public

hearings, adopt and submit to the Administrator, within nine

months after the promulgation of 2 national primary ambient

air quality standard (or any revision thereof) under section

109 for any air pollutant, a plas: which provides for imple-

mentation, maintenance, and enforcement of such primary

standard in each air quality control region (or portion thereof)

within such State... .

(2) The Administrator shall, within four months after the

"1 Subsection 107(d) was enacted without a paragraph (3).

date required for submission of a plan under paragraph (1),

approve or disapprove such plan or each portion thereof. The

Administrator shall apprové such plan, or any portion thereof,

if he determines that it was adopted after reasonable notice

and hearing and that—

(A) except as may be provided in subparagraph (1), (i) in the

case of a plan implementing a national primary ambient air

quality standard, it provides for the attainment of Such’

primary standard as expeditiously as practicable but (subject

to subsection (e)) in no case later than three years from the

date of approval of such plan (or any revision thereof to take

account of a revised primary standard); and (ii) in the case of

a plan implementing a national secondary ambient air quality

standard, it specifies a reasonable time at which such second-

ary standard will be attained;

(B) it includes emission limitations, schedules, and timetables

- for compliance with such limitations, and such other measures

as may be necessary to insure attainment and maintenance

‘of such primary or secondary standard, including, but not

limited to, transportation controls, air quality maintenance

plans, and preconstruction review of direct sources of air

pollution as provided in subparagraph (D);

7 * + ~

(I) it provides that after June 30, 1979, no major stationary

source shall be constructed or modified in any nonattainment

area (as defined in section 171(2)) to which such plan applies,

if the emissions from such facility will cause or contribute to

concentrations of any pollutant for which a national ambient

air quality standard is exceeded in such area, unless, as of

the time of application for a permit for such construction or

modification, such plan meets the requirements of part D

(relating to nonattainment areas);

(34A) The Administrator shall approve any revision of an

implementation plan applicable to an air quality control region

if he determines that it meets the requirements of paragraph

(2) and has been adopted by the State after reasonable notice

and public hearings.

. * *

Section 111 (42 U.S.C. § 7411). Standards of Performance for

New Stationary Sources

(a) For purposes of this section:

(1) The term “standard of performance” means—

(A) with respect to any air pollutant emitted from a category

of fossil fuel fired stationary sources to which subsection (b)

of this section applies, a standard—

(i) establishing allowable emission limitations for such cate-

_ gory of sources, and

(ii) requiring the achievement of a percentage reduction in

the emissions from such category of sources from the emissions

which would have resulted from the use of fuels which are

not subject to treatment prior to combustion,

(B) with respect to any air pollutant emitted from a category

of stationary sources (other than fossil fuel fired sources) to

which subsection (b) applies, a standard such as that referred

to in subparagraph (A)(i);

. *

(2) The term “new source” means any stationary source, the

construction or modification of which is commenced after the

publication of regulations (or, if earlier, proposed regulations)

prescribing a standard of performance under this section

which will be applicable to such source.

(3) The term “stationary source” means any building, struc-

pe Ba or installation which emits or may emit any air

pollutan

(6) The term “existing source” means any stationary source

other than a new source.

. * + *

(e) After the effective date of standards of performance

promulgated under this section, it shall be unlawful for any

owner or operator of any new source to operate such source

in violation of any standard of performance applicable to such

source.

* . *

Part D—Plan Requirements for Nonattainment Areas —

Section 171 (42 U.S.C. § 7501). Definitions

For the purpose of this part and section 110(a)(2)(D—

(1) The term “reasonable further progress” means annual

incremental reductions in emissions of the applicable air

pollutant (including substantial reductions in the early years

following approval or promulgation of plan provisions under

thisf part and section 110(a)(2)(I1) and regular reductions

thgreafter) which are sufficient in the judgment of the Ad-

istrator, to provide for attainment of the applicable na-

tional ambient air quality standard by the date required in

section 172(a).

(2) The term “nonattainment area” means, for any air pollutant

an area which is shown by monitored date or which is

calculated by air quality modeling (or other methods deter-

mined by the Administrator to be reliable) to exceed any

national ambient air quality standard for such pollutant. Such

term includes any area identified under subparagraphs (A)

through (C) of section 107(d)(1).

(3) The term “lowest achievable emission rate” means for any

source that rate of emissions which reflects—

(B) the most stringent emission limitation which is achieved

in practice by such class or category of source, whichever is

more stringent.

In no event shall the application of this term permit a proposed

new or modified source to emit any pollutant in excess of the

amount allowable under applicable new source standards of

performance.

(4) The terms “modification” and “modified” mean the same

as the term “modification” as used in section 111(a)(4) of this

Act.

Section 172 (42 U.S.C. § 7502). Nonattainment Plan Provisions

(a)(1) The provisions of an applicable implementation plan for

a State relating to attainment and maintenance of national

ambient air quality standards in any nonattainment area

which are required by section 110(a)(2)(I) as a precondition

for the construction or modification of any major stationary

source in any such area after July 1, 1979, shall provide for

attainment of each such national ambient air quality standard

in each such area as expeditiously as practicable, but, in the

case of national primary ambient air quality standards, not

later than December 31, 1982.

(2) In the case of the national primary ambient air quality

standard for photochemical oxidants or carbon monoxide (or

both) if the State demonstrates to the satisfaction of the

Administrator (on or before the time required for submission

of such plan) that such attainment is not possible in an area

with respect to either or both of such pollutants within the

public hearing;

(2) provide for the implementation of all reasonably available

control measures as expeditiously as practicable;

(3) require, in the interim, reasonable further progress (as

defined in section 171(1)) including such reduction in emissions

from existing sources in the area as may be obtained through

the adoption, at a minimum, of reasonably available control

technology;

(4) include a comprehensive, accurate, current inventory of

actual emissions from all sources (as provided by rule of the

Administrator) of each such pollutant for each such area which

is revised and resubmitted as frequently as may be necessary

to assure that the requirements of paragraph (3) are met and

to assess the need for additional reductions to assure attain-

ment of each standard by the date required under subsection

(a);

(5) expressly identify and quantify the emissions, if any, of

any such pollutant which will be allowed to result from the

construction and operation of major new or modified stationzry

sources for each such area;

(6) require permits for the construction and operation of new

or modified major stationary sources in accordance with

section 173 (relating to permit requirements);

(7) identify and commit the financial and manpower resources

necessary to carry out the plan provisions required by this

subsection;

(8) contain emission limitations, schedules of compliance and

such other measures as may be necessary to meet the

requirements of this section;

Section 173 (42 U.S.C. § 7503). Permit Requirements

The permit program required by section 172(b\6) shall

a re gy

(1) the permitting agency determines that—

(A) by the time the source is to commence operation, total

allowable emissions from existing sources in the region, from

new or modified sources which are not major emitting facilities

and from the proposed source will be sufficiently less than

total emissions from existing sources allowed under the

applicable implementation plan prior to the application for

such permit to construct or modify so as to represent (when

considered together with the plan provisions required under

section 172) reasonable further progress (as defined in section

171); or

(B) that emissions of such pollutant resulting from the pro-

posed new or modified major stationary source will not cause

or contribute to emissions levels which exceed the allowance

permitted for such pollutant for such area from new or

modified major stationary sources under section 172(b);

(2) the proposed source is required to comply with the lowest

achievable emission rate;

(3) the owner or operator of the proposed new or modified

source has demonstrated that all major stationary sources

owned or operated by such person (or by an entity controlling,

controlled by, or under common control with such person) in

such State are subject to emission limitations and are in

compliance, or on a schedule for compliance, with all applicable

emission limitations and standards under this Act; and

(4) the applicable implementation plan is being carried out

for the nonattainment area in which the proposed source is

to be constructed or modified in accordance with the require-

mentsof this part.

Any emission reductions required as a precondition of the

issuance of a permit under paragraph (1)(A) shall be legally

binding before such permit may be issued.

x « *

Title III—General

* * *

Section 302 (42 U.S.C. § 7602). Definitions

When used in this Act—

* * *

(j) Except as otherwise expressly provided, the terms “major

stationary source” and “major emitting facility’ mean any

stationary facility or source of air pollutants which directly

emits, or has the protential to emit, one hundred tons per

year or more of any air pollutant (including any major emitting

facility or source of fugitive emissions of any such pollutant,

as determined by rule by the Administrator). —

B. GLOSSARY OF CERTAIN ABBREVIATIONS AND

TECHNICAL TERMS

(Section references are to the Clean Air Act, 42

U.S.C. §§ 7401 et seq., as amended)

Attainment or PSD areas—-(for purposes of Part C of the

Act) Areas identified by the states as having ambient

air quality levels better than any NAAQS or which

cannot be classified on the basis of available infor-

mation. Sections 107(d), 161.

Bubble—Netting within a plant of emission increases against

decreases of such emissions.

Construction moratorium—Prohibition of construction or

modification of major stationary sources that would

contribute to violation of NAAQS in nonattainment

areas if a Part D SIP is not in effect. Section

110(a)(2)(1).

LAER (for purposes of Part D of the Act)—Lowest achievable

emission rate. Sections 171(3), 173(2).

Major stationary source—Source emitting, or having potential

to emit, one hundred tons per year or more of any

air pollutant. Section 302(j).

Modification of a source (for purposes of Part D of the Act)—

A physical change in or manner of operating a

source resulting in a net pollutant emission increase.

Sections 111(aX4), 171(4).

NAAQS—National ambient air quality standards. Section

109.

New source (for purposes of section 111}—Any stationary

regulations or proposed regulations prescribing an

applicable standard of performance. Section 111(aX2).

Nonattainment areas (for purposes of Part D of the Act)—

Areas identified by the states as not meeting one

or more NAAQS. Sections 107(d), 171(2).

Offset ruling—EPA’s Emission Offset Interpretative Ruling,

41 Fed. Reg. 55524 (December 21, 1976).

Part C—Sections 160-169A dealing with prevention of sig-

nificant deterioration.

Part D—Sections 170-178 dealing with plan requirements for

nonattainment areas.

PSD—Prevention of “significant deterioration.” Part C of

Title I of the Act (Sections 160-169A).

Reasonable further progress (for purposes of Part D of the

Act)}~—Annual incremental reductions in emissions

of applicable air pollutants sufficient to provide for

timely attainment of NAAQS. Section 171(1).

Reconstruction—when more than 50% of the capital cost of

the components of a source is replaced, regardless

of whether this causes a net increase in emissions.

EPA’s nonattainment area regulations; see, ¢.g.,

former 40 C.F.R. § 51.18(j)(1)(ix) (1981).

SIPs—State Implementation Plans for the attainment, main-

tenance and enforcement of NAAQS. Section 110.

New source standards of performance (for purposes of Section

111)—Air pollutant emission standards reflecting

Section 111(a\(1).

C. REVISIONS TO THE LIST OF CORPORATE PE-

TITIONERS’ PARENT COMPANIES, SUBSIDI-

ARIES AND AFFILIATES SET FORTH, PUR-

SUANT TO SUPREME COURT RULE 28.1, IN

APPENDIX C TO THE PETITION FOR A WRIT

OF CERTIORARI IN NO. 82-1247

The following corrections, additions and deletions are to be

made to the list of corporate petitioners which were inter-

venor-respondents together with the American Petroleum

Institute in the proceedings below. The original list of sub-

sidiaries and affiliates for Gulf Oil Corporation is set forth in

Appendix C to the Petition for a Writ of Certiorari in No.

82-1247 at 38a - 41a, for Mobil Oil Corporation at 43a - 52a,

and for Phillips Petroleum Company at 53a - 54a.

Gulf Oil Corporation

1. “Chinhac Chemical Company, Ltd.” should be “Chinhae

Chemical Company, Ltd.”

2. “G.S. Equipment and General Supply,” “Gulf Canada

Petroleum Inc.,” “Gulf Canada Resources Inc./Resources

Gulf Canada Inc.,” “Gulf Canada Resources Leasing Inc.”

and “Gulf Oil Canada-Greenland A/S,” should be deleted

in favor of “Gulf Oil Canada Limited Associated Com-

panies.”

“China Gulf Plastics Corporation” should be deleted.

“Taiwan VCM Industries Corporation” should be deleted.

“Bio Research Center Company, Ltd.” should be deleted.

“Agricultural Anhydrous Ammonia Co. Ltd.” should be

deleted.

“Alberta Products Pipe Line Ltd.” should be deleted.

“Alberta Underground Storage Limited.” should be de-

leted.

“Burgan Pension Fund Trustees Limited” should be

deleted.

10. “Canada Systems Group (EST) Limited” should be de-

letecl.

11. “Cansulex Limited” should be deleted.

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“Carnduff Gas Limited” should be deleted.

“Central Pipeline Company Limited, The” should be

deleted.

“Commercial Alcohols Limited” should be deleted.

“Compagnie D’Investissement Combustibles De Reac-

teurs A Haute Tp” should be deleted.

. “Components Industriales Mexicanos, S.A.” should be

deleted. |

“ ‘Condor’ Industria Quimica, S.A.” should be deleted.

. “Crediton Enterprises, Inc.” should be deleted.

“Econ Oil (1977) Inc.” should be deleted.

“G&C Realty Limited” should be deleted.

“GAE Propane Blanchard Ltee.” should be deleted.

“GEA/Power Cooling Systems, Inc.” should be deleted.

. “Glen Park Gas Pipe Line Company Limited” should be

deleted.

. “Gobles Oil and Gas Limited” should be deleted.

“Kaisha” should be deleted.

“Ice Pinturas, S.A.” should be deleted.

“Ico Pinturas, S.A.” should be deleted.

“Industrias Veneedor, S.A.” should be deleted.

“Interprovincial Pipe Line Limited” should be deleted.

“Interquimica S.A.” should be deleted.

“Iranian Oil Participants Limited” should be deleted.

“Iranian Oil Services (Holdings) Limited” should be

ted.

“Kuwait Oil Company Trustees Limited” should be de-

leted.

“Maple Insurance Limited” should be deleted.

“Mid-Atlantic Chemical Corporation S.A.” should be de-

leted.

“Montreal Pipe Line Limited” should be deleted.

“Morrow Fuel Oil Sales Ltd.” should be deleted.

“Mozambique Gulf Oil” should be deleted.

“Newfoundland Propane Limited” shouid be deleted.

“Northward Development Ltd.” should be deleted.

“Northwest Propane Ltd.” should be deleted.

FSSSASHRESS

SSSASKHEER

SSRESR A

. “Northwest Terminals Ltd.” should be deleted.

“Nova, An Alberta Corporation” should be deleted.

“Panindustrial, S.A.” should be deleted.

“Peace Pipe Line, Ltd.” should be deleted.

“Penrith Enterprises, Inc.” should be deleted.

“Permapint, S.A.” should be deleted.

“Petromont, Inc.” should be deleted.

“Polyquimicos, S.A.” should be deleted.

“Produtos Quimicos Somox, Ltda.” should be deleted.

“Redwater Water Disposal Company Limited” should be

deleted.

“Resinas Andinas S.A.” should be deleted.

. “Rimbey Pipe Line Co., Limited” should be deleted.

. “Ripon Enterprises, Inc.” should be deleted.

“Servico Limited” should be deleted.

“Sorrenio Electronics, Inc.” should be deleted.

. “Superior Propane Limited” should be deleted.

. “Synerude Canada, Ltd.” should be deleted.

. “faiwan Plasticizer Corporation” should be deleted.

. “Trans Mountain Pipe Line Company, The” should be

deleted.

“Trans-Northern Pipe Line Company” should be deleted.

“Western G.M.C. Pontiac Buick Ltd.” should be deleted.

“Forenade Svenska Oljeimportorers AB” should be added.

“Gulf Oil Corporation ERISA” should be added.

“Gulf Oil Terminals (Ireland) Limited” should be added.

“Harshaw - Bryce & Co. Pty. Ltd.” should be added.

“Insco Holding & Finance Company N.V.” should be

added.

“Plastijal Sociedad Anonima” should be added.

“Solvo Finanzierungs-Und Beteiligungs AG” should be

added.

“Valley Pines Associates” should be added.

Mobil Oil Corporation

“AIMCO (Blasbjerg) Limited” should be added.

“Arabian International Maritime Company” should be

added.

“Compania Colombiana De Forestacion S.A.” should be

added.

“Constructura Calle 67, Limitada” should be added.

“East Texas Sal Water Disposal Company” should be

added.

“Handelmaatschappij Jugenholtz & Co. B.V.” should be

spelled “Handelmaatschappij Hugenholtz & Co. B.V.”

“Inmunizadoras Unidas, S.A.” should be added.

“Mobil Oil de Mexico, Sociedad Anonima” should be

added.

“New Zealand Synthetic Fuels (Housing) Corporation

Limited” should be added.

. “S.A. Ets. George DUBOIS” should be added.

. “Societe Africaine de a should be spelled “So-

ciete Africaine de

. “Societe Jean Roussel S.A.” ’ should be added.

. “Societe Tehadienne D’Entreposage de Produits Petro-

liers” should be spelled “Tchadienne D’Entreposage de

Produits Petroliers.”

. “Wadohjushi Kabushiki Kaisha” should be spelled “Wa-

kohjushi Kabushiki Kaisha.”

. “City Point Oil Terminal, Inc.” should be deleted.

. “Australasian Petroleum Company Proprietary Limited”

should be deleted.

“Croager Bros. Limited” should be deleted.

. “Fountain Garage (Alfreton Road)” should be deleted.

. “Fountain Garage (Leyton)” should be deleted.

. “H.E. Oils Limited” should be deleted.

. “Highgate Associates, Ltd.” should be deleted.

. “Industria de Carbon del Valle Cauca, S.A.” should be

deleted. »

“Island Exploration Company Proprietary Limited” should

be deleted.

. “Michael Beecham Limited” should be deleted.

. “Mobil Oil Angola, SARL” should be deleted.

go bo

-SSENS

“Mobil Tyco Solar Energy Corporation” should be deleted.

“Modern Buildings Membranes, Ltd.” should be deleted.

“Motrate Products Limited” should be deleted.

“Ragosine Oil Company Limited” should be deleted.

“Roe Lubricants Limited” should be deleted.

“Societe d’Entreposage d’Hydrocarbures de Bingo

(SEHBI)” should be deleted.

an Petroleum Company

. “Kanai LNG Corporation” should be spelled “Kenai LNG

Corporation.”

“Phillips Gas Supply Corporation” should be deleted.

. “Phillips Pacific Cheemical Corporation” should be spelled

“Phillips Pacific Chemical Corporation.”

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.