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

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Office -§ EK.

Nos, 82-1005, 82-1247, and 82-1591 i ap

Iu the Supreme Court of the United BAYE 31 1993

OCTOBER TERM, 1983 apie t STEVaS

CHEVRON U.S.A. INC., PETITIONER

Vv.

NATURAL RESOURCES DEFENSE COUNCIL, INC., ET AL.

AMERICAN IRON AND STEEL INSTITUTE, ET AL.,

PETITIONERS

Vv. :

NATURAL RESOURCES DEFENSE COUNCIL, INC., ET AL.

WILLIAM D. RUCKELSHAUS, ADMINISTRATOR,

ENVIRONMENTAL PROTECTION AGENCY, PETITIONER

Vv.

NATURAL RESOURCES DEFENSE COUNCIL, INC., ET AL.

ON WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

BRIEF FOR THE ADMINISTRATOR OF THE

ENVIRONMENTAL PROTECTION AGENCY

Rex E. LEE

Solicitor General

F. Henry Hasicat, II

Acting Assistant Attorney

General

Pau. M. BaTor

Deputy Solicitor General

Mary L, WALKER

Deputy Assistant Attorney

General

. A. JAMES BARNES MakRK I. Levy

Acting General Counsel Assistant to the Solicitor

WILLIAM F. PEDERSEN General

CHARLEs S. CARTER Josz A. ALLEN

Attorneys ANNE S. ALMY

QUESTION PRESENTED

Whether the Clean Air Act prohibits EPA from allow-

ing a state to adopt a plantwide approach to new source

review in nonattainment areas in circumstances where the

state can demonstrate that its State Implementation Plan

contains all of the elements required by the Clean Air

Act and provides for timely attainment and maintenance

of air quality standards.

PARTIES TO THE PROCEEDING

In addition to the American Iron and Steel Institute,

petitioners in No. 82-1247 include the American Petroleum

Institute, the Chemical Manufacturers Association, Gen-

eral Motors Corporation, and the Rubber Manufacturers

Association. Nominal parties under Rule 19.6 include

various member companies of two of the organizations

that are petitioners in No. 82-1247, and a group of 81

electric power generating companies and two electric

utility trade associations, all of which were intervenor-

respondents in the court of appeals. Those additional

parties are listed at 82-1247 Pet. iii-iv nn. 1, 2, & 3.

Respondents in these cases, in addition to the Natural

Resources Defense Council, Inc., include Citizens for

a Better Environment, Inc., and the Northwestern Ohio

Lung Association, Inc.

(1)

TABLE OF CONTENTS

Statute and regulations involved 2000000000000

Statement ECE SH EL RE SEES SE

I OD I scechetrmeabemipeied manleniennaiceen

Argument:

The Administrator’s decision to allow states to use

a plantwide definition of “source” in nonattainment.

I eskicitcinnhcntenihicieniecehns ce ntictdelianentildne iisaieceis

I. The court of appeals’ decision depriving the Ad-

ministrator of any discretion to allow states to

use a plantwide definition of “source” and impos-

ing a test of its own invention was erroneous........

II. The Administrator’s decision to allow states to

use a plantwide definition of “source” comports

with the policies of the statute and is a reason-

able exercise of administrative discretion ..........

A. The plantwide definition of “source” repre-

sents a balanced accommodation of the statu-

tory policies of environmental protection and

“reasonable economic growth” .....0000..0.........

1. Congress’s purpose was to achieve a rea-

sonable balance between the policies of

environmental protection and industrial

growth

2. The plantwide definition of “source”

serves to ensure that “reasonable eco-

nomic growth” does not prevent attain-

ment of air quality standards ........00........

B. The Administrator’s decision to allow states

to use a plantwide definition of “source” ef-

fectuates Congress’s ‘purpose to increase

state flexibility in selecting the detailed meth-

ods deemed necessary to attain national air

quality standards ....

(111)

Argument—Continued Page

Ill. The text and legislative history of the Clean Air

Act do not preclude the Administrator from al-

lowing states to use a plantwide definition of

“source” for purposes of the nonattainment

‘ II crete chadatihsnitenntinaneianaciishan denetinnlanndadegighiatinsinjenengien 41

Nhe ST ALR Ar OD A Sec SEE ERE OO 49

FEE ER RT LE Se la

TABLE OF AUTHORITIES

Cases :

Alabama Power Co. Vv. Costle, 6386 F.2d 323... ...... passim

ASARCO, Inc. v. EPA, 578 F.2d 319 ............. 13, 15, 20, 44

I We Cs Ce I I reticence cctenssnnmmnctnsienation 22

Hancock v. Train, 426 U.S. 167 ........2.....2..22......... 26, 36, 43

og BS 8 eer eer 22

Investment Company Institute v. Camp, 401 U.S.

ee i NERS TAY De a eer 22

po mene oes 22

Sierra Club v. Costle, 657 F.2d 298 ........................ 13

Train V. NRDC, 421 U.S. 60 220.....02.........220.0. 17, 22, 36, 38

Union Electric Co. v. EPA, 427 U.S. 246 ................. 22, 36

Vermont Yankee Nuclear Power Corp. v. NRDC,

ee en eee eee ee 20

Statutes and regulations:

Act of July 14, 1955, ch. 360, 69 Stat. 322 et seq..... 35

Clean Air Amendments of 1970, Pub. L. No. 91-604,

84 Stat. 1676 (formerly 42 U.S.C. 1857 et seq.).. 4

Section 101(a) (8), 42 U.S.C. 1857 (a) (3) ..... 4, 36

Section 107(a), 42 U.S.C. 1857c-2(a)............ 4, 36

Section 109, 42 U.S.C. 1857-4 2... 4

Section 110(a) (2), 42 U.S.C. 1857¢-5 (a) (2).. 4

Section 111, 42 U.S.C. 1857¢-6 _............ 18, 18, 27, 42,

48, 45, 46

Section 111(a) (3), 42 U.S.C. 1857c-6(a) (3).. 13, 44

Clean Air Act as amended by Pub. L. No. 95-95, 91

Stat. 685, 42 U.S.C. (Supp. V) 7401 et seg........... 2, 4, 5

Section 101(a) (3), 42 U.S.C. (Supp. V) 7401

(a) (3) 4, 36

Statutes and regulations—Continued Page

Section 107 (a), 42 U.S.C. (Supp. V) 7407(a).. 4, 36

Section 109, 42 U.S.C. (Supp. V) 7409 .......... 4

Section 110(a) (2), 42 U.S.C. (Supp. V) 7410

ABAD OID scccireststiasniihaaaceastadiailatdataislilatebinieeililanadais 4

Section 110(a) (2) (1), 42 U.S.C. (Supp. V)

FORE) CD CED aecaincsdeinenccntetiseitnedececrnnnn

Section 111, 42 U.S.C. (Supp, V) 7411..13, 18, 27, 42,

48, 45, 46

Section 111(a) (8), 42 U.S.C. (Supp. V) 7411

CaS GBD sscecichiancnnniadatetcitbitih igi teceevepenisenasentatontiin 13, 42, 44

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

TAT |} RR ERR aE a ee AS AS | Br 6, 48

Sections 160-169, 42 U.S.C. (Supp. V) 7470-

DUNE ccccnssiadbantalibabcien tea ideas ahs tactetstniabiitentsnnate ll

Section 165(a), 42 U.S.C. (Supp. V) 7475

GAD sicsriccosdasiesntieiebaiataieeieshinaataicatansaiasalbidhie aces 11

Sections 171-178, 42 U.S.C. (Supp. V) 7501-

I Re EN RY Rn ore aN 5

Section 171(4), 42 U.S.C. (Supp. V) 7601

| RSNA Bol eR AS A A Seg 0 OR 6, 43

Section 172, 42 U.S.C. (Supp. V) 7502 ............ 6

Section 172(a) (1), 42 U.S.C. (Supp. V) 7502

GUD CUP nnciccticaniitnlentinnnthtenieteicarenbinctniicconistsncndad 6

Section 172(a) (2), 42 U.S.C. (Supp. V) 7502

NY aE ai Oe SN NG OO 6

Section 172(b), 42 U.S.C. (Supp. V) 7502

CE «senda vcedidiciladapaidteteintinitisdimenickdunidinaiiiie 6

Section 172(b) (2), 42 U.S.C. (Supp. V) 7502

COD GED Wich cecssciteasicensusaillnsaniscenadiaicanttentieukdlcens 6, 27

Section 172(b) (3), 42 US.C. (Supp. V) 7502

IRTRD, iscdaceeciepaseieibinaideaiaiepniadiaadad Anes tama 6, 27

Section 172(b) (5), 42 U.S.C. 7502 (Supp. V)

SOON ED hebiinatittllesh thisiiniiatantsatain nceiingliidiiniiteds 7

Section 172(b) (6), 42 U.S.C. (Supp. V) 7502

CIOS. ssvhenthesnsiteceedinteillettinennicn cheateaiglanced 6

Section 172(b) (8), 42 U.S.C. (Supp. V) 7502

GODS . ccmctecimpaienaee Oi et 6, 27

Section 173, 42 U.S.C. (Supp. V) 7508 ............ 7,39

Section 178(1)-(4), 42 U.S.C. (Supp. V)

7608 (1)-(4) 7

Statutes and regulations—Continued Page

Section 178(1)(A), 42 U.S.C. (Supp. V)

I ininsilal i aciniteactndinttbaenicecesnniansiiegnines 80

Section 301(a) (1), 42 U.S.C. (Supp. V) 7601

ae ciiahedneibocmaieanapen 21

Section 302(j), 42 U.S.C. (Supp. V) 7602

RR cE ay ee ee oe 6

Section 307(b) (1), 42 U.S.C. (Supp. V) 7607

| REET PE Eee armen vow ens sen 15, 41

40 C.F.R.:

SOG RGR EIAISEEE SER Sees Seen en 40

Pt. 51:

ER |. ST eee 2, 1a

1 > | Serene 14, la

Section 51.18(j) (1) (i)-(ii) ...... ee 14, la

Section 51.18(j) (1) (ix) (1981) .............. 12

Section 51.18 (j) (1) (xiih) ..............cccceceeeees 28

Section 62.24 (f) (1)-(2) .....c.ccccccccceeeeseeeees 14

Section 52.24(f) (1)-(8) (1981) .............. 11

Section 52.24(f) (9) (1981) ................ 12

EE HNO COD teclececscecnenevecnsteinienense 28

Miscellaneous:

Air Pollution—Kahn Stresses Analyzing Marginal

Costs of Standards, [9 File Binder] Env’t Rep.

(BNA) 3181 (Mar. 38, 1979) ....0.cccccccoscoscccsccccceeeee $2

Clean Air Oversight: Hearings Before the Senate

Comm, on Environment and Public Works, 97th

Cong., 2d Sess., Pt. QB (1981) .........ceccecossecsesveeneeee 27

122 Cong. Rec. 245649 (1976) ...........cccccecceeseseeeeeees 47

128 Cong. Rec. (1977):

ad sceeeebieganeiatiiens 36

IID «cilities anccabienntenteencnabeaetinde 36

I Nk a sesencenctenselienibubbionibni 24

TG Sao SES SE eae sce Ne Ce 86

SC TERI si cssclecherubeniensteenshedainbinangunainesiion 24

oy SSC ART SS ae Sec 47

i I IR nace ies snns decipceptapeciilingsenpnittitidipmnst 24

SE, DIED scssntcascnesensechotalonentioneentanitatbiendabett 40

p. 18018 26, 40

Vir

Miscellaneous—Continued Page

i) ITS chciscebisetd hss hocessiigeecaoaieeansitaditadatendancemibede 47

i SEIT. dasihetibdntepsiiesistiessnlicdessianianiaehiadiamatGioaaans 47

i TIED icin cdscetstateianhitiedcninticitalaaiadnaenaieebdedetinas 26

i HITE iassinlsshiconsachsssantctatceehdiiiinetceteihdiiacateataanl abhi 87

SE SEINE detedsrdpusclacnusbuehiniacsesteniestinntsesehinibaeiiitamandaeaadiiaes 38

IRs IIIT settee ach cdeeenemsiesbtibhddasbctelemssbotentialeeadaneaeiee 88, 40

is TIE iaiwiiidewrsntecincanieetn~ctidtacadadisaniaienteababatas mies 25

is SII danselabcetierhevinamnadbiatslastnabdaenieabesbieemasiectaia scare 25

INET ah Eee eee. oe OME 25, 28

Ge ER a 25

Council on Environmental Quality, Thirteenth An-

SEE ID CITI seinsecsesitneminsesncsbicnenceceseneid 8, 26, 31, 32

41 Fed. Reg. (1976):

A, SRY sleaiceisdeinitibihgnenestinecicheechicenid nptinilceasiataibcdeatan 5

i, AEP IPUTEIT dejuissiashennittihusanpnsacainniasgsis diamine 5

BE I atid ckstaienccahthninesptinnincccotenninigaiiiaanbasbien 40

ORE Giiiidesdaihnsasigtisaincenabetashadphdleaaeimoteaea aden 5

44 Fed. Reg. (1979)

ITE Tiered ceciessinsiesihuavcatsctecanniteascalidebeseasncnaed 9

Ip SIE dukasncisbtetituenncisiecnscshnsbiaisttestnseephudsbendeleasamnacnn 9

IEEE © -sicinsstunntmcipnnicnatitasenteieibiinasiet da 9

O_o Serres ey 9

IO TITITIET psiatananttasasissatesdgnccsnnnsisnstecinnibidgsiaaiéhailiabiansd 10

Oe ITE Saniocdidscccinaseantgeiadiselssbaninaanpiiinnmasabbelccaiel 10

Ie ITT dessinesadrnuntnstheniinnicubbeabcegenidaciatindiniooaneasiocaal 10

ae 27

Sh, TUE spsiscbliaitcsnitienssisinstniitassllinmanniaaiiantisiiiiiaeciite 27

p. 61924 ......... 10

1D SaIIIET ltnsasincsshbinpspanettbieiatinabinocakdaaniemaics 11

IIIT sip hilinchotensectnicphansanedocenesiesptieabhccesbicaseimineesee 11

Ro CIEE ecschicidstiigstsicdtiesenichaaeligtinganslenidbltdadsaidal ett 10

ee NPS EO REO Sr. 27, 28

OIE vinsselisctdenstentinteceniesineransstibiiacsnisassestaacadstbiall 10

45 Fed. Reg. (1980)

p. 52676 ..... 12

p. 52693 12

pp. 52696-52698 0... : 12

Miscellaneous—Continued Page

A 12

IIIT ls cdieiciisdaniensenanepesescertnnerveceeevesenssecesesssesees 12

46 Fed. Reg. (1981):

lean osceanachnctensecsssccoesessshentecwnscces 12

a 12-13, 29, 33, 34

SE ee ee ae 14, 29, 33

EE a 14, 35, 38, 41

ER ee 29, 33

EE SS! SS LR 14, 34, 35

EES SEES TS 14, 29

TE | EE ~

H.R. 6161, 95th Cong., Ist Sess. (1977) ......0......... 46

H.R. Conf. Rep. No. 95-564, 95th Cong., 1st Sess.

a GEM TD 35, 43, 46

H.R. Rep. No. 95-294, 95th Cong., Ist Sess. (1977)... 6, 16,

21, 23, 36

A. Kneese, Economics and the Environment (1977).. $2

Landau, Economic Dream or Environmental Night-

mare? The Legality of the “Bubble Concept”

in Air and Water Pollution Control, 8 B.C.

Beer. AM, Te, OV. TEL C1GBO) ....--.ecccecccceccsceee--e-- 34

L. Lave & G. Omenn, Clearing the Air: Reform-

ing the Clean Air Act (1981) ..0...........ccccccccecceens 27, 30, 31

Maloney & Yandle, Cleaner Air at Lower Costs:

Bubbles and Efficiency, Regulation, May-June

a esssunvesenseneones $2

I I I nn a ccssssnnsensnnsnsenvonncs x

National Commission on Air Quality, To Breathe

ns ccescsnesioassne 25, 28, 30, 40

Note, An Overview of the Bubble Concept, 8

Colum. J. Envtl. L. 187 (1982) ............................ 34

Remarks of William D. Ruckelshaus to the Annual

Convention of the Air Pollution Control Associa-

oc saqueseneussouscsne &

S. 3219, 94th Cong., 2d Sess. (1976) 000... 45

S. 252, 95th Cong., Ist Sess. (1977) .............0.......... 48, 45

S. Rep. No, 95-127, 95th Cong., Ist Sess. (1977).. 7, 26,

37, 47

Miscellaneous—Continued Page

Staff of Senate Comm. on Environment and Public

Works, 95th Cong., 2d Sess., A Legislative His-

tory of the Clean Air Act Amendments of 1977

(Comm. Print 1978) :

5 POE ER SR SACS eae FES CASS passim

Wis Al ab ccetciedahesecisteehecndanl 6, 16, 21, 23, 24, 36, 40, 46, 47

WUE GD ccispenssinsiticeveediciicitanentinaihdheinaiiinantetedions 45, 47

U.S. General Accounting Office, PAD-82-15, A Mar-

ket Approach to Air Pollution Control Could Re-

duce Compliance Costs Without Jeopardizing

Clean Air Goals (Mar. 28, 1982) ...0......000000000... 82

Zerbe, Optimal Environmental Jurisdictions, 4

fe OTS | A ee eeeees 82

Iu the Supreme Court of the United States

OCTOBER TERM, 1983

No. 82-1005

CHEVRON U.S.A. INC., PETITIONER

Vv.

NATURAL RESOURCES DEFENSE COUNCIL, INC., ET AL.

No. 82-1247

AMERICAN IRON AND STEEL INSTITUTE, ET AL.,

PETITIONERS

NATURAL RESOURCES DEFENSE COUNCIL, INC., ET AL.

No. 82-1591

WILLIAM D. RUCKELSHAUS, ADMINISTRATOR,

ENVIRONMENTAL PROTECTION AGENCY, PETITIONER

NATURAL RESOURCES DEFENSE COUNCIL, INC., ET AL.

ON WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

BRIEF FOR THE ADMINISTRATOR OF THE

ENVIRONMENTAL PROTECTION AGENCY

OPINIONS BELOW

The opinion of the court of appeals (82-1005 Pet. App.

Al-A20) is reported at 685 F.2d 718.'

1 “82-1005 Pet. App.” refers to the appendix to the petition in

Chevron U.S.A. Inc. Vv. Natural Resources Defense Council, Inc.,

et al.

(1)

JURISDICTION

The judgment of the court of appeals was entered on

August 17, 1982. Timely petitions for rehearing were

denied on October 27, 1982 (82-1005 Pet. App. B22-

B25). The petitions for a writ of certiorari were timely

filed on the following dates: No. 82-1005, December 15,

1982; No. 82-1247, January 25, 1988; No. 82-1591,

March 25, 1983 The petitions were granted, and the

cases consolidatec., on May 31, 1983. The jurisdiction of

this Court is invoked under 28 U.S.C. 1254(1).

STATUTE AND REGULATIONS INVOLVED

Pertinent provisions of the Clean Air Act, 42 U.S.C.

(Supp. V) 7401 et seg., are reproduced in Appendix A

to the brief of the American Iron and Steel Institute.

Pertinent portions of implementing regulations, 40 C.F.R.

51.18(j), are reproduced in the Addendum to this brief

and at 82-1247 Pet. App. 32a-33a.*

STATEMENT

The 1977 Amendments to the Clean Air Act required

“nonattainment” states—state, that had not yet met

prescribed national air quality standards—to establish

a permit program (commonly called a “new source re-

view” or “NSR” program) regulating the construction

of “new or modified major stationary sources” of air

pollution. The Act does not define the term “stationary

. sources” for purposes of this NSR program; so the En-

vironmental Protection Agency undertook to develop one.

Its regulations permit a state under certain circum-

stances to adopt a “plantwide” definition of “stationary

source.” The court of appeals held that this definition

is unlawful, concluding that the EPA is bereft of any

discretion to leave the states such flexibility. The ques-

tion in this case is whether that court’s conclusion is

correct.

2 “82-1247 Pet. App.” refers to the appendix to the petition in

American Iron and Steel Institute, et al. v. Natural Resources De-

fense Council, Inc., et al.

The EPA regulations, first proposed in 1979 and

adopted in 1981, permit (but do not require) those states

that have an approved “State Implementation Plan”

(“SIP”) providing for timely attainment of national air

quality standards to treat an entire industrial plant as

a single “source.” This means that the addition of equip-

ment (and modifications to existing equipment) within

a plant do not trigger formal new source review if in-

creased emissions from the new or modified unit are

offset by corresponding decreases from other units at the

plant, so that aggregate plant emissions do not increase

by more than de minimis amounts. The regulations also

permit the states to treat each component or process unit

at a plant as a separate source. Thirty-one states (or

jurisdictions within states)* have to date availed them-

selves of the option to adopt the plant definition of

“source.”

Under either definition, new plants located in non-

attainment areas are subject to new source review. Addi-

tions or alterations at existing sites, however, require

review under the plantwide definition only if total emis-

sions from the plant as a whole increase. In contrast, a

definition that focuses on each process unit within the

plant requires new source review whenever there is a

significant increase in emissions from an individual unit,

regardless of net impact on air quality.

In this case, the United States Court of Appeals for

the District of Columbia Circuit held that the 1977

Amendments, as construed by it in prior cases, leave the

Agency with no discretion to permit states to adopt a

plantwide definition. The decision requires review of

numerous equipment modifications that have no effect on

air quality (because of intra-plant offsets), and not-

withstanding that a State Implementation Plan approved

by EPA provides for timely attainment of national air

3 Most State Implementation Plans cover an entire state. In

approximately eight states, however, there is a separate plan for

designated areas within the state.

quality standards. Further, while the 1981 regulations

allow each state to select the appropriate definition in

light of its particular pollution problems, the court of

appeals imposed a uniform standard on every state.

1. In the Clean Air Act, Congress established a fed-

eral-state partnership that recognizes that “the prevention

and control of air pollution at its source is the primary

responsibility of States and local governments.” Section

191 (4) (3), 42 U.S.C. 1857(a) (3) and.42 U.S.C. (Supp.

V) 7401(a)(3).* See also Section 107(a), 42 U.S.C.

1857c-2(a) and 7407(a). EPA was required to establish

primary and secondary National Ambient Air Quality

Standards (“NAAQS”). Section 109, 42 U.S.C. 1857c-4

and 7409.5 Primary NAAQS are designed to protect the

public health; secondary NAAQS are to protect the pub-

lic welfare.

Following EPA promulgation of the NAAQS, each state

was required to adopt a plan, known as a “State Im-

plementation Plan” or “SIP,” to attain and maintain

these NAAQS by the deadlines established in the Act.

Sections 107(a) and 110(a) (2), 42 U.S.C. 1857¢-2(a)

and 7407(a), 42 U.S.C. 1857c-5(a) (2) and 7410(a) (2).

if a SIP provided for timely attainment and maintenance

of the NAAQS and otherwise complied with the require-

ments of the Act, the Administrator was required to

approve it. Section 110(a) (2), 42 U.S.C. 1857c-5(a) (2)

and 7410(a)(2). Primary standards were generally to

be attained by 1975.

* At the time of the Clean Air Amendments of 1970, Pub. L. No.

91-604, 84 Stat. 1676 et seq., the Act was codified at 42 U.S.C. 1857

et seq. In 1977 the Act was further amended. As amended, the Act

was reclassified to 42 U.S.C. (Supp. V) 7401 et seq. Where reference

is made to pre-1977 provisions that were not materially changed by

the 1977 Amendments, citations to both the former and present

codifications are provided. We will hereinafter omit “Supp. V” in

references to the current version of the Act.

5 Pursuant to this authority, the Administrator has promulgated

primary and secondary NAAQS for sulfur dioxide (SO,), par-

ticulate matter, carbon monoxide (CO), nitrogen dioxide (NO,),

photochemical oxidants, and lead. 40 C.F.R. Pt. 50.

2. By 1975 it became clear that many areas had

failed to attain primary air quality standards and thus

continued to have excessive levels of pollution. Concern

was also expressed that existing law might prohibit con-

struction or modification of any industrial facility in a

nonattainment area.

Congress not having acted, EPA implemented an ad-

ministrative solution. In December 1976, it published an

interpretive rule comm@nly known as the “Emissions Off-

set Ruling.” See 41 Fed Reg. 55524-55530. The Offset

Ruling imposed three conditions on the construction or

modification of any major source in nonattainment areas.®

First, emissions from existing sources in the area were

to be reduced by an amount greater than the projected

emissions from the proposed new or modified source.

Second, state-of-the-art emissions control technology was

to be installed to meet the “lowest achievable emission

rate” for the particular source. Third, the owner or op-

erator of the proposed source had to certify that all ex-

isting sources in the area under his control were in com-

pliance with the applicable SIP, or were on an approved

compliance schedule. EPA also requested that the states

develop and submit revised SIPs for all areas in which

the national standards had not been attained. See 41

Fed. Reg. 28600 (1976).

In 1977 Congress passed the Clean Air Act Amend-

ments of 1977, Pub. L. No. 95-95, 91 Stat. 685 et seg.

Part D of Title I of the amended act’ dealt with non-

attainment areas. Part D had

two main purposes: (1) to allow reasonable economic

growth to continue in an area while making rea-

sonable further progress to assure attainment of the

standards by a fixed date; and (2) to allow States

* The Offset Ruling referred to a “major source” as “any struc-

ture, building, facility, installation or operation (or combination

thereof) for which the allowable emission rate is equal to or greater

than [prescribed levels)” (41 Fed. Reg. 55528 (1976) ).

7 42 U.S.C. 7601-7508.

greater flexibility for the former purposes than

EPA’s present interpretive regulations afford.

H.R. Rep. No. 95-294, 95th Cong., 1st Sess. 211 (1977),

reprinted in 4 Staff of Senate Comm. on Environment

and Public Works, 95th Cong., 2d Sess., A Legislative

History of the Clean Air Act Amendments of 1977, at

2678 (Comm. Print 1978) (hereinafter Leg. Hist.].

Steps prescribed for nonattainment areas included sub-

mission of substantially revised SIPs for the Administra-

tor’s approval by July 1, 1979.* In order to be approved,

a revised SIP was required to provide for attainment of

the primary NAAQS by December 31, 1982.° Revised

SIPs also had to comply with requirements set out in

new Section 172(b) of the Act, 42 U.S.C. 7502(b). These

included: implementation of all reasonably available con-

trol measures as expeditiously as practicable; adoption, at

a minimum, of reasonably available control technology for

existing sources; annual incremental reductions in emis-

sions leading to “reasonable further progress” toward

attainment; emissions limitations, schedules of com-

pliance, and other measures necessary to meet the re-

quirements of Section 172; and—most important for this

case—a permit program governing construction of “new

or modified major stationary sources” of air pollution.’

8 Prior to July 1, 1979, a state without an approved revised SIP

continued to be generally subject to EPA’s Offset Ruling.

®42 U.S.C. 7502(a)(1). If a state demonstrated that it could

not meet the 1982 deadline for attainment of the primary NAAQS

for carbon monoxide or ozone, the Administrator was authorized to

grant extensions to December 31, 1987. 42 U.S.C. 7502(a) (2).

10 Section 172(b) (2), (8), (6), and (8), 42 U.S.C. 7502(b) (2),

(3), (6), and (8). A stationary source is defined as “major” if

it “directly 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). An existing major source is “modified” whenever

its emissions increase by more than a de minimis amount, as deter-

mined by EPA. Sections 111(a)(4) and 171(4), 42 U.S.C. 7411

(a) (4) and 7501(4); Alabama Power Co. v. Costle, 636 F.2d 323,

400 (D.C. Cir. 1979). These significance thresholds for ‘“modifica-

tions” apply under both the plantwide and dual definitions.

The permit program for new or modified sources—

usually called the new source review (““NSR”) program—

was designed to correct a “major weakness in imple-

mentation of the 1970 Act”: “the failure to assess the

impact of emissions from new sources of pollution on

State plans to attain air quality standards by statutory

deadlines.” S. Rep. No. 95-127, 95th Cong., Ist Sess. 55

(1977), 3 Leg. Hist. 1429. Section 178, 42 U.S.C. 7503,

establishes the four mandatory elements for a new source

review program. First, a permit may be issued only if

the owner or operator of the new source obtains sufficient

emission reductions in the region to offset the increased

emissions from that source and allow for reasonable fur-

ther progress toward attainment—or, alternatively, if the

increased emissions will not exceed an allowance for

growth budgeted by the state pursuant to Section

172(b) (5), 42 U.S.C. 7502(b) (5). Second, the source

must be equipped with state-of-the-art emission controls

meeting a standard described as the “lowest achievable

emission rate” (“LAER”). Third, the permit applicant

must certify compliance with the applicable State Imple-

mentation Plan for his other sources in the state. Fi-

nally, no permit may be issued unless the state is carry-

ing out the applicable implementation plan for the rele-

vant nonattainment area. See Section 173(1)-(4), 42

U.S.C. 7503 (1)-(4).

In addition, Congress required each state to impose a

limited conditional moratorium on the construction or

modification of major stationary sources in nonattainment

areas if the state did not have a revised Part D SIP ap-

proved by EPA on July 1, 1979. Upon approval of a re-

vised SIP, the moratorium would be inapplicable and the

construction or modification of major stationary sources

would be governed by the SIP. Section 110(a) (2) (I),

42 U.S.C. 7410(a) (2) (1)."

11 An issue concerning the construction moratorium is currently

under consideration by the agency. The 1977 Amendments set an

attainment deadline for most primary air quality standards of De-

8a. The NSR (and moratorium) programs apply to

“major stationary sources.” But the term “sources” is

not defined in the Act for purposes of these nonattain-

ment programs. Since enactment of the 1977 Amend-

ments, two competing definitions have been suggested.

Under a plantwide definition, a so-called “bubble” con-

cept is employed to treat the entire plant as a source;

that is, the plant is viewed as if it were encased in a

bubble that has a single emission point for the plant as a

whole.” Under this definition, when emissions from one

unit within a plant are increased or a new unit is added,

the change need not undergo formal new source review if

the operator can reduce emissions of the same pollutant

elsewhere within the plant so that total emissions do not

increase by more than a de minimis amount.” In con-

trast, under a dual definition, each process unit within

a plant, as well as the plant as a whole, is viewed as

a “source.” Thus, any major new unit or any significant

increase in emissions from an existing unit triggers

cember 31, 1982. Some areas have, however, failed to attain that

goal Initially, as we explained in our reply brief at the petition

stage (at 9 n.13), EPA concluded that the Act required the mora-

torium to be imposed in these regions. See 48 Fed. Reg. 4972

(1983). Subsequently, the new Administrator reexamined the issue

and concluded that the moratorium was not mandatory if the state

had an approved implementation plan and had made reasonable ef-

forts to achieve attainment. See Remarks of William D. Ruckelshaus

to the Annual Convention of the Air Pollution Control Association

(June 28, 1983); N.Y. Times, June 24, 1983, at Al0, col. 1. EPA is

now in the process of formulating this policy and preparing imple-

menting regulations.

12 As applied in the NSR program, the bubble concept is some-

times referred to in the literature as “netting” because operations

within a plant are offset or netted against each other. See, ¢.g.,

Council on Environmental Quality, Thirteenth Annual Report 185

(1982).

13 If total emissions do not increase by more than a de minimis

amount, the change is not deemed a “modification” of the plantwide

source for purposes of new source review. See page 6 note 10,

supra.

formal new source review, even if aggregate emissions

from the plant decrease or remain the same."

b. In January 1979, EPA first addressed the require-

ments for new source review programs under Part

D of the amended Clean Air Act. See 44 Fed. Reg.

3274, 3276-3277."° EPA indicated that it would permit

states with approved revised SIPs to adopt a plantwide

definition of “source”; '* states without approved revised

SIPs, however, would be required to treat each individual

unit as a “source” subject to new source review. In

proposing this approach, EPA explained (id. at 3276,

3277):

Where a state implementation plan is revised and

implemented to satisfy the requirements of Part D

including the reasonable further progress require-

ment, the plan requirements for major modifications

may exempt modifications of existing facilities that

are accompanied by intra-source offsets so that there

is no net increase in emissions. The Agency endorses

such exemptions, which would provide greater flex-

ibility to sources to effectively manage their air emis-

sions at least cost.

™ Under both definitions the plant as a whole would be subject

to new source review whenever its aggregate emissions increase by

more than a de minimis amount even if no individual process unit

would be subject to review. This can occur when several new

pieces of equipment that are “minor” emitters of pollution (see

page 6 note 10, supra) result in a cumulative increase in emissions

sufficient to constitute a “modification” of the plant as a whole. It

can also occur when existing equipment is altered in a way that

emissions from any individual unit do not increase by more than a

de minimis amount but total emissions from the plant in the aggre-

gate do significantly rise.

16 This occurred in the context of a revision to the Offset Ruling

and a discussion of the new requirements for SIPs.

16 This plantwide approach was limited to modifications of exist-

ing facilities and did not apply to the addition of a major new facil-

ity (44 Fed. Reg. 3277 (1979) ).

The above exemption is permitted under the SIP

because, to be approved under Part D, plan revisions

* * * must contain adopted measures assuring that

reasonable further progress will be made. Further-

more, * * * the measures adopted * * * must be suf-

ficient to actually provide for attainment of the stand-

ards by the dates required under the Act * * *. Also,

Congress intended under Section 178 of the Act that

States would have some latitude * * * when the State

plan is revised and is being carried out in accord-

ance with Part D, Under a Part D plan, therefore,

there is less need to subject a modification of an

existing facility to * * * stringent uirements if

the modification is accompanied by sufficient intra-

source offsets so that there is no net increase in

emissions,

In April 1979 EPA reiterated these considerations and

adhered to its January 1979 approach, See 44 Fed. Reg.

20372, 20379." In discussing the requirements for revised

SIPs, the agency noted its “policy to encourage and assist

states in adopting economically efficient pollution control

methods” (id, at 20373). In particular, citing to the

January 1979 discussion, EPA repeated that it “en-

courages states to consider allowing plants to place less

control on processes where the marginal cost of control is

high, in return for placing greater control where cost is

low, so that the total control satisfies SIP requirements”

(id, at 20878 n.9).

Thereafter, in September 1979, EPA formally proposed

to allow states with approved SIPs to use a plantwide

definition. See 44 Fed. Reg. 51924, 51958." EPA ex-

plained (id. at 51933 (citation omitted) ) :

7 This discussion was contained in a general preamble for pro-

posed rulemaking with respect to revised State Implementation

Plans.

'* This plantwide definition did not distinguish between modified

equipment and new (or reconstructed) equipment; rather, it allowed

intra-plant offsets to be applied to all changes at a plant. See 44

Fed. Reg. 61933 (1979).

[Clomplete Part D SIPs, which contain adopted and

enforceable requirements sufficient to assure attain-

ment, may apply the approach * * * [of] plant-wide

review but no review of individual pieces of equip-

ment. * * * [This is only 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 attainment, new

construction or modifications with enough offset

credit to prevent an emission increase should not

jeopardize attainment.

In addition, EPA noted that it proposed a consistent

plantwide definition of “source” both for the new source

review program in nonattainment areas and for the pro-

gram for the prevention of significant deterioration—the

“PSD” program—in areas that had attained national air

quality standards (id. at 51925, 51926)."*

In August 1980, EPA abruptly reversed its position.

Instead of allowing states with approved SIPs to use a

plantwide definition, it imposed an across-the-board dual

definition that treats as “sources” both an entire plant and

the discrete pieces of pollution-emitting equipment within

the plant.”” The states were therefore required—irrespec-

' The PSD program was originally enacted as Part C of the 1977

Amendments, Sections 160-169, 42 U.S.C, 7470-7479. Designed to

prevent the deterioration of air quality in areas in which ambient

air is cleaner than required by national standards, it contains a pre-

construction review program requiring compliance with stringent

omission and technology standards. Section 165(a), 42 U.S.C,

7475(a). See Alabama Power Co, V, Coatle, 636 F.2d 828 (D.C, Cir.

1979), Because an area can attain federa) standards for one pol-

lutant but not for another, a project in a given area can be subject

to both PSD and NSR reviews.

See 40 C.F.R. 61.18(j)(1)(i)-(iii) and 62,24(f) (1)-(8)

(1981). The 1980 regulations defined “stationary source” to mean

“any building, structure, facility, or installation which emita or

may emit any air pollutant subject to regulation under the Act’;

the terms “building, structure, or facility” were defined to denote

a plant, while “installation” was defined as “an identifiable piece of

process equipment,”

tive of any actual effect upon aggregate piant emissions or

air quality—to subject new and modified units to new source

review under all circumstances where emissions from the

unit increased by more than de minimis amounts. See 45

Fed. Reg. 52676, 52696-52698 (1980). EPA believed that

the dual definition was supported by the purpose of the

nonattainment program to improve existing air quality

(id, at 52698, 52097) and was consistent with the legisla-

tive history of the 1977 Amendments (id. at 52697). The

agency recognized that applying a different definition of

“source” to the NSR and PSD programs would “add|[})

to the complexity of the permitting process” (ibid.),”’

and it acknowledged the claim “that some sources may

not be willing to modernize their facilities’ under the

dual definition (id, at 52698). EPA concluded, however,

that such considerations were outweighed by the need to

“bring in more sources and modifications for review and

* * * require better pollution control technology in non-

attainment areas” (ibid.).™ These regulations were

promptly challenged by numerous industries. See Chemi-

cal Manufacturers Association v, EPA, No, 79-1112 (D.C.

Cir.) .™

Seven months later EPA announced its intention to

return to its original proposal to allow states to use a

plantwide definition of “source” under the new source

review program, 46 Fed, Reg. 16280 (1981); J.A. 89-96,

Having reviewed the dual definition as part of “a Gov-

ernment-wide reexamination of regulatory burdens and

complexities,” and having “reevaluated all of the argu-

ments on al! sides of these definitional issues” (46 Fed.

*! The 1980 regulations adopted a plantwide definition of “sta-

tionary source” for PSD purposes (45 Fed. Reg. 52731 (1980) ).

* In addition, the 1980 regulations treated substantially recon-

structed process units as new sources. 40 C.F.R, 61,18(j) (1) (ix)

and 562.24(f)(9) (1981). The effect of this approach was to require

formal new source review of such reconstructed facilities even when

emissions were not greater than those of the equipment superseded.

2% This litigation was settled in response to the ensuing adminis-

trative developments outlined below.

Reg. 16281 (1981)), EPA concluded that neither the

statute nor its legislative history provides a definition and

therefore that the “question * * * inyolves a judgment

as to how best [to] carry out the Act” (ibid.). The

agency found that the plantwide definition was preferable

because (a) the dual definition was a disincentive to

modernization of facilities, resulted in a ban on modifica-

tions in areas subject to the construction moratorium

notwithstanding that the project would not increase and

could even reduce emission levels, and served t retard

progress in air pollution control by discouraging the re-

placement of older, dirtier processes and equipment; (b!

consistency in the definition of “source” under the NSR

and PSD programs would simplify the regulations and

reduce confusion and regulatory burden; and (c) the ap-

proved SIP providing for reasonable further progress and

timely attainment gave adequate assurances that the

purpose of the Part D program would not be impeded

(ibid.). In addition, EPA pointed out that, even under a

plantwide definition, new equipment is in any event sub-

ject to stil! another program—the New Source Perform-

ance Standards (“NSPS”) program under Section 111 of

the Act, which requires that prescribed standards of pol-

lution control technology be applied to new equipment.”

EPA solicited public comments on its proposal. There

was strong support for the plantwide approach.” Accord-

ingly, in October 1981, EPA exercised its discretion to

promulgate the plantwide definition, 40 C.F.R. 51.18(j)

* The NSPS program was enacted in 1970. Section 111, 42 U.S.C.

1857c-6 and 7411. It imposes a single technology-forcing require

ment and is applicable uniformly throughout the country without

regard to the attainment or nonattainment of air quality standards.

See Sierra Club y. Costle, 657 F.2d 298 (D.C. Cir. 1981); ASARCO,

Inc. V. EPA, 678 F.2d 319 (D.C. Cir. 1978). Unlike the NSR and

PSD programs, NSPS con'ains an explicit definition of “source”

to be used in that program. Section 111(a) (8), 42 U.S.C. 1857c-

6(a)(8) and 7411(a) (3).

* The rulemaking record is discussed at pages 32-38 and 38-40,

infra.

(1) (i)-(ii) and 52.24(f) (1)-(2) (see 46 Fed. Reg. 50766

(1981); J.A. 97), characterizing it as the one “best suited

to the nonattainment program” (46 Fed. Reg. 50769

(1981) ).*° EPA noted that its definition conforms to the

PSD definition of source, and eliminates the need to de-

termine what particular pieces of equipment constitute a

“source” under the dual definition (id. at 50767, 50768)

—thus reducing regulatory complexity. In addition, EPA

determined that the plantwide definition was in accord

with Congress’s intent that states play an important role

in pollution control and have flexibility under the Act to

balance environmental and economic goals (id. at 50767,

50768).

EPA emphasized that states choosing to adopt the plant-

wide definition “must demonstrate that their plans, as

revised, continue to demonstrate [reasonable further

progress] and attainment” (46 Fed. Reg. 50767 (1981) ).

Because “demonstration of attainment and maintenance

of the NAAQS continues to be required, deletion of the

dual definition increases state flexibility without inter-

fering with timely attainment of the ambient standards,

and so is consistent with Part D” (ibid.). EPA also

reiterated that the dual definition would impede moderni-

zation of existing plants and, especially in areas subject

to the construction moratorium, could actually hinder the

reduction of emissions (id. at 50768) .”"

2¢In the 1981 regulations, a “stationary source” is defined to

mean “any building, structure, facility, or installation which emits

or may emit any air pollutant subject to regulation under the Act.”

In turn, the constituent elements “building, structure, facility, or

installation” are defined in terms of the entire plant and do not

refer to individual pieces of equipment. 40 C.F.R. 61.18(j) (1) (i)-

(ii); 40 C.F.R. 52.24(f) (1)-(2). States retain the option to define

an individual unit as a “source.” 40 C.F.R. 51.18(j) (1).

27 In the October 1981 regulations EPA also eliminated the special

reconstructed source rule that had been adopted in 1980 (see note

22, supra), explaining that, in light of the plantwide definition of

“source,” a veconstruction requirement no longer was necessary

because an entire plant is rarely reconstructed (46 Fed. Reg. 50767

(1981) ; J.A. 108).

4. On November 18, 1981, the Natural Resources De-

fense Council, Inc. (“NRDC’’), Citizens for a Better En-

vironment, Inc., and the Northwestern Ohio Lung Associ-

ation, Inc., filed a petition for review of the EPA’s

October 1981 regulations in the United States Court of

Appeals for the District of Columbia Circuit.* That court

granted the petition for review and vacated EPA’s regula-

tions (82-1005 Pet. App. A20). The court acknowledged

that “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”

(id. at A8). The court also found that the issue was not

“squarely addressed in the legislative history” (ibid.),

and it “agree[d] with EPA that ‘with regard to the

actual content of the definition of “source,” the legisla-

tive history is at best contradictory’” (id. at Al7 n.39

(citation omitted)). Nevertheless, the court declined to

defer to the agency’s regulation. Instead, the court con-

cluded that the case was “controlled” (id. at A183) by two

of its prior decisions, ASARCO, Inc. v. EPA, 578 F.2d

319 (D.C. Cir. 1978), and Alabama Power Co. v. Costle,

636 F.2d 328 (D.C. Cir. 1979), and that those cases

“impelled” it to reject the plantwide definition as “im-

permissible” (82-1005 Pet. App. A8, A4). According to

the court, those decisions, taken together, establish (id.

at Al6 (emphasis added; footnote omitted) )

a bright line test for determining the propriety of

EPA’s resort to a bubble concept. The bubble con-

cept * * * is mandatory for Clean Air Act programs

designed merely to maintain existing air quality; it

is inappropriate * * * in programs enacted to im-

prove the quality of ambient air.

The court “express[ed] no view on the decision we would

reach if the line drawn in Alabama Power and ASARCO

did not control our judgment” (id. at A4 n.7); instead,

it summarily concluded that, because the objective of the

entire nonattainment program was to improve (rather

28 See Section 307 (b) (1), 42 U.S.C. 7607(b) (1).

than maintain) air quality, a plantwide definition of the

term “source” was absolutely prohibited for purposes of

the new source review program (id. at Al7-A18).

The court deemed it irrelevant that new source review

is but one element of the intricate regulatory complex

constituting the nonattainment program. In addition, not-

withstanding the House Report that explained that “al-

low[ing] States greater flexibility” is one of the “two

main purposes” of Part D of the statute (H.R. Rep. No.

95-294, supra, at 211, 4 Leg. Hist. 2678), the court con-

cluded that such flexibility is only “a method of attain-

ing” the goal of improved air quality, but “is not an in-

dependent goal of the nonattainment scheme” (82-1005

Pet. App. Al9). In the court’s view, the only pertinent

consideration under its “bright line’ test was that the

purpose of the nonattainment program falls “on the ‘im-

proving’ side of the line” as between air quality mainte-

nance and air quality improvement ‘id. at A17).”

SUMMARY OF ARGUMENT

The question presented in this case is whether the Ad-

ministrator of EPA has discretion under Part D of the

Clean Air Act Amendments to allow nonattainment states

the option of using a plantwide approach to new source

review in cases where the State Implementation Plan

has been approved as consistent with the Act and con-

tains adequate assurance of further progress toward and

timely attainment of national air quality standards.

1, The court of appeals, although acknowledging that

neither the text nor the legislative history of the Act

furnishes a definition of “stationary source,” invented a

so-called “bright line” test of its own—a test creating a

set of rigid statutory pigeon-holes whose function is to

strip the Administrator of any discretion whatever in

working out the details of the nonattainment program.

* The court also invalidated EPA's deletion of the reconstructed

facilities rule, see notes 22 and 27, swpra, reasoning that the agency's

action depended upon its adoption of the plantwide source definition

(82-1006 Pet. App. Al9-A20).

In so doing, the court of appeals violated fundamental

principles of administrative law. Instead of deferring to

the Administrator’s wholly reasonable definition, the court

substituted its own version of good policy and imposed

on the agency—and the states—a mechanical and arti-

ficial formula not rooted in the language or history of

the Act. But under the Clean Air Act, as under other

statutes, this Court has made it clear that the task of

formulating policy by filling in gaps implicitly or ex-

plicitly left by Congress belongs to the administrative

agency authorized to administer the congressional pro-

gram, and not to the courts; the Administrator’s con-

struction is to be given deference and upheld if it is

reasonable. Train v. NRDC, 421 U.S. 60 (1975).

2. Measured against these standards of judicial re-

view, the court of appeals erred in casting aside the

agency’s interpretation of ‘“source’—an interpretation

that is a reasonable exercise of administrative discretion

fully consistent with the purposes of the Clean Air Act.

Giving the states the option to use a plantwide approach

to new source review represents a balanced accommoda-

tion of the multifarious purposes of the Act. In passing

the nonattainment provisions of the 1977 Amendments,

Congress made it clear that it wanted to achieve a rea-

sonable balance between the policies of improving air

quality and encouraging industrial growth. The plant-

wide definition encourages modernization and expansion

by eliminating the expense and delay of new source re-

view for equipment changes that do not materially affect

net air quality, which is held harmless by the requirement

of intra-plant offsets. It thus allows pollution to be re-

duced in the cheapest and most efficient way, provided

that the state has an approved SIP that is consistent

with the Act and provides for reasonable further progress

toward and timely attainment of national air quality

standards. In the meantime, new equipment is in any

event subject to technology forcing regulation under the

independent New Source Performance Standards pro-

gram. Accordingly, the plantwide definition is sensibly

designed to effectuate the congressional purpose to en-

courage industrial renewal consistent with timely achieve-

ment of the goal of attainment.

3. The Administrator’s decision allowing states with

approved SIPs to use a plantwide definition fulfills Con-

gress’s express purpose to provide increased flexibility

to the states in accommodating the policies of environ-

mental protection and industrial growth in light of local

conditions. Congress understood that in a geographically

and industrially diverse nation problems of air pollution

and their solutions are not uniform. The plantwide def-

inition allows a state to adapt its attainment strategy to

local conditions by dispensing with costly new source re-

view in cases in which there is no significant increase in

a plant’s emissions; it allows the state to concentrate its

scarce enforcement resources on those measures (¢.g.,

mobile sources or fugitive emissions) that are truly im-

portant to that state’s attainment of national air quality

standards.

4. The court of appeals was correct in finding that

the meaning of “source” for purposes of the New Source

Review program is neither explicitly defined by statute

nor specifically addressed by legislative history. Con-

trary to respondents’ assertion, the specific definition of

“sources” in Section 111 of the Clean Air Act—itself am-

biguous—is expressly limited to the discrete program

created by that provision and does not apply to Part D.

Respondents’ contention that the history of the 1977

Amendments points to a congressional decision to deny

the Administrator any discretion to adopt a plantwide

approach is belied by the convoluted and lengthy legisla-

tive history. That history shows that Congress eliminated

from the nonattainment provisions all language pointing

toward a legislatively mandated definition precluding ad-

ministrative discretion in defining the term “source.”’ In-

sofar, then, as Congress addressed the question of how

“source” should be defined in this context, its only deci-

sion was not to decide that question for itself. Accord-

ingly, the normal rule—that the Administrator is to have

authority to implement the statute with respect to mat-

ters not legislatively determined—should operate. And

since the Administrator exercised this discretion by adopt-

ing a regulation that effectuates the various policies of

the Act, that leaves the states a sensible flexibility to

adapt their attainment strategies to local circumstances,

and that prevents new or modified sources from preju-

dicing attainment, that regulation should be sustained.

ARGUMENT

THE ADMINISTRATOR’S DECISION TO ALLOW

STATES TO USE A PLANTWIDE DEFINITION OF

“SOURCE” IN NONATTAINMENT AREAS IS VALID

I. THE COURT OF APPEALS’ DECISION DEPRIV-

ING THE ADMINISTRATOR OF ANY DISCRETION

TO ALLOW STATES TO USE A PLANTWIDE DEFI-

NITION OF “SOURCE” AND IMPOSING A TEST

OF ITS OWN INVENTION WAS ERRONEOUS

The question presented in this case is whether it is

permissible for the Administrator of EPA to allow states

the option to use a plantwide definition of the term

“source” under the NSR provisions of Part D of the

Clean Air Act Amendments. The court of appeals cor-

rectly found that Part D of the Act, “dense as it is, does

not explicitly define what Congress envisioned as a ‘sta-

tionary source’ * * *” (82-1005 Pet. App. A8) ; that this

issue is not “squarely addressed in the legislative history”

(ibid.) ; and that “ ‘the legislative history is at best con-

tradictory’” (id. at 17 n.89 (citation omitted)). The

court nevertheless invalidated the Administrator’s deter-

mination that a state may use the plantwide definition if

its SIP contains all of the elements required by the Act

and provides for reasonable further progress toward and

timely attainment of national air quality standards.

The decision of the court of appeals is fundamentally

at odds with the most basic principles of administrative

law, and constitutes an unwarranted usurpation of the

authority reserved to the administrative agency. Con-

gress having left the matter open, it was not for the

court to invent a standard of its own. The decision

whether to leave the states with reasonable flexibility

rather than mandating a single rigid bright line test was

to be an administrative, not a judicial, decision. Thus,

once again, the United States Court of Appeals for the

District of Columbia Circuit has ignored this Court’s

admonition that “[a]dministrative decisions should be

set aside * * * only for substantial * * * substantive rea-

sons as mandated by statute [and] not simply because

the court is unhappy with the result reached.” Vermont

Yankee Nuclear Power Corp. v. NRDC, 435 U.S. 519,

558 (1978) (citation omitted).

The court of appeals purported to derive its “bright

line” test (82-1005 Pet. App. Al6) from its earlier deci-

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

1978), and Alabama Power Co. v. Costle, 636 F.2d 323

(D.C, Cir. 1978).*° Under that test, the bubble concept is

mandatory and must be applied in Clean Air Act pro-

grams that are designed to maintain existing air quality;

conversely, it may not be applied where the purpose of the

program is to improve air quality. Finding that the pur-

pose of Part D of the 1977 Amendments is to improve air

quality, the court concluded that the plantwide definition

is prohibited under the new source review program.

This “bright line” test is wholly unjustified. The court

of appeals has judicially defined the term “source” for all

purposes under the Clean Air Act and has left the Ad-

ministrator with no discretion whatever—a remarkable

result given the court’s conclusion that the text and legis-

lative history of the Act do not provide a definition. In

fact the court’s test is an artificial construct, an inven-

tion extrapolated from two previous decisions involving

not the NSR program but two distinct Clean Air Act

programs. From these decisions the panel in this case

derived a rigid and simplistic formula: the lawfulness

of regulations defining the meaning of “source” for pur-

poses of a particular Clean Air Act program turns on

In fact, a reading of those cases will show that they do not

support the simplistic and rigid dichotomy created by the “bright

line” test formulated by the court in this case.

whether “the” purpose of “that program” is air quality

maintenance or air quality improvement. This mechani-

cal approach creates a dangerously distorting perspective.

It assumes that all parts and all subparts of a complex

and variegated program can be pigeonholed into one

simply-stated overriding purpose. It assumes that every

subsection of a complex statute works in an undiffer-

entiated manner toward one simple end. But the var-

ious provisions of the various nonattainment and air

quality maintenance programs cannot be fitted into such

a mold. Of course the ultimate purpose of attainment is

attainment—that is, eventual compliance with a fixed set

of air quality standards. But Congress made clear that

it wanted “reasonable economic growth” and “greater

flexibility” for the states as well as “reasonable further

progress * * * [toward] attainment.” See H.R. Rep. No.

95-294, supra, at 211, 4 Leg. Hist. 2678 (pages 5-6, su-

pra). And the various complex regulatory substructures

operate in different ways with respect to these multi-

farious purposes. As we shall show, the plantwide ap-

proach that the Administrator made permissible is fully

consistent with the statutory requirement of “reasonable

further progress” toward timely attainment; it simply

eliminates formal new source review where growth and

efficiency can be accommodated to attainment without such

review. Since the definition in this way reasonably meets

the various purposes Congress directed the Administrator

to keep in mind, it was not for the court to shunt it aside

and substitute its own judgment as to what the solution

to the definitional problem should be.

The Clean Air Act gives broad power to the Adminis-

trator “to prescribe such regulations as are necessary to

carry out his functions under this chapter” (42 U.S.C.

7601(a)(1)). Accordingly, the court of appeals was not

at liberty to intrude upon the Administrator’s authority.

“The power of an administrative agency to administer

a congressionally created * * * program necessarily re-

quires the formulation of policy and the making of rules

to fill any gap left, implicitly or explicitly, by Congress.”

Morton v. Ruiz, 145 U.S. 199, 231 (1974). A reviewing

court is not free to overturn the Administrator “simply

because it may prefer another interpretation of the stat-

ute” or because “reasonable men could easily differ as to

their construction” (INS v. Wang, 450 U.S. 139, 144

(1981)). Rather, “[i]t is settled that courts should give

great weight to any reasonable construction of a regulatory

statute adopted by the agency charged with the enforce-

ment of that statute” (Investment Company Institute v.

Camp, 401 U.S. 617, 626-627 (1971)), and the agency’s

construction of the statute “ ‘should be followed unless

there are compelling indications that it is wrong.’” Beal

v. Doe, 482 U.S. 488, 447 (1977) (citations omitted).

Under the Clean Air Act itself this Court has “accorded

great deference to the Administrator’s construction of

the * * * Act.” Union Electric Co. v. EPA, 427 U.S. 246,

256 (1976). To sustain the agency’s position, the Court

need not “go[{] so far as to hold that * * * [its] con-

struction of the Act was the only one it permissibly

could have adopted.” Train v. NRDC, 421 U.S. 60, 75

(1975). It must find only that the agency’s construction

of this “complex statute” is “sufficiently reasonab.e to

preclude the Court of Appeals from substituting its judg-

ment for that of the Agency” (id. at 87).

Measured against these standards of judicial review,

the court of appeals erred in casting aside the agency’s

definition of “source.” Since 1979, when EPA first con-

sidered the issue after enactment of the 1977 Amend-

ments—and with one brief deviation—EPA has in-

terpreted its statute as authorizing it to give states with

an approved SIP the flexibility to use a plantwide defini-

tion of “source.” As we now show, this administrative

interpretation constitutes a reasonable exercise of the

Administrator’s authority, one that is fully consistent

with the purposes of the Clean Air Act. Because the

court of appeals has substituted judicial rulemaking for

this reasonable exercise of discretion, its “bright line”

test must be rejected.

Il. THE ADMINISTRATOR’S DECISION TO ALLOW

STATES TO USE A PLANTWIDE DEFINITION OF

“SOURCE” COMPORTS WITH THE POLICIES OF

THE STATUTE AND IS A REASONABLE EXER-

CISE OF ADMINISTRATIVE DISCRETION

The regulation at issue in this case, allowing the states

to adopt the “bubble” concept by using a plantwide def-

inition of “source” for purposes of the nonattainment

program, helps effectuate both of the statute’s

two main purposes: (1) to allow reasonable eco-

nomic growth to continue in an area 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 interpretive regulations afford.

H.R. Rep. No. 95-294, supra, at 211, 4 Leg. Hist. 2678.

The Administrator’s decision to promulgate this regula-

tion was, accordingly, a reasonable—and eminently sen-

sible—exercise of administrative discretion, one that

should not have been set aside.

A. The Plantwide Definition Of “Source” Represents

A Balanced Accommodation Of The Statutory Poli-

cies Of Environmental Protection And “Reason-

able Economic Growth”

1. Congress’s Purpose Was To Achieve A Reason-

able Balance Between The Policies Of Environ-

mental Protection And Industrial Growth

The legislative history of the 1977 Amendments makes

clear that the nonattainment program was designed “as

a means of assuring realization of the dual goals of at-

taining air quality standards and providing for new eco-

nomic growth [in nonattainment areas]” (H.R. Rep. No.

95-294, supra, at 13, 4 Leg. Hist. 2480). The House Re-

port further explained (H.R. Rep. No. 95-294, supra,

at 210, 4 Leg. Hist. 2677 (citation omitted) ) :

[A] complete prohibition on new growth or ex-

pansion in nonattainment regions would pose very

serious problems. The economic impact on certain

urban areas of such a growth ban could be quite

harmful. Similarly, certain industries pointed out in

testimony the large cost increases that might be

necessary if new plants had to be located in com-

pletely new areas rather than expanding existing fa-

cilities or locating new plants near existing ones.

Similarly, in areas of particularly high unem-

ployment complete restriction of growth or expansion

possibilities might exaggerate unemployment or at

least hinder reemployment efforts. Concern was also

expressed about the aggregate impact of such growth

restrictions on the general economy’s recovery from

the recent recession.

In order to reconcile these conflicting concerns,

the committee adopted [the nonattainment program].

The purpose of the provision is to permit States to

allow continued growth or expansion in nonattain-

ment areas, so long as this growth or expansion is

undertaken in a manner consistent with the goals

and objectives of the Clean Air Act.

Reconciling the attainment of national air quality

standards with “new industrial growth” was “[o]ne of

the most difficult clean air issues” that confronted the

Congress. 123 Cong. Rec. 16204 (1977) (remarks of Rep.

Waxman), 4 Leg. Hist. 3055. Congressman Rogers stated

(128 Cong. Rec. 16196 (1977), 4 Leg. Hist. 3036-3037) :

[O]ver the past years our Nation has been beset

by serious economic and energy problems. These

factors have presented a new challenge requiring a

midcourse correction in the 1970 Clear Air Act; cor-

rections which will help assure our Nation’s con-

tinued economic growth and vitality.

Accordingly, Part D of the 1977 Amendments “pro-

vides a new, more flexible means of assuring continued

economic growth in areas now exceeding primary air

quality standards while continuing toward attainment

of these standards which protect public heaith.” 123

Cong. Rec. 16196 (1977) (remarks of Rep. Rogers), 4

Leg. Hist. 3037. See also 123 Cong. Rec. 16197-16198

(1977) (remarks of Rep. Rogers), 4 Leg. Hist. 3040-

3041.

The same principle was expressed during debate over

the Conference Report on the 1977 Amendments. Sen-

ator Stevens observed (123 Cong. Rec. 26852 (1977), 3

Leg. Hist. 369) :

The measure before the Senate * * * recognizes

that the goal of enhanced environmental quality

must be sought in the context of other national ob-

jectives. Some of the most extensively discussed por-

tions of this measure, in fact, are those providing a

mechanism to continue economic growth at the same

time we reduce pollution levels. I believe we have

succeeded in providing this balance so that pollution

can be abated while orderly economic growth is

sustained. '*"!

Likewise, the House debate on the Conference Report

noted the “balance [in the bill] which can assure us of a

cleaner environment and a growing economy at the same

time” (123 Cong. Rec. 27069 (1977) (remarks of Rep.

Carter), 3 Leg. Hist. 317), and it emphasized

a proper balance between environmental controls

and economic growth in the dirty air areas of

America. * * * There is no other single issue which

more clearly poses the conflict between pollution con-

trol and new jobs. We have determined that neither

need be compromised. * * *

This is a fair and balanced approach, which will

not undermine our economic vitality, or environ-

mental objectives.

123 Cong. Rec. 27076 (1977) (remarks of Rep. Wax-

man), 3 Leg. Hist. 336."

*! Senator Muskie pointed out, with respect to state authority to

sanction future growth, that “a community which is anxious to

attract new capital and relies on heavy economic activity will have

to show that it has a plan to achieve health standards by specific

dates and at each point that major new economic activity becomes

attractive, that plan will have to be checked and the time schedule

reviewed to assure that a community is fulfilling its commitment.”

128 Cong. Rec. 26842 (1977), 8 Leg. Hist. 342-848.

*2 See also National Commission on Air Quality, To Breathe Clean

Air 1, 2-8 (1981). We note that in 1980 total expenditures for air

It was in the context of this “more flexible’ and

“balanced” approach that the new source review program

was created to ensure that industrial growth did not

worsen air quality. As the Senate Report explained, a

“major weakness in implementation of the 1970 Act has

been the failure to assess the impact of emissions from

new sources of pollution on State plans to attain air

quality standards by statutory deadlines.” S. Rep. No.

95-127, supra, at 55, 3 Leg. Hist. 1429. See also Hancock

v. Train, 426 U.S. 167, 194 (1976). Based on this ex-

perience, it was concluded that “[s]ome mechanism is

needed to assure that before new or expanded facilities

are permitted, a State demonstrate that these facilities

can be accommodated within its overall plan to provide

for attainment of air quality standards. * * * [This will]

assure that introduction of the new source will not pre-

vent attainment of the applicable standard by the statu-

tory deadline” (S. Rep. No. 95-127, supra, at 55, 3 Leg.

Hist. 1429). See also 128 Cong. Ree. 18018 (1977)

(remarks of Sen. Muskie), 3 Leg. Hist. 716; 123 Cong.

Rec. 18088 (1977) (remarks of Sen. Stafford), 3 Leg.

Hist, 771."

In sum, the overarching purpose of the new source re-

view program was to assure that new plants and equip-

ment would not prejudice the transition from nonattain-

ment to attainment. To be sure, as the court of appeals

correctly stated, the overall objective of the nonattain-

ment provisions of Part D in their entirety is “to amelio-

rate the air’s quality in nonattainment areas” (82-1005

Pet. App. Al7) and “improve the quality of ambient air”

(id. at A16 (footnote omitted)). But the bubble concept

—permissible only in states with approved attainment

plans—is in no way inconsistent with that overall ob-

jective. It assures that the quality of air will be “held

pollution abatement and control represented $25.4 billion. Council

on Environmental Quality, supra, at 307 (Table A-80).

%3 See also Alabama Power Co. Vv. Custle, 636 F.2d 323, 346, 401

(D.C. Cir, 1979).

harmless” from new plant and equipment; at the same

time it allows the other elements of the regulatory scheme

to operate to assure that states will attain the required

air quality. For it is important to remember that new

source review is only one of an integrated complex of

regulatory measures mandated by Part D. These include

the requirement of reasonable further progress toward

timely attainment (Section 7502(b)(3)); the imple-

mentation of all reasonably available control measures as

expeditiously as practicable (Section 7502(b)(2)); the

adoption, at a minimum, of reasonably available control

technology for existing sources (Section 7502(b) (3));

and the development of emissions limitations, schedules of

compliance, and other measures that may be necessary to

achieve compliance (Section 7502(b)(8)). In addition,

under the Section 111 NSPS program new equipment is

independently subject to technological “quality control.”

See page 13 & note 24, supra. Given this integrated

statutory scheme, it is misleading to isolate the new

source review program and to assume that it was de-

signed all by itself to improve national air quality. New

source review was designed to enuure that reasonable eco-

nomic growth could continue without prejudicing—as it

had under the 1970 Act—progress toward the enhance-

ment of air quality in nonattainment areas.™

™ As the court stated in Alabama Power Co. v. Costle, supra,

636 F.2d at 346, “[t)he provisions for the attainment and main-

tenance of [national ambient air quality standards] were to operate

primarily through controls on existing sources of pollution.” See

also L. Lave & G. Omenn, Clearing the Air: Reforming the Clean

Air Act 46 (1981). For example, in Houston, Texas—an area that

tap Gantt Quinte, os Gusbenment ond Pulte Washo, 97th Cong.,

prevent a worsening of pollution while the state prepares revised

SIP in conformity with the 1977 Amendments (44 Fed. Reg. 38471,

88472 (1979) ; id. at 51986). In addition, the moratorium: serves to

2. The Plantwide Definition Of “Source” Serves To

Ensure That “Reasonable Economic Growth”

Does Not Prevent Attainment Of Air Quality

Standards

A plantwide definition of “source” is well suited to

promoting the objectives of the new source review pro-

gram: allowing growth without threatening the attain-

ment of national air quality standards. Under this defini-

tion, the expansion or alteration of a plant is not subject

to new source review if emissions elsewhere in the plant

are correspondingly reduced, so that there is no significant

impact on air quality.* In addition, the State Imple

mentation Plan must contain all of the elements required

by the Clean Air Act and provide for reasonable further

progress toward and timely attainment of air standards.

In this way, economic expansion and industrial moderni-

zation are facilitated without impeding the goal of achiev-

ing improved air quality.

The economic issues at stake in achieving a “balanced

approach” (see 123 Cong. Rec. 27076 (1977), 3 Leg. Hist.

336) were accurately set forth by the court of appeals in

its prior decision in Alabama Power Co. v. Costle, supra,

holding that a plantwide definition of “source” is appli-

cable to the preconstruction review program for the pre-

vention of significant deterioration (“PSD”) in attain-

ment areas (636 F.2d at 401):

provide an incentive for states promptly to develop and submit re-

vised SIPs (ibid.). Like the NSR program, the construction mora-

torium is designed to ensure that new “sources” do not exacerbate

the levels of pollution and thereby prevent reasonable further prog-

For instance, the de minimis level for sulfur dioxide is 40 tens per

. Y ( 40 C.F.R. 62.24(f) (18). By con-

trast, in 1978 total sulfur dioxide emissions in the United States

It is important first to recognize that alterations of

almost any plant occur continuously; whether to re-

place depreciated capital goods, to keep pace with

technological advances, or to respond to changing

consumer demands. * * * To apply * * * [a process-

unit] construction of “increase,” however, would re-

quire 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 “modifica-

tion” subject to PSD review. Not only would this re-

sult be extremely burdensome, it was never intended

by Congress in enacting the Clean Air Act Amend-

ments.

Here, too, a plantwide definition “will allow for im-

provement of plants, technological changes, and replace-

ment of depreciated capital stock, without imposing a

completely disabling administrative and regulatory bur-

den” (636 F.2d at 400).** On the other hand, the dual

definition can impose new source review on even routine

changes in a single piece of equipment. The resulting

expense and delay create a substantial disincentive to

expand capacity or replace outmoded and inefficient equip-

ment, hampering growth and retarding modernization.

See 46 Fed. Reg. 16281 (1981); id. at 50766, 50767-

50768."

* Similarly, the plantwide definition is consistent with the pur-

poses of the construction moratorium (see pages 27-28 note 35,

supra). Because of offsetting reductions within the plant, the plant-

wide definition ensures that an expansion or modernization

will not produce significant net increases in emissions and

worsen air quality while the state is preparing ite SIP. And,

the moratorium prohibits both the construction of all new plants

the renovation of existing plants for which there is an emissions

increase, the state | is a strong incentive promptly to develop and

™* “No aspect of the Clean Air Act is more frustrating to industry

than the expensive analyses, multiple delays, and uncertainties in

A simple example will illustrate the point. Consider a

plant with two pieces of equipment, each emitting 500

units of pollution. Suppose that it is economically desir-

able to modernize and expand the capacity of machine A,

leading to an increase in its emissions to 700 units, and

that at the same time emissions from machine B would be

correspondingly reduced from 500 to 300 units. It would

surely be review for review’s sake here to require the

project to undergo the expense and delay of new source

review, since the project would have no adverse impact

on air quality. Now assume that machine A, if subject

to new source review (including its requirement that

LAER technology be installed) under the dual definition,

would emit 600 units of pollution after expansion. As-

sume that the LAER technology would cost $2 million ®

and that the company would have to spend an additional

$.5 million to reduce the emissions from machine B by

101 units in order to offset the 100-unit increase at

machine A, as required by Section 173(1) (A). Assume

also that the company could reduce emissions from ma-

chine B by 200 units at a cost of $1 million. In these

circumstances, the dual definition would entail an ex-

penditure for pollution control of $2.5 million (plus the

additional costs of new source review). On the other

hand, under the plantwide definition, the project would

not be subject to new source review and would involve a

cost of only $1 million. The dual definition might com-

pletely deter the proposed expansion and modernization

the ry t process for construction or modification of plants.” L.

Lave & G. Omenn, supra, at 38-39. See also id. at 46. It has been

found that the median time for new source review permits to be

processed and approved is three to five months, with more than 25%

of the permits taking a longer time. National Commission on Air

Quality, supra, at 139-140.

*® The alternative of reducing pollution from expanded machine A

by circa 200 units, so that the project would not be a “modification”

subject to NSR, if feasible at all, would necessarily exceed the cost

of installing LAER technology and hence make the project even

more expensive.

even though the project would not adversely affect air

quality. And even if the project goes forward, the duai

definition has increased the cost of modernization by $1.5

million without benefiting air quality.

Our example illustrates that the plantwide definition is

consistent with the objectives of the NSR program. It

ensures that emissions from new or modified sources do

not prejudice attainment; it requires review of those

projects that could interfere with achievement of na-

tional air quality standards. It also facilitates the statu-

tory policies of industrial growth and modernization

by eliminating the costs necessary to comply with new

source review for projects that do not adversely affect air

quality. And it gives a plant owner the flexibility to con-

trol emissjons in the most efficient manner.

The economic benefits of this flexible approach were

explained in a recent study by the Brookings Institution:

Economists have proposed that economic incentives

be ‘substituted for the cumbersome administrative-

legal framework. The objective is to make the profit

and cost incentives that work so well in the market-

place work for pollution control. * * * [The “bubble”

or “netting” concept] is a first attempt in this

direction. By giving a plant manager flexibility to

find the places and processes within a plant that

control emissions most cheaply, pollution control can

be achieved more quickly and cheaply.

L. Lave & G. Omenn, Cleaning the Air: Reforming the

Clean Air Act 28 (1981) (footnote omitted) ; see also id.

at vii, 18-19, 46, 48. Likewise, the Council on Environ-

mental Quality has noted that “[i]n the case of air qual-

ity management, several studies indicate that there are

many market-based opportunities for cleaning the air and

reducing air pollution costs at the same time.” Council

on Environmental Quality, Thirteenth Annual Report 181

(1982) (footnote omitted). In view of these advantages,

the Council has recommended that

greater attention be focused on the use of cost/

benefit analysis and the use of market-based ap-

proaches to environmental management. These an-

alytical and regulatory tools offer potential for con-

tinuing environmental improvement while reducing

the incremental costs of such improvements. In

times of general economic austerity and high un-

employment, it is important to explore alternative,

more economically efficient approaches to the “com-

mand and control” kinds of regulatory programs now

in general use.

Id, at 176.”

Comments subriitted to EPA in the rulemaking pro-

ceeding both by industry *' and the states also support the

# Although no specific study has yet been made of the eco-

nomic impact of the plantwide definition in the NSR program,

generic studies indicate that uniform “command and control’”’ meas-

ures typically have costs two to 10 times greater than flexible

methods. See A. Kneese, Economics and the Environment 163-

164 (1977); Zerbe, Optimal Environmental Jurisdictions, 4 Ecol-

ogy L.Q. 193, 215 (1974). The General Accounting Office has

found that studies of economic incentive approaches “suggest that

our environmental targets can be achieved at only a modest frac-

tion of the costs under traditional command and control programs.

Estimates of the static savings in abatement costs for particular

pollutants range from about 40 percent to about 90 percent * * *.”

U.S. General Accounting Office, PAD-82-15, A Market Approach to

Air Pollution Control Could Reduce Compliance Costs Without

Jeopardizing Clean Air Goals 34 (Mar. 23, 192). And studies of

pollution reductions from existing emission points at a plant indi-

cate that a flexible approach will have a cost that is between 25%

and 63% lower than a point-performance standard to achieve the

same air quality result. See Maloney & Yandle, Cleaner Air at

Lower Cost: Bubbles and Efficiency, Regulation, May-June 1980,

at 49, 51; Air Pollution—Kahn Stresses Analyzing Marginal Costs

of Standards, [9 File Binder) Env’t Rep. (BNA) 2131 (Mar. 23,

1979) (statement of Alfred Kahn, Chairman of the President's

Council on Wage and Price Stability).

41 For example, a utility company noted that the plantwide

definition would “encourage industry to modernize existing facili-

ties through retrofit or replacement of old equipment and should

speed progress toward * * * more efficient emissions controls.”

C.A. App. 147 (Southern California Gas Company). A pharma-

ceutical company stated that the plantwide definition would “in-

conclusion that the plantwide definition would promote

both the growth and modernization of industry and the

economically efficient control of emissions. For example,

the New York State Department of Environmental

Conservation commented (J.A. 128-129) :

The main outcome of requiring individual review

of each new piece of equipment at a plant in a non-

attainment area was to preclude any modernization.

No flexibility was permitted a source owner in select-

ing options. In many cases, it was simpler and

cheaper to operate old, more polluting sources than

to trade up. * * *

The previous definition requiring individual re-

view of any new unit would be fine if there were an

infinite amount of investment capital available and

an incentive for scrapping existing equipment.'*)

In fact, these comments show that the plantwide defini-

tion can lead to greater reduction in emissions than the

dual definition, because it encourages the replacement of

older, highly polluting machinery with newer, cleaner

equipment. See 46 Fed. Reg. 16281 (1981); id. at 50766,

50767-50768. Once again consider a plant with two ma-

chines each discharging 500 units of pollution. Customer

demand justifies expanding machine A, which would

then emit 700 units of pollution. Assume that emis-

crease[] flexibility and * * * enhance economic incentives” and

would “encourage the * * * replace[ment of] older equipment.”

C.A. App. 156 (Upjohn Company). A paper manufacturer pointed

out that it would be able to reduce plantwide emissions in order to

utilize a new printing press that would not have been installed

under the dual definition. J.A. 181 (Crown Zellerbach). And the

comments of a major trade association offered an example of a

modernization project that would be feasible under a plantwide

definition but would be put off if the dual definition were applicable

to require new source review. C.A. App. 198-199 (Chemical Manu-

facturers Association). See also C.A. App. 234 (American Iron

and Steel Institute); C.A. App. 136 (National Steel Corporation) ;

C.A. App. 67 (Union Oil Company).

#2 See also J.A. 136-137 (Arizona Department of Health Services).

sions from machine B could be reduced to 250 units by

modernization costing $1 million and that the cost of re-

ducing the pollution from machine A to 500 units is $3

million. Under the plantwide definition, the project—

which would result in a net emissions reduction of 50

units—would not be subject to new source review, and

would cost $1 million for pollution control." Under the

dual definition, new source review would be required—

notwithstanding the overall decrease in pollution levels—

unless emissions from the expanded machine were re-

duced at a cost of $3 million, which could render the

project uneconomical, The alternative of complying with

the new source review requirements might be no better,

for the expense and delay could make it impractical to ex-

pand. The consequence of applying the dual definition

might thus be that the equipment would not be expanded

or modernized and the emissions from the plant would

not be reduced.**

43 In addition, aa some commentators have noted, the “bubble” or

“netting” concept may serve aa an incentive for developing coat-

effective pollution control technology. See Note, An Overview of

the Bubble Concept, 8 Colum, J, Envti, L. 197, 155 (1982), citing

Landau, Economie Dream or Environmental Nightmare? The

Legality of the “Bubble Concept” in Air and Water Pollution Con-

trol, 8 B.C. Envtl, Aff. L. Rev, 741, 742-748 n.6 (1980),

44 This consideration is eapecially significant in areas in which

the construction moratorium ia in effect. The moratorium prohibita

the modification of a “source” even though the proposed project,

by installing newer equipment or utilizing cleaner operations, would

effect a net reduction in total emissions from the plant. In this

situation, the dual definition bara modernization projecta that would

be of environmental (aa well as economic and commercial) ad-

vantage. See 46 Fed, Reg. 16281 (1981); id, at 50768, Several

comments in the administrative record emphasized this concern

and presented examples of environmentally desirable moderniza-

tions that could not go forward under the dual definition because of

the moratorium, See the comments of: American Iron and Steel

Institute (C.A. App. 284); American Textile Manufacturers Inati-

tute (J.A. 133-194); Chemical Manufacturers Association (C.A.

App. 198-199); Chevron (C.A, App, 163); Congressman George

Miller of California (J.A. 186); Loulsiana-Pacific Corporation (J.A,

In sum, the “bubble” concept not only makes eminent

economic sense, but carries out with precision Congress's

expressly stated purpose of encouraging economic growth

and industrial renewal without prejudicing the timely

attainment of national air quality standards,”

B. The Administrator's Decision To Allow States To

Use A Plantwide Definition Of “Source” Effectuates

Congress's Purpose To Increase State Flexibility In

Selecting The Detailed Methods Deemed Necessary

To Attain National Air Quality Standards

The regulations in issue in this case, giving states with

an approved SIP the choice of using the plantwide defini-

tion of “source” for purposes of the new source review

program, properly allow the states discretion in the selec-

tion of the particular means of implementation and en-

forcement necessary to attain required air quality.

1, From the first congressional efforts in 1955 to im-

prove the quality of our Nation's air (Act of July 14,

1955, ch. 860, 69 Stat, 822 et seq.) to the present, the

118-119); National Steel Corporation (C.A, App, 185); New York

State Department of Environmental Conservation (J.A, 128-129) ;

Standard Oj] Company (SOHIO) (C.A, App, 140); United States

Department of Energy (C.A, App. 117); Upjohn Company (CA.

App. 156),

“ The Administrator alao found that the use of the same defini-

tion of “source” in the NSR and PSD programa would “reduce

regulatory complexity” (46 Fed, Reg, 60767 (1981)), Firat, because

a given project can be subject to both NSR and PSD review (aince

an area can be in nonattainment atatua for one pollutant and

attainment atatua for another pollutant), such consistency of defini-

tion “almplifies the permit proceaa” by determining for both reviews

whether the project ja or ia not a “source” (id, at 60768), Second,

the plantwide definition eliminates the diMeulty of determining

exactly what individual process unita within a complex and inte

grated industrial operation would qualify aa “sources” under the

dual definition (id, at 60767, 60768). In fact, there ia some indica-

tion in the legislative history of the 1977 Amendments that Con-

greas contemplated that the meaning of the term “source” would

be the same for the NSR and PSD programa, See H.R. Conf, Rep.

No, 95-564, 95th Cong., lat Seas, 127, 128 (1977), 8 Leg. Hiat, 607,

608.

states have been vested with primary responsibility for

the control and prevention of air pollution at {is source.

The Court's cases prior to the 1977 Aimendments have

reviewed this development. See 7'rain v. NRDC, 421 U.S.

60, 63-65, 86-87 (1975) ; Hancock v. Train, 426 U.S, 167,

169 (1976); Union Electric Co. v. EPA, 427 U.S, 246,

250, 256-257 (1976).*%° The keynote, as the Court ob-

served in 7'rain v. NRDC, supra, 421 U.S, at 79 (foot-

note omitted), is that EPA, as the federal agency,

is plainly charged by the Act with the responsibility

for setting the national ambient air standards, Just

as plainly, however, it is relegated by the Act to a

secondary role in the process of determining and en-

forcing the specific, source-by-source emission limita-

tions which are necessary if the national standards

it has set are to be met,

“Each State is given wide discretion in formulating its

[State Implementation Plan]. * * * So long as the na-

tional standards are met, the State may select whatever

mix of control devices it desires,”” Union Electric Co, v.

EPA, supra, 427 U.S, at 250, 266,

These principles were not changed by the 1977 Amend-

ments. On the contrary, the House Report on the 1977

Amendments stated that one of the principal purposes of

Part D was “to give the States more flexibility in determin-

ing how to protect public health while still permitting

reasonable new growth” (H.R. Rep. No, 95-294, supra,

at 218, 4 Leg. Hist. 2680 (emphasis added)), Once

the requirements of federal law are met, “the State may

choose whatever mix of continuous emission reduction

measures and strategies it wants to meet the require-

ments of [Part D)"” (ibid.)." The Senate likewise em-

phasized the need for state authority and flexibility;

* See also Sections 101(a) (8) and 107(a), 42 U.S.C, 18567(a) (8),

7401 (a) (3) and 1867o-2(a), 7407(a).

*" See alao 123 Cong. Rec, 16028 (1977) (remarka of Rep, Preyer),

4 Leg. Hiat, 8022; 128 Cong. Rec, 16194-16195 (1977) (remarka of

Rep. Meeda), 4 Leg. Hist, 3081-3082; 128 Cong, Rec, 16197 (1977)

(remarks of Rep. Rogers), 4 Leg. Hist, 80388,

The authority of States and localities to imple-

ment 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 at-

taining firm national goals.

S. Rep. No, 95-127, supra, at 10, 8 Leg. Hist, 1884 (em-

phasis added); see also S, Rep. No, 95-127, supra, at

8, 8 Leg. Hist, 1877,"

State discretion was thought to be necessary because

both the problems of air pollution and their solutions are

di) erse and vary from area to area:

Obviously, air pollution is a national problem re-

quiring a national approach, but neither the problem

nor the solutions are the same in various parts of the

country. Geography, population density, degree of

industrial concentration, land characteristics, and

many other factors contribute to the variation that

causes or mitigates pollution, For those reasons,

[the bill] gives States primary responsibility for air

pollution control on the theory that they are best

suited to assess local conditions and needs and to

most effectively enforce the controls necessary to

achieve acceptable emission levels.

In carrying out that responsibility, States and

local governments are assigned increased authority

to develop and carry out implementation plans and

hexibility in choosing the best approach within the

broad framework of the national plan,

128 Cong. Ree, 18042 (1977) (remarks of Sen, Ran-

dolph; emphasis added), 8 Leg, Hist. 778, Congress also

believed that this approach represents a proper division

of political responsibility between the national govern-

ment and the states:

These Amendments tell the American people that

* * * the National Government realizes that change

without an adequate underpinning cannot be forced;

4* See alao Alabama Power Co, Vv. Coatle, eupra, 686 F.2d at 964,

that local decisions locally arrived at with proper

incentives, can achieve the goals we share.

123 Cong. Rec. 26841, 26842 (1977) (remarks of Sen.

Muskie), 3 Leg. Hist. 341, 343.

Congress’s concern With flexibility and sensitivity to lo-

cal concerns was, in this context, based on more than

abstract considerations of federalism. This Court has

pointed out that the preparation of a State Implementa-

tion Plan is “a comprehensive planning task of the first

magnitude” (Train v. NRDC, supra, 421 U.S. at 68).

In striving to attain federal air quality levels, a state

must inventory and control emissions that arise in a

wide variety of ways within its borders. In any given

nonattainment area, pollution can be caused by “minor”

sources as wel! as major ones,*® by mobile sources such as

automobiles and trucks as well as by stationary sources,

and by fugitive emissions such as windblown dust, un-

paved roads, agricultural activities, and construction proj-

ects. The relative importance of each of these varies from

area to area. And each of these causes of pollution poses

a distinct control problem and requires different abate-

ment efforts.

2. The regulations at issue here were expressly char-

acterized by the Administrator as

consistent[] with the purposes of Part D of the Act.

Congress expressly provided that states are to play

the primary role in pollution control * * * [and]

intended that states retain the maximum possible

flexibility to balance environmental and economic

concerns in designing plans to clean up nonattain-

ment areas. Today’s action follows this mandate by

allowing states much greater flexibility in develop-

ing their nonattainment area [new source review]

programs and attainment demonstrations.

46 Fed. Reg. 50767 (1981) (citations omitted).

The administrative record in this case fully supports

the Administrator’s determination. Of the nine state,

42 A minor source is one that omits less than 100 tons per year

of pollution. See page 6 note 10, supra.

regional, or local governmental agencies that participated

in the 1981 rulemaking proceeding, seven favored the

elimination of the mandatory dual definition and the

optional use by the state of a plantwide definition con-

sistent with that in the PSD program.” In fact, 31

states (or jurisdictions within states) have sought to

modify their State Implementation Plans to adopt the

plantwide definition (see page 3 & note 3, supra).

More particular examples of the significance of re-

gional variations in the causes and control of pollution

also dot the record. In its comments in the rulemaking

proceeding, Arizona pointed out (J.A. 186) that appli-

cation of the dual definition “would have had no sub-

stantial effect upon attainment status” in that state and

would serve only “to deprive the State of its latitude in

choosing [an] implementation strategy for Section 173

of the Act that would best fit local conditions * *

5% See comments of: the Arizona Department of Health Services

(J.A. 186-187); California Air Resources Board (J.A. 154-155);

Erie County, New York, Department of Environment and Planning

(J.A. 153) ; Missouri Department of Natural Resources (J.A. 130);

New York State Department of Environmental Conservation (J.A.

128-129) ; Ohio Environmental Protection Agency (J.A. 138) ; Ohio

Regional Air Pollution Control Agency (J.A. 120-121). The only

state comments in opposition to the plantwide definition were sub-

mitted by the Maryland Department of Health and Mental Hygiene,

Office of Environmental Programs (J.A. 139-140) and the Pennsyl-

vania Department of Environmental Resources (J.A. 122-127).

In addition, in the 1979 rulemaking, the Alabama Air Pollution

Control Commission (C.A. App. 75) and the New Hampshire Air

Resources Commission (C.A. App. 110) submitted comments sup-

porting the plantwide definition.

51 In Arizona there were “only two urban nonattainment areas

and the primary cause of both is the automobile * * *” (J.A. 186).

In these circumstances, “no strategy applied to any stationary

source would make any significant difference” (ibid.). The plant-

wide definition allows the state the flexibility to design an attain-

ment strategy—such as one focusing on automobile emissions—

that would be most effective in light of the state’s specific situa-

tion. See also J.A. 162-166 (affidavit of Milton Feldstein) (auto-

mobile sources are of far greater importance to air quality in the

San Francisco area than new or modified stationary sources).

—

Comments from Ohio indicated that Ohio has devised an

attainment strategy that is broader and more encom-

passing than federal requirements. (J.A. 120-121, 138) .*

In various counties in western states, nonattainment is

primarily attributable to fugitive emissions such as wind-

blown dust, and in 1980 this problem resulted in 23

counties in five states being out of compliance with the

national standard for total suspended particulates. Na-

tional Commission on Air Quality, To Breathe Clean Air

114 (1981). Since such fugitive emissions “are not sus-

ceptible to traditional control strategies” (ibid.), the pol-

lution in these areas would not be affected by using the

dual definition of “source.” See also id. at 118-119.

In enacting the 1977 Amendments Congress was aware

of this complexity and diversity in the causes of air

pollution.” It recognized the importance of flexibility in

the design of emission contro] strategies adapted to the

specific pollution problems faced by particular states. Its

intention was that states be able to focus their efforts in

the way best suited to their local and regional problems.

As EPA noted in a related context, state “reviewing au-

thorities have limited resources * * *.” 41 Fed. Reg.

55525 (1976). The plantwide definition enables each

state to focus its scarce implementation and enforcement

resources on problems that truly matter. In contrast, the

dual definition requires states to undertake new source

review of individual units without regard to regional

circumstances.

It is common ground that the need for state flexibility

cannot excuse noncompliance with the requirements of the

Clean Air Act. States must have a new source review

program that comports with federal law. Compare 82-

% Ohio reviews minor as well as major new emissions and re-

quires that all such “individual equipment installations” employ

the “best available technology” to control pollution (J.A. 120). See

also J.A. 154-155 (California Air Resources Board).

53 See e.g. 123 Cong. Rec. 18018, 26842 (1977) (remarks of Sen.

Muskie), 3 Leg. Hist. 715, 342; 123 Cong. Rec. 16679-16680 (1977)

(remarks of Rep. Daniel), 4 Leg. Hist. 3214.

1005 Pet. App. Al9. But the statute provides no legisla-

tive definition of the term “source” for purposes of such

new source review. By permitting the use of a plantwide

rather than a dual definition, the Administrator in effect

allows each state to make an informed and sensitive judg-

ment on whether equipment-oriented (rather than plant-

oriented) new source review is best suited to its overall

pollution control strategy—a strategy embodied in an

EPA-approved State Implementation Plan that must con-

form to all federal requirements and provide for reason-

able further progress toward and timely attainment of

national air quality standards. The Administrator’s deci-

sion to accord the states that flexibility should be sus-

tained.™

IIL. THE TEXT AND LEGISLATIVE HISTORY OF THE

CLEAN AIR ACT DO NOT PRECLUDE THE AD-

MINISTRATOR FROM ALLOWING STATES TO

USE A PLANTWIDE DEFINITION OF “SOURCE”

FOR PURPOSES OF THE NONATTAINMENT

PROGRAM

The court of appeals found that Part D of the 1977

Amendments to the Clean Air Act “does not explicitly

define ‘what Congress envisioned as a ‘stationary source’

to which the permit process and construction moratorium

should apply” (82-1005 Pet. App. A8). The court also

found that the legislative history of the Amendments does

not “squarely address[]” the question (ibid.), and it

“agree[d] with EPA that ‘[wJith regard to the actual

% Of course, it is possible—as the Administrator has recognized

(see 46 Fed. Reg. 50767 (1981) )—that use of the dual definition

might be necessary in order for a given state to be able to demon-

strate reasonable further progress and ultimate attainment. In

those cases the state would not be free to use the plantwide defi-

nition, and a SIP containing the plantwide definition would not

be eligible for EPA approval. If in any instance respondents believe

that a specific plantwide definition will prevent the required progress

and attainment, they may seek to challenge EPA's approval of that

SIP in the court of appeals under Section 307(b)(1) of the Act,

42 U.S.C. 7607(b) (1).

content of the definition of “source,” the legislative history

is at best contradictory’” (id. at Al7 n.39 (citation

omitted) ).

In their brief in opposition, respondents took issue with

these conclusions. Relying on both the language and

history of the Act, respondents contended that “(t]he Act

* * * does determine the meaning of the term ‘source’

and the scope of the permit provisions in the nonattain-

ment areas” (Br. in Opp. 10). In their view, Congress

fixed the meaning of the word “source” in accordance

with the dual definition, and the Administrator has no

more discretion in this respect than if that definition had

been included in the statute and enacted into law in

haec verba.

We assume that respondents will discuss these conten-

tions further in their brief on the merits, and a complete

response must necessarily await our reply brief. At this

juncture, we simply outline the principal considerations

that indicate that the court of appeals was correct in its

conclusion that the statute and legislative history do not

foreclose the Administrator’s discretion to allow states

to use a plantwide definition.

1. The nonattainment provisions of Part D of the 1977

Amendments do not themselves contain a definition of

the term “source.” Nor is that term defined in the gen-

eral definitional section of the Clean Air Act. See 42

U.S.C. 7602. Respondents have not contended otherwise.

Respondents have contended (Br. in Opp. 14, 15) that

the definition of “source” in the NSPS provisions of Part

A of the Act (see page 13 note 24, supra) is applicable

as well to the nonattainment program created by Part D.

Respondents fail to mention, however, that the NSPS

definition in Section 111(a) (3), 42 U.S.C. 7411(a) (3),

states expressly that it is applicable only “[f)or pur-

poses of this section” (emphasis added)—that is, for Sec-

tion 111, which was enacted in 1970 and establishes the

NSPS program. By its terms, therefore, the NSPS defi-

nition of “source” does not extend to the new source re-

view program.”

In fact, the 1977 Senate bill to amend the Clean Air

Act contained a provision adopting the NSPS definition

for all purposes under the Act. See S. 252, 95th Cong.,

Ist Sess. § 39(a), at 112 (1977), adding Section 302(m)

to the Act, 3 Leg. Hist. 686. The House bill contained no

such section. The Senate provision was deleted in Con-

ference, and the nonattainment program as passed di-

rected that “[a]ll [state] implementation plan revisions

must contain a permit program for new or modified

major facilities similar to the program required in the

House bill.” H.R. Conf. Rep. No. 95-564, 95th Cong., 1st

Sess. 157 (1977), 3 Leg. Hist. 537. At the same time,

in enacting Part D Congress did incorporate by reference

the NSPS definition of the terms “modifications” and

“modified” See 42 U.S.C. 7501(4), incorporating by

reference 42 U.S.C. 7411(a) (4). These legislative ac-

tions—deleting the Senate provision that expressly adopted

the NSPS definition of “source” and incorporating by

In fact, the nonattainment program and the NSPS program

are fundamentally different, so that there is no a priori reason to

apply the NSPS definition to new source review. The nonattain-

ment program is confined to areas that do not meet national air

quality standards, and it remains in operation only as long as this

nonattainment condition continues; in seeking to promote the goal

of attainment, the program involves a complex of pollution-control

measures, of which new source review is only one (see pages 6-7 and

26-27, supra). The NSPS program, in contrast, is applicable to new

sources nationwide without regard to the existing quality of air; un-

like the nonattainment program, NSPS employs the single technology-

forcing approach of uniform federal] standards requiring the instal-

lation of stringent emission controls on new emitters of pollution.

See Hancock v. Train, supra, 426 U.S. at 198. The NSPS definition,

which is indifferent to the net effect of equipment changes on air

quality, surely should not control in the context of new source re-

view, which is inextricably tied to the attainment or nonattainment

of ambient air quality standards. The plantwide definition is well

suited to the NSR program because it requires new source review

in those instances where the prospect of attainment might be

threatened by a net increase in emissions.

reference other NSPS definitions—are compelling indica-

tions that the 1977 Amendments do not, by silent impli-,

cation, incorporate the NSPS definition of “source” for

purposes of the NSR program.”

2. Respondents also have argued (Br. in Opp. 16-21)

that the history of the 1977 Amendments shows that Con-

gress intended to deprive the Administrator of all discre-

tion to allow states to use a plantwide approach to new

source review. Again, we deal only summarily with this

argument here, since we cannot be certain whether re-

spondents will choose to revive it in their brief on the

merits. The argument—which failed to convince the court

of appeals—rests on an account of the provenance of the

1977 Amendments that is blithely straightforward and

unproblematical. Respondents start with the 1976 Senate

bill, which, they allege, clearly contemplated a permit pro-

gram geared to individual pieces of equipment. It was

this approach which, they assert, was adopted by the Ad-

ministrator as the “Emissions Offset Ruling” of December

1976, when the Congress in 1976 failed to enact a statute.

It was also adopted without relevant change as the Sen-

5¢ Even if Section 111(a)(3) applied in the new source review

program—and we note that the NSR definition promulgated by EPA

in fact conforms precisely to the language in Section 111(a) (3) (see

82-1005 Pet. App. A9 n.22)—the agency should have discretion

in construing the constituent terms “building, structure, facility,

or installation.” See Alabama Power Co. Vv. Costle, sunra, 636 F.2d

at 396, 398, 410; ASARCO, Inc. v. EPA, supra, 578 F.2d at 324

n.17; see also 82-1005 Pet. App. A9 n.22. Given the differences

among the NSR program, the PSD program, and the NSPS pro-

gram, those constituent terms need not be given a uniform mean-

ing. See Alabama Power Co. v. Costle, supra, 636 F.2d at 397-398.

As a matter of linguistic analysis, the terms “facility” and “installa-

tion” (as well, of course, as the terms “building” and “structure”)

can “reasonabl[y] * * * [be] define[d] * * * broadly enough to

encompass an entire plant” (id. at 396; see also id. at 397).

It should also be noted that the Section 111 definition—if it is

to apply to the NSR program—is not easily read to authorize—much

less require—a dual definition of source.

ate’s 1977 bill; moved unscathed through Conference; and

was passed by both Houses in August 1977.

This account is misleading. The complex legislative

history of the 1977 Amendments is in fact anything but

straightforward and unproblematical. It casts relatively

little light on the specific question before the Court. The

1976 Senate bill did use phrasing that inferentially seems

to point to a permit program geared to industrial] units

short of the entire plant.** The 1976 Emissions Offset

Ruling is itself not explicit.**° The 1977 Senate bill looks

in two different directions: (a) It abandoned the specific

phrase used in the 1976 bill which most powerfully points

to an intra-plant unit approach.” (b) On the other hand,

5? This account is topped off with the suggestion (see Br. in Opp.

8) that the Administrator interpreted the statute as requiring

a dual definition until, in a dramatic shift, the present regula-

tions were adopted in October 1981. As we have pointed out, pages

9-14, supra, in fact the Administrator interpreted the 1977 statute

as permitting a plantwide definition until August 1980 and returned

to that interpretation in March 1981.

58 The 1976 Senate bill created a permit program in nonattain-

ment areas for “a [major emitting] facility proposed for construc-

tion or modification at an existing site or plant.” S. 3219, 94th

Cong., 2d Seas. 48-44 (1976), 6 Leg. Hist. 4652-4653. It is the use

of the word “facility” in contradistinction to the word “plant” that

respondents single out as important. (The bill defined “major

emitting facility” as “any stationary source” of a particular ca-

pacity, and in turn incorporated the Section 111 NSPS definition of

the term “stationary source.” S. 3219, supra, at 77, 79 (proposed

subsections (k) and (m) of Section 302), 6 Leg. Hist. 4686, 4688.)

% To establish the proposition that the Offset Ruling was equip-

ment (rather than plant) oriented, respondents rely on implica-

tions derived from its preamble and on the assertion that the regu-

lation’s passing use of the phrase “a source may replace an existing

source” must contemplate intra-plant units because “whole plants

are almost never replaced.” Br. in Opp. 19 n.39.

facility proposed for construction or modification in such region”

for the previous language (see note 58, supra), thus eliminating

the words “at an existing site or plant.” See S. 252, supra, at 59,

3 Leg. Hist. 683.

the 1977 bill, like the 1976 bill, did incorporate the Sec-

tion 111 NSPS definition as the relevant definition of the

term “stationary source.” See S. 252, supra, at 110, 112,

3 Leg. Hist. 684, 686.

Far more important, however, is that respondents’

account is Hamlet without the Prince of Denmark. For

what emerged from the 1977 Conference was not the Sen-

ate version of the permit program, but a Conference bill

based on the House version. As the Conference Report

stated,

All implementation plan revisions must contain a

permit program for new or modified major facilities

similar to the program required in the House bill.

H.R. Conf. Rep. No. 95-564, supra, at 157, 3 Leg. Hist.

537. The House bill did not incorporate the NSPS def-

inition of “source”; nor did the Conference bill. The

House bill did not use the term “facility * * * at an

existing site or plant” to describe the unit subject to new

source review; like the Conference bill, it required a per-

mit program for the construction of any “new or modified

major stationary source,” leaving the word “source” un-

defined. See H.R. 6161, 95th Cong., 1st Sess. 350-351

(1977), 4 Leg. Hist. 2335-2336. Most significantly, it

was the nonattainment provisions of the House bill that

were authoritatively reported as having, as their two

“main” purposes, (a) “allow[ing] reasonable economic

growth” while the area makes “reasonable further prog-

ress” toward attainment, and (b) “allow[ing] States

greater flexibility for the former purposes than EPA’s

present interpretive regulations afford.” See H.R. Rep.

No. 95-294, supra, at 211 (emphasis added), 4 Leg. Hist.

2678.

Surely all this makes clear that it was not the Con-

gress’s purpose simply to codify the approach of the 1976

or 1977 Senate bills or the 1976 Emissions Offset Ruling.

Indeed, Congress wished the States to have more flexi-

bility to create a balanced approach in accommodating

growth to the achievement of attainment than the 1976

Ruling permitted. Given this explicit statement, it would

surely be remarkable to conclude that the Congress in

1977 sub silentio froze into place the 1976 Ruling’s am-

biguous bar against a plantwide approach to the NSR

permit program.

We do not argue here that the evidence shows that a

plantwide approach was expressly in mind when the Con-

ference adopted the House version and eliminated the

textual phrases that might have restricted the Adminis-

trator’s discretion to afford the states this form of flexi-

bility. Although there is some indication that Congress

was aware of the need for administrative discretion in

implementing the NSR program,” and although in the

debates references were made to an entire plant or facility

as constituting a “source,” a balanced reading of the

/) legislative history leads to the conclusion that nobody in

Congress focused sharply or pointedly on the difference

between a plantwide or a dual definition. Congress simply

did not address or resolve this issue.

*! The 1977 Senate Report stated that EPA “must be given some

discretion” to identify those situations in which “new facilities

* * * will prevent attainment or maintenance of a national air

quality standard” and thus “requir{e] the most rigorous assess-

ment and stringent limitations” (S. Rep. No. 95-127, supra, at 56,

3 Leg. Hist. 1480).

® For instance, Representative Waxman referred to a “stationary

source” as “utilities, refineries, smelters and so forth,” and he men-

tioned that “stationary sources” that were out of compliance with

emissions limitations included “coal-fired powerplants, * * * steel

complexes, * * * nonferous smelters, * * * large refineries, * * *

commercial boilers, and * * * municipal boilers * * *.” 123 Cong.

Rec. 16202 (1977), 4 Leg. Hist. 3050, 3051. Senator Muskie re-

ferred to “a powerplant” as a “source.” 123 Cong. Rec. 18023

(1977), 8 Leg. Hist. 730; see also 123 Cong. Rec. 18035 (1977),

3 Leg. Hist. 763 (chart). Similarly, Senator McClure submitted

for the record an EPA memorandum that listed “source categories”

including lime plants, sulfur recovery plants, carbon block plants,

pulp mills, copper smelters, petroleum refineries, cement plants,

and iron and steel mills. 122 Cong. Rec. 24549 (1976), 6 Leg. Hist.

5262-5263.

If we are correct in this conclusion, what is its conse-

quence for this case? We submit that the answer is clear,

Congress legislates in full contemplation of the conven-

tional rule that the Administrator is deemed to have au-

thority in normal course to construe and implement the

statute with respect to matters not legislatively deter-

mined. Congress made it clear that in doing so, the

Administrator should adopt a balanced approach to the

problem of accommodating growth to attainment, and

should leave the states some flexibility in their imple-

mentation of attainment programs. Since KPA exer-

cised its discretion by adopting a regulation that is

reasonably designed to effectuate the various policies of

the Act, that leaves states a sensible flexibility to adapt

their attainment programs to local conditions, and that

holds air quality harmless on the road to attainment, tae (ts

regulations should be sustained.

CONCLUSION

The judgment of the court of appeals should be reversed.

Respectfully submitted,

A. JAMES BARNES

Acting General Counsel

WILLIAM F, PEDERSEN

CHARLES S, CARTER

Attorneys

Environmental Protection

Agency

Avuaust 1983

Rex BE, Lee

Solicitor General

F, Henry Hapicnt, Il

Acting Assistant Attorney

General

PAUL M, BATOR

Deputy Solicitor General

MARY L, WALKER

Deputy Assistant Attorney

General

MARK I, Levy

Assistant to the Solicitor

General

Jose A, ALLEN

ANNE 8S. ALMY

NANCY S. BRYSON

Attorneys

ADDENDUM

40 C.F.R, 51.18(j) provides in pertinent part:

(j) State Implementation Plan provisions satisfy-

ing sections 172(b) (6) and 178 of the Act shall meet

the following conditions:

(1) All such plans shall use the specific defi-

\ nitions, Deviations from the following wording

will be approved only if the state specifically

demonstrates that the submitted definition is

more stringent, or at least as stringent, in all

respects as the corresponding definition below:

(i) “Stationary source’ means any build-

ing, structure, facility, or installation which

emits or may emit any air pollutant subject

to regulation under the Act.

(ii) “Building, structure, facility, or in-

stallation” means all of the pollutant-

emitting activities which belong to the same

industrial grouping, are located on one or

more contiguous or adjacent properties,

and are under the control of the same per-

son (or persons under common control) ex-

cept the activities of any vessel. Pollutant-

emitting activities shall be considered as

part of the same industrial grouping if

they belong to the same “Major Group”

(i.e, which have the same two-digit code)

as described in the Standard Industrial

Classification Manual, 1972, as amended by

the 1977 Supplement (U.S. Government

Printing Office stock numbers 4101-0066

and 003-005-00176-0, respectively).

6. 8. CoveeNmaNT PermTiNe Office, (008 aianva) = 76

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