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

L . nie Court, US

FILED

Nos. 82-1005, 82-1247, and 82-1591 FEB AY 1964

OCTOBER TERM, 19838

CHEVRON U.S.A., INC., PETITIONER

D.

NATURAL RESOURCES DEFENSE COUNCIL, INC., ET AL.

AMERICAN IRON AND STEEL INSTITUTE, ET AL.,

PETITIONERS

V.

NATURAL RESOURCES DEFENSE COUNCIL, ING., ET AL. 0

WILLIAM D. RUCKELSHAUS, ADMINISTRATOR,

ENVIRONMENTAL PROTECTION AGENCY, PETITIONER

V.

NATURAL RESOURCES DEFENSE COUNCIL, INC., ET AL.

ON WRIT OF CERTIORAL: TO THE

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

REPLY BRIEF FOR THE ADMINISTRATOR OF THE

ENVIRONMENTAL PROTECTION AGENCY

(202) 633-2217

TABLE OF AUTHORITIES

Cases: Page

Alabama Power Co. v. Costle, 636 F. 2d 323. 7, 10, 15, 19

ASARCO, Inc. v. EPA, 578 F.2d 31999999 19

Chrysler Corp. v. Brown, 441 U.S. 211111 11

CPSC v. GTE Sylvania, 447 U.S. 102 11

FCC v. National Citizens Committee for Broad-

TD 16

Motor Vehicle Manufacturers Association v. State

Farm Mutual Co., No. 82-854 (June 24, 1983) 16

Pennhurst State School v. Halderman, 451 U.S. 1. 11

Regional Rail Reorganization Act Cases, 419 U.S.

— —— ¶ ˙ — —— messapiune 11

Russello v. United States, No. 82-472 (Nov. 1,

%%% — a ec On 9

Secretary of Interior v. California, No. 82-1326

344 9

United States v. Clark, 445 U.S. 332 11

Statutes and regulations:

Clean Air Act Amendments of 1970, Pub. L. No.

91-604, 84 Stat. 1676 (formerly 42 U.S.C. 1857

et geg.):

§110(a)(2)(D), 42 U.S.C. 1857c-5(a) (2)

(D

OE CE ne 8, 4,5

5110 (a) (4), 42 U.S.C. 1857¢-5 (a) |) Lae 3, 4, 5

D OS {> ie Sees eee 4,5

5111 (a) (8), 42 U.S.C. 1857c-6 (a) 3 3, 18

F111 c), 42 U.S.C. 1876-6 (b) 4

§111(b) C) G), 42 U.S.C. 1887-6 (b) (1)

(A) 20

§111(b)(1)(B), 42 U.S.C. 1857c-6(b) (1)

arne 20

111 c) (2), 42 U.S.C. 1857-6 (b) (2) ......... 20

5112 (a) (8), 42 U.S.C. 1857-7 (a) (3 8

Clean Air Act, as amended by Pub. L. No. 96-95, 91

Stat. 685, 42 U.S.C. (Supp. V) 7410 et geg.:

§ 110(a) (2) (D), 42 U.S.C. 7410 (a) (2) (D). 6

§ 110(a) (4), 42 U.S.C. 7410 (a) (o) 6

§ 111, 42 U.S.C. 7411 7,10

(1)

Statutes and regulations —Continued: Page

§ 111(a) (8), 42 U.S.C. 7411 (a) (8) ................ 3, 18

3111 cb), 42 U.S.C. 7411 (b) 4

§ 111(b) (1) (A), 42 U.S.C. 7411 (b) (1) (A). 20

§ 111(b) (1) ), 42 U.S.C. 7411(b) (1) (B).. 20

§ 111(b) (2), 42 U.S.C. 7411 (b) (2) 20

§ 112(a) (3), 42 U.S.C. 7412 (a) (3) .............. 8

$172, 43 U.S.C. 7% no 13

§ 172(b) (5), 42 U.S.C. 7502 (b) (5) 17

§ 802(j), 42 U.S.C. 7602 () . 7

Energy Supply and Environmental Coordination

Act of 1974, 42 U.S.C. 1857c-10, repealed, Pub.

L. No. 95-95, f 112 (b) (1), 91 Stat. 799 8

Steel Industry Compliance Extension Act of 1981,

j— . eee 11

40 C. F. R.:

. 15

eee 15

Miscellaneous:

Comment, The Bubble Concept A Feasible Emis-

sions Reduction Alternative?, 9 Dayton L. Rev.

e LIE ava CT ee 2

123 Cong. Rec. (1977):

D 5

rr 17

„eee 11

C. Duerksen, Environmental Regulation of Indus-

trial Plant Siting (Conservation Foundation

. ̃ Ä ̃⁵dV“9v9 TTT 18

36 Fed. Reg. (1971):

r 12

r 12

1 4 12

38 Fed. Reg. (1978):

S rere 12

, A 12

*

3

Miscellaneaous—Continued : Page

41 Fed. Reg. (1976):

rr 6

p. 55528 a 18

45 Fed. Reg. (1980):

2 Se ee ie 2 15

. — * mis 15

H.R. 10498, 94th Cong., 2d Sess. (1976) 10

H.R. 6161, 95th Cong., Ist Sess. (1977) 10

H.R. Conf. Rep. 95-564, 95th Cong., Ist Sess.

%%% 6, 7, 10, 12, 13, 17

H. I.. Rep. 95-294, 95th Cong., Ist Sess. (1977).... 2, 6,

18, 14, 17

Rhinelander, The Proper Place for the Bubble Con-

cept Under the Clean Air Act, 18 Envtl. L. Rep.

r 2

S. 8219, 94th Cong., 2d Sess. (1976) 9

S. 252, 95th Cong., Ist Sess. (1977) .. 9

S. Rep. 95-127, 95th Cong., Ist Sess. (1977) 6

Staff of Senate Comm. on Environment and Pub-

lie Works, 95th Cong., 2d Sess., A Legislative

History of the Clean Air Act Amendments of

1977 (Comm. Print 1978)....... 4 2

/ —ͤ passim

» eee ö 6, 10, 18, 14, 17

Vol. 6 9

Vol. 7 tin 10

In the Supreme Court of the United States

OCTOBER TERM, 1983

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

CHEVRON U.S.A., INC., PETITIONERS

*.

NATURAL RESOURCES DEFENSE COUNCIL, IN c., ET AL.

ON WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

REPLY BRIEF FOR THE ADMINISTRATOR OF THE

ENVIRONMENTAL PROTECTION AGENCY

The issue posed by this case is whether the 1977

Amendments to the Clean Air Act—which created the

New Source Review (NSR) program for nonattainment

areas—impose a statutory prohibition precluding the Ad-

ministrator of EPA from adopting a regulation that

allows—but does not require—a state to adopt a plant-

wide (“bubble”) definition of the term “source” for pur-

2

standards. Respondents must further establish that

Congress foreclosed the “bubble” approach in a statute

one of whose “main purposes,” according to Congress

itself, was to allow reasonable economic growth to con-

tinue” during the attainment process (see H.R. Rep.

95-294, 95th Cong., Ist Sess. 211 (1977) (emphasis

added), reprinted in 4 Staff of Senate Comm. on Environ-

ment and Public Works, 95th Cong., 2d Sess., A Legisla-

tive History of the Clean Air Act Amendments of 1977,

at 2678 (Comm. Print 1978) [hereinafter Leg. Hist.] )—

notwithstanding the wide consensus that the “bubble” ap-

proach represents an innovative and creative method pre-

cisely for accommodating the goals of efficient growth and

environmental protection.“ And, finally, they must show

that the Act denies the Administrator discretion to give

the states any flexibility whatever in how to define

“source” for purposes of the NSR program, even though

Congress stated that the second of the two “main pur-

poses” of the nonattainment provisions of the 1977

Amendments was “to allow States greater flexibility” in

achieving reasonable economic growth while making rea-

sonable further progress to assure attainment (ibid.

(emphasis added) ).

The history of this case consists of a series of at-

tempts to invent new justifications for the foregoing,

1There is no basis whatever for respondents’ assertion (Br.

4, 37, 41, 42) that EPA is seeking to dispense with or waive

the statutory requirements prescribed by Congress. The issue in

implausible, propositions. Respondents’ brief in this

Court is no exception. Respondents have dramatically

abandoned any defense of the artificial “bright-line” test

adopted by the court of appeals—a test which led that

court to the extraordinary conclusion that the term

“source” is to be given a fixed judicial definition not-

withstanding the court’s own conclusion that the text

and legislative history of the Act provide no such defini-

tion. Instead, respondents renew the contention that the

plantwide definition is “prohibited” by the Act itself

because Congress “specifically intended” new source re-

view to apply to every individual piece of equipment

(Br. 6).* The principal vehicle advanced to buttress this

contention is that the definition of “source” provided by

Congress in Section 111 of the Clean Air Act—a defini-

tion applicable by its terms only to the NSPS (new

source performance standards) program (42 U.S.C.

1857c-6(a) (3) and 7411(a) (3) )*—in fact applies to the

NSR (new source review) program as well.

However, the argument that the Section 111 NSPS

definition “applies” to new source review receives an

entirely new twist in respondents’ merits brief. Respond-

ents purport at the eleventh hour to have discovered that

the new source review program created by Congress in

1977 is not a new program at all. It is now asserted

to be simply the continuation of an old “new source re-

view” program, instituted by Congress in the 1970 Act,

and contained in Sections 110 (a (2) (D) and (4) of the

Act, 42 U.S.C. 1857c-5(a)(2)(D) and (4) (App., in-

* “Br.” refers te respondents’ brief in this Court.

:

i

:

1

|

i

1

4

plicit cross-reference to the Section 111 NSPS definition,

the suggested conclusion is that, ever since 1970, the NSR

program has applied to sources as defined in Section 111.

It follows, respondents say, that in perpetuating the new

source review program in 1977, Congress obviously as-

sumed that the program would continue to apply to all

individual pieces of process equipment.

In fact this argument is a concoction presenting an

entirely distorted picture of the architecture of the Clean

Air Act. The program created by Congress in 1970 in

Sections 110(a)(2)(D) and (4)—usually called loca-

tional review—has nothing to do with the new source

review program first created in 1977 in order to deal

with the problem of nonattainment. The cross-reference

to the Section 111 NSPS definition contained in those

sections“ thus does not in any way suggest that the

Section 111 definition was to apply to the nonattainment

program created in 1977.

The 1970 Clean Air Act did not contemplate non-

attainment at all. It envisioned that all areas of the

country would attain National Ambient Air Quality

Standards (NAAQS) by the statutory deadline of 1975.

To achieve this, the 1970 Act relied primarily on two

programs. First, emissions from existing sources were to

be reduced, in accordance with the state implementation

plan, to meet NAAQS (see Gov’t Br. 4). Second, new

“sources” were subject to new source performance stan-

dards to be promulgated by EPA pursuant to Section 111,

42 U.S.C. 1857c-6.

In connection with the process of attaining and main-

taining NAAQS, new “sources” were required to undergo

a locational review process (to be specified in the SIP)

5 In fact, the locational review sections do not simply incorporate

the NSPS definition of “source” or apply to all “sources” within

the NSPS definition. They require locational review for those

sources for which an NSPS standard has in fact been promulgated

by the Administrator. With respect to the NSPS process, see 42

U.S.C. 1857c-6(b) and 7411(b); page 20, infra.

5

pursuant to Sections 110(a)(2)(D) and (4). This was

to be a “procedure” for “review (prior to construction or

modification)” of the “location of new sources” so as to

“prevent the construction or modification of any new

source” that the state determines “will prevent the attain-

ment or maintenance” of NAAQS. See 42 U.S.C. 1857c-

5(a)(2)(D) and (4). The “procedure” was to cover all

new sources to which a “standard” under the NSPS Sec-

tion 111 program “will apply.”

The purpose of locational review was to create a re-

view process—applicable in “clean” and “dirty” air areas

alike—to make sure that the installation of new plant

and equipment would not prejudice either the attainment

or the continuing maintenance of national air quality

standards.* It looked to the net effect on air quality of

a new or modified “source.” For this reason, its refer-

ence to the NSPS definition of “source” has no independ-

ent functional signific:. ce. The only substantive question

in connection with locational review is whether construc-

tion or modification of a new source“ however defined

—should be prevented because it will adversely affect net

air quality. “Netting” is implicit in the only substantive

judgment called for in locational review: whether the

addition or modification should be vetoed because it will

lead to air quality that does not satisfy NAAQS. If the

addition or modification produces no net increase in emis-

sions, locational review has, by hypothesis, no bite. In

contrast, the whole point of respondents’ submission

about NSR is to impose elaborate requirements (e. g.,

LAER technology, see Gov’t Br. 7) on individual pieces

of machinery even if there is no net effect on air quality.

Importing the NSPS definition into the 1977 NSR pro-

|

*In practice locational review did not turn out to be a program

of great significance; [ flor the first 4 years after the 1970

amendments, States and EPA conducted rather spotty review of new

sources in dirty air areas.” 123 Cong. Rec. 18017 (1977) (remarks

of Senator Muskie), 8 Leg. Hist. 718.

6

gram would thus have a radically different substantive re-

sult than is created by the cross-reference to that defini-

tion in the 1970 locational review provisions.

Beyond this, the fact is that the 1977 Amendments

marked a major change in the over-all architecture of the

Clean Air Act. In contrast to the 1970 Act, which had

assumed that air quality standards would be timely at-

tained, the 1977 Act was established in response to the

failure of a number of regions to attain air quality

standards by 1975. A major concern was that existing

law might completely prohibit the construction or modifi-

cation of facilities in such areas.“ Following EPA’s prom-

ulgation of an administrative solution to this problem

in its “Emissions Offset Ruling” (41 Fed. Reg. 55524

(1976)), Congress passed the NSR program specifically

to deal with the issue of accommodating industrial

growth to the problem of nonattainment. The NSR stat-

ute was intended to be a “comprehensive scheme.”* It

was designed “to reconcile the[] conflicting concerns“ be-

tween air quality attainment and continued economic

growth.“ Congress made clear that it was adopting new

legislation to address new problems not foreseen in 1970.

There exists no support for the novel assertion that the

elaborate NSR provisions considered at length in 1977

are nothing more than an extension of the locational re-

view requirements. Indeed, NSR and locational review

both continue to exist in the current version of the Act

(see 42 U.S.C. 7410(a)(2)(D) and (4)); such co-

existence would hardly be expected if NSR were simply

the current version of locational review.

See Gov't Br. 4-5; H.R. Conf. Rep. 95-564, 95th Cong., Ist Sess.

155-158 (1977), 3 Leg. Hist. 535-538; S. Rep. 95-127, 95th Cong.,

Ist Sess. 55 (1977), 3 Leg. Hist. 1429; H.R. Rep. 95-294, 95th Cong.,

Ist Sess. 207-211 (1977), 4 Leg. Hist. 2674-2678.

8. Rep. 95-127, supra, at 55, 3 Leg. Hist. 1429.

H.R. Rep. 95-294, supra, at 210, 4 Leg. Hist. 2677.

7

At the same time Congress passed the nonattainment

provisions in Part D of the 1977 Amendments, it also

adopted Part C. This dealt with a converse problem:

preventing the significant deterioration of air quality in

areas where the air was cleaner than required by federal

standards. This program—called the “Prevention of Sig-

nificant Deterioration” (PSD) program—was considered

by Congress together with the NSR program in 1977.

See, e.g., H.R. Conf. Rep. 95-564, supra, at 128, 3 Leg.

Hist. 508. The test for what is to be considered “major”

in connection with the NSR term “major stationary

source” and the PSD term “major emitting facility” is

provided in the same section of the Act (42 U.S.C.

7602(j)). And, as noted in our opening brief (at 11

n.19), it is not unusual for a given plant to be subject

to NSR review for one pollutant and PSD review for an-

other. All these considerations suggest that “source”

should have the same meaning in both the NSR and PSD

programs. And it has of course been held that the plant-

wide definition of “source” is the proper one for purposes

of the PSD program. See Alabama Power Co. v. Costle,

636 F.2d 323 (D.C. Cir. 1979).

In sum, the assertion that the Section 111 definition of

“source” applies to the 1977 NSR program because that

program simply continues the requirements of the 1970

locational review sections—which do refer to the Section

111 definition—is a last-minute invention that ignores

the Act’s history and twists it into an unrecognizable

shape.

II.

Respondents’ remaining arguments concerning the ap-

plicability of the Section 111 NSPS definition to the

1977 NSR program were generally anticipated in our

principal brief and can be dealt with summarily. As

pointed out in that brief (at 42-43), Section 111 ex-

plicitly provides that its definition is [for purposes of

this section” (emphasis added). Respondents object that

8

the specification does not provide that it is“ for the

[sic] purposes of this section only’” (Br. 30 n. 57). But

why should Congress, in enacting the NSPS definition in

1970, add the (redundant) word “only” to exclude the

possibility of its applying to the NSR program not created

until 1977? * In fact, Congress took affirmative steps to

avoid tying the new source review program to the NSPS

definition of “source”: as discussed in our opening brief

(at 48-44), it deleted from the 1977 Act a provision

expressly adopting the NSPS definition for the NSR pro-

gram, while at the same time incorporating by reference

other NSPS terms.

Finally, the NSR and NSPS programs are entirely

different in function and structure (see Gov’t Br. 13

n.24, 42-43 n.55). There is therefore no substantive rea-

son to import the NSPS definition into the NSR program.

III.

Respondents' further argument is that the legislative

history of the 1977 Act shows that Congress intended the

NSR program to apply to every individual piece of

process equipment. Respondents misconceive that history.

9

for purposes of the NSR program; in addition, as re-

spondents emphasize (Br. 10, 33), its NSR section re-

ferred to “a facility proposed for construction or modifi-

cation at an existing site or plant,” * thereby suggesting

a difference between “facilities,” on the one hand, and

“sites” and “plants,” on the other. As previously dis-

cussed (Gov’t Br. 45-46 & nn.58, 60), however, both of

these provisions were deleted from the 1977 NSR statute

enacted by Congress.“

Respondents’ contention is that, nevertheless, the Senate

assumed that the NSPS definition would apply to NSR

and that this assumption persisted throughout the con-

sideration and ultimate enactment of the NSR provisions.

Not a shred of evidence supports this argument. Indeed,

it ignores the critical fact that the NSR program eventu-

ally enacted was based principally on the House rather

than the Senate bill.“ The Conference Report plainly

states: 2

All implementation plan revisions must contain a

permit program for new or modified major facilities

similar to the program required in the House bill.

11 8. 8219, 94th Cong., 2d Sess. § 802 (m), at 79 (1976), 6 Leg.

Hist. 4688, 4918.

12 8. 3219, supra, § 118 (g) (1), at 48, 6 Leg. Hist. 4652, 4869.

sumed that the limitation was not intended” (Russello v. United

States, No. 82-472 (Nov. 1, 1988), slip op. 7), and [it is

10

H.R. Conf. Rep. 95-564, 95th Cong., Ist Sess. 157

(1977), 3 Leg. Hist. 537.“ Most significantly, neither

the House bill nor the NSR statute incorporated the

NSPS definition of “source” or referred to a “facility

* * * at an existing site or plant” as the entity subject to

new source review; both applied new source review to a

“new or modified major stationary source” and left the

term “source” undefined.

Respondents argue—in a confusing paragraph—that

the 1977 House bill did not need to adopt the Section 111

definition of “source” because the “plain reading” of

“source” is the Section 111 definition (“ ‘building, struc-

ture, facility, or installation'“) (Br. 31). But this is

nothing more than ipse dixit. The question is whether the

15In fact an examination of the House bill will show that its

permit program was largely the same as the one ultimately adopted.

See Gov't Br. 5-7, and H.R. 6161, 95th Cong., Ist Sess. § 127, at 847-

353 (1977), 4 Leg. Hist. 2332-2338, 2854-2857.

16 The confusion is caused, in part, by the use of the word “an-

other” in the sentence: “In the House bill, there was simply no need

for another provision to define ‘major stationary source’” (Br. 31

(emphasis added)). This suggests what is not the case—that the

just quoted Section 111 definition is made applicable to the NSR

program by some other provision.

In this connection, respondents refer (Br. 31 n.59) to the fact

that the 1976 House bill—unlike the 1977 bill—included a definition

of “major stationary source” that refers to the NSPS definition

of “source.” See H.R. 10498, 94th Cong., 2d Sess. §§ 121(a) (8) and

127(c) (3), at 159, 236 (1976), 7 Leg. Hist. 6896 and 5972, 6880 and

11

House intended, in the absence of an explicit eross-

reference, to import the NSPS definition of “source” into

the NSR program. It begs that question simply to assert

that such an explicit cross-reference was unnecessary, in

the absence of some independent evidence that the lan-

guage or structure or functional purposes of the statute

suggest such a cross-reference."”

The sole “evidence” in fact adduced by respondents is

their quotation (Br. 31-32) (footnote omitted) from the

17 Respondents rely (Br. 86) on part of a statement made by

Senator Muskie during the debates over the Conference Report.

Even assuming that great weight can be accorded to a single floor

remark (see, e. g., Pennhurst State School v. Halderman, 451 U.S. 1,

20 (1981); Chrysler Corp. v. Brown, 441 U.S. 281, 311 (1979)),

this statement does not carry respondents’ argument. Fairly read

in its entirety, it appears to do no more than explain the difference

between “new” and “modified” sources—both subject to new source

review—and makes clear that a “new” source does not escape review

simply because it replaces an older facility that had higher emis-

sions. See 123 Cong. Rec. 26847 (1977), 3 Leg. Hist. 355-356.

In addition, respondents (Br. 38) and amicus United Steelwork-

ers of America cite to the history of the Steel Industry Compliance

Extension Act of 19810 42 U.S.C. 7418) to show that Congress con-

templated a process-unit definition of “source.” The purpose of the

Steel Extension Act was to afford assistance to the steel industry by

extending certain compliance dates. Neither the Act nor its legisla-

tive history focused on the quite unrelated issue of the definition of

“source” under existing law. When the Steel Extension Act was

under consideration in May and June of 1981, the EPA regulations

then in force provided for a dual definition (see Gov’t Br. 11-14) ;

12

Conference Report of the sentence, “The bill [dl efines

major stationary source and major emitting facility as

defined in the Senate bill.“ But the quoted sentence has

nothing to do with the question whether “source” means

a plant or an individual piece of machinery. As a glance

at the context will make clear, it refers exclusively to the

fact that the House and Senate bills differed in their defi-

nitions of the term “major.” The House bill was based on

“design capacity to emit 100 tons annually,” while the

Senate bill referred to “an annual potential to emit 100

tons.” The Conference adopted the Senate’s definition of

“major.” H.R. Conf. Rep. 95-564, supra, at 172, 3 Leg.

Hist. 552. The quoted sentence, referring to this action

on the quantitative standard for measuring “major”

emissions, in no way suggests that the Conference also

intended—at the same time that it deleted the Senate’s

explicit definition of source“ —to endorse the Senate's

understanding of the industrial unit that, if “major,”

would be covered by the NSR program.

IV

Respondents next argue that EPA has, since 1971,

applied the NSPS definition of “source” to new source

review (Br. 4, 6, 7, 15-19, 42) and that Congress

ratified that approach in enacting the NSR program in

1977 (Br. 11, 38, 42, 43). This argument is without

merit.

It is EPA’s Emissions Offset Ruling of 1976 that con-

stitutes the proper point of departure for analyzing

EPA’s approach to the issue in this case (see Gov't Br.

5). There is no quarrel over respondents’ contention

18 Respondents’ reference to EPA's practice back to 1971 is based

on the 1970 locational review provisions, which (as we have shown)

have no bearing on the question presented here. Furthermore, since

those provisions expressly referred to the NSPS section, the fact

that EPA in 1971 and 1973 construed or applied the locational re-

view program in light of NSPS is without significance. In fact,

EPA's pre-1977 regulations recognized state flexibility to determine

the “sources” subject to such review’. See 36 Fed. Reg. 22898, 22400,

22406 (1971) ; 88 Fed. Reg. 15834, 15886, 16886 (1978).

13

(Br. 16-17, 34) that the Offset Ruliny, in referring to a

“major source,” essentially tracked the language of the

NSPS definition (41 Fed. Reg. 55528 (1976)). Nor can

it be disputed that Congress was well aware of the Offset

Ruling when it passed the 1977 Act.“ But we find no

evidence of congressional intent to ratify—indeed, to

freeze—this definition of “source” for purposes of the

NSR program.

The critical fact is that in 1977 Congress determined

that the Offset Ruling should not be enshrined into per-

manent national policy. It was adopted as a temporary

measure to apply to nonattainment areas until July 1,

1979. See 42 U.S.C. 7502 note, 3 Leg. Hist. 251.% Even

in this interim period, the one specific feature of the Rul-

ing that Congress addressed—the “baseline” to be used

for calculating the level of available offsets (ibid.)—was

amended to make it easier to build or alter a “source”

in nonattainment areas. And with respect to all other

aspects of the Ruling during the pre-1979 period, the

statute expressly provided that they “may be modified

by rule of the Administrator” (ibid.). Surely this lim-

ited interim continuation of the Offset Ruling is a giant

step from the proposition that Congress intended in per-

petuity to freeze its approach to new source review. In

any event, Congress made it clear that it intended no

such thing. After the interim period, Congress specified

its own approach to the problem of nonattainment. And,

in doing so, it stated explicitly that one of the “two

main purposes” of the NSR program was “to allow

States greater flexibility for the former purpose [i.e.,

allowing ‘reasonable economic growth to continue in an

% However, EPA did not explain or elaborate on its use of the

NSPS language in defining “major source.” It is not surprising,

therefore, that respondents cannot point to any evidence that Con-

gress knew about or focused on the specific definitional issue.

‘oe See also H.R. Conf. Rep. 95-564, 96th Cong., Ist Sess. 157

(1977), 8 Leg. Hist. 687; H.R. Rep. 96-294, supra, at 14, 211, 4 Leg.

Hist. 2481, 2678.

14

area while making reasonable further progress to assure

attainment’) than EPA's present interpretative regula-

tions afford” (H.R. Rep. 95-294, supra, at 211, 4 Leg.

Hist. 2678 (emphasis added) ). Against this background,

it is hardly plausible that Congress should have intended,

sub silentio, to freeze into place an approach to new source

review that would prevent the Administrator from giving

states any discretion to adopt a definition of the (statu-

torily undefined) term “source” precisely calculated to

achieve the statute’s “main purposes.”

We submit that the most siggpificant fact about the

“administrative” history of the question at issue is not

the pre-1977 history at all. It is that, ever since the

1977 Amendments were adopted, EPA has taken the

position that the statute does not itself mandate one au-

thoritative definition of “source” for purposes of new

source review. As our principal brief recounts in detail

(at 9-14), from the first time that it addressed the 1977

Amendments the agency has asserted the power to allow

states to adopt a plantwide approach. (Respondents’ ar-

gument (Br. 18) that EPA’s 1979 proposals were some-

what narrower than the rules adopted in 1981 is, of

course, irrelevant on the question at issue: whether

EPA has power to permit states to use the “bubble”

concept at all.) In fact, when EPA in August 1980

adopted the dual definition, it did not assert that it has

no discretion in the premises; its action constituted an

exercise of that discretion. This case is, then, one for

the application of the conventional rule of administra-

tive law that a court should defer to the agency’s view

of its own authority under a statute committed to it

for enforcement. See Gov’t Br. 22.

15

than-even offset and therefore conflicts with the purpose

of “[{mJaking the construction of major new sources a

force for reducing pollution” (Br. 38). As shown in

our opening brief (at 26-27, 28, 35), however, the pur-

pose of new source review is to ensure that emissions

from new or modified sources do not prejudice the tran-

sition to attainment. New source review is only one part

of an integrated and complex scheme; it was not de-

signed to carry by itself the burden of improving air

quality in nonattainment regions. By looking to the net

impact on pollution levels of a new or modified source,

the plantwide definition serves the preventive objective

of the NSR program.

Respondents also object (Br. 4, 18, 20, 40 n.69) that

the EPA regulation does not require new source review

even when there is not a total offset in emissions at a

plant. This objection, however, does not bear on the

issue of the NSR definition of “source.” Rather, it is

an attack on the significance levels that EPA has set

pursuant to the decision in Alabama Power Co. v. Costle,

supra, which were not challenged in a proceeding for

judicial review and whose validity is not before the

Court. It should: also be noted that respondents’ argu-

ment applies to the dual as well as the plantwide defini-

tion: the significance levels are applicable under both

definitions (see Gov’t Br. 6 n.10, 9 n.14, 28 n.36). In

fact the increases permitted by the significance levels

are truly de minimis (see Gov’t Br. 28 n.36). The NSR

statute itself excludes—as “minor’—sources that emit

less than 100 tons per year of a pollutant (see Gov't

Br. 6 n.10, 9 n.14); surely it should not be read to re-

quire a dual definition of “source” in order to trigger

review of every marginal increase in emissions. The

existing EPA regulation fairly effectuates the statutory

purpose of new source review: to ensure that emissions

™ See Gov't Br. 6 n.10; 40 C. F.. 61.18(j) (1) (x); % CA.

52.24(f) (10); 45 Fed. Reg. 62676, 62706 (1980).

t

16

resulting from economic growth and industrial expan-

sion do not interfere with the goal of attainment.”

Respondents further urge (Br. 2, 4, 32, 40-41) that

it is illogical and contrary to the purposes of the Act to

require new source review when a large piece of equip-

ment is installed at a new site, but not to require it

when that same piece of equipment is installed (and

offsetting pollution reductions are made) at an existing

plant. But, once again, respondents have overlooked the

“hold harmless” purpose of new source review in the

overall context of the nonattainment program. In the

case of the existing plant, the plantwide definition en-

sures that the industrial modernization or expansion

does not interfere with air quality attainment. On the

other hand, the project at the new site, by hypothesis,

22 As discussed in our opening brief (at 13, 14, 29-84), the

plantwide definition can facilitate reductions in emissions by en-

couraging the replacement of older, heavily polluting equipment

with newer, cleaner equipment. (Respondents’ claim that this con-

tention was abandoned in the court of appeals (Br. 22, 44, 45, 46)

is unfounded; see EPA C. A. Br. 12, 87 n.34.) Respondents echo

(Br. 42, 44-47) the court of appeals’ criticism (82-1005 Pet. App.

Al18 n.41 (emphasis in original)) that, “in abandoning [in 1981]

its earlier position [in the 1980 regulation], EPA did not cite, nor

have we found in the record, any study, survey, or support for the

opposite position, now tendered by EPA, that the dual definition

would indeed retard improvement of air quality in the aggregate

* * * byWiscouraging replacement of older processes or equipment

with newer, cleaner varieties.” This fails to recognize that the

Administrator's conclusion involved a prediction of how business

and investment decisions would differ in response to the plantwide

and dual definitions. “[T]o the extent that factual determinations

17

results in a new increase in emissions that significantly

worsen the level of pollution, thus interfering with the

goal of attainment. To make new source review a func-

tion of a project’s net impact on air quality and its con-

sequences for attainment, as the plantwide definition

does, is in full accord with the design and purpose of the

NSR program.”

23 For the same reason, there is no merit to respondents’ argu-

ment (Br. 40-41) that the EPA regulation improperly discriminates

between existing and new business competitors in a nonattainment

area.

In much the same vein, the amici states argue that the EPA

regulation, by not requiring a uniform national definition of

“source,” will allow a state to be pressured into adopting the defi-

nition that minimizee its environmental controls in order to attract

new businesses; in effect, amici ask the “ourt to relieve them

of the hard choices about accommodating growth and environmental

protection (see State Am. Br. 11) that Congress desired in 1977

to leave to the states. Their argument—which would be satisfied by

any nationwide definition and therefore lends no support to the

dual definition as such—overlooks the fact that the Act requires

the states to have an EPA-approved implementation plan that con-

forms to the requirements of the Act and provides for reasonable

progress toward and timely attainment of national air quality

standards. That states have flexibility to design the detailed

methods and enforcement procedures for achieving attainment, con-

sistent with federal law, and to make economic choices between

existing and new sources or between present and future growth, is

exactly what Congress intended in 1977 (see Gov't Br. 28, 35-41) 7

indeed, the statutory provision that allows a state to budget, at its

option, an emissions ellowance for growth (42 U.S.C. 7502 (b) (5) )

clearly reflects this intent. Amici have cited nothing in the legisla-

tive history to indicate that Congress was so concerned about

18

VI.

Respondents lastly contend (Br. 4-5 n.11, 19-20, 40

n.69, 42, 44) that the EPA regulation, even if valid

with respect to construction or modifications in areas

in which there is an approved state implementation

plan, is improper in areas that do not have an approved

plan and are subject to the construction moratorium

(see Gov’t Br. 7). Respondents suggest no reason why

EPA should be required to give two different meanings

to the term „source“ in the NSR program,“ and to

do so would exacerbate the regulatory complexities and

burdens that the 1981 regulations were intended to re-

duce (see Gov’t Br. 12-14, 35 n.45). Furthermore, the

regulation is consistent with the purposes of the mora-

torium: by allowing industrial growth that does not

adversely affect air quality while prohibiting both the

construction of all new facilities and the renovation of

existing facilities for which there is a non-de minimis

emissions increase, it prevents a deterioration in air

quality during the period an approved implementation

plan is not in place and provides a strong incentive for

the prompt submission of a plan that complies with fed-

eral requirements (see Gov’t Br. 27-28 n.35, 29 n.87,

34-35 n.44). Accordingly, application of the EPA reg-

ulation in areas subject to the construction moratorium

is not invalid.

VII.

Even if the NSPS definition of source“ “any build-

ing, structure, facility, or installation which emits or

may emit any air pollutant” (42 U.S.C. 1857e-6 (a) (3)

and 7411 (a) (3)) —were formally applicable to new

source review, it would not resolve the question pre-

company’s decision where to locate its operations. See C. Duerksen,

Environmental Regulation of Industrial Plant Siting 56-71 (Con-

servation Foundation 1983).

As the court below noted (82-1005 Pet. App. A1l7 n.40), the

moratorium “has been cast, not as a discrete program, but as an

integral part of a larger production, the nonattainment scheme.”

19

sented in this case: the industrial unit or entity that

is subject to such review. Consistent with general prin-

ciples of administrative law, the D.C. Circuit has rec-

ognized, in this case“ and in other cases involving the

Clean Air Act,“ that EPA has discretion to construe the

constituent terms of the definition in light of the lan-

guage, history, and purposes of the particular program

under consideration; as these decisions “illustrate, dif-

ferent delineations may be appropriate for different stat-

utory programs” (82-1005 Pet. App. A9 n.22). Once the

“bright line“ test adopted by the Gourt below is set

aside—as even respondents do not contest it must be—

there is no reason why the terms “building,” “struc-

ture,” “facility,” and “installation” cannot be under-

stood to embrace an entire plant rather than a specific,

individual item of equipment.”

Respondents offer two arguments in response to this

analysis. First, they assert (Br. 29-30 n.56) that a dual

definition applies throughout the Clean Air Act and that

Alabama Power supports that conclusion. But Alabama

Power does no such thing. As the court below under-

stood (82-1005 Pet. App. A2-A3, A13, A16), Alabama

Power clearly holds that the plantwide definition is re-

quired in the PSD program and that the dual definition

is impermissible (636 F.2d at 396-398, 401-402).

Second, respondents argue (Br. 8, 27, 41-42) that in

the NSPS program itself every individual piece of

25 82-1005 Pet. App. A9 n.22.

26 Alabama Power Co. v. Costle, 636 F.2d at 396-398, 410;

ASARCO, Inc. v. EPA, 578 F.2d 319, 824 n.17 (1978).

27 We note that in any event the NSPS definition in no way re-

quires a dual definition of “source.”

28In Alabama Power, the court stated (636 F.2d at 397) that,

in order “!t)o allow an entire plant or other appropriate grouping

of industrial activity to be subject as a single unit to PSD, as

Congress clearly intended, EPA should devise regulatory definitions

of the terms ‘structure,’ ‘building,’ ‘facility,’ and ‘installation’ to

provide for the aggregation, where appropriate, of industrial activi-

ties according to considerations such as proximity and ownership.”

— —

20

pollution-emitting equipment must be deemed to be a

“source.” Again, this is incorrect. The NSPS program

calls upon the Administrator to “publish * * * a list of

categories of stationary sources * * * [that] in his judg-

ment * * cause[], or contribute[] significantly to, air

pollution” (42 U.S.C. 1857c-6 (b) (1) (A)) and 7411(b)

(1) (A)), and to establish “Federal standards of per-

formance for new sources within [each] such category”

(42 U.S.C. 1857e-6 (b) (1) (B) and 7411(b) (1) (B)); in

establishing such standards the Administrator is author-

ized to “distinguish among classes, types and sizes within

categories of new sources” (42 U.S.C. 1857c-6(b) (2) and

7411(b) (2)). Thus, in the NSPS program itself, the Ad-

ministrator exercises discretion and judgment in listing

categories of sources and in determining the appropriate

“source” to be subject to a given standard. In contrast,

if the NSPS meaning of “source” were simply carried

over to new source review, such flexibility would be lost.

Instead—and this is the very result respondents seek—

the NSR program would rigidly encompass any and all

industrial units that fall within the expanse of the NSPS

definition. Such an outcome wrenches the NSPS defini-

tion from its substantive and statutory context; it is nei-

ther good law nor good sense.

This brings us back to where we began. Our submis-

sion is that the definitional issue in this case is, like many

other questions brought to the courts, a matter of sound

policy, not legal validity. Respondents bear a heavy bur-

den in challenging that submission. To prevail, they must

demonstrate that the Act precludes the regulation and

that the Administrator has no discretion—either in prom-

ulgating a definition of “source” for NSR or in inter-

preting the constituent terms in the NSPS definition.

Nothing in the text, history, or policies of the Act, or in

its administrative implementation, warrants such an ex-

treme conclusion.

21

For the foregoing reasons and those stated in our

opening brief, it is respectfully submitted that the judg-

ment of the court of appeals should be reversed.

REX E. LEE

Solicitor General

FEBRUARY 1984

la

APPENDIX A

As enected in 1970, Section 110 (a), 42 U.S.C. 1857c-

5(a), provided in pertinent part:

State implementation plans for national primary and

secondary ambient air quality standards

(a) Submission to Administrator; time for submis-

sion; State procedures; required contents of

plans for approval by Administrator; approval

of revised plan by Administrator

(1) Each State shall, after reasonable notice and

public hearings, adopt and submit to the Adminis-

trator, within nine months after the promulgation

of a national primary ambient air quality standard

(or any revision thereof) under section 1857c-4 of

this title for any air pollutant, a plan which pro-

vides for implementation, maintenance, and enforce-

ment of such primary standard in each air quality

control region (or portion thereof) within such

State. In addition, such State shall adopt and sub-

mit to the Administrator (either as a part of a plan

submitted under the preceding sentence or sepa-

rately) within nine months after the promulgation

of a national ambient air quality secondary stan-

dard (or revision thereof), a plan which provides for

implementation, maintenance, and enforcement of

such secondary standard in each air quality control

region (or portion thereof) within such State. Un-

less a separate public hearing is provided, each State

shall consider its plan implementing such secondary

2a

determines that it was adopted after reasonable

notice and hearing and that—

(D) it includes a procedure, meeting the re-

quirements of paragraph (4), for review (prior

to construction or modification) of the location

of new sources to which a standard of per-

formance will apply.]

(4) The procedure referred to in paragraph (2)

(D) for review, prior to construction or modifica-

tion, of the location of new sources shall (A) pro-

vide for adequate authority to prevent the construc-

tion or modification of any new source to which a

standard of performance under section 1857c-6 of

this title will apply at any location which the State

determines will prevent the attainment or mainte-

nance within any air quality control region (or

portion thereof) within such State of a national am-

bient air quality primary or secondary standard,

and (B) require that prior to commencing construc-

tion or modification of any such source, the owner

or operator thereof shall submit to such State such

information as may be necessary to permit the State

to make a determination under clause (A).

W „ 4 „. everea, 1904 4h 20.