## Facts

- The Clean Air Act Amendments of 1977 required “nonattainment” states to operate permit programs for “new or modified major stationary sources” of air pollution.
- The statute did not expressly define “stationary source” for purposes of the nonattainment permit program, and the legislative history did not directly resolve the definition.
- In 1981, the Environmental Protection Agency (EPA) issued regulations allowing states to treat all pollution-emitting units within a plant as a single “stationary source” (the “bubble concept”).
- Under the plantwide approach, a facility could add or modify equipment without triggering stringent new-source permitting so long as total plant emissions did not increase.
- Environmental groups challenged the regulations in the U.S. Court of Appeals for the D.C. Circuit.
- The D.C. Circuit set aside the regulations, reasoning that the nonattainment program’s purpose was to improve air quality and that a plantwide definition was therefore inappropriate.
- The Supreme Court granted certiorari and consolidated related petitions.

## Issues

1. Whether the Clean Air Act permits the EPA to define “stationary source” on a plantwide basis in the nonattainment permit program.
2. What standard a court should apply when reviewing an agency’s interpretation of an ambiguous statutory term in a statute the agency administers.

## Decision

- The Supreme Court reversed the D.C. Circuit and upheld the EPA regulation.
- The Court held that Congress had not directly addressed whether “stationary source” must be defined unit-by-unit or could be defined plantwide in this context.
- Because the statute was silent or ambiguous on the precise question, the Court asked only whether EPA’s interpretation was permissible.
- The Court concluded the plantwide definition was a permissible construction of “stationary source” and consistent with the statutory scheme, including the goal of balancing economic development and air-quality improvement in nonattainment areas.
- The Court rejected the D.C. Circuit’s substitution of its own statutory construction for a reasonable agency interpretation.

## Legal Principles

- Step one of judicial review of an agency’s statutory interpretation asks whether Congress directly spoke to the precise question at issue; if so, the court and agency must follow Congress’s unambiguous intent.
- If Congress did not directly address the issue, step two asks whether the agency’s interpretation is based on a permissible (reasonable) construction of the statute.
- When Congress leaves a gap for an agency to fill, regulations adopted within that delegated space receive controlling weight unless arbitrary, capricious, or manifestly contrary to the statute.
- A reviewing court may not choose what it considers the best policy within statutory bounds if the agency’s interpretation is reasonable.

## Conclusion

The Court upheld EPA’s “bubble concept” as a permissible construction of an ambiguous Clean Air Act term and set out a two-step framework requiring judicial acceptance of reasonable agency interpretations where Congress has not clearly resolved the precise statutory question.


Chevron U.S.A. Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984)