This case involves a dispute between the Environmental Protection Agency ("EPA"), supported by industry intervenors, and petitioning environmental associations concerning EPA's application of a "bubble concept"1 to a discrete Clean Air Act (or "Act") scheme, the new source review requirements for areas in which air quality does not meet federal standards ("nonattainment areas").2 The controversy centers on the appropriate definition of the word "source" for the purpose of implementing the statutory scheme. Under EPA's current, bubble concept regulation, effective October 14, 1981,3 source means an entire plant. Under the regulation previously in force,4 an individual piece of process equipment within the plant ranked as a source. EPA changed its definition of source expressly to cut back substantially the coverage of nonattainment area new source review.5

In ruling upon EPA's regulatory change, we do not write on a clean slate. Our course is marked by two prior decisions in which panels of this court determined the applicability vel non of the bubble concept to distinct Clean Air Act programs. In Alabama Power Co. v. Costle, 636 F.2d 323 (D.C.Cir.1979), the court held EPA must employ the concept in the Act's Prevention of Significant Deterioration ("PSD") regime, a scheme designed to maintain air quality in clean air areas; in ASARCO, Inc. v. EPA, 578 F.2d 319 (D.C.Cir.1978), the court ruled out application of the concept to national new source performance standards ("NSPSs") which the Act directs EPA to set with a view to enhancing air quality. In each case the court focused on the purpose Congress envisioned for the particular program at issue. ASARCO declared the bubble concept impermissible when the congressional objective was improvement, rather than simply preservation, of existing air quality. See 578 F.2d at 327-29; see also id. at 330 (Leventhal, J., concurring) (challenged regulations would contravene congressional policy contemplating that modification of a facility would bring about air quality improvement). Alabama Power held the concept "precisely suited" to the congressional design when the intent was "to preserve (existing) air quality," rather than to improve it. 636 F.2d at 402.

Congress, EPA does not dispute, intended the new source review requirements to operate not simply as a quality-maintaining scheme but specifically to promote the cleanup of nonattainment areas.6 We are therefore impelled by the force of our precedent in Alabama Power and ASARCO to hold that EPA's regulatory change, its employment of the bubble concept to shrink to relatively small size mandatory new source review in nonattainment areas, is impermissible.7I. Background

Congress substantially redesigned the Clean Air Act in 1970 amendments8 to better " 'protect and enhance the quality of the Nation's air resources.' "9 The amendments established a comprehensive federal-state program to control existing and new sources of air pollution.10 Central to the new design, Congress charged EPA to prescribe national ambient air quality standards ("NAAQSs"),11 and required all states to adopt, and submit to EPA for approval, State Implementation Plans ("SIPs") that provide for the timely attainment of the NAAQSs.12

By 1976, it was clear that many regions of the country had failed to attain the primary NAAQSs within the statutory deadline, and remained distant from those national standards. In light of this shortfall, EPA endeavored to clarify, in an interpretive rule, the circumstances in which new sources of pollution would be permitted in areas where an ambient standard had not been achieved. EPA Interpretative Ruling of December 21, 1976 ("Offset Ruling"), 41 Fed.Reg. 55524 (1976); see S.Rep.No.127, supra note 12, at 55.13 Congress, however, "(b)eliev(ed) that a statutory clarification of the question (was) needed," id., and therefore added to its 1977 Clean Air Act Amendments,14 Part D to Title I of the Act.15

Part D required states with nonattainment areas to submit revised SIPs not later than January 1, 1979. 42 U.S.C. § 7502 note (Supp. IV 1980). These revised SIPs must demonstrate that the primary NAAQSs will be attained "as expeditiously as practicable," but not later than December 31, 1982, or "if the State demonstrates to the satisfaction of the Administrator ... that such attainment is not possible in an area with respect to either (ozone or carbon monoxide (or both) ), ... not later than December 31, 1987." Id. § 7502(a). The SIPs must also "provide for the implementation of all reasonably available control measures as expeditiously as practicable." Id. § 7502(b)(2). Until the NAAQSs are attained, "reasonable further progress" towards the standards must occur in each intervening year. Id. § 7502(b)(3).16

At the heart of the present dispute are two features of Congress' 1977 alterations: the Part D permit program, id. § 7502(b)(6), and the prohibition of major new construction in nonattainment areas lacking a SIP that meets the Part D requirements ("construction moratorium"), id. § 7410(a)(2)(I). Part D mandates that SIPs establish a permit program "for the construction and operation of new or modified major stationary sources" in nonattainment areas. Id. § 7502(b)(6).17 States may issue a permit for construction or modification18 of a major19 source only if four conditions are met. First, the increased emissions from the proposed source must not exceed the allowance for growth identified and quantified in the SIP pursuant to 42 U.S.C. § 7502(b)(5) or, alternatively, the applicant must obtain sufficient reductions in emissions in the nonattainment area to offset the increased emissions from the proposed source. Id. § 7503(1). Second, the proposed source must comply with the "lowest achievable emission rate (LAER)."20 Id. § 7503(2). Third, the applicant must demonstrate that all other major sources in the state under its control are in compliance (or are on a schedule for compliance) with applicable emissions limitations. Id. § 7503(3).

Finally, no permit may be issued unless the state is carrying out the applicable implementation plan for the nonattainment area in which the proposed source is to be located. Id. § 7503(4). If the nonattainment area lacks an EPA-approved SIP that meets Part D's requirements, the "construction moratorium" becomes operative and "no major stationary source (that would emit the nonattainment pollutant(s) ) shall be constructed or modified in (the) area." Id. § 7410(a)(2)(I).21B. EPA's Regulations

Part D, dense as it is, does not explicitly define what Congress envisioned as a "stationary source" to which the permit process and construction moratorium should apply. Nor is the issue squarely addressed in the legislative history. By regulation, EPA has twice attempted to provide a clear-cut answer. The response it gave on August 7, 1980, rested on the notion that Congress intended new source review to be "an important tool in the drive towards attainment of ambient air quality standards," 45 Fed.Reg. 52676, 52697 (1980) ("1980 Regulations"); EPA therefore designed its definition to subject to review more new construction projects in areas with unhealthy air than in areas where the legislative objective was simply to prevent significant deterioration of healthy air. On October 14, 1981, EPA, upon reconsideration, dramatically altered its "source" definition. This time, the agency focused on the "regulatory burdens and complexities" the 1980 definition entailed, 46 Fed.Reg. 16280, 16281 (1981), and on a "state flexibility" concern. 46 Fed.Reg. 50766, 50767 (1981) ("1981 Regulations"). To reduce the reach of the permit and moratorium requirements, EPA conformed the nonattainment area definition of source to the definition applicable, under the PSD program, in clean air areas.

1. The 1980 Regulations.

In its August 7, 1980, nonattainment program implementing regulations, 45 Fed.Reg. 52676 (1980), EPA defined as a "stationary source," "any building, structure, facility, or installation which emits or may emit any air pollutant subject to regulation under the Act." Id. at 52746.22 The regulations further defined "building, structure, (and) facility" to mean, essentially, an entire plant. Id.23 "Installation," however, was defined as "an identifiable piece of process equipment." Id. Defining "source" as both a plant and an individual piece of equipment at a plant (a "source" within a "source") is commonly termed the "dual definition." See id. at 52696, 52697.24

EPA gave two imbricated reasons for adopting the dual definition to implement Part D of the Act. First, EPA inferred from the purpose, detail, and history of Part D that Congress intended application of new source review "to the greatest extent possible." Id. at 52697. "The dual definition, by defining individual units as a 'source,' will bring more units in for review in areas with unhealthy air," EPA stated, therefore "use of (this) definition clearly is more consistent with Congressional intent." Id. Second, EPA observed that "the purpose of the nonattainment provisions is to 'positively reduce emissions,' not merely to hold emissions constant." Id. EPA therefore concluded that the dual definition "comports with the purposes of Part D," while "use of a plantwide definition to avoid new source review would appear to be inappropriate in nonattainment areas." Id.25

The August 7, 1980, regulations contained a further provision at issue here. EPA ruled that "reconstructed facilities" at a plant would be treated as new sources rather than modifications of existing sources. Id. at 52744. "Reconstruction" would be presumed whenever "the fixed capital cost of the new components exceeds 50 percent of the fixed capital cost of a comparable entirely new stationary source." Id.

2. The 1981 Regulations.

On October 14, 1981, the EPA repealed the dual definition trigger for new source review in nonattainment areas and adopted a plantwide definition of "stationary source." 46 Fed.Reg. 50766 (1981).26 Two concerns, EPA asserted, motivated this volte-face. First, regulatory complexity would be reduced for now the same definition of "source" would apply to both the PSD and nonattainment programs. Id. at 50767. Second, "and more important," EPA said, the action is faithful to Congress' mandate that states "play the primary role in pollution control," for the plantwide definition of source "allow(s) states much greater flexibility in developing their nonattainment ... programs." Id.27

EPA also deleted the requirement that reconstructed facilities, as defined in the August 7, 1980, regulations, be treated as new sources; the agency explained:

Adoption of the plantwide definition means that the reconstruction requirement applies only to entire plants which are rebuilt. Since few if any such reconstructions are anticipated, there is little reason to retain this requirement. In addition, deletion of the requirement makes the PSD and nonattainment rules the same in this respect.

Id.

On November 18, 1981, Natural Resources Defense Council, Inc., Citizens for a Better Environment, Inc., and Northwestern Ohio Lung Association, Inc. (collectively "Petitioners") filed the instant petition for review of EPA's October 14, 1981, regulations. Various members of the industrial community intervened in support of the altered regulations.28II. Analysis

As stated at the outset, the central issue confronting us is whether EPA's discretion under the Clean Air Act is sufficiently broad to allow it to apply the bubble concept to the nonattainment program. Our decision, we earlier observed, is controlled by two recent adjudications of this court determining the propriety of the bubble concept as applied to two other Clean Air Act programs. We now turn to a closer examination of those prior decisions.

In Alabama Power this court concluded that EPA, to act consistently with the purposes of the PSD program (Part C of Title I of the Act),29 must apply the bubble concept to that regulatory scheme. 636 F.2d at 401-02. In reaching this conclusion the court reviewed, in light of Part C's language and its legislative history, definitions EPA had issued for the PSD program.

First, the court stated that in the absence of contrary congressional intent, the word "source" is to be defined consistently throughout the Act, as Congress defined it explicitly in Section 111(a)(3), to "mean( ) any building, structure, facility, or installation ...."30 Finding no contrary legislative intent with respect to the PSD program, the court held that the Section 111(a)(3) definition governed all PSD provisions. 636 F.2d at 396. Therefore, the court ruled, EPA exceeded its authority when it augmented the components of "source," for Part C definitional purposes, to embrace "any structure, building, facility, equipment, installation, or operation (or combination thereof) ...." See id. at 395 (emphasis in original).

However, the court further ruled that EPA has discretion to define, by regulation, the four components of the word "source" (building, structure, facility, and installation) "to carry out the expressed purposes" of the program at issue. See id. at 396. In sum, the court recognized that EPA might adopt for one Clean Air Act program regulations defining "the component terms of 'source' that are different in scope from" regulations employed in another program "due to differences in the purpose and structure of the two programs." Id. at 397-98.

Applying this analysis, the court declared the bubble concept "precisely suited" to the goals of the PSD program, "preserv(ing) air quality within a framework that allows cost-efficient, flexible planning for industrial expansion and improvement." Id. at 402 (emphasis added).31 A point-specific definition of source, in the Alabama Power panel's view, would be "contrary to the expressed purposes of the PSD provisions of the Act." Id. at 401.32 The panel regarded its decision as entirely in harmony with this court's decision less than two years earlier in ASARCO, Inc. v. EPA, for "ASARCO ... dealt with a significantly different regulation and statutory purpose." Id. at 402; cf. infra note 37.

In ASARCO the court "rejected in toto " EPA's application of the bubble concept33 to the NSPS program.34 578 F.2d at 325, 326-27. In addition to finding the bubble regulations inconsistent with the plain language of the Act,35 the court found them contrary to the basic purpose of the NSPS program, to "improve ( ) air quality." Id. at 327 (emphasis in original). "The bubble concept in the challenged regulations would undercut (the NSPS program) by allowing operators to avoid installing the best pollution control technology on an altered facility as long as the emissions from the entire plant do not increase."36 Id. at 327-28.37

These decisions, particularly the Alabama Power panel's reconciliation of its holding with ASARCO, see supra note 37, establish as the law of this Circuit a bright line test for determining the propriety of EPA's resort to a bubble concept. The bubble concept, Alabama Power declares, is mandatory for Clean Air Act programs designed merely to maintain existing air quality; it is inappropriate, both ASARCO and Alabama Power plainly signal, in programs enacted to improve the quality of the ambient air.38

Applying the Alabama Power-ASARCO test to the nonattainment provisions of the Act, we must conclude that the bubble concept may not be employed in that scheme.39 The nonattainment program's raison d' etre is to ameliorate the air's quality in nonattainment areas sufficiently to achieve expeditious compliance with the NAAQSs.40 See supra note 6 and accompanying text. This purpose comfortably places Part D on the "improving" side of the line drawn by Alabama Power and ASARCO and thus rules out application of the bubble concept to the nonattainment program.41

EPA argues that we have misperceived the purpose and nature of the nonattainment program. The agency asserts that a fundamental purpose of the nonattainment scheme is to afford the states flexibility in designing revised SIPs which will attain compliance with the NAAQSs. See EPA Brief at 20-23 (quoting H.R.Rep.No.294, supra note 38, at 211). The bubble concept, EPA argues, would further this statutory purpose by leaving the states with considerable authority to define source as they believe best-advised: they might adopt the bubble concept or, if necessary for timely attainment, a more stringent standard. Regardless of the method chosen, EPA maintains, the states remain under an obligation to submit and comply with a revised SIP that assures improved air quality. Fulfillment of the other prime purposes of the nonattainment program, timely compliance with the NAAQSs and reasonable further progress toward that goal, EPA asserts, is thereby assured. Thus, EPA concludes, application of the bubble concept to the nonattainment scheme fits neatly within the "purpose" language of Alabama Power. We disagree.

As we recently pointed out, see Wilson v. Johns-Manville Sales Corp., 684 F.2d 111, 118 & n.36 (D.C.Cir.1982), the legal significance of a word or phrase must be gleaned from the context in which it is used. In the Alabama Power-ASARCO context, "purpose" clearly means goal, objective. The goal of the nonattainment program is undoubtedly to improve air quality in regions lagging behind in meeting the NAAQSs. Offering flexibility to the states may be a method of attaining that objective, but it is not an independent goal of the nonattainment scheme.

We further note that the permit and moratorium provisions of Part D are wholly federal requirements imposed on the states. 42 U.S.C. § 7503 (Supp. IV 1980). The states do not retain flexibility to submit SIPs which provide for timely attainment of the NAAQSs, but which do not contain a permit program applicable to new or modified sources.42 Allowing the states large leeway to define the sources to which the federal requirement applies is not easily reconciled with the statutory design.

EPA explained that it deleted the reconstruction rule from the nonattainment program regulations because, upon the agency's adoption of the plantwide definition of source, the rule would do scant service. See 1981 Regulations, 46 Fed.Reg. at 50767; EPA Brief at 40; supra p. 13. The bubble concept, pursuant to our decision today, may not be employed in nonattainment program regulations. Therefore, EPA's incidental deletion of the reconstruction rule must be vacated together with the agency decision to which it is ancillary.43

This court's prior adjudications in Alabama Power and ASARCO preclude us from sanctioning EPA's employment of the bubble concept in the Clean Air Act's nonattainment program. We therefore grant the petition for review and vacate EPA's October 14, 1981, regulations.

So ordered.