Case Title: Nat. Res. Defense Council v. Poet Biorefining- North Manchester, LLC

Citation: 

Docket Number: 49S02-1405-MI-313

State: indiana

Court: Indiana Supreme Court

Date: 2014-09-02T00:00:00Z

Document:
ATTORNEY FOR APPELLANT 
Kim E. Ferraro 
Valparaiso, Indiana 
 
Benjamin H. Longstreth 
Washington, D.C.
ATTORNEY FOR APPELLEES, 
POET BIOREFINING – NORTH 
MANCHESTER, LLC, AND POET 
BIOREFINING – CLOVERDALE, 
LLC 
Therese A. Czajka 
Indianapolis, Indiana 
 
ATTORNEYS FOR APPELLEE, 
CENTRAL INDIANA ETHANOL, 
INC. 
Anthony C. Sullivan 
E. Sean Griggs 
Mark J. Crandley 
Timothy A. Haley 
Indianapolis, Indiana 
 
ATTORNEYS FOR APPELLEE, 
INDIANA DEPARTMENT OF 
ENVIRONMENTAL 
MANAGEMENT 
Gregory F. Zoeller 
Attorney General of Indiana 
 
Thomas M. Fisher 
Solicitor General of Indiana 
 
Carol S. Comer 
Andrew R. Falk 
Deputy Attorneys General
ATTORNEYS FOR INTERVENOR, 
GREEN PLAINS BLUFFTON, LLC 
Vicki J. Wright 
Bryan S. Strawbridge 
Indianapolis, Indiana 
 
ATTORNEYS FOR INTERVENOR, 
THE ANDERSONS CLYMERS 
ETHANOL, LLC 
Joseph S. Simpson 
Louis E. Tosi 
Toledo, Ohio 
 
John E. Haller 
Columbus, Ohio 
 
ATTORNEYS FOR AMICUS 
CURIAE, THE RENEWABLE 
FUELS ASSOCIATION 
John S. Paniaguas 
Chicago, Illinois 
 
Charles H. Knauss 
Shannon S. Broome 
Robert T. Smith 
Washington, D.C. 
 
 
 
In the 
Indiana Supreme Court  
No. 49S02-1405-MI-313 
NATURAL RESOURCES DEFENSE COUNCIL, 
Appellant (Respondent below), 
v. 
POET BIOREFINING – NORTH MANCHESTER, 
LLC, POET BIOREFINING – CLOVERDALE, 
LLC, CENTRAL INDIANA ETHANOL, INC., 
Sep 2 2014, 11:49 am
2 
AND THE INDIANA DEPARTMENT OF 
ENVIRONMENTAL MANAGEMENT, 
Appellees (Petitioners below), 
GREEN PLAINS BLUFFTON, LLC, AND 
ANDERSONS CLYMERS ETHANOL, LLC, 
Intervenors below. 
Appeal from the Marion Superior Court, No. 49F12-1102-MI-5363 
The Honorable David J. Certo, Judge 
The Honorable Valerie Horvath, Commissioner 
On Petition to Transfer from the Indiana Court of Appeals, No. 49A02-1205-MI-423 
September 2, 2014 
David, Justice. 
Agencies at both the state and federal level are tasked with promulgating, interpreting, 
and enforcing specific regulations pertaining to their particular area of expertise.  Because of the 
agencies’ degree of expertise, courts exercise significant deference in reviewing those 
interpretations.  Here, Indiana’s environmental agency revised its interpretation of a regulatory 
term and that interpretation was challenged and subjected to judicial review.  But in light of the 
deference we show to such an agency assessment of its own regulations, we find the new 
interpretation reasonable—and because no more formal revision process was required, we affirm 
the trial court. 
The Clean Air Act and Indiana’s Implementation Plan 
The U.S. Clean Air Act is a federal framework through which states can develop 
pollution prevention and control programs, and it seeks to encourage “reasonable Federal, State, 
and local government actions” consistent with the standards contained within that framework.  
3 
42 U.S.C. § 7401(c).  To this end, the federal government—through Congress and the 
Environmental Protection Agency—establishes National Ambient Air Quality Standards, and the 
individual states must submit to the EPA their plans to implement or enforce the NAAQS within 
their borders.  42 U.S.C. §§ 7409, 7410(a)(1).  These State Implementation Plans do not have 
effect until they are approved by the EPA.  See Envtl. Def. v. EPA, 467 F.3d 1329, 1331 (D.C. 
Cir. 2006).  Any modification of a SIP must also be approved by the EPA before it has effect, see 
Sierra Club v. Ind.-Ky. Elec. Corp., 716 F.2d 1145, 1152 (7th Cir. 1983), thus an “existing SIP 
remains the ‘applicable implementation plan’ even after the State has submitted a proposed 
revision,” General Motors Corp. v. U.S., 496 U.S. 530, 540 (1990).   
The Clean Air Act also requires states to designate areas within their boundaries as either 
meeting the applicable NAAQS (“attainment” areas) or not meeting the applicable NAAQS 
(“nonattainment” areas).  42 U.S.C. § 7407(d).  State SIPS are required to contain pollutant 
emission limitations and other regulatory measures in order “to prevent significant deterioration 
of air quality” within those designated attainment areas.  42 U.S.C. § 7471.  And under the 
auspices of the Act’s Prevention of Significant Deterioration program, no “major emitting 
facility” may be constructed or undergo major modifications without receiving a permit.  42 
U.S.C. §§ 7475, 7479(C).   
The Clean Air Act defines “major emitting facility” as a stationary facility capable of 
emitting airborne pollutants, subject to one of two broad categorizations.  It is either one of 
twenty-eight types of facilities specifically listed in the Clean Air Act “which emit, or have the 
potential to emit, one hundred tons per year or more of any air pollutant,” or it is “any other 
source with the potential to emit two hundred and fifty tons per year or more of any air 
pollutant.”  42 U.S.C. § 7479(1).   
PSD review for a major emitting facility’s permit requires a demonstration that 
“emissions from construction or operation of such facility will not cause, or contribute to, air 
pollution” in excess of set standards and that “the proposed facility is subject to the best available 
control technology for each pollutant.”  42 U.S.C. § 7475(a)(3), (4).  Those major emitting 
4 
facilities contained within the list of twenty-eight industrial source categories are also subject to 
stricter monitoring of their emission levels:  their emission levels include not only the actual 
emissions directly produced by the facility (such as smoke from a smoke stack), but also 
“fugitive emissions” (such as pollutants that might leak from pipes or particles that might blow 
off the facility).  42 U.S.C. § 7602(j); 40 C.F.R. §§ 51.166(b)(1)(iii), 52.21(b)(1)(iii). 
One of the twenty-eight specifically identified categories of industrial facility constituting 
a major emitting facility if it exceeds the 100 tons of pollutants per year threshold is “chemical 
process plants.”  42 U.S.C. § 7479.1  The term “chemical process plant” is not defined by the 
Clean Air Act, but up until 2007 the EPA consistently interpreted the term to include fuel ethanol 
plants.  Thus, if a fuel ethanol plant was capable of exceeding the one hundred ton per year 
threshold it was classified as a major source facility; and if it was located in an attainment area 
then it was subject to PSD review and permitting. 
On May 1, 2007, the EPA issued a final rule modifying the definition of major emitting 
facilities (the “Ethanol Rule”).  72 Fed. Reg. 24060.  The rule, effective July 2, 2007, amended 
                                                 
1 The full list includes 
[F]ossil-fuel fired steam electric plants of more than two hundred and fifty million 
British thermal units per hour heat input, coal cleaning plants (thermal dryers), kraft 
pulp mills, Portland Cement plants, primary zinc smelters, iron and steel mill plants, 
primary aluminum ore reduction plants, primary copper smelters, municipal 
incinerators capable of charging more than fifty tons of refuse per day, hydrofluoric, 
sulfuric, and nitric acid plants, petroleum refineries, lime plants, phosphate rock 
processing plants, coke oven batteries, sulfur recovery plants, carbon black plants 
(furnace process), primary lead smelters, fuel conversion plants, sintering plants, 
secondary metal production facilities, chemical process plants, fossil-fuel boilers of 
more than two hundred and fifty million British thermal units per hour heat input, 
petroleum storage and transfer facilities with a capacity exceeding three hundred 
thousand barrels, taconite ore processing facilities, glass fiber processing plants, [and] 
charcoal production facilities. 
42 U.S.C. § 7479(1). 
5 
the portions of the Clean Air Act and its supporting regulations to expressly exclude fuel ethanol 
plants from the term “chemical process plant.”  72 Fed. Reg. at 24061; see 40 C.F.R. §§ 
51.166(b)(1)(iii)(t), 52.21(b)(1)(iii)(t) (“term chemical processing plant shall not include ethanol 
production facilities that produce ethanol by natural fermentation included in NAICS codes 
325193 or 312140”).   
Indiana first submitted its SIP in 1972.  See 40 C.F.R. § 52.770(a) (1998).  In 2003, 
Indiana submitted an amendment to its SIP for EPA approval on February 1, 2002, incorporating 
PSD regulations; the EPA approved the amendments effective April 2, 2003.  68 Fed. Reg. 9892; 
see generally 326 Ind. Admin. Code 2-2.  Since that time, Indiana has not formally modified or 
amended its SIP through the complete EPA approval process in any way relevant to this case. 
The PSD provisions of Indiana’s SIP largely parallel the Clean Air Act, in that the 
construction or modification of a “major stationary source” triggers PSD review and 
requirements.  326 Ind. Admin. Code 2-2-2(a).  And a “major stationary source” in Indiana’s 
SIP, like the “major emitting facility” from the Clean Air Act, includes sources that are either 
listed as one of the same twenty-eight industrial facility categories and capable of emitting more 
than 100 tons per year of a regulated pollutant, 326 Ind. Admin. Code 2-2-1(ff)(1), or are a 
stationary source capable of emitting 250 tons per year of a regulated pollutant, 326 Ind. Admin. 
Code 2-2-1(ff)(2).  Like the Clean Air Act, chemical process plants are listed as one of the 
twenty-eight specific industrial categories, 326 Ind. Admin. Code 2-2-1(ff)(1)(U), and like the 
Clean Air Act the phrase “chemical process plant” is undefined in Indiana’s SIP.   
Up until the EPA issued its Ethanol Rule in 2007, Indiana consistently tracked the EPA’s 
prior stance and interpreted “chemical process plant” to include fuel ethanol plants for the 
purposes of the Indiana PSD SIP.  But after the Ethanol Rule was issued, IDEM began following 
the new EPA interpretation.   
In 2011, the Indiana General Assembly passed a law providing that for purposes of 
Indiana’s SIP, “chemical process plants” did not include fuel ethanol plants.  Act of May 10, 
6 
2011, Public Law 159-2011, § 21(e), 2011 Ind. Acts 1614–15; Ind. Code § 13-17-3-4(e) (Supp. 
2011).2  IDEM then published a nonrule policy document, citing the EPA’s Ethanol Rule and 
affirming its intention to interpret the phrase “chemical process plants” in Indiana’s SIP in 
accordance with the Ethanol Rule—in other words, to exclude ethanol plants from being 
classified as chemical process plants.  20110525 Ind. Reg. 318110311NRA (May 25, 2011).  
This change was then incorporated into the Indiana Administrative Code, see 326 Ind. Admin. 
Code 2-2-1(ff)(1)(U), but again, Indiana’s SIP has not yet been amended through the EPA 
approval process to codify this new interpretation. 
Facts and Procedural History 
The facilities at issue in this case have the potential to emit more than 100 tons per year 
of pollutants, but less than 250 tons per year.  But they produce fuel-grade ethanol, and whether 
such facilities are treated as chemical process plants therefore determines whether they are major 
stationary sources—and subject to the more rigorous PSD requirements—or not. 
On March 26, 2010, IDEM issued an operating permit to Putnam County Ethanol, LLC 
(“Putnam County”) for an ethanol facility.  The permit identified the Putnam County facility as 
not being one of the twenty-eight source categories, and classified it as a “minor source.”  The 
permit therefore allowed the facility to emit pollutants up to 250 tons per year before PSD review 
would be triggered.  And on May 5, 2010, IDEM issued a similar permit to POET Biorefining – 
North Manchester (“POET Biorefining”) for an ethanol production facility.   
NRDC sought administrative review of both permits.  It claimed that because the permits 
did not classify the facilities as chemical process plants, the permits violated Indiana’s SIP by 
                                                 
2 The provision expired by its own terms on April 1, 2012.  Ind. Code § 13-17-3-4(e). 
7 
permitting annual emissions in excess of 100 tons per year without PSD review, and for failing 
to include fugitive emissions in the calculation of annual emissions.  The two challenges were 
consolidated into one proceeding before the Indiana Office of Environmental Adjudication.   
 
After these actions had been briefed, Central Indiana Ethanol, Inc., (“CIE”), which 
operates an ethanol facility, sought to intervene as NRDC had challenged a permit issued to it on 
similar grounds.  The OEA denied this request.   
On January 11, 2011, the OEA issued findings agreeing with NRDC and vacating the 
Putnam County and POET Biorefining permits.  It ordered the permits remanded to IDEM, with 
instructions not to approve any further permits for the facilities unless they identified the ethanol 
plants as major emitting facilities—with all PSD restrictions that accompany such a 
classification.  It later stayed the order so that the facilities could continue to operate while the 
matter was resolved.   
Putnam County, POET Biorefining, and CIE all independently sought judicial review of 
the OEA order.  Two other ethanol facilities, Green Plains Bluffton, LLC, (“GPB”) and 
Andersons Clymers Ethanol, LLC, (“Andersons Clymers”), filed motions to intervene following 
NRDC challenges to their permits.  The motions to intervene were granted and the petitions for 
review were consolidated into one action before the Environmental Division of the Marion 
County Superior Court.3   
                                                 
3 While that action was pending before the trial court, NRDC’s request for administrative review of 
CIE’s permit still proceeded before the OEA.  CIE filed a motion for summary judgment, arguing that 
the General Assembly’s declaration—through Indiana Code § 13-17-3-4—that fuel ethanol plants 
were not to be considered as chemical process plants, and IDEM’s amendment of the Indiana 
Administrative Code to reflect the same interpretation, rendered NRDC’s challenge moot.  The OEA 
agreed, distinguishing the order vacating the Putnam County and POET Biorefining permits because 
“the law that the OEA interpreted is no longer the law in Indiana” and granting summary judgment in 
8 
The trial court acknowledged that Indiana’s EPA-approved 2003 SIP still governed 
Indiana’s PSD program, but found that the phrase “chemical process plant” as used in the SIP 
was ambiguous.  But it viewed the EPA’s Ethanol Rule, the General Assembly’s legislative 
action, IDEM’s nonrule policy document, and the amendment of the Indiana Administrative 
Code, collectively, to be clear indicators of legislative intent that fuel ethanol plants should no 
longer be categorized as chemical process plants—and that the new interpretation did not 
conflict with any provision contained in Indiana’s SIP or the Clean Air Act.  It concluded that 
“ethanol production plants that produce ethanol by natural fermentation do not constitute 
‘chemical process plants’” and therefore reversed the OEA.  (NRDC’s App. at 12.)  
NRDC appealed and the Court of Appeals reversed the trial court.  Natural Res. Def. 
Council v. Poet Biorefining-North Manchester, LLC, et. al, 987 N.E.2d 531, 533, 539 (Ind. Ct. 
App. 2013).  We granted transfer, thereby vacating the Court of Appeals opinion.  Natural Res. 
Def. Council v. Poet Biorefining-North Manchester, LLC, et. al 7 N.E.3d 992 (Ind. 2014) (table); 
Ind. Appellate Rule 58(A).  
Standard of Review 
Judicial review of decisions made by administrative agencies is limited.  LTV Steel Co. 
v. Griffin, 730 N.E.2d 1251, 1257 (Ind. 2000).  We may only set aside the agency action on the 
grounds set forth in the Indiana Administrative Orders and Procedures Act.  Id.; see Ind. Code § 
4-21.5-5-14(d).  “An interpretation of a statute by an administrative agency charged with the 
duty of enforcing the statute is entitled to great weight, unless this interpretation would be 
inconsistent with the statute itself,” and we grant deference to the agency’s findings of fact.  
                                                                                                                                                             
favor of CIE.  (CIE’s App. at 201.)  NRDC sought judicial review of this order, but failed to timely file 
the agency record and its petition was dismissed.   
9 
Griffin, 730 N.E.2d at 1257.  But its conclusions of law are entitled to no such deference and we 
review those conclusions de novo.  Id.     
Discussion 
Technically, from a procedural standpoint the final agency action here was the OEA’s 
decision to vacate the Putnam County and POET Biorefining permits.  But on judicial review 
that cause was merged with un-adjudicated administrative challenges to permits issued to GPB 
and Andersons Clymers.  And the OEA then eventually adjudicated the challenge to CIE’s 
permit in favor of CIE, although judicial review of that determination was dismissed.  So for 
simplicity and clarity in addressing three branches of administrative action—one branch favoring 
one side, one branch favoring the other side, and the third branch undecided—we focus instead 
on the root issue:  NRDC’s challenge to IDEM’s change in its classification of fuel ethanol 
plants and whether such a change was permissible.  This is also how the parties have approached 
their appeal of the trial court’s decision.    
NRDC challenges IDEM’s policy change in a number of ways, but they boil down to two 
main arguments:  was IDEM required to formally amend Indiana’s SIP to effect the change, and 
if not, is IDEM’s interpretation of the term “chemical process plant” correct? 
I. 
SIP Revision Was Not Required. 
NRDC’s argument on this issue is straightforward:  that under Indiana’s SIP, fuel ethanol 
plants are chemical process plants and that remains the governing law until the SIP is formally 
amended and approved by the EPA.  And because it is unequivocal that IDEM did not amend its 
SIP, the permits at issue should therefore have classified the fuel ethanol facilities as chemical 
process plants.  This argument, however, rests on a flawed foundation and cannot prevail. 
10 
The flaw is NRDC’s initial premise that Indiana’s SIP “defines” fuel ethanol plants as 
chemical process plants.  NRDC argues that prior to the EPA’s Ethanol Rule, “IDEM 
consistently classified fuel ethanol plants this way because that is what Indiana’s SIP required.”  
(NRDC’s Br. at 25.)  In fact, the Indiana SIP does no such thing—and at no point anywhere in its 
argument does NRDC actually point to a provision in either the SIP or the Clean Air Act 
containing such a definition.   
NRDC argues that IDEM’s new interpretation must go through the full proposal process, 
with full federal notice and comment proceedings before the EPA may approve it.  But when no 
provision in the current SIP affirmatively classifies fuel ethanol plants as chemical process 
plants, what is there to revise through that process?  We do not disagree with NRDC’s assertions 
that Indiana’s 2003 SIP remains valid and that no act of the Indiana General Assembly can 
overrule it; but when the SIP did not address the question of how fuel ethanol plants are 
classified, it cannot control IDEM’s interpretation of that term.  As IDEM says, “merely because 
IDEM and the EPA had a particular understanding of an undefined term at the time a SIP is 
approved does not render that understanding a de facto condition of the SIP approval.”  (IDEM’s 
Br. at 9.)   
NRDC points to the Seventh Circuit’s decision in U.S. v. Cinergy Corp., 623 F.3d 455 
(7th Cir. 2010), for support.  It argues that this case “establishe[s] that Indiana, EPA, and 
regulated entities must continue to comply with the measures in an EPA-approved SIP even 
though a new state law was consistent with newer EPA rules.”  (NRDC’s Br. at 28.)  But we find 
Cinergy easily distinguishable, and therefore not controlling in this case. 
In Cinergy, the EPA sued a number of facility owners, alleging that they had modified 
their facilities without obtaining the proper permits.  623 F.3d at 456.  Cinergy acknowledged 
that Indiana’s SIP had been revised to require a permit for future modifications like the one at 
issue and the EPA had later approved that amendment, but argued that the SIP in effect when the 
modifications actually took place preceded the revision and did not require a permit.  Id. at 457.  
The Seventh Circuit agreed, finding that “[t]he Clean Air Act does not authorize the imposition 
11 
of sanctions for conduct that complies with a State Implementation Plan that the EPA has 
approved.”  Id. at 458. 
But the critical regulatory question in Cinergy was whether permits were required for 
modifications resulting in an increase in a facility’s hourly-rate capacity to produce electricity, or 
if the plants’ actual emissions capacity was used instead.  Id. at 457.  A specific regulatory term 
defined “modification,” and under the prior Indiana SIP that definition used the hourly-rate 
capacity—the amended SIP, though, “conform[ed] the definition of ‘modification’ to the actual-
emissions standard.”  Id. at 457–58.  Thus, the letter of the existing SIP specifically addressed 
which standard applied, and a SIP revision had been required to change that specific standard.  
And until that revision process was complete, the language of the existing SIP still controlled. 
So Cinergy’s statement about the validity of an existing SIP is certainly good law within 
its own context:  when a provision of a state SIP defines a particular term, the state may not 
amend that definition—or reject it—without amending its SIP through the formal EPA approval 
process.  And if the language of Indiana’s SIP defined “chemical process plant” as specifically 
including fuel ethanol plants, that would certainly be the case here as well.  But because there is 
no such correlating provision here defining either of those phrases, Cinergy simply does not bear 
on the outcome of NRDC’s challenges. 
The Ethanol Rule itself alludes to this very point.  In it, the EPA noted that 
it may not be necessary for a State, local or tribal authority to 
revise its SIP . . . to begin to implement these changes.  Some 
State, local or tribal authorities may be able to adopt these 
changes through a change in interpretation of the term “chemical 
process plant” without the need to revise the SIP. 
72 Fed. Reg. at 24074 (emphasis added).  It does, however, still encourage such authorities “to 
make such SIP . . . changes in the future to enhance the clarity of the existing rules,” and points 
out that where SIP revision is required, “the changes are not effective in such area until we 
approve the SIP revision.”  72 Fed. Reg. at 24075–76.  So if a State’s SIP, for example, listed 
12 
types of facilities—including fuel ethanol plants—as being under the heading of “chemical 
process plant,” then the Ethanol Rule makes clear that formal SIP revision would be required.  
But again, that is not the case here. 
NRDC also argues that Indiana’s definition of a major stationary source incorporates the 
Standard Industrial Classification Manual (“SIC Manual”), which categorizes fuel ethanol plants 
as chemical process plants, and “IDEM has neither proposed nor obtained EPA approval for any 
SIP change that would alter the incorporation of the [SIC Manual] or otherwise provide that fuel 
ethanol facilities are no longer part of the Chemical Process Plant category.”  (NRDC’s Br. at 
38.)  Again we disagree with NRDC’s view. 
Indiana’s PSD SIP provides that the phrase “[b]uilding, structure, facility, or 
installation,” includes “all of the pollutant-emitting activities that belong to the same industrial 
grouping, are located on one (1) or more contiguous or adjacent properties, and are under the 
control of the same person.”  326 Ind. Admin. Code 2-2-1(j).   “Pollutant-emitting activities shall 
be considered as part of the same industrial grouping if they belong to the same major group, for 
example, that have the same first two (2) digit code, as described in the [SIC Manual].”  Id.   
We agree with IDEM that this provision “incorporates the SIC Manual strictly for the 
purpose of determining whether pollutant-emitting activities at a facility belong to the same 
industrial grouping.”  (IDEM’s Br. at 11.)  Whether the SIC Manual defines chemical process 
plants to include fuel ethanol plants or not, that definition is not incorporated into the PSD SIP’s 
definition of major stationary source or chemical process plant.  As such, it does not compel 
IDEM to formally amend the SIP in this case. 
13 
II. 
IDEM’s Interpretation of Indiana’s SIP is Reasonable. 
Having determined that IDEM was not required to formally amend Indiana’s SIP to 
effectuate its change in how it interprets the regulatory phrase “chemical process plant,” we turn 
now to the question of whether this interpretation is itself legally permissible.  We find that it is. 
As a starting point, NRDC argues that permitting clarifications or interpretations of the 
SIP “would render federal Clean Air Act SIPS fundamentally indeterminate and fluid,” and 
“would severely undermine the clarity and certainty that the rule of law affords to both industry 
and the public.”  (NRDC’s Br. at 32.)  We do not see the consequences as being so dire.  Rather, 
this fluidity is precisely the point of such programs. 
“The power of an administrative agency to administer a congressionally created . . . 
program necessarily requires the formulation of policy and the making of rules to fill any gap 
left, implicitly or explicitly, by Congress.”  Chevron, U.S.A., Inc. v. NRDC, Inc., 467 U.S. 837, 
843 (1984) (quoting Morton v. Ruiz, 415 U.S. 199, 231 (1974)).  The same principle is true here 
at the state level.  And here, the purpose of the Clean Air Act is to create a framework within 
which states may regulate and operate.  To do so successfully, states and their implementing 
agencies must be afforded the flexibility to responsively adapt to changing technologies, market 
fluctuations, environmental conditions, and shifts in public policy.   
Requiring the Clean Air Act and SIPs to contain each and every rule, definition, 
interpretation, and administrative construction would turn a framework into a hide-bound 
behemoth of legal provisions addressing all manner of minutia that would require years to 
modify for even the most basic of reasons.  “[W]ere the shoe on the other foot,” (NRDC’s Br. at 
32), and were IDEM promulgating an interpretation tightening pollution restrictions, we doubt 
that NRDC would be making this claim with such force. 
NRDC also maintains that IDEM consistently (and in a mirror of the EPA) interpreted 
“chemical process plant” to include fuel ethanol plants.  But this is neither disputed nor 
14 
especially persuasive.  “[O]nce an administrative agency’s interpretation of a regulatory statute is 
deemed reasonable, the reviewing court shall terminate its analysis and not address the 
reasonableness of a conflicting interpretation.”  Ind. Dep’t of Envtl. Mgmt. v. Boone Cnty. Res. 
Sys., Inc., 803 N.E.2d 267, 274 (Ind. Ct. App. 2004), trans. denied.  Thus, even if we presumed 
that such a past interpretation was itself reasonable, this does not foreclose the possibility that a 
different (and even opposite) interpretation might be equally reasonable.   
The only question here, then, is whether IDEM’s new interpretation is reasonable and 
supports the issuance of the permits in this case.  More specifically, the question is whether the 
regulatory phrase “chemical process plant” can reasonably be interpreted to permit exclusion of 
fuel ethanol plants. 
Appellate courts review questions of regulatory interpretation in a similar manner as 
questions of statutory interpretation.  Ind. Port Comm’n v. Consol. Grain & Barge Co., 701 
N.E.2d 882, 890 (Ind. Ct. App. 1998), trans. denied.  As we said, however, when the meaning of 
an administrative regulation is in question we give great weight to the interpretation put in place 
by the relevant agency—unless that interpretation would be inconsistent with the regulation 
itself.  Griffin, 730 N.E.2d at 1257; State Bd. of Tax Com’rs v. Two Market Square Assocs. Ltd. 
Partnership, 679 N.E.2d 882, 886 (Ind. 1997).  And the foremost goal of regulatory 
construction—like with statutory interpretation—is to give the words and phrases in the 
regulations their plain and ordinary meaning, within the context of the regulatory scheme in a 
way that reflects the intent of the agency that promulgated the regulations.  Id. at 885–86. 
NRDC argues that the plain meaning of “chemical process plant” must include fuel 
ethanol plants, because the phrase “refers on its face to a category of industrial facilities that 
utilize chemical processes to produce chemical products,” and “[f]uel ethanol plants fall squarely 
within that definition” because “converting raw plant matter to fuel ethanol is a chemical 
process.”  (NRDC’s Br. at 39–40.)  But we do not see interpretation of the phrase as needing to 
be that strict. 
15 
For one thing, the Ethanol Rule points out that up until its adoption, the production of 
ethanol was treated differently depending on whether it was for human consumption or fuel 
production.  72 Fed. Reg. at 24062.  If, as NRDC argues, interpretation of the phrase “chemical 
process plant” is as simple as looking at whether making fuel ethanol involves a chemical 
process, then certainly the same should always have been true of making food-grade ethanol.  
And yet it was not. 
The Ethanol Rule also states that the EPA   
[does] not believe the term “chemical process plant” is subject to a 
“plain meaning interpretation.”  There is not a universally accepted 
definition of chemical process, and accepted definitions differ 
depending on whether you view the term from a purely scientific 
sense or from an engineering sense, or for economic purposes.  
The scope of the chemical industry is in part shaped by custom 
rather than logic and excludes industries that nevertheless engage 
in chemical processes, e.g., petroleum refineries are a separate 
category on the [U.S.C. § 7479(1)] list. 
72 Fed. Reg. at 24063.  Additionally, “[t]he specific chemical process relevant here, natural 
fermentation, is common to many industries,” including some not on the list of twenty-eight 
source categories.  Id.  “Accordingly, we do not believe that whether or not an industry engages 
in a ‘chemical process’ and specifically whether it engages in ‘natural fermentation’ can be used 
as the decisive factor in determining whether Congress intended the industry to be included 
within the ‘chemical process plants’ category.”  Id. 
NRDC does not explain why or how its view of “chemical process plant” applies only to 
fuel-grade ethanol plants and not ethanol plants producing ethanol for human consumption; or to 
any other plants that employ a chemical as part of a process.  Under such an interpretation the 
phrase “chemical process plant” would undoubtedly subsume many—if not all—of the other 
twenty-eight major source categories enumerated in Indiana’s SIP.  See, e.g., 326 Ind. Admin. 
Code 2-2-1(ff)(1)(J) (“Hydrofluoric, sulfuric, and nitric acid plants”), -1(ff)(1)(K) (“Petroleum 
refineries”), -1(ff)(1)(R) (“Fuel conversion plants”).     
16 
 
We therefore reject NRDC’s claim that the language of Indiana’s SIP mandates that 
IDEM employ such a rigid interpretation of the words it chose to employ.  We will not interpret 
a regulatory phrase in a way that both produces absurd results and vitiates other regulatory 
provisions for the sake of strictly applying the “plain meaning” canon of regulatory 
interpretation. “[W]e give words their common and ordinary meaning without unduly 
emphasizing a strict literal or selective reading of the individual words.”  Ind. Port Comm’n, 701 
N.E.2d at 890 (emphasis added).  Instead our “plain meaning” review must be primarily aimed at 
“giving effect to the intention of the administrative body that promulgated the rule.”  Id. 
 
And that intent could not be clearer.  Prior to 2007, IDEM consistently classified fuel 
ethanol plants as chemical process plants.  It did so because the EPA did so.  And when the EPA 
changed course and issued the Ethanol Rule, IDEM followed suit—with the Indiana General 
Assembly’s approval.   
When the federal agency charged with implementing the Clean Air Act, the Indiana 
General Assembly, and the state agency charged with drafting and applying Indiana’s SIP all 
concur as to what a regulatory phrase includes—or does not include—and nothing in that 
interpretation conflicts with the rest of the regulatory scheme, we think that interpretation must 
stand.   
Whether the interpretation is sound public or environmental policy is not something we 
review, nor do we seek to propose a long-term judicial definition of “chemical process plant” 
that will bind IDEM to our view of how that phrase should apply in every circumstance.  The 
question we face is only whether IDEM’s exclusion of fuel ethanol plants from that phrase is 
reasonable, and we find that it is. 
17 
Conclusion 
Neither the Clean Air Act nor Indiana’s State Implementation Plan mandate that IDEM 
pursue the formal SIP revision process before excluding fuel ethanol plants from the chemical 
process plant major source category.  Moreover, there is nothing unreasonable in IDEM’s 
decision to define “chemical process plant” to incorporate such an exclusion as a matter of 
regulatory interpretation.  We therefore affirm the trial court.   
Rush, C.J., Dickson, Rucker, and Massa, JJ., concur.