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Connecticut Fund for Environment Inc. v. Environmental Protection Agency

decided: December 1, 1982.


Petitioner The Connecticut Fund for the Environment, Inc. and intervenor City of Middletown, Connecticut seek review of final rule of Environmental Protection Agency approving Connecticut's Air Pollution Control/Energy Trade Option Program. Approval opposed on grounds that it will contribute to violation of National Ambient Air Quality Standards for total suspended particulates, that it fails to provide for prevention of significant deterioration of levels of sulfur dioxide, and that notice of state hearing on adoption of program was inadequate. Petition denied.

Feinberg, Chief Judge, Friendly and Kaufman, Circuit Judges.

Author: Feinberg

FEINBERG, Chief Judge:

This is a petition under the Clean Air Act (the Act) to review a final rule of the Environmental Protection Agency (the Agency) approving a revision to Connecticut's State Implementation Plan (SIP) for sulfur dioxide. 46 Fed. Reg. 43,418 (1981). The revision establishes the Air Pollution Control/Energy Trade Option Program (Energy Trade Program), which allows sources that conserve fuel to burn less expensive fuel containing a higher percentage of sulfur than is otherwise permitted by the SIP. Petitioner The Connecticut Fund for the Environment, Inc. (the Fund) and intervenor City of Middletown, Connecticut contend that the approval of the Energy Trade Program violates § 110(a)(3) of the Act, 42 U.S.C. § 7410(a)(3)(A).*fn1 For the reasons stated below, we deny the petition.

I. Background

We have already set out the complex provisions of the Act, 42 U.S.C. §§ 7401-7642 (Supp. 1981), in a companion case, The Connecticut Fund for the Environment, Inc. and American Lung Association v. Environmental Protection Agency and State of Connecticut, 696 F.2d 169 (Connecticut Fund II.) We will therefore review the statutory framework of this case only briefly, and refer the reader to the companion case for greater detail.*fn2

The Act directs the Agency to promulgate a primary and a secondary National Ambient Air Quality Standard (NAAQS) for various pollutants, including sulfur dioxide (SO[2]) and total suspended particulates (TSP), which are at issue in this case. The states are required to submit for Agency approval SIPs for "implementation, maintenance, and enforcement" of these standards. 42 U.S.C. § 7410(a)(1). The Agency must approve a SIP if it determines that it was adopted by the state after reasonable notice and hearing and that it fulfills eleven specific requirements. 42 U.S.C. § 7410(a)(2)(A)-(K). The same is true for revisions of SIPs. 42 U.S.C. § 7410(a)(3)(A). By August 28, 1981, when the Agency published the final rule at issue here, Connecticut had attained both the primary and the secondary NAAQSs for SO[2]. 46 Fed. Reg. 43,420 (1981). We were informed after oral argument that on September 23, 1982, the Agency announced that the state had attained the primary (but not the secondary) NAAQS for TSP. 47 Fed. Reg. 44,263 (1982).

Part C of the Act, 42 U.S.C. §§ 7470-7479, imposes requirements for the prevention of significant deterioration (PSD) in areas where the air is cleaner than required by the NAAQSs. Part C provides for the establishment of a "baseline" level of each pollutant for which the area is in attainment, and forbids any new construction or modification of a major source of that pollutant that will raise the level of the pollutant above a stated increment.

II. This Case

As already indicated, the SIP revision challenged in this case will reward sources of pollution that conserve fuel by allowing them to burn fuel containing a higher percentage of sulfur than otherwise permitted by the SIP. Since Connecticut adopted its unusually strict sulfur-in-fuel limitations in 1972, 37 Fed. Reg. 10,842, the level of SO[2] in its air declined to well below both the primary and the secondary NAAQSs. While this undoubtedly benefits the health and welfare of state residents, it also imposes certain burdens -- most notably the markedly higher price of lower-sulfur fuel. The Energy Trade Program recognizes that energy conservation can be used as an alternative means of pollution control and that this can be done by a variety of strategies, including energy efficiency, decreased fuel use and fuel switching. Certainly, any decrease in the amount of fuel burned will result in a reduction of pollution emissions. Thus, if sources that cut down the amount of sulfur-containing fuel they burn are permitted to offset the resulting reduction in SO[2] emissions by using cheaper, higher-sulfur fuel, they will save money and energy while Connecticut's air still remains as clean as, or cleaner than, the NAAQSs for SO[2] require.

The Energy Trade Program establishes procedures by which sources may apply for permits to switch to higher-sulfur fuel. The applications will be reviewed simultaneously by the state and the Agency; only the state will provide a public notice and comment period, although the Agency will review the written comments submitted to Connecticut. 46 Fed. Reg. 24,600-01 (1982). See also id. at 43,421. The analysis requires two steps. First, the maximum allowable percentage of sulfur in fuel for the "premise"*fn3 is calculated by a formula that permits emission of 0.55 pounds of SO[2] per million British Thermal Units (BTUs) consumed by the premise. Agency-approved models are then used to determine whether burning the maximum sulfur in fuel at the premise would cause or contribute to violation of the primary or secondary NAAQS for SO[2] or TSP, and the allowable percentage would be reduced as necessary. Each application is also screened for its impact on air quality in areas for which a baseline has been established under Part C of the Act. Thus, by decreasing its use of energy -- i.e., its input of BTUs -- a plant would be able to increase its emissions, but only if this did not cause violation of the NAAQSs or significant deterioration in areas with established baselines.

The Energy Trade Program has also been called the "BTU Bubble" program, because rather than analyzing the emissions of a premise smokestack-by-smokestack, it examines them as though the premise were inside a giant bubble with one smokestack. See NRDC v. Gorsuch, 685 F.2d 718, slip op. at 12-13 (D.C. Cir. 1982), hereinafter cited as NRDC v. Gorsuch. It is not clear from the record whether the bubble concept is to be used only in the first step of the analysis, in which the maximum allowable percentage of sulfur in fuel is derived from the total allowable SO[2] emissions, or whether it will also be used in the second step, the adjustment of the percentage to avoid violations of the NAAQSs.

On July 16, 1980, Connecticut published a notice of a public hearing to be held on August 20, 1980 on the updating of its SIP and the inclusion of the Energy Trade Program. The Fund and other groups and citizens of Connecticut participated in the hearing, and the Fund submitted written comments. The proposed revision was submitted to the Agency in December 1980 and, after a public comment period during which the Fund and others responded to the proposal, was approved on August 28, 1981. 46 Fed. Reg. 43,418. In October 1981, the Fund filed this petition for review of the August 28 approval, naming the Agency and its administrator, Anne M. Gorsuch, as respondents. This court has permitted intervention by the City of Middletown as a petitioner and by the State of Connecticut as a respondent.

Petitioners raise three issues in this court. They contend (1) that the revision constitutes a relaxation of Connecticut's SIP for TSP that is impermissible under 42 U.S.C. § 7410(a)(2)(B) and NRDC v. Gorsuch, supra; (2) that the revision fails to satisfy 42 U.S.C. § 7410(a)(2)(J) because it does not meet the PSD requirements of Part C for SO[2]; and (3) that Connecticut did not provide the "reasonable notice" required by 42 U.S.C. § 7410(a)(3)(A). For these reasons, petitioners claim that the Fund abused its discretion in approving the revision under the statute and urge us to set that approval aside.

III. Standard of Review

As a preliminary matter, it is worth repeating what we have already stated in Connecticut Fund II about the standard of review to be used in evaluating the Agency's approval of a SIP revision. A reviewing court should uphold such administrative actions unless they are found to be "'arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.'" Friends of the Earth v. USEPA, 499 F.2d 1118, 1123 (2d Cir. 1974) (quoting 5 U.S.C. § 706(2)(A)). Of course, the statutory provisions at issue here delineate the Administrator's duties quite specifically. Section 7410(a)(3)(A) directs her to approve any SIP revision that was adopted after reasonable notice and hearing and that fulfills the eleven detailed criteria of § 7410(a)(2)(A)-(K). But considerable ...

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