Supplemental Appendix — Save The Valley, Inc. v. Environmental Protection Agency
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Office - Supreme Court, U.S
FILED
OCT 25 1962
ALEXANDER L. STEVAS-
No. 82-637
— = *
IN THE
Supreme Court of the United States
OCTOBER TERM, 1982
SAVE THE VALLEY, INC.,
Petitioner
V.
ENVIRONMENTAL PROTECTION AGENCY
SUPPLEMENTAL APPENDIX CONTAINING
ADMINISTRATIVE OPINIONS
JOHN L. OBERDORFER
J. GORDON ARBUCKLE
DUANE A. SILER
RUSSELL V. RANDLE
PATTON, Boccs & BLOW
2550 M Street, N.W.
Washington, D.C. 20037
(202) 457-6000
Attorneys for Petitioner
Save The Valley, Inc.
WILSON - Epes Printinc Co., Inc. - 789-0096 - WASHINGTON, D.C. 20001
SUPPLEMENTAL APPENDIX
TABLE OF CONTENTS
Letter from EPA granting PSD permit, April 27, 1977,
ss. a
Letter from EPA requiring re-analysis of PSD permit,
September 28, 1977, R. 497
Letter from EPA denying petitioner STV de novo re-
view of PSD permit, January 4, 1978, R. 522
Letter from EPA granting revised PSD permit, Janu-
ary 18, 1979, R. 528
Letter from EPA informing STV of grant of revised
PSD permit over STV objections, February 17, 1978,
R. 539
Letter from EPA denying STV request for adjudica-
tory hearing on factual issues concerning NPDES
permit, January 4, 1979, R. 648 2
Letter from EPA denying STV request for adjudica-
tory hearing on legal issues concerning NPDES per-
mit, January 8, 1979, R. 650
Letter from EPA revoking PSD permit for Units 2, 3,
and 4 of Trimble County Plant, May 8, 1979
Opinion of EPA General Counsel at Request of Parties
in Save The Valley, Inc. v. Environmental Protection
Agency, pending in the United States Court of Ap-
peals for the Sixth Circuit, August 16, 1979
In The Matter Of National Pollutant Discharge Elimi-
nation System Permit for Louisville Gas & Electric
Company Trimble County Power Plant NPDES No.
KY0041971, EPA Order and Initial Decision, De-
cember 8, 1980
In The Matter Of National Pollutant Discharge Elimi-
nation System Permit for Louisville Gas & Electric
Company Trimble County Power Piant NPDES No.
KY0041971, NPDES Appeal No. 81-8, EPA Final
Decision, September 24, 1981
Page
la
Ta
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18a
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18a
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UNITED STATES ENVIRONMENTAL
PROTECTION AGENCY
REGION IV
345 Courtland Street
Atlanta, Georgia 30308
Mr. Robert C. Somers
Assistant General Superintendent
Louisville Gas & Electric Company
P. O. Box 354
Louisville, Kentucky 40201
Dear Mr. Somers:
Review of your September 14, 1976, application for au-
thority to construct an electric power generating plant
has been completed. On the basis of this review, we have
determined that the conditioned operation of the proposed
plant at the specified location will not violate the Class II
air quality increments specified in the EPA Regulations
for Prevention of Significant Deterioration (PSD). Fur-
Available Control Technology (BACT) be used to limit
emissions of sulfur dioxide and particulate matter.
A request for public comment regarding the prelim-
1977, “Preconstruction Review and Final Determina-
ity. It does not apply to NPDES or other permits issued
by this agency or permits issued by other agencies. Addi-
tionally, construction covered by this Authority to Con-
struct must be initiated within 18 months.
Please be advised that a violation of any condition is-
sued as part of this approval, as well as any construction
which proceeds at material variance with information
submitted in your application, will be regarded as a vio-
lation of construction authority, and will be subject to
enforcement action.
Sep. 28, 1977
Mr. Robert C. Somers
Assistant General Superintendent
Louisville Gas & Electric Company
Post Office Box 354
Louisville, Kentucky 40201
Dear Mr. Somers:
On April 19, 1977 you were granted approval to con-
struct a source subject to EPA’s Regulations for Preven-
tion of Significant Deterioration. This approval was based
on criteria for review and approval contained in the EPA
Regulations in effect at that time (40 CFR 52.21).
On August 7, 1977, President Carter signed into la
the Clean Air Act Amendments of 1977 which signifi-
cantly changed the Prevention of Significant Deteriora-
tion requirements. Major immediate changes include new
air quality increments for SO, and total suspended par-
ticulate matter and designation of certain areas as Class
I. Section 168(b) of the Clean Air Act as amended fur-
ther states:
. . In the case of a facility on which construction
was commenced in accordance with this definition
after June 1, 1976, and prior to the enactment of the
Clean Air Act Amendments of 1977, the review and
permitting of such facility shall be in accordance
with the regulations for the prevention of significant
deterioration in effect prior to the enactment of the
Clean Air Act Amendments of 1977.
Sources which have not commenced construction by Au-
gust 7, 1977, must meet the requirements of the new
Amendments. Therefore, we are reviewing all previously
granted approvals. This review will be to determine if
construction has commenced prior to August 7, 1977, and,
if it has not, to determine if construction meets the re-
quirements of the new Amendments.
Our review of the final determination prepared for the
Trimble County Generating Station indicates that the pro-
posed construction may not meet the review requirements
contained in the new Amendments. Therefore, our ap-
4
4a
proval to construct is hereby voided until you demonstrate
to our satisfaction that you commenced construction prior
to August 7, 1977, or that the provisions of the new
Amendments are met. The appropriate definition of
“commenced” is contained in Section 168 (2) (A) of the
Clean Air Act as amended, and reads as follows:
The term “commenced” as applied to construction of
a major emitting facility means that the owner or
operator has obtained all necessary preconstruction
approvals or permits required by Federal, State, or
local air pollution emissions and air quality laws or
regulations and either has (i) begun, or caused to
begin, a continuous program of physical on-site con-
struction of the facility or (ii) entered into binding
arrangements or contractual obligations, which can-
not be canceled or modified without substantial loss
to the owner or operator, to undertake a program of
construction of the facility to he completed within a
reasonable time.
If you had not commenced construction of this facility
prior to August 7 you will have to re-apply to EPA for
a new approval under the new requirements. If you wish
us to reconsider your initial application without modi-
fication, you may so indicate in writing and provide one
additional item of data: the height of the tallest facility
adjacent to the stack(s) from ground level to roof peak.
Be advised that the new Clean Air Act Amendments allow
no credit for stack height beyond good engineering prac-
tice, generally two and one-half times building height.
If you have any questions concerning this matter please
call Raymond Gregory /404-881-2864.
Sincerely yours,
/s/ John A. Little
Deputy Regional Administrator
5a
ENVIRONMENTAL PROTECTION AGENCY
Jan. 4, 1978
Mr. J. Gordon Arbuckle, Esquire
Patton, Boggs and Blow
1200 Seventeenth Street, N.W.
Washington, D.C. 20036
Dear Mr. Arbuckle:
This is in response to your letter of December 12, 1977,
regarding the prevention of significant deterioration
(PSD) pre-construction review, and final determination
for the Trimble County Generating Station Units 1, 2, 3
and 4 near Wises Landing, Kentucky. In your letter you
stated that a de novo review must be conducted by EPA,
“with full opportunity for public comment on the Ad-
ministrator’s preliminary determination and on all in-
formation submitted by the applicant in connection there-
with.”
Our re-examination of the proposed Wises Landing
facility was in order to determine if this source would
meet the immediately effective PSD requirements of the
1977 Clean Air Act Amendments (P. L. 95-95). Our pre-
vious PSD approval of this source was suspended pend-
ing this re-examination since the company had not com-
menced construction prior to P.L. 95-95. The Company
has proposed no materia] change to the construction that
was approved earlier after public notice and comment.
Consequently, we feel that a new comment period is not
required.
However, we have decided that we will offer your client,
Save The Valley, the opportunity to review and comment
on the material we are looking at in our re-examination.
Accordingly, on December 23, 1977, Mr. Cassidy of Save
The Valley was notified by phone of this opportunity, and
6a
of our willingness to let him inspect the relevant ma-
terials at our offices. On December 27, 1977, you were
similarly notified. As tentatively discussed in those con-
versations, we will consider comments made by the close of
business on January 13, 1977, in our re-examination.
If you have any questions, please call Winston Smith,
Chief of our Trends and Analysis Section at (404/881-
3043).
Sincerely yours,
G. T. HLS, P.E.
Chief
Air Programs Branch
Ta
UNITED STATES
ENVIRONMENTAL PROTECTION AGENCY
REGION IV
345 Courtland Street
Atlanta, Georgia 30308
January 18, 1978
Mr. Robert C. Somers
Assistant General Superintendent
Louisville Gas and Electric Company
Post Office Box 354
Louisville, Kentucky 40201
termined that the Prevention
:
|
tion requirements as modified by the Clean Air Act
Amendments of August 7, 1977, will be complied with.
This determination was based upon the additional infor-
mation submitted resulting in the amended List of Con-
ditions of Approval enclosed. This enclosure
the conditions in the April 19, 1977 letter to
Mr. Jack Ravan.
Please be advised that a violation of any condi
sued in this amended List of Conditions of App
well as any construction which proceeds at material
ance with information submitted in your application,
be regarded as a violation of construction authority,
will be subject to enforcement action.
i
3
177
BE
8a
Any questions concerning this approval may be directed
to Winston Smith, Chief, Trends Analysis and Program
Coordination Section (404/881-2864).
Sincerely yours,
/s/ John C. White
JOHN C. WHITE
Regional Administrator
Enclosure
9a
Feb. 17, 1978
Mr. J. Gordon Arbuckle
Patton, Boggs and Blow
1200 Seventeenth Street, N.W.
Washington, D.C. 20036
Dear Mr. Arbuckle:
This letter is to acknowledge receipt of your letter of
January 13, 1978. For your information, approval to con-
struct the Wises’ Landing Power Plant was granted to
Louisville Gas and Electric on January 18, 1978.
If you have any questions, please call (404/881-2854).
Sincerely,
G. T. HEeLMs, P. E.
Deputy Director
Air & Hazardous Materials
Division 5
ce: Smither
Cassidy
Phillips, ORC
10a
Jan. 4, 1979
4R-LB
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
Save the Valley, Inc.
c/o Mrs. George Clark, President
Hanover, Indiana 47243
Re: Request for Adjudicatory Hearing
Louisville Gas and Electric Company
NPDES Permit No. KY0041971
Dear Mrs. Clark:
I have completed my evaluation of your November 30,
1978, Request for Adjudicatory Hearing in accordance
with Title 40, Code of Federal Regulations, Section 125.36,
and Section 6.918. For the reasons set forth below, I have
determined the request should be, and is hereby, denied.
It is my determination that your Request does not raise
material issues of fact relating to the terms, conditions,
and requirements of the NPDES Permit which was is-
sued but, rather, appears to directly contest and chal-
lenge the PSD approval issued April 19, 1977 and the
adequacy and substance of the Environmental Impact
Statement issued for this facility on October 20, 1978.
The preliminary determination to issue a PSD approval
for the Wise’s Landing facility was announced on October
14, 1976. The Final PSD approval was issued on April
19, 1977. This final approval was subsequently reviewed
in light of modified Prevention of Significant Deteriora-
tion requirements and it was determined these require-
lla
ments would be complied with. Provision for the review
of the PSD approval is contained in Section 307 and in
Section 304 of the Clean Air Act; these sections specify
both the time and proper forum for such review. Issues
related to the air pollution potential and/or impact of the
facility should have been raised under one or both of these
provisions and are not appropriate issues for considera-
tion in an adjudicatory hearing concerning an authoriza-
tion to discharge pollutants to the waters of the U.S.
issued under the National Pollutant Discharge Elimina-
tion System.
Similarly, issues involving the alleged failure of the
Agency to comply with the requirements of the National
Environmental Policy Act or the regulations of the Coun-
cil on Environmental Quality in the preparation of the
Environmental Impact Statement should be raised and
tested in Federal District Court. Issues based on alleged
inadequacies of the Environmental Impact Statement are
not properly subject to consideration in an adjudicatory
hearing unless directly related to the terms, conditions or
requirements of the NPDES Permit.
In the absence of specific factual issues challenging spe-
cific NPDES permit provisions or stating specific NPDES
permit provisions necessary to carry out the intent of the
Clean Water Act, I have determined the requested adju-
dicatory hearing would not be an appropriate forum and
should not be granted. However, while I have determined
there are no factual issues which may be appropriately re-
solved in an adjudicatory hearing, I have not yet reached
a decision on the propriety of referring certain issues of
law to the Assistant Administrator for Enforcement and
General Counsel in accordance with 40 CFR 125.36(m)
(3). This decision will be made in the very near future
and should I determine such a referral is necessary I will
12a
establish an expeditious briefing schedule at the same
time.
Sincerely,
/s/ John A. Little, Deputy
JOHN C. WHITE
Regional Administrator
ce: Secretary, Kentucky DNR&EP
Regional Hearing Clerk
J. Gordon Arbuckle
John L. Oberdorfer
Professor Harold G. Cassidy
Louisville Gas & Electric Co.
13a
UNITED STATES ENVIRONMENTAL
PROTECTION AGENCY
Region 4
345 Courtland Street NE
Atlanta GA 30303
Alabama, Georgia, Florida,
Mississippi, North Carolina,
South Carolina, Tennessee,
Kentucky
[SEAL] EPA
Jan. 8, 1979
REF: 4RC
BY CERTIFIED MAIL
RETURN RECEIPT REQUESTED
Save the Valley, Inc.
c/o Mrs. George Clark, President
Hanover, Indiana 47243
Re: Request for Adjudicatory Hearing
Louisville Gas and Electric Company
NPDES Permit No. KY0041971
Dear Mrs. Clark:
I am writing to inform you that I have reached a de-
cision concerning the referral of issues of law raised in
your November 30, 1978, Request for Adjudicatory Hear-
ing to the Assistant Administrator for Enforcement and
General Counsel in accordance with 40 C.F.R. § 125.36
(m)(3). For the reasons set forth below, I have de-
termined that the request should be, and is hereby,
denied.
l4a
It is my determination that any possible issues of law
raised in your request and the January 5 follow-up letter
are not properly the subject of the NPDES permit is-
suance process and review. It is my conclusion, based
upon my review of the NPDES process in this case and
your request and January 5 letter, that the allegations
made against this Agency are based upon the PSD per-
mit review process, as well as the Environmental Impact
Statement (EIS) review process and not the NPDES
process per se. As indicated in my letter to you dated
January 4, 1979, I do not believe that the NPDES process
can be or should be used to collaterally attack the PSD
or EIS process.
My reasoning is further supported by the fact that your
organization has been given ample opportunity to make
its concerns known to this Agency with regard to both
the PSD and EIS process. I am particularly concerned
over Save the Valley’s allegations that no opportunity
was given the public to comment upon the proposed PSD
approval and conditions.
Our records show that public notice requireraents for the
PSD permit were properly given under the then applicable
regulations and that the time requirements for public
reply were, in fact, extended as noted by letter from G.T.
Helms, Deputy Director, Air & Hazardous Materials Di-
vision, Region IV, EPA, to your counsel, J. Gordon
Arbuckle of Patton, Boggs & Blow, dated January 7,
1977. Moreover, any concerns you may have had with
regard to the PSD permit should have been brought to
EPA’s attention pursuant to Section 304 and/or 307 of
the Clean Air Act.
With regard to the adequacy of the EIS, I believe on be-
half of EPA that it properly addresses all of your or-
ganization’s environmental concerns within and without
the arguak'e parameters of the NPDES permit. For this
reason, I do not believe it to be in the best interests of the
15a
public, judicial economy, and administrative economy to
submit this NPDES permit to an unparalleled collateral
review process neither required nor contemplated by the
NPDES regulations. To the extent you may still take
issue with the EIS, your concerns will have to be ad-
dressed to the appropriate judicial forum.
Sincerely yours,
/s/ John C. White
JOHN C. WHITE
16a
May 8, 1979
REF: 4AH-AP
Mr. R. C. Somers, Manager
Cost and
Assistant General Superintendent
Louisville Gas and Electric Company
P. O. Box 354
Louisville, Kentucky 4020i
Dear Mr. Somers:
On October 16, 1978, you were notified by Winston
Smith of this office that for each unit of the Trimble
County Plant, which did not commence construction be-
fore March 19, 1979, our April 19, 1977, Prevention of
Significant Deterioration (PSD) approval under 40
C.F.R. § 52.21 would be invalid.
Part of the definition of “commence” (40 C.F.R. § 52.21
(b)) requires that the owner or operator have “all nec-
essary preconstruction approvals or permits. ., includ-
ing those required by the State Implementation Plan.
The Kentucky Division of Air Pollution Control has in-
formed us that as of March 19, 1979, permits for Units
2, 3, and 4 have not been obtained. Therefore, the EPA
Authority to Construct, which was issued April 19, 1977,
and revised January 18, 1978, is invalid for Units 2, 3,
and 4. Before construction on those units can begin, a
new application, under the PSD regulations promulgated
June 19, 1978, must be submitted to the Kentucky Divi-
sion of Air Pollution Control and a permit issued by this
office. The new application must comply with all the re-
quirements of these new regulations and must consider
current air quality and the consumption of air quality
increments by all sources whose applications were sub-
mitted before the new applications for Units 2, 3, and 4.
17
If you desire further information concerning this matter,
please write to Winston A. Smth, Chief, Air Programs
Branch, or call him at 404/881-3043.
Sincerely yours,
/s/ John C. White
JOHN C. WHITE
Regional Administrator
RPfaff
OPINION OF GENERAL COUNSEL AT REQUEST OF
PARTIES IN SAVE THE VALLEY, INC. v. EN-
VIRONMENTAL PROTECTION AGENCY, PEND-
ING IN THE UNITED STATES COURT OF AP-
PEALS FOR THE SIXTH CIRCUIT
I. Introduction
This case involves the issuance of a new source NPDES
permit to Louisville Gas and Electric Co. (LG&E) for a
coalfired electric generating plant in Trimble County,
Kentucky. During the permit proceedings, EPA’s Re-
gional Administrator, Region IV, denied Save the Val-
ley’s (STV) request for an adjudicatory hearing on the
grounds that the issues STV raised dealing with the PSD
permit and/or the inadequacy of the EIS were inappropri-
ate in an NPDES proceeding. STV has challenged the
NPDES permit in the Sixth Circuit on the grounds that
the Agency’s rules required it to grant the adjudicatory
hearing. In the course of settlement talks it was proposed
that the agency stay the permit and hold an adjudicatory
hearing on all or some of STV’s issues. At the request of
the parties to the lawsuit, this opinion addresses the ques-
tions of whether the agency should hold an adjudicatory
hearing, which issues are appropriate for consideration if
such a hearing is held, and whether the NPDES permit
should be stayed pending the completion of the adjudica-
tory hearing.
I have concluded that a hearing should be held, on issues
and under conditions set forth below, but that the permit
should not be stayed. The reasons for this conclusion are
set forth below.
II. The Granting of the Hearing
At the threshold, I note that the Regional Administra-
tor’s denial of the adjudicatory hearing request was based
on a misunderstanding of the law. In his letters to STV
on January 4 and 8, 1979, the RA stated that issues deal-
19a
ing with NEPA were outside the permissible scope of an
NPDES hearing and would have to be addressed in Dis-
trict Court. Under § 511 (e) (1) of the CWA, the environ-
mental impact statement requirements of NEPA are ap-
plicable to new source NPDES permits issued by EPA.
Thus, under basic NEPA law, no decision can be made to
issue a permit until a legally sufficient EIS has been pre-
pared and considered by the decisionmaker. Thus, the
adequacy of the EIS may raise material issues relating to
the issuance of the permit. Under EPA’s regulations, ad-
judicatory hearings are available (upon proper request)
to contest such matters considered by the decisionmaker.
40 C.F.R. § 6.918 provides:
86.918 Decision on the Federal action.
The responsible official shall issue, issue and con-
dition, or deny the new source NPDES permit follow-
ing a complete evaluation of any significant benefi-
cial and adverse environmental impacts on the human
environment consistent with Federal, State, or local
requirements outlined in section 6.910 above. The
applicant or other interested party may seek an ad-
judicatory hearing or other judicial review of the
responsible official’s decision pursuant to 40 CFR
125.36."
Since the issues which STV raises are prima facie
material, as required by the NPDES regulations, the
question to be considered now is whether there is any
other reason why an adjudicatory hearing would be in-
appropriate.* The basic reason offered by LG&E against
the holding of an adjudicatory hearing is that none of the
1 While this specific language was eliminated in the June 7, 1979
changes in the NPDES regulations, there was no change in the need
to consider the EIS or the scope of the hearing available upon
request.
21 note that the original request contained all the information
required under 40 CFR 125.36(b).
issues presented in the Joint Motion“ is appropriate for
an adjudicatory hearing. More specifically, LG&E argues
that each of the issues is barred because it is an improper
attempt to relitigate a matter because it should be re-
served for another forum, or because it was not raised in
a timely fashion.
First, LG&E argues that certain issues are barred by
res judicata and/or collateral estoppel in that they were
or could have been adjudicated in prior proceedings.
Under the doctrine of res judicata, the cause of action in
the two cases must be the same. It is clear that the prior
PSD and PSC proceedings do not meet this requirement.
The purpose of the PSD proceeding was to ensure that
emissions from the facility would not violate specified
numerical standards for ambient air quality or prevention
of significant deterioration and would meet a limitation
for certain pollutants representing best available control
technology (BACT). The purpose of the PSC proceeding
was to determine whether a certificate of convenience and
necessity and a certificate of environmental compatability
should issue under Kentucky law.“ NEPA’s goal is to
ensure that all environmental impacts are considered in
the project decision, whether or not these impacts pass
other statutory hurdles.“ As the court noted in Calvert
Cliffs Committee v. AEC, 449 F.2d 1109 (D.C. Cir.
1971):
[Other agencies’] certification does not mean that
they found no environmental damage whatever. In
Draft “Joint Motion for Order Dismissing Action Pursuant to
Agreed Terms,” Appendix A. I note that some of the issues listed
in Appendix A have been reworded since LTV's original request.
My decision that a hearing would be appropriate is based on con-
sideration of the issues as they appear in Appendix A.
*The PSC proceeding was conducted by the Kentucky Public
Service Commission.
5While §511(c)(2) of the CWA prohibits the imposition of
effluent limitations more stringent than those developed under the
CWA, the CAA does not have an equivalent provision.
2la
fact, there may be significant environmental damage
. . . but not quite enough to violate applicable
standards.. . It may be that the environmental costs,
though passing prescribed standards, are nonetheless
great enough to outweight the particular economic
and technical benefits involved in the planned ac-
tion at 1123.
Each statute involves its own balancing of a particular
set of factors and has its own purposes. Thus, even un-
der the “flexible” approach advocated by LG&E, I find
that the causes of action in the earlier proceedings are not
the same as the cause of action in the NPDES proceed-
ing, and that therefore, the doctrine of res judicata should
not be applied to limit issues in the NPDES proceeding.
Moreover, uner the doctrine of res judicata, the prior pro-
ceeding must have been judicial in character. The notice
and comment procedures of the PSD proceeding do not
meet this requirement. (See 40 CFR § 52.21(r)).
LG&E also argues that a number of issues should be
barred under the doctrine of collateral estoppel. The doc-
trine of collateral estoppel applies only to those issues
which were actually decided in a prior proceeding. Al-
though LG&E has argued that many of the present issues
were raised in the PSD and PSC proceedings, it has not
shown that they were necessarily decided or that findings
were made. (LG&E brief, p. 41-42, lists only two issues
on which Kentucky allegedly made findings—(g) and
(h}.) As Professor Davis notes, “The party asserting
collateral estoppel has the burden of showing that issues
are identical and that they were determined on the merits
in the first proceeding.” Administrative Law § 18.12
(1958 Ed.)). In addition, as in the case of res judicata,
the earlier proceeding must be one in which the agency
was acting in a quasi-judicial capacity. For the latter
reason alone, collateral estoppel should not be applied to
PSD notice and comment proceedings.
22a
LG&E sugests that EPA ought to bind itself to follow
Kentucky’s PSC public necessity and convenience decision,
out of deference to the public system. With all due defer-
ence to Kentucky, this agency cannot bind itself to an-
other agency’s value judgments, cf. Calvert Cliffs.
LG&E also argues that certain issues should be dealt
with generically, through past or future rulemaking,
rather than on a case-by-case basis. This argument must
be rejected as far as it relates to future rulemaking. If
a subject is relevant under NEPA and the CEQ guide-
lines, it should be considered in connection with a major
federal action like a NPDES permit issuance. The mere
fact that the agency expects to deal with the subject
generically does not excuse it from ignoring the subject
in the meanwhile. NRDC v. NRC (Vermont Yankee),
547 F.2d 633, 641 (D.C. Cir.)
For example, LG&E suggests that solid waste issues
need not be considered in the EIS because RCRA regu-
lations will deal with the subject (see issues I, J, K, L,
and M in appendix I). While the EIS cannot be expected
to anticipate what standard those regulations will set
for the disposal of power plant solid waste, that is not a
release from the obligation to discuss the subject.
The question of the impact of existing rules on a NEPA
decision is more difficult. No across the board “yes” or
“no” can be given. NEPA does not require an agency
to ignore everything it has learned in the past; it merely
ensures that past learning will be supplemented or up-
dated as appropriate. Accomplishing this depends on a
care il analysis of what the scope of the rule is, what
consiuerations it purports to have incorporated, whether
the rule invalidates certain procedures or merely vali-
dates them, and how the scope of the NPDES issues com-
pares to the scope of the rule. It may well be that the
rule limits the scope of the issue, or sets up certain re-
buttable presumptions. Because of the number and com-
23a
plexity of the issues and rules involved and the limited
briefs submitted by the parties, I feel that it will be more
appropriate to allow the presiding officer to determine
whether any of the issues should be barred or curtailed
because of existing regulations.
LG&E also argues that three issues were not raised
before the request for a hearing. While a rule strictly
imposing such a requirement has been incorporated into
the new NPDES regulations (40 CFR § 124.76), these
regulations were not in effect when the hearing request
was made. In any case, at most three out of 23 issues are
involved, they are limited in scope, and they are not iikely
to delay the proceeding significantly. Therefore, I con-
clude that there is no firm basis for denying a hearing on
the grounds of timeliness.“
Finally, LG&E also argues that the appeals section of
the CAA, § 307, bars consideration of anything that was
or could have been raised in the PSD proceeding, because
it sets up the sole avenue for challenging the issuance of
a PSD permit. However, since STV’s issues are directed
at the adequacy of the EIS and their resolution in this
context will have no bearing on the validity of the PSD
permits, § 307 is irrelevant.
In sum, it appears that at least some of the issues
raised by STV are appropriate for hearing under EPA’s
NEPA obligations. Since the Regional Administrator
erred in denying an adjudicatory hearing, I conclude that
the agency should hold an adjudicatory hearing, as soon
as practicable, to comply with NEPA and our regulations.
While I sympathize with LG&E’s desire not to engage
in duplicative proceedings and while the agency certainly
does not want to waste its resources in that manner, the
* This conclusion is not based on Pacific Legal Foundation v.
Costle, relied on by STV. The agency disagrees with this decision
and has appealed it to the Supreme Court.
24a
traditional doctrines of collateral estoppel and res ju-
dicata do not provide an adequate basis for altogether
denying an adjudicatory hearing. However, as discussed
below, the fact that there have been prior proceedings
may play a role in the ALJ’s assessment of whether cer-
tain sections of the EIS are reasonably complete and
reliable.
In addition, I note that the practical problems pre-
sented by this case should be less frequent in the future.
Under the proposed consolidated permit regulations (June
14, 1979, 44 FR 34244) PSD, NPDES, and RCRA permit
hearings may be consolidated. In the meanwhile, to sim-
plify matters in the instant case, I direct the trial staff
to offer in evidence the record of the PSC and PSD pro-
ceedings. At the minimum this should eliminate disputes
over what was actually at issue and eliminate the need
to prepare new testimony and exhibits. Finally, I stress
that even if the ALJ should find that the EIS was in-
adequate or that the NPDES permit should be modified,
such finding will not affect the validity of the PSD
permits.
III. Issues on Which a Hearing is Granted
A. Preliminary Remarks
At the time STV requested an adjudicatory hearing in
these proceedings, the applicable regulations defining the
right to a hearing and its appropriate scope, and the pro-
cedures for the hearing were those apearing at 40 CFR
Part 125 and 40 CFR Part 6. Since that time, EPA has
promulgated new NPDES regulations which make some
changes in the hearing process. These new regulations
have an effective date of August 13, 1979. The two sets
of regulations set out essentially identical standards for
granting a request for a hearing—that is, that the request
have a certain degree of specificity and that it set out
“material issues of fact.” (§ 125.36(c)(3) under the
25a
old regulations and § 124.75(a) under the new ones)“
However, the two regulations provide different mech-
anisms for dealing with legal questions and certain other
aspects of the hearing itself. Under the old procedures,
legal questions were not to be considered at the adjudica-
tory hearing, but rather were certified to the General
Counsel, whose opinion was binding on the Regional Ad-
ministrator (who made the initial decision based on the
record certified by the Presiding Official). § 125.36(m).
Under the new procedures, the Presiding Official decides
legal issues as well as factual issues in an initial de-
cision. The parties have apparently assumed that the
earlier procedures would apply here. However, under
§ 124.135(b) the new hearing rules apply to any adju-
dicatory hearing the notice of which is given 60 days
after issuance (June 14, 1979). This is consistent with
the general principles that regulations which become ef-
fective during the pendency of administrative proceedings
control those proceedings, unless injustice would occur
(see preamble discussie: of Section 124.86(c) of the new
rules). Thus, I conclude that the new NPDES procedures
should apply to the hearing to be conducted in this
case. Therefore, in considering the appropriateness of
issues for the hearing, I have not distinguished between
factual and legal questions or specified the latter for a
legal decision, as would have been required under the pre-
vious rules. The Presiding Officer should conduct the
hearing and render his initial decision in accordance with
the procedures in Subpart H of the new rules. This new
approach should result in a more expeditious proceeding,
benefitting both LG&E and STV.
In designating issues for the hearing, I have followed
a principle of liberality, that is, giving the benefit of the
doubt towards inclusion, in light of the fact that the Pre-
7 As noted above, the request contained all the required infor-
mation and the only dispute concerns the appropriateness of the
issues themselves.
26a
siding Officer will have the authority and responsibility to
clarify and refine the issues at trial (§§ 124.83 (e) (1)
and 124.85(b) of the new rules.) In the case of certain
issues which involve both fact and law, it is possible that
a legal ruling will obviate the need to consider evidence.
As explained above, the adequacy of the EIS is material to
the issuance of the permit. However, in narrowing the
issues, the Presiding Officer should consider whether each
of STV’s issues is really material to the adequacy of the
EIS and, if so, whether the appropriate means of clari-
fying it is a legal decision, submission of written ma-
terials, oral proceedings, or some other means.
It is well settled that a test of reasonableness must be
applied in determining whether the discussions of alterna-
tives and other issues in an EIS is adequate. NRC v.
Morton, 458 F.2d 827 (D.C. Cir. 1972). “A ‘rule of rea-
son’ is used to ascertain those effects anticipated.”
Carolina Environmental Study Group v. United States,
510 F.2d 796, 798 (D.C. Cir. 1975). The fact that an
issue has previously been debated in another proceeding
may well mean that it was reasonable for the EIS to
rely on the conclusions or findings of that earlier proceed-
ings. In such a circumstances, in order to meet its bur-
den under § 124.85 of coming forward with an affirma-
tive case on its claim, STV must show either that on its
face the prior finding does not reach the full range of
NEPA concerns or that it was unreasonable for the EIS
to rely on the prior finding, e.g., because of new facts not
considered in the earlier proceeding. Such an approach
will give a strong, but rebuttable presumption to findings
in prior proceedings and therefore screen the more serious
objections from those that are “overly technical and hyper-
critical”, to use the words of the Sixth Circuit in EDF v.
TVA, 492 F.2d 466 (6th Cir. 1974).*
® Contrary to STV’s contention in its brief, Calvert Cliffs does
not hold that an agency must ignore all prior findings. Rather it
stresses that such findings may not address all environmental
27a
B. The Issues
Each of the issues identified in the Joint Motion is
hereby referred to the Presiding Officer to be appointed,
who may eliminate, limit, or clarify any or all of them in
accordance with the preceding discussion.
However, I am directing that only issues raised by the
construction of units 1 and 2 be considered. These units
can function independently of units 3 and 4. Also, the
progress of units 3 and 4 is less advanced. Since the PSD
permits for the latter units have expired, and will have to
be reissued, the possibility exists for combining the
public hearing on the new PSD permits with a panel
hearing under EPA’s new NPDES procedures. This
would appear desirable as a matter of policy.
IV. Stay Pending Hearing
Under EPA’s NPDES regulations, EPA cannot stay
the effectiveness of a permit after the permit has become
final. These regulations recognize the well-established
policy of finality. (See, CAB v. Delta Airlines, 367 U.S.
316 (1961)). While STV cites § 125.36 in support of
EPA’s authority to stay, that section is on its face limited
to certain circumstances not present heve.
STV also argues that EPA has “inherent authority”
to stay a permit to correct an agency mistake. However,
assuming such authority, there must be a compelling rea-
son to disregard the agency’s regulations. It is horn-
book law that an agency must ordinarily follow its own
procedures and that an action may be set aside if not in
conformance with applicable regulations. (United States
ex rel Accardi v. Shaughnessy, 347 U.S. 260 (1954) ; Serv-
costs or may use a different balancing test, and therefore that
reliance on such findings does not relieve the decisionmaking agency
of its obligation to balance the whole panoply of environmental
costs against the project benefits.
28a
ice v. Dulles, 345 U.S. 363 (1959); Elmo Division of
Drive-X Co. v. Dixon, 348 F.2d 342 (D.C. Cir. 1965).)
In the present case, STV has failed to establish a com-
pelling reason to disregard the NPDES regulations.
NEPA does not compel a stay of construetion“ pending
correction of an EIS which has been determined to be in-
adequate. Ohio v. Calloway, 497 F.2d 1235, 1240 (6th
Cir. 1974), EDF v. Froelke, 348 F. Supp. 338 (W.D. Mo.
1972), aff'd 477 F.2d 1033 (8th Cir. 1973), Sierra Club
v. ICC, (D.C. Cir.), 1978 F. Carr. Cas. p. 82, 768 (Feb.
21, 1978). Where, as in the instant case, it has merely
been alleged, but not yet decided, that the EIS is inade-
quate in any material respect, there is even less require-
ment for a stay.“
Moreover, it appears from the pleadings and the un-
contested portions of the EIS that the major adverse
environmental impacts will not occur until the facility
begins operations. At this time, there is no reason to
believe that the facility will be operating before the end
of the hearing. Moreover, the PSD permits for units
3 and 4 have expired, so that even if operations were to
begin, the impacts would be less than originally esti-
mated. Most of the impacts alleged by STV are subject
to continuing (and, if necessary, tighter) control by EPA
under various regulatory statutes, another factor making
for diminished impact. Thus, if the permit is ultimately
STV has not controverted LG&E’s claim that a stay of the per-
mit effectively would halt construction.
10 Concerned Citizens of Bushkill v. Costle, (3rd Cir., Jan. 9,
1979), cited by STV, is distinguishable. In that case, EPA had
not prepared any EIS; when that was challenged, EPA, the grant
recipient, and the environmental plaintiff entered into a stipulation
that EPA would not continue to process the grant until the Dis-
trict Court could consider the merits of the NEPA claim. Later,
the trial court postponed the date over the recipient’s objection,
prompting an interlocutory appeal. What the Court of Appeals
held was that the trial court did not abuse its discretion in postpon-
ing the trial.
Finally, given the degree of judgment involved in as-
sessing the adequacy of an EIS, the fact that the role of
the EIS is one of education via full disclosure, rather
than mandating particular decisions, and the fact that a
private, not a Federally funded, project is involved, STV
has not established a likelihood that it will succeed in
getting the permit reversed.
My conclusion is not inconsistent with the agency’s
stay of an issued permit in Bethlehem Steel, (STV brief
p. 42). That stay was issued 5 days after final action
and was apparently with the approval of the permittee.
For all the above reasons, I conclude that the permit
should not be stayed pending the hearing."
/s/ Joan Z. Bernstein
JOAN Z. BERNSEIN
General Counsel
Dated: August 16, 1979
1! However, all parties are urged to conduct the hearing expedi-
tiously. It is clearly in STV’s interests to do so. It should equally
be in LG&E’s interest to have the question of the permit resolved
before it commits much more resources, particularly since invest-
ments since the completion of the EIS should have little or no
weight in any subsequent reassessment of reasonable alternatives
to the project as proposed.
UNITED STATES ENVIRONMENTAL
PROTECTION AGENCY
Washington, D.C. 20460
Office of the Administrator
NPDES No. KY0041971
IN the MATTER of
NATIONAL POLLUTANT DISCHARGE
ELIMINATION SYSTEM PERMIT for
LOUISVILLE GAS & ELECTRIC COMPANY
TRIMBLE COUNTY POWER PLANT
ORDER AND INITIAL DECISION
This matter is before me on a motion for a summary
determination and elimination of issues by the permittee,
Lousiville Gas and Electric Company (hereinafter LGE),
pursuant to 40 C.F.R. § 124.84. The requestor, Save the
Valley, et. al. (hereinafter STV), replied to the motion
and filed a cross-motion for summary determination as
to certain issues. The Environmental Protection Agency
(EPA) also filed its responses and essentially sought a
summary determination on the issues in accordance with
those sought by LGE.
FACTUAL BACKGROUND
In April of 1975, LGE applied to EPA for a National
Pollutant Discharge Elimination System (NPDES) per-
mit for Trimble County Units 1 through 4, pursuant to
§ 402 of the Clean Water Act, 33 U.S.C. § 1342. STV was
a particpant in various proceedings instituted by EPA,
including, but not limited to, a public hearing in the town
of Bedford, Trimble County, Kentucky. Following the
of a draft Environmental Impact Statement
(EIS), the Kentucky Department of Natural Resources
31a
and Environmental Protection and EPA conducted a joint
hearing in Bedford to receive comments from the public
on the draft EIS.
On April 19, 1977, EPA issued a Prevention of Signifi-
cant Deterioration (PSD) permit to LGE for the Trimble
County Generating Station. This final action was subject
to judicial review set out in § 307(b) of the Clean Air
Act, i.e., within 60 days.
On April 27, 1978, LGE filed an Application with the
Public Service Commission of Kentucky (now the Ken-
tucky Energy Regulatory Commission) for a Certifcate
of Public Convenience and Necessity and a Certificate of
Environmental Compatibility. Pursuant to Kentucky
statutes (K.R.S. 278.025), the Kentucky Department of
Natural Resources and Environmental Protection re-
viewed the environmental aspects of the Company’s pro-
posed plan and approved the same. STV participated in
a two-day adversary public hearing before the Kentucky
Public Service Commission on LGE’s need for Trimble
County Generating Stations 1 and 2 and its enviromental!
affect. The Commission found Generating Units 1 and 2
would be needed by their expected completion dates and
issued a Certificate of Convenience and Necessity and a
Certificate of Environmental Compatibility on October 20,
1978. S1 v's et. al. appeal is pending.
On November 28, 1978, a final NPDES permit was is-
sued to LGE. STV duly requested an adjudicatory hear-
ing and legal decision from the Regional Administrator.
Its request was denied on January 7, 1979. STV sought
no further administrative review (it did not exhaust its
administrative remedies) by appealing to Mr. Douglas
Costle, the Adminstrator. Rather STV filed a petition to
review the NPDES permit in the United States Court of
Appeals for the Sixth Circuit (STV v. Costle, No. 79-
3058). LGE intervened. Also, on January 19, 1979, STV
filed a companion case in the United States District Court
for the District of Columbia (Save The Valley v. Costle,
Civil Action No. 79-0214). This latter case has now been
dismissed by STV.
In February of 1979, STV began extended discussions
with the Government in which it sought to convince EPA
and the Justice Department that EPA had erred in not
granting STV an adjudicatory hearing. LGE was not in-
vited to participate in these discussions.
On July 19, 1979, at the request of LGE, counsel for
EPA, STV and LGE met in the Office of the General
Counsel (OGC) of EPA to discuss and settle the then
pending litigation as to (1) whether STV should be
granted a hearing and (2) if so, on what issues, and (3)
whether EPA should stay LGE’s NPDES permit. Briefs
were filed.
On September 5, 1979, approximately eight months
after STC filed its action in the Sixth Circuit and approx-
imately eight months after construction of the Trimble
County plant began, STV moved the Sixth Circuit for a
stay of the effectiveness of the NPDES permit. The mo-
tion was fully briefed by both sides and the Sixth Cir-
cuit refused to grant STV’s motion.
Approximately ten days after the denial of the motion
for reconsideration, STV filed an action in the U.S. Dis-
trict Court for the District of Columbia (STV v. Douglas
Costle, No. 80-0930) seeking an injunction against fur-
ther construction of the Trimble County plant. LGE in-
tervened. The factual allegations in the complaint have
been denied by affidavits of engineers of LGE and EPA.
STV made a motion to take certain depositions. LGE has
opposed these motions and has filed its motion seeking to
dismiss the case on jurisdictional grounds. The motions
are pending before the Court.
On August 16, 1979, EPA’s OGC issued an opinion on
this matter which held, in essence, that EPA Region IV
erred in refusing to grant an adjudicatory hearing to
STV on its initial request filed in November of 1978 and
action following the hearing procedures. On July 16,
1980, the Sixth Circuit Court of A issued an order
which denied STV’s request for a stay of in
volved and held that the air permit (PSD) granted to
LGE was a valid one. The Court adjourned the proceed-
ings but kept the case on its active docket pending admin-
istrative action within EPA.
The request for hearing filed by STV raises twenty-
three (23) issues all relating to the adequacy of the EIS
prepared by EPA prior to issuing the subject NPDES
permit. Following Public Notice of the granting of the
adjudicatory hearing, the following persons and entities
were admitted as parties either by the Regional Admin-
istrator or myself:
1. Louisville Gas and Electric Company,
2. Trimble County Water District No. 1,
3. Dr. Harold Cassidy, and
4. The City of Bedford, Kentucky.
Since this matter involves the adequacy of an EIS
rather than the traditional issues normally associated
with a hearing involving an NPDES permit, I solicited
from the parties memoranda of law on the scope of my
review. They filed their responses which I have carefully
reviewed and will discuss later.
On August 27, 1980, LGE filed a motion for summary
determination on and elimination of all the issues raised
by STV. A pre-hearing conference was held on September
9, 1980 in Louisville, Kentucky. At this pre-hearing con-
ference, STV indicated that they intended to file no direct
testimony, but rather would make their case by cross-
examining EPA witnesses who helped prepare the EIS.
EPA also filed a motion to consolidate the twenty-three
34a
(23) isues raised by STV into four (4) broadly stated
issues which they urged encompassed all the issues raised
by STV. The parties were directed to respond to this mo-
tion as well as the motion for summary determination
previously filed by LGE. LGE was given fifteen (15)
days to reply to these pleadings. Further, all parties ex-
cept EPA and LGE were consolidated for procedural
purposes.
During the pre-hearing conference, I expressed my con-
cern about STV’s assertion that it would present no di-
rect testimony. In that context, I suggested to STV that,
in its brief, it identify with specificity those portions of
the EIS which it felt were inadequate and if possible
make statements, in the nature of an offer of proof, as to
what facts it intended to bring out in cross-examination
which would support its argument of inadequacy.
Following the granting of several extensions of time,
the parties have filed all their required pleadings and
briefs, and the matter is now ripe fer decision. In its
reply and motion, STV did not take a firm position on
EPA’s motion for consolidation of the twenty-three (23)
issues into four (4), but stated that for purposes of their
brief, they were seeking a summary judgment on Issues
1, 3 and 4* as proposed by EPA. They stated that the
reason for not taking a position on EPA’s motion was
that they did not know which of their issues the consoli-
dated issues intended to include and which it intended to
eliminate. My direction to the parties on this point was
not to speculate as to EPA’s intent, but rather tell me
* They are: (1) Whether the EIS is supported by adequate air
quality modeling analysis and properly considered air quality im-
pacts which could be reasonably anticipated to result from the
Trimble County project? (3) Whether the EIS adequately con-
sidered alternatives to the construction of the Trimble plant as
planned, including the no-construction alternative? and (4) Whether
the EIS adequateiy considered the environmental impacts of the
proposed disposal method of sludges from the flue gas desulfuriza-
tion devices?
35a
which of the twenty-three (23) issues were not, in fact,
included in EPA’s consolidation. Since STV were the au-
they were the logical party to tell me the effect of
EPA consolidation. I regret that they did not do so.
SCOPE OF REVIEW
As indicated above, the parties, at my request, provided
briefs on the question of the scope of my review
case. I sought the guidance of the parties in this
because this is a case of first impression for the
in that it involved an appeal of the issuance of an
permit wherein no issues as to the terms of the pe
were raised. The requestors in this case only raised
sues concerning the adequacy of the final EIS issued
conjunction with the permit. Although the issuance
most NPDES permits are expressly exempted from the
provisions of the National Environmental Policy Act
(NEPA)', the issuance of an NPDES permit to a “new
source”, as that term is defined in the Act, is subject to
the procedures mandated by NEPA.
NEPA, which was enacted in 1969 and became effective
in January of 1970, set forth a broad policy statement
which exhorted the Nation to:
Fulfill each generations responsibility as environ-
mental trustee for the next;
Assure for all Americans esthetically and culturally
pleasing surroundings;
Obtain the widest range of beneficial uses of the en-
vironment without risk to health or safety;
Maintain, where possible, an environment which sup-
ports diversity and variety of individual choice;
vA
2 8
A 7
142 U.S.C. §§ 4321-4361.
36a
Maintain population levels so that life’s amenities
may be widely shared; and
Approach the maximum recycling of renewable re-
sources.”
Whether viewed as ambitiousness or hyperbole, the elo-
quence of the above-cited substantive portions of NEPA
appears to have led ultimately and ironically to their un-
enforceability. Though laudable as national objectives,
they do not translate readily into usable standards of
review.
The meat of NEPA appears to reside in § 102(2) (c)
which requires that Federal agencies prepare an EIS be-
fore embarking on “major Federal actions significantly
affecting the quality of human environment“.“ The Act
then proceeds to require the responsible Federal official
to prepare a detailed statement (EIS) on:
“(i) the environmental impact of the proposed ac-
tion,
(ii) any adverse environmental effects which cannot
be avoided should the proposal be implemented,
(iii) alternatives to the proposed action,
(iv) the relationship between local short-term uses
of man’s environment and the maintenance and en-
hancement of long-term productivity, and
(v) any irreversible and irretrievable commitments
of resources which would be involved in the proposed
action should it be implemented.”
Most courts have held that NEPA is primarily a “pro-
cedural statute” and although plaintiffs have had con-
siderable success in challenging agencies’ noncompliance
with the law’s procedural dictates, specifically with re-
242 U.S.C. § 4331(b).
42 U.S.C. § 4332(2) (e).
37a
spect to the preparation of EIS’s, there is an absence of
a single plaintiff’s victory in a “substantive NEPA case’’.*
What this all means is well stated in the case of Ver-
mont Yankee Nuclear Power v. N. R. D.C., 435 U.S. 519,
which held that NEPA, while establishing “significant
substantive goals for the Nation”, imposes upon agencies
duties that are “essentially procedural”. That is to say
the NEPA was designed “to insure a fully-informed and
well considered decision”, but not necessarily “a decision
the judges of the courts would have reached had they
been members of the decision making unit of the Agency”.
Consequently, once an agency has made a decision sub-
ject to NEPA’s procedural requirements, the only role for
a court is to insure that the agency has considered the
environmental consequences; it cannot “interject itself
within the area of discretion of the executive as to the
choice of action to be taken”. Kleppe v. Sierra Club, 427
U.S. 390. In other words, the court should not substitute
its judgment for that of the Agency as to the environ-
mental consequences of its actions. An agency had con-
sidered the environmental consequences of its action if it
has taken a “hard look” at them. Kleppe v. Sierra Club,
supra. In determining whether or not an agency had in
fact given these consequences the required “hard look”,
the courts have adopted the “arbitrary and capricious
standard” within the meaning of the Administrative Pro-
cedures Act (APA), Overton Park v. Volpe, 401 U.S.
402, 413-414.
Thus, the scope of review applicable to Federal courts
is clear. What is not clear is what my scope of review is.
The primary reason the courts have developed this stand-
ard of review is that Congress has left to the various
agencies the power to make policy decisions and exercise
discretion based upon their expertise and knowledge in-
volved in administering the statutory program in question.
* Council on Environmental Quality, Env. Quality 1978 at 409.
As an Administrative Law Judge (ALJ), am I the
Agency? Do I possess this expertise? May I substitute
my judgment for that of the Agency? I think not. It is
apparent that the Agency, in promulgating the regula-
tions giving persons a right to a hearing on NEPA and
EIS issues, have not thought the process through. No
agency policy or regulation provides guidance on this
question. Logic, however, would tend to dictate the futil-
ity of my reviewing final Agency action on a de novo
basis, making independent determinations concerning
whether a particular environmental consequence is so
heavy as to outweigh any benefits, when a court will re-
view my decision and that of the Administrator using a
totally different standard. This is particularly true since
I am, in essence, reviewing a final Agency action for
which a full record exists. This record being the Admin-
istrative Record which includes the Draft and Final EIS,
as well as the PSD and Public Service Commission
(PSC) records developed elsewhere.“
Accordingly, I am of the opinion that my scope or
standard of review for this case will follow that estab-
lished by court decisions relevant to NEPA. I will take
a hard look at the Agency’s hard look and apply the arbi-
trary and capricious standard of the APA. If I am in
error in this conclusion, I am sure the Agency will so ad-
vise and perhaps establish some guide posts to help my
colleagues find their way along this uncharted trail.
THE ISSUES
I will first consider Issue No. 1, identified above, which
has to do with EPA’s choice of a particular air quality
model to evaluate the air quality impacts of the proposed
Trimble County project.
In assessing air quality impacts of the proposed facil-
ity, EPA, in the Draft EIS, utilized the single source
5 See OGC Opinion at 9 and my Order of September 19, 1980.
CRSTR model assuming a four-boiler unit with full load
operation and a ninety (90) percent scrubber efficiency.
Annual average SO, concentrations were obtained in runs
of the Uneven Terrain (valley) Diffusion Model. Both
annual and short term projected SO, concentrations were
found to be well below the established standards. (See
p. 6-40 Draft EIS Vol. II.)
Use of this model was criticized at the public hearing
on the Draft EIS and in response to this concern, EPA
made several changes in models and methodology used to
predict the impact of the proposed plant. One of the criti-
cisms had to do with the limitations of the CRSTR model,
originally used, to assess the interaction of the proposed
source’s emissions with that of the existing Clifty Creek
plant at Madison, Indiana. Accordingly, the EPA re-
modeled this interaction using a multi-source CRSTR
model. This remodeling effort confirmed the findings of
the Draft EIS that no violation of air quality standards
would occur. (See EIS 2-1.)
Despite this effort by EPA in remodeling using a more
complex model, STV argues that they should not have
used the CRSTR model at all, but rather a newer model
developed by TEKNEKRON for the Ohio River Basin
Energy Study (“ORBES”). STV states that the TEK-
NEKRON model, which was specifically developed for the
Ohio Valley, is the preferred technique and that EPA’s
failure to use it, fatally flaws the EIS.
This concern was addressed in the EIS at p. 2-2
wherein the EPA responded that, although well aware of
the existence of the new TEKNEKRON model, it does not
use unvalidated models in a site specific EIS on a proposed
project for which the Agency has regulatory authority.
There is no evidence in the record nor has STV pointed to
any evidence elsewhere that the results to be obtained us-
ing the TEKNEKRON model would be any different or
more accurate than those developed by using the CRSTR
model. Thus, their arguments in this regard are pure
40a
speculation. A similar argument was made in Sierra
Club v. Morton, 510 F.2d 818 (1975), which involved the
proposed leasing of 147 tracts on the outer continental
shelf along the coasts of Mississippi, Alabama, and Flor-
ida for oil exploration. The Sierra Club argued that the
matrix analysis used by the Secretary of Interior to pre-
dict possible adverse impacts from oil spillage was in-
sufficient as compared to procedures identified in a CEQ
report on oil development in the Gulf of Alaska and the
Atlantic Coast. In dismissing this argument, the Court
held that:
“Interior’s decision to project possible environmental
damage from all tracts by the matrix approach, as
opposed to the use of a more detailed analysis for a
few select sensitive points, certainly does not evince
a lack of good faith effort to afford the decision-
mater with the necessary quantitative information
concerning the potential impact of oil spillage. Be-
cause no exact data exists until a spill occurs at a
given location, any analysis of future oil spillage in-
volves a degree of speculation. Therefore, every at-
tempt to select quantitative values will be to some
extent arbitrary. The use of relative proximity and
importance scales to project adverse environmental
impacts from all tracts is no more arbitrary than
CEQ’s selection for analysis of 23 specific points out
of the vast Atlantic Coast and Gulf of Alaska area
they analyzed.”
Clearly the Agency’s policy of not using unvalidated
models is a reasonable one. The use of untested method-
ology in making decisions as critical as the one involved
in this case would be likely viewed as imprudent . As the
Court held in Vermont Yankee, supra:
“But this much is absolutely clear. Absent consti-
tutional constraints or extremely compelling circum-
stances the ‘administrative agencies “should be free
4la
to fashion their own rules of procedure and to pursue
methods of inquiry capable of permitting them to
discharge their multitudinous duties.”’ FCC v.
Schreiber, 381 U.S., at 143, 60 S.Ct., at 441. Indeed,
our cases could hardly be more explicit in this re-
gard.”
In view of the above, I find that EPA’s use of the
CRSTR model in preference to the TEKNEKRON model
was a valid exercise of Agency discretion and was clearly
not arbitrary or capricious. Cleveland Elec. and Illum-
inating Company v. EPA, 872 F.2d 1150 (1978). This
is especially true in light of the fact that the EIS fully
considered the entire matter and gave it the hard look
required by law.
NEED AND SITING ISSUE
Issue No. 3 involves the extent to which the EIS con-
sidered alternatives to the construction of the Trimble
Plant, including the no-construction alternative. STV
argues that the EIS overestimates the growth in elec-
tricity demand and as a result ignores siting alternatives.
It should be noted that the EIS was prepared on the as-
sumption that four (4) units would be constructed at the
site. It now turns out to be the case that only two (2)
units are to be immediately constructed since the PSD
permits for Units 3 and 4 have expired. New hearings
will have to be held on these units, if and when LG&E
elects to construct them. The General Counsel’s opinion
directs me to only consider those issues which are rele-
vant to Units 1 and 2. Since the EIS addresses all four
(4) units as an environmental whole, I see no way to dis-
tinquish which issues apply to any particular unit, nor
have any of the parties suggested that such an exercise
should or could be accomplished. Consequently, I find the
General Counsel’s discretion in this regard to be of little
or no value.
42a
STV argues that the EIS projected an increase in peak
demand for 1978 of 4.7 per cent and although the EIS
was not published until October of 1978, EPA ignored
available data that indicated only a 2.4 per cent increase
for 1978. STV further argues that available data also
refute projections made in the EIS for the years 1976 and
1977.
STV states that since the EIS was based on four (4)
units, siting options for a facility of less than that were
ignored. STV then posits the notion that inasmuch as
future power demands were unrealistically inflated, the
EIS is flawed since the need for the facility in the first
instance is the “linch pin” of the EIS process. STV points
to LGE’s allowing the PSD permit for Units 3 and 4 to
expire as support for its contention that LGE did not
really need all that power in the first place. That being
the case, STV argues that an EIS based on four (4) units
must fail since it did not consider sites for a smaller
facility.
In preparing an EIS, the Government must, of neces-
sity, attempt to forecast or predict the future adverse im-
pact of the various environmental consequences of the
proposed agency action. These predictions must, of course,
be more than mere guesses. An agency must, perforce,
choose some well-established technique for making these
predictions, whether it be a model for predicting air
quality impacts, econometric models for economic and
financial impacts, or growth models to determine future
energy needs. As stated above, in regard to the choice
of air quality models, an agency is vested with broad
discretion in picking and choosing among the various
options available to it to make these predictions.
Even a cursory examination of the EIS demonstrates
that the Agency clearly considered the no-construction op-
tion, alternative sites, alternative energy sources, post-
poning the project and design alternatives. (See pp. 3-8
to 3-39 EIS.)
43a
Early in the process, LGE submitted to EPA a study
setting forth the forecasting assumptions and methodology
by which it determined its need for the proposed fa-
cility. This study was reviewed by the EPA, an in-
dependent consultant and the Federal Power Commission.
These reviews concluded that the methodology, forecast-
ing techniques and the results obtained were reasonable.
Additionally, the U.S. Department of Energy reviewed
LGE’s generation reserves and concluded that it would
be “imprudent to force cancellation of the Trimble County
units”. (EIS at 5-62.)
The fact that predictions made in 1976 as to power de-
mands into the next century did not precisely coincide
with actual power demands in 1977 and 1978 does not, in
my judgment, render the EIS legally defective. This is
especially true since the discrepancies in the predictions
were pointed out to the Agency by numerous commentors,
and the Agency responded to them in the EIS. (See pp. 5-
8, 5-4 EIS.) It is therefore clear that the Agency was
aware of the current situation and considered all vari-
ables in deciding to permit the project. This decision was
not arbitrary or capricious given the uncertainties of our
times in terms of the economy and energy need fluctua-
tions.
As pointed out in Vermont Yankee:
“Administrative consideration of evidence. ..... .
always creates a gap between the time the record is
closed and the time the administrative decision is
promulgated [and, we might add the time the de-
cision is judicially reviewed. If upon the
coming down of the order litigants might demand
rehearing as a matter of law because some new
stance has arisen, or some new trend has been ob-
served, some new fact discovered, there would be
little hope that the administrative process could ever
be consummated in an order that weuld not be sub-
ject to reopening.”
44a
The Agency carefully considered all relevant data be-
fore it in making its decision. They additionally re-
evaluated their data in response to comments from the
public and were still of the opinion that the facility is
needed. The fact that others, including experts, may dis-
agree with that decision is of no moment unless it can be
demonstrated that such decision was clearly arbitrary or
capricious. Life of the Land v. Beinegar, 485 F.2d 460.
No such showing has been made here.
I similarly find no merit in the argument that since
only two (2) of the original units are immediately
planned for construction, the EIS is defective for not dis-
cussing smaller sites. LGE has not abandoned its plans
for ultimately constructing the other two (2) units. The
question of alternative sites was discussed in great detail
in the Draft EIS and the Final EIS (pp. 12-15 Draft EIS
and 2-3 EIS). The EIS was based on the assumption that
four (4) units will be built and did so effectively. No
proof has been suggested that ultimately four(4) units
will not be built there. An EIS need not discuss un-
likely eventualities or evaluate future options that are
unrealistic. National Helium v. Morton, 486 F.2d 995.
Only a reasonable discussion is required, not perfection.
THE UN-ENFORCEABLE STIPULATION
Even though STV adopted three (3) of the EPA re-
phrased issues for purposes of their motion for summary
determination, the topic hearings in their brief are not
similar to the language in those articulations. Issue No.
4 by EPA talks about whether or not the EIS adequately
addressed the adverse evnironmental impacts of disposal
of sludges from the flue gas desulferization (FGD) de-
vices. STV apparently feels this refers to the stipulation,
which among other things requires a thirty (30) day
supply of low sulphur coal to be kept on the site for
use during FGD malfunction. I will apply a broad in-
terpretation of the EPA Issue No. 4, so as to include it
in the stipulation question.
45a
The FGD technique which LGE has elected to use
generates vast quantities of a nasty sludge that must
disposed of in some fashion. They have proposed
dispose of this waste in a large valley adjacent to
facility. EPA knows the nature of this sludge and i
chemical components were described in great detail in the
EIS. (See pp. 3-55, 3-56.) LGE plans to line its initial
sludgeponds with an impermeable clay layer and subject
the sludge to a chemical stabilization process which will
make it less likely to leach out into the ground waters and
substrata of the valley. This whole matter was exhaus-
tively discussed in the Draft EIS, the EIS and public
hearings held on the permit. Test borings were made to
study the substrata, test wells will be sunk to monitor any
potential leaking of sludge liquors into important acqui-
fers. The State of Kentucky, which administers its own
solid waste disposal program, has required constant moni-
toring and relation of the disposal site if the planned
mitigation measures do not work.
Despite all this, the EPA and LGE entered into a stipu-
lation in September of 1978, in which IGE agreed to dem-
onstrate to the EPA the efficacy of its sludge disposal
plan if it could not do so, would come up with a new plan
at a new site. This new plan would be subject to a com-
plete Environmental Impact Anaylsis (EIS) prior to its
execution. The stipulation also required LGE to keep a
thirty (30) day supply of low sulphur coal on hand in the
event of FGD malfunction and other requirements con-
cerning the proposed transmission line construction.
This stipulation was, on its face, entered into for the
following reasons:
“The EIS identified potentially unacceptable environ-
mental impacts in the form of future contingencies.
The stipulations set forth below were developed pur-
suant to EPA’s authority and responsibility under the
Act and under NEPA. It is understood by both
parties that this stipulation has been entered into
46a
for the purposes of preventing or minimizing poten-
tially adverse environmental impacts identified in the
EIS and for the purposes of obtaining EPA’s recom-
mendation to issue the permit.“
This stipulation was touted by EPA to a concerned Trim-
ble County citizen, as a “legally binding pre-condition”
*9 the NPDES permit. The writer concluded his letter by
saying that:
I believe that the conditions imposed by EPA and
agreed to by LGE provide adequate safeguard against
our uncertainty on this issue.” *
Obviously at this point in time, the EPA felt that the
stipulation was enforceable and was an integral part of
the Agency’s decision to issue the permit. The stipulation
was made a part of the EIS as Appendix D and an
earlier version was included in the Draft EIS. Despite
this scenario, the EPA has now concluded that the stipu-
lation is un-enforceable by it or any aggrieved citizen.
When this fact was brought out in the Sixth Circuit case,
mentioned above, the EPA brushed it aside by saying,
with some arrogance, I feel, that:
“If agreements made in an EIS have never been en-
forceable, then an EIS cannot be declared invalid for
failure to discuss that obvious un-enforceability. Sim-
ilarly, the EIS is not invalid because of failure to
emphasize the un-enforceability of its stipulation.”
(EPA Brief p. 40.)
The obvious problem with that statement is that the
issuing authority and the general public thought it was
enforceable. LGE and EPA now defend by saying, in
effect, well it does not really matter whether the stipu-
lation is enforceable or not since the Clean Air Act, the
Clean Water Act and the Resource Recovery Act all re-
R. 143, letter of October 27, 1980.
47a
quire LGE to abide by it in any event. If so, why did
EPA and LGE enter into it in the first place? The stipu-
lation itself says that it was entered into for the pur-
pose of obtaining EPA’s recommendation to issue the
permit and that it was to assure mitigation of potentially
adverse environmental impacts identified in the EIS.
To now argue that no one really needed it in the first
place simply will not wash. Its terms were referred to in
the EIS as a response to citizens concerns about sludge
disposal. It was used to allay public fears about potential
adverse impacts. Either the EPA and LGE knew at the
outset that the stipulation was un-enforceable and merely
used it as a device to con the public or they really felt
it would cure future environmental problems with the
project and was a necessary element of permit issuance.
The first, if true, is irreprehensible, and the latter an
honest mistake which nevertheless casts grave doubts on
the adequacy of the EIS.
NEPA is not only a “full disclosure” statute in that it
requires the Government to consider and discuss all re-
quired issues, the agency’s rationale for its ultimate de-
cision must also be spelled out. Both the reviewing courts
and the public have a right to know the agency’s thought
processes, how it went about weighing and balancing all
the opposing interests, impacts and benefits.
The record before me indicates that: (1) EPA would
not have issued the permit absent the stipulation, (2)
EPA believed the stipulation to be a binding and enforce-
able committment by LGE, and (3) EPA relied on the
stipulation as a means of mitigating certain potential un-
acceptable adverse environmenta! impacts.
An EIS must stand on its own and the after-the-fact
arguments of counsel, no matter how cleverly couched,
cannot add to or detract from the record upon which the
Agency purportedly made its decision. LGE and EPA
obviously take this position since they move for summary
determination on all issues without a hearing.
48a
In essence then, it must be concluded that the existence
of an assumed-to-be enforceable stipulation played an im-
portant part of EPA’s decision-making process which is
embodied in the EIS. That being the case, the EIS must
be found to be inadequate since one of its essential un-
derpinnings has been washed away in the tide of con-
flicting opinion.
This conclusion, however, does not necessarily mean
that the project must cease and the defect identified is
incurable. Let us assume that I remanded back to EPA
for corrective action. The Agency would simply issue a
modified permit, including in its terms, the language of
the stipulation, advertise the modification, have another
public hearing and issue a modified permit. All of this
would take time, taxpayers’ money and necessitate the
expenditure of additional sums of money by STV, other
concerned citizens and LGE to no particular purpose. I
can accomplish the same result at no cost. 40 C.F.R.
122.66 (e) (3), 45 Fed. Reg. 33453, May 19, 1980, per-
mits the Regional Administrator to place conditions in a
new source NPDES permit based upon his/her evaluation
of the EIS. I have the same authority. I realize that I
have previously ruled that the permit issuing pertions of
the new regulations do not apply to this casc. However,
I can make them applicable if I find it appropriate te do
so to carry out the purpose of the Clean Water Act and
when no party would be unduly prejudiced thereby. (40
C.F.R. § 124.86 (e).) Clearly to have applied them retro-
actively to the LGE permit and, in essence, declare the
permit invalid after its final issuance would have severely
prejudiced LGE.* To apply the new rules to the present
situation will prejudice no one, if one assumes that STV’s
true concerns are the inadequacy of the EiS and not just
a ploy to temporarily delay the project which will most
likely proceed in any event. (Unless, of course, the Ad-
* Such action would also have been contrary to the rulings of the
OGC and the Sixth Circuit, which are binding on me.
49a
ministrator or the courts reverse this decision.) I there-
fore propose to amend the permit by incorporating therein
the terms of the stipulation. This will cure the defect al-
luded to above by making the permit’s terms consistent
with the rationale expressed in the EIS. In passing, I
should note that I find the case of North Slope v. Andrus,
No. 80-1148 (D.C. Circuit), cited to me by LGE, not to be
applicable to this case since no one was questioning the
enforceability of the stipulations in that case.
THE REMAINING ISSUES
Issue (f) questions the validity of EPA’s assumption
that the FGD device proposed to be installed by LGE
will achieve ninety (90) per cent efficiency, which assump-
tion was utilized by EPA in the air quality modeling
exercise.
In the first place, the whole subject of sulphur dioxide
control was discussed and thoroughly considered by EPA
in both the Draft and Final EIS. See pp. 8-121, 131 EIS.
EPA acknowledged that many utilities have experienced
problems with these devices in the past, in terms of ef-
ficiency and reliability. EPA has commissioned numerous
studies of these devices and published the results thereof
over a period of many years. The EIS points to improve-
ments in their reliability in recent years and EPA has
have officially sanctioned their use in numerous instances.
The Congress has also examined this question and en-
dorsed their use in its House Report on the Clean Air Act
Amendments of 1977. The courts have also rejected the
notion that one-hundred (100) per cent reliability must
be demonstrated prior to mandating the use of these
devices. U.S. v. West Penn Power Company, 460 F.Supp.
1305 (1978).
If there was ever a clear case of the exercise of an
agency’s expertise in deciaing a complex issue, this is it.
This is one of those instances where a court would not sub-
50a
stitute its judgment for that of the agency. The use of
these devices was fully discussed as were their potential
problems. The full disclosure and hard look required by
NEPA has been accomplished. EPA’s decision in this re-
gard was not arbitrary or capricious.
Issue (i) suggests that EPA’s reliance of further study
and control by the State of Kentucky was an unlawful
delegation of EPA’s duty to consider the environmental
effects of the sludge disposal scheme. The EIS discussed
the potential problems associated with sludge disposal in
the valley. It also stated that the nature of the problem
posed questions that are not scientifically capable of being
answered at this time, because of the fact that no one
can know precisely the exact nature of the underlying
rock strata. The fact that the State of Kentucky, which
has solid waste disposal authority, will monitor the effects
of this disposal method to insure its success or mandate al-
ternative sites in no way detracts from the adequacy of
the EIS. As stated in Sierra Club v. Morton, supra:
“What we hold today is that where shortcomings in
a major federal action can be corrected or minimized
when and if they surface, the EIS upon which such
action is authorized may meet NEPA’s obpectives
with some less detail and analysis than would other-
wise be required.”
The court in Morton also sanctioned the use of state ac-
tion to control adverse environmental impacts that may
occur in the future.
The EIS full considered the problems associated with
sludge disposal and the Agency’s decision to allow the
project to proceed in light of the stipulation and the
State’s ability to control future problems can not be
said to be arbitrary or capricious. For additional author-
ity for this methodology, see 40 C.F.R. G.924(c) (4) and
40 C. F. R. 1502(f).
51a
In Issue (n) STV questions whether the EIS gave ade-
quate consideration to the potential effect of accidental
spills of toxic substances during barge unloading opera-
tions. The Draft EIS recognized that such spillage could
occur and acknowledged the fact that such occurrences
could result in deterioration of the River’s water quality,
depending on the amount and duration of the spill. (See
p. 6-76.)
Mitigative measures to address this eventuality were
discussed at p. 7-3 of the Draft EIS. They include the
use of floating booms, motorized oil skimmers and the con-
struction of dikes around the oil tanks with a capacity
equal to 110 per cent of the largest tank. Applying the
Rule of Reason enunciated in County of Suffolk v. In-
terior, S62 F.2d 1375 (1979), I can not say that the EIS
failed to adequately address this issue.
Issue (p) asks whether the EIS adequately addressed
the adverse effects of “soot-blowing” associated with safe
and efficient boiler operation. The EIS apparently did not
address this question. The practice of “soot-blowing” is
well recognized in the field of air pollution control and
is addressed in the air pollution regulations of every
state in the Union. It involves a periodic and short-
term blowing of the soot and particulate particles from
the heat exchanger tubes in a boiler to insure safe and
efficient overation of the boiler. Accumulation of soot de-
posits on the tubes interferes with the ability of the
heat exchanger to perform its designed function. It can
also cause build-up of hot spots in the heat exchanger
which can lead to their failure causing serious damage
to the equipment, and it is dangerous to the operators.
The effect of this practice on air quality is truly de
minimus and the failure of the EIS to address it is not
fatal in its adequacy. The air pollution regulations of the
State of Kentucky limit this practice to a very short dura-
tion in a given time period. The EPA has approved this
regulation and knows of its existence. An EIS need not
52a
address every conceivable environmental impact but only
those of importance and significance. EDF v. TVA, 492
F.2d 466 (1974).
Issues (u) and (v) question the use of data generated
by Fluor Pioneer, a LGE consultant, in the EIS and
whether or not Dames & Moore, a third party consultant
of EPA, had sufficient independence and objectivity to
adequately perform its functions on the EIS. This precise
issue was addressed in Life of Land v. Brinegar, supra,
wherein it was alleged that the EIS was flawed because
a private consulting firm (Parsons), which had a finan-
cial interest in the project, prepared the EIS. In dispos-
ing of this contention, the court held that:
“It does appear from the record that Parsons has a
financial interest in an affirmative decision on the
proposed project. We find nothing, however, in either
the wording of NEPA or the case law, which indi-
cates that, as a matter of law, a firm with a financial
interest in the project may not assist with the draft-
ing of the EIS. As the Eighth Circuit has indicated,
compliance with section 102 of NEPA is based upon
good faith objectivity rather than subjective impar-
tiality. Environmental Defense Fund v. Corps of En-
gineers, 470 F.2d 289, 296 (8 Cir. 1972), aff’g, 342
F.Supp. 1211 (D. Ark. 1972). See also, Sierra Club
v. Froehlke, 359 F.Supp. 1289, 1342 (S.D. Tex.
1973).
“While Parsons may have assisted in the EIS’ prep-
aration, the significant and active participation by
the F. A. A. therein precludes us from concluding that
there was any improper or illegal delegation in this
case.”
I find no reason, in this case, to disagree with that
conclusion, given EPA’s preparation of the EIS and its
independent consideration of all relevant impacts discussed
therein.
Issue (w) asks whether the EIS adequately considered
the air quality impacts which would result from long-
term scrubber (FGD) malfunction and exhaustion of the
low sulphur coal required, by the stipulation, to be main-
tained on the premises.
In my judgment, an EIS need not identify what the
Agency would do if the owners of a project elect to vio-
late the law. One assumes that the owner will comply
with all applicable laws incident to its operation of the
subject facility. Obviously, the Agency will prosecute the
owner if it fails to meet the permit limits. Although not
required to do so, the EIS does address this eventuality
on p. 5-124, wherein the Director of EPA’s Division of
Stationary Source Enforcement discussed what EPA
would do in the event of “upset” or “malfunction”.
Issue (w) is not really an appropriate issue for consid-
eration in evaluating the adequacy of an EIS. Even if i
were, the EIS adequately considered the point.
CONCLUSION
I have studied the issues raised by STV and have tried
to determine which ones were fairly included in the EPA
consolidation of them into four (4) broad statements. The
discussion above entitled, “The Remaining Issues”, identi-
fied those issues which I felt may not have been addressed
in that consolidation. I am, therefore, of the opinion that
I have addressed all issues raised by STV and the other
parties.
54a
FINDINGS OF FACT AND CONCLUSIONS OF LAW
Upon consideration of the entire record before me and
the briefs and arguments of counsel, the following find-
ings are made:
1. The matters set forth in factual background and
discussion of issues are adopted as findings of fact.
2. The EIS prepared by the EPA, concerning the
subject project, fully complies with the requirements
of NEPA.
3. The motions of LGE and EPA for a summary
determination on all issues raised by STV and the
other parties are granted.
4. Since this opinion decides all factual and legal is-
sues raised by t“ parties, it constitutes an Initial
Decision pursuam. 40 C.F.R. § 124.89, and as such
represents final Agency action within thirty (30)
days of its service upon the parties unless a petition
for review is filed or the Administrator files notice
that he intends to review the decision sua sponte,
purusant to 40 C.F.R. § 124.91.
ORDER
The permit heretofore issued by the Agency to LGE
shall be modified to include the terms of the stipulation
entered into between LGE and EPA on October 27, 1978,
which is set forth as Appendix D to the Fnal EIS, and
issued to the permittee.
/s/ T. B. Yost
THOMAS B. Yost
Administrative Law Judge
DATED: December 8, 1980
55a
BEFORE THE ADMINISTRATOR
U.S. ENVIRONMENTAL PROTECTION AGENCY
Washington, D.C.
NPDES Appeal No. 81-3
IN THE MATTER OF:
NATIONAL POLLUTANT DISCHARGE
ELIMINATION SYSTEM PERMIT FOR
LOUISVILLE GAS & ELECTRIC COMPANY
TRIMBLE COUNTY POWER PLANT
NPDES No. KY0041971
Final Decision
Save the Valley, Inc. (STV) appeals from an initial
decision, dated December 8, 1980, in which the presiding
officer, Administrative Law Judge Thomas B. Yost,
granted motions for summary determination filed by
Louisville Gas and Electric Company (LG&E) and Re-
gion IV of the Environmental Protection Agency (EPA).
LG&E and EPA sought a summary determination that
an environmental impact statement (EIS) prepared by
EPA under the terms of the National Environmental
Policy Act (NEPA) fully satisfied the requirements of
that statute in connection with the issuance of a National
Pollutant Discharge Elimination System (NPDES) per-
mit to LG&E for a power plant it proposed to construct
in Trimble County, Kentucky. The power plant was to
consist of four units having a combined electrical gener-
ating capacity of 2340 megawatts.
STV challenged the adequacy of the EIS and by cross-
motion sought a summary determination in its own favor.
In its original request for a hearing and in its cross-
motion for summary determination, STV raised a number
of issues and asserted numerous reasons why it believed
the EIS was deficient. On appeal from the initial de-
56a
cision, however, STV confines its allegations of inade-
quacies in the EIS to the issue of whether, as required
by § 102 (2) (C) of NEPA, EPA gave adequate considera-
tion to the need for and alternatives to the facility. Spe-
cifically, STV argues that the EIS is defective for failing
to include and give consideration to data on actual de-
mand for electricity during the summer of 1978. The
EIS was released to the public in final form on October
20, 1978, and STV contends the data from the summer
of that year were available to EPA, that the data should
have been considered by EPA and that such considera-
tion would have shown that there was no need for a
power plant of the size proposed by LG&E. According
to STV, a much smaller plant or possibly none at all
might have been deemed sufficient to meet future de-
mand for electricity had the 1978 data been considered.
In addition, if future demand for electricity could be
satisfied by a smaller plant, EPA could have then given
consideration to other sites for locating the plant which
were either rejected or not considered in the EIS be-
cause they were not large enough to accommodate a plant
of the size proposed by LG&E. The presiding officer dis-
missed these contentions in the initial decision, and STV
argues on appeal that the presiding officer erred.
In addition, STV also argues that the presiding officer
committed procedural error in reviewing the EIS. The
presiding officer reviewed the EIS applying an “arbitrary
and capricious” standard of review, as would a reviewing
court. STV contends that he should have placed himself
instead in the role of the Agency’s final decisionmaker
and, as such, decided independently whether, in light of
the issues raised by STV and the consideration given
those issues in the EIS, the NPDES permit should be
issued.
For the reasons stated below, I conclude that the stand-
ard of review which the presiding officer adopted was in
error; however, because it is evident from his initial
this proceeding for the taking of further evidence on the
matters disposed of in the initial decision which are not
specifically addressed in STV’s appeal. With respect to
the matter which STV does specifically address in its
appeal, namely, EPA’s failure to give consideration to
data on actual demand for electricity during the sum-
mer of 1978, I conclude that EPA was not under any
obligation to consider the data.
Standard of Review
A court reviewing an agency’s compliance with NEPA
will not overturn the ageney’s decision unless it is ar-
bitrary and capricious. The Supreme Court has ruled
that the duties NEPA imposes on Federal agencies are
“essentially procedural.” Strycker’s Bay Neighborhood
Center v. Karlen, 440 U.S. 223, 227 (1980), quoting
Vermont Yankee Nuclear Power Corp. v. NRDC, 435
U.S. 519, 558 (1978). Thus, while NEPA establishes
important substantive goals for improving the quality
of the human environment, Federal agencies are not re-
quired to “elevate environmental considerations over other
appropriate considerations,” and as a consequence, a court
“cannot ‘interject itself within the area of discretion of
the executive as to the choice of the action to be taken.’
v. Sierra Club [infra].” Id. In other words, the
court is to ensure that the agencies have
t the mandate of NEPA “to insure a fully
and well-considered decision” but “not neces-
a decision the judges . . would have reached had
been members of the decisionmaking unit of the
Vermont Yankee Nuclear Power Corp. v.
, supra at 558. As a consequence, a court will not
tute its judgment for that of the agency in decid-
the environmental consequences of authoriz-
particular project are or are not outweighed by
appropriate considerations. Kleppe v. Sierra Club,
U.S. 309, 410, n. 21 (1976).
2525
41
115
l
3
The presiding officer felt that he too was not empowered
to substitute his judgment for that of the Agency inso-
far as the permit issuer’s EIS determination was con-
cerned. He reasoned that the “arbitrary and capricious”
edge involved in administering the statutory program in
“As an Administrative Law Judge (ALJ), am I
the Agency? Do I possess this expertise? May I
substitute my judgment for that of the Agency? I
think not. It is apparent that the Agency, in promul-
gating the regulations giving persons a right to a
hearing on NEPA and EIS issues, have not thought
the process through. No agency policy or regulation
provides guidance on this question. Logic, however,
would tend to dictate the futility of my reviewing
outweigh any benefits, when a court will review my
decision and that of the Administrator using a to-
tally different standard.” Decision at 9.
In accordance with this reasoning, the presiding officer
opinion that my scope of
ease will follow that es-
decisions relevant to NEPA. I
a hard look at the Agency’s hard look and
59a
apply the arbitrary and capricious standard of the
Administrative Procedure Act].“ Decision at 9-10.
STV argues that by applying the “arbitrary and ca-
pricious” standard of review the presiding officer ac-
too much deference to the Region’s decision to
warrant issuance of an NPDES permit
ng this decision, STV contends that
42 —4 44 ——
In maki
whether he agreed with the Regional Administrator's de-
eision to issue the permit, and in doing so, he was also
free to substitute his judgment for that of the Regional
Administrator, if supported by the facts in the record.
These arguments are persuasive. The presiding officer
should have reviewed the EIS in the same way a con-
ventional NPDES permit is reviewed, rather than apply-
ing the arbitrary and capricious standard used by the
of the Agency do not apply to the presiding officer. A
Federal court is barred from substituting its judgment
for that of an agency by the Administrative Procedure
Act requirement that agency ings and conclusions can
only be set aside by the court if it finds that the agency
action was “arbitrary and capricious.” 5 U.S.C. § 706.
A Federal Court is also barred from substituting its
judgment for that of an agency if the exercise of that
judgment would
require
are “essentially legislative
Radio Commission v. General Electric Co., 281 U.S. 464,
469 (1930). Under Article III of the Constitution the
courts cannot perform non-judicial functions. See Keller
v. Potomac Electric Power Co., 261 U.S. 428 (1923).
Therefore, a court cannot substitute its judgment for
that of an agency in a decision involving an EIS de-
termination because, as the Supreme Court decisions in
Vermont Yankee and Stryckers Bay made clear, once the
procedural requirements of NEPA are satisfied, the re-
maining functions are essentially administrative.
Since these statutory and constitutional restrictions ob-
tional NPDES proceeding involving specific terms and
conditions of a permit. In both cases § 402(a)(1) is the
basic provision of the Clean Water Act under which
the proceeding is conducted. There is nothing in § 402
(a) (1) which provides for treating the two types of cases
differently.“ In a conventional NPDES proceeding, the
1 By its terms, § 402(a)(1i) simply provides that an NPDES per-
mit may be issued by the Agency after an opportunity for hearing
6la
hearing ordinarily serves as a forum for interested per-
sons, including the permit applicant, to contest the terms
and conditions of the permit.“ In such a proceeding the
presiding officer is expected to make and, in fact, does
make independent or de novo determinations regarding
the terms and conditions of the permit based upon the
evidence adduced at the hearing. He is directed by the
rules to conduct a fair and impartial hearing,
to admit all relevant and material evidence, to review and
evaluate the record, and to issue an initial decision. See
generally 40 CFR §§ 124.85 and 89 (1980). By virtue
of this authority, it is clear that the presiding officer is
also expected to decide any factual or legal issues which
are properly raised in the course of the hearing, includ-
ing, of course, the ultimate issue of whether a permit
should be issued or denied, and if it is to be issued, upon
what terms and conditions. Moreover, although the rules
do not expressly provide that the presiding officer is au-
thorized to decide policy issues arising in the course of
the hearing, such authority is necessarily implied.* In
addition, if the initial decision is not appealed and if the
Administrator does not otherwise elect to review it, it
automatically becomes the final decision of the Agency.
40 CFR § 124.89(b) (1980). In short, it is clear that the
and only upon condition that the discharge authorized by the permit
meets the requirements of §§ 301, 302, 306, 307, 308 and 403 of the
Act.
2 Typically, if the permit applicant requests a hearing, it is for
the purpose of seeking less stringent terms and conditions in the
permit, whereas other interested persons typically request a hearing
for the purpose of seeking more stringent terms and conditions. If
no one requests a hearing, the permit becomes a final permit upon
the terms and conditions proposed by EPA.
This implied authority is apparent from the fact that a party
appealing the presiding officer’s initial decision is required by
§ 124.91(a)(1)(ii) to show where the initial decision contains
aln exercise of discretion or policy which is important and which
the Administrator should review.” (Emphasis added.)
presiding officer is empowered to make decisions for the
Agency. Therefore, as part of the decisionmaking unit
of the Agency, the presiding officer, unlike a reviewing
court, is free to substitute his judgment for that of the
permit issuer where the facts and circumstances war-
rant it. The principal limitation on his authority is the
requirement that his decision be based solely on the facts
appearing of record in the proceeding.
The 1978 Data
There is no dispute that under the terms of § 102(2)
(C) of NEPA EPA must give consideration to the need
for and alternatives to the proposed Trimble County fa-
cility. In this instance, the need for the 2340 megawatt
facility was justified in the EIS largely on the basis of
a forecast of future demand for electricity within the
relevant area where LG&E provides electrical service to
its customers. The forecast spanned the period from
1976 to 1990 and was based on a technical analysis of
demand for electricity collected from data covering the
period from 1965 to 1974. EIS at 3-2. Because the EIS
was not finalized until October 20, 1978, EPA was able
to test the accuracy of a small portion of the forecast by
comparing actual demand for electricity during 1975
and 1976 with the projected demand contained in the
forecast for the same two years. In addition, EPA was
also able to conduct a preliminary analysis of the 1977
summer load data, and based on that analysis, EPA con-
cluded that the forecast for the summer of 1977 was
generally confirmed. EIS at 3-1. Thus, EPA’s basis for
relying on the forecast rested on a data base of actual
demand for a ten year period (1965 to 1974) which was
supplemented by data from 1975 and 1976 and by a
preliminary analysis of data for 1977. With this in-
formation available to it, EPA concluded that an NPDES
permit should be issued to LG&E.
STV contends that EPA’s assumptions about growth
of demand for electricity in the EIS are so flawed that
63a
they must be considered arbitrary and capricious. Spe-
cifically, STV contends EPA made no effort to determine
whether demand during the summer of 1978 had in-
creased at a rate approaching that predicted in the draft
EIS. Had the Agency done so, according to STV, it
would have learned mat the increase in peak demand
during the 1978 covling season had fallen far short of
projections set out in the EIS. According to STV, LG&E’s
Annual Report discloses that the actual increase in de-
mand in 1978 was only 2.4 percent, in contrast to the
growth rate of 4.7 percent projected in the EIS. STV
also points out that the increase in demand fell short of
predictions in the two preceeding years, thus indicating
a trend of declining demand for electricity. The lowest
rate of increase in the forecast is 4.1 percent annually
and ranges as high as 6.1 percent, yet demand in 1976
only increased by 3 percent and in 1977 it only increased
by 1.4 percent. In sum, the rate of increase fell short of
annual projections for three consecutive years.
STV’s position cannot be sustained. By charging EPA
with failing to update the EIS with data from the sum-
mer of 1978, STV is seeking to hold EPA to a standard
of diligence which is simply not reasonable or required
by law. In this instance, the draft EIS was circulated
for public comment in early 1978 and the final EIS was
released on October 20, 1978. STV nevertheless argues
that the EIS is defective for failing to include and give
consideration to data which, at the earliest, could not
have come into existence until the first days of autumn
of the same year. While the parties disagree as to
whether the data were in existence prior to the time the
final EIS was released, it is safe to conclude that, even
if the data were physically available, the timing of the
data’s availability and release of the final EIS could
hardly have been far apart.“ Furthermore, if a reason-
* Of course, if the data were not physically available, then there
is no question that the Agency could not have factored the data into
the EIS, and therefore, further inquiry into this matter would be
unnecessary.
64a
able but nevertheless brief period of time is allowed for
transmitting a typed copy of the final EIS to the printer
for duplication, any gap between the availability of the
data and release of the EIS obviously narrows ever fur-
ther. The issue thus presented is whether, under the
circumstances, the Agency was under an obligation to
consider the 1978 summer data before releasing the EIS
in final form. The answer, as discussed below, must
certainly be no when due consideration is given to the
nature of the data, its timing and to all of the surround-
ing circumstances.
In Vermont Yankee the Supreme Court established
the principle that an agency’s consideration of alterna-
tives to a proposed project must be judged “by the in-
formation then available to it.” Id. at 553. The question
before the court was whether the Nuclear Regulatory
Commission [NRC] erred when it failed to consider
“energy conservation” as an alternative to constructing
a nuclear <lectrical generating station. At the time the
matter was before the NRC, not much was known about
energy conservation. The Supreme Court took that fact
into consideration and refused to hold that NEPA placed
any obligation on the NRC to consider alternatives which
were poorly understood; in other words, it looked at “the
historical setting” in which the NRC made its decision
before passing final judgment on the adequacy of the EIS.
Id. The Supreme Court also recognized that in certain in-
stances new information must be brought to the agency’s
attention before the agency is under an obligation to con-
sider it. Thus, even though the court held that NEPA
places upon an agency the obligation to consider “every
significant aspect of the environmental impact of a pro-
posed action,” it also held that those wishing to par-
ticipate in the process have an obligation “to structure
their participation so that it is meaningful, so that it
alerts the agency to [their] position and contentions.” Id.
These statements by the Supreme Court plainly indi-
cate that an agency’s actions under NEPA are to be
65a
measured against standards of reasonableness and that
due regard must be given to all of the surrounding cir-
cumstances. In other words, the principle that an
agency’s actions are to be judged “by the information
then available to it” refers to information that is rea-
sonably available to the agency, taking into account its
materiality and the setting in which it is supposed to
have come to the agency’s attention. Therefore, when
these principles are applied to the present controversy in-
volving the Trimble County EIS, it is unreasonable to
conclude that EPA’s Regional officials failed to give ade-
quate consideration to the need for and alternatives to
the 2340 megawatt facility because data on actual power
demand during the summer of 1978 was not factored into
the EIS. In the setting in which the EIS was released,
there was little if any reason for the Agency to believe
that the data had the significance which STV now seeks
to attach to them. The fact that data on actual power
demand for the first two years of the forecast showed
discrepancies is hardly a sufficient basis for discrediting
the entire forecast. As the presiding officer observed:
“The fact that predictions made in 1976 as to power
demands into the next century did not precisely coincide
with actual power demands in 1977 and 1978 does not
. . render the EIS legally defective.” Decision at 14.
In fact, given the nature of forecasts in general and the
scope of the Trimble County forecast in particular, such
discrepancies are probably the rule rather than the ex-
ception. In any event, when the draft EIS was released
in early 1978, it was certainly foreseeable by everyone
that another summer season’s data would be available
for consideration if the issuance of the EIS were de-
layed or postponed; however, none of the comments re-
ceived from the public, including those received from
STV, provides any reasonable basis for alterting EPA
to the possibility that there was any compelling need to
postpone the final EIS in order to consider one more
summer season’s data. STV in its written comments did
66a
indeed contend that the projections contained in the EIS
were too high, but the basis for STV’s contentions did
not signal any need to postpone the EIS until after the
summer data could be gathered and analyzed. Instead,
the basis for STV’s contentions rested on other grounds,
and those grounds were given full consideration in the
EIS. For example, in response to comments received from
STV, the Agency requested the Department of Energy
(DOE) for assistance, and DOE responded in a memo-
randum dated August 25, 1978, by stating that “it ap-
pears imprudent to force cancellation of me Trimble
County units” in view of the projected electrical reserve
margin requirements for the region of which LG&E is
a part. EIS at 5-62. Therefore, when all of the sur-
rounding circumstances are taken into consideration, the
data for the summer of 1978 were not reasonably avail-
able to the Agency before the final EIS determination
was made. As a consequence, the EIS is not defective
for failing to include and give consideration to the data,
and the Agency’s consideration of the need for and al-
ternatives to the Trimble County facility is not thereby
rendered inadequate.
Conclusion
For the reasons stated herein, the order entered by the
presiding officer which grants summary determination in
favor of LG&E and EPA is affirmed.
So ordered.
/s/ Ronald L. McCallum
RONALD L. MCCALLUM
Judicial Officer
Dated: Sep. 24, 1981
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.