ELR Citation: ELR 20140
No(s). 89-1883 (7th Cir. Nov 5, 1991)

The court holds that the U.S. Environmental Protection Agency's (EPA's) set-aside regulations governing the allocation of Clean Air Act grants to states for state implementation plan (SIP) development do not violate the Clean Air Act or the Fiscal Year 1988 Appropriations Act. The regulations, which implement Clean Air Act §105, authorize EPA to set aside grant funds to cover the expenses of promulgating federal implementation plans required in the absence of satisfactory state plans. The court first holds that Illinois' challenge to EPA's set-aside regulation was timely under Clean Air Act §307(b)(1). The petition for review is untimely under §307(b)(1)'s promulgation review provisions, which require that challenges to national air quality standards be filed within 60 days of notice. However, the petition is timely under §307(b)(1)'s implementation review provisions, which require challenges of EPA final actions with local or regional applicability to be filed within 60 days of notice. Illinois filed this action within 60 days of EPA's denial of its fiscal year 1988 grant request, a final action of local or regional applicability. The court holds that Illinois' petition was properly filed in the 7th Circuit, because final actions of local and regional applicability must be filed in the appropriate court of appeals.

On the merits, the court holds that EPA's set-aside regulations are a reasonable interpretation of its authority under Clean Air Act §105. The statute is silent on whether Congress intended to allow EPA to set aside §105 grant funds to cover the expenses of issuing federal implementation plans. The regulations do not upset the Act's balancing of federal and state interests, because they allow EPA to withhold funds only if the state is incapable of issuing a satisfactory SIP. The legislative history weighs slightly in favor of EPA's interpretation. Having concluded that Congress was silent on the issue, the court holds that EPA's interpretation is reasonable. Clean Air Act §105(b) grants EPA broad authority to make grants under terms and conditions necessary to carry out the purpose of §105, which is to provide programs for the prevention and control of air pollution and to implement air quality standards in the states. EPA's set-aside regulation furthers this goal by providing that EPA may use any uncommitted funds to accomplish what a state has failed to do in cleaning up its air. The court also holds that EPA was not prohibited from reallocating state grant moneys to fund its promulgation of federal plans by the principle that federal agencies may use appropriated funds only for the purposes designated by Congress. The Fiscal Year 1988 Appropriations Act did not earmark a specific sum for grants to the states, but indicated that a specific amount was designated for EPA's abatement and control compliance activities.

Counsel for Petitioner
Michelle Jordan
Attorney General's Office
100 W. Randolph St., State of Ill. Ctr., Chicago IL 60601
(312) 814-6987

Counsel for Respondent
Gary Guzy
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000

Before BAUER, Chief Judge, MANION and KANNE, Circuit Judges.