The Second Circuit U.S. Court of Appeals recently upheld the Environmental Protection Agency's (EPA) exemption of Harvard's Medical Area Total Energy Plan (MATEP) from clean air standards, clearing the way for completion and full operation of the long-delayed and controversial facility by this summer.

The December 18 court ruling affirmed the May decision of Leslie Carothers, EPA acting regional administrator, to exempt the $230 million power plant from Clean Air Act standards because it is a non-profit health and educational institution. Harvard requested the federal exemption after the diesel plant received approval from the state under strict operating conditions.

Residents of Brookline and Mission Hill--the towns nearest MATEP's Brookline Ave. and Francis St. Boston location--appealed the EPA decision, contending that an energy plant incorporated by Harvard as a for-profit institution failed to qualify for the exemption.

But the appeals court rejected all of the arguments by the MATEP opponents, who have fought the plant, claiming that the diesel engines when operating will emit unsafe leves of nitrous oxides.

Judge Hugh Bownes, who wrote the decision, ruled that although MATEP itself is indeed a power plant incorporated under Massachusetts business statutes, "the meaning of 'non-profit institution' does not turn on whether a corporate entity exists or on how it might be classified."

MATEP qualifies as "non-profit," Bownes wrote, because it is "wholly owned by a non-profit institution, Harvard" and because the EPA "could reasonably conclude that the facility will not make a profit on its sales of electricity, steam heat and chilled water" to six Harvard-affiliated teaching hospitals in addition to filling the complete energy needs of the Medical School, Dental School and School of Public Health.

"The phrase 'health or education institution' is broad enough to include a facility owned and operated by the shell corporation of a health or education institution..." Bownes added.

In addition, "the bare possibility that MATEP may sell excess energy to Boston Edison in the future does not affect the plant's non-profit status, "particularly when there is little likelihood that such sales will occur," he wrote.

The decision marked another in a string of MATEP regulatory and court victories begun in November 1980 when, after several years of haggling, the state's Department of Environmental Quality Engineering (DEQE) approved installation of the plant't six diesel engines under 32 operating conditions, aimed at preventing dangerous levels of diesel exhaust.

And now MATEP opponents, who have battled the plant in court since its inception in 1976, have only one legal case pending--a state Supreme Judicial Court appeal of the DEQE approval.

But there is little possibility that a decision on that appeal--which still does not have a court date--will come before the plant is in operation, Harvard officials and plant oponents said yesterday.

Each engine--delivered to the plant in August after more than two years of storage in an area warehouse--currently is being "torn down and put back together" and then installed in a "tune up" program, Joe B. Wyatt, vice president for administration, said yesterday.

DEQE inspection and testing of the first installed engine will probably begin in April, Wyatt said, adding that the entire review will take six to eight months.