Court Sides With Environmentalists Over Utility in Air Pollution Case

By J.R. Pegg

WASHINGTON, DC, April 2, 2007 (ENS) – The U.S. Supreme Court today unanimously upheld a federal program designed to clean up the nation's oldest coal-fired power plants, vacating a lower court ruling that has derailed major air pollution enforcement efforts against Duke Energy and other utilities.

The court rejected a ruling by the 4th U.S. Circuit Court of Appeals that found Duke Energy did not violate provisions of the Clean Air Act when it upgraded eight coal-fired power plants in North and South Carolina during the late 1980s and 1990s.

The Supreme Court ruled that the lower court's interpretation of the law was "too far a stretch" and ordered the court to reconsider its decision.

Environmentalists praised the ruling and said it is a major victory in a broader effort, launched by the Clinton administration, to clean up older coal-fired power plants.

"The decision is going to reverberate throughout the electric utility industry and have a major impact on the air quality in dozens of states," said NRDC attorney John Walke. "It also puts the final nail in the coffin of the Bush administration's ceaseless six-year effort to monkey-wrench the federal laws requiring power companies to bring half-century-old plants up to safe environmental standards."

The case was originally brought against Duke Energy by the U.S. Environmental Protection Agency (EPA) in 2000 and illustrates the confusion with federal rules that aim to clean up older power plants.

The dispute centers on a Clean Air Act provision enacted in 1980 known "prevention of significant deterioration" (PSD). The provision requires utilities obtain a permit from EPA before making a modification to a power plant based on a definition in another part of the law, known as the New Source Performance Standards (NSPS).

But EPA's regulations interpret "modification" differently for the NSPS regulations, enacted in 1975, and the PSD provision.

One of the plant's at the center of the dispute, the Buck Steam Station is a four-unit coal-fired generating station located on the Yadkin River in North Carolina. (Photo courtesy Duke Energy)

The NSPS regulations require the use of the best available pollution control technology when a modification would increase hourly emissions, whereas the PSD rules require a permit only when a major modification would increase annual emissions.

EPA filed suit against Duke Energy alleging its upgrades violated the PSD provisions and that the company failed to obtain the appropriate permits for its modifications.

Duke Energy argued that it did not need the PSD permits because its upgrades did not increase hourly emission rates.

But EPA and the environmental groups who intervened in the case said annual emissions, not hourly emissions, are the true indicator of the impact of a modification on operations as the modifications allowed a plant to run longer hours, thus producing more pollution. They argued that EPA has the authority to use annual emissions in order to define a modification that triggers the need for modern pollution controls.

The appellate court agreed with Duke Energy, but the Supreme Court rejected its decision.

The 4th Circuit's interpretation "amounted to the invalidation of the PSD regulations … and was not a permissible reading of their terms," wrote Justice David Souter, who authored the unanimous opinion.

The PSD regulations "may be no seamless narrative, but they clearly do not define a 'major modification' in terms of an increase in 'the hourly emissions rate,'" Souter wrote.

The court remanded the case back the Fourth Circuit, which must now apply the annual emissions test to determine if Duke Energy's modifications required the installation of new pollution controls.

Duke Energy released a statement expressing its disappointment with the ruling as well as its view that the court's decision is a narrow one that only considered the hourly emissions standard, not what constitutes modifications that trigger the requirement of stricter controls under the Clean Air Act's New Source Review (NSR) program.

"We continue to believe we have solid defenses against the government's claims and will show in the lower courts that our power plant projects were not subject to NSR," said Marc Manly, Duke Energy group executive and chief legal officer.

Blan Holman, senior attorney with the Southern Environmental Law Center, said the case demonstrates "the dangers of 'grandfathering' old polluters."

"Almost two generations of Americans have had to breathe pollution that could have, should have been cleaned up long ago," Holman said. "But industry chose to spend hundreds of millions to prop up dirty plants instead of building cleaner ones."

The decision is "a victory for good government," added Frank O'Donnell, president of the Clean Air Watch.

But O'Donnell noted that the Bush administration is continuing with a plan to enact further changes to the NSR program, pursuing revisions that are at odds with the argument used to win the Duke Energy case before the Supreme Court.

"The Bush administration ought to throw this industry-friendly rulemaking into the trash can and go back to enforcing the law," O'Donnell said.