US Top Court Overturns Duke Clean Air Law Ruling

US Top Court Overturns Duke Clean Air Law Ruling

PlaetArk US

3rd April 2007

WASHINGTON - A unanimous Supreme Court Monday overturned a lower court's ruling that would have allowed utility Duke Energy Corp. to modernize aging coal-fired power plants without reducing air pollutants.

The case had been closely watched by the industry because it could determine whether US electric utilities must spend billions of dollars on emission-reduction equipment and whether similar lawsuits against other US utilities for alleged noncompliance with the Clean Air Act will succeed.

About half of the nation's electricity comes from coal plants, many of which have been operating for decades and need to be overhauled to stay out of mothballs.

The justices set aside a ruling by the Fourth Circuit Court of Appeals that Duke did not need a permit from the US Environmental Protection Agency because hourly emissions from Duke's plants in North and South Carolina would not increase.

Writing the high court's opinion, Justice David Souter said the appeals court's reading of 1980 regulations "was inconsistent with their terms and effectively invalidated them." The case was remanded to the lower court.

Environmental groups had argued that federal law requires utilities to install anti-pollution equipment if they make plant modifications that change their annual - not hourly - emissions of nitrogen oxides, sulfur dioxide, and other pollutants.

Those emissions are linked to heart disease, respiratory ailments and other health problems.

The Natural Resources Defense Council, an environmental group, called the ruling a victory and said it will lead to cleaner air in dozens of US states where coal plants operate -- mostly in the Midwest and Southeast.

Charlotte, North Carolina-based Duke said it was disappointed with the ruling.

"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 (federal emissions regulations)," Duke Energy's chief legal officer Marc Manly said in a statement. Between 1988 and 2000, Duke replaced or redesigned tube assemblies at older coal-fired power plants it built prior to 1975 in order to extend their working life.

Those actions spurred a lawsuit from the Clinton administration's Justice Department in 2000, which alleged that Duke violated federal law by failing to get permits.

The Edison Electric Institute, which lobbies for most major utilities, said the ruling leaves intact major regulatory uncertainties which have clouded the industry's path going forward.

However, the court did not rule on a major issue of many federal lawsuits -- whether "routine maintenance" activities at power plants should trigger federal requirements.

"This exclusion was not addressed by the court, and it remains a valid defense for the industry," said Dan Riedinger, a spokesman for the group.

Utility experts say the case does not bode well for the industry's ability to run aging coal-burning plants without retooling them. "Everything is trending against running cheaper power for longer periods of time," said Kevin Book, an analyst with Friedman, Billings, Ramsey and Co. Inc. "As a proxy for other coal related law suits, this doesn't bode well."

(Additional reporting by Jim Vicini in Washington and Lisa Lee in New York)

Story by Chris Baltimore

REUTERS NEWS SERVICE