Supreme Court questions interpretation of modifications
Washington (Platts)--2Nov2006
Duke Energy finally got its day in court on Wednesday when the Supreme Court
heard oral arguments in a case that pits Environmental Defense against the
utility.
Environmental Defense said Duke violated New Source Review rules under the
federal Clean Air Act when it made 29 modifications to eight coal-fired power
plants over a 12-year period from 1988 to 2000, without adding pollution
control equipment to the plants in question.
At issue is not only what type of modifications at a facility triggers NSR but
also the interpretation of the rules. Duke said its work didn't change its
hourly emissions, and NSR is triggered when there is a change in hourly
emissions. Environmental Defense argued that Duke's modifications changed the
annual emissions, and NSR is triggered when a change in annual emissions
occurs.
A majority of the debate before the court centered on the US Environmental
Protection Agency's interpretation of modification and whether utilities like
Duke understood that interpretation.
"What we have here is a physical change in the plants, massive renovations of
their elaborate networks of pipes and tubes that compose a central component,"
Sean Donahue, lawyer for Environmental Defense, told the court.
Duke knew what type of modifications triggered NSR rules, Donahue said. But
Justice Antonin Scalia responded that former EPA Director Edward Reich gave
two opinions about the prevention of significant deterioration program and
that Duke and EPA were in agreement on what it meant.
NSR states that before any modifications are done to a facility, PSD permits
must be obtained. Duke didn't obtain those permits because it said it didn't
need them.
"What I'm concerned about is that companies can get whipsawed," Scalia told
Donahue. "They don't challenge the regulations when they come out because as
far as they know, the agency is interpreting them in a way that they favor."
Outside the courthouse, Duke lawyer Marc Manly said that the utility didn't
challenge the rule because it understood the interpretation.
"Rather, the interpretation now advanced by the appellant of what constitutes
an emissions increase under NSR is an after-the-fact, made-for-litigation
theory that was correctly rejected by the lower courts," Manly said.
A decision is not expected until mid-2007.
The case is Environmental Defense versus Duke Energy Corporation, No. 05-848.
-- Regina Johnson, regina_johnson@platts.com
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