Supreme Court vacates circuit court ruling in Duke case

Washington (Platts)--2Apr2007

The Supreme Court Monday said the US 4th Circuit Court of Appeals erred
when it ruled in favor of Duke Energy in a lawsuit the government brought
against the utility charging it violated the Clean Air Act when it modified a
number of aging coal-fired power plants without also installing additional
pollution controls.

The court said in that in its 2005 decision, the circuit court improperly
found that the "modification" of a power plant under the new source review's
prevention of significant deterioration (PSD) regulations has to conform with
the separate program for new source performance standards. Such an
interpretation, the high court said, "amounted to the invalidation of the PSD
regulations."

"Principles of statutory interpretation do not rigidly mandate identical
regulation here," the Supreme Court said.

Still, the court said that the US Environmental Protection Agency "has
been inconsistent" in its definition of a "modification" during the past 20
years. To the extent the court did not address that situation, the justices
said "Duke may press it on remand."

Justice David Souter wrote the opinion for the court with all the
justices joining. Justice Clarence Thomas filed an opinion only concurring in
part with one section.

The case centered on how EPA should apply NSR after a physical or
operational change at an aging fossil-fueled power plant that had been exempt
from the program, which was established to enforce national ambient air
quality standards.

The electric utility industry argued that upgraded generating units could
be found in violation of NSR only if their emissions increased on an hourly
basis after the change. Environmentalists in the case said NSR requirements
for permits and pollution control equipment are triggered if there is an
actual annual increase in emissions at an overhauled plant.

--Cathy Cash, cathy_cash@platts.com
--Martin Coyne, martin_coyne@platts.com