Supreme Court hears arguments in Duke Energy's NSR case

On Nov. 1, the US Supreme Court heard oral arguments in a historic case involving eight Duke Energy Corp. power plants in North and South Carolina. From 1988 through 2000, Duke Energy modernized eight aging, coal-burning power plants in North and South Carolina which allowed each to run more hours and consequently produce more emissions. At issue in the case, Environmental Defense v. Duke Energy, is how to measure utilities' compliance with the Clean Air Act's New Source Review (NSR) program, which governs emissions from plants that have been modernized or expanded. NSR requires the installation of pollution controls on newly constructed power plants and on existing power plants in which modifications are made that result in an increase in emissions. At the rule's inception in the 1970s, the Environmental Protection Agency (EPA) measured emissions on an hourly basis, which gave power plants a major loophole: Companies could modify their older plants to extend their hours of operation and not increase their hourly emissions, rendering them safe from NSR regulations. In 1988, the EPA announced new regulations in which a power plant could be subject to litigation if a project led to an increase in annual emissions. The EPA, under President Clinton, filed a lawsuit in 2000 with Environmental Defense contending that Duke Energy should have installed new pollution controls on the plants. The plaintiffs asserted that the plants' total emissions, when measured annually, were dramatically increased, and thus subject to NSR. But Duke countered that the proper standard was not the total amount of pollution its plants emitted, but the rate at which they emitted it, as the initial NSR rules entailed. By that measure, the company said, its renovations had not changed the plants' capacity for pollution. The legal case has worked its way through the courts, and the 4th US Circuit Court of Appeals ruled in favor of Duke's reading of the law in June 2005. The appeals court said the regulations were open to an "hourly rate only interpretation." The Supreme Court is now hearing the case despite the Bush administration's attempts to persuade the court to reject the case prior to the Nov. 1 opening arguments. The outcome of the case could affect power plants in 10 states where utility companies are challenging federal requirements under the NSR program. The plants are the remaining targets of more than a dozen lawsuits brought by the government against utilities starting in 1999. The Bush administration announced in 2002 that no new cases would be brought against utilities over NSR regulations.