IMAGE: POWER PLANT
Chris Keane  /  AP file
Duke Power, the owner of this power plant in Mount Holley, N.C., and dozens of others, is at the center of a case being heard by the U.S. Supreme Court.
updated 11/1/2006 4:58:44 PM ET 2006-11-01T21:58:44

Several Supreme Court justices reacted skeptically Wednesday to a Clinton-era clean-air plan that is costing the electric power industry billions of dollars for installation of pollution control equipment at aging coal-fired plants.

The government reluctantly joined environmental groups in the fight against Duke Energy Corp. over the interpretation of 26-year-old federal rules that the Bush administration has proposed relaxing.

The outcome of the Duke case could affect power plants in 10 states where utility companies are being sued under the New Source Review program. The plants are the remaining targets of what had been more than a dozen lawsuits brought by the government.

Federal regulators suddenly switched their interpretation of the 1980 rules and sued Duke in 2000, Carter Phillips, a lawyer for Duke, told justices.

Lawyers for the environmental groups and the government said Duke and other utilities always have understood federal requirements and chose not to comply with them, an assertion that prompted extended scrutiny from the justices.

Issue of interpretation
Justice Antonin Scalia said it is “a little bit of an exaggeration” to argue that the regulations always had been interpreted the same way by the government. He pointed to a federal regulator who long ago gave a different interpretation that favors Duke.

“Companies can get whipsawed,” Scalia said in suggesting the Environmental Protection Agency might have changed the way it applies the rules.

Lawyer Sean Donahue, representing Environmental Defense and two other groups opposing Duke, said a court challenge to the rule in the early 1980s went against industry, with the decision spelling out what the regulation requires.

“If they are so clear,” why did an EPA official in the 1980s interpret the rule in favor of the position Duke is taking? asked Justice Samuel Alito.

Donahue said the official “misapplied” the rule in what Donahue called “an anomalous circumstance.”

“I know you say he’s wrong,” Alito replied. “But if somebody in his position with his expertise can interpret the regulations in that way, doesn’t that show that they’re not clear on their face?”

At the start of his argument, Donahue got exactly three sentences out before Chief Justice John Roberts interrupted. He noted that Donahue’s statement, which the lawyer was presenting as fact, was disputed by Duke.

Bush administration on both sides
Justice Ruth Bader Ginsburg focused on a recent EPA rule-making that would adopt Duke’s position on how to measure pollution emissions.

That is “only a proposal,” replied Deputy Solicitor General Thomas Hungar, struggling to address a point that has put the Bush administration in a difficult position in the case.

A few months after Duke won in the 4th U.S. Circuit Court of Appeals in Richmond, Va., the Bush administration proposed an industry-friendly rule that is along the lines of what Duke and other utilities always have wanted.

If not for the environmental groups, there would have been no case Wednesday in the Supreme Court. The government asked the high court not to take the case, a move that would have left Duke victorious if the justices had gone along.

At issue is whether the appeals court had the authority to handle the case when it ruled in favor of Duke last year. Also in dispute is whether pollution emissions should be calculated hourly, as Duke wants, or annually, as the environmental groups say.

The enforcement program is aimed at reducing power plant emissions of nitrogen oxide and sulfur dioxide that contribute to smog and acid rain.

States where utility companies are challenging federal requirements are Alabama, Indiana, Kentucky, Ohio, Pennsylvania, North Carolina, South Carolina, Tennessee, Virginia and West Virginia.

The case is Environmental Defense v. Duke Energy Corp., 05-848.

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