7th U.S. Circuit Court Sides With Government, Says Cinergy Corp. Broke Clean Air Rules

WASHINGTON – The government won a round Thursday in a long-running dispute over how much authority it has to force industrial plants to cut air pollution.

Its victory over Cinergy Corp. in a federal appeals court in Chicago could help the Supreme Court decide the issue in a similar case this fall.

The Supreme Court's decision — which is shaping up as a test of the Bush and Clinton administrations' competing legal approaches for cutting air pollution — would affect up to 17,000 industrial plants and the unhealthy air breathed by 160 million Americans.

The facilities are major sources of nitrogen oxides and sulfur dioxide, which contribute to smog, acid rain, soot and other fine particles that lodge in people's lungs and cause asthma and other respiratory ailments.

The Cinergy case turned on whether its power plants could spew more pollutants into the air when they modernized to operate for longer hours. The Environmental Protection Agency said no, because Cinergy should have gone through a federal permit process, and the 7th U.S. Circuit Court of Appeals in Chicago agreed.

"Cinergy's suggested interpretation, besides not conforming well to the language of the regulation ... would elude the permit requirement," Circuit Judge Richard Posner wrote for a three-judge panel of the federal appeals court.

The Cinergy case is one of the lawsuits the Clinton administration filed in 1999 against electric utilities in the Midwest and South. The government contended that 51 aging, coal-burning power plants in 10 states, primarily in the Ohio Valley and the South, illegally polluted for two decades.

The cases were attempts to enforce a neglected and red tape-laden 1977 provision of the Clean Air Act. It requires a company to get a federal permit and install costly pollution controls when modernizing a facility and significantly increasing emissions.

A month before President Clinton left office in 2001, Cinergy agreed to settle its case and spend $1.4 billion to reduce air pollution at 10 coal-fired power plants in Ohio, Indiana and Kentucky. But soon after President Bush took office and said his administration would review the Clinton-era enforcement cases, Cinergy backed out of the agreement.

Earlier this year, the Supreme Court took the unusual step of agreeing to an environmental group's request that it take up a related case.

The court accepted Environmental Defense's request that it hear a case involving Duke Energy Corp., based in Charlotte, N.C., over the same issue as the Cinergy case. Duke Energy acquired Cinergy in April. No one at the company could be reached immediately for comment Thursday.

In the Duke case, the 4th U.S. Circuit Court of Appeals, in Richmond, Va., concluded the opposite of what Posner wrote. Posner took aim at that court Thursday.

"In so ruling, the Fourth Circuit stepped out of its bounds," Posner wrote. "But in any event, the argument's premise is incorrect."

Vickie Patton, an Environmental Defense attorney, said the Cinergy ruling will be pivotal, since it comes from one of the most influential federal court of appeals.

She said the Chicago court's decision sends "a powerful signal that it is time to address the serious human health and environmental impacts of coal-fired power plants."

After Duke won, the Justice Department asked the 4th Circuit to reconsider. But the Bush administration then asked the Supreme Court not to overturn the favorable ruling for Duke. Solicitor General Paul Clement explained that EPA had responded by issuing new regulations.

Those regulations were struck in March by the U.S. Court of Appeals for the District of Columbia Circuit, which said the Bush administration had resorted to "a Humpty Dumpty" interpretation of the law that contradicted Congress' intent.