From 1988 through 2000, Duke Energy modernized eight aging, coal-burning power plants in North and South Carolina that allowed each to run more hours and consequently produce more emissions.

Those changes -- and whether the utility should have also installed new pollution controls -- are the subject of a closely watched case being argued before the U.S. Supreme Court today.

The court's decision, expected in early 2007, could affect not only Duke but also plants across the eastern United States that are under pressure from regulators to match plant upgrades with better pollution controls.

A decision in support of the regulators could force power companies to install pollution equipment costing hundreds of millions of dollars per plant. It could also lead to greatly improved air quality, environmentalists say.

The plants collectively emit about 1.6 million tons per year of sulfur dioxide, a harmful pollutant that contributes to respiratory problems in children and the elderly, acid rain, and a white haze that sometimes shrouds the mountains.

"If cleanup is ordered on those plants, we're talking about a very major reduction of those 1.6 million tons," said Blan Holman, an attorney for the Southern Environmental Law Center, which represents advocacy groups, including Environmental Defense, Sierra Club and Environment North Carolina.

Under the federal Clean Air Act, a utility must install pollution controls on old plants whenever modifications are made that result in an increase in emissions. That seems clear enough. But it gets fuzzy, depending on what interval of time is used to measure the emissions.

An older plant that is renovated may not be more polluting hour to hour, but if the improvements allow it to run for more hours, its annual output of pollution may increase. The industry argues that a plant's compliance is based on the hourly standard, while regulators say the plant's annual level of pollution is what matters.

The legal path to today's Supreme Court debate started in 2000 when the U.S. Environmental Protection Agency filed a lawsuit, contending Duke spent hundreds of millions of dollars updating the plants and should have installed new pollution controls. Environmental Defense and others joined the suit the following year.

Duke says its renovations to the plants were routine and done in full view of federal and state air regulators, who made no mention of new pollution controls. Then starting in the late 1990s, Duke contends, EPA took a new stance and tried to force utilities to retrofit old plants with new controls with threats of civil penalties and litigation.

"EPA changed its interpretation of the rules," said Tom Williams, a Duke Energy spokesman.

Lower court rulings

As the legal case has worked its way through the courts, the U.S. District Court and the 4th U.S. Circuit Court of Appeals have agreed with Duke's reading of the law. The appeals court said the regulations were open to an "hourly rate only interpretation."

"The U.S. District Court and 4th Circuit Court of Appeals have both issued solid rulings, supporting the fact that Duke Energy has -- for decades -- understood and lawfully complied with the requirements of the Clean Air Act ...," Williams said.

Contending that the renovations were anything but routine, the EPA has cited Duke's modifications of its Buck Steam Station unit 4 in Rowan County as an example in legal briefs. The World War II-era coal burning unit had been shut down for modernization under a plan to extend the operating life of old plants. After Duke spent $17 million to rehabilitate Buck unit 4, it resumed operation in 1995 -- more than a decade after it was shut down.

It was one of 29 units at eight plants -- seven of them in central and western North Carolina -- that underwent renovations.

Lawyers for Environmental Defense added that Duke's project manager compared the modernization of Buck unit 4 to taking a 1932 Ford and "rebuilding it completely" so it could run from North Carolina to Denver every day.

"It raises a question: Are you doing routine maintenance or something more major?" Holman asked.

Emissions are being cut at some plants. Because of requirements under North Carolina's 2002 Clean Smokestacks Act, Duke plans to add scrubbers to four of its eight coal-fired plants.

Those four plants are responsible for 90 percent of its power production from coal, Williams said. The first of three scrubbers planned for the Marshall plant in Catawba County began operating Monday.