WASHINGTON (AP) - Efforts since former U.S. president Bill Clinton's administration to clean up the United States' biggest industrial source of air pollution reached what may be a legal dead end Wednesday.

A federal appeals court ruled power plants can throw more pollutants into the air annually when they modernize to operate for longer hours.

The 4th U.S. Circuit Court of Appeals ruled Duke Energy Corp. didn't need the Environmental Protection Agency's permission when it made improvements between 1988 and 2000 at eight power plants in North Carolina and South Carolina.

While the modifications would allow the plants to operate more hours and, therefore, pollute more each year, what matters is that the hourly rate of emissions wouldn't increase, said a three-judge panel on the Richmond, Va., court.

Among the biggest pollutants from coal-burning power plants are nitrogen oxides and sulphur dioxide, blamed for smog, acid rain and soot and other fine particles that lodge in people's lungs and cause asthma and other respiratory ailments.

The case centred on what Congress meant by the word "modification." The judges said the EPA must interpret it consistently among its various programs.

"Of course, this does not mean that this regulatory interpretation must be retained indefinitely," Judge Diana Gribbon Motz wrote for the three-member panel.

President George W. Bush's administration in 2002 and 2003 rewrote the EPA's "new source review" regulations, which Clinton used to bring suits against 51 aging, coal-burning power plants, primarily in the Ohio Valley and the South. Those new regulations have been placed on hold while federal courts review challenges to them by state officials and environmental and health groups.

Even so, Justice Department officials have continued during the Bush presidency to negotiate settlements in which many of the sued utilities agreed to pay stiff fines and install new pollution controls costing in the tens of millions of dollars. They have also filed six lawsuits against other coal-burning power plants since Bush took office.

Utility industry officials said Wednesday's ruling signals a death knell for the Clinton-era enforcement initiative that resulted from a strict interpretation of the Clean Air Act.

"There can be little doubt this is the beginning of the end of an ill-conceived effort to use an arcane regulatory program," said Dan Riedinger, a spokesman for the industry's Edison Electric Institute.

Scott Segal, a lawyer who heads the Electric Reliability Co-ordinating Council, said the ruling "eviscerates the legal basis" for the Clinton initiative.

John Walke, clean air director for the Natural Resources Defense Council, an environmental group, called the ruling a disappointment. But he said one bright spot for environmentalists is the court did not adopt the utility industry's argument that "routine maintenance" should be exempted from the program.

The Bush administration has been trying to scale back the "new source review" program and make it less burdensome to industry, even as the EPA and the U.S. Justice Department continued to enforce the previous regulations.

The ruling could undermine future settlements. The Justice Department and the EPA said its effects were still being studied.

Duke Energy, headquartered in Charlotte, N.C., was sued by the government in December 2000 for alleged violations of a 1977 Clean Air Act program aimed at cleaning up coal-burning power plants.

"We're extremely pleased," said Pete Sheffield, spokesman for Duke Energy.

"In a word, we feel vindicated by the court's opinion in our favour."