A federal appeals court sided yesterday with industry groups that have been fighting a government crackdown on aging coal-fired power plants, ruling that utility giant Duke Energy did not break the law when it modernized its facilities without obtaining a permit.

The Richmond-based U.S. Court of Appeals for the 4th Circuit said Duke did not violate the Clean Air Act when it upgraded eight plants that provide electricity in North Carolina and South Carolina. The Clinton administration had accused Duke and other utilities of expanding their facilities without adding modern antipollution devices to combat dangerous emissions.

"Common sense would seem to dictate this result. Supreme Court precedent certainly does,'' a three-judge panel wrote in the ruling, which upheld a lower court decision that said Duke did not need a permit for the upgrades because overall emission levels at individual plants would not increase.

The enforcement policy in dispute was developed by the Environmental Protection Agency in the mid-1990s to crack down on aging power plants and refineries that enlarged their facilities and increased their emissions without installing new antipollution equipment. Under the Clean Air Act, these older plants are exempted from modern pollution standards unless they modernize and expand their facilities and generate "new sources" of emissions.

The ruling is another blow to an effort begun late in the Clinton administration to crack down on coal-fired plants that are the major source of health-threatening pollutants and green house gas emissions blamed for global warming. The Clinton Justice Department and states filed lawsuits against the parent companies of dozens of older power plants and refineries, and Charlotte-based Duke was one of the largest companies sued.

While the Justice Department and EPA have continued to pursue these cases, the Bush administration responded to pressure from the utility industry by attempting to alter rules to make it far more difficult to bring similar cases in the future.

Industry groups hailed yesterday's ruling as a major victory, pointing out that the 4th Circuit is the first appeals court in the nation to pass legal judgment on the crackdown.

"The decision in Duke eviscerates the legal basis for the lawsuits,'' Scott Segal, director of the Electric Reliability Coordinating Council, said in a statement. He said he hopes the EPA will now "focus its resources in more appropriate and less costly ways to improve air quality."

Duke Energy, which is one of the nation's largest electric utilities, said in a statement that the ruling "further supports the fact that our company has -- for decades -- understood and lawfully complied with the requirements of" the Clean Air Act.

Frank O'Donnell, president of Clean Air Watch, called the decision "a very perverse reading of the law" and said it is a "setback for clean air in areas covered by the 4th Circuit.'' The 4th Circuit covers Virginia, Maryland, West Virginia, North Carolina and South Carolina.

But O'Donnell pointed out that some lower courts in other states have issued rulings against the industry and that some companies that operate coal-fired plants have settled the cases.

"It would be a tragedy for public health if the government stopped enforcing the law just because of this one case,'' he said.

An EPA spokesman, who spoke on the condition of anonymity, said the government is reviewing the ruling and will determine "an appropriate course of action.''