This post is the second part of a two part series analyzing challenges to coal-fired power plant permits under federal statutes.

Challenges to coal-fired power plants under the National Environmental Policy Act (NEPA) may not be as standard as those under the Clean Air Act, but their impact will be no less substantial. Lawsuits challenging permitting of coal-fired power plants under NEPA will, by their very nature, be limited because NEPA challenges require a “major” federal action that significantly affects the quality of the human environment – for example, a funding decision or a permit approval. While the cases may impact a small number of coal-fired power plants, the outcomes will have far-reaching consequences on any private project with greenhouse gas (GHG) emissions that requires federal approvals.

To date, there have been only two lawsuits filed challenging coal-fired power plant approvals under NEPA. Both cases involve loans and other approvals provided by the Rural Utilities Service (RUS), a Depression-era agency created to bring electricity to farming communities. The Sierra Club and local environmental groups argue that RUS’ Environmental Impact Statement (EIS) for the Highwood generating plant near Great Falls, Montana, failed to disclose the project’s carbon emissions and discuss the impacts of those emissions on climate change.

The second case, which involves the Sunflower Electric Corporation’s proposed expansion of its facility in Holcomb, Kansas, alleges failure to undertake an EIS to analyze global warming impacts (among other things), prior to approving alleged construction loans and other financing at the site. The Sunflower case – which also is in litigation over the Kansas Department of Health and Environment’s rejection of its permit on global warming grounds – involves a limited federal handle and defendants certainly will raise objections to Sierra Club’s characterization of RUS’ approvals as a “major” federal action.

If a project is subject to a federal approval or funding decision, the failure of an Environmental Assessment or EIS to consider the project’s impact on GHG emissions likely will open the door to a substantive challenge. This holds true even if the project itself does not result directly in emissions of GHG. Courts have held that the construction of electric transmission lines and the construction of rail lines to transport coal to power plants both required assessments of the indirect impacts of the projects on carbon dioxide emissions. See Border Power Plant Working Group v. Dep’t of Energy, 260 F. Supp. 2d 997 (S.D. Cal. 2003), Mid States Coalition for Progress v. Surface Transportation Board, 345 F.3d 520 (8th Cir. 2003).

In addition to the impacts of the emissions themselves, environmental analyses under NEPA also may be required to consider the impact of climate change — from rising sea levels and increased storm activity to reduced access to water — on the siting of the project. If direct and indirect impacts of a project on a pollutant as ubiquitous as carbon dioxide must be analyzed, along with reasonably foreseeable impacts of climate change on the project itself, the scope of the analysis could be staggering. Although courts have yet to reject an EIS on grounds its analysis of climate change was inadequate, it is a risk that project sponsors must consider.

For further information about this topic, please contact Akin Gump.