Kansas Governor Kathleen Sebelius has vetoed legislation aimed at overturning her administration’s denial of an air quality permit for the $3.6 billion expansion of Sunflower Electric Power Corporation’s (”Sunflower”) Holcomb, Kansas, coal-fired power plant.

Kansas Department of Health and Environment (”DHE”) Rob Bremby denied the permit last October on grounds the new units would produce 11 million tons of carbon dioxide each year.

SB 327, which passed the Kansas Senate by a vote of 37-7 but failed to muster a veto-proof majority in the Kansas House of Representatives, would have allowed Sunflower to seek reconsideration of its permit denial while stripping DHE’s authority to deny an air quality permit if the standards imposed by the agency are stricter than those found in the federal Clean air Act.

The issue of whether the Clean Air Act requires greenhouse gas emissions controls in air quality permits is being litigated before the Environmental Protection Agency’s (”EPA”) Environmental Appeals Board, but the EPA has consistently argued that it cannot impose permit restrictions for pollutants that do not have established emissions limitations (and the agency has not established such limitations for any greenhouse gases). The DHE, therefore, would be in the position of denying the permit or imposing emissions limitations on GHG emissions — and bucking the EPA’s interpretation of the Clean Air Act — or bowing to political pressure and approving Sunflower’s expansion plans.

Because the law would have required EPA approval of major emissions source permits to ensure compliance with the Clean Air Act, it is unlikely that DHE could have successfully imposed any restrictions on greenhouse gas emissions in its state air quality permits.

The bill also would have required the promulgation of energy efficiency guidelines for state agencies and established a mandatory renewable portfolio standard. But Governor Sebelius said that the renewable standard “slows down progress we have already made” in the state on investment in renewable technologies, such as wind power. The Governor offered approval of a smaller coal-fired power plant permit as a compromise, as long as the approval is combined with mitigation strategies and additional investment in wind power. Sebelius said the smaller power plant project would provide adequate base load power in western Kansas and provide adequate time for Kansas to develop GHG regulations against which all permits for new and expanded coal-fired power plants could be considered. Sebelius also created the Kansas Energy and Environmental Policy Advisory Group to develop recommendations for opportunities to reduce GHG emissions in the state.

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