In a show of the increasing influence of climate change concerns at the state level, the Kansas legislature failed yesterday to override Governor Kathleen Seblius’ veto of a bill that would have opened the door for expansion of Sunflower Electric Power Corp’s (“Sunflower”) coal-fired power plant in Holcomb, Kansas. Although the Kansas Senate easily approved the veto override by a vote of 32 to 7, the House fell four votes short.

Legislative leaders who supported the project told Sebelius last week to accept a compromise that would reduce the size of the project from 1,400 megawatts to 1,200 megawatts, or face a veto override. Sebelius, who had already vetoed the 1,400 megawatt power plant and proposed a single 660 megawatt facility, rejected the proposal, citing concerns over projected emissions of 11 million tons of carbon dioxide annually.

The showdown between Sebelius and the legislature resulted from a decision by Kansas Secretary of Health and Environment Rod Bremby last October to deny an air-quality permit for Sunflower on climate change grounds. Legislators argued that the decision to hold up the project would damage Kansas’ business climate and result in higher costs for electricity.

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Environmental groups have filed an administrative challenge to a state permit issued to Duke Energy Corporation for a proposed $2.4 billion expansion of its Cliffside, N.C., coal-fired power plant. The contested case petition, filed on March 27, alleges that the North Carolina Division of Air Quality’s (NCDAQ) permit violates state and federal clean air standards for a list of air pollutants, including carbon dioxide (CO2).

Southern Environmental Law Center (SELC), which brought the petition on behalf of a number of federal and regional environmental groups, argues that the Clean Air Act’s (CAA) Prevention of Significant Deterioration (PSD) provisions require NCDAQ to apply the Best Available Control Technology (BACT) for carbon dioxide. SELC grounds its argument in the premise that CO2 is “subject to regulation” under the CAA — a premise that is not accepted by the Environmental Protection Agency (EPA) and is currently being litigated before the EPA’s Environmental Appeals Board in the In re Deseret Power Electric Cooperative case.

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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.

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The Environmental Protection Agency’s Environmental Appeals Board (EAB) declined to hear a Clean Air Act (CAA) challenge to a permit issued for construction of a coal-fired electric generating plant near Springfield, Illinois, on grounds the petitioners failed to properly raise their climate change arguments during public comment on the draft permit. Although the EAB did not reach the merits of the petitioners’ argument that the failure to include Best Available Control Technology (BACT) for CO2 violates the CAA, the Board did note that the issue “remains a matter of considerable dispute.”

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

Lawsuits challenging coal-fired power plant permits from Oregon to Georgia have the potential to shape the regulatory future of industries that emit large quantities of greenhouse gases. These lawsuits are taking aim at power plants under two statutes: the Clean Air Act (CAA) and the National Environmental Policy Act (NEPA). Although these cases are in the early stages, the issues raised offer insight into what regulatory requirements will look like in a carbon-constrained world.

This post reviews the two CAA petitions filed before the Environmental Protection Agency’s appeals board challenging permitting of coal-fired power plants in Utah and Illinois, with plaintiffs’ groups vowing to challenge on CAA grounds permitting decisions by state boards in Georgia, Arkansas, Montana, and Oregon.

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Leveraging the decision in Massachusetts v. EPA, public interest groups are using the National Environmental Policy Act (NEPA) to challenge approvals of coal-fired power plants on global warming grounds. Montana Environmental Information Center v. USDA, No. 07-1311 (D. D.C. July 23, 2007).

The groups sued to enjoin Rural Utilities Service (RUS), an agency of the U.S. Department of Agriculture, from providing federal loans for construction of a coal-fired power plant. The plaintiffs asserted that the agency failed to assess adequately the proposed plant’s environmental impacts, including the impact of CO₂ emissions on global warming. The plaintiffs claimed further that the proposed plant, along with other coal-fired power plants seeking funding from RUS, “could account for a significant share of U.S. greenhouse gas emissions.” RUS’s failure to consider these cumulative impacts on global warming in its Environmental Impact Statement, according to plaintiffs, violates its obligations under NEPA to take a “hard look” at actions that could impact the environment.

The Supreme Court’s decision in Massachusetts v. EPA did not involve NEPA and did not address whether federal agencies must consider global warming potential when undertaking such actions as permit approvals or funding decisions. The Ninth Circuit’s recent decision in Center for Biological Diversity v. NHTSA, however, concluded that regardless of whether climate change is outside the control of the agency whose action is at issue, NEPA obligates the agency to assess the effects of its own actions on greenhouse gas emissions. Courts’ willingness to require agencies to consider global warming in regulatory decisionmaking will complicate previously routine actions such as funding coal-fired power plants.

Briefing in the case is slated to begin March 7, 2008 and conclude May 30, 2008.

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Last month, the Kansas Department of Health and Environment (KDHE) denied an air quality permit for the proposed $3.6 billion expansion of a coal-fired power plant on grounds the emissions would contribute to global warming. The state’s denial of the permit demonstrates the extent to which concerns about climate change can derail previously routine permit proceedings, without warning or precedent.

KDHE Secretary Roderick Bremby denied the permit - over staff recommendations that the permit be issued - based on an opinion from the Kansas Attorney General indicating that state law authorizes the Secretary to address air contaminants that substantially endanger public health and welfare. Following the denial of the permit, Kansas Governor Kathleen Sebelius released a letter to the “people of Kansas” expressing her support for the decision. Governor Sebelius stated that the power plants would produce 11 million tons of carbon dioxide each year, and the impact of global warming on Kansas could be “devastating.” State lawmakers, concerned with electricity demands in the area, have responded by promising to overturn the decision.

Sunflower Electric Company filed suit in state county and appeals courts on November 16 challenging the denial of the permit on due process protection and statutory grounds. On November 27, the Chief Justice of the Kansas Supreme Court signed an order transferring the cases to the high court; a schedule for briefing and arguing the case has not yet been set.

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On November 27, 2007, the State of Washington’s Energy Facility Site Evaluation Council stayed an application for a new “clean coal” power plant by Energy Northwest (a consortium of 20 public utilities in the Northwest United States), citing climate change concerns.

The Council ruled unanimously that the application failed to meet the requirements of a law enacted earlier this year, mandating that all new energy facilities include a Greenhouse Gas Reduction Program (GGRP). The statute requires that electrical generators limit greenhouse gas emissions to specified levels; any emissions above the statutory limit must be captured and sequestered permanently. Energy Northwest’s application did not contain any specific plans for emissions capture, so the Council ordered that the application process be halted until Energy Northwest offers a suitable GGRP.

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The Sierra Club is challenging EPA’s issuance of a permit for a waste-coal-fired generating unit at a power plant in Utah that did not establish Best Available Control Technology (BACT) emissions limits for CO₂. In re Deseret Power Electric Cooperative (EAB Appeal No. PSD 07-03, Oct. 1, 2007).

Sierra Club asserts that because the Supreme Court has determined that CO₂ is an “air pollutant” under the Clean Air Act (CAA), EPA is obligated to establish BACT for CO₂ emissions in the permit. EPA responded that while the Supreme Court’s decision Massachusetts v. EPA confirmed that CO₂ is a “pollutant” under the CAA, it is not yet a pollutant “subject to regulation” for which BACT is required. EPA indicated that it would determine in the future whether CO₂ endangers public health or welfare, which would be the first step in EPA’s regulation of the pollutant. If EPA delays too long, however, the courts may answer the question for the agency.

The Environmental Appeals Board granted review of the permit decision on November 21, 2007.

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