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

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.

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