Lawsuit ties up plan for coal plant near Great Falls

By MATTHEW BROWN
Associated Press

Construction of a coal-fired power plant near Great Falls will be delayed pending resolution of a lawsuit that challenged the project's $650 million federal loan request, the project's general manager said Wednesday.

The setback for the Highwood Generating Station, a 250-megawatt facility that would be the largest coal plant built in Montana in two decades, follows action by three Montana cities to reject the power it would provide.

The city of Great Falls, with a 15 percent stake in the plant, had attempted to solicit Missoula, Bozeman and Helena as future Highwood customers. But elected officials from the three cities recently rejected the offers following complaints from residents and environmental groups opposed to greenhouse gas-producing coal plants.

"There was quite a bit of reaction from the public saying, 'Let's please look at other alternatives,' " said Missoula city spokeswoman Ginny Merriam.

Across the country, plans to build new coal plants have encountered opposition in recent months because of their potential to exacerbate global warming. A lawsuit filed in July by three environmental groups sought to scuttle the U.S. Department of Agriculture loan program that would finance construction of Highwood and at least six other plants nationwide.

Loans for those facilities could top $5.1 billion, including $650 million for Highwood, according to the Rural Utilities Service, the USDA division that manages the loan program. The funds would cover 85 percent of the Highwood project's costs.

The utilities service in May gave initial approval to Highwood following an environmental review of the project. The review did not include greenhouse gas emissions because those are not regulated by the federal government.

The plant would be built by the Southern Montana Electric Cooperative and provide power to customers throughout southern and central Montana. Backers of the plant say it would meet growing demand for electricity in Montana and across the West. A coal plant was chosen as more cost-effective and reliable than a wind farm or natural gas plant.

On Wednesday, SME general manager Tim Gregori said construction could not move forward until the lawsuit over the loan program is resolved.

"It is our understanding that the legal challenge ... will have to be resolved before the loan becomes final," Gregori said. He said the project "will move forward as a function of financing."

SME is not a party in the lawsuit, which named as defendants Agriculture Secretary Mike Johanns, Rural Utilities Service Administrator James Andrew and Richard Fristik, an environmental specialist with the agency.

The Rural Utilities Service referred questions about the financing delay to the U.S. Justice Department, which is handling the lawsuit. A Justice Department spokesman, Andrew Ames, declined comment.

No hearings in the lawsuit have been scheduled. Plaintiffs include the Sierra Club, Citizens for Clean Energy and the Montana Environmental Information Center.

Highwood's air quality permit from the Montana Department of Environmental Quality also has been challenged by environmentalists. A hearing on that matter before the state Board of Environmental Review is set for January.

Additionally, the project lacks the necessary zoning permissions from Cascade County, which approved the project but later rescinded that approval as part of a countywide review of its zoning policies.

"There are all sorts of indicators this thing is in big trouble," said Anne Hedges with the Montana Environmental Information Center. "We've had a series of successes in the last couple of weeks that indicate Montana isn't interested in dirty power."

Great Falls City Manager John Lawton said the rejection of electricity from the plant by Bozeman, Missoula and Helena would not undermine the city's share of the project's finances. He added that Bozeman's action came after that city was given some preliminary information but before final details could be offered.

"If they don't want it, that's fine," Lawton said.

Gregori described the multiple obstacles faced by the plant as temporary and expressed confidence it would be built.

"It isn't a matter of, 'If it's delayed to a certain point we stop,' " Gregori said. "It doesn't change the reason for doing it, it just means we are delaying how quickly we can reach our goal."