The Supreme Court of the state of Kansas last week invalidated a controversial air pollution permit granted in 2010 by state regulators to Sunflower Electric Power Corp.’s proposed 895-MW coal-fired Holcomb 2 plant.

The court ruled in favor of environmental group the Sierra Club, which claimed that the Kansas Department of Health and Environment (KDHE) erroneously interpreted the Clean Air Act and the Kansas Air Quality Act when it failed to apply Environmental Protection Agency (EPA) rules regarding 1-hour emission limits for nitrogen dioxide and sulfur dioxide during its permitting process for the project. Those federal regulations “became effective before the Holcomb 2 permit was issued,” the court said as it reversed KDHE’s issuance of the permit and remanded the matter to the state.

The court last week also noted another Sierra Club claim that KDHE had erred in its application of hazardous air pollution emission requirements had been “rendered moot” by its decision to remand the Holcomb 2 permit. On remand, the state regulator will now be forced to apply new Mercury and Air Toxics Standards that have since been finalized by the EPA to any permits issued to the project.

However, the court threw out the environmental group’s contention that KDHE erred in its analysis when it determined that use of an ultrasupercritical (USC) pulverized coal boiler was not the best available control technology (BACT) for the proposed facility. The record relating to that determination included “evidence supporting the permitting authority’s findings that the use of [USC] technology lacked operating history in the U.S., information regarding the technology’s use and performance in other countries was not accessible or verifiable, and there were concerns about the reliability and maintainability of a facility using the technology,” the court noted.

Significantly, it also found that although a permitting authority has “broad discretion” in considering fuels or innovative technologies when determining BACT, “changing a fuel source from coal to natural gas would redesign a proposed facility and therefore need not be considered.”

The court’s ruling marks a major development in a long-standing dispute about the project’s necessity and its environmental impacts between the Sierra Club, Sunflower Electric, and the state.

Sunflower in 2006 filed an application with the KDHE—under then-governor (and now U.S. Secretary for Health and Human Services) Kathleen Sebelius (D)—for a prevention of significant deterioration (PSD) permit to add three 700-MW units to its existing 360-MW plant in Holcombe, Kan. Soon after, Tri-State Generation and Transmission Association obtained an option from the company for rights to a portion of the new power and facilities.

But in October 2007, though KDHE staff had recommended the PSD permit be approved, the KDHE secretary denied the permit based on the level of carbon dioxide emissions from the proposed plant, declaring greenhouse gas emissions “an imminent and substantial hazard to public health and the environment.” Between 2007 and 2009, the Kansas Legislature passed four bills to try to force approval of the permit, all of which Sebelius vetoed. In 2009, Sebelius’ successor, Mark Parkinson (D), brokered a bipartisan compromise that allowed Sunflower to resume the permitting process for one 895-MW unit. The project received its PSD permit in December 2010. The state’s current governor, Sam Brownback (R), is a strong backer of the utility’s plans.

Sunflower Electric said in response to the court’s ruling last week that it would continue to take “the steps necessary to preserve and advance the project, which is one of many resources under consideration to meet the long-term power needs of our member co-ops.”

Earlier this year, the D.C. Circuit Court separately upheld a district court decision that found in favor of the Sierra Club, ruling that the Rural Utilities Service (RUS), which is part of the U.S. Department of Agriculture, must complete an environmental impact study (EIS) before granting any approvals to Sunflower for its proposed Holcomb plant.

The case is Sierra Club v. Robert Moser (No. 105,493). Kansas’ Supreme Court is its highest court and consists of seven justices, each selected by the state’s governor.

Sonal Patel, associate editor (@POWERmagazine, @sonalcpatel)