Jul 30 - McClatchy-Tribune Regional News - James Mayse Messenger-Inquirer, Owensboro, Ky.

Attorneys for the state Natural Resources and Environmental Protection Cabinet and Thoroughbred Generation attempted to sway the state Court of Appeals on Tuesday into overturning a lower court ruling that has effectively blocked the construction of a 1,500-megawatt coal-fired power plant in Muhlenberg County.

For their part, lawyers for the Sierra Club argued the lower court had ruled properly to deny Thoroughbred an air emissions permit, saying the proposed plant's pollution controls were recognized as insufficient by the lower court judge.

The Court of Appeals will likely issue a judgment within a month. Whether that ruling is the end of the dispute is an open question, since either side can appeal.

Peabody Energy wants to build the Thoroughbred Energy Campus near Central City. Officials announced their intention to build the coal-burning power plant in 2001, and the state granted the company an air emissions permit in 2002 -- but the Sierra Club appealed the ruling.

In 2005, a hearing officer for what was then called the Environmental and Public Protection Cabinet recommended the permit application be sent back for more review, to make sure the plant would use the best available pollution control technology. In her 300-page report, the hearing officer also recommended further study to ensure the plant's emissions would not injure plant and animal life.

One year later, then-Cabinet Secretary LuJuana Wilcher overruled the hearing officer's recommendations and granted Peabody the permit. The Sierra Club sued, and a Franklin Circuit Court judge ruled last year the permit should not have been granted, saying Wilcher's decision was not backed up with evidence.

The state environmental cabinet then appealed the Franklin Circuit Court ruling. During much of Tuesday's hearing, the three-judge panel focused on whether stronger emissions control technology was available when Peabody was designing the plant.

Attorney Robin Thomerson, one of the lawyers representing the environmental cabinet, said the burden was not on the cabinet and Peabody to prove the plant had the best pollution controls.

"When you issue a permit and a challenge comes forward ... the burden of proof is set by regulation and says the burden of proof is on the challenger to show the Cabinet made the error," Thomerson said.

The sulfur dioxide scrubbers in the original plan would remove 98 percent of the pollutant from plant emissions. But the permit process requires companies that will emit pollutants to utilize the "best available control technology" to reduce emissions -- and the Sierra Club argued that technology existed when the plant was being designed that would reduce sulfur dioxide emissions by 99 percent.

Thomerson said the Sierra Club's petition "did not show a 99 percent rate was available or achievable." When Judge Joy Moore noted the hearing officer's report listed several plants that had achieved 99 percent sulfur dioxide removal, Thomerson said that level of removal was not consistent.

"Many of them worked in the short term but couldn't work in the long term," Thomerson said.

Harry Johnson, an attorney representing Thoroughbred, said later that companies can only use technologies that are "commercially" available.

"There are technologies out there that will work, but it's a two-prong analysis," Johnson said. "You have to go to the second step: What can (the technology) achieve in the life of the plant?

"We methodically went through (and found) ... the 99 percent was not achievable every single day," Johnson said.

"A (best available control technology) limit is something we've got to meet all the time," Johnson said. "The (state Division of Air Quality) is going to be knocking on your door when you don't meet that limit."

Vendors asked to bid on the sulfur dioxide scrubbers could not guarantee they could meet the 99 percent standard, Johnson said.

Sierra Club attorney Sanjay Narayan said the hearing officer's report showed other plants had eliminated 99 percent of their sulfur dioxide emissions. Thoroughbred had failed to use "best available control technology" for the pollutant because other plants had eliminated 99 percent of their sulfur dioxide emissions while Thoroughbred's plan was to eliminate 98 percent.

"They were commercially available," Narayan said.

When Judge Jeff Taylor asked if a "line" had to be drawn, Narayan said: "The line has been drawn (on pollution controls): You have to be able to go out and buy it.

"The whole point of the (best available control technology) requirement is to make sure (plants) use state-of-the-art technology," Narayan said. " ... All you have to look at is what ... is commercially available."

When Moore asked if a technology could be considered "commercially available" if vendors would not guarantee it would consistently meet the 99 percent standard, Narayan claimed Peabody did not ask for a 99 percent guarantee.

The hearing officer's report says Peabody's bid letter required firms to submit a system to eliminate 98 percent of sulfur dioxide but made bids for a system that would eliminate 99 percent optional.

The lack of a vendor guarantee is "not evidence something is not commercially viable," Narayan said. The 98 percent standard was based on what other plants had achieved in the past, not on what was commercially available, Narayan contended.

"The Cabinet never got to the topic of whether it is technologically feasible," Narayan said.

Thomerson said the hearing officer recommended against issuing the air emissions permit based on data that became known after Peabody had submitted its permit application. Such "post-dated" information should not have been considered, Thomerson said.

"That's what the whole permit process is -- what is available, what is achievable -- at the time the permit is issued," Thomerson said. " ... At the time the permit was issued, that was the best available control technology."

Clayton asked why an analysis hadn't been done on the effect of plant emissions on surrounding areas. One concern Sierra Club officials have raised is the proximity of the plant to Mammoth Cave National Park.

Johnson said such a study was not required for the permit.

"You have other regulations that look at the impact of all the other sources combined," Johnson said. The federal Environmental Protection Agency did not object to the plant receiving a permit, and the National Park Service withdrew its objections after emissions controls were upgraded, Johnson said.

Narayan said the EPA has a limited role in the state's permit process.

The Sierra Club argued emissions from the plant would place the region at the limit in terms of air quality, which would prohibit development of other businesses that would emit pollutants as well.

Johnson said Wilcher correctly read the regulation to mean she could only look at the effect of such "increment consumption" in Muhlenberg County.

"The Cabinet is giving all of that resource to one party," Narayan said. Public notice about plant emissions should have included information about areas affected by "increment consumption," Narayan said.

"A state-of-the-art plant, at the end of the day, will only be good for Kentucky's economy," Narayan said. A plant with the best available pollution controls would allow for other economic development in the surrounding region and would reduce respiratory illnesses attributed to industrial emissions, Narayan said.

Such illnesses don't "cost industry anything, but it costs the state quite a bit," Narayan said.

After the hearing, Roger Brucker, one of the individuals who filed suit against the permit with the Sierra Club, said the appellate court's ruling would have a broad impact.

"I think there are a number of coal plants planned," Brucker said. "If the Cabinet can (issue permits) on the basis of what was achieved in the past ... anything is possible."

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