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District Court Revives California Gas-Fired Power Project

In what could be a harbinger for a string of energy projects, the U.S. Environmental Protection Agency (EPA) has exempted a proposed 600 MW natural gas-fired electric generation plant in California from new federal emissions rules. The action follows a strong dressing down of EPA's handling of the case by a judge in the U.S. District Court of the District of Columbia last Thursday.

Judge Richard Leon ordered EPA to make a yes-or-no decision on the proposed Avenal Power Center slated for the central valley of California on a agricultural patch of land south of Fresno and within the city limits of Avenal, CA.

In deciding to grandfather the project being pushed by a unit of Houston-based Macquarie Energy LLC, EPA is setting a possible precedent that might also be applied to as many as 20 other pending projects. This prospect has environmental groups worried, and one such organization, Earthjustice, has already indicated that it will challenge the EPA on the Avenal project, according to a recent report in the New York Times.

Earthjustice said it filed comments opposing EPA's proposed exemption for the Avenal plant on behalf of the Sierra Club, the Center for Biological Diversity and the Center on Race, Poverty & the Environment. Clean air advocates, who earlier called for the newer, stronger air pollution restrictions on the plant, vowed to appeal the decision, according to a posting on the Earthjustice website.

Leon's May 26 ruling was part of a three-year-old case between the EPA and the Avenal project, which obtained a final approval from California power plant siting authorities in December 2009. Leon ordered EPA to "issue a final, nonappealable, agency action" -- either granting or denying plaintiff's permit application -- no later that Aug. 27 this year.

EPA didn't wait that long, deciding last Friday to approve the Avenal project, a day after Leon called the federal environmental agency's promises of a final decision "inherently disingenuous."

At issue was the 1977 law passed by Congress mandating that EPA make permit decisions within a year of deeming an application complete. Avenal's application was designated as complete at EPA more than three years ago. In March 2010 Avenal's backers filed a lawsuit in federal district court seeking judicial relief.

EPA said the delay was caused by two unresolved issues -- one with Avenal and the U.S. Fish and Wildlife Service, and a second one involving a new standard it had set for nitrogen dioxide (NO2) emissions. Earlier this year EPA reversed itself and said Avenal could be grandfathered from additional NO2 requirements.

In the early 1990s the EPA established a regulatory process in which the agency could issue an interim decision that was appealable to the Environmental Appeals Board, and it was attempting to apply that regulatory process to Avenal, but the judge ruled that was only applicable within the one-year time limit set by Congress.

"It is axiomatic that an act of Congress that is patently clear and unambiguous [such as the Clean Air Act one-year requirement] cannot be overridden by a regulatory process created for the convenience of an administrator," Leon said in his eight-page ruling.

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