Kentucky coal group sues TVA over Paradise shutdown decision

The Kentucky Coal Association filed a federal lawsuit on July 10 against the Tennessee Valley Authority, claiming it failed to do a complete environmental review of a decision to shut two out of three coal units at the Paradise power plant.

The lawsuit was filed at the U.S. District Court for the Western District of Kentucky, which represents the region where the Paradise plant is located.

Said TVA in a July 11 e-mail statement about the lawsuit: “It is our practice not to comment on pending litigation but we believe we fully complied with our obligations on the Paradise decision. The business decision to build a natural gas plant was made after a deliberative process in which all options were considered. An Environmental Assessment was conducted and posted for an extended public comment period. The TVA board based its decision on what is best for the 9 million consumers in the TVA service area.”

“This is an action for preliminary and permanent injunctive relief against TVA; and for a declaratory judgment holding that TVA has acted arbitrarily, capriciously, and contrary to law and in abuse of its discretion and its statutory authority,” said the July 10 lawsuit. “As set forth below, this action challenges TVA’s failure to undertake required environmental analysis under the National Environmental Policy Act (‘NEPA’) and failure to engage in least-cost planning per the TVA Act in connection with its decision to retire two coal fueled generating units at the Paradise Plant (‘Paradise’) and construct and operate a new major power generating combustion turbine/combined cycle (‘CT/CC’) natural gas plant.”

The lawsuit said that NEPA itself, implementing regulations from the Council on Environmental Quality (CEQ), and TVA’s own NEPA implementing regulations all direct that prior to deciding to retire Paradise Units 1 and 2 and construct a new natural gas-fired facility with a summer generating capacity of up to approximately 1,025 MW, TVA must prepare an Environmental Impact Statement (EIS).

“TVA did not prepare an EIS before deciding to construct this major new power generating facility with highly controversial environmental impacts,” the legal action said. “Instead, TVA conducted only a more limited Environmental Assessment to inform a decision with a significant effect on the quality of the human environment, unmistakable potential for controversy, and a cost of over a billion dollars.”

Lawsuit says this action has a ‘significant impact,’ despite TVA’s finding

TVA ultimately selected Alternative C in the environmental assessment after finding it to have no significant impact on the quality of the human environment.

“If performed correctly, TVA’s EA would have acknowledged that Alternative C will have a significant impact on the quality of the human environmental and prompted TVA to initiate an EIS to comply with NEPA, CEQ regulations and its own NEPA implementing regulations,” said the lawsuit. “In an attempt to avoid that requirement, TVA characterized the construction of a new 1,025 MW gas-fired facility and its related infrastructure as an ‘upgrade’ or ‘maintenance’ of the existing coal fueled facilities, implying that characterization allows it to ignore the significant environmental impacts of constructing an entirely new facility and associated fuel supply and storage structures and of decommissioning and demolishing the existing coal fueled units. This characterization is arbitrary and capricious, and unsupported by substantial evidence.

“Further, TVA failed to prepare an EIS to inform its decision to decommission and demolish the two existing coal fueled generating units known as Paradise Units 1 and 2, a decision with significant environmental impacts,” the lawsuit added. “The proposed action – abandoning TVA’s previous investment in emission controls on Paradise Units 1 and 2, demolition and removal of those two units, and building a brand new facility with necessary infrastructure installations – is highly controversial, representing a sudden change of course by the TVA Board of Directors and running contrary to almost all public comment on the Environmental Assessment. It also sets a precedent to construct new gas-fired facilities and infrastructure rather than implementing less expensive and less environmentally impactful emission control upgrades, by segmenting and deferring analysis of the environmental impacts of various components and aspects of the decision.”

In addition to failing to prepare an EIS, the lawsuit said that TVA:

  • failed to consider a legitimate No Action Alternative;
  • failed to examine reasonable alternatives to the chosen alternative;
  • prejudged its decision prior to and outside of the NEPA process;
  • failed to provide for adequate public comment on its Finding of No Significant Impact;
  • improperly segmented its environmental impact analysis and thus ignored the
  • decommissioning component of the chosen alternative; and
  • improperly segmented and thus ignored the significant environmental impacts associated with constructing one or more 24-inch diameter natural gas pipelines extending up to 20 miles over private properties and the construction of a 5 million gallon fuel oil storage system.

Local landowners impacted by gas pipeline also join the suit 

There are other plaintiffs to the lawsuit besides the coal association. For example, plaintiff James Rogers III is the controlling member of J.L. Rogers Family LLC and purchases power generated by TVA. His company owns property through which a pipeline to serve the new gas-fired facility at Paradise would likely be built.

“On or about June 24, 2014, Jimmy Rogers was contacted by TVA’s agent or supplier, Texas Gas Transmission, LLC (‘Texas Gas’) who is developing a 24 inch diameter pipeline to supply TVA’s new facility,” said the lawsuit. “Texas Gas seeks access to J.L. Rogers Family, LLC’s property to ‘conduct land boundary engineering design, archeological and environmental surveys.’ Texas Gas advised that construction is expected to begin in the first quarter on 2016 and the pipeline is targeted to be in service by the third quarter 2016. This was the first notice Mr. Rogers or J.L. Rogers Family, LLC had that TVA and/or its agent and supplier intends to construct a 24-inch diameter natural gas pipeline across the property. Moreover, it is the first time TVA and/or its agent and supplier sought to conduct archeological and environmental surveys on his property.”

Other plaintiffs include other property owners potentially impacted by the gas pipeline.

Plant is one of TVA’s biggest and most efficient coal facilities

The Paradise power plant is located in Muhlenberg County, approximately 35 miles northwest of Bowling Green and 95 miles southwest of Louisville. TVA completed Paradise Unit 1 and Unit 2 in 1963. Construction of Paradise Unit , which TVA plans to keep open, was completed in 1970.

Paradise Unit 1 and Unit 2 are coal fueled cyclone units, each with a rated capacity of 704 MW. Unit 3 has a rated capacity of 1,150 MW. Combined, the three units have a nameplate capacity of 2,558 MW. The three units typically generate 14 million MW of electricity a year. They burn coal from nearby counties in western Kentucky and southern Illinois. Coal is transported to the plant by truck, rail, and barge.

Paradise Unit 1 and Paradise Unit 2 are equipped with selective catalytic reduction (SCR) systems to remove NOx and wet flue gas desulfurization (FGD) systems to remove SO2 and Particulate Matter (PM). A hydrated lime injection system was installed in the fall of 2011 to control sulfur trioxide (SO3) emissions. Paradise Unit 3 is equipped with an SCR to remove NOx, an electrostatic precipitator (ESP) to remove PM, and a recently installed FGD system to control SO2 and acid gases.

The lawsuit noted that Paradise has the lowest delivered fuel costs in the TVA fleet due to its favorable location near the Illinois Basin. The units also have the most stable coal prices, insulating TVA ratepayers from fuel price risk, it added. “Moreover, Paradise Unit 1 and Paradise Unit 2 are two of the most efficient TVA units, and Paradise Unit 2 recently set a new continuous operation record in 2013 with 259 consecutive days in operation.”

U.S. Energy Information Administration data shows that coal suppliers to the plant earlier this year included Armstrong Coal, Alliance Coal and KenAmerican Resources.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.