Appeals court rejects coal group appeal of TVA decision to shut part of Paradise

A three-judge panel at the U.S. Sixth Circuit Court of Appeals on Oct. 23 rejected the appeal by the Kentucky Coal Association of the Tennessee Valley Authority‘s decision to shut later this decade two of three coal-fired units at the Paradise power plant in western Kentucky and replace them with new gas-fired combined-cycle capacity built at the same site.

The panel noted that any judicial power to halt such a project arises only if the TVA acted arbitrarily and capriciously in making its decision. “Because that was not the case, any problems from the conversion are not ours to fix,” the judges ruled. “We affirm.”

Upon the completion by TVA of a new 1,085-MW natural gas-fired facility at the Paradise site, coal-fired Units 1 and 2 with a summer net capability of 1,230 MW will be retired. The coal-fired Unit 3 would be the only coal unit at the site to remain in operation.

In 2012, the U.S. Environmental Protection Agency told the TVA that it needed to reduce emissions from some of the coal-fired units at its plants, including Units 1 and 2 at the Paradise Fossil Plant in Drakesboro, Kentucky, to comply with the Clean Air Act and its regulations. In response, the TVA considered several options, including two in particular: maintaining coal-fired generation by retrofitting the Paradise units with new pollution controls; and switching the fuel source from coal to natural gas.

The TVA initially picked the retrofitting option but conditioned that choice on “satisfactory completion of required environmental reviews.” After more than a year of environmental study, the TVA changed its mind. It decided to switch from coal to natural-gas generation at Paradise Units 1 and 2, and concluded that the conversion would be better for the environment. The TVA issued a “finding of no significant impact” on the environment stemming from the newly-configured project.

The court ruling noted: “The Kentucky Coal Association, as its name hints, was not a fan of this decision. Neither were local businesses and landowners. Together, the three groups sued to halt the project, alleging that the TVA exceeded its authority in making the decision. The district court denied the plaintiffs’ motion for a preliminary injunction, and granted the TVA’s motion for judgment on the administrative record. The plaintiffs appealed.”

Notable is that Paradise is almost a minemouth power plant, getting its coal from nearby mines, so the loss of two of three of its coal units would have an economic impact in the region beyond the shutdowns themselves.

The ruling pointed out: “Federal courts may ‘hold unlawful’ an agency’s action or failure to act when it is ‘arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.’ This is not an invitation for judicial second-guessing.” So long as the agency examined the relevant data and articulated a satisfactory explanation for its action, the three-judge said it will not set aside TVA’s decision.

In this instance, the plaintiffs contend that the TVA acted arbitrarily in two ways: it failed to follow the particulars of the Tennessee Valley Authority Act for making such decisions; and it failed to consider the project’s environmental effects in an impact statement under the National Environmental Policy Act.

The decision to switch to natural gas advances TVA’s current Integrated Resource Plan (IRP) for “a more balanced, diverse portfolio of energy resources,” the judges ruled.

Court says more coal shutdowns than originally planned not a relevant factor

The plaintiffs rely on the fact that the Paradise decision contributes to the TVA’s shutting down about 7,000 MW of coal generation across its system, even though the IRP recommends idling only up to 4,700 MW of system-wide coal generation. The TVA, the plaintiffs claim, has no authority to “simply disregard rules” that it previously created. “But the TVA did not disregard the Plan in making the Paradise decision,” the court ruled. “In addressing the point, it helps to clarify what the Plan does and what it does not do. The Plan creates broad ‘strategy alternatives’ and provides ‘guideline ranges for key components’ of the TVA’s entire power system. It ‘does not dictate a specific series of actions’ or ‘[f]inalize specific asset decisions’ at particular plants. It thus sets nothing in stone about the appropriate amount, even the appropriate range, of coal or natural-gas generation across the entire system, much less at the Paradise plant in particular. 

On the subject of local enconomic impacts, the National Environmental Policy Act is not a national employment act, and its environmental goals and policies were never intended to deal with social problems such as those presented here, the court said. “The TVA at any rate did consider these and other socioeconomic effects and concluded that, while some negative effects may result (such as a 2% reduction in the county’s workforce), they would not significantly affect the human environment,” the judges wrote. “That decision was reasonable in light of the regulations and our precedent.”

The decision added: “Finally, plaintiffs argue that the retrofitting option would have been a much better policy choice, as it would save money, help the environment, and support the local economy. Maybe; maybe not.” The court said that such an analysis is not relevant in this case.

In other recent news for the Paradise project:

  • The Federal Energy Regulatory Commission said in a Sept. 25 notice that it plans to issue an environmental assessment covering a March application by Texas Gas Transmission LLC for approval to construct and operate a natural gas pipeline leading to the Paradise plant. This is known as the Western Kentucky Lateral Project, which would provide up to 230,000 million British thermal units per day of firm natural gas transportation capacity. The project would include the construction of 22.5 miles of 24-inch-diameter pipeline connecting the existing Texas Gas Midland 3 Compressor Station to the TVA’s Paradise Fossil Plant.
  • TVA issued on July 13 a final 2015 Integrated Resource Plan that shows how the federal utility plans to sharply reduce its coal-fired generating capacity over the next few years, including the shutdown of Paradise 1 and 2. TVA operates 10 coal-fired power plants consisting of 41 active generating units with a total capability of almost 11,900 MW. By 2016, the existing coal fleet will decrease to about 35 active units with a total capability of 10,300 MW. After evaluating how to comply with the federal Mercury and Air Toxics Standards, TVA decided to retire Paradise Units 1 and 2 upon completion in 2017 of the adjacent combined cycle plant currently under construction.

The Paradise Fossil Plant is located next to the Green River in Drakesboro, Ky. It currently consists of three cyclone furnace coal-fired boilers (Units 1-3), three distillate oil-fired heating boilers, eleven distillate oil-fired space heaters, three natural-draft cooling towers, and solid fuel, limestone, ash, and gypsum handling processes. The boilers are fueled by coal with distillate fuel oil used for start up and low load conditions to ensure flame stability.

  • Units 1 and 2 are identical cyclonic steam boilers, each with a maximum capacity of 6,959 MMBtu/hr and a nameplate capacity of 704 MW.
  • Unit 3 (the one that will survive the shutdowns) is a cyclonic steam generating boiler with a maximum capacity of 11,457 MMBtu/hr. The nameplate capacity is 1,150 MW.
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.