A panel of the Georgia Court of Appeals reversed a trial judge's 2008 ruling that said plans for the south Georgia plant should have regulated carbon dioxide emissions. Environmentalists who had hailed the lower court ruling last year as a precedent-setting decision were dismayed.
"We are very disappointed that the Court rejected other important claims that are critical to the protection of public health," said Justine Thompson, director of GreenLaw, which challenged the permit. She said the group will appeal to the Georgia Supreme Court.
LS Power, the plant's developer, said the company looks forward to moving the project forward after years of delays.
"We'll take it," said company spokesman Mike Vogt, who said the ruling overturns 95 percent of the trial judge's order.
"We feel pretty good about our chances here."
The Court of Appeals ruling still likely means another delay for the $2 billion Longleaf Energy Plant because it requires an administrative judge to review the permitting process again.
But the three-judge panel's decision said requiring the state to regulate the greenhouse gas would "engulf a wide range of potential carbon dioxide emitters in Georgia and Georgia alone in a flood of litigation over permits, and impose far-reaching economic hardship on the state."
The plant is expected to create more than 100 full-time jobs and millions of dollars in tax revenues for Early County, where almost a quarter of the 12,000 residents live in poverty. It would power more than a half-million homes through utilities in Georgia, Alabama and Florida.
It would also emit as much as 9 million tons of carbon dioxide each year, worrying critics who say it could cause health problems in a county that already suffers above-average air pollution.
GreenLaw, the Sierra Club and other environmental groups sought to block the plant and others like it because of the April 2007 U.S. Supreme Court ruling that found greenhouses gases were air pollutants.
But even the environmentalists seemed surprised in June 2008 when Fulton County Superior Court Judge Thelma Wyatt Cummings Moore agreed, halting the plant from going forward.
The green groups said that decision was the first time a judge applied a U.S. Supreme Court finding that carbon dioxide is a pollutant to emissions from an industrial source.
Moore ruled that federal air pollution laws require permits for all pollutants that could be regulated under the federal Clean Air Act including carbon dioxide. The gas, which is blamed for global warming, is not currently regulated, though legislation to do so is pending.
Environmental groups had said Moore's ruling would help them stave off 30 other coal plants now in active litigation. At the very least, they said, it's a sign that energy companies will face more challenging legal hurdles over coal-fired power projects.
But the state Court of Appeals concluded that Moore's order would pre-empt federal efforts to regulate the gas, require the state to invent new regulations and ultimately lead to "a regulatory burden on Georgia never imposed elsewhere."
Business groups, which warned Moore's decision could stall other energy plants and hamper economic development, said they were thrilled by the appeals court panel's 34-page ruling.
The Georgia Chamber of Commerce said upholding the trial judge's order would have led to "draconian" regulations.
"It's a big victory for Georgia businesses and consumers," said Ryan Mahoney, the group's spokesman. "It affirms what we said all along: The lower court's ruling was overreaching in the extreme."