Environmental Lawsuit Threatens $625 Million Power Plant Overrun That Ratepayers Could Eat

An environmental lawsuit nearly pulled the plug on a Tennessee power plant, threatening thousands of union jobs and potentially leaving electricity customers footing a hefty bill before a federal appeals court intervened.

The Sixth Circuit Court of Appeals granted the Tennessee Valley Authority (TVA) a stay pending appeal Friday, allowing construction to continue on its $2.5 billion Kingston natural gas plant after three environmental groups successfully challenged the project’s approval under the National Environmental Policy Act (NEPA). A prolonged shutdown could add an estimated $625 million to the project’s cost, according to TVA testimony cited in the ruling.

“Even a short work stoppage would deprive them of ‘their paychecks,’ while a longer one might force them to ‘find another job,’” wrote Circuit Judge Eric Murphy, an appointee of President Donald Trump, referring to the roughly 2,000 union construction workers employed on the project.

Roughly 2,000 union construction workers could lose their paychecks during a work stoppage, while electricity customers could face higher utility bills and future power shortages, according to the court’s Oct. 16 opinion.

The Sierra Club, Appalachian Voices and Center for Biological Diversity sued the TVA in October 2024, arguing that the utility failed to adequately consider alternatives to the gas plant and improperly committed to the project before completing its environmental review.

The authority does not comment on active litigation. The Sierra Club, Appalachian Voices and Center for Biological Diversity did not immediately respond to the Daily Caller News Foundation’s request for comment.

The Sierra Club, a national environmental advocacy organization; Appalachian Voices, a nonprofit focused on environmental protection; and energy issues in Appalachia and the Center for Biological Diversity, a conservation group focused on protecting endangered species and ecosystems, sued the TVA in October 2024, arguing that the utility failed to adequately consider alternatives to the gas plant and improperly committed to the project before completing its environmental review.

The Sierra Club has been involved in several other legal and political battles over American energy policy. The environmental group joined a coalition challenging Washington state’s voter-approved natural gas protections, which the state’s Supreme Court struck down in September.

The organization was also among environmental groups challenging the Trump administration’s rollback of Biden-era power plant regulations and participated in a Colorado campaign supporting legislation that would make fossil fuel companies pay for climate-related damages.

The dispute centers on the TVA’s effort to replace its aging Kingston coal-fired plant in Harriman, Tennessee, with 1,500 megawatts of natural gas generation. Construction began in April 2024, with completion now expected in December 2028, according to the ruling.

The environmental groups filed their lawsuit six months after construction began but did not seek a preliminary injunction, allowing construction to continue throughout the litigation, according to the appeals court.

A district court subsequently ruled that the TVA violated NEPA by failing to consider enough viable alternatives and entering an agreement with East Tennessee Natural Gas before completing its environmental review. The court vacated the authority’s project approval, effectively requiring construction to stop, according to the opinion.

However, the appeals court concluded that the TVA was likely to prevail and warned that the lower court’s decision could impose substantial economic consequences.

A TVA construction official estimated that a work stoppage could force the utility to rehire workers, renegotiate labor contracts and absorb additional equipment-related costs. More than half of the construction workers commute over 50 miles to the project, potentially complicating their employment and living arrangements if construction stops, according to the ruling.

The consequences could extend beyond the construction site. An extended delay could create a “high risk of power outages and rolling blackouts” across the authority’s service territory during peak electricity demand, according to a TVA official’s declaration cited in the opinion.

The appeals court also rejected the environmental groups’ suggestion that TVA could prioritize residential customers by curtailing electricity to businesses, including large data centers, according to the ruling.

“It is difficult to see how two mere ‘procedural’ hiccups could justify these potentially enormous harms,” Murphy wrote.

The environmental groups have argued that the TVA failed to consider cleaner and less expensive alternatives, with the Southern Environmental Law Center contending in September that the utility committed ratepayer money to the project before completing the required environmental review.

However, the appeals court questioned the district court’s interpretation of NEPA, concluding that the law does not necessarily require multiple viable alternatives when only one can meet an agency’s legitimate objectives.

“The unwarranted interruption of power may cause serious and unnecessary economic loss and possibly even loss of life,” Murphy wrote, citing an earlier federal appeals court decision.

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