Montana Supreme Court hears arguments on permits for Laurel power plant

Earthjustice attorney Jenny Harbine argues on behalf of the Montana Environmental Information Center and Sierra Club in front of the Montana Supreme Court on May 15, 2024. (Photo by Blair Miller, Daily Montanan)

The short-term fate of NorthWestern Energy’s new methane-fired power plant in Laurel and whether it was properly granted permits now rests in the hands of the Montana Supreme Court after justices heard oral arguments Wednesday in the case challenging the state’s analysis for the plant that, when operational, is expected to emit more than 700,000 tons of carbon dioxide a year.

Combined with the pending appeal of a district court’s decision in the Held vs. Montana case, the court’s decision in the two cases will have broad ramifications over what environmental protection provisions in the state constitution mean and what the state must analyze when considering granting permits for energy projects that emit carbon dioxide, methane, and other greenhouse gases.

The Montana Environmental Information Center and Sierra Club first sued the Department of Environmental Quality and NorthWestern Energy in 2021 over the planned 175-megawatt Laurel Generating Station, alleging the DEQ had not taken a hard look at emissions from the power plant or at the impacts of lighting and noise from the project on nearby residents.

How the case got to the Supreme Court

In April 2023, Yellowstone County Judge Michael Moses found the environmental assessment the DEQ produced violated the Montana Environmental Policy Act in part because the department failed to consider the plant’s environmental impacts from greenhouse gas emissions within Montana and to fully consider lighting impacts to residents living nearby.

Moses vacated the permit until DEQ could perform a more thorough environmental analysis, which temporarily stopped construction that was ongoing at the plant. But he declined to rule on the groups’ argument that failing to perform a climate analysis violated the provision of the state constitution that provides a right to a clean and healthful environment.

But NorthWestern Energy appealed halting the permit 11 days after Moses’ order, and the Republican-supermajority Legislature suspended its rules and crafted a new bill that leadership said was a direct response to the ruling.

The bill amended the MEPA to say that environmental reviews for projects, when considering permits, could not include an evaluation of greenhouse gas emissions and climate impacts both inside and outside of Montana unless it was done alongside a federal agency or if Congress changes the Clean Air Act to regulate carbon dioxide as a pollutant.

In two weeks, the bill passed both chambers, and Gov. Greg Gianforte signed it into law on May 8. On May 16, however, the Supreme Court ruled in a case from Flathead County that a judge had improperly vacated a permit granted by DEQ for a separate project when the judge did not follow the new, current law to overturn a permit.

That ruling, combined with the changes to the law, led the court in Yellowstone County in June to reverse the decision to stop work on the plant.

“Although only two months have passed since this court issued its order vacating the air quality permit for the Laurel Gas Station, much changed in the legal landscape,” Moses wrote at the time, “Whether (NorthWestern and DEQ) will have to analyze the impacts of LGS’s carbon dioxide emissions within the boundaries of Montana will depend upon the changing legal landscape.”

The MEIC also appealed parts of the original decision that upheld portions of the DEQ’s permits granted for the plant and the decision to pause the original order vacating the other permits.

Oral arguments center on whether judge improperly vacated permit

The bulk of Tuesday’s oral arguments, held in the Supreme Court chambers in Helena, went back to the Supreme Court’s findings in the Flathead County case that said the district court had erroneously vacated the permits for that project, and whether that same analysis applied in this case.

DEQ attorney Jeremiah Langston told the justices the department believes that in the case of the Laurel plant, Moses substituted his own judgment in place of the law when he vacated the permit in the first place. He argued that attorneys for the plaintiffs were incorrectly interpreting which section of a statute applies when looking at remedies for when someone successfully challenges a permitting decision.

“The district court must make specific findings before granting other equitable relief. Vacature is other equitable relief. Therefore, a district court must make specific findings before vacating a permit under MEPA,” Langston said.

He said the supplemental environmental assessment originally ordered by Moses was still on hold, that the DEQ had planned to analyze greenhouse gas emissions for the plant until House Bill 971 was signed into law, and that the district court decision in the Held vs. Montana case, which overturned the MEPA limitation barring consideration of climate impacts, has further complicated the current landscape.

“It would be immensely helpful to DEQ to know what laws apply to its MEPA analysis for the project. I assume the court will manage its docket in a rational and reasonable way, but if the courts could somehow issue its decision at the same time as Held or tie the two cases together so that DEQ knows whether or not to apply HB 971, it would be very helpful to the agency,” Langston told the justices.

NorthWestern Energy attorney Shannon Heim argued that since the MEPA limitation from 2011 was in effect initially, which prohibited environmental reviews from looking into impacts outside of Montana, and then the 2023 limitation was in effect, DEQ had no ability to deny the permit under the Clean Air Act based on greenhouse gas emissions.

“An agency is not required to perform a MEPA review of environmental effects it cannot lawfully prevent or regulate if it cannot lawfully prevent or regulate that environmental effect. Therefore, a permit cannot be conditioned or denied upon failure to perform such a review,” she said.

Jenny Harbine, an attorney with Earthjustice, presented the arguments on behalf of the MEIC and Sierra Club. She told the court that DEQ can regulate pollutants as a whole because granting an air quality permit is how the state allows pollution to occur from power plants in the first place, and that in 2021, the MEPA limitation allowed the state to regulate emissions within Montana.

Harbine said if the Supreme Court did not uphold Moses’ original decision vacating the permit, their constitutional argument that the granting of the permit would violate Montanans’ right to a clean and healthful environment should be addressed by the court.

“It’s very important to note this case isn’t being considered in a vacuum,” she said. “The court’s concurrent consideration of these two cases allows for a fulsome consideration of the very broad impacts and harm, constitutional infringement, from the climate limitation, and the very specific practical application of that climate limitation to a single large fossil fuel project.”

She said she agreed with Langston that solving that issue in the Held case would also solve it in the MEIC case, but noted that NorthWestern has said it could have the plant in Laurel up and running by the third quarter of the year.

The Held case has been fully briefed in the Supreme Court, but the court has yet to set a date for oral arguments in the state’s appeal. Attorneys for the Held plaintiffs said Tuesday they hoped a date would be set by the court soon.

Harbine also noted that lawmakers changed the law regarding relief in challenging state agency permitting decisions last session in Senate Bill 557, requiring people to obtain an injunction before a permit can be voided and post a bond in case the affected party has their project wrongfully stopped.

She said NorthWestern calculated the cost of delays had the pause remained in place to be more than $60 million, which she said would prevent nearly anyone from trying to challenge a permitting decision in the first place and violates MEPA’s entire purpose when it comes to public scrutiny of the state’s decisions surrounding the environment.

The attorneys for DEQ and NorthWestern Energy asked the court not to vacate the original permit should it remand the case back to Yellowstone County. Harbine wants the court to vacate the construction and operation permit “unless and until DEQ complies with MEPA and its constitutional obligations.”

Heim, NorthWestern’s attorney, argued that Harbine’s contention the laws were preventing the public from upholding MEPA discounted NorthWestern’s role in Montana.

“She talked about all of the harm to the public by doing a bonding, but that ignores the harm to the utility, and the underlying issue of, ‘What is the project? What is the purpose?’” Heim said. “And for us, our purpose is to serve Montana. This project serves Montana, and ultimately, we ask the court to overturn the district court and reinstate our air permit.”

Justice Dirk Sandefur was not present at the hearing Tuesday, but Chief Justice Mike McGrath said he would be reviewing the argument and participating in the opinion. Decisions from the court typically come several months after they hear oral arguments in a case.

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