CINCINNATI (CN) - The Sierra Club has standing to challenge the construction of a government-subsidized power plant that will convert lumber to ethanol, the 6th Circuit ruled.
The environmental group, along with Larry Klein, sued the U.S. Department of Energy and Frontier Renewable Resources LLC in the Western District Court of Michigan in 2011, alleging violations of the National Environmental Policy Act.
The Department of Energy awarded a $100 million grant to Frontier after an environmental assessment showed its proposed Kinross Charter Township ethanol conversion plant would have "no significant impact" on the nearby environment.
A federal judge in Marquette, Mich., dismissed the lawsuit, finding that the Sierra Club had no standing to assert its claims, and even if it did, the claims failed on their merits.
On appeal, the Sierra Club claimed that the district's court determination that the plant could - and would - be built even without the Department of Energy's grant was erroneous, and gives it standing to pursue its claims.
According to a project funding document, the $100 million grant makes up roughly 34 percent of the ethanol plant's cost.
A three-judge panel of the 6th Circuit sided with the Sierra Club, contending that "one can reasonably infer that this project would not proceed if more than a third of its funding disappeared, especially since that funding takes the form of a grant rather than a loan."
Despite ruling that the Sierra Club and Klein have proper standing to pursue their claims, the panel found the Department of Energy's environmental assessment fell within the guidelines of the NEPA.
"The Department's assessment - over 400 pages in length - ... considered the plant's potential impacts on forest resources, threatened and endangered species, land use patterns, cultural resources, weather, air quality, soil quality, water quality, landfills worker safety, noise, traffic, environmental justice and aesthetics," Judge Jeffrey Sutton wrote for the court.
The panel concluded that the "Department's funding of the plant will carry out the requirements of the Energy Policy Act, which aims to reduce dependence on fossil fuels by commercializing alternative renewable energy sources."
To back up its ruling, Sutton bluntly wrote: "(T)here is a good reason, it turns out, for constructing this kind of plant in the Upper Peninsula of Michigan. There are a lot trees there. Frontier plans to purchase the feedstock for the plant - trees - through 'the traditional hardwood pulpwood supply chain' in the area ... [and] two recent studies [show] ... the forest resources in the area ... would continue to increase even with the added demand created by the plant."
The plaintiffs' claims that the government was required to consider alternatives other than simply funding or not funding the project did not sway the panel, who determined that the Department of Energy's assessment considered different plant locations, sizes and supply systems.
An argument put forth by the plaintiffs calling for a more thorough environmental impact statement - in addition to the assessment - based on 10 factors concerning the "intensity" of the plant's impact was also rejected by the panel.
Judge Sutton concluded that "while the 10 factors may show that the department could have prepared an environmental impact statement, they do not show that the department acted arbitrarily and capriciously in not completing one."