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Lamar coal plant shut down by lawsuit -- maybe forever?

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In a stunning defeat for the beleaguered coal industry, a southeast Colorado utility group has agreed to shut down a troubled coal-fired power plant, as well as to pay $325,000 in legal fees to environmental groups who challenged the plant in court over emission violations. The settlement also calls for the plant to stay offline until at least 2022, when the current agreements to supply electricity to Lamar and other communities expires.

As first reported in my 2010 feature "Black Out," the Lamar coal plant had been a controversial move from the start. A joint effort by the Lamar Utilities Board and the Arkansas River Power Authority, the project involved converting a plant right in the middle of town, which had previously been powered by natural gas, to a coal-burning process -- at a time when many utilities were heading in the opposite direction to meet increasingly stringent emission standards.

The conversion was supposed to provide a cheap, reliable source of fuel and increased power for several towns served by ARPA. But the technical challenges proved more costly than projected and left many locals feeling steamed -- about noise, pollution, breakdowns, and the health concerns associated with operating a coal plant next door to residential neighborhoods. Trinidad and Raton soon dropped out of the deal and sought power elsewhere, complaining of rising costs and mismanagement.

The move also prompted legal challenges from Lamar residents partnered with WildEarth Guardians, a New Mexico-based environmental group. Last fall, U.S. District Judge David Ebel ruled that the plant had violated provisions of the Clean Air Act for at least four years by failing to obtain proper federal clearances for a potential "major source" polluter and ordered a trial to determine what penalties ARPA and the Lamar utility could face.

The plant hasn't been operating with any regularity for months, and ARPA finally decided to settle the lawsuit by taking it out of commission entirely and seeking power from other sources -- most likely coal plants operated by other utilities that aren't so technologically challenged. The settlement also involves a $225,000 payment to the University of Denver's Environmental Law Clinic and $100,000 to WildEarth Guardians, the plaintiffs in the case. ARPA and LUB also agreed to funnel $125,000 into environmental projects in the community, such as solar panels for schools.

An LUB board member told the Lamar Ledger that the settlement was a "win win" and "stops some of the bleeding." The plant cost an estimated $120 million to build, roughly double initial estimates.

WildEarth spokesman Jeremy Nichols points out that the utility can still operate the plant for "testing" purposes for up to 120 days in the next year, perhaps to nail down what went wrong for future litigation against its suppliers. "The bottom line is, they know they have a lemon on their hands," he says.

Read the official consent decree below.

Lamar Consent Decree

More from our Follow That Story archive circa March 2011: "Lamar coal plant: Trinidad sues to get out of 'mismanaged' project."

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