Key Points

  • The Sixth Circuit granted TVA a stay pending appeal of a district court judgment that vacated the environmental impact statement and Record of Decision for its Kingston gas plant.
  • The panel held TVA likely to succeed because NEPA's 'reasonable range of alternatives' requirement can be met when only one feasible alternative serves an agency's reasonably defined purpose and need.
  • The panel questioned the legal source of NEPA's precommitment prohibition and concluded that TVA's Precedent Agreement with East Tennessee Natural Gas contained conditions precedent letting TVA exit if it rejected the gas plant.
  • The panel held that the APA likely permits remand without vacatur for NEPA violations and that the identified errors did not warrant vacatur given their limited seriousness and the disruptive consequences of a shutdown.
  • The panel found irreparable harm in unrecoverable construction costs and grid-reliability risks, and noted unresolved doubts about the conservation groups' Article III standing.

A federal appeals court on Oct. 16 allowed the Tennessee Valley Authority to keep building a $2.5 billion gas-fired power plant in Harriman, Tenn., suspending a trial judge's ruling that the agency approved the project in violation of the National Environmental Policy Act.

Judge Murphy wrote for a Sixth Circuit panel that included Judges McKeague and Thapar. The panel granted TVA's emergency motion for a stay pending appeal, which freezes the lower court's judgment while the appeal is decided. Construction on the half-finished plant can continue.

On the merits, the judges concluded that NEPA, which requires federal agencies to prepare a detailed environmental impact statement, likely does not force an agency to study two workable alternatives when only one exists. And they held that the Administrative Procedure Act likely lets courts return a flawed NEPA review to an agency without voiding its decision, a remedy the Sixth Circuit has not yet adopted.

TVA, the nation's largest public power provider, is replacing its 1950s coal-fired Kingston plant with a gas plant meant to supply at least 1,500 megawatts. Its February 2024 impact statement also weighed updated coal units and solar and energy-storage facilities. TVA found the solar option could not be finished by its 2027 target. TVA approved the gas plant in an April 2024 Record of Decision and began construction that month.

Appalachian Voices, the Center for Biological Diversity and the Sierra Club sued six months later but never sought a preliminary injunction, so construction continued through two years of litigation. TVA estimates that supply-chain problems will delay completion until at least December 2028.

U.S. District Judge Curtis L. Collier of the Eastern District of Tennessee rejected two of the groups' four claims but found two NEPA violations. The judge read the statute's demand for "a reasonable range of alternatives" to require at least two feasible options that served the project's purpose. Collier also found that a 2021 "Precedent Agreement" with East Tennessee Natural Gas, LLC, which is building a 122-mile pipeline to the plant, committed TVA to gas before its review was complete. The court vacated, or voided, the impact statement and the Record of Decision.

"TVA will likely succeed for three reasons. The district court misread the phrase 'range of alternatives' in NEPA," Murphy wrote. The parties agree on appeal that only the gas plant met TVA's purpose and need. Collier had relied on a dictionary definition of "range" as "a series of things in a line." Murphy responded that "the word 'range' itself has a range of meanings. And we doubt the court picked the right one." The panel read the word to mean scope, which can cover a single qualifying option.

The panel also rejected the district court's view that 2023 amendments to NEPA, enacted in a law called the BUILDER Act, imposed new requirements. Murphy wrote that "one might find it surprising" that a statute with that name "would impose more procedural hoops."

On the second violation, Murphy wrote that "we do not know where this 'precommitment' prohibition comes from," noting that regulations some courts had relied on were held invalid by the D.C. Circuit and later rescinded. The panel left that question open. It concluded that TVA likely made no forbidden commitment because the agreement's conditions precedent, events that must occur before a party is bound, included completion of TVA's NEPA review. "In plain English, then, if TVA's NEPA analysis led it to disqualify the gas plant, it could get out of the agreement," Murphy wrote.

The groups had argued that the agreement required only some completed NEPA review, not a decision choosing gas. The panel found that TVA and East Tennessee Natural Gas, which filed an amicus brief, both read the contract to let TVA exit. "Yet why would the parties enter a contract for a 122-mile pipeline to nowhere?" Murphy wrote.

The panel added that TVA would likely prevail even if the district court was right about the law. Remand without vacatur, in which a court sends a decision back for more analysis while leaving it in force, is settled relief in other circuits, the opinion said, and the Supreme Court suggested in 2025 that the remedy applies to NEPA. "Because we deal only in likelihoods at this emergency stage, it suffices to hold that the APA likely permits remand without vacatur for NEPA violations," Murphy wrote. The judges did not find the claimed errors "fatally serious" and called the costs of a shutdown high. "It is difficult to see how two mere 'procedural' hiccups could justify these potentially enormous harms," the opinion said.

On irreparable harm, the panel cited a TVA officer's declaration that a work stoppage could raise the plant's cost by 25%, or $625 million, and idle about 2,000 union workers. Another officer warned that a long delay could create a "high risk of power outages and rolling blackouts" across TVA's territory. The groups argued that TVA inflicted any harm on itself by building during the suit. Murphy wrote that "none of their cases supports the claim that a defendant has a duty to cease operations merely because a party has sued it."

The panel also raised doubts about the groups' Article III standing, the constitutional requirement that a plaintiff show an injury a court can remedy, which the parties have not yet briefed. Murphy wrote that "we remain unsure how the Conservation Groups satisfy all these elements for their two successful claims."

TVA was represented by Beau Carter of Baker Botts L.L.P. The conservation groups were represented by O.W. "Trey" Bussey of the Southern Environmental Law Center. Jeremy C. Marwell of Vinson & Elkins LLP was on the brief for the amicus curiae.

The stay of the vacatur order and judgment remains in place while TVA's appeal proceeds, and the panel said it would have to consider standing before affirming any relief. Responding to members' fears of pollution once the plant runs, Murphy wrote that "we will resolve this appeal well before then."