In re Otter Tail Power Company

South Dakota law required a permit for the construction of new power plants. The South Dakota Public Utilities Commission was tasked with evaluating permit applications under criteria set out in the state law, including a finding that the facility would not pose a threat of serious injury to the environment. Otter Tail Power Company (plaintiff), on behalf of several utilities, submitted a permit application for the construction of a new coal-fired electric-generating plant. Several nonprofit environmental organizations (the environmental organizations) intervened in opposition to the permit, arguing that carbon dioxide (CO2) emissions would cause serious injury to the environment. The environmental organizations presented expert testimony that coal-fired plants were a major source of CO2 emissions and that the new plant would contribute to global warming, resulting in increasingly severe disruption of ecosystems and droughts, and reduced crop yields. In response, Otter Tail showed that the projected CO2 emissions from the plant would constitute only a tiny percentage (0.07 percent) of total United States CO2 emissions and pointed out that there were no regulations setting standards for CO2 emissions. The Public Utilities Commission (the commission) granted the permit. The commission found that the plant’s projected CO2 emissions were not significant enough to pose a threat of serious injury to the environment, and that there were no viable renewable alternatives to coal that could supply the needed wattage. The environmental organizations unsuccessfully appealed in South Dakota circuit court, and then sought further review in the South Dakota Supreme Court. The environmental organizations argued on appeal that the commission had failed to consider the threat of serious injury to the environment as required by South Dakota law, and that the commission’s decision was clearly erroneous.