The U.S. Environmental Protection Agency has challenged an environmental review of a controversial gas-fired power plant planned for Superior, Wis., saying it did not adequately evaluate carbon dioxide emissions.

The EPA made its recommendations last week to the U.S. Department of Agriculture's Rural Utilities Service, which recently completed an environmental review of the $700 million plant.

The plant would be 20% owned by Duluth-based Allete, parent company of Minnesota Power, a utility serving northeastern Minnesota. Minnesota Power would build and operate the plant.

Regulators and courts in both Minnesota and Wisconsin have ruled favorably for the plant — known as the Nemadji Trail Energy Center (NTEC) — but a review process continues at the federal level.

That's because La Crosse-based Dairyland Power, which would own 50% of the plant, is seeking financing for the plant from the Rural Utilities Service. The power cooperative has not disclosed how much financing it is seeking from the federal program.

The program makes low-interest loans to cooperatives for electricity infrastructure.

The Rural Utilities Service conducted an environmental assessment of NTEC and in May 2021 concluded that it would have no significant impact.

However, four environmental groups — the Minnesota Center for Environmental Advocacy, Honor the Earth, the Sierra Club and Clean Wisconsin — asked the USDA to rescind its conclusion and do an analysis of greenhouse gas emissions and climate change.

The USDA's supplemental review — with a climate analysis — was completed in June.

NTEC would pump out 2.24 million tons of carbon dioxide annually, but it would lead to a net decrease of 964,000 tons in overall greenhouse gas emissions on the Upper Midwest's electric grid from 2025 to 2040, the review said.

That's because NTEC would displace coal-fired power — which emits twice as much CO2 — as well as output from less efficient gas generators, according to the review.

NTEC also would reduce transmission congestion on the Upper Midwest grid, which would boost renewable energy, the USDA review said. The Star Tribune has reported that power line congestion has become so bad in southern Minnesota that some wind farms have had to increasingly limit their output.

However, the EPA concluded that the USDA's new review "does not fully quantify or adequately disclose the impacts of the [greenhouse gas] emissions."

The review did not calculate lifecycle greenhouse gas (GHG) emissions associated with NTEC, including for the plant's construction and for gas extraction and transport.

"Without upstream, construction-related activities and indirect GHG emission estimates, it is not clear that project GHG emissions would be lower than GHG emissions in the without-NTEC scenario," the EPA said in its comments.

Also, the EPA estimated that the social cost of carbon associated with NTEC between 2025 to 2040 would cumulatively amount to $2.15 billion. The social cost of carbon takes economic damages into account.

The USDA will continue to take comments on NTEC through most of August before making a final decision on the project's environmental impact.

"The EPA's comments show that the current plan for the Nemadji Trail Energy Center is reckless," Evan Mulholland of the Minnesota Center for Environmental Advocacy said in a statement.

"In a climate crisis, the last thing we should do is add more pollution by building new fossil fuel power plants." Environmental groups are calling on the USDA to reject funding for NTEC.

In a statement, Dairyland Power said NTEC will provide reliable power generation to support its expansion of wind and solar energy plants. Minnesota Power said it will continue to work through regulatory and permit reviews.

The Minnesota Public Utilities Commission (PUC) in 2018 approved Minnesota Power's participation in NTEC, a decision that environmental groups appealed.

In August 2021, the Minnesota Court of Appeals ruled that the PUC correctly found that NTEC is necessary and "serves the public interest better than a renewable-resource alternative."

In May, a Dane County Circuit Court judge affirmed Wisconsin utility regulators' approval of NTEC. Environmental groups have appealed that decision to a higher court in Wisconsin.

North Dakota-based Basin Electric Power Cooperative would be the third partner in NTEC, owning 30% of the plant.