An effort led by Earthjustice attorney Abigail Dillen challenging federal government funding of new dirty coal power plants has paid off. The federal Rural Utility Service (RUS) reversed itself and announced that due in part to uncertainty over litigation, it will not fund new dirty coal plants in 2008 and 2009. The Rural Utility Service, an arm of the U.S. Department of Agriculture, provides low-cost financing to rural electric cooperatives. It has issued more than $1.3 billion in loans for new plant construction since 2001.

The RUS announcement reverses a position it took last May when it said it would process a loan application to fund 85 percent of a proposed coal-fire power plant near Great Falls, Montana, at an estimated cost of $600 million. In July 2007, Earthjustice filed a lawsuit challenging RUS financing of the Montana power plant, citing RUS’ failure to consider the global warming implications of financing several new coal plants.

The RUS funding suspension will also affect at least five other proposed coal plants in Kentucky, Illinois, Arkansas, Texas, and Missouri.

“This is a big decision. It says new coal plants can’t go to the federal government for money at least for the next couple years, and these are make or break times to get these plants built,” said Earthjustice attorney Abigail Dillen.

American coal-fired power plants currently dump 2 billion tons of greenhouse gases into the atmosphere annually which exceed the emissions of any other source. NASA’s top climate scientist has said the most immediate thing needed to ward off global warming is to stop construction of new dirty coal-fired power plants.

The RUS announcement is the latest bit of bad news for would-be coal plant operators. Recently Wall Street downgraded coal stocks, citing cost increases of burning coal coming when Congress regulates greenhouse gas emissions.

Last month Congressman Henry Waxman sent a letter to RUS questioning their financing of new dirty coal plants. They said they were “concerned that financing these huge new sources of greenhouse gas emissions puts taxpayer dollars at risk, as well as undermines the United States government’s efforts to address global climate change by reducing greenhouse gas emissions.”

“We will know that the Rural Utilities Service has agricultural interests at heart when it starts promoting clean renewable energy that directly benefits rural agriculture instead of promoting coal,” said Anne Hedges of the Montana Environmental Information Center. “Now it has a chance to help the country and rural communities by funding renewable energy sources that truly benefit local people.”