The Environmental Protection Agency has issued an air permit for a 1,500-megawatt coal plant that Sithe Global Power LLC and the Navajo nation plan to build south of Farmington in northwest New Mexico.
Gov. Bill Richardson's administration said it plans to appeal the EPA decision.
Sithe and the Navajo-owned Diné Power Authority have been struggling for four years to get an air permit for the proposed Desert Rock Power Plant -- a $3 billion project that will supply electricity to neighboring states.
Sithe and Diné sued the EPA earlier this year to make a decision on the permit, which, according to federal regulations, should have been issued within one year after the companies filed their permit application in 2003. In June, the EPA issued a consent decree to reach a decision by July 31, at the latest.
Sithe and Navajo officials praised the EPA decision as a major milestone in moving the project forward.
"It's a huge step forward," said Frank Maisano, spokesman for Sithe Global's subsidiary, Desert Rock Energy Co. "The Navajo Nation has been waiting for this a long time. It's a matter of economic opportunity and tribal sovereignty for the Navajos."