updated 11/12/2010 8:15:21 AM ET 2010-11-12T13:15:21

The Arkansas Supreme Court said Thursday that it will clarify elements of state law that apply to a federal lawsuit in which landowners are seeking to block operation of a $1.7 billion coal-fired electric generation plant being built in southwest Arkansas.

The Hempstead County Hunting Club filed the lawsuit against Southwestern Electric Power Co. earlier this year after the utility announced it would use the plant to sell power on the wholesale market. SWEPCO made the move after the state Supreme Court overturned a permit for the plant that was granted by the Arkansas Public Service Commission.

The plant had been intended to provide power to SWEPCO's Arkansas rate-payers, which would require a permit from the Public Service Commission. The high court found that the commission did not go through proper procedures in the permitting process.

The hunting club contends that the plant violates state and federal statutes.

In October, U.S. District Judge William R. Wilson Jr. issued a preliminary injunction that blocked continued construction on a part of the plant that involved filling a wetland. That order was sought by environmental groups, which are also suing.

The hunting club argues that the plant should not be exempt from obtaining a Certificate of Environmental Compatibility and Public Need from the Public Service Commission, a requirement that SWEPCO says it is no longer bound by because the electricity won't go directly to its Arkansas rate-payers.

The state Supreme Court agreed to answer three questions at issue in the federal lawsuit.

The court is to say whether the hunting club should seek relief first before the Public Service Commission on the permitting issue. It will also clarify whether the utility waived its right to an exemption to obtaining a commission permit by having gone through the permitting process before it changed course. The court will also say whether a separate state law requires SWEPCO to seek a permit from the commission.

SWEPCO, based in Shreveport, La., says it plans to sell electricity from the plant to its customers in Louisiana and Texas, as well as wholesome customers in Arkansas.

Lawyers in the case didn't respond to phone messages Thursday seeking comment.

In October, SWEPCO said construction at the John W. Turk plant was 40 percent complete on the 620-megawatt plant and that it expects employment will peak at 1,800 to 2,000 jobs next March.

Members of the hunting club bringing the suit include Damon Young, Mary O'Boyle, Yancey Reynolds and F. Patrick Schultz.

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