A federal appeals board has blocked a proposed coal-fired power plant expansion in eastern Utah, citing the project's failure to adequately address the issue of carbon-dioxide emissions.

A large national law firm that represents electric utilities said Thursday's decision will "require the Obama administration to decide early in its tenure whether and to what extent it intends to regulate CO2 emission under the CAA (Clean Air Act)."

But another law firm said the nation's electric utility industry can actually breathe a "sigh of relief" this week, because the ruling didn't impose a specific regulation and instead sent the issue back to the Environmental Protection Agency for further review.

The Environmental Protection Agency's Environmental Appeals Board blocked a construction permit previously issued by the EPA's regional Denver office. The Deseret Power Electric Cooperative has been planning to expand the 486-megawatt Bonanza Power Plant, located southeast of Vernal.

As a result of the board's decision, the matter "goes back to the drawing board," said Pat Gallagher, director of environmental law for the Sierra Club. Utah Physicians for a Healthy Environment and Western Resource Advocates were among several groups that filed briefs in support of the Sierra Club.

The Deseret Power expansion calls for a 110-megawatt plant. Environmentalists' appeal of the plan said EPA officials in Denver failed to explain why the permit they issued for the plant did not include emissions limitations for carbon dioxide. According to estimates, the expansion alone would emit 3.37 million tons of carbon dioxide annually. Nationwide, coal-fired plants emit about 2 billion tons of carbon dioxide each year.

About 90 percent of Utah's electricity needs are met by coal-fired power plants.

Last year, the U.S. Supreme Court ruled against an EPA claim that carbon dioxide is not an air pollutant in need of regulation under the federal Clean Air Act. The regional group Western Climate Initiative, of which Utah is a member, will over the next year be urging states to draft legislation that would hold polluters accountable for carbon dioxide and other greenhouse-gas emissions.

The law firm Akin Gump Strauss Hauer & Feld said on the Web site, www.ClimateIntel.com, that President-elect Barack Obama's administration will now have to decide how to regulate carbon dioxide.

"The decision has immeasurable implications for not only the electric utility industry, but also any industrial facility emitting carbon dioxide," the law firm said.

Frank Maisano, whose Washington D.C. law firm represents coal-fired plant developer Sithe Global, issued a statement saying environmental groups were "over-reading" the board's ruling. Maisano works for the firm Bracewell & Giuliani.