Richmond, Va. — A federal appeals court refused Thursday to dismiss a lawsuit in which  North Carolina accuses the Tennessee Valley Authority of causing a "public nuisance" with pollution from its coal-fired power plants.

The 4th U.S. Circuit Court of Appeals, in Richmond, upheld the decision of a lower court, which also refused to dismiss the lawsuit that state Attorney General Roy Cooper filed in January 2006.

"Clean air is critical to our health and our economy," Cooper said in a statement. "This ruling clears the way for us to make TVA clean up its pollution that's dirtying our air and making North Carolinians sick."

TVA has coal-fired plants in three states: Tennessee, Alabama and Kentucky. Cooper's lawsuit says the pollution from such plants harms North Carolina's health, environment and economy. The TVA argued that as a federal entity, it was immune from such a lawsuit.

TVA spokesman John Moulton said that while the federal utility was disappointed in the appeals court decision, it has been preparing for the case to go to trial.

"And TVA's analysis shows that emissions from North Carolina power plants impact air quality in North Carolina far more than emissions from TVA plants," Moulton said from TVA's headquarters in Knoxville, Tenn.  "This will continue to be true even if the North Carolina plants reduce emissions to comply with North Carolina's Clean Smokestacks Act."

He suggested TVA will argue that North Carolina needs to get its own house in order before coming after coal-fired power plants on the other side of the Great Smoky Mountains.

TVA has already reduced sulfur dioxide emissions by more than 80 percent since 1977 and has cut nitrogen oxide by more than 80 percent during the summer ozone season, he said. Additional emission reductions are planned.

TVA, the country's largest public utility, has spent almost $5 billion on controls and has plans to spend another $3 billion to $4 billion – including $1.2 billion on control projects now under way at the three plants: John Sevier, Bull Run and Kingston, all in Tennessee. Those are the plants closest to the Great Smoky Mountains.

The case is pending trial in U.S. District Court in Asheville, N.C., before Judge Lacy H. Thornburg.