ALBUQUERQUE — The U.S. Environmental Protection Agency will have to reconsider an air permit the agency issued last year for a proposed $3 billion coal-fired power plant on the nation's largest American Indian reservation, a federal appeals board has ruled.

The decision by the Environmental Appeals Board in part grants a request by regional EPA officials who wanted to take another look at parts of the permit for the $3 billion Desert Rock Energy Project on the Navajo Nation in northwestern New Mexico.

The board, in a ruling released Friday, said the EPA abused its discretion by not considering integrated gasification combined cycle technology in its analysis of best available pollution control systems for the plant.

"The board concludes that remand of the permit in its entirety on this ground is warranted because reconsideration of the issue could have overarching impacts on the rest of the (agency's) analysis," the ruling states.

Desert Rock critics said Friday they were thrilled with the board's decision.

Environmentalists and the state of New Mexico have argued that Desert Rock — which would be the third coal-fired power plant in the Four Corners region — would further degrade air quality, harm the environment and impact human health.

"This is a coal plant that should never be built," said Mike Eisenfeld of the San Juan Citizens Alliance.

The Navajo Nation's Diné Power Authority and Houston-based Sithe Global LLC have partnered to build the 1,500-megawatt power plant south of Farmington.

They have said Desert Rock would be one of the cleanest coal-burning plants in the nation and it would generate more than $50 million in annual revenues and create jobs on a reservation where more than half of people are unemployed.

George Hardeen, a spokesman for Navajo President Joe Shirley Jr., said the tribe waited years for EPA to issue the air permit in the first place and now the reconsideration mandated by the board will push back economic self-sustainability for the Navajos even further.

"While the country has been experiencing economic hardships for past year, the Navajos have been experiencing it for the past many decades and we've been looking forward to getting started on Desert rock to put the people to work," Hardeen said. "This is more than just a project to sell electricity, it's to help jump start the Navajo economy."

At issue in the board's ruling is whether Desert Rock will be outfitted with the best technology to control emissions. Some critics have said developers should consider integrated gasification combined cycle technology, or IGCC, which turns coal into gas that can be used to generate lower-emission electricity. The success of the technology depends on the type of coal that's used and the location of the plant.

Jeff Holmstead, a partner with Bracewell & Giuliani, a law firm that represents Desert Rock developers, said gasification technology just won't work in the high desert of northwestern New Mexico.

It could take many months and possibly another round of public comment for EPA to complete the required analysis on the air permit.

Aside from looking at coal gasification technology, the EPA plans to reassess the limits for particulate matter emissions, fully analyze methods for controlling hazardous emissions and finish consulting with the U.S. Fish and Wildlife Service about endangered species issues.

Amy Atwood, a senior attorney with the Center for Biological Diversity, one of the groups that opposes the plant, said federal wildlife officials have raised questions about the vitality of endangered fish in the nearby San Juan River.

"The existing conditions are so bad for these fish that this plant may actually put them over the edge," she said. "We'll have to see what happens, but it's at least theoretically possible that the plant may not be built because of those additional effects to already very struggling species."