The suit was filed with the US District Court for the District of Columbia by environmental law firm Earthjustice, green group the Sierra Club and others. It claims RUS broke federal environmental laws by not disclosing the impacts of the Montana plant and that it did not consider other power generation sources such as wind power before moving ahead with funding for it.

The suit seeks to stop the office, part of the Department of Agriculture, from approving federal loan funds for the plants until it confronts the global warming impacts of coal burning. The loan rates would be about 2 percentage points lower than commercial rates.

US utilities have rushed to push plans for 150 power plants fired by coal amid flat production of natural gas and rising power demand.

But coal emits more of the main greenhouse gas carbon dioxide than any other fuel and environmentalists and the business world alike are pressuring the government to limit output of the gases.

Congress is increasingly mulling bills that would set limits on the greenhouse emissions and the Supreme Court ruled this year that federal environmental regulators have the power to regulate carbon dioxide emissions from vehicles.

"You have the Supreme Court and Congress finally recognizing that we need to move now to curb greenhouse gas emissions and yet you have the federal government financing a whole new generation of new coal plants," Abigail Dillen, a lawyer for Earthjustice in Montana, said in an interview.

Recently, environmentalists have helped stop plans for eight coal plants in Texas and two in Florida.

The other plants RUS is considering funding are a 600 MW plant in Missouri, a 385 MW plant in Wyoming, a 400 MW plant in Idaho, a 750 MW plant in Florida, a 750 MW coal plant in Oklahoma and two 278 MW coal plants in Kentucky.