ALBUQUERQUE, N.M. -- Navajo Nation officials as well as environmentalists are anxiously awaiting a decision on an air permit for a controversial coal-fired power plant to be built on tribal land.

The U.S. Environmental Protection Agency says it will either deny or grant the permit by Thursday. The Dine Power Authority and Houston-based Sithe Global Power are partnering to build the $3 billion, 1,500-megawatt power plant south of Farmington in northwestern New Mexico.

Approval of the permit would be a huge victory for Desert Rock Power Plant developers, who contend it will be one of the cleanest power plants ever built. Construction on the plant south of Farmington can't start until the air permit and an environmental impact statement are approved.

Margot Perez-Sullivan, a spokeswoman for the EPA in San Francisco, said Wednesday the agency will meet the deadline to act on the permit.

Should EPA grant the permit, tribal officials expect to face legal challenges from environmentalists who contend the power plant would further harm the environment and residents' health.

"I would be knocked-down surprised if they didn't challenge these permits," said Frank Maisano, a spokesman for Sithe. "They've already shown us their cards in every challenge they've made. We don't think they're right on the merits, but we'll see."

The EPA received more than 1,000 mostly negative comments on the air permit.

Mike Eisenfeld of the San Juan Citizens Alliance, which has been fighting the plant, said he believes the comments raised issues about existing air issues in the Four Corners region that would preclude a third coal-fired power plant from being built there.

"We will certainly look at our options and be part of the appeals process and take whatever course of action we need to make the EPA do its job more legitimately," Eisenfeld said Wednesday.

The air permit would set limits for emissions covered under the federal Clean Air Act, such as sulfur dioxide, nitrogen oxides, carbon monoxide, particulates and lead emissions.

The developers applied for the permit in early 2004 and sued the EPA in March, accusing the federal agency of dragging its feet on the permit. Under federal law, the EPA has a year to make a determination and issue a decision.

The EPA filed a consent decree in June, agreeing to make a decision on the permit by Thursday as part of a settlement of a lawsuit.

New Mexico and Colorado officials have accused the EPA of "fast-tracking" the permit. They say if the EPA grants the permit Thursday, it would be in noncompliance with statutory requirements under the Clean Air Act.

They say the proposed plant raises unresolved air pollution issues relating to mercury controls and emissions, greenhouse gases, ozone and haze.