UPDATE 1-US court lifts order blocking $655 mln clean-energy transmission line

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By Clark Mindock

May 2 (Reuters) - A U.S. appeals court on Thursday lifted a lower court's order blocking a land exchange needed before developers can build a major clean-energy transmission line through a Mississippi River wildlife refuge.

A three-judge panel of the Chicago-based 7th U.S. Circuit Court of Appeals said a Wisconsin federal judge's preliminary injunction issued in March blocking work on a last stretch of the Cardinal-Hickory Creek high voltage line, which has already cost developers $655 million, was not justified.

The appeals court said the lower court needed to determine the three environmental groups that challenged the swap - the National Wildlife Refuge Association, Driftless Area Land Conservancy and Wisconsin Wildlife Federation - were likely to succeed in their lawsuit, but did not do so.

The decision lifts a major hurdle stopping developers ITC Midwest and Dairyland Power Cooperative from clearcutting a path through the Upper Mississippi River National Wildlife and Fish Refuge for the power line, which would connect Iowa and Wisconsin.

The environmental groups, which claimed in their lawsuit filed in March that the land swap would illegally destroy floodplains and fragment vital wildlife habitat, asked the Wisconsin court for a temporary restraining order hours after the 7th Circuit's decision. They also asked the 7th Circuit to stay its order so the lower court could review the issue.

The refuge "should not be bulldozed before the conservation groups receive their long-delayed fair day in court," Howard Learner, an attorney for the groups, said in a statement.

A spokesperson for the developers said they are pleased with the court's decision, which they had asked for "to avoid imposing further unnecessary delays and additional expenses on this critically important project."

The U.S. Interior Department and U.S. Army Corps of Engineers, which approved the land exchange, did not immediately respond to requests for comment.

The developers of the 102-mile (164 km) power line say the it will connect more than 160 renewable energy projects to the Midwestern energy grid once complete.

The land exchange at the heart of the lawsuit was approved by the federal government in February and would swap around 20 acres (8 hectares) of refuge land in the path of the transmission line to the developers in exchange for 35 acres (14 hectares) of land that would be added elsewhere to the refuge. (Reporting by Clark Mindock; Editing by Josie Kao and Michael Perry)