The Environmental Protection Agency rejected yesterday an application by a consortium of western power companies to build one of the West's biggest and most controversial coal-field power projects, saying it would pollute the air of a nearby Indian reservation.

In a statement issued here EPA deputy administrator Barbara Blum said the application for the twin $1.4 billion power plants at Colstrip, Mont., was turned down because of objections from the Northern Cheyenne Indian tribe, whose reservation lies 13 miles from the proposed plants.

Officials of the utility group said they will seek a court order to contimue construction.

The 760-megawatt plants have been the focus of bitter protests and lawsuits by groups of Indians and environmentalists in the Northwest since they were proposed as an addition to the existing Colstrip power complex five years ago.

Blum said the Indians had requested a "Class I" clean air designation for their reservation under recent amendments to the federal Clean Air Act. The proposed plants, she said, would emit levels of sulphur dioxide in excess of allowable limits under the classification.

The plants, among the nation's largest coal-fired power facilities now on the drawing boards, are the project of four companies led by Montana Power Co.

William Coldiron, executive vice president of Montana Power, said yesterday, "We've already spent $130 million getting ready to build them and they are so badly needed that we do not intend to stop now."

Blum said EPA's denial of the construction application could be changed if the power companies add more advanced pollution control equipment. She said EPA had approved applications for 38 plants having such equipment since the Clean Air Act was passed last August.