Federal Government Reaches Record Settlement in New Source Review Case

American Electric Power (AEP) agreed to cut 813,000 tons of air pollutants annually at an estimated cost of more than $4.6 billion, pay a $15 million penalty and spend $60 million on projects to mitigate the adverse effects of its past excess emissions. The record settlement was announced on Oct. 9 by the U.S. Department of Justice (DOJ) and EPA.

Officials said this is the single largest environmental enforcement settlement in history by several measures. For example, it is the largest settlement in terms of the value of injunctive relief, and will result in the largest amount of emission reduction from stationary sources, such as power plants and factories.

"(This) settlement will save $32 billion in health costs per year for Americans," said Granta Nakayama, assistant administrator for EPA's enforcement and compliance assurance program. "Less air pollution from power plants means fewer cases of asthma and other respiratory illnesses."

"The AEP settlement will have an unprecedented impact on air quality in the eastern United States," said Ronald J. Tenpas, acting assistant attorney general for DOJ's Environment and Natural Resources Division. "This settlement is a major victory for the environment and public health, and it demonstrates our continued commitment to vigorous enforcement of the Clean Air Act."

A coalition of eight states (New York, New Jersey, Massachusetts, Vermont, Connecticut, New Hampshire, Maryland and Rhode Island) and 13 citizen groups joined the federal government in the settlement. The agreement imposes caps on emissions of pollutants from 16 plants located in five states. The facilities are located in Moundsville (2 facilities), St. Albans, Glasgow, and New Haven (2 facilities), W. Va; Louisa, Ky; Glen Lyn and Carbo, Va.; Brilliant, Conesville, Cheshire, Lockburne, and Beverly, Ohio; and Rockport and Lawrenceburg, Ind.

AEP will install pollution control equipment to reduce and cap sulfur dioxide and nitrogen oxide emissions by more than 813,000 tons per year when fully implemented. By installing these pollution control measures, the plants will emit 79 percent less sulfur dioxide and 69 percent less nitrogen oxides, as compared to 2006 emissions.

The settlement resolves a lawsuit filed against AEP in 1999, alleging the company violated the New Source Review requirements of the Clean Air Act. The company will spend an additional $60 million to finance and conduct projects to mitigate the impact of past emissions. Of the total, $24 million for these projects will be allocated among the states that joined the settlement. The remaining $36 million will be spent on mitigation projects identified in the settlement agreement.

In reaching the settlement, AEP admitted to no violations of the law, company officials said. "Since November 1999, when the initial complaint was filed by the government, we have remained firm in our belief that we operated our plants in compliance with the New Source Review provisions," said Michael G. Morris, AEP's chairman, president and chief executive officer. "That remains our position today.

"But we have also said that we would be willing to consider ways to reasonably resolve these issues," Morris said. "This consent decree represents such a resolution. It recognizes the billions we have spent on environmental retrofits at our plants as part of ongoing business and the significant emissions reductions achieved at our plants. It also takes into account our existing plans for additional environmental retrofits on other plants. The mitigation projects included in the agreement are the types of activities that we have often undertaken on our own. And most importantly, this agreement enables us to make much-needed efficiency improvements at our plants without fear of additional (New Source Review) allegations."

The AEP settlement was lodged on Oct. 9 in the U.S. District Court for the Southern District of Ohio and is subject to a 30-day public comment period. A copy of the consent decree is available at http://www.epa.gov/compliance/resources/cases/civil/caa/americanelectricpower1007.html.

This article originally appeared in the 10/01/2007 issue of Environmental Protection.

Featured Webinar