Duke Energy Out $93 M for Clean Air Act Violations in Indiana

Duke Energy, one of the largest electric power companies in the nation, will spend approximately $85 million to significantly reduce harmful air pollution at an Indiana power plant and pay a $1.75 million civil penalty, under a settlement to resolve violations of federal clean air laws, the Justice Department and the U.S. Environmental Protection Agency announced on Dec. 22. The settlement also requires Duke to spend $6.25 million on environmental mitigation projects.

The agreement, filed in federal court in Indianapolis, resolves violations of the Clean Air Act's new source review requirements found at the company's Gallagher coal-fired power plant in New Albany, Ind., located directly across the Ohio River from Louisville, Ky.

The settlement is anticipated to reduce sulfur dioxide emissions at the Gallagher Plant by almost 35,000 tons per year, an 86 percent reduction when compared to 2008 emissions.

Duke is required to spend $6.25 million on environmental mitigation projects, including

  • $250,000 for the U.S. Forest Service to address acid rain in downwind national forests,
  • $1 million for environmental mitigation projects to be allocated among the states that joined the settlement.
"Coal-fired power plants are big contributors to air pollution, which is why we need to make sure they comply with the law," said Cynthia Giles, assistant administrator for EPA's Office of Enforcement and Compliance Assurance. "As a result of this enforcement action, Duke will make large cuts in air pollution, which means cleaner air and better health for the millions of people living in communities downwind of this plant."

"This important settlement resolves lengthy litigation on very favorable terms," said Ignacia S. Moreno, assistant attorney general for the Justice Department's Environment and Natural Resources Division. "The settlement will achieve substantial emission reductions through the use of natural gas and other control measures, and it includes important steps to mitigate the negative impact from past illegal emissions as well as a significant civil penalty."

As a result of a lawsuit filed 1999, Duke went to trial in May 2009 for related violations. At that time, an Indianapolis jury found that Duke violated the Clean Air Act by failing to obtain required permits and pollution controls before making modifications to Gallagher Units 1 and 3 that caused significant increases in sulfur dioxide. The trial to determine the appropriate remedy for the violations resolved by the settlement had been scheduled to begin on Jan. 25, 2010.

The settlement requires Duke to either repower Units 1 and 3 at Gallagher with natural gas or shut them down to remove all sulfur dioxide pollution. This natural gas repowering will also reduce other air pollutants, including nitrogen oxides, particulate matter, mercury, and carbon dioxide. The combined nitrogen oxide emissions from Units 1 and 3 are expected to decrease by about 2,198 tons per year as compared to 2008 emissions. By using natural gas rather than coal, Duke will eliminate emissions of particulate matter and mercury from the units. The switch from coal to natural gas will also decrease these units' carbon dioxide emissions by roughly half per unit of electricity.

The settlement also requires that Duke install new pollution controls for sulfur dioxide at the other two units at the plant, Units 2 and 4. The work and projects that are required by the settlement will, when fully implemented, result in substantial improvements to the air quality for the communities that are the most heavily impacted by the Gallagher Plant's emissions.

The states of New York, New Jersey and Connecticut, as well as the Hoosier Environmental Council and the Ohio Environmental Council joined the federal government in the settlement.

Duke Energy, which is based in Charlotte, N.C., supplies and delivers energy to approximately 4 million customers in the Midwest and the Carolinas.

The proposed settlement was lodged in the U.S. District Court for the Southern District of Indiana and is subject to a 30-day public comment period.

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