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$4.6 billion settlement in power plant air pollution case

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  • NEW: Utility to install $4.6 billion in pollution control equipment at plants
  • NEW: Settlement requires AEP to spend millions to mitigate damage
  • NEW: Largest environmental settlement in Justice Department history
  • NEW: Northeast should see better health, less smog, official says
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From CNN's Peter Dykstra and Terry Frieden
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WASHINGTON (CNN) -- American Electric Power has agreed to install $4.6 billion in equipment to sharply reduce emissions at coal-fired power plants in five states, the Justice Department announced Tuesday.

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A utility with coal-fired plants, like the one here, has settled a major suit to reduce emissions.

It is the largest environmental settlement in the department's history, Ronald J. Tenpas, acting assistant attorney general for environmental enforcement, said at a news conference Tuesday morning.

The settlement requires AEP to pay a $15 million civil fine to the federal government and spend $60 million on "mitigation measures" like cleanup and repair of damaged lands, Tenpas said.

The upgrades will be made at AEP power plants in Ohio, West Virginia, Virginia, Indiana and Kentucky, he said.

The company will be required to reduce pollution emissions by 800,000 tons per year, he added. The requirement even covers pollution generated by the company's fleet of vehicles and barges, he said.

"This is truly an historic day for clean air in the United States," said Grant Nakayama, the Environmental Protection Agency's assistant administrator for enforcement and compliance.

The government has sought to sharply reduce the release of sulfur dioxide, nitrogen oxides and particulate matter [soot], which affect atmospheric conditions in at least 13 Northeastern states.

"The best news of all is that this settlement will result in record-breaking environmental and public health benefits," Nakayama said.

The reduction in airborne pollutants will result in health benefits worth an estimated $32 billion a year, Nakayama said, including 24,000 fewer instances per year of respiratory problems among children in the affected states.

Those areas also should see a noticeable reduction in haze and smog, he said, and acid rain damage to forests and bodies of water will be reduced.

On its Web site, AEP noted that it admitted no violations of law in the settlement and defended its efforts at pollution control.

"Since 2004, AEP has spent nearly $2.6 billion on installation of emissions control equipment on its coal-fueled plants in Kentucky, Ohio, Virginia and West Virginia as part of a larger plan to invest more than $5.1 billion by 2010 to reduce the emissions of its generating fleet," a statement on the Web site read.

"This consent decree ... 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," Michael G. Morris, AEP's chairman, president and chief executive officer, said in the statement.

Several similar lawsuits against other utilities are ongoing, Tenpas said.

The record settlement comes eight years after the Justice Department, headed by then-Attorney General Janet Reno, filed suit alleging AEP and six other power companies had "illegally released massive amounts of air pollutants for years."

On November 3, 1999, the Justice Department filed the landmark lawsuits against the power companies alleging they violated the Clean Air Act by making major modifications to many of their plants without installing the equipment required to control smog, acid rain and soot.

"When children can't breathe because of pollution from a utility plant hundreds of miles away, something must be done," Reno declared.

Justice prosecutors brought the case on behalf of the Environmental Protection Agency, a dozen environmental groups and the plaintiff states of New York, New Jersey, Maryland, Connecticut, Vermont, New Hampshire, Rhode Island and Massachusetts.

Legal battles and negotiations between federal prosecutors and industry representatives continued throughout the years of the Bush administration.

The government charged that the Clean Air Act requires power companies to install the "best available control technology" but said the utilities did not do so when they made major modifications.

AEP had maintained its improvements amounted to "routine maintenance" and not "major modifications."

Environmental groups accused the firm of skirting the law.

Government lawyers and scientists say 70 percent of sulfur dioxide emissions each year and 30 percent of nitrogen oxide emissions are produced by electric utility plants.

AEP, based in Columbus, Ohio, provides electric power to 5 million customers in 11 states, according to its Web site. The company is No. 192 on the Fortune 500 list of corporations, with annual revenue of $12.6 billion. E-mail to a friend E-mail to a friend

All About U.S. Environmental Protection AgencyJanet Reno

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