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AEP, feds settle pollution lawsuit for $4.6 billion

American Electric Power is well on its way to finishing new pollution control projects touted by the Bush administration as part of a $4.6 billion air quality lawsuit settlement.

But regulators say their lawsuit pushed AEP into those reforms, while critics argue the Bush administration is taking too much credit for the new settlement.

The deal, announced last week, ends nearly eight years of legal wrangling between federal regulators and the Columbusbased power company over changes made to 10 of its coalfired plants.

Government lawyers continued the fight through numerous legal delays, endless battles over document requests and evidence secrecy, and Bush administration moves to essentially eliminate the regulations at the heart of the case.

The U.S. Environmental Protection Agency said that pollution controls required by the settlement will reduce sulfur dioxide emissions by 79 percent and nitrogen oxide emissions by 69 percent over 2006 levels at 18 AEP plants in the eastern United States.

AEP was among the most vigorous defendants in a series of civil lawsuits started in November 1999 by the Clinton administration. Eventually, lawsuits and violation notices covered at least 32 plants in 10 states.

Essentially, the lawsuits argued that power companies had upgraded their facilities without obtaining proper permits to do so. The permits, under a program called New Source Review, would require companies to install the latest pollution controls whenever they expanded or rebuilt a plant. Since early 2000, federal officials have settled pollution cases with 13 power companies. But prior to the October 9 AEP deal, some of the largest players in the industry – Southern Company, Duke Energy, Cinergy, and the Tennessee Valley Authority – had continued to fight the pollution suits.

Over that period, the Bush administration also slowed or halted the flow of additional New Source Review cases. EPA also proposed new rules to rework the program in a manner favored by the power industry.

Previously, the largest civil penalty included in any of the power plant cases was a $5.3 million fine paid by Virginia Electric Power in 2003.

The AEP deal includes a $15 million civil penalty. AEP also is required to pay $36 million for environmental projects coordinated with the federal government, and another $24 million for mitigation projects for the states that joined the lawsuit. Those states are New York, New Jersey, Massachusetts, Vermont, Connecticut, New Hampshire, Maryland and Rhode Island.

In coming up with its $4.6 billion figure for the total settlement, EPA included numerous major pollution control projects that already were underway at AEP plants.

For example, EPA included sulfur dioxide scrubbers AEP is installing at its Amos, Mitchell and Mountaineer plants in West Virginia. Those costly projects are part of $5.2 billion in pollution controls AEP had announced for completion between 2010 and 2020.

AEP Chairman Michael G. Morris said that the settlement “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.”

Pat Hemlepp, an AEP media spokesman, said the federal government’s $4.6 billion figure overstated the amount the settlement is costing the company.

“It’s a mischaracterization on their part, to put it politely,” Hemlepp said.

For new projects, the settlement requires AEP to install scrubbers and nitrogen oxide controls at its plant in Rockport, Ind., and new nitrogen oxide controls at its Clinch River facility in Cleveland, Va.

Also, the company agreed to begin operating nitrogen oxide controls year-round – rather than only during the five-month smog season – in 2008, a year earlier than required by federal rules.

Adam Kushner, EPA’s director of air enforcement, said that the government lawsuit pushed AEP to add pollution controls over the last few years that it might otherwise not have installed.

“We know that the ongoing litigation was the impetus for them to roll out these plans,” Kushner said in an interview.

The settlement also comes six months after the U.S. Supreme Court, in a case involving Duke Energy, threw out one of the power industry’s main defenses to the EPA lawsuits.

In the AEP case, U.S. District Judge Edmund A. Sargus Jr. had delayed ruling on the first phase of a trial held in July 2005 to see how the Duke case turned out.

John Walke, clean air director for the Natural Resources Defense Council, said that career government litigators pursuing the AEP case had to go against Bush administration wishes and changes the EPA was making to its power plant pollution rules.

“How can you claim this victory one day when you have a policy in place that would prohibit you from bringing similar cases tomorrow?” Walke said.

In the AEP settlement, EPA specifically gave up its authority to pursue a similar case against the company if it commits similar New Source review violations in the future.

AEP’s Morris said that language “enables us to make muchneeded efficiency improvements at our plants without fear of additional allegations.”

But Walke noted that his organization, other environmental groups and states that intervened in the case did not give up their right to file separate suits over any future violations.

Ken Ward Jr. is a writer for the Charleston (W.Va.) Gazette, specializing in the coal industry. This report was distributed by the Center for Rural Journalism and Community Issues.

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