Electric utility to pay $1.4 billion for Clean Air Act violations

As part of an on-going drive to halt illegal air pollution from coal-fired power plants, the US Justice Department and the Environmental Protection Agency have announced the settlement of a massive $1.4billion (£0.93 billion) lawsuit with Cincinnati-based electric utility Cinergy Corporation. The enforcement action is the largest ever taken by the EPA under the US’s Clean Air Act.

The EPA began investigating coal-fired power plants, the main source of industrial pollution in the US, nearly four years ago. This culminated in a series of lawsuits against electric utilities, including Cinergy, at the end of 1999. The charge against them was that they violated the law by making major modifications to their plants without installing pollution prevention equipment to control smog, acid rain and soot.

Federal regulators revealed that over the past 15 years, Cinergy, who provide energy to over one million customers in Indiana, Ohio and Kentucky, had undertaken at least 38 substantial modifications to these plants, increasing the amount of pollution emitted, without applying for a Clean Air Act permit and without taking steps to minimise these increased emissions.

“I am announcing the largest enforcement settlement ever reached by the US Environmental Protection Agency under the Clean Air Act,” said EPA Administrator Carol M Browner. “It is the Clinton-Gore Administration’s latest action to provide cleaner air for all Americans. This action will help ensure that the health of millions of citizens throughout the Eastern United States is protected from harmful levels of air pollution.”

The lawsuit relates to the fact that power plants already in existence when the Clean Air Act was amended in the late 1970s were not required to be retrofitted with new air pollution control equipment unless they undertook major modifications of those plants. The federal case asserted that the utilities each made major modifications to their plants to extend their lives and avoid the cost of building new plants. These projects included replacing major parts of the boilers at the heart of the plants – actions that cost tens of millions of dollars and took years to complete. The government asserted that under the Clean Air Act, modifications of this kind required companies to install the ‘best available control technology’, but that utilities did not do so.

Since the lawsuits were filed, a number of states and environmental groups including those involved in the current settlement, have joined the crusade – in this case the states of Connecticut, New York and New Jersey.

These states, along with several citizen groups, are party to the agreement in principle with Cinergy Corporation and its two operating companies – PSI Energy and Cincinnati Gas & Electric Company. This agreement means the companies must significantly reduce harmful air pollution from ten coal-fired power plants. They must also undertake environmental projects worth $21.5 million (£15.4 million), and pay an $8.5 million (£6.1 million) fine.

The agreement with Cinergy will bring substantial reductions in pollution from one of the US utilities’ largest and most intensive users of coal. The agreement will ultimately see sulphur dioxide emissions reduced by 400,000 tons per year and nitrogen oxide by 100,000 tons per year.

Cinergy will have to install permanent emission control equipment to meet strict pollution limits; implement a series of interim pollution reduction measures; decrease the amount of pollution released from its plants; and set aside pollution emission allowances that could otherwise have allowed it to emit extra pollution. The agreement gives Cinergy a degree of flexibility in meeting its requirements to reduce pollution, and allows it to plan efficiently for future energy demands, says the US EPA.

Although the enforcement action against Cinergy targeted six of its plants, the agreement limits emissions from all ten of its coal-fired plants in Ohio and Indiana.

Not only do the sulphur dioxide and nitrogen oxides produced by the power plants in the Ohio River Valley and the Southeast affect air quality nearby, they also have effects far downwind and contribute to acid rain in the north east.

In addition to Cinergy, the United States has brought legal actions for Clean Air Act violations against American Electric Power, FirstEnergy, Illinois Power, Southern Indiana Gas & Electric Company, the Southern Company, and the Tampa Electric Company. The EPA has brought a related administrative action against the Tennessee Valley Authority – a federal agency that owns and operates many coal-fired power plants.

An environmental settlement has also been reached with Koch Petroleum Group, which will reduce air emissions from three petroleum refineries in Minnesota and Texas by at least 5,200 tonnes.

Under the agreement, Koch will spend an estimated $80 million (£57 million) to install up-to-date pollution-control equipment at two refineries in Texas and Minnesota, reducing emissions from stacks, leaking valves, wastewater vents and flares.

Koch also will pay a $4.5 million (£3.2 million) penalty to settle Clean Air Act violations and other environmental claims at its Minnesota refinery.

“This is the first settlement in a federal enforcement strategy for achieving comprehensive, across-the-board compliance with U.S. refineries. I hope other refineries will take note,” said Assistant Attorney General for the Environment at the Justice Department, Lois Schiffer.

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