Nation’s Top Polluter to Pay $4.6 Billion to Clean the Air

The nation's top polluter will clean up its act.

American Electric Power has agreed to cut 813,000 tons of air pollutants annually at an estimated cost of more than $4.6 billion, after settling a long-running case brought by environmental groups, states and the Environmental Protection Agency under the Clinton Administration. The case was prosecuted by the Department of Justice.

The 1999 case became increasingly controversial during the Bush Administration's tenure, as the argument for bringing the case -- that the company had revamped old plants without upgrading pollution controls -- lost favor in the federal government. The Bush EPA sought to change the so-called New Source Review rules that allowed for this kind of prosecution of Clean Air Act violations, and has stopped pursuing cases that were being investigated under the Clinton Administration.

American Electric Power, the nation's largest electric power producer, delivers electricity to more than 5 million customers in 11 states. It earned $1.1 billion in 2006.

In addition to the record $4.6 billion cost of installing pollution controls on 16 of its 80 power plants, it will pay a $15 million penalty and spend $60 million on projects to mitigate the adverse effects of its past excess emissions. The company produces about three quarters of its power from burning coal -- the most highly polluting form of energy -- and the plants affected by this settlement are coal-fired plants in West Virginia, Kentucky, Virginia, Ohio and Indiana. It is the nation's top polluter of global warming-, smog- and acid rain-producing pollution, according to the latest available data.

The record-setting settlement is not only the most expensive for a company, but also will result in the greatest reduction in pollution -- and this is pollution that affects the entire Northeast. Though American Electric Power's plants are primarily in the South and Midwest, the pollution produced affects a huge swath of the country downwind -- including the Adirondack Mountains in New York, which have long been icons for the damage from acid rain. The emissions -- sulfur dioxide and nitrogen oxides -- also contribute to smog and ozone pollution, which damage lungs and can increase the risk of heart disease. After the new pollution controls are installed, those emissions will decline by 69% and 79%, respectively.

It's unclear what, if any, of those improvements would have been required under other new federal rules enacted by the Bush EPA that seek to limit the same pollutants.

"Today’s 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 the Justice Department's Environment and Natural Resources Division.

The coalition that prosecuted the case included eight states and 13 environmental and health groups.

"Today’s historic settlement not only holds AEP accountable, but also puts big polluters on notice that they can no longer run and hide from their actions or circumvent the Clean Air Act," said John Walke, director of the Natural Resources Defense Council's Clean Air Program.

Scott Segal, director of the Electric Reliability Coordinating Council (ERCC), a group of power-generating companies working on clean air issues, said the days of big settlements based on New Source Review were over.

"The AEP lawsuit was filed in November 1999. It took almost eight years to reach settlement," Segal said. "Taking eight years at such great cost can hardly be viewed as a ringing endorsement of the EPA enforcement initiative."

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