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U.S. EPA Calls AEP $4.6 Billion Settlement Largest in Environmental Enforcement History


In the late 1990s the U.S. Department of Justice (“DOJ”) filed a series of lawsuits against several coal-fired electric utilities for alleged violations of the Clean Air Act. Among the utilities sued by DOJ was American Electric Power (“AEP”), which operates two facilities in Indiana at Rockport and Lawrenceburg that were the subject of the suit. The United States, joined by states and citizens groups, alleged that AEP made physical and operational changes at nine of its plants that constituted “major modifications” without first undergoing PSD review or non-attainment New Source Review, obtaining required permits, and installing and operating Best Available Control Technology and/or technology reflecting the Lowest Achievable Emission Rate to reduce air pollution.

On October 9, 2007, the United States, eight states and 13 citizens groups reached a settlement with AEP that requires AEP to take the following steps:

  • AEP will install and continuously operate pollution control technology such as selective catalytic reduction devices for the control of nitrogen oxide and flue gas desulfurization equipment, also known as scrubbers, for the control of SO2 emissions.
  • By 2016, nitrogen oxide emissions at the 16 plants will be reduced to 72,000 tons per year, continuing in perpetuity.
  • By 2018, sulfur dioxide emissions at the 16 plants will be reduced to 174,000 tons per year, continuing in perpetuity.
  • AEP will pay a civil penalty in the amount of $15 million; and
  • AEP is also required by the settlement to spend $60 million to perform and finance environmental mitigation projects to address the impacts of past emissions. The $60 million will be split between the federal government (60%) and settling states (40%).

U.S. EPA believes the annual emission reductions will cost AEP more than $4.6 billion. The Consent Decree constituting the settlement has been lodged with the United States District Court for the Southern District of Ohio and is subject to a thirty-day comment period. The Consent Decree can be viewed here.

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