Settlement Reached in Acid Rain Case


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WASHINGTON (AP) -- Settling an eight-year legal battle, a major power generator has agreed to spend $4.6 billion to reduce chemical emissions blamed for spreading acid rain across the Northeast, The Associated Press has learned.

American Electric Power Co., based in Columbus, Ohio, also will be required to reduce the emissions by at least 69 percent over the next 10 years and pay an additional $15 million in civil penalties and $60 million in cleanup and mitigation costs to help heal polluted parkland and waterways.

Two people familiar with the case described the terms of the agreement Monday on condition of anonymity because it had not yet been filed in federal court. The settlement was expected to be filed Tuesday, the day a six-week trial in federal court in Columbus, Ohio, was scheduled to begin before U.S. District Judge Edmund Sargus.

An AEP spokesman confirmed Monday night that the company had decided to settle. Representatives of the Justice Department and the Environmental Protection Agency declined to comment.

The settlement marks one of the largest government fines in an environmental case. By contrast, Exxon Mobil Corp. estimates it has paid $3.5 billion in cleanup costs, government settlements, fines and compensation for the 1989 Exxon Valdez oil spill. The company is fighting an additional $2.5 billion in punitive fines.

The EPA, a dozen environmental groups and eight states -- Connecticut, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island and Vermont -- brought the lawsuit against AEP in 1999 during the Clinton administration. They accused the energy company of rebuilding coal-fired power plants without installing pollution controls as required under the Clean Air Act.

Environmentalists blame acid rain caused by coal-fired power plants for plaguing the Northeast over the last quarter-century, including damage that has eaten away at the Statue of Liberty and the Adirondacks mountain range in upstate New York. Smog and acid rain have been linked to sulfates and nitrates that are products of coal-fired plants.

AEP has more than 5 million customers in 11 states. It has agreed to clean up 46 coal-fired operations in 16 of the plants in its eastern system -- a group likely to include at least nine plants in Ohio, Indiana, Virginia and West Virginia.

AEP has maintained that the work in at least some of its plants was routine maintenance that didn't fall under federal requirements for pollution controls.

The settlement requires AEP to:

--Spend $4.6 billion on so-called scrubbers and other pollution controls to reduce emissions of nitrogen oxide and sulfur dioxide, which cause acid rain and smog.

--Cut nitrogen oxide emissions by 69 percent by 2016, and reduce sulfur dioxide emissions by 79 percent by 2018.

--Pay civil fines of $15 million.

--Pay $60 million in mitigation measures. The money includes $21 million to reduce emissions from barges and trucks in the Ohio River Valley; $24 million for projects to conserve energy and produce alternative energy; and $3 million for the Chesapeake Bay, $2 million for Shenandoah National Park and $10 million to acquire ecologically sensitive lands in Appalachia.

AEP was adamant that it had not violated the Clean Air Act, its spokesman Pat Hemlepp said Monday night. The company had opposed the $15 million civil penalty but did not have to admit guilt as part of the settlement, he said.

Hemlepp said the company planned to spend only $1.6 billion in improvements under the terms of the settlement. Emissions-reducing devices would be installed in two plants in Indiana and Virginia for that cost, he said.

Hemlepp speculated that the $4.6 billion figure given to the AP includes money that AEP has already committed to cleanup efforts. The company has already budgeted an estimated $5 billion through 2010, and those improvements ''include things we've already done or committed to do or already budgeted, even before the settlement,'' he said.

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