American Electric Power Corp Gets Hammered by Feds

Record-Breaking $4.6 Billion Clean Air Act Settlement Announced
After Eight-Year Battle, American Electric Power Agrees to Major Power Plant Upgrades, Pollution Reductions, Environmental Improvements

CHICAGO (October 9, 2007) -- The Natural Resources Defense Council (NRDC), in collaboration with the U.S. Environmental Protection Agency (EPA), 8 states, and 12 other environmental organizations, reached a history-making settlement with American Electric Power (AEP) today after a nearly decade-old battle over AEP’s violations of the Clean Air Act’s “New Source Review” requirements.

The $4.6 billion settlement represents the largest of its kind in the history of the Clean Air Act and the most money an energy company has ever agreed to put towards new pollution controls.

AEP also agreed to pay an additional $15 million civil penalty, which is the highest penalty paid by any electric utility in settlement of a New Source Review case, and also fund $60 million in environmental mitigation projects.

"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 NRDC’s Clean Air Program. "The size of the settlement means that we will be able to keep 813,000 tons of harmful pollution out of the atmosphere, improving air quality and public health around these plants and beyond."

NRDC filed suit against AEP in 1999 under the Clean Air Act for violations at 16 of its coal-fired electric power plants because AEP facilities had upgraded and increased smog and soot pollution without installing the pollution controls required by law.

As a result of its Clean Air Act violations, AEP emitted illegal amounts of harmful nitrogen oxides and deadly sulfur dioxide pollution at plants in Indiana, Kentucky, Ohio, Virginia and West Virginia for over two decades.

The Columbus, Ohio-based AEP owns 25 coal-fired electric plants in the United States, and was the number one industrial emitter of carbon dioxide, nitrogen oxides and sulfur dioxide pollution in the country, based on 2004 data.

Under the settlement, AEP agreed to undertake approximately $4.6 billion worth of pollution control measures at its existing plants over the next decade. The new pollution controls will, reduce sulfur dioxide emissions by 79 percent and nitrogen oxide emissions by 69 percent from the 16 plants covered by the settlement. The sulfur dioxide reduction is among the largest percentage decrease ever achieved in any settlement with coal-fired electric utilities. AEP will also put $60 million towards projects to mitigate the impacts of their past illegal emissions, including the conversion of heavily-polluting trucks and barges to low-sulfur diesel fuel.

"We are happy that AEP has finally agreed to install the modern pollution controls that the Clean Air Act has required for decades," said Shannon Fisk, attorney in NRDC's Midwest office. "This is an important first step toward reducing the disproportionate air pollution burden that is placed on residents of the Ohio River Valley. With today’s settlement, a new day has dawned in the region and cleaner air will soon follow."

NRDC's lawsuit, which also represented the Sierra Club, was one of several suits filed against AEP. Other plaintiffs included the Environmental Protection Agency (EPA), which initiated the battle against AEP, as well as 8 states: New York, New Jersey, Massachusetts, Vermont, Connecticut, New Hampshire, Maryland, and Rhode Island, and 12 other environmental groups: Citizen Action Coalition of Indiana, Clean Air Council, Hoosier Environmental Council, Indiana Wildlife Federation, Izaak Walton League of America, League of Ohio Sportsmen, National Wildlife Federation, Ohio Citizen Action, Ohio Valley Environmental Council, Sierra Club, U.S.PIRG, and West Virginia Environmental Council.