Acid rain lawsuit is settled

American Electric Power hit for $4.6 billion, largest environmental payout ever

WASHINGTON -- A $4.6 billion settlement Tuesday by one of the last holdouts among polluting power companies signals the end of a long legal debate over acid rain -- and a tougher battle ahead over carbon dioxide and the use of fossil fuels.

The agreement with American Electric Power, struck just as the company was to defend itself in court, ends an eight-year battle over reducing smokestack pollution that drifted across Northeast and mid-Atlantic states and chewed away on mountain ranges, bays and national landmarks.

In all, the government brought eight lawsuits against polluters accused of violating the Clean Air Act. Four are still ongoing, including one against Duke Energy, but AEP was considered the largest polluter of the bunch.

Government officials praised the AEP deal as the largest environmental settlement in the nation's history.

The company maintains it never violated Clean Air Act rules to curb emissions and had already spent or planned to pay $5.1 billion on scrubbers and other equipment to reduce its pollution.

"Plans change," said acting Assistant Attorney General Ron Tenpas, announcing the settlement filed in U.S. District Court in Columbus. "And obviously there is a big difference between a company saying it has plans to do something in the future and a company being bound by an order of the court to take those steps."

Columbus, Ohio-based AEP must also pay a $15 million civil fine and $60 million in cleanup and mitigation costs to help heal polluted land in the Shenandoah National Park and waterways including the Chesapeake Bay.

Largest payout ever

In all, the costs and civil fines will far exceed any company payout in an environmental case, the attorneys said. The 1989 Exxon Valdez oil spill, by contrast, yielded $1 billion in restoration and restitution costs, although Exxon Mobil estimates it has spent $3.5 billion and faces an additional $2.5 billion in criminal penalties.

New York Gov. Eliot Spitzer, who as the state's attorney general hounded AEP and other pollution-spewing power companies, said AEP finally conceded to legal, scientific and political pressure.

"The debates over acid rain to a certain extent have been resolved," said Spitzer, a Democrat. "Carbon is the real issue now. Do we have to move away from all fossil fuels? These are tough issues, from a policy standpoint and an economic standpoint."

John Walke, a lawyer for Natural Resources Defense Council, an environmental group involved in the case, said Tuesday's success is a blueprint for confronting global warming.

"Many people have compared where we are now with global warming to where we were with acid rain in the 1980s," said Walke. "We are following the road map from the acid rain era."

The case against AEP began in 1999 when eight states and 13 environmental groups joined the Environmental Protection Agency's crackdown on energy companies accused of rebuilding coal-fired power plants without installing pollution controls as required. In states like New York, officials complained that acid rain linked to sulfates and nitrates from coal-fired plants were eating away at landmarks, including the Statue of Liberty.

AEP has about 5 million customers in 11 states. In a statement, chief executive officer Michael G. Morris noted the settlement did not find AEP guilty of violating the Clean Air Act but was willing "to consider ways to reasonably resolve these issues."

16 plants in cleanup

As part of the settlement, AEP will clean up 46 coal-fired operations in 16 of the plants in Ohio, Indiana, Kentucky, Virginia and West Virginia. Morris also noted the risk of AEP paying a far greater fine if the company had fought the case in court and lost.

AEP said it has paid nearly $2.6 billion since 2004 on equipment to cut emissions in coal-fired plants in Kentucky, Ohio, Virginia and West Virginia, and will be spending an additional $1.6 billion for environmental controls in two more plants. Both costs are part of the company's $5.1 billion plan reduce the emissions of its eastern region by 2010.

The states involved in the lawsuit were: Connecticut, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island and Vermont. Connecticut Attorney General Richard Blumenthal, a Democrat, said the deal shows "clean air enforcement is alive and well despite Bush administration efforts to gut the Clean Air Act."

Tuesday's settlement will reduce pollution by 1.6 billion pounds each year through 2018 and save $32 billion in annual health costs to treat lung and respiratory problems, the government said.