Clean Air Settlement Costs Utility $1.2 Billion

By J.R. Pegg

WASHINGTON, DC, April 21, 2003 (ENS) -The Bush administration announced a $1.2 billion settlement today with Dominion Virginia Power, resolving charges that the company violated the New Source Review requirements of the Clean Air Act.

It is the largest enforcement settlement with a power utility in the history of the Clean Air Act and is the third major settlement of New Source Review violations by the Bush administration this month.

"We will work with companies that share our goal of cleaner air, we will give them the opportunity to meet their obligation to the law and to the people those laws are meant to protect," said U.S. Environmental Protection Agency (EPA) Administrator Christie Whitman.

Under the terms of the settlement, the company will pay $1.2 billion in pollution control upgrades, plant modifications, and civil penalties.

Dominion Virginia, formerly known as Virginia Electric Power Company, is a subsidiary of Dominion, the largest fully integrated natural gas and electric power company in the United States.

The settlement brings to a close federal and state litigation that alleged the energy giant had not complied with the New Source Review provisions of the Clean Air Act, which requires that new pollution controls be installed when plants are expanded or modified.

According to the Bush administration, the settlement improves the air for people and for parks like Virginia's Shenandoah. (Photo courtesy National Park Service)

The alleged violations included the doubling of the height of the smokestack at the Mount Storm, West Virginia plant to 730 feet in the mid 1980s, a modification that pushed more of the plant's air pollution away from local communities onto jurisdictions in northeastern states.

The settlement includes the EPA, the Department of Justice, the National Park Service, and the states of Connecticut, New Jersey, New York, Virginia, and West Virginia.

Dominion will install new pollution control equipment and upgrade existing controls at eight of its plants - six in Virginia and two in West Virginia. These eight plants emitted more than 350,000 tons of sulfur dioxide and nitrogen oxides in 2000. These pollutants are significant contributors to acid rain and smog.

According to the EPA, the settlement will reduce these emissions by some 67 percent to 116,000 tons by 2013.

The company agreed to pay a $5.3 million civil penalty and spend at least $13.9 million for projects in each of the five states that participated in the case and its settlement to offset the impact of past emissions.

These projects include retrofitting diesel school buses, installing photovoltaic cells on municipal buildings, purchasing conservation easements to preserve environmentally sensitive areas, and providing alternative-fueled vehicles for use in the Shenandoah National Park.

Executives with the company said they were more than satisfied with a deal that gives them flexibility and some 10 years to fulfill its terms.

EPA Administrator Christie Whitman says the EPA is keen to enforce the Clean Air Act. (Photo courtesy U.S. Environmental Protection Agency)

This is the third major settlement of New Source Review violations by the Bush administration this month - the other two announced with Alcoa and Archer Daniels Midland totaled some $670 million.

All three settlements have come as the administration pushes on with an administrative rulemaking process to reform the New Source Review program, which it believes is confusing for industry.

The industry and the administration believes that New Source Review, in particular the clause that defines "routine maintenance," is often counterproductive, forcing industry to delay or avoid needed maintenance that could reduce emissions for fear of the program's bureaucracy and penalties.

But environmentalists and state pollution control officers strongly object to the administration's clean air policy, which they believe aim to weaken the Clean Air Act.

Nine Northeastern U.S. states have sued the Bush administration to block its proposed changes to the New Source Review program.

This settlement, critics say, exposes the contradiction in the Bush administration's habit of celebrating enforcement of existing laws while trying to simultaneously weaken them.

The settlement "illustrates the need to both enforce and defend the Clean Air Act," said New York Attorney General Eliot Spitzer, a vocal critic of the Bush administration's planned revisions to New Source Review. "The Clean Air Act is a cornerstone of our environmental law."

It demonstrates that the "existing Clean Air Act can work if the EPA bothers to enforce it," said Frank O'Donnell, and "it undercuts the Bush administration's rationale for its attempts to pressure Congress to re-write the law."

"We need more effort to enforce the Clean Air Act, not to weaken it," O'Donnell said.

A new report issued today by the National Academy of Public Administration heaps further criticism on the New Source Review program and calls for tightening the rules rather than giving industry greater flexibility to comply with them.

The National Academy of Public Administration is a Congressionally chartered independent, nonprofit organization that responds to specific requests from public agencies and nongovernmental organization.

The Bush administration's rule revisions will affect regulation of air pollution from the nation's 17,000 industrial facilities, which emit the majority of nitrogen oxide and sulfur dioxide. (Photo courtesy National Park Service)

"New Source Review is not having the positive effect on the health of individuals, or on the quality of the nation's air, that Congress intended," the report finds.

Loopholes in the New Source Review program, the report finds, has allowed older plants to live on far longer than Congress ever envisioned.

The result, according to the study's authors, has been "thousands of premature human deaths, and many thousand additional cases of acute illnesses and chronic diseases caused by air pollution."

Although it agrees with a key Bush administration argument that the program's unpredictable and lengthy permitting process is "detrimental to facilities that want to change operations quickly and compete effectively," the report recommends that the oldest and dirtiest facilities be given a "firm deadline to install cleaner equipment or shut down" within the next decade.

It says Congress should put in place air pollution caps for existing sources of pollution that would decrease over time as well as improved state and federal information systems and public accountability.

The report is a "failing grade from the nation's leading policy experts who have concluded that the Bush administration plan for revamping the nation's Clean Air Act misses the mark both environmentally and economically," said Environmental Defense senior attorney Vickie Patton.

Any new Congressional action to reform New Source Review should think "anticipate future environmental challenges," the study's authors wrote, and federal agencies must continue to enforce the rules of the program.

"The report reinforces what states and localities have been saying for some time - that we need to eliminate loopholes and to end the grandfathering of older, dirtier facilities," said Bill Becker, executive director of the State and Territorial Air Pollution Program Administrators and the Association of Local Air Pollution Control Officials.

"It puts a finger right on the problem - the New Source Review program is in need of refinement and strengthening. And any settlement on an NSR violation merely underscores once again the importance of a good effective program."

The public comment period on the administration's proposed changes to New Source Review closes May 2, 2003.