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Transcript of Press Conference Announcing Settlement in United States Et Al vs. American Electric Power

WASHINGTON, Oct. 9/PRNewswire-USNewswire/ -- The following was released today by the U.S. Department of Justice:

9:05 A.M. EDT

MR. TENPAS: Good morning. I am Ronald Tenpas, acting Assistant Attorney General for the Environment and Natural Resources Division here at the Department of Justice. Joining me today is Granta Nakayama, the EPA's assistant administrator for Enforcement and Compliance Assurance.

We are here today to announce the largest environmental enforcement settlement in the history of our agencies. The agreement reached with American Electric Power Company and lodged with the court today requires the company to install approximately $4.6 billion in pollution control technologies and to reduce its emissions by 800,000 tons per year in the coming years.

In addition, the company will pay a $15 million civil penalty and will spend a further $60 million on a group of projects designed to address the effects of its past emissions. These projects include the acquisition and protection of ecologically valuable land, buying buffer zones to help protect the people from harmful effects of nitrogen and taking steps with respects to its own fleet of transportation vehicles such as barges and trucks.

This case was originally brought in November of 1999. It has involved a coalition of eight states and more than a dozen citizens groups. In bringing this case, the government alleged that the company had made major modifications to many of its coal-fired power plants in the eastern United States, changes that led it to emit more air pollution.

We alleged that the company should have obtained a permit and installed pollution control devices, often called best available control technology, in order to prevent these emissions and should have made the installation of that technology at the time it made the plant modifications.

This historic settlement covers 16 coal fire plants. You can see their location in five states shown on the chart here to my left. The company has agreed that the total emissions from those plants, emissions that spread well beyond the five states in which the plants are located, that extend eastward to areas such as Virginia, Maryland, Pennsylvania and New York, those emissions will be subject to enforceable emission caps in the coming years. It has also agreed to install state-of-the-art pollution abatement equipment.

The scale of the resulting environmental benefits is enormous and also can be seen here. When fully implemented this settlement will produce a 77 percent reduction in pollutants, totaling more than 800,000 tons a year. And you can see here the relative scale of 2006 emissions and where those emissions will be in 2019 when this agreement is fully implemented.

The Clean Air Act was passed in 1963 with a goal of saving the air that we breathe. In doing so it sought to slow the degradation of our forests from acid rain, to help us see the beauty of our national parks, the reduce asthma attacks in children and to cut smog in our cities. Today's settlement fulfills the best hopes of the Clean Air Act and provides a demonstrably brighter and cleaner future for our citizens.

This settlement could not have happened without the commitment of all the partners in our coalition, and I want to specifically thank the eight states and the thirteen citizen groups who have joined in this settlement. I wish to commend each of them for their valuable contributions and for their continuing partnership. The settlement provides for environmentally beneficial projects that will be under their control as we move forward.

I also want to commend the men and women of the Department of Justice, specifically of our environmental enforcement section and of our partners at the Environmental Protection Agency, many of whom are here today. Their work was extraordinary. They conducted one trial. They prepared for a follow-on trial that would have begun today, and their perseverance and diligence has made this settlement a reality.

At this point I'll turn the podium over to Granta and then we will be available to take questions.

MR. NAKAYAMA: Well, thank you, Ron.

As Ron stated, today EPA and the Department of Justice are announcing the single largest environmental settlement in our nation's history. This is truly an historic day for clean air in the United States and a day that demonstrates the tremendous public good that can be accomplished through enforcement of our environmental laws.

As many of you know, this settlement is part of EPA's initiative to enforce the new source review provisions of the Clean Air Act at coal-fired power plants. Today's settlement with AEP is the fourteenth in the initiative and is by far the largest.

This settlement is the largest environmental settlement ever, as measured by the value of the injunctive relief. To meet its settlement obligations, AEP will be required to install pollution control technology, estimated to cost more than $4.6 billion. This is also the largest settlement that has ever been reached with a stationary source of air pollution in terms of the amount of pollution reduced. AEP will reduce its emissions by 813,000 tons or over 1.6 million pounds each year.

To give you a sense of the mammoth scale of these reductions, the amount of S0(2) emission reductions from this settlement alone will exceed all the S0(2) emissions from all sources in the states of New York, New Jersey and Connecticut combined. That's all sources, in other words, all the power plants, refineries, boilers and other SO(2) sources in those three states are eclipsed by the emission reductions we achieved in this settlement.

The best news of all is that this settlement will result in record-breaking environmental and public health benefits not only in the areas near the plants but also in the vast, downwind areas that are affected by emissions from these plants.

We estimate that the annual benefits to public health and the environment once pollution controls are installed will include a savings of approximately $32 billion per year in health-related costs associated with respiratory and cardiopulmonary illnesses, including asthma and heart attacks and the prevention of at least 24,000 instances per year in which children experience lower respiratory problems.

The benefits to the environment from this settlement include cleaner air in the Midwest and North East, a reduction in haze and smog formation and a reduction in the acid deposition that harms our forest and surface waters.

In addition, AEP has committed to spend $60 million on projects to mitigate the adverse effects of its past emissions. These projects will include, for example, as Ron highlighted, the purchase of ecologically sensitive lands as well as emission reductions from tugs, barges and trucks in the Ohio River valley.

These results demonstrate the resounding success of our efforts to reduce air pollution from coal-fired power plants. All told, our settlements with utilities to date will result in annual emission reductions totally 1.8 million tons of SO(2) and NO(x). Those are annual emission reductions.

We have secured investments of over $10 billion in pollution control, $50 million in civil penalties and an additional $175 million for projects that will mitigate the environmental effects of past emissions. These are historic achievements. They will benefit the environment and public health across a wide section of our country for many years to come.

And as Ron mentioned, it is important to recognize the United States did not achieve this settlement alone. EPA and our colleagues at the Department of Justice partnered with eight northeastern states, including New York, New Jersey, Connecticut, Massachusetts, Vermont, New Hampshire, Maryland and Rhode Island. And we also worked closely with a coalition of over a dozen national, state and local environmental groups, organizations such as the Natural Resources Defense Council, the Sierra Club and the National Wildlife Federation. And I want to thank these partners on behalf of EPA.

Finally, I would like to also specifically express my gratitude to the hard working and dedicated EPA employees and our colleagues at the Department of Justice. It was their tireless efforts and their skilled representation of the United States that produced this result, and at this time Ron and I would be happy to take any questions.

QUESTION: AEP is saying that they had already planned or started spending or budgeted to $5 billion in some of the emission production controls. Why are you including that in the settlement?

MR. TENPAS: Well, a couple of observations on that. First, I think it's fair to say that those things were not in the plans in 1999 when this case was first brought. Second, as those of you who are familiar with business enterprises know, plans change. And so 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, which is what this will be, to take those steps.

So this is an agreement that secures very concrete, very definite steps. In addition, it is an agreement that contains within the agreement itself a schedule of significant penalties if the company fails to comply with the reductions that the agreement sets out. So we think it's entirely fair and appropriate to say that it is this agreement and it is this litigation that has cumulatively produced the collection of steps that the company now is going to take.

QUESTION: Since 1999 what evidence or knowledge do you have that the company was knowingly sidestepping environmental laws?

MR. TENPAS: This is an agreement that relates to their conduct before 1999 at the time this complaint was filed. This is not an agreement and this was not a case that related to any conduct after 1999.

QUESTION: What does this do in terms of the other settlement talks going forward with companies like Duke and the other utilities that are still pending?

MR. TENPAS: We do have four other significant power plant cases still ongoing. I don't want to comment or speculate about the status of those cases. Obviously we think this is a significant result. Time will tell whether that has any effect on any of those other matters.

QUESTION: Can you compare the size of this case to that of the four that are still ongoing or -- I guess there were three others that have since been settled?

MR. TENPAS: Do you want to try addressing that?

MR. NAKAYAMA: Sure. This is the largest settlement by about a factor of four compared to any of our prior power plant settlements in the initiative, and I think it's probably the largest when we look at the total, 22,000 megawatts in the fleet here that we're addressing today.

But again, you can never tell until you finally have a settlement agreement in hand what the environmental benefits of any settlement would be, so I think it's premature.

Let me also add in response to the prior question, we are vigorously enforcing the law at EPA and so with respect to our efforts, they continue, and I think it's quite clear from our court filings the position of the United States is that we are all regulated entities, including utilities to meet their environmental responsibilities under the laws and regulations of the United States.

QUESTION: Because it took nine years to reach this settlement from the time that it was originally filed, this department has gone through three Attorneys General, Reno, Ashcroft and Gonzales, and I'm wondering if you could talk a little bit about sort of the sweep of history here on this case. That is, were there intermittent negotiations throughout that entire nine-year period? How would you sort of characterize the way you eventually came to this day?

MR. TENPAS: Well, let me just say this has been a hard fought matter. We estimate that at the Department of Justice we have expended in excess of 52,000 attorney hours on this matter.

Just put that in perspective real quickly. If you think about an attorney working 40 hours a week, 50 weeks a year, that's 2,000 hours. So you're talking about the equivalent of 26 attorney years devoted to this matter alone.

We estimate that we have spent in excess of $7 million on expert fees, expert witness fees, other court and litigation-related costs. So that gives you some sense of the magnitude of the effort involved here.

In any matter of this size it is not unusual for there to be discussions as the matter is proceeding about whether there is a way to resolve it. That was a part of this case as well. I don't think it's appropriate to go into the details of different talks we've had along the way except to say that you can usually expect, in a case of this kind, on the one hand you are doing everything you can as the United States to prepare the case, to prove your case. On the other hand, you always want to be open to the possibility that there is a way to resolve the matter satisfactorily.

And ultimately, in the last several weeks, we got to that point. It is probably fair to think that the attention of AEP was focused by the fact that we had trial that would have begun this morning on the question of what remedies the government was entitled to for the violations that we had claimed.

QUESTION: Can you talk a little bit more about that? I mean obviously if the trial was supposed to start today there must have been something that AEP wanted to avoid in order to come to the settlement.

MR. TENPAS: I don't want to speak for AEP. You can ask them about that, but certainly it would be my experience that having a firm trial date tends to focus the attention of all parties on whether there is an agreement that can be reached.

QUESTION: How many states does this affect?

MR. TENPAS: There are five states in which there are plants located, okay. There are eight states that joined the United States as plaintiffs in bringing the suit.

And then I'll let Granta speak to the number of states that will be benefited by this resolution, because although you have five places where the plants are sitting, these are emissions that the winds carry and spread much more broadly. So Granta, do you want to address that?

MR. NAKAYAMA: Well, the breadth of this settlement is very significant and it does not obviously affect only the five states where the facilities are located but it also affects all the downwind areas. So with respect to the Mid-Atlantic region and the Northeast, those are states directly downwind from these plants, those are states whose air quality is going to be impacted. And because of the massive scope, the scale of these emission reductions, 813,000 tons per year, you're going to see an effect.

And that's what's really significant here. This is going to have an effect over this whole broad region, which I believe is one of the reasons why those states joined us as co-plaintiffs.

Let me correct one thing I said. Ron just reminded me. I said 1.6 million pounds and I should have said 1.6 billion pounds. I just want to be very clear on that, a little difference between 1.6 billion and 1.6 million, and that is a historic settlement. I mean that is just huge when you talk about the amount of emission reduction.

Let me put it in context. We've had three record breaking years at EPA. Our last three fiscal years we've issued reports. As a result of our enforcement activities we've reduced about 1 million to 1.1 million pounds and I think 890 million pounds in the last three years if you look at the last three years through our enforcement efforts. This one case alone is 1.6 billion pounds. So we're about 1 billion pounds a year in the enforcement arena as a result of our efforts, and those are three of the highest four years, by the way, the last three years at EPA as a result of our enforcement efforts, the types of emission reductions and pollutant reductions we're getting, and yet this one case is greater than that. This is 1.6 billion pounds, so clearly a significant case and I think clearly the one that is exactly the type of case we need to work on at EPA.

MR. TENPAS: Thank you.

SOURCE U.S. Department of Justice
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