Caption: Four Corners Power Plant
FLAGSTAFF, Ariz. (AP) - The owners of a coal-fired power plant on the Navajo Nation reached a settlement Wednesday with federal agencies over complaints they flouted rules for permits and violated the Clean Air Act, leading to expanded pollution control upgrades that will cost millions of dollars.
The settlement filed in U.S. District Court in New Mexico came after years of negotiation among federal officials, the plant owners and environmentalists who sued in 2011. It includes no admission of wrongdoing but resulted in a $1.5 million civil penalty.
The plant's operator, Arizona Public Service Co., said upgrades made to the Four Corners Power Plant in northwestern New Mexico were part of routine maintenance and didn't require federal permits. The U.S. Environmental Protection Agency disagreed.
The EPA said a 2007 inspection revealed a lack of permits to replace equipment that pulverizes coal or to upgrade parts of the turbines, boilers and generators that could increase emissions. The 1,540-MW plant supplies power to households in Arizona, New Mexico and Texas.
"Basically, it's a level-playing-field issue," Jared Blumenfeld, administrator of the EPA's Pacific Southwest Region in San Francisco, told The Associated Press. "If you're building or renovating large power plants, you need to get a permit."
The U.S. Department of Justice has filed complaints in more than two dozen cases around the country since 1999 alleging that coal-fired power plants violated the Clean Air Act. The largest settlement came in 2007 with American Electric Power (AEP, NYSE: AEP) for power plants around the Midwest and carried a $15 million civil penalty.
In some cases, companies failed for years to obtain permits to retrofit power plants, said Bruce Gelber, deputy assistant attorney general with the Justice Department's Environment Division.
"They essentially had uncontrolled emissions of pretty significant priority pollution," he said.
A key part of the settlement is a $2 million fund that will pay for expenses related to respiratory health of Navajos, Blumenfeld said. Tribal members living around the power plant long have complained about pollution, saying it makes them sick, but the issue has not been well-studied.
"That's one of the unanswered questions," he said. "It will be one of the nation's first studies to look at the impact to tribal members from the power plant, indoor air quality and other respiratory impacts."
An additional $4.7 million goes to weatherizing homes and replacing heating sources with more energy-efficient systems in 750 Navajo residences. Those details still are being worked out.
Federal officials estimate it will cost the plant's owners $160 million for pollution controls beyond what the EPA already mandated in an earlier regional haze rule.
Arizona Public Service Co. is the primary owner of the Four Corners plant and runs it on behalf of Tucson Electric Power Co., the Salt River Project, Public Service Co. of New Mexico and El Paso Electric Co. The settlement also includes Southern California Edison Co., which sold its shares in the power plant to APS in late 2013.
The power plant's capacity diminished at the same time when two of the five generating units were shuttered under the EPA rule, and the owners committed to upgrade technology to control nitrogen oxide emissions at the remaining two units by 2018. The settlement requires deeper cuts in nitrogen oxide emissions and factors in sulfur dioxide emissions.
Ann Becker, an APS vice president, said the owners decided to settle in the best interest of the plant, employees and the Navajo Nation but disputed allegations against them. The owners argued in the 2011 lawsuit, which also will be resolved through Wednesday's settlement, that it was too late for a coalition of environmental groups to file a complaint about pulverizers replaced in the 1980s. The owners said there was no evidence upgrading other components increased emissions.
"We have a long and strong history of environmental stewardship and compliance," Becker said.
The public has 30 days to comment on the settlement. It won't be final until it's approved by a judge.