(Washington, DC - January 13, 2011) The U.S. Environmental Protection Agency (EPA) and the U.S. Justice Department today announced a global Clean Air Act settlement with Northern Indiana Public Service Co. (NIPSCO) that will cover all of NIPSCO's coal-fired power plants, located in Chestertown, Michigan City, Wheatfield and Gary, Ind. NIPSCO has agreed to invest approximately $600 million in pollution control technology that will protect public health and resolve violations of the Clean Air Act.

The settlement will require that NIPSCO spend $9.5 million on environmental mitigation projects and pay a civil penalty of $3.5 million. The state of Indiana has been involved in the development of this settlement and is a signatory.

On this page:

• Overview of Company and Location of Facilities
• Violations
• Injunctive Relief
• Pollutant Reductions
• Health and Environmental Benefits
• Environmental Mitigation Projects
• Civil Penalty
• Comment Period
• The Power Plant Enforcement Effort
• Contact

Overview of Company and Location of Facilities

Northern Indiana Public Service Company (NIPSCO) is a corporation headquartered in Merrillville, Ind. It is the second largest electric distribution company in the state, with approximately 457,000 electric customers across the northern third of the state.

The combined generating capacity of NIPSCO's coal-fired facilities totals over 3,300 megawatts (MW) of capacity. This settlement covers NIPSCO's four coal-fired power plants:

• Bailly Station- Chestertown, Ind.
• Dean H. Mitchell- Gary, Ind.
• Michigan City Station- Michigan City, Ind.
• R.N. Schahfer Station- Wheatfield, Ind.

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Violations

In September 2004, EPA issued a Notice of Violation to NIPSCO alleging that NIPSCO modified a number of its coal-fired power units without first complying with Clean Air Act (CAA) pre-construction obligations that include obtaining pre-construction permits and installing and operating state-of-the-art pollution control technology (CAA Prevention of Significant Deterioration/Nonattainment New Source Review provisions, 42 U.S.C. §§ 7470-7492, §§7501-7515; and Title V of the CAA).

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Injunctive Relief

The consent decree secures injunctive relief from all of NIPSCO's coal-fired power units. Compliance with the settlement will reduce nitrogen oxide (NO_x) and sulfur dioxide (SO₂) emissions by 64,000 tons per year from 2008 levels. It will also significantly reduce particulate matter (PM) emissions. NIPSCO estimates that the cost of the injunctive relief will be approximately $600 million.

The settlement includes:

• Permanent retirement of the Dean H. Mitchell Station
• Installation of three new flue gas desulfurization systems (FGD) at Schahfer 14, Schahfer 15, and Michigan City 12
• Upgrades to existing FGD's at the Bailly Station Units 7 and 8, and Schahfer Units 17 and 18
• Upgrades to the existing selective catalytic reduction systems (SCR's) at the Bailly Station, Michigan City 12, and Schahfer 14 to achieve and maintain separate emissions rates, one on a 30-day rolling average basis, and the other on a 365-day rolling average basis
• Installation and continuous operation of selective non-catalytic reduction (SNCR) at Schahfer 15
• Optimization of existing PM controls to meet unit-specific emissions limitations
• Compliance with annual system tonnage limitations for NO_x and SO₂
• Annual surrender of any excess SO₂ and NO_x­ allowances resulting from actions taken under the consent decree

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Pollutant Reductions

As compared to NIPSCO's 2008 emissions, EPA expects the following emission reductions to result from this settlement:

• SO₂ about 46,000 tons per year
• NO_xabout 18,000 tons per year

PM emissions are expected to decline by about 4,500 tons per year, compared to NIPSCO's current permitted PM limits.

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Health and Environmental Benefits

The pollutants reduced under this settlement have numerous adverse environmental and health effects. Sulfur dioxides and nitrogen oxides can be converted to fine particulate matter once in the air. Fine particulates can be breathed in and lodged deep in the lungs, leading to a variety of health problems and even premature death. Other health and environmental impacts from the pollutants addressed in this settlement include the following:

• Sulfur Dioxide - High concentrations of SO₂ affect breathing and may aggravate existing respiratory and cardiovascular disease. Sensitive populations include asthmatics, individuals with bronchitis or emphysema, children and the elderly. Sulfur dioxide is also a primary contributor to acid deposition, or acid rain.
• Particulate Matter - Short term exposure to particulate matter can aggravate lung disease, cause asthma attacks and acute bronchitis, may increase susceptibility to respiratory infections and has been linked to heart attacks.
• Nitrogen Oxides - Nitrogen oxides can cause ground-level ozone, acid rain, particulate matter, global warming, water quality deterioration, and visual impairment. Nitrogen oxides play a major role, with volatile organic chemicals, in the atmospheric reactions that produce ozone. Children, people with lung diseases such as asthma, and people who work or exercise outside are susceptible to adverse effects such as damage to lung tissue and reduction in lung function.

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Environmental Mitigation Projects

This settlement also requires NIPSCO to spend $9.5 million on environmental mitigation projects to address the impacts of past emissions. NIPSCO must spend a minimum of $3.5 million of the total $9.5 million on Clean Diesel Retrofit, Woodstove/Outdoor Boiler Changeout, and Land Acquisition and Restoration projects. The remaining money may be spent on the Hybrid/Electric Fleet, Electric Infrastructure, and Electric to Natural Gas Conversion projects.

• The Clean Diesel Retrofit Project will require NIPSCO to retrofit in-service, public diesel engines with emission control equipment designed to reduce emissions of NO_x and volatile organic compounds (VOCs).
• The Woodstove/Outdoor Boiler Changeout Project will require NIPSCO to sponsor a wood-burning stove/outdoor boiler changeout and retrofit project. To do this, NIPSCO will provide incentives through rebates, discounts, and in some instances, actual replacement of old, inefficient, high polluting wood-burning technology for newer, low emitting, energy efficient technology, including geothermal heat pumps, EPA Phase 2 hydronic heaters, or EPA-certified woodstoves and hearth appliances.
• The Land Acquisition and Restoration Project will require NIPSCO to acquire/donate and restore lands adjacent to the Indiana Dunes National Lakeshore. Restoration may include, direct reforestation, particularly of tree species that may be affected by acidic deposition. NIPSCO may spend no more than $2 million on this project.
• The Hybrid/Electric Fleet Project allows NIPSCO to elect to submit a plan for a hybrid and/or electric fleet project to reduce emissions from NIPSCO's fleet of motor vehicles. NIPSCO may spend no more than $2 million on this project.
• The Electric Infrastructure Project allows NIPSCO to elect to fund creation of one or more charging stations for electric vehicles in the Northwest Indiana. NIPSCO may spend no more than $2 million on this project.
• The Residential and Commercial Electric to Natural Gas Conversion Project allows NIPSCO to elect to fund the removal and replacement of electric resistance furnaces and water heaters and replace them with natural gas-fired units. NIPSCO may spend no more than $2 million on this project.

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Civil Penalty

NIPSCO will pay a total of $3.5 million in civil penalties.

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Comment Period

The proposed settlement, lodged in the U.S. District Court for the Northern District of Indiana, is subject to a 30-day public comment period and final court approval. Information on submitting comments is available at the Department of Justice website.

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The Power Plant Enforcement Effort

The United States has filed lawsuits against a number of other utilities for alleged violations of the CAA. These cases seek to bring the power plant industry into full compliance with the New Source Review and Prevention of Significant Deterioration requirements of the CAA. This consent decree with NIPSCO represents the twenty-first judicial settlement under the power plant enforcement effort.

The total combined sulfur dioxide and nitrogen oxides emission reductions secured from these settlements will be about 2 million tons each year once all the required pollution controls have been installed and implemented. More information about these settlements is available at the Coal-Fired Power Plant Enforcement Initiative website.

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For more information, contact:

Seema Kakade
U.S. Environmental Protection Agency (2242A)
1200 Pennsylvania Ave., N.W.
Washington, DC 20460-0001
(202) 564-2416
kakade.seema@epa.gov

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