Dairyland Power reaches settlement with EPA and Sierra Club

Cooperative concedes no violations of law, all claims released

LA CROSSE, Wis., June 29, 2012 /PRNewswire-USNewswire/ -- Dairyland Power Cooperative has reached a joint settlement agreement with the U.S. Environmental Protection Agency (EPA) and the Sierra Club concluding litigation regarding alleged violations of the New Source Review (NSR)* provisions of the Clean Air Act. In doing so, Dairyland admits no violations of law, and all claims against Dairyland based on facility modifications prior to the settlement were released by the other parties.

"A long, drawn out legal battle would not be in the best financial interest of Dairyland's members and, since we had already begun adding hundreds of millions of dollars of air emission controls at our power plants, we agreed to work toward a settlement to reduce the risk of uncertain outcomes and the accompanying additional rate pressure for our cooperative consumers," said Bill Berg, President and CEO. "Dairyland stands by its strong belief that our cooperative did not violate the law."

"The most important part of this consent decree is that it recognizes Dairyland's major investments in air emission controls at our plants and the significant emissions reductions that have already been achieved at our plants," added Berg. "It also formalizes a commitment for additional air emission controls on our facilities which are compatible with our existing plans."

He noted, "This agreement allows us the ability to keep our existing power plants operating, with the addition of already planned controls. The agreement also includes the end of coal-fired generation at the three oldest Alma Station generators, which we already chose to do at the end of 2011. The emission limitations on Dairyland's other coal-fired facilities are consistent with our strategic intent to reduce environmental impacts and our dependence on coal in favor of other resources to diversify and improve the balance of our energy resources portfolio."

Under terms of the settlement agreement, filed in the U.S. District Court for the Western District of Wisconsin, Dairyland agreed to sulfur dioxide (SO2), nitrogen oxides (NOx) and particulate matter emissions limits for coal-fired power plants in Genoa and Alma, Wis. Additionally, the cooperative agreed to continue to go forward with plans to install additional air emissions control equipment on these facilities.

Dairyland will also invest $5 million over a five-year period in a combination of renewable energy, energy efficiency and public land improvement projects. The terms of the settlement also include a civil penalty of $950,000. "We maintain our position that the civil penalty is inappropriate," said Berg. "However, similar settlements have included such penalties and always involve compromise. This agreement eliminates the financial risk of pursuing litigation while still achieving the environmental improvements that both we and the other parties involved deem appropriate."

Background

The Sierra Club filed a civil lawsuit for alleged violations of the Clean Air Act on June 8, 2010.
On Feb. 13, 2012, the EPA issued a notice of violation with similar allegations. Even before these filings, Dairyland was already in the midst of a $400 million plan to further reduce air emissions at its generating facilities.

In 2007, Dairyland installed fabric filter "baghouses" designed to remove more than 99 percent of particulate matter from the exhaust gas stream at the Genoa #3 Station (G-3) and John P. Madgett Station (JPM).  In 2009, Dairyland also completed installation of a semi-dry flue gas desulfurization system, or "scrubber," to remove SO2 at the G-3 plant. Dairyland has also installed equipment to reduce emissions of NOx at JPM, G-3, and Alma units 4 and 5. 

In the settlement, Dairyland agreed to limits in emission rates and total annual amounts emitted for SO2 and NOx and particulate matter for JPM, G-3 and Alma units 4 and 5. Dairyland also agreed to install selective catalytic reduction or equivalent alternative NOx control technology at JPM and selective non-catalytic reduction at G-3. Dairyland has also notified EPA that it will install dry sorbent injection (DSI) to further reduce SO2 emissions at JPM. Additional emission controls will also be installed on Alma units 4 and 5. As part of the agreement, Dairyland's Alma units 1-3 ceased burning coal as of Dec. 31, 2011.

With headquarters in La Crosse, Wis., Dairyland provides wholesale electricity to 25 member distribution cooperatives and 15 municipal utilities in four states (Wisconsin, Minnesota, Iowa and Illinois). Dairyland's generation resources include coal, natural gas, hydro, wind, landfill gas, biomass, solar and animal waste. For more information, visit www.dairynet.com.

* New Source Review (NSR) was created by the U.S. Congress in 1977 as part of a series of amendments to the Clean Air Act. Among other things, the NSR process requires existing emission sources to undergo pre-construction environmental review and permitting for major modifications to existing facilities that would create a "significant increase" of a NSR regulated pollutant. Routine maintenance, repair, and replacement are exempt from the NSR process. The NSR program has been subject to conflicting and changing interpretations since many of its terms are not precisely defined in the Clean Air Act.

SOURCE Dairyland Power Cooperative