Tennessee Valley Authority Clean Air Act Settlement

"This agreement will save lives and prevent billions of dollars in health costs. Modernizing these plants and encouraging clean energy innovation means better health protections and greater economic opportunities for the people living near TVA facilities. Investments in pollution control equipment will keep hundreds of thousands of tons of harmful pollutants out of the air we breathe, and help create green job opportunities that will reduce pollution and improve energy efficiency." - Lisa P. Jackson, EPA Administrator

(Washington, DC - April 14, 2011) The U.S. Environmental Protection Agency (EPA) today announced a settlement with the Tennessee Valley Authority (TVA) to resolve alleged Clean Air Act violations at 11 of its coal-fired plants in Alabama, Kentucky, and Tennessee. The settlement will require TVA to invest a TVA estimated $3 to $5 billion on new and upgraded state-of-the-art pollution controls that will prevent approximately 1,200 to 3,000 premature deaths, 2,000 heart attacks and 21,000 cases of asthma attacks each year, resulting in up to $27 billion in annual health benefits. TVA will also invest $350 million on clean energy projects that will reduce pollution, save energy and protect public health and the environment.

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

Tennessee Valley Authority (TVA) is a corporation owned by the United States government, created and existing pursuant to the Tennessee Valley Authority Act of 1933, 16 U.S.C. § 831-831ee.

TVA is headquartered in Knoxville, Tenn. TVA operates a total of fifty-nine coal-fired boilers at eleven plants in Alabama, Kentucky, and Tennessee. The total coal-fired system capacity is around 17,407 megawatts. TVA also operates nuclear, natural gas and hydroelectric plants. TVA's service territory includes Alabama, Georgia, Kentucky, Mississippi, North Carolina, Tennessee, and Virginia.

TVA provides wholesale power to 155 municipal and cooperative power distributors and direct service to 56 large industrial and government customers, thereby supplying power to about nine million people across its 80,000 square mile territory. TVA does not receive any public tax dollars.

This settlement covers these coal-fired power plants:

• Allen Fossil Plant near Memphis, Tenn.
• Bull Run Fossil Plant near Oak Ridge, Tenn.
• Colbert Fossil Plant in Tuscumbia, Ala.
• Cumberland Fossil Plant in Cumberland City, Tenn.
• Gallatin Fossil Plant in Gallatin, Tenn.
• John Sevier Fossil Plant near Rogersville, Tenn.
• Johnsonville Fossil Plant near Waverly, Tenn.
• Kingston Fossil Plant near Kingston, Tenn.
• Paradise Fossil Plant in Drakesboro, Ky.
• Shawnee Fossil Plant near Paducah, Ky.
• Widows Creek Fossil Plant near Stevenson, Ala.

Violations

In November 1999, EPA issued TVA an administrative compliance order (ACO) alleging that TVA modified a number of coal-fired units at nine of TVA's plants without first complying with Clean Air Act (CAA) preconstruction obligations that include obtaining preconstruction 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).

TVA appealed the ACO to the United States Court of Appeals for the Eleventh Circuit. The Eleventh Circuit determined that the ACO was not final agency action.

This settlement resolves all past preconstruction violations as well as alleged violations of the New Source Performance Standards program and Title V of the CAA as of the date Federal Facilities Compliance Agreement (Compliance Agreement) is signed by both EPA and TVA.

Injunctive Relief

The Compliance Agreement between EPA and TVA secures injunctive relief at all of TVA's coal-fired power plants. TVA estimates that the new and upgraded state-of-the-art pollution controls required by the settlement could cost from $3 to $5 billion.

This landmark settlement includes:

• An obligation to address 92 percent of TVA's coal-fired system between 2011 and 2018 with either the installation of state-of-the-art pollution controls such as selective catalytic reduction (SCR) or flue gas desulfurization (FGD), retirement, or repowering to renewable biomass:
  • For NO_x, 60 percent of TVA's coal-fired system will be equipped with SCR, 16 percent will be retired, and 16 percent have the option to retire, retrofit with SCR, or repower to renewable biomass
  • For SO₂, 51 percent of TVA's coal-fired system will be equipped with FGD, 16 percent will be retired, and 25 percent have the option to retire, retrofit with FGD, or repower to renewable biomass
  • Permanent retirement of 18 coal-fired units equating to about 16 percent of TVA's coal-fired electricity generating system -- the largest retirement commitment any settling company has made to date under EPA's Coal-Fired Power Plant Initiative
• Continuous operation of all new and existing SCRs and FGDs
• Optimization studies for existing PM controls to maximize PM emission reductions
• Compliance with annual descending system-wide tonnage caps for NO_x and SO₂
• Annual surrender of any excess NO_x and SO₂ allowances resulting from actions taken under the Compliance Agreement

Pollutant Reductions

As compared to TVA's 2008 emissions, upon full implementation of this settlement, TVA will achieve the following emission reductions:

• For NO_x, a reduction of at least 115,977 tons per year (69 percent reduction)
• For SO₂, a reduction of at least 225,757 tons per year (67 percent reduction)

EPA estimates that the monetized health benefits of these emission reductions range from $11 to $27 billion (in 2010 dollars), per year, including avoiding 1,200 to 3,000 premature deaths, 2,000 non-fatal heart attacks, 800 cases of chronic bronchitis, 960 hospital admissions, 1,200 emergency department visits for asthma, 1,900 cases of acute bronchitis, 21,000 asthma attacks, 39,000 cases of upper or lower respiratory symptoms, 150,000 days when people miss work, and 880,000 days when people must restrict their activities per year.

EPA estimated these benefits using the BenMAP model and the methodology from Fann et al. (2009) with mortality risk estimates from Pope et al. (2002) and Laden et al. (2006). These benefits reflect the human health benefits from reducing exposure to ambient PM_2.5 by reducing precursor pollutants like NO_x and SO₂. Health effects from direct exposure to NO_x and SO₂, visibility effects, and ecosystem effects are not included. Please contact [email protected] with questions.

Because this approach is based on national average benefits from power plants, these estimates may not reflect local variability in population density, meteorology, exposure, baseline health incidence rates, or other local factors that would affect the actual benefits.

The settlement will also significantly reduce particulate matter (PM) and carbon dioxide (CO₂) emissions.

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.
• Carbon dioxide - The burning of fossil fuels, such as coal and oil, and deforestation have caused the concentrations of heat-trapping "greenhouse gases" to increase significantly in our atmosphere. These gases prevent heat from escaping to space, somewhat like the glass panels of a greenhouse. Climate change affects people, plants, and animals. Scientists are working to better understand future climate change and how the effects will vary by region and over time. Under this settlement, TVA is taking important steps to reduce greenhouse gases from its coal-fired system by retiring older, less efficient units and implementing energy efficiency and demand reduction strategies to further reduce energy consumption thereby reducing greenhouse gas emissions.

Environmental Mitigation Projects

This settlement also requires TVA to spend $350 million on environmental mitigation projects to address the impacts of past emissions. Communities near TVA's facilities will directly benefit from $350 million in environmental projects designed to reduce harmful air pollution and advance EPA's goals in addressing environmental justice issues.

TVA will distribute a subset of the $350 million, a total of $60 million, to Alabama, Kentucky, North Carolina, and Tennessee for these states to implement projects of their choosing from a list of categories in the consent decree. Under the settlement with EPA, TVA will spend $290 million to perform the following projects:

• $240 million as part of the Energy Efficiency Projects that are designed to increase efficiency in transmission and demand-side supply to displace utilization of coal-fired electricity generation.
  • TVA's Smart Energy Communities project will focus on energy efficiency, including: high efficiency air conditioning or water heating, lighting upgrades, and grid integrated renewable energy.
  • As part of the Smart Energy Communities, TVA will provide "Extreme Energy Makeovers" for at least two communities in the Tennessee Valley. This project will retrofit low-income housing with the most cost-effective energy reduction packages thereby reducing energy consumption by as much as 25 percent, and thus power generation and associated criteria and greenhouse gas emissions.
  • Additionally, TVA is offering incentive programs for residential, commercial, and industrial energy efficiency projects.

• $40 million to reduce greenhouse gases and other pollutants through the Clean/Renewable Energy Projects. These projects include: waste heat recovery, electric vehicle and plug-in hybrid electric charging stations, solar photovoltaic (PV) installations, and landfill or waste treatment methane gas capture and generation.

• $8 million for a Clean Diesel Retrofit and Electric Vehicle Project that requires TVA to either retrofit in-service, public diesel engines with emission control equipment designed to reduce emissions of NO_x and volatile organic compounds or to replace such vehicles with electric or hybrid-electric vehicles.

• $1 million each to the National Park Service and the National Forest Service to improve, protect, or rehabilitate park and forest lands that have been injured by emissions from TVA's plants, including Mammoth Cove National Park and Great Smoky Mountains National Park (Park Service) and Cohutta Wilderness Area, Linville Gorge Wilderness Area, Shining Rock Wilderness Area, Sipsey Wilderness Area, and Joyce Kilmer-Slickrock Wilderness Area (Forest Service).

TVA estimates that the Energy Efficiency Projects and the Clean/Renewable Energy Projects will achieve the following reductions:

• CO₂ will be reduced by 30,000,000 tons
• SO₂ will be reduced by 96,000 tons
• NO_x will be reduced by 25,000 tons
• Mercury will be reduced by 800 pounds

Civil Penalty

TVA will pay a total of $10 million in civil penalties. TVA will pay $8 million to EPA, $1 million to Tennessee, and $500,000 each to Alabama and Kentucky. EPA is collecting the $8 million penalty through a consent agreement and final order.

Comment Period

EPA reviewed all public comments submitted pursuant to Paragraph 211 of the Federal Facilities Compliance Agreement (Compliance Agreement) These comments were submitted by the comment closing date, May 20, 2011 via regulations.gov ID# EPA-HQ-OECA-2010-0710.

On June 14, 2011, EPA found that the public comments did not warrant a change to the Compliance Agreement or an extension of the public comment period. The public comments received, while useful and informative, did not present any information that demonstrated that the Compliance Agreement was erroneous, or any new policy concerns which EPA had not already considered. Therefore, EPA found that the Effective Date of the Compliance Agreement is June 13, 2011, sixty (60) says after the Date of Execution of the Compliance Agreement.

On July 8, 2011, EPA issued a specific written response to comments that is available on regulations.gov, ID# EPA-HQ-OECA-2010-0710.

The Power Plant Enforcement Effort

The United States has filed lawsuits against a number of 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 Compliance Agreement with TVA represents the twenty-second settlement under EPA's Coal-Fired Power Plant Enforcement Initiative.

The total combined sulfur dioxide and nitrogen oxides emission reductions secured from these settlements will be well over 2 million tons each year once all the required pollution controls have been installed and when other required actions (such as unit retirements) have been implemented. More information about these settlements is available at the Coal-Fired Power Plant Enforcement Initiative.

For more information, contact:

Ilana Saltzbart, Attorney
U.S. Environmental Protection Agency (2242A)
1200 Pennsylvania Avenue, N.W.
Washington, DC 20460

Jason Dressler
U.S. Environmental Protection Agency
Region 4 (9T25)
South Air Enforcement Section
61 Forsyth Street, S.W.
Atlanta, GA 30303
404-562-9208
[email protected]

David Lloyd
U.S. Environmental Protection Agency
Region 4 (9T25)
North Air Enforcement Section
61 Forsyth Street, S.W.
Atlanta, GA 30303
404-562-9216
[email protected]

Footnotes:

1. Fann, N., C.M. Fulcher, and B.J. Hubbell. 2009. "The influence of location, source, and emission type in estimates of the human health benefits of reducing a ton of air pollution." Air Qual Atmos Health. 2: p. 169-76

2. Laden, F., J. Schwartz, F.E. Speizer, and D.W. Dockery. 2006. "Reduction in Fine Particulate Air Pollution and Mortality." American Journal of Respiratory and Critical Care Medicine.
173: p. 667-672.

3. Pope, C.A., III, R.T. Burnett, M.J. Thun, E.E. Calle, D. Krewski, K. Ito, and G.D. Thurston. 2002. "Lung Cancer, Cardiopulmonary Mortality, and Long-term Exposure to Fine Particulate
Air Pollution." Journal of the American Medical Association. 287: p. 1132-41.