Dairyland Power Cooperative Settlement

(Washington, DC - June 29, 2012) The Department of Justice (DOJ) and the U.S. Environmental Protection Agency (EPA) announced a Clean Air Act (CAA) settlement with Dairyland Power Cooperative (DPC) that will cover the utility’s three power plants in Alma and Genoa, Wis. DPC has agreed to invest approximately $150 million in pollution control technology that will protect public health and resolve violations of the CAA. The settlement will also require that DPC spend $5 million on environmental mitigation projects and pay a civil penalty of $950,000.

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Overview of Company

Dairyland Power Cooperative (DPC) is an electric generation and transmission cooperative association organized under the laws of Wisconsin and Minnesota. DPC generates and transmits electricity at wholesale to 25 electric distribution cooperatives and 16 municipal utilities that, collectively, have a service territory of approximately 500,000 people. DPC was formed in 1941 and has its headquarters and principal place of business in La Crosse, Wisconsin.

The combined generating capacity of DPC’s coal-fired facilities totals over 1,000 megawatts (MW) of capacity.  This settlement covers all seven coal-fired boilers at DPC’s three power plants:

  • Alma Station – Alma, Wisconsin
  • J.P. Madgett Station – Alma, Wisconsin
  • Genoa Station – Genoa, Wisconsin

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As part of the Coal-Fired Power Plant Initiative, the EPA began an investigation of the DPC system in 2006. Based upon DPC’s response to the EPA’s CAA Section 114 Information Requests, and other information obtained during its investigation, EPA Region 5 concluded that violations of the Prevention of Significant Deterioration (PSD) program existed at some of the plants in the DPC system. The parties initiated settlement discussions prior to the issuance of a Notice of Violation (NOV).

On February 13, 2012 the EPA issued the statutorily required NOV. The NOV generally alleged that DPC performed projects that triggered PSD applicability at the Alma/Madgett and Genoa plants. The EPA also alleged violations of Title V of the CAA for failure to submit an application to include all applicable requirements in DPC’s Title V permits.

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Injunctive Relief

The consent decree secures injunctive relief from all of DPC’s coal-fired power units.  Compliance with the settlement will reduce nitrogen oxide (NOx) and sulfur dioxide (SO2) emissions by 29,000 tons per year from 2008 levels and significantly reduce particulate matter (PM) emissions.  DPC estimates that the cost of the injunctive relief will be approximately $150 million.

The settlement includes:

  • installation and continuous operation of a selective catalytic reduction (SCR), and Flue Gas Desulfurization (FGD) or Dry Sorbent Injection (DSI) system on the J.P. Madgett Units
  • installation and continuous operation of Non-Selective Catalytic Reduction (SNCR) system on the Genoa Units
  • cessation of coal burning at Alma Unit 4 and install of FGD or DSI on Alma Unit 5, or installation of FGD or DSI on Alma Unit 4 and a tight declining emission cap on Alma Units 4 and 5
  • permanent retirement of Alma Units 1,2, and 3
  • compliance with annual system tonnage limitations for (NOx) and (SO2)
  • optimization of existing PM controls to meet units-specific emissions limitations
  • annual surrender of any excess (SO2) and (NOx) allowances resulting from actions taken under the consent decree

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Pollutant Reductions

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

  • SO2 about 23,000 tons per year
  • NOx about 6,000 tons per year

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Health Effects 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

The proposed consent decree requires DPC to spend not less than $5 million on environmental mitigation projects. 

  • $2 million, at least, on a major solar photovoltaic development project
  • $250,000 apiece to the United States Forest Service and the National Park Service for land restoration projects.

The remaining mitigation dollars can be apportioned to implement one or more of the following projects:

  • installation of solar photovoltaic panels;
  • home weatherization; and
  • replacement of DPC’s standard vehicle fleet with hybrid or plug-in vehicles. 

DPC will submit a plan to the EPA, for review and approval, identifying which of these projects it intends to perform, the proposed amount(s) to be spent on the projects, and the schedule for implementing the projects.

The United States Forest Service and the National Park Service will each use $250,000 on projects to address the damage done from DPC’s alleged excess emissions. 

  • The Forest Service Project(s) will focus on the Chequamegon-Nicolet National Forest.  If the Chequamegon-Nicolet National Forest is not possible as a Project focus, the Project(s) shall focus on the Superior National Forest and/or the Ottawa National Forest.
  • The National Park Service Project(s) will focus on the Effigy Mounds National Monument, Mississippi River National Recreation Area, Saint Croix National Scenic River, and/or Apostle Islands National Lakeshore. The project will restore areas adversely impacted by the DPC system’s SO2 emissions that resulted, in part, from the deposition of acid rain. 

The Major Solar Photovoltaic Development Project requires DPC to execute a long term power purchase agreement with one or more third-party project developers. They, in turn, will develop new major solar photovoltaic (“PV”) installations to be located in Wisconsin, Minnesota, Illinois or Iowa. The power purchase agreement will include a term of at least 10 years for which DPC commits to purchase the power generated and, if generated, acquire associated renewable energy credits (“RECs”) from the solar PV installations.

DPC is not allowed to use and must retire all RECs generated during the first 10 years of performance and must identify these RECs as retired in a tracking system designated as acceptable by the program recognizing the REC. The proposed consent decree prohibits DPC from using the RECs generated during the initial 10 years of the power purchase agreement(s) for compliance with any renewable portfolio standard or for any other compliance purpose during or after the initial 10 years. The project is expected to promote the development of solar energy.

Proposed mitigation projects for selection:

  • For the Solar PV Panels Project, DPC will submit a plan to install fixed flat or tracking PV panels and the associated equipment to create a grid connected on public school buildings and buildings owned by not-for-profit organizations. The buildings are located in the DPC service territory or in areas surrounding the Madgett/Alma and Genoa plants.

    As part of this project, DPC must fund a project service contract for maintenance costs for 25 years. If implemented, the project will benefit the local community by reducing the demand for power in an area dominated by coal.
  • For the Home Weatherization Project, DPC will submit a plan to fund home weatherization projects through not-for-profit community action program agencies. These projects are targeted to low income residents served by DPC or its member electric distribution cooperatives,. In addition, the project may also fund a “Pay as You Go” residential weatherization program by providing loan funds to DPC distribution cooperatives. The cooperatives will become part of a low interest revolving loan fund to help residential members finance home energy efficiency improvements.

    DPC will participate in these programs for at least five years from approval of the plan. Because these services reduce the use of electricity or fossil fuels, they will benefit the local community by directly reducing emissions, including (NOx), SO2, and PM. The project may use up to $500,000 for purposes of satisfying the requirements of the proposed consent decree.
  • For the Hybrid/Electric Fleet Project, DPC will submit a plan for a hybrid and/or electric fleet project to reduce emissions from DPC’s fleet of diesel and gas powered motor vehicles. The use of hybrid engine technologies in DPC’s motor vehicles, such as diesel-electric engines, will improve fuel efficiency and reduce emissions of (NOx), PM, volatile organic carbons (VOCs), and other air pollutants.

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Civil Penalty

DPC will pay a total of $950,000 in civil penalties.

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Comment Period

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

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The Power Plant Enforcement Effort

This is the 22nd judicial settlement secured by DOJ and EPA, and the 23rd settlement overall, as part of a national enforcement initiative to control harmful emissions from power plants under the Clean Air Act’s New Source Review requirements. The total combined sulfur dioxide and nitrogen oxides emission reductions secured from these settlements will exceed nearly 2 million tons each year once all the required pollution controls have been installed and implemented.

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For more information, contact:

Sabrina Argentieri
Air Enforcement Division
U. S. Environmental Protection Agency
77 West Jackson Boulevard
Mail Code – C-141
Chicago, IL  60604-3507

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