U.S. AND PREPA REACH AGREEMENT
FOR MORE POLLUTION REDUCTIONS AT FOUR POWER PLANTS

Modification Will Provide Substantial Environmental Benefits To Local Communities

PUERTO RICO - The federal government announced today that it has reached an agreement with the Puerto Rico Electric Power Authority (PREPA) that will result in substantial environmental and health benefits for the local communities. The agreement between the Department of Justice, on behalf of the U.S. Environmental Protection Agency (EPA) and PREPA, will modify a 1999 consent decree reached with the participation of Comunidaes Unidas Contras La Contamination (CUCCo), a prominent citizens’ environmental organization. PREPA had been violating Clean Air Act requirements to limit the opacity of emissions from its power plant stacks. Today’s agreement will bring the power plants into compliance with those requirements at four plants and build on environmental projects that PREPA has been carrying out under the terms of the prior consent decree.

“This case represents the vigilance of the federal government, working hand in hand with the local citizen’s organization, to enforce our nation’s environmental laws and defend the environment against harmful pollution,” said Thomas L. Sansonetti, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “Current and future generations of Puerto Rico’s citizens will benefit from this agreement through the excellent environmental benefit it delivers.”

“This agreement with PREPA requires pollution reductions that will result in further health benefits for the people of Puerto Rico,” said Jane M. Kenny, EPA Regional Administrator. “This is a real victory for Puerto Rico’s environment and especially for communities located near these power plants.”

Under the settlement, PREPA has agreed to operate its units using cleaner fuel that has a lower sulfur content. In addition, the authority has agreed to use a more efficient and less polluting diesel fuel to start up its boilers. PREPA will pay a penalty of $300,000 for past violations and provide $200,000 to supplement two environmental projects agreed upon in the 1999 Consent Decree. The authority has agreed to more stringent stipulated penalties for future violations.

Negotiations leading to this settlement began after PREPA disputed EPA-identified violations of the 1999 Consent Decree. A federal magistrate judge recommended that the court find in favor of the federal government and ordered the parties to negotiate before the federal district court judge ruled on the merits of the dispute. During these negotiations PREPA, EPA, and CUCCo agreed to modify the previous consent decree. The modification requires PREPA to take both long and short-term actions to comply with federal environmental laws and regulation.

Under the terms of today’s agreement PREPA has agreed to:

• Switch to fuel with a very low sulfur content at the largest units at the South Coast and Aguirre plants. It must use fuel with a sulfur content of no more than 0.75% sulfur by March 2005 and no more than 0.50% by March 2007. In addition, PREPA has agreed to continue burning fuel with a sulfur content of 0.50% at its Palo Seco plant until July 18, 2009. PREPA is already required, by permit, to burn fuel with 0.50% sulfur at its San Juan plant. PREPA may choose to install pollution controls in lieu of using fuel with 0.50% sulfur, but only if the equipment reduces sulfur dioxide emissions as much as they would have been reduced using the cleaner fuel.
• Conduct a Nitrogen Oxide Emissions Reduction Program. This program requires PREPA to test its generating units to determine current emissions of nitrogen oxides and to take steps to reduce these emissions by optimizing operating conditions or, if necessary, by making modifications at its plants.
• Adhere to EPA’s interpretation of the method for determining the opacity of emissions from the power plant stacks. Under the prior consent decree, PREPA had agreed to establish operational parameters that would ensure compliance with the opacity limit. In this modification, PREPA has agreed to change these parameters using EPA’s interpretation of its method for determining opacity.
• Burn diesel fuel - a less polluting fuel - after restarting boilers that have been out of operation for more than 48 hours.
• Notify the public and CUCCo when it switches fuels and allow community representatives to be present when developing optimum operating ranges. PREPA will also arrange for meetings between the community and the environmental review contractor to discuss matters related to PREPA’s compliance, and will provide all publicly-available documents related to its compliance to the community.
• Supplement two environmental projects agreed upon in the prior decree by spending an additional $100,000 to acquire valuable wetlands in Las Cucharillas and by adding $100,000 to its previous commitment to pay an environmental contractor who oversees compliance with the 1999 consent decree.

In 1999, the U.S. and PREPA entered into a consent decree under which PREPA agreed to take actions to come into compliance with environmental laws at a cost of about $200 million; pay a $1.5 million penalty; implement additional projects to benefit the environment, costing $3.5 million; and spend $1 million to hire an environmental contractor to oversee compliance with the consent decree.

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