Minnesota Power Settlement

(Washington, DC - July 16, 2014) – In a settlement with the United States, Minnesota Power, an ALLETE company based in Duluth, has agreed to install pollution control technology and meet stringent emission rates to reduce harmful air pollution from the company’s three coal-fired power plants located in Cohasset, Hoyt Lakes, and Schroeder, Minnesota, the Department of Justice and the U.S. Environmental Protection Agency (EPA) announced today. The settlement will resolve claims that the company violated the New Source Review provisions of the Clean Air Act by unlawfully constructing major modifications at its plants without obtaining required permits and installing and operating the best available air pollution control technology, as the Act requires. 

• Overview
• Violations
• Injunctive Relief
• Pollutant Reductions
• Human Effects and Environmental Benefits
• Environmental Mitigation Projects
• Civil Penalty
• Comment Period
• Power Plant Effort
• Contact

Overview of Company

Minnesota Power serves approximately 143,000 residential and electric customers, 16 municipalities and some of the nation’s largest industrial customers in Minnesota. The Minnesota Power system subject to this settlement has a combined capacity of approximately 1,450 megawatts (MW), as well as 350,000 pounds per hour of steam generation capacity.

• The Boswell Plant consists of four coal-fired electric utility steam generating units identified as Units 1, 2, 3, and 4, with a rated capacity of 68, 68, 362, and 585 MW, respectively.
• The Laskin Plant consists of two coal-fired units, Units 3 and 4, with a rated capacity of 47 and 50 MW, respectively.
• The Taconite Harbor Plant consists of three coal-fired electric utility steam generating units identified as Taconite Harbor 1, 2, and 3, with a rated capacity of 79, 76, and 84 MW, respectively.
• The Rapids Energy Center consists of two industrial biomass-and-coal-fired steam and electricity cogeneration units, co-located at the Blandin Paper Mill, with an electric generation capacity of 13 and 16 MW, respectively, and a steam generation capacity of 175,000 pounds of steam per hour each.

Violations

EPA began an investigation of the Minnesota Power system as part of the Power Plant Initiative. Based upon Minnesota Power’s response to the EPA’s Clean Air Act (CAA) Section 114 information requests and other information obtained during its investigation, EPA concluded that there were prevention of significant deterioration (PSD) violations at some of Minnesota Power’s plants. On August 5, 2008, EPA issued a notice of violation to Minnesota Power for the Boswell and Laskin plants. EPA issued a notice of violation to Minnesota Power for the Rapids Energy Center on March 31, 2011. Both of these notices of violation generally allege that Minnesota Power performed projects that triggered PSD applicability. The EPA also alleged violations of Title V of the CAA for failure to submit an application to include all applicable requirements in Minnesota Power’s Title V permits, as well as new source performance standard (NSPS) violations.  

Injunctive Relief

The consent decree secures injunctive relief from all of Minnesota Power’s coal-fired power units, as well as from one biomass-and-coal-fired steam and electricity cogeneration plant.  Compliance with the settlement will reduce sulfur dioxide (SO₂), oxides of nitrogen (NO_x), and particulate matter (PM) emissions by approximately 13,350 tons per year from 2010 levels. EPA estimates that the cost of the injunctive relief for emission controls will be more than $500 million. 

The settlement includes:

• Retirement, refueling, or repowering of Laskin Units 1 and 2 and Taconite Harbor Unit 3 by December 31, 2015, and meeting unit-specific rates at each of the Laskin units prior until that time. For Boswell Units 1 and 2, retirement, refueling, repowering, or rerouting of their emissions through the flue gas desulphurization (FGD) technology for Boswell Unit 3 by December 31, 2018.
• Installation of FGD technology at Boswell Unit 4 (by May 31, 2016), and either dry sorbent injection (DSI) or furnace sorbent injection (FSI) at Taconite Harbor Units 1 and 2 (December 31, 2015). Meeting unit-specific SO₂ emission rates at all Boswell and Rapids Energy Center units, and at Taconite Harbor Units 1 and 2, including a 30-day rolling average emission rate for SO₂ of no greater than 0.030 pounds per million British thermal units (lbs/mmBTU) at Boswell Units 3 and 4, and potentially 1 and 2.
• Optimization of combustion at Boswell Units 1 and 2.  Meeting unit-specific NO_x emission rates at all Boswell units, and at Taconite Harbor Units 1 and 2, including a 30-day rolling average emission rate for NO_x of no greater than 0.060 lbs/mmBTU at Boswell Unit 3.
• Compliance with annual plant tonnage limitations for NO_x and SO_2.
• Optimization of existing PM controls to meet unit-specific emissions limitations.  New baghouse at Boswell 4.
• At Rapids Energy Center, capping its 12-month percent heat input from coal to no more than 40% during each 12-Operating Month period.
• Prior installation of 210 MW of renewable wind energy in advance of its obligations under the Minnesota Renewable Energy Standard.  The installation was completed in December 2012. 
• Annual surrender of any excess SO₂ and NO_x allowances resulting from actions taken under the consent decree

Pollutant Reductions

As compared to Minnesota Power’s 2010 emissions, EPA expects the following emission reductions to result from this settlement:

• SO₂ about 8,500 tons per year
• NO_x about 4,200 tons per year
• PM about 650 tons per year

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.

Environmental Mitigation Projects

The proposed consent decree requires Minnesota Power to spend $4.2 million on environmental mitigation projects. Under the proposed consent decree, Minnesota Power will spend $2 million to build a large-scale solar photovoltaic panel array for the benefit of the Fond du Lac Band, and will spend between $500,000 and $1,000,000 on residential wood-burning appliance change outs.

The National Park Service (NPS) will also be provided with $200,000 for the restoration of wetlands in Voyageurs National Park. Additionally, under the proposed decree, Minnesota Power must choose to perform a selection of the following projects, each of which is described in greater detail below:

• land donation and/or restoration
• installation of small-scale solar photovoltaic, solar water heating, or geothermal systems on government or non-profit buildings
• clean diesel projects
• installation of electric vehicle charging stations. 

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

Large-Scale Solar Photovoltaic Development on Fond du Lac Tribal Land

Under this proposed consent decree, Minnesota Power has agreed to contribute $2,000,000 towards building a large-scale photovoltaic array with 1.0 MW of capacity on Fond du Lac tribal land, and to benefit the Fond du Lac Band. The project is expected to cost approximately $2.5 million total, and the Band has indicated its willingness to cover the remainder of the costs beyond $2 million. If the Band refused to cover remaining costs, the solar array installed would be as large as could be built for $2 million. Minnesota Power will require the Band to open an escrow account or use an alternative mechanism to fund ongoing maintenance of the solar array.  Unlike in similar projects in the past, the Band will retain all renewable energy credits and other environmental benefits solely for its own use; this ensures that the full benefit of the project can be attributed to the consent decree.

Residential Wood-Burning Appliance Change-Out Project

The residential wood-burning appliance change-out project requires Minnesota Power to propose a plan to spend between $500,000 and $1,000,000 to sponsor a wood-burning appliance change out and retrofit project in 17 counties in Minnesota within or near the Minnesota Power service area. The air pollutant reductions shall be obtained by replacing, retrofitting, or upgrading inefficient, higher polluting wood burning appliances with cleaner burning appliances and technologies, such as:

• retrofitting older hydronic heaters (a.k.a., outdoor wood boilers) to meet EPA Phase 2 hydronic heater voluntary emission limits
• replacing older hydronic heaters with current EPA Phase 2 hydronic heaters, or with EPA-certified wood stoves, other cleaner-burning, more energy-efficient hearth appliances (e.g., wood pellet, gas, or propane appliances), or EPA Energy Star qualified heating appliances
• replacing non-EPA-certified wood stoves with EPA-certified wood stoves or cleaner-burning, more energy-efficient appliances
• replacing spent catalysts in EPA-certified wood stoves; and
• replacing or retrofitting wood-burning fireplaces with EPA Phase 2 qualified retrofit devices or cleaner-burning natural gas appliances. 

To qualify for replacement, retrofitting, or upgrading, the wood burning appliance must be in regular use in a primary residence during the home-heating season or in a frequently used non-residential building (e.g., churches, greenhouses, schools), and preference shall be given to replacement, retrofitting, or upgrading wood burning appliances that are a primary or significant source of residential heat. The intent of the projects would be to reduce fine particle pollution and hazardous air pollutants in areas.

Land Donation and Restoration Project

The land donation and restoration project allows Minnesota Power to elect to submit a plan to spend up to $750,000 to donate and/or restore lands alleged to have been adversely effected by emissions from Minnesota Power’s plants. Any transfer of property or land interests by Minnesota Power to any governmental or nongovernmental organization would be credited at 75 percent of fair market value and must provide for perpetual protection of the land. Restoration may include direct reforestation and removal of invasive species, and must provide for perpetual protection of the land through a donation of an interest in the land (e.g., through an easement). Restoration would be credited as the value of the actual restorative work (removal of invasive species, reforestation, etc.), and 75 percent of the value of the donated land interest. EPA has had a number of land acquisition and restoration projects in previous Clean Air Act settlements with utilities.

Small-Scale Solar Photovoltaic, Solar Water Heating, and Geothermal Project

The solar photovoltaic, solar water heating, and geothermal project allows Minnesota Power to elect to submit a plan to spend up to $1,500,000 to fund the installation of conventional flat panel or thin film solar photovoltaics, solar water heating systems, or ground source geothermal heat pump systems on buildings or sites owned or operated by public schools, non-profit groups, and/or federal, state or local governments located within the Minnesota Power service territory. As part of this project, Minnesota Power must escrow funds to cover fund project service contracts for maintenance costs for 25 years for geothermal and photovoltaic systems, and 20 years for solar water heating systems. If implemented, the projects will benefit the local community by reducing the demand for non-renewable power in an area.

Clean Diesel Project

The clean diesel project would provide up to $500,000 to a third party to complete projects to significantly reduce diesel emissions from diesel engines and vehicles that serve public needs in Northern Minnesota. The diesel engines and vehicles would be based and/or primarily operated in Cook, St. Louis, or Itasca Counties or otherwise in the Minnesota Power service territory.  Reducing diesel emissions will reduce emissions of NOx, PM, volatile organic compounds, and other air pollutants. 

Electric Vehicle Infrastructure Enhancement Project

The electric vehicle infrastructure enhancement project would allow Minnesota Power to elect to submit a plan to spend up to $500,000 to fund the installation of electric vehicle charging stations in Northern Minnesota. This is intended to help expand the useful driving range of electric vehicles in Northern Minnesota, and encourage Northern Minnesota drivers and visitors to purchase electric vehicles for local and commuting use. The stations will be powered by solar or wind energy, and so will be considered zero emissions. If implemented, the project will thus reduce NOx, SO2, particulate matter, and other air emissions from gas-powered vehicles in the region.

United States National Park Service Funding for Land Restoration Project

NPS will use $200,000 on a project to address damage from Minnesota Power’s alleged excess emissions to wetlands in Voyageurs National Park in International Falls, Minnesota. This project will involve the removal of an invasive species of cattail that has flourished due, in part, to nitrogen deposition from the atmosphere, and replace with native plants appropriate to the wetlands.

Civil Penalty

Minnesota Power will pay a total of $1.4 million in civil penalties. EPA will receive $1.2 million, and the State of Minnesota will receive $200,000.

Comment Period

The proposed settlement, lodged in the U.S. District Court for the Minnesota, 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.

The Power Plant Enforcement Effort

This is the 28th judicial settlement secured by DOJ and EPA, 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 2 million tons each year once all the required pollution controls have been installed and implemented.

For more information, contact:

Sara Froikin
Air Enforcement Division
U. S. Environmental Protection Agency
1200 Pennsylvania Ave, NW, MC 2242A
Washington, DC 20460
[email protected]
(202) 564-3187