Company Faces $300M Penalty in Pennsylvania Pollution Suit

By Joe Mandak | March 23, 2011

GenOn Northeast Management Co. is liable for fouling the Conemaugh River with metal discharges from a power plant in Indiana County since 2005, a federal magistrate has ruled, opening the door to a maximum civil penalty of more than $300 million.

U.S. Magistrate Judge Robert Mitchell must still decide what penalty to impose. But according to one of the environmentalists who sued the company, the more likely outcome is that GenOn will attempt to settle the lawsuit before the judge imposes a penalty.

“Now we have to do the main part of what we’ve been trying to and that is to get the company to comply with the law after years of litigation,” said David Masur, the director of PennEnvironment which filed the citizen lawsuit in 2007 along with the Sierra Club. “We need compliance, we need to make sure companies aren’t making money or that there’s a financial incentive to break the law.”

GenOn’s lead attorney referred comment to a spokesman for GenOn Northeast, Mark Baird, who said the company is reviewing the opinion, but does not generally comment on pending litigation.

Josh Kratka, senior attorney for the National Environmental Law Center which helped filed the suit, said two specific issues remain to be settled at a trial scheduled to start June 1 before Mitchell: How big will the civil penalty be, and what kind of court order must the judge issue to ensure that GenOn complies with federal anti-pollution laws.

GenOn Northeast is a wholly-owned subsidiary of GenOn Energy Inc. of Houston, which owns 16.5 percent of the Conemaugh Generating Station in West Wheatfield Township about 50 miles east of Pittsburgh. GenOn Northeast operates the coal-fired power plant on behalf of its parent and seven other owners.

The lawsuit was filed in April 2007 when Reliant Energy Inc. still controlled the plant. Reliant last year merged with another power company, Mirant, to create GenOn Energy.

At that time, the environmental groups claimed the plant was violating the federal Clean Water Act “practically every day” by discharging aluminum, boron, iron, manganese and selenium in about 2 million gallons of water the plant dumped into the river each day.

A Reliant spokeswoman said then that the company was complying with an agreement it has with the state Department of Environmental Protection, which enforces limits for the federal government. That agreement acknowledged that technology did not yet exist to enable Reliant to meet the discharge levels, and instead established the federal guidelines as goals the company should work toward — and also called for Reliant, now GenOn, to monitor new technology and have it in place by this year.

Because the DEP was satisfied with the agreement, it dropped a companion lawsuit against the plant but the citizens’ groups pressed on saying they had a right to sue on behalf of people whose recreational use of the river was curtailed by the pollution.

PennEnvironment argued that the metal dumping could hamper efforts to clean up the river, which has also suffered from acid mine drainage saying pollutants in the discharges can be made worse by acidic water.

The power plant’s attorneys argued that the plaintiffs couldn’t prove that the plant’s pollution was directly causing harm to the river, such as making it so acidic that it stained the clothes of boaters and potentially harmed aquatic life. But Mitchell agreed that seven reports the plaintiffs submitted from agencies including the federal Environmental Protection Agency, the U.S. Fish and Wildlife Service, and the DEP make it plain that metals pollution can cause the types of problems the citizens’ groups say they’ve encountered.

GenOn contends that “Plaintiffs are unable to establish that the metals it discharges into the river cause or contribute to the kind of injuries complained of,” Mitchell said in his 23-page opinion. “Plaintiffs, however, have submitted the following documentary evidence which clearly indicates that the pollutants at issue cause or can contribute to the kinds of injuries testified to by Plaintiffs.”

As such, Mitchell agreed that the plant has violated daily limits under its National Pollutant Discharge Elimination System permit for the various metals 8,684 times since February 2005. The maximum penalty for each violation is generally $32,500, though some carry penalties up to $37,500, which Masur said means the potential penalty Mitchell could eventually impose is more than $300 million.

A more likely scenario is that GenOn will try to settle with the environmental groups by paying less money and enacting pollution controls and monitoring, Masur said.

“The company has two routes: one would be come back and say, ‘OK, we want to settle the case,’” Masur said. “The second is to roll the dice and take their chances with the judge.”

If the case doesn’t settle, Kratka said the judge’s decision on any penalty will take into account the number of violations and the country’s history, and any economic benefit GenOn achieved by not complying with the law.

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