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Last Updated: Tuesday, 9 October 2007, 08:49 GMT 09:49 UK
US company settles pollution case
Smog
Firms have to meet requirements under the Clean Air Act
American Electric Power (AEP) has settled a long-running pollution case, which will see it spend $1.6bn (786m) to upgrade its coal plants.

The case, brought by the Environment Agency and US states, accused the firm of failing to take the necessary steps to mitigate the impact of acid rain.

AEP will also pay a $15m civil penalty and $60m for clean-up costs.

The company has denied any wrongdoing. AEP said it felt it was better to settle the dispute than let it drag on.

'End to litigation'

The $1.6bn will go towards installing mechanisms in plants in Indiana among others, the firm said.

"That is the biggest portion beyond anything we had already announced or committed to," AEP spokesman Pat Hemlepp told the Reuters news agency.

"This ends all litigation on the case," he added.

The case - brought in 1989 - said AEP failed to install pollution-mitigation devices for older plants, which in turn caused acid rain that damaged the northeastern US.

Under the Clean Air Act, firms are obliged to ensure that when plants are expanded or new ones are built, they face a environmental review beforehand.

AEP said the settlement - which is to be formally announced on Tuesday morning - would not alter the firm's earnings outlook.

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