BOSTON - In a settlement considered the largest over allegations of violations of the federal New Source Review Program brought against a major power producer, American Electric Power resolved claims that it illegally refurbished its power plants.

Eight states and the federal government joined in the settlement with AEP, the nation's largest power producer. The plaintiffs said AEP did not install state-of-the-art air pollution controls in its plants and did not obtain proper permits.

Massachusetts, New York, New Jersey, Connecticut, Vermont, New Hampshire, Rhode Island and Maryland were the states involved in the litigation, as was the federal Department of Environmental Protection and 14 environmental groups.

"Massachusetts joined the national battle for clean air to protect the public health and to forestall the economic costs we suffer with as a result of excess pollution," Massachusetts Attorney General Martha Coakley said. "We have long said that by relying on largely unregulated coal-fired power plants, upwind states have been able to take advantage of less expensive power while sending the Northeast much of their dirty air."

AEP must reduce the emissions of sulfur dioxide from its eastern plants by 80 percent and oxides of nitrogen by 70 percent by installing the proper emissions controls. It also must pay a $15 million Clean Air Act civil penalty to the U.S. and provide $60 million for projects designed to lessen the harms to public health and environment allegedly caused.

Of that number, $36 million will go the U.S., which will use it on programs that will address any problems near AEP's plants, to improve National Forest Service park land allegedly impacted and to address pollution in the Chesapeake Bay.

The remaining total will be shared by the other states for pollution reduction programs.

The NSR was established in 1977 as an amendment to the Clean Air Act. It ensures air quality is not significantly degraded from the modification of old or the addition of new factories, industrial boilers and power plants.

The case is filed in U.S. District Court for the Southern District of Ohio in Columbus. Affected will be 16 power plants and 45 generating units owned by AEP and located in Ohio, Virginia, West Virginia, Indiana and Kentucky.

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