Power plant owner and management compaines to pay $8.5 million to resolve allegations

WESTERN MASSACHUSETTS POWER PLANT OWNER AND MANAGEMENT COMPANIES AGREE TO PLEAD

TO TAMPERING AND FALSE REPORTING; OPERATIONS & MAINTENANCE COMPANY

ENTERS INTO CONSENT JUDGMENT

 Companies to pay $8.5 million to resolve allegations

  

BOSTON – Berkshire Power Plant’s owner and management company have agreed to plead guilty to tampering with emissions equipment and submitting false information to both environmental and energy regulators.  The former plant operation and maintenance company also agreed to pay a state civil penalty.

United States Attorney Carmen M. Ortiz and Massachusetts Attorney General Maura Healey announced the resolution today following a joint federal and state investigation into allegations that Berkshire Power Plant in Agawam, Massachusetts tampered with its air pollution monitoring equipment and falsely reported data to environmental and energy regulators regarding its emissions levels and its availability to produce power. 

“This resolution addresses a pattern of behavior by multiple persons and entities in obstructing the enforcement of laws designed to protect the air we breathe,” said United States Attorney Carmen Ortiz.  “The comprehensive resolution, including the first ever criminal charges for false statements to the Federal Energy Regulatory Commission, demonstrates the seriousness with which we take conduct which undermines environmental compliance and the fair regulation of energy markets.”

“The deliberate scheme Berkshire Power Plant management and staff undertook gave them an unfair competitive advantage over responsible companies, and undermined a system that depends on honest data reporting,” said Tyler Amon, Special Agent in Charge of the U.S. Environmental Protection Agency’s Criminal Investigation Division in Boston. “Maximizing profit to minimize the cost of controlling pollution is placing greed over protecting nearby communities. EPA will continue to pursue cases that maintain data integrity, so we can do our job to protect clean air.” 

“Fraud against the Commonwealth is very serious and will be aggressively prosecuted, criminally and civilly, by this Office, especially when the consequence of the fraud is to expose the public to health and safety risks,” said Massachusetts Attorney General Maura Healey.  “This type of conduct can not be tolerated.”

“Reporting environmental information accurately is essential to state and federal efforts to improve air quality. Cases where information is misrepresented will be pursued to the fullest extent to protect the integrity of our air quality programs,” said MassDEP Commissioner Martin Suuberg. “Some of the funds generated by this settlement will support innovative programs to improve air quality in the Commonwealth, including the woodstove change-out and electric vehicle subsidy programs.”

Berkshire Power Co. (“BPC”), the owner of Berkshire Power Plant (“the Plant”), and Power Plant Management Services (“PPMS”) the Plant manager, agreed to plead guilty to felony charges that they violated and conspired to violate the federal Clean Air Act.  These charges arose from air pollution monitoring equipment tampering and related false emissions reporting between 2009 and 2011.  PPMS also agreed to plead guilty to charges that it violated the Federal Power Act, the first ever criminal charges under this statute, for making false statements to the regional power grid administrator, ISO-New England, regarding the Plant’s availability to produce power. 

Under the terms of the plea agreements, BPC and PPMS agree to pay a total of $4.25 million related to the criminal charges.  BPC will pay $2.75 million in criminal fines for the Clean Air Act violations and make a $750,000 community service payment to the American Lung Association to fund a program for the replacement of polluting wood burning stoves in western Massachusetts.  PPMS will pay $500,000 in criminal fines for the Clean Air Act and Federal Power Act violations and make a $250,000 community service payment to the American Lung Association’s wood stove change-out program.  The wood stove program payments would be established only after sentencing.

Between them, BPC, PPMS, and the Plant’s former operation and maintenance company, EthosEnergy Power Plant Services, LLC (formerly Wood Group Power Plant Services, LLC), will also pay over $4 million in civil penalties.  EthosEnergy agreed to resolve allegations that it violated sections of the Commonwealth’s Public Health Law dealing with air pollution stemming from its employees’ involvement with the air pollution monitoring equipment tampering at the Plant.   Under the terms of the state Consent Judgment, EthosEnergy will pay a $1.1 million civil penalty, and make a $200,000 payment to fund the installation of electric vehicle charging stations in the Commonwealth. 

In addition to the criminal fines outlined above, BPC and PPMS have agreed to pay $3,042,563 plus interest to the Federal Energy Regulatory Commission in civil penalties and disgorgement for their misrepresentations to ISO-New England regarding the Plant’s availability to produce power.

      

According to documents filed in federal and state court, between January 2009 and March 2011, BPC engaged PPMS to manage the Plant, including overseeing day-to-day operations and maintenance and to act as the owner’s representative for the Plant.  A PPMS employee served as the Plant General Manager and as BPC’s on-site representative.  BPC also retained Wood Group during this same time to provide the day-to-day Plant operation and maintenance. 

PPMS and BPC caused the Wood Group employees at the Plant to tamper with the Plant’s air pollution monitoring equipment to conceal the fact that the Plant was emitting air pollutants in excess of permitted levels.  This tampering was accomplished by intentionally biasing the Plant’s Continuous Emissions Monitoring System so it would show lower emissions levels than were actually being produced by the Plant.  BPC and PPMS then used this inaccurate data in filing required emissions reports with United States Environmental Protection Agency (“USEPA”) and the Massachusetts Department of Environmental Protection (“MassDEP”).  The purpose of the tampering was to avoid lost revenues that would have resulted from reducing power production to stay within the Plant’s air pollution emissions limits, or by taking the Plant out of service to implement needed repairs of the Plant’s pollution control and other equipment.

Excess nitrogen oxide (“NO_x“) emitted from fossil-fuel-burning power plants and mobile sources, like cars and trucks, combines in the atmosphere with volatile organic compounds emitted from industrial and residential sources to form ground-level ozone.  At ground level, ozone is a respiratory pollutant that can cause many human respiratory effects, and even premature mortality, especially in vulnerable elderly persons and young children.   NO_x emissions also cause environmental damage to coastal waters, aquatic life, and other property, and contribute to the formation in the atmosphere of fine particulates that also harm humans, aquatic life, and vegetation.

During the course of the tampering investigation, criminal investigators also learned that PPMS made and caused staff at the Plant to make false statements to the ISO-New England, about the Plant’s availability to produce power for the New England grid.  They also caused staff at the Plant to falsely claim to the ISO that the Plant was available to produce power when it was not.  PPMS did this to maximize the Plant’s revenues and to minimize repair expenditures. 

In February 2015, Ortiz’s office filed charges against Frederick Baker and Scott Paterson, respectively, a former Wood Group manager and instrument control technician at the Plant at the time the tampering occurred.  It is alleged that Baker had, at the direction of the PPMS on-site General Manager, directed Wood Group employees at the Plant, including Paterson, to tamper with the Continuous Emissions Monitoring System.  In light of the fact Wood Group spearheaded the disclosure of the tampering conduct to USEPA and MassDEP, and provided a high level of cooperation during the case, the case against EthosEnergy is being resolved with a civil settlement.    

The federal criminal case is being prosecuted by Sara Miron Bloom of Ortiz’s Economic Crimes Unit and Daniel Licata, an Assistant Attorney General with the Massachusetts Attorney General’s Office working as a Special Assistant United States Attorney, with the assistance of Dianne Chabot, USEPA Criminal Enforcement Counsel. 

The case was investigated by USEPA-CID, the Massachusetts Environmental Crimes Strike Force (an interagency investigative team dedicated to developing the most significant environmental enforcement cases) and the Massachusetts Environmental Police, with the technical assistance of attorneys, analysts and engineers from MassDEP and EPA Region 1.

The state civil case is being handled by Assistant Attorney General Frederick Augenstern of Attorney General Healey’s Environmental Protection Division, with assistance from attorneys from MassDEP’s Office of General Counsel, and engineers in MassDEP’s Boston Office.  

The details contained in the criminal information and civil complaint are allegations.  The defendants in the criminal cases are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.  By entering into the Consent Judgment, EthosEnergy does not admit to the truth of the allegations contained in the Complaint.