Mar 07 - The Kansas City Star (Kansas City, Missouri)

At least 15 upgrades at power plants operated by the Board of Public Utilities of Kansas City, Kan., may have violated federal clean air laws, according to a confidential BPU document.

On Friday, a Jackson County judge barred The Kansas City Star from publishing an article based on the document and ordered the newspaper and The Pitch newsweekly to remove articles from their Web sites.

But on Tuesday the Missouri Court of Appeals Western District ruled that the order was unenforceable, which had the effect of allowing publication.

The document, obtained from an anonymous source by The Star, was prepared in 2004 by an attorney to lay out for BPU the risks of penalties by the Environmental Protection Agency. It examined 73 projects to determine whether they followed regulations.

Of those, 15 were "probably not defensible" and another 15 were "questionable," it said.

The document, which calls itself a "liability analysis," says BPU could be subject to thousands of dollars in fines. It points out that the utility had the choice of approaching the EPA to reach a settlement or waiting for the EPA to initiate action.

Leon Daggett, who was then the BPU's general manager, said BPU wanted to be prepared in case the EPA asked for the information in the analysis. At the time, the EPA was cracking down on utilities that were violating anti-pollution laws. But the EPA never sent a request and BPU did not turn over the analysis during his tenure, Daggett said.

Daggett left BPU in 2005 and now is director of Independence Power and Light.

BPU General Manager Don Gray was traveling Tuesday and could not be reached for comment.

Board President Mary Gonzales said she did not recall seeing the liability analysis or discussing it with staff. She said she hoped the staff would discuss the issue with the board during its regularly scheduled meeting tonight.

"I have to understand the issue before I can tell you what my level of concern is," Gonzales said.

Robert Milan, a BPU board member for 16 years, said he also had never seen the document.

"BPU hasn't done anything wrong," Milan said. "Someone is trying to discredit BPU for some reason."

EPA officials said they did not know anything about possible violations but they planned to look into the matter.

"It is the EPA's full intention to investigate any noncompliance," said Becky Dolph, with the office of regional counsel for the agency.

The Kansas Department of Health and Environment said it too wanted to review the matter.

Stanley A. Reigel, the lawyer who wrote the analysis, declined Friday to discuss the contents of the report and was concerned that The Star had a copy of it.

"It was unfortunate it was leaked," said Reigel, a partner with Stinson Morrison Hecker. He could not be reached late Tuesday.

Marc Conklin, BPU's human resources director, said an internal investigation was being conducted to determine who stole the document.

"We have some real concerns about ... individuals who had access to a very confidential attorney-client communication," Conklin said.

The analysis was prompted by an EPA crackdown in the late 1990s, when the agency began to more strictly enforce the Federal Clean Air Act, which was passed to reduce pollutants being emitted by coal-fired power plants.

The BPU's report does not address the amount of emissions that its projects might have added to the air. But the EPA was looking at some power plants in all states, and the BPU document notes that the regional EPA was targeting at least one plant in Kansas.

Under the EPA's process for determining what pollution-control equipment a utility should install, it would cost about $160 million to upgrade the entire BPU system, the analysis reported.

As a result of that "enormous cost" and the aggressive enforcement by the EPA, BPU retained the law firm to analyze its projects.

"BPU wishes to best posture itself in the face of the enforcement initiative," Reigel wrote.

Reigel, with the assistance of Burns & McDonnell, a worldwide engineering firm with headquarters in Kansas City, reviewed the upgrades and repairs done at BPU's three power plants since 1980.

The three plants:

-- Nearman Creek Power Station, 4240 N. 55th St., with a capacity of 303 megawatts.

-- Quindaro Power Station, 3601 N. 12th St., 304 megawatts.

-- Kaw Power Station at 18th Street and Kansas Avenue, which has been inactive for several years.

The law firm first identified 73 projects that represented the type of upgrades the EPA was targeting for enforcement. BPU did not evaluate before or after construction whether those projects would have an effect on air emissions, according to the report.

The report cites federal law and a legal case that showed those types of evaluations are required.

Under the law, BPU would be unable to defend that it did no evaluations using an argument that emissions did not increase, the report said.

Next, the report looked at whether the upgrades should have received "New Source Review" permits from the EPA. New Source Review is the title of an EPA program that requires utilities planning upgrades to analyze whether the modifications would increase air pollution.

The report broke BPU's projects into three categories: Probably defensible, questionable and probably not defensible.

It found that 41 probably could be defended for not obtaining a permit, and that 15 others were questionable.

But 15 projects probably were not defensible for not having permits and "best available" pollution-control technology. Four projects were at the Kaw plant, six at the Quindaro plant and five at the Nearman plant.

"The presence of a single 'Questionable' or 'Probably Not Defensible' project puts BPU at risk for (a New Source Review) enforcement action by EPA, Kansas or a citizens' group," according to the analysis.

That might result in demands that the power plant be retrofitted with state-of-the-art pollution equipment, the report warned. BPU also might be forced to pay penalties, it concluded.

Daggett pointed out that BPU was always in compliance with state and federal government emissions standards. "Almost every day we submitted reports," he said.

BPU serves more than 64,000 electric customers and more than 50,000 water customers in Wyandotte County.

It has two power generation stations, according to the company's Web site, with 30 substations.

BPU plans to build a $600 million to $700 million power plant on 800 acres next to its 25-year-old Nearman plant by 2012.

At least one other local utility is battling allegations that it circumvented the same types of New Source Review evaluations.

The Sierra Club says it has documents that show Kansas City Power & Light violated anti-pollution laws by upgrading its Iatan 1 power plant. KCP&L denies any such upgrades or violations.

A federal grand jury in February subpoenaed the Sierra Club to turn over its KCP&L documents. Last week, KCP&L filed a lawsuit asking a federal court to rule that the Sierra Club's allegations were false.

The Star's Mark Wiebe contributed to this report. To reach Karen Dillon, call (816) 234-4430 or send e-mail to kdillon@kcstar.com.

-----

Copyright (c) 2007, The Kansas City Star, Mo.

Distributed by McClatchy-Tribune Business News.