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Power Company AES Settles Claims That It Killed or Deformed Babies With Dumped Coal Ash

  • Parents in Caribbean country blame birth defects on dumped ash
  • Ash was generated by AES's coal-fired Puerto Rico power plant

AES Corp. settled a lawsuit accusing the power-generating company of allowing one of its units to dump coal ash on beaches in the Dominican Republic, which allegedly caused a spate of birth defects in children.

AES was slated to go to trial in state court in Delaware Monday over the birth-defect claims, but Kim Cephas, a court official, said the case had settled. The terms of the accord weren’t available.

Families of three Dominican children born without limbs, who suffered from gastrointestinal and other defects, sought about $30 million in damages. The case was the first of more than a half dozen set for trial in Delaware.

Amy Ackerman, an AES spokeswoman, and Ian Conner Bifferato, a lawyer for the families suing the company, didn’t immediately respond to phone and e-mail messages seeking comment on the settlement.

"It’s easier to sometimes quietly settle these things to get rid of them," Charles Fishman, an analyst for Morningstar Inc., said Monday. Fishman said he has a hold rating on AES’s shares and doesn’t own any.

‘Not an Admission’

"It’s not an admission that they did something illegal,” Fishman said. “It wouldn’t surprise me if you saw more of these types of things get settled because coal ash has become a high-profile issue."

Shares of Arlington, Virginia-based AES fell fell more than 1. 4 percent on news of the settlement and closed at $11.36, down more than 1.8 percent, in New York Stock Exchange composite trading.

Handling of ash generated by coal-fired power plants has been a hot-button environmental issue in the U.S. over the past 20 years. The Sierra Club estimates there are more than 1,000 ash-holding sites in the U.S. where 140 million tons are stockpiled each year.

In 2014, the U.S. Environmental Protection Agency tightened regulations governing coal-ash disposal in the wake of the 2008 collapse of Tennessee Valley Authority containment dikes surrounding 1 billion gallons of sludge. A judge held the TVA liable in 2012 for damages to a Tennessee community near the facility.

The parents of Maximiliano Calcano, Isael Altagracia Andujar and Estanlyn Garcia Deogracia, the three Dominican children, sued AES, which is incorporated in Delaware, in 2009.

18 Countries

The settlement of the Dominican birth-defect cases comes after AES, which operates in 18 countries, agreed in 2007 to pay $6 million to settle a suit filed by the government of the Dominican Republic over coal-ash dumping.

The Dominican government alleged an AES unit illegally dumped more than 57,000 tons of the ash from its coal-fired plant in Guayamam, Puerto Rico, onto the areas of Manzanillo and Samana Bay in the island’s northern section.

Two other women sued AES claiming in-utero exposure to the coal ash led to the early deaths of their children, who were also born with birth defects, according to court filings.

The parents contend alleged AES officials misled them and Dominican officials into believing the coal ash wasn’t toxic and “might be profitably utilized by the residents of Samana as construction material,” according to the filings.

The case is Pallano v. AES Corp., N09C-11-021, Superior Court of Delaware (Wilmington).