CORRECTED - UPDATE 1-U.S. files clean air lawsuit against Westar Energy

(Corrects year in paragraph 6)

(Recasts, adds detail, company comment)

LOS ANGELES, Feb 4 (Reuters) - The U.S. government on Wednesday filed a clean air lawsuit against Westar Energy WR.N, claiming the utility updated a Kansas coal-fired power plant without installing modern pollution controls.

The U.S. Justice Department and the Environmental Protection Agency allege that Westar’s 1,857-megawatt Jeffrey Energy Center in St. Marys, Kansas, violated the Clean Air Act for more than a decade.

The suit filed in U.S. district court in Kansas City, Kansas says Westar violated the ‘new source review’ portion of the Clean Air Act.

Westar faces hefty fines for emissions violations charged by the government dating from 1994 until present.

The U.S. government has settled 16 new source review lawsuits since first filing them in 1999. A suit filed in 2007 was settled Tuesday with Kentucky Utilities Co EONGn.DE agreeing to pay a fine of $1.4 million and spend $135 million in new pollution-fighting equipment.

A Justice Department spokesman declined to estimate how much in fines and other costs Westar may face. The largest fine, the Justice Department said, in a new source review suit was $1.4 billion in an October 2007 settlement with American Electric Power AEP.N.

Westar, based in Topeka, Kansas, said it has worked to curb emissions at the big Jeffrey plant, which can supply power to about 1.5 million households when running at full capacity.

“We are good environmental stewards, and that is why over the last several years, we have invested nearly $500 million to remove up to 90 percent of the very emissions that the EPA has targeted with its complaint. We also expect to invest more than $1 billion in additional equipment over the next five years,” said Westar in a statement.

“Many of the EPA’s allegations relate to plant modifications made 10 to 15 years ago when such modifications were believed to be compliant with EPA regulations. With or without litigation, we are making the air cleaner,” Westar said.

In a press statement, the Justice Department and the EPA said “coal-fired power plants collectively produce more pollution than any other industry in the United States. They account for nearly 70 percent of sulfur dioxide emissions each year and 20 percent of nitrogen oxides emissions. Emissions from coal-fired power plants have detrimental health effects on asthma sufferers, the elderly and children.”

Environmentalists have long claimed that utilities have sought to skirt rigorous “new source review” of emissions of by calling major upgrades routine maintenance.

EPA and the Justice Department allege that Westar did not use the “best available emissions-control technology” at the Jeffrey plant to limit emissions including sulfur dioxide, nitrogen oxide and particulate matter, which contributes to formation of fine particulate matter, smog and acid rain.

Two months ago, the Bush Administration dropped plans to rewrite policies regarding the new source review that would have allowed some existing power plants -- as well as cement plants, auto plants, oil refineries -- to expand without having to install new pollution controls.

The three coal-fired units at Jeffrey went into operation in 1978, 1980 and 1983.

Westar, the largest electric utility in Kansas, serves 675,000 power customers in the state and has a generation portfolio of 6,500 megawatts. (Reporting by Bernie Woodall; Editing by Marguerita Choy)