In a move that could help clean up Chicago’s chronically dirty air, the Obama administration today brokered a legal deal that cracks down on some of the biggest sources of pollution along the southern shore of Lake Michigan.

As part of the settlement, Northern Indiana Public Service Co. will permanently scuttle an idled coal-fired power plant in Gary and spend $600 million to install and improve pollution controls at three other aging electric generators in Chesterton, Michigan City and Wheatfield.

The improvements will reduce smog- and soot-forming sulfur oxide by 46,000 tons a year and curb lung-damaging nitrogen oxide by 18,000 tons annually, according to the U.S. Environmental Protection Agency. Illinois officials have documented how the pollution swirls around the region and contributes to air quality problems miles away from the smokestacks.

Like many other Midwest utilities, NIPSCO faced legal troubles for upgrading the power plants to keep them operating while failing to install modern pollution controls required under the Clean Air Act. The plants avoided the toughest provisions of the law for decades, in part because regulators assumed during the 1970s that they wouldn’t be running much longer.

“The pollution reductions achieved in this settlement will ensure that the people of Indiana and neighboring states have cleaner, healthier air to breathe,” said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance.

The settlement is the 17th negotiated by the EPA and the Justice Department as part of a national campaign to reduce air pollution from old coal plants, some of which date back to the 1940s. Most of the cases have involved utilities in Illinois, Indiana and Ohio.

A lawsuit is pending against Midwest Generation, the owner of five plants in Chicago and its suburbs, and the EPA has filed an administrative complaint citing the owner of another former ComEd plant just over the state line in Hammond, Ind.

NIPSCO also will pay a $3.5 million fine and spend another $9.5 million on environmental projects, including soot filters for old diesel engines, cleaner woodstoves and restoration of land next to the Indiana Dunes National Lakeshore.

Environmental groups hailed the deal as another step toward cleaner air in the Chicago area.

“Old coal plants have polluted our air and harmed our health for too long,” said Brian Urbaszewski, director of environmental health programs for the Respiratory Health Association of Metropolitan Chicago. “It is extremely satisfying to see that the EPA has stepped up and righted a wrong that was costing us our health.”

-- mHawthorne@tribune.com