American Electric Power agreed today to pay more than $4.6 billion to cut 813,000 tons of air pollutants in what is the largest environmental enforcement settlement ever.

The utility also agreed to pay a $15 million penalty and another $60 million to fund projects to reduce the effects from its past excess emissions. The settlement ends an eight-year battle with the Department of Justice and the Environmental Protection Agency, as well as with eight states and 13 citizen groups, according to a statement from the Justice Department.

The settlement will provide relief at nine coal-fired power plants in Indiana, Kentucky, Ohio, Virginia, and West Virginia. Under the terms of the deal, A.E.P. will reduce sulfur dioxide pollutants by 79 percent and nitrogen oxide emissions by 69 percent, according to Reuters. These are some of the key ingredients in smog and acid rain.

"Today’s settlement will save $32 billion in health costs per year for Americans," said Granta Nakayama, assistant administrator for the E.P.A.’s enforcement and compliance-assurance program, in a statement. "Less air pollution from power plants means fewer cases of asthma and other respiratory illnesses."

Perhaps relieved to have the matter behind the company, investors bid up A.E.P.'s stock slightly in afternoon trading today. A.E.P., which is one of the largest power companies in the U.S., said that the settlement will not impact its earnings for 2007. It also said it will not impact the company's recently announced capital expenditure program for 2008 to 2010.

"Since November 1999, when the initial complaint was filed by the government, we have remained firm in our belief that we operated our plants in compliance with the New Source Review provisions," said A.E.P. chief executive Michael G. Morris. "That remains our position today. But we have also said that we would be willing to consider ways to reasonably resolve these issues. This consent decree represents such a resolution."