State News

Duke Energy pleads guilty to environmental charges in coal ash spill, leaks

Posted May 14, 2015 3:37 p.m. EDT
Updated May 14, 2015 5:50 p.m. EDT

— Duke Energy pleaded guilty in federal court Thursday to environmental crimes and will pay $102 million in fines and restitution for illegally discharging pollution from coal-ash dumps at five North Carolina power plants.

The company's plea to nine misdemeanor counts involving violations of the Clean Water Act was part of a negotiated settlement with federal prosecutors.

Prosecutors say the criminal negligence of the nation's largest electricity company resulted in unlawful pollution at its coal-fired power plants. Duke pleaded guilty to crimes involving its operations in Eden, Moncure, Asheville, Goldsboro and Mount Holly.

Duke will pay $68 million in fines and $34 million for mitigation projects, including $10 million to help restore wetlands.

Senior U.S. District Judge Malcolm Howard said this was the largest federal criminal fine in North Carolina history.

The Charlotte-based utility also must set aside $3.4 billion to guarantee that it can address all coal ash-related problems not just at its 14 North Carolina plants but at all of its operating and retired coal-fired plants in five states.

State and federal environmental regulators continue to look at possible civil penalties against Duke for its coal ash operations, authorities said. They declined to say whether any individuals could be cited in the probe.

The sentencing came after prosecutors told Howard that Duke ignored repeated warnings about problems at its coal ash pits.

"Duke management failed in their responsibility to the people of North Carolina. Their criminal negligence is what caused this disaster," said Cynthia Giles, assistant administrator for enforcement for the U.S. Environmental Protection Agency.

Holding the company's plea agreement in his hand, Howard went through each charge and asked if the company had engaged in these illegal actions. Julia Janson, the company's chief legal officer, replied yes. Then the judge asked how Duke was pleading to each count, and each time, she replied softly, "Guilty."

"We want to apologize again," Janson told the judge, adding that the company is addressing its coal ash problems and plans to work to restore public confidence in its operations.

The investigation into Duke began in February 2014 after a pipe collapsed under a coal ash dump at the Eden plant, coating 70 miles of the Dan River in gray sludge. However, prosecutors said that Duke's illegal pollution dated to at least 2010.

In the hearing, prosecutors gave multiple examples where Duke employees knew or were warned that they were discharging pollution into the state's waterways and they were slow to do anything or took no action at all.

"They should have been monitoring better. They should have been fixing what they saw. They should have been listening to their employees," said John Cruden, assistant attorney general for the U.S. Department of Justice's Environment and Natural Resources Division. "If they had done that, the spill that we saw would not have occurred."

At Dan River, officials at the plant requested $20,000 from company headquarters to use a camera to inspect four pipes, including the one that eventually collapsed, and another that was found leaking after the spill.

The company denied the request on two occasions, even after a top manager at the plant called to personally ask for the money to inspect the pipes.

In another example, Duke illegally channeled seeps from its Asheville plant into the French Broad River. At the Moncure plant, employees informed supervisors in 2011 a riser pipe was leaking, but no action was taken for two years. As a result, prosecutors say Duke was engaged in unpermitted discharges. The company was negligent because it knew about the problems but failed to take action.

Duke has said in statements and court filings that the costs of the settlement will be borne by its shareholders, not passed on to its electricity customers.

"Today’s proceedings closes an important chapter for our company and allows us to focus on the future," spokeswoman Paige Sheehan said. "After the Dan River coal ash spill a year ago, our company immediately apologized for what happened and said we would make it right. We’ve demonstrated and done that with our actions over the past year. We’ve improved our operations and improved our company, and today, we’re focused on the future and closing ash basins across North Carolina."

As part of its plea, Duke will spend the next five years on probation, which subjects the company to court-ordered monitoring – paid for by the company – of the cleanup of its ash ponds and overall compliance with state and federal environmental laws.

"It's going to send a signal to (coal ash) impoundments across the United States – don't cut corners," Cruden said of the guilty pleas.

The EPA plans to keep an eye on new permits issued for the ash ponds by the North Carolina Department of Environment and Natural Resources, Giles said. Continued leaks of contaminants from the ponds could put it at risk of violating its probation unless DENR includes those leaks as permitted discharges.

Environmental groups hailed the federal prosecution as vindication for their years of efforts to get regulators to hold Duke accountable for the pollution leaking from 32 coal ash dumps at 14 power plants scattered across the state. The ash, which is the waste left behind when coal is burned to generate electricity, contains such toxic heavy metals as arsenic, selenium, chromium and mercury.

The Associated Press reported last year that environmental groups tried three times in 2013 to sue Duke under the Clean Water Act to force the company to clean up its leaky coal ash dumps. The groups said they were forced to sue after North Carolina regulators failed to act on evidence conservationists gathered of ongoing groundwater contamination at Duke's dumps.

But each time, North Carolina Department of Environment and Natural Resources blocked the citizen lawsuits by intervening at the last minute to assert its own authority under the act to take enforcement action in state court.

The administration of Gov. Pat McCrory, a Republican who worked at Duke for 29 years, then proposed what environmentalists derided as a "sweetheart deal" under which Duke would have paid fines of just $99,111 to settle violations over toxic groundwater leeching from two of its plants. That agreement, which included no requirement that Duke immediately stop or clean up the pollution, was pulled amid intense criticism after the Dan River spill.