Many environmentalists see Duke Energy's guilty plea and sentencing here last week as a potential turning point in their battle against coal ash, a turning point that could have implications well beyond North Carolina's borders.
In addition to socking Duke Energy with the largest criminal fine in the history of the state's federal court system, the accompanying plea bargain requires the utility to prepare a "national environmental compliance plan" that applies to more than 30 ash ponds it operates in four other states.
It also sends a message to utilities with coal ash ponds that they could face similar federal criminal penalties -- anywhere in the nation.
"Any company that owns or operates a coal ash lagoon like these needs to be concerned about its criminal liability, as well as civil liability," said Frank Holleman, a senior attorney with the Southern Environmental Law Center in Chapel Hill.
"The Department of Justice took this matter seriously, and they conducted a serious investigation," Holleman said of the probe that began after last year's Dan River coal ash spill near Eden. A broken pipe beneath a storage pond at Duke Energy's retired Dan River Steam Station dumped 30,000 to 39,000 tons of coal ash into the river.
U.S. District Judge Malcolm J. Howard accepted the power company's guilty plea Thursday, entered as part of its agreement with federal prosecutors that included $102 million in fines and restitution, plus a requirement that two Duke Energy subsidiaries set aside a total of $3.4 billion to meet related obligations that include closing ash basins at the retired Dan River Steam Station and three other North Carolina plants by August 2019.
Making Duke Energy's negligence in handling coal ash a federal case with significant punishment sends a message other power companies cannot ignore, according to Holleman and other environmentalists.
"It is definitely significant to have the biggest utility in the country admitting that they have been operating a criminal enterprise in dealing with coal ash," said Peter Harrison of the Waterkeeper Alliance, whose headquarters are in New York.
Beyond Dan River
Holleman also found it noteworthy that in addition to four criminal charges stemming from the Dan River spill on Feb. 2, 2014, five charges in Duke's guilty plea emerged from negligence at coal ash storage ponds at four North Carolina plants that did not suffer catastrophic accidents."They deal with the day-to-day operation of leaking, unlined coal ash lagoons," he said.
For its part, Duke Energy said it planned to use the guilty plea and sentencing to put a coda on a regrettable chapter in its corporate history.
"We've used the Dan River incident as an opportunity to set a new, industry-leading standard for the management of coal ash," the company said in a news release. "We are implementing innovative and sustainable closure solutions for all of our ash basins, building on the important steps we've taken over the past year to strengthen our operations."
The requirement for Duke Energy to improve its coal ash practices, not just in North Carolina but in the other four states where it has ash ponds, is not a new or novel approach in federal cases dealing with environmental misdeeds. But it is a key part of the criminal-court settlement between the utility and the U.S. Environmental Protection Agency, said Cynthia Giles, assistant administrator of EPA's enforcement and compliance office.
"It is very important to us that the entire corporation turn the corner," Giles said.
The same day it pleaded guilty in a federal courtroom in North Carolina, Duke Energy dispatched the first trucks full of coal ash from a former storage pond it is excavating near a plant in Belton, S.C. The company plans to move about 1.4 million tons of ash from that plant to a lined landfill.
"This is an important milestone for our customers as we transition out of the wet ash business altogether," John Elnitsky, Duke Energy's senior vice president of ash strategy, said Friday.
Coal ash is the residue of coal that has been burned to produce electricity. It contains heavy metals and other constituents that can be toxic in excessive amounts. For years, Duke Energy and other utilities have stored ash submerged in ponds. The Charlotte-based utility has pledged to close its 32 active and inactive ash basins across North Carolina in line with a state law requiring their elimination within 15 years.
Duke Energy owns a total of four active and former storage ponds in South Carolina, which will be covered in the national plan the utility must submit as part of the federal plea deal. A spokesman for the S.C. Department of Health and Environmental Control declined to comment on the plea bargain's impact in that state because South Carolina was not involved in the case.
Other states where Duke Energy has a total of 30 more ponds include Indiana, Kentucky and Ohio.
Meanwhile, in North Carolina, state officials issued stormwater permits Friday to several Duke Energy plants with coal ash ponds in the Charlotte area -- the Riverbend, Allen and Marshall plants -- one of the first steps toward excavating them and burying their stored ash in a lined landfill as required by North Carolina's new coal ash law.
'Crimes of negligence'
Duke Energy announced plans last month to build a lined landfill on the grounds of the Dan River plant as part of plans to close the two ponds there, in addition to shipping some of the Eden plant's ash to a privately owned Virginia landfill.Thursday's court proceedings against Duke Energy in Greenville spanned more than three hours, but were largely procedural because so many of the fine points of the case and its outcome already had been settled in advance by Duke Energy and the government.
But the two sides were able to present their differing takes on the case to Howard, the judge, about three hours into the hearing, when Duke Energy lawyer James Cooney cast the spill at Dan River and the utility's other coal ash shortcomings as honest and understandable mistakes.
"These are crimes of negligence," Cooney said. "There's no evidence they willfully committed a crime, intentionally committed a crime, knowingly committed a crime."
He pointed out that Duke was a century-old company that has done much to promote North Carolina's growth and well-being over the years. And he said that the utility quickly owned up to its sins after the Dan River spill and tackled its statewide coal ash problem with admirable determination.
Cooney attributed the Eden spill last year partly to a 60-year-old manufacturing flaw in the metal elbow joint that gave way in February 2014, noting that it had been layered in asphalt at the wrong spot in a way that made it corrode more easily.
None of that cut much ice with Banumathi Rangarajan, a senior litigator in the criminal division of the U.S. Attorney's Office for the Eastern District of North Carolina.
Rangarajan credited Duke Energy for its cooperation with federal and state authorities in the criminal case. And she agreed that it had responded effectively to the Dan River spill and changed directions to confront its coal ash burden more effectively.
But that didn't happen automatically, she said.
"It took the third-largest coal ash spill in this nation's history to bring about that change, to sufficiently motivate the companies to change," Rangarajan said of Duke Energy and several of its subsidiaries.
The utility got into trouble through arrogance and by taking a miserly approach to proper ash pond maintenance, she suggested.
"So in 2012, they were willing to take the $5,000 gamble and not do the video inspection," she said, referring to what it would have cost the multibillion-dollar corporation to snake a camera up the line that ruptured to cause last year's spill. Several Duke Energy employees recommended such tests in the years leading up to the spill, prosecutors said.
After the hearing, Cooney and other Duke Energy representatives spoke briefly to the press, practicing damage control as best they could.
Federal officials from North Carolina and Washington, on the other hand, were jubilant. Spokesmen from each U.S. attorney's office in the state -- east, west and middle districts -- spent a few moments at the microphone to praise the multidistrict nature of the investigation triggered by the Dan River spill.
"Today is a win for the land. Today is a win for the water. Today is a win for the air we breathe," said Thomas G. Walker, the U.S. attorney for North Carolina's eastern district whose office led the investigation.
Duke Energy had nobody to blame but itself for its predicament, said Assistant Attorney General John Cruden of the U.S. Department of Justice's environment and natural resources division.
"They should have been monitoring better. They should have been fixing what they saw. They should have been listening to their employees," Cruden said.
(c)2015 the News & Record (Greensboro, N.C.)
