Duke Fined $102.2 Million for Mishandling Coal Ash

Duke Energy has been charged by federal authorities with nine misdemeanor counts of violating the Clean Water Act and other federal regulations stemming from improper disposal of coal ash at multiple sites in North Carolina.

Duke said in a statement on Feb. 20 that it had entered a plea agreement with federal prosecutors to settle the matter with a $102.2 million payment, which will go toward a range of fines, restitution, and community service initiatives. The amount will be paid by Duke shareholders.

The investigation began last spring after a major coal ash spill at the Dan River Steam Station in Eden, N.C., on Feb. 2 resulted in the release of around 70,000 tons of coal ash and 35 million gallons of contaminated water into the Dan River. The spill—which occurred after an aging storm drain under the plant’s ash pond ruptured—fouled 70 miles of the river and caused a major public relations headache for the company.

Years of Problems

Duke has been criticized for years by environmental groups in the region for its handling of coal ash. The complaints led to a series of lawsuits, which were suspended after the North Carolina Department of Energy and Natural Resources (DENR) entered the case and tried to broker its own settlement. That deal, which would have resulted in a $99,000 fine but required few changes in Duke’s operations, was denounced as far too light for the violations that had been uncovered by state investigators.

After the Dan River spill, the DENR itself came under fire for what critics called lax oversight and a too-cozy relationship with the company. North Carolina Governor Pat McCrory—who was a long-time Duke executive before his election—was also attacked for his ties to Duke. The proposed settlement was later withdrawn.

Duke and the Environmental Protection Agency reached a settlement over the Dan River spill last May, but by then federal investigators were looking into Duke’s record in handling coal ash across the state, as well as the DENR’s role in overseeing it. Duke said changes in how it handles coal ash might result in the retirement of nearly 1 GW of coal generation in North Carolina.

The latest charges go beyond the Dan River spill and also charge that Duke failed to properly maintain water treatment systems at the Cape Fear Steam Electric Plant in Moncure and allowed illegal discharges of coal ash and wastewater at the Riverbend Steam Station in Mt. Holly, the H.F. Lee Steam Electric Plant in Goldsboro, and the Asheville Steam Electric Generating Plant.

The charges were filed as misdemeanors rather than felonies because federal investigators found that Duke employees acted negligently but not intentionally.

Duke admitted in December that its internal investigations had identified around 200 leaks from its North Carolina ash ponds, which collectively released more than 3 million gallons of wastewater a day.

Much to Do

In the statement, Duke CEO Lynn Good accepted responsibility for the problems and pledged to improve the company’s performance going forward.

“We are accountable for what happened at Dan River and have learned from this event,” Good said. “We are setting a new standard for coal ash management and implementing smart, sustainable solutions for all of our ash basins. Our highest priorities are safe operations and the well-being of the people and communities we serve.”

Environmental groups hailed the settlement as vindication for their years of complaints about Duke’s coal ash handling.

“The days when Duke Energy was held above the law in North Carolina are coming to an end,” said Pete Harrison, an attorney with the Waterkeeper Alliance. “Unfortunately, it took the relentless efforts of Waterkeeper Alliance, our local Riverkeepers and other partners in North Carolina to hold Duke Energy accountable. Without pressure from these citizen groups, government officials would continue to turn a blind eye to the company’s illegal pollution.”

The agreement includes a five-year probationary period during which a court-appointed monitor will ensure compliance with the provisions. Duke will be required to submit environmental compliance plans, including training, audits, reporting, and other measures related to its coal ash basins. The company will also create an evaluation and claims process to help municipalities in the region whose water treatment systems need upgrading as a result of the leaks and other releases.

Though not part of the agreement, Duke plans to close and remediate all 32 of its coal ash ponds in North Carolina. It said it has also revamped the way it manages coal ash and monitors compliance with regulations governing its disposal. Duke had previously stated that the planned changes could cost as much as $10 billion over 30 years.

The plea deal must still be approved by the U.S. District Court for the Eastern District of North Carolina. Duke said the full details of the plan will be released after a court hearing on the case in the next few weeks.

Duke has not closed the book on its coal ash problems in North Carolina. While the settlement will end the federal investigation, the state lawsuits remain ongoing, as do multiple federal civil suits filed by environmental groups. The DENR said after the settlement was announced that the federal charges support a number of the allegations in the state actions.

—Thomas W. Overton, JD is a POWER associate editor (@thomas_overton, @POWERmagazine).