State Politics

March 26, 2014

DENR hires former federal prosecutor to steer it through grand jury probe

The governor’s office has hired a former U.S. attorney to steer the state Department of Environment and Natural Resources through the federal coal ash investigation.

Gov. Pat McCrory’s administration has hired a former U.S. attorney with close ties to the prosecutor who is heading the federal investigation into possible environmental and other crimes related to coal ash pollution.

Mark Calloway will help steer the state Department of Environment and Natural Resources through the process. He has extensive experience in the U.S. Department of Justice and in private practice focusing on government investigations.

He was the United States attorney in Charlotte from 1994 to 2001, where he hired Thomas Walker as a prosecutor. He also supervised Walker at Alston & Bird, the law firm where Calloway still works. Walker is now the U.S. attorney in Raleigh; his office is supervising the investigation into how DENR has regulated Duke Energy’s coal ash plants.

It’s typical for people or companies who are the targets of a federal criminal investigation to hire attorneys with experience in federal court. Landing a former top prosecutor also brings with it someone who has built a reputation and made a lot of contacts.

“Mark Calloway is a wonderful choice to represent the state and DENR in this investigation,” said David Long, a longtime criminal defense attorney in Raleigh who works in federal court. “He’s got all the experience in the world. He knows exactly how the system works. Frankly couldn’t be a better person.”

At the same time, Long said, Calloway shouldn’t expect any favors from Walker.

“Thomas Walker is going to do his job, absolutely,” Long said.

Calloway, who is in a section in the Charlotte office of the Alston & Bird law firm that specializes in complex criminal defense cases, said Wednesday that is what he expects.

“Walker is a straight shooter,” Calloway said. “He will expect my client to fully comply with the grand jury subpoenas, and we intend to do so.”

A career prosecutor in Walker’s office, Banumathi Rangarajan, is running the investigation. Last month a federal grand jury in Raleigh subpoenaed extensive records and a number of past and former employees from DENR. The grand jury met for three days this month, but its proceedings are secret.

Drew Elliot, a spokesman for the state environmental agency, said Calloway will make sure DENR turns over all the records federal authorities seek, so that employees don’t have to decide what they’re supposed to turn over.

“An attorney with his experience obviously is in a much better position than anyone at DENR to evaluate and decide what documents are covered,” Elliot said.

A Democratic choice

Calloway is also a Democrat who was appointed to the post of U.S. attorney by then U.S. Attorney General Janet Reno. Elliot said the administration factored Calloway’s political affiliation into choosing him, thinking that would inject a sense of nonpartisanship to what has become a political controversy over how to handle coal-ash pollution.

McCrory worked at Duke Energy for close to three decades. N.C. Attorney General Roy Cooper, who has become involved in the coal-ash issue, is a likely opponent when McCrory runs for re-election in 2016.

Cooper’s office provides legal counsel for DENR. But last month DENR asked the governor’s office to hire outside counsel for the federal probe. Cooper’s chief deputy attorney general, Grayson Kelley, balked in a letter on March 13, saying the office has already been working on the case by explaining to DENR staff how the grand jury process works and producing records.

McCrory’s chief legal counsel, Bob Stephens, wrote back saying Kelley had previously told him the attorney general’s office couldn’t help decide which documents comply with the subpoenas because there was a conflict of interest: the State Bureau of Investigation, which is under Cooper’s control, is assisting federal authorities in the coal-ash probe. Stephens also said Cooper amplified the conflict by using the Feb. 2 Dan River coal ash spill to raise campaign funds.

Duke Energy ties, too

This is not the first time Calloway has been involved in litigation with Duke Energy. He represented the utility in a yearlong federal grand jury investigation that ended in 2004 with the company cleared of criminal wrongdoing. Duke was accused of under-reporting profits. It agreed to reimburse customers to settle the matter.

That isn’t considered to be a conflict of interest for a variety of legal reasons. Duke, the largest utility in the country, has employed many lawyers in North Carolina over the years, including in such large firms as Hunton & Williams and Womble Carlyle, Sandridge & Rice.

The Southern Environmental Law Center, which is at odds with DENR and involved in litigation against Duke over coal ash pollution, says there’s a bigger issue than hiring Calloway.

“DENR is free to hire any lawyer it chooses, but coincidences like this just underscore how pervasive the network of America’s largest utility is in our state government and business sector,” SELC attorney D.J. Gerken said Wednesday. “It is precisely because of the reach and influence Duke enjoys that we need a real watchdog in Raleigh protecting North Carolina’s environment – something that has been woefully absent in recent years.”

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