Federal charges filed against Duke Energy

Federal prosecutors Friday filed nine criminal charges accusing Duke Energy of violating the Clean Water Act by polluting four of the state’s rivers with coal ash.

Four of the misdemeanor counts stem from Duke’s Dan River power plant in Eden, 97 miles northwest of Raleigh, where a spill of 39,000 tons of ash a year ago prompted a grand jury investigation.

Other violations occurred at power plants near Moncure in Chatham County, Goldsboro, Charlotte and Asheville.

As the charges were filed, Duke said it has negotiated a proposed agreement to resolve them. Duke first reported the settlement in an earnings report Wednesday.

Duke would pay $68.2 million in fines and restitution and $34 million for community service and mitigation projects. The money would come from shareholders, not customers.

The settlement, which was not released, has to be reviewed and approved by a federal judge. Duke said it would resolve all federal investigations of its ash, including enforcement by the Environmental Protection Agency.

The fine might be the second-largest penalty ever assessed under the landmark Clean Water Act, which was enacted in 1972. The second-largest penalty now stands at $45 million. It’s not clear how much of the $68 million in Duke’s case is divided between fines and restitution.

Prosecutors on Friday did not outline in detail the extent of any harm to the environment or to people by the alleged pollution.

State officials have previously said samples from leaks at the company’s plants have appeared in lab tests in “trace” amounts.

Gerald LeBlanc, director of N.C. State’s Environmental and Molecular Toxicology Program, has said trace elements wouldn’t cause a health problem for most people from limited exposure.

LeBlanc noted that the most serious problems found have been high arsenic levels at the H.F. Lee plant in Goldsboro, about 53 miles southeast of Raleigh, where arsenic concentrations in groundwater have been recorded at 66 times the recommended maximum level for drinking water.

Arsenic concentrations at those levels are associated with increased incidence of some cancers, vascular diseases and diabetes, LeBlanc said.

Prosecutors alleged that pollution occurred there from Oct. 2010 through 2014. It was one of the nine misdemeanors.

U.S. Attorney Thomas Walker of the Eastern District, where the cases will be transferred, said he won’t comment until the charges come before a judge.

Each of the charges says Duke employees “negligently” violated provisions of the law. They repeat that employees failed to “exercise the degree of care that someone of ordinary prudence would have exercised,” and aided and abetted one another.

The wording stops well short of describing the violations as intentional.

“The difference between a misdemeanor and a felony violation is that misdemeanors involve negligence rather than a willful violation,” said Chapel Hill lawyer Robin Smith, a former state assistant environment secretary.

Frank Holleman, a Southern Environmental Law Center attorney who is suing Duke, said the agreement is remarkable “in that it is a series of criminal charges against one group of criminal defendants for illegal pollution across an entire state.”

Duke chief executive Lynn Good, in an interview, repeated that Duke stands accountable for the Dan River spill. The company is revamping ash management across its six-state territory and is under legislative orders to close its 32 North Carolina ash ponds.

“We believe that the settlement was in the best interests of our shareholders, our customers and our employees,” Good said.

“This has had a profound impact on the company. This is a hard day for Duke Energy. I’m so proud of our team; we’ve learned so much from this experience, and I think we’ll be a better company for our customers going forward.”

Four rivers polluted

The first hint that criminal charges could be filed after the Dan River spill came two weeks later, when a federal grand jury in Raleigh started issuing subpoenas in pursuit of a “suspected felony.”

Wide-ranging subpoenas went to Duke, 18 current or former state environmental regulators and the utilities commission. They demanded inspection records, correspondence and enforcement documents for the 108 million tons of ash Duke stores at power plants scattered across the state.

Advocates had accused Duke and the administration of Gov. Pat McCrory, a former Duke employee, of working together to avoid harsh punishment for the company. The administration hotly denied those claims.

They say Duke illegally drained coal ash and wastewater into four rivers: The Catawba River from the Riverbend power plant just west of Charlotte; the Neuse River from the H.F. Lee plant; the French Broad River from the Asheville plant; and the Dan River.

The charges say Duke also failed to maintain treatment system equipment at the Dan River plant and the Cape Fear power plant in Chatham County.

In March, state regulators cited the Cape Fear plant for violations after Duke pumped 61 million gallons from ash ponds into a stream.

Each charge is punishable by a range of potential penalties including up to five years’ probation and a fine of up to $25,000 a day.

State lawsuits remain

The federal charges and settlement sting a fast-growing company that until Feb. 2, 2014 had largely avoided public embarrassment in recent decades.

The Dan River spill happened months before the EPA issued the first national standards on coal ash. And while it was the third-largest spill of the past decade, Duke’s was the only one of the three to result in criminal charges.

Dam inspectors had repeatedly warned Duke to stay alert for signs of leakage into the 48-inch stormwater pipe that broke under an ash pond at the retired Dan River power plant in Eden, records show.

Only after the pipe broke did Duke learn that it was made of metal, not the much stronger concrete that the utility had assumed.

Groundwater contamination apparently from coal ash has been found at each of Duke’s 14 North Carolina coal-fired plants. Duke has reported leaks that drain more than 3 million gallons a day.

The state Department of Environment and Natural Resources says the federal settlement won’t affect state lawsuits over Duke’s ash ponds or investigation of groundwater contamination.

In a statement, DENR said it is pleased “that several of the criminal counts against Duke Energy are consistent with the allegations contained in DENR’s civil lawsuits filed against the utility in 2013.”

About a dozen environmental groups have been allowed to join the state’s four lawsuits, giving them a say in settlements regarding 12 of the 14 power plants.

The groups have also filed federal lawsuits against several Duke power plants, all still before the courts.

Environmental advocate Amy Adams, a former DENR official who’s now at Appalachian Voices, said she remains troubled by “the currently unanswered question of whether DENR was aware of negligence and failed to act, or was unable to recognize the magnitude of the situation in the first place.”

This story was originally published February 20, 2015 at 4:39 PM.