Coal Ash Issue

Federal case looking at Duke Energy and state regulators begins to unfold

The subpoenas that the U.S. Attorney’s Office in Raleigh has served on state environmental regulators and Duke Energy over the past two weeks outline the path that federal prosecutors are taking.

They want to determine whether there was anything improper about the relationship between the power company and the N.C. Department of Environment and Natural Resources, and see whether that allowed criminal violations of federal safeguards to go unchecked and even contributed to the massive coal ash spill into the Dan River earlier this month.

It’s an unusual case: federal authorities scrutinizing not only a company that polluted but also state regulators.

Victor Flatt, an environmental law professor at UNC-Chapel Hill, said it’s not unprecedented for state regulators to clash with the federal government, particularly the U.S. Environmental Protection Agency. But this case looks different, he said.

“I do think this – investigating DENR’s own activities and the settlement – is unusual,” Flatt said. “It’s not unheard of, but it is unusual. If the state is doing something beyond what’s discretionary – acting improperly – that’s more unusual.”

Prosecutors – assisted by the EPA and the N.C. State Bureau of Investigation – want to know how often regulators have inspected Duke Energy’s 14 coal ash sites. They want to know what inspectors found and what they did about it and demanded certified copies of any enforcement actions DENR has taken against the sites over the past five years.

They want to know about the connections that close to two dozen state regulators had with Duke Energy officials. They want to understand what went into DENR’s decision to file lawsuits against the company, then craft a settlement imposing a small fine, and then withdraw that proposal following the Dan River spill.

They want to know who was present for key meetings where the lawsuit was discussed and whether anything of value changed hands between regulators and the utility.

Problems in Gaston County

When the federal EPA goes after polluters it can choose between two routes: civil and criminal. Civil prosecutions, more common, are used when the pollution is an accident or a mistake.

A criminal prosecution is triggered by the suspicion that a polluter knowingly violated the law, and in those cases felony charges are usually sought. A criminal conviction can result in a prison sentence.

In 2012, U.S. Attorney Thomas Walker’s office in Raleigh prosecuted a Columbus County farmer for a violation of the Clean Water Act for intentionally discharging more than 324,000 gallons of hog waste into a creek that flows into the Waccama River. The farmer was sentenced to six months in prison and ordered to pay $1.5 million in fines and cleanup.

Walker has made environmental prosecutions a priority.

It isn’t known if Walker’s office was already investigating Duke coal ash regulations before a pipe broke at the Dan River plant on Feb. 2 and spilled up to 39,000 tons of coal ash into the river, which runs along the North Carolina-Virginia border and reaches downstream to Kerr Lake.

But it’s clear prosecutors already know about problems at Duke’s Riverbend steam plant in Gaston County dating back several years. They have DENR’s reports about that facility and have subpoenaed similar reports at all 14 of the company’s coal ash sites.

If Riverbend was the launching point for the federal probe, it is typical of the fingerpointing that is going on between the environmental agency and the power company. Conservation groups say the state balked at imposing meaningful sanctions on Riverbend.

In 2009, a conservation group began checking power company sites that stored coal ash, looking for signs that the pollutant was seeping into the Catawba River in the southern part of the state near two plants.

They found unauthorized water seepage and runoff in Mountain Island Lake and Lake Wylie. They say state regulators were told several times before they got the agency’s attention.

“Some of these were black and white violations,” said Rick Gaskins, the Catawba Riverkeeper Foundation’s executive director. “The local offices were not being allowed to take enforcement action against Duke.”

In December 2012, DENR inspectors confirmed that water seepage and runoff were getting into the lake, but determined the amount was minimal and didn’t pose a threat to aquatic life.

The agency didn’t take any action to force the discharges to stop, until the Riverkeepers in March 2013 gave formal notice it intended to sue.

It was one of three instances in which the state environmental agency sued Duke Energy in 2013 to enforce the federal Clean Water Act regulations involving coal ash impoundments in the state – each time preceded by environmentalists’ notice that they would sue if the state didn’t. The state and the company reached an agreement to quickly and cheaply settle the first two lawsuits, which involved Riverbend and a plant in Asheville, but that settlement is on hold now.

The 2012 DENR report also noted that the Riverbend plant wasn’t allowed to let coal ash seep from the pond. Their report indicated that earthen dams naturally seep, and that inspectors thought these dams had an internal drainage system, but they weren’t sure because the dams were so old they couldn’t check design plans.

Duke reiterates statement

Duke Energy says the containment ponds were designed so they wouldn’t contaminate the waterways. A spokeswoman for Duke Energy on Friday said she couldn’t comment further than providing a statement that the company previously issued about seepage at its facilities: “To assure the integrity of the dike structure, the dikes are designed with a system that allows water to be drained from the dike. This designed toe drain system prevents the dikes from becoming overly saturated with water. The volume of that water or from any other seepage is typically nominal and is not impacting lake water quality.”

The lawsuits DENR brought against Duke Energy last year took a more dire tone. They allege the seepage and groundwater runoff at the Riverbend plant “pose a serious danger to the health, safety and welfare of the people of the state of North Carolina and serious harm to the water resources of the state.”

Frank Holleman, an attorney with the Southern Environmental Law Center, which is representing several conservation groups in the lawsuits, says what happened at Riverbend goes to the heart of the current controversy over the Dan River spill. He said the 2012 DENR inspection report proves that polluted water was illegally discharging from unpermitted points and getting into the waterways, yet the state didn’t require immediate action.

The environmental groups want Duke Energy to dig up its coal ash ponds and move them to a lined containment area. That’s what the utilities are doing in South Carolina after the Southern Environmental Law Center sued there in 2012. South Carolina utilities agreed within months to clean up their ponds.

“All these problems (in North Carolina) could easily have been avoided had they simply enforced the law and done what the South Carolina utility did – agree to move the coal ash into lined landfills away from waterways,” Holleman said. “This is an extraordinary quagmire that DENR and Duke have created for themselves.”

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