Department of Justice: Duke Energy sentenced to pay $102 million for Clean Water Act crimes

File photo by Max Cooper

Duke Energy pleaded guilty in federal court on Thursday to nine criminal violations of the Clean Water Act at five of its North Carolina plants.

The nation’s largest power company agreed to pay $102 million in fines and restitution for the pollution of the Dan River, which flooded with coal ash from Duke’s Eden plant last February, and for illegal dumping practices at sites in Asheville, Moncure, Goldsboro and Mt. Holly.

Part of that sum, $34 million, will be spent on environmental projects and land conservation to benefit North Carolina and Virginia rivers and wetlands.

In a press release from the U.S. Department of Justice, Western District of North Carolina U.S. Attorney Jill W. Rose is quoted saying, “Duke’s subsidiaries discharged potentially toxic pollutants that put at risk North Carolina’s water quality and wildlife, and today’s outcome ensures they will be held responsible for violating federal environmental requirements. The defendants will now have to comply with the terms imposed by the court, including paying hefty financial penalties and making significant financial contributions toward improving the quality of impacted waterways, wetlands and our water supply system.”

The alleged violations, the Department of Justice reports, “included unlawfully failing to maintain equipment at the Dan River and Cape Fear (Moncure) facilities.”

Additionally, the company admits to being in violation of “unlawfully discharging coal ash and/or coal ash wastewater from impoundments at the Dan River, Asheville, Lee (Goldsboro, Wayne County) and Riverbend (Mt. Holly, Gaston County) facilities.

“Approximately 108 million tons of coal ash are currently held in coal ash basins owned and operated by [Duke Energy],” reads the release.

The energy company must also meet federal and state laws by excavating and closing coal ash impoundments at the Asheville, Dan River, Riverbend and Sutton (Wilmington) facilities.

Read the full press release, from the U.S. Department of Justice, here:

WASHINGTON – Three subsidiaries of North Carolina-based Duke Energy Corporation, the largest utility in the United States, pleaded guilty today to nine criminal violations of the Clean Water Act at several of its North Carolina facilities and agreed to pay a $68 million criminal fine and spend $34 million on environmental projects and land conservation to benefit rivers and wetlands in North Carolina and Virginia.  Four of the charges are the direct result of the massive coal ash spill from the Dan River steam station into the Dan River near Eden, North Carolina, in February 2014. The remaining violations were discovered as the scope of the investigation broadened based on allegations of historical violations at the companies’ other facilities.

Under the plea agreement, both Duke Energy Carolinas and Duke Energy Progress, must certify that they have reserved sufficient assets to meet legal obligations with respect to its coal ash impoundments within North Carolina, obligations estimated to be approximately $3.4 billion.

Officials from the Justice Department’s Environment and Natural Resources Division and the three U.S. Attorney’s Offices in North Carolina, the Environmental Protection Agency’s (EPA) Office of Enforcement and Compliance Assurance, EPA’s Office of Inspector General, the Internal Revenue Service (IRS) Criminal Investigations and the North Carolina State Bureau of Investigation (SBI) made the announcement following a plea hearing at the federal courthouse in Greenville, North Carolina today.

“The massive coal ash spill into North Carolina’s Dan River last year was a crime and it was the result of repeated failures by Duke Energy’s subsidiaries to exercise controls over coal ash facilities,” said Assistant Attorney General John C. Cruden of the Justice Department’s Environment and Natural Resources Division.  “The terms of these three plea agreements will help prevent this kind of environmental disaster from reoccurring in North Carolina and throughout the United States by requiring Duke subsidiaries to follow a rigorous and independently verifiable program to ensure they comply with the law.”

“Duke Energy’s crimes reflect a breach of the public trust and a lack of stewardship for the natural resources belonging to all of the citizens of North Carolina,” said U.S. Attorney Thomas G. Walker for the Eastern District of North Carolina.  “The massive release at the Dan River coal ash basin revealed criminal misconduct throughout the state – conduct that will no longer be tolerated under the judgment imposed by the court today.”

“Duke’s subsidiaries discharged potentially toxic pollutants that put at risk North Carolina’s water quality and wildlife and today’s outcome ensures they will be held responsible for violating federal environmental requirements,” said Acting U.S. Attorney Jill W. Rose for the Western District of North Carolina.  “The defendants will now have to comply with the terms imposed by the court, including paying hefty financial penalties and making significant financial contributions toward improving the quality of impacted waterways, wetlands and our water supply system.”

“Duke’s actions adversely impacted the Dan River ecosystem and caused residents who live near and rely on the water supply much apprehension about the safety of the river,” said Criminal Chief Cliff Barrett for the U.S. Attorney’s Office in the Middle District of North Carolina.  “Today’s plea holds Duke accountable for this result and charts a course to remediate the impact of these spills.”

“Over two hundred sixteen million Americans rely on surface water as their source of drinking water,” said Assistant Administrator Cynthia Giles for EPA’s Office of Enforcement and Compliance Assurance.  “Duke Energy put that precious resource at risk in North Carolina as the result of their negligence.  Companies that cut corners and contaminate waters on which communities depend, as Duke did here, will be held accountable.”

On Feb. 20, 2015, the three U.S. Attorney’s Offices in North Carolina filed separate criminal bills of information in their respective federal courts, alleging violations of the Clean Water Act at the following Duke facilities: the Dan River steam station (Rockingham County), the Cape Fear steam electric plant (Chatham County), the Asheville steam electric generating plant (Buncombe County), the H.F. Lee steam electric plant (Wayne County) and the Riverbend steam station (Gaston County).  The alleged violations included unlawfully failing to maintain equipment at the Dan River and Cape Fear facilities and unlawfully discharging coal ash and/or coal ash wastewater from impoundments at the Dan River, Asheville, Lee and Riverbend facilities.

As part of their plea agreements, Duke Energy Business Services LLC, Duke Energy Carolinas LLC and Duke Energy Progress Inc. will pay a $68 million criminal fine and a total $24 million community service payment to the National Fish and Wildlife Foundation for the benefit of the riparian environment and ecosystems of North Carolina and Virginia.  The companies will also provide $10 million to an authorized wetlands mitigation bank for the purchase of wetlands or riparian lands to offset the long-term environmental impacts of its coal ash basins.  In addition, they will pay restitution to the federal, state and local governments that responded to the Dan River spill and be placed on a period of supervised probation for five years.

Duke’s subsidiaries operating 18 facilities in five states, including 14 in North Carolina, will also be required to develop and implement nationwide and statewide environmental compliance programs to be monitored by an independent court appointed monitor and be regularly and independently audited.  Results of these audits will be made available to the public to ensure compliance with environmental laws and programs.  The companies’ compliance will be overseen by a court-appointed monitor who will report findings to the court and the U.S. Probation Office as well as ensuring public access to the information.

Approximately 108 million tons of coal ash are currently held in coal ash basins owned and operated by the defendants in North Carolina.  Duke Energy Corporation subsidiaries also operate facilities with coal ash basins in South Carolina, approximately 5.99 million tons of coal ash, Kentucky, approximately 1.5 million tons of coal ash, Indiana, approximately 35.6 million tons of coal ash and Ohio, approximately 5.9 million tons of coal ash.

The companies must also meet the obligations imposed under federal and state law to excavate and close coal ash impoundments at the Asheville, Dan River, Riverbend and Sutton facilities.

Additionally, at the insistence of the United States, the holding company Duke Energy Corporation has guaranteed the payment of the monetary penalties and the performance of the nationwide and statewide environmental compliance plans.

“Duke’s environmental crimes required a special financial review of their actions to which we were proud to join our partners in investigating,” said Special Agent in Charge Thomas J. Holloman, III of the IRS Criminal Investigation.  “The considerable fines, formal apologies and massive cleanup initiatives will impact the Duke image and brand, assuring the public that corporations will be held accountable for their gross actions involving the environment, wildlife and the communities of this great state.”

“The SBI worked closely with the Environmental Protection Agency Criminal Investigation Division and the Internal Revenue Service in this matter,” said Acting Director B.W. Collier of the North Carolina SBI.  “This type of collaboration is critical to ensuring a thorough and intensive review on cases such as this.  The SBI remains committed to the public interest and is prepared to continue assisting the U.S. Attorney’s office.”

The criminal investigation was conducted by the Criminal Investigation Division, Region Four and the Office of Inspector General of EPA, Criminal Investigations of the IRS and North Carolina State Bureau of Investigation with assistance from the Federal Bureau of Investigation and the Department of Defense Criminal Investigative Service.

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About Hayley Benton
Current freelance journalist and artist. Former culture/entertainment reporter at the Asheville Citizen-Times and former news reporter at Mountain Xpress. Also a coffee drinker, bad photographer, teller of stupid jokes and maker-upper of words. I can be reached at hayleyebenton [at] gmail.com. Follow me @HayleyTweeet

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7 thoughts on “Department of Justice: Duke Energy sentenced to pay $102 million for Clean Water Act crimes

  1. Meiling Dai

    It’s about time Duke Energy admitted its polluting of rivers and streams, instead of denying it. By admitting their role,
    perhaps they can help undo the harm they have inflicted on innocent people who no longer can use their wells due to chemical contamination
    from coal ash. Water is a precious commodity, it should be guarded and protected like any other natural resource. I hope it’s not
    too late to reverse some of the harm Duke Energy has caused to the environment and rivers and streams in N.C. and Virginia.

  2. Karen Youket

    Now I’m wondering, are these fines going to be paid by Duke’s shareholders or the customers?

    • bsummers

      It appears that the fine will be paid by Duke shareholders. The actual coal ash cleanup costs (up to 100 times larger than the fine) will almost certainly be paid entirely by ratepayers. See below.

  3. Meiling Dai

    That’s an excellent question. I happened to see the article, “Duke pleads guilty on pollution” on the front page of today’s Citizen-Times edition.
    Here is a quote from this article which might interest you: “Duke has said in statements and court filings that the costs of the settlement
    will be borne by its shareholders, NOT passed on to its electricity customers.” I hope Duke Energy keeps its word because
    customers are not responsible for the crimes Duke Energy committed regarding water and air pollution due to
    coal ash chemicals. What took them so long and why did they refuse to take responsibility for years?
    According to this article, Duke is on a 5 year probation period and if they do not follow the
    court’s orders re cleanup, etc., the energy giant will be socked with more hefty fines.

  4. bsummers

    Legislation crafted by the “Good Republican” on the environment, Chuck McGrady, ensures that ratepayers will be stuck with some, if not all the bill for the cleanup.

    “One thing the compromise ash bill does not do is say who will pay of the cleanup of the ponds. Duke Energy has committed to paying for the cost of cleaning up the Dan River spill, but company executives have said they may seek rate hikes in order to help pay the disposal costs.”
    (snip)
    “McGrady said that it was too soon to lay out who would bear the cleanup costs, although he did say that it would likely be split between the company and rate payers.”

    http://www.wral.com/general-assembly-sends-compromise-coal-ash-bill-to-the-governor/13908833/

    “Shortly after the spill, key lawmakers said they did not believe Duke should be allowed to recover the cost of cleaning up either the spill or other coal ash ponds by raising their rates. To do that, Duke would have to request a rate increase from the Utilities Commission.

    Lawmakers placed a moratorium on such requests last year, but that has now expired. Rather than deal with the question of who pays in law, legislators say they will leave that question to the Utilities Commission.

    As of yet, the company has not made such as request.

    “The fuel statute in NC allows the recovery of certain costs related to the disposal of ash, typically for beneficial reuse projects,” Duke spokesman Jeff Brooks said in an email. “The company has historically recovered some costs in that manner and would likely continue to do so in the future.”
    http://www.wral.com/uncertainty-clouds-coal-ash-picture-one-year-after-spill/14407943/

    • bsummers

      In other words, people are patting Duke on the back for saying they won’t pass on the cost of the $100 million settlement to ratepayers, but they are likely to quietly pass on the $10 billion cleanup cost to us.

      “Duke officials are keeping a low profile about who will pay that cost, but a state regulator estimated the higher price tag cited Tuesday could cost North Carolina households more than $20 a month.”
      http://www.newsobserver.com/news/local/coal-ash-issue/article10323560.html

  5. Perry

    102$ was well worth the investment of NOT properly disposing of the coal ash; as it would’ve cost much more to do so… And since the cost are going to be paid for by us their customers; it was well worth our investments; as these costs are passed down. Sadly they have attorneys and actuaries calculating these risks and rewards…They are a monopoly; we have no choice but to get service from Duke energy…

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