Dirty Tricks Duke Energy’s Attempt to Sweep All Coal Ash Litigation into a Single Settlement Agreement
By: Stacey Amanda Cargile
In February of 2014, the Dan River in northern North Carolina was inundated by an estimated 50,000 to 82,000 tons of coal ash. For two weeks, the coal ash flowed seventy miles downstream before settling to the riverbed. Arsenic levels soared to four times the levels allowed by state water quality standards. The city of Danville, which relies on the Dan River as a water source, is located only twenty miles downstream of the spill site.
The source of this toxic pollution was a faulty impoundment lagoon at Duke Energy’s Dan River Power Station. Coal ash is created when coal is burned to generate electricity. At its fourteen power facilities in North Carolina, Duke Energy stores millions of tons of coal ash in unlined pits or lagoons and behind earthen dams. These lagoons often leak, allowing the toxic chemicals to seep into groundwater, rivers, lakes, and drinking water reservoirs. Sometimes the lagoon suffers a complete failure, as in Kingston, Tennessee, where in December of 2008, an earthen dam broke, dumping 1.1 billion gallons of coal as into the Emory and Clinch Rivers. Despite containing twenty-five heavy metals, other toxic chemicals, and being stored in a manner known to be faulty and dangerous, coal ash is currently less regulated than household garbage.
Several conservation nonprofit organizations banded together to initiate and intervene in lawsuits meant to hold Duke Energy accountable, require that it clean up contamination caused by faulty lagoons, and change storage practices to prevent future spillages. While four of these cases were pending in North Carolina Superior Court (allegedly due to stalling by the North Carolina Department of Environmental Quality (“DEQ”) and a failure to prosecute), in March of 2015, the DEQ fined Duke Energy Progress $25.1 million for violations at its Sutton facility near Wilmington, NC. Duke Energy Progress appealed this fine to the Office of Administrative Hearings. Neither Duke Energy Carolinas, nor any of the interested conservation nonprofit organizations, were parties to the penalty case. The only parties were Duke Energy Progress and the DEQ. Ultimately, the penalty case ended in a settlement on September 29, 2015, with the settlement approved by the Administrative Law Judge the very same day the order was filed.
Under this settlement agreement, the $25.1 million was reduced to $7 million. More troubling to the conservation organization parties who had cases pending in Superior Court, however, certain language in the agreement grabbed far more power than was appropriate. Although not parties to the penalty case, the organizations filed a petition for judicial review on October 13, 2015, alleging that the agreement far exceeded its scope and authority and is thus void.
First, in addition to the dramatic decrease of the fine, the settlement agreement expressly states that the agreement fully resolves “all issues related to groundwater contamination with coal ash facilities . . . including all groundwater violations alleged in the state enforcement actions currently pending in Superior Court in Wake and Mecklenburg County.” By doing so, Duke Energy Progress and the DEQ attempted to sweep a judicial matter under an executive rug. The pending cases were stalled in Superior Court, while the penalty case was an administrative matter being resolved through hearings before an Administrative Law Judge. This attempt to do away with a judicial matter in an administrative court is a clear overstepping of authority and a separation of powers issue. At the same time, the settlement agreement was made entirely independent of multiple parties to the Superior Court cases. The conservation organizations and Duke Energy Carolinas were not parties to the penalty case, yet the resulting settlement agreement purports to resolve the issues for those entities without having provided notice or opportunity to even participate. A basic understanding of high school civics should be sufficient to trigger cause for concern.
Second, Administrative Law Judge’s determination that the settlement agreement is “fair and comprehensive” was based on a record devoid of substantial evidence. While administrative agencies are generally afforded a level of deference as experts in the field, this deference must be supported by actual evidence and data. Here, however, with such a sparse record, the conservation organizations argue that the resulting agreement is arbitrary and capricious, as well as the result of just the sort of closed-door, secretive deal that administrative processes are intended to avoid. Especially in environmental law matters, where scientific information and very specific pollutant measurements can make or break a case, a record is essential to educate the court and parties and to support and justify the result. Without any sort of record on which the decision rests, the Administrative Law Judge’s approval of the settlement agreement has no foundation and cannot stand.
Allowing the judicial approval of this settlement agreement to stand without careful review will undermine protections and procedures intended to prevent the very sort of collaboration between polluters and government seem here.
- Southern Alliance for Clean Energy. Dan River Coal Ash Disaster Near Eden, North Carolina. http://blog.cleanenergy.org/2014/02/04/dan-river-coal-ash-disaster-near-eden-north-carolina/ (last accessed October 29, 2015).
- Appalachian Voices. Duke Energy Coal Ash Spill Pollutes the Dan River. http://appvoices.org/2014/02/07/coal-ash-spill-pollutes-dan-river/ (last accessed October 29, 2015).
- Appalachian Voices. Cleaning up Coal Ash. http://appvoices.org/coalash/ (last accessed October 29, 2015).
- Southern Environmental Law Center. Timeline: North Carolina’s Environmental Agency’s Interference with Coal Ash Clean Ups and Citizen Enforcement Efforts. https://www.southernenvironment.org/uploads/words_docs/2015-10_DENR-Duke_Coal_Ash_Timeline.pdf
- Appalachian Voices. TVA Coal Ash Spill, December 2008. http://appvoices.org/coalash/tva-spill/
- Petition for Judicial Review: In re Final Decision of Administrative Law Judge, Contested Case 15 EHR 02581, Duke Progress Energy, Inc. v. North Carolina Department of Environmental and Natural Resources, Division of Water Resources. https://www.southernenvironment.org/uploads/words_docs/Petition_for_Judicial_Review_Wake_County_File_Stamped.pdf
 “Duke Energy” is used collectively to refer to two separate Duke Energy entities: Duke Energy Progress and Duke Energy Carolinas.
 Cape Fear River Watch, MountainTrue, Roanoke River Basin Association, Sound Rivers, The Waterkeeper Alliance, and Winyah Rivers Foundation
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