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Duke Energy Ignored Warnings Before Ash Spill, Prosecutors Say

Duke Energy Ignored Warnings Before Ash Spill, Prosecutors Say

By Bruce Henderson, The Charlotte Observer (TNS)

CHARLOTTE, N.C. — Duke Energy ignored repeated warnings before a broken pipe dumped tons of coal ash into the Dan River last year, prosecutors said Thursday as the company faced a federal judge.

Duke twice refused to spend $20,000 on video inspections of the pipe that would have shown it to be made of a weaker-than-believed material, a government lawyer told Senior U.S. District Judge Malcolm Howard.

Instead, the company filed guilty pleas to nine criminal charges that it has agreed to settle for $102 million.

Duke’s chief legal officer, Julia Janson, quietly acknowledged the company’s guilt in a 10-minute recitation of nine misdemeanor counts against three Duke subsidiaries. Chief executive Lynn Good did not appear in court.

Sentencing was set to begin Thursday afternoon.

Duke has agreed to pay $68 million in fines, which it can’t pass to customers and is one of the largest under the 43-year-old Clean Water Act.

Duke also agreed to serve five years of probation under a court-appointed monitor and pay $34 million for environmental projects.

Two stormwater pipes ran under a 27-acre ash pond at the Dan River plant.

Installed in 1954, the part of the 48-inch pipe that failed on Feb. 2, 2014, was made of corrugated metal — a fact that plant employees knew but engineers and budget writers did not, attorney Banu Rangarajan of the U.S. Attorney’s office in Raleigh told the judge. They believed the whole pipe was stronger reinforced concrete.

Duke had repaired leaks in both pipes in 1979, Rangarajan said, and independent consultants had identified the aging pipes as potential problems since 1981.

But Duke didn’t measure the water flowing from the pipes, to detect leaks, as consultants repeatedly recommended, she said.

“Duke continued to not address warnings of the potential for problems of this type,” Rangarajan said.

When plant officials asked for $20,000 internal video inspections of the aging pipes in 2011 — which would likely have shown heavy corrosion in the pipe that failed — Duke’s corporate office twice denied the request.

The money was denied again in 2012, when Dan River’s coal unit was retired.

“Had they done so, the actual composition of the 48-inch pipe would have been made known and the leaks would have been detected in the 36-inch pipe,” Rangarajan told Howard.

Video inspections of the 36-inch pipe that didn’t break, done days after the spill, found water jetting into it from the ash pond above it.

“This closes an important chapter for the company and is allowing us to focus on the future,” Duke spokeswoman Paige Sheehan said in a brief statement during a break in the hearing.
The company has emphasized the steps it has taken since the spill. Those include an overhaul of coal ash management, including the naming of an outside advisory board, and closing ash ponds in both Carolinas.

The Dan River spill was the nation’s third-largest of the past decade. Neither of the other two spills, in Tennessee and Pennsylvania, resulted in criminal investigations.
Duke also pleaded guilty to ash violations at four other power plants.

Those charges involve improper maintenance of equipment at a power plant in Chatham County, leading to ash pond leaks into the Cape Fear River. Duke had also failed to do a recommended inspections of leaking pipes called risers, prosecutors said.

At three other plants the charges say Duke illegally channeled seeps from ash ponds into the rivers.

The federal grand jury investigation that resulted in Thursday’s expected plea began two weeks after the Dan River spill.

Wide-ranging subpoenas went to Duke, 18 current or former state environmental regulators and the Utilities Commission. The subpoenas demanded inspection records, correspondence and enforcement files for the 108 million tons of ash Duke stores in 32 ponds.

U.S. attorneys in Charlotte, Greensboro and Raleigh filed charges against Duke in February.

The $68 million in fines appears to be the second-largest penalty ever assessed under the landmark Clean Water Act, which was enacted in 1972. It’s also the largest environmental penalty the century-old Duke has paid, dwarfing the $8 million in fines and environmental projects in a 2009 air-pollution case in Indiana.

Duke, which earned nearly $1.9 billion in 2014, recorded a 14-cent charge on its fourth-quarter earnings to reflect the fine.

The settlement doesn’t resolve state investigations of groundwater contamination from coal ash. Duke is fighting a $25 million state fine levied in March for contamination at the Sutton power plant in Wilmington. The state has also cited Duke for violations at its Asheville plant, but has not issued a fine.

Duke also faces more than a dozen lawsuits over ash contamination filed by North Carolina and advocacy groups, and six shareholder suits claiming company officers and directors placed Duke at financial risk.

(c)2015 The Charlotte Observer (Charlotte, N.C.) Distributed by Tribune Content Agency, LLC.

Photo: Duke Energy has pled guilty to nine criminal charges stemming from a broken pipe that dumped coal ash into the Dan River last year. Photo Stuart McAlpine via Flickr https://flic.kr/p/9nF5gN

U.S. Judge Delays Criminal Sentencing Of Duke Energy

U.S. Judge Delays Criminal Sentencing Of Duke Energy

By Anne Blythe, The News & Observer (Raleigh, N.C.) (TNS)

RALEIGH, N.C. — A federal judge took the opportunity to share what he described as a “light moment” on Tuesday after agreeing to delay by one month the criminal sentencing of Duke Energy related to coal-ash pollution.

U.S. District Court Judge Malcolm J. Howard had read sealed documents provided by Duke Energy, in which attorneys laid out concerns that could arise out of an expected plea agreement in which the utility would be placed on probation for five years related to nine criminal charges stemming from illegal coal ash discharges.

Once convicted of a crime under the Clean Water Act, the utility would be disqualified from entering into new or modified contracts with the federal government.

That could mean trouble, Duke officials say, for military bases in Duke Energy territory — Fort Bragg and Camp Lejeune, were mentioned in court — as well as federal courthouses, post offices, and large office complexes scattered through North Carolina’s Research Triangle Park and elsewhere.

Duke officials had asked for the delay of a sentencing hearing that had been set for later this week in Greenville so they could try to work out a waiver with the U.S. Environmental Protection Agency.

Howard, the federal judge who presided over the 20-minute hearing, asked about the possibility of the lights going out in Fort Bragg, whose contract with Duke Energy expires in September.

Banumathi Rangarajan, the assistant U.S. attorney whose investigation into Duke led to nine misdemeanor charges against the utility for polluting four of the state’s rivers with coal ash, told Howard she did not expect the worst.

“No power will be shut off, your honor,” she said.

Howard granted the delay, not for the reasons requested by Duke, which were filed under seal with the federal court. Instead, the judge said figuring out the logistics for keeping a company on probation for five years had been a difficult task that needed more thought.

The sentencing was rescheduled for May 14 in Greenville. Then the judge brought out lyrics for a song that he had been reminded of while reading documents in preparation for the Tuesday hearing.

One of his aides had taken a minute “to consult Mr. Google,” then produced the lyrics for “The Nights the Lights Went Out In Georgia,” a so-called “Southern Gothic” song written in 1972 by songwriter Bobby Russell and sung by Vicki Lawrence.

The judge singled out one line and recited it.

“Don’t trust your soul to no backwoods Southern lawyer;

“Cause the judge in the town’s got bloodstains on his hand,” Howard said, with a touch of song in his voice.

Then with a smile, he looked down from the bench at the attorneys in his courtroom and added: “I don’t think that applies to any of my Southern lawyers’ friends.”

Then he pointed them to the copies of the song he had printed for them and recessed the hearing for a month.

Photo: Duke Energy via Flickr

EPA Rules On Coal Ash May Disappoint Environmentalists, Buoy Industry

EPA Rules On Coal Ash May Disappoint Environmentalists, Buoy Industry

By Sean Cockerham, McClatchy Washington Bureau (TNS)

WASHINGTON — The federal government is about to announce its first rules for the handling and storage of potentially toxic coal ash, months after tons of the waste spilled into a major river in North Carolina.

Environmental groups, though, are preparing for disappointment. The Obama administration appears likely to refuse to designate the material as hazardous and could let states decide whether to enforce the rules.

“It will be incredibly disappointing and reckless if EPA doesn’t solve the problem that it knows how to solve,” said Lisa Evans, an attorney for Earthjustice.

The Environmental Protection Agency is expected to release the new rules Friday. In the meantime, utility industry officials and environmental groups have been lobbying federal regulators in a series of meetings the past several weeks with the White House Office of Management and Budget.

Coal ash is the dustlike material that’s left over when pulverized coal is burned to fuel electrical power plants. It’s stored in about 1,000 sites nationwide, including in ponds and landfills. It’s known to contain toxic materials such as arsenic and selenium and, according to the EPA, without sufficient protection the contaminants in coal waste can leach into groundwater and migrate to sources of drinking water.

The federal government always has left it up to the individual states to manage coal ash storage and disposal, and the result is an inconsistent patchwork of regulations.

Pressure for federal intervention began in 2008, when a dike rupture at a Tennessee power plant spilled more than 1 billion gallons of ash slurry that covered 300 acres and flowed into two rivers. But the Obama administration delayed action until a federal court order last fall demanded that it get moving, setting up Friday’s announcement of how the EPA is going to deal with coal ash.

Federal disclosures show that more than two dozen utilities and other energy interests have had their lobbyists working in Washington to influence coal ash decisions this year, including Duke Energy of Charlotte, N.C, which in February spilled up to 39,000 tons of coal ash into the Dan River in North Carolina and has ongoing problems disposing of more than 100 million tons of the ash elsewhere in the state.

On the other side, lobbyists for the Southern Environmental Law Center and the League of Conservation Voters have been pressing for federal intervention.

If the EPA declares coal ash a hazardous waste it will mean strict and costly new rules for the material, backed up with federal enforcement. But if the agency decides it’s non-hazardous, the new requirements will be more modest and citizens might have to sue to get them enforced.

Most analysts expect the EPA to declare the coal waste non-hazardous, based on signals from the agency.

Clearview Energy Partners, an energy research firm in Washington, said in a research note that the EPA appears to have been influenced by state regulators worried that a hazardous designation would prove costly for municipal landfills that have accepted coal ash.

Influential members of Congress are also pressing the EPA not to start policing coal ash. Sen. James Inhofe (R-OK), the incoming chairman of the Senate Committee on the Environment and Public Works, said states have “responsibly and effectively managed coal ash” without federal intervention.

“In the new Congress, my colleagues and I will intently review the impacts this rule could have to our economy and electricity reliability as well as highlight how states are leading the way on properly disposing and recycling coal ash,” Inhofe said in an emailed statement.

The Utility Solid Waste Activities Group, an industry trade group, favors new rules — as long as coal ash is allowed to be managed as non-hazardous. The Environmental Protection Agency has previously “concluded on four occasions that coal ash need not be regulated as a hazardous waste, and we agree with the agency on that point,” said Jim Roewer, executive director of the group.

Declaring coal ash a hazardous waste also would hurt the companies that recycle coal ash and make it into building materials, Roewer argued.

Photo: Robert S. Donovan via Flickr

Appalachia Gathers Dissent To Gas Pipeline Bound For Eastern North Carolina

Appalachia Gathers Dissent To Gas Pipeline Bound For Eastern North Carolina

By Sean Cockerham, McClatchy Washington Bureau (MCT)

WAYNESBORO, Va. — Fred Powell was born under the misty mountain ridges that hug southwest Virginia, beneath the Appalachian Trail and where Shenandoah National Park’s Skyline Drive turns into the Blue Ridge Parkway, in a farmhouse his great-great-grandfather built in 1832.

Part of the so-called “Breadbasket of the Confederacy” during the Civil War, farmers have long worked the land, raising cows and crops, joined in recent years by wineries and craft breweries that attract day-trippers from the college town of Charlottesville.

This quiet area is being roiled by plans announced in September to put it in the path of a 42-inch pipeline from West Virginia through North Carolina. The Atlantic Coast Pipeline, primarily a project of Dominion Resources and Duke Energy, would ship natural gas 550 miles from the fracking fields of the Marcellus and Utica shales to economically struggling counties in eastern North Carolina, where there are hopes it will help to attract industry.

Powell, like others in Virginia’s Nelson and Augusta counties, is refusing to allow Dominion Resources to come through his farmland and survey for the pipeline right of way, saying they’ll do whatever they can to try to stop the $5 billion project.

“We’re not against pipelines, but the location for this is terrible,” said Powell, 65, whose fears range from water contamination to an explosion.

More than 100 people turned out on a bone-chilling November day to protest the pipeline in Waynesboro, accusing their state’s politicians of selling them out and invoking the spirit of the Revolution.

“What is left to us but to rise up on our own, like in 1776?” said Tracy Pyles, a member of the Augusta County Board of Supervisors.

The view is different in the lowlands of eastern North Carolina, where the pipeline would deliver its cargo after narrowing to 36 inches. Opposition does exist, as seen at a mid-October public hearing in Rocky Mount, but so does a powerful sense of opportunity.

The plans call for the pipeline to end in rural Robeson County, where the most recent Census Bureau statistics showed 1 in 3 residents living in poverty. It’s among the poorest areas in the nation, with the highest violent-crime rate in North Carolina.

“We need help,” said Greg Cummings, the economic development director for Robeson County, who expects there will be feeder lines to increase the availability of natural gas for industrial parks in the area.

“It’s going to play a major role as far as helping us to market our industrial parks,” Cummings said. “The majority of companies manufacturing today, 90 percent of them, they are asking for natural gas.”

Keith Dimsdale, who owns a Chick-fil-A in Smithfield, N.C., said there also were opportunities in Johnston County, which has undeveloped sites without access to natural gas.

“We’re very positive about the jobs it would bring to the community putting in the pipeline, as well as getting the natural gas available for industry,” said Dimsdale, chairman of the local Chamber of Commerce.

The North Carolina section of the pipeline is planned to roughly parallel the Interstate 95 corridor, entering the state in Northampton County, northeast of Raleigh.

North Carolina Gov. Pat McCrory, a Republican, is a big pipeline supporter. So is Virginia Gov. Terry McAuliffe, a Democrat, who called it a “game changer” for his state’s economy. The pipeline is proposed to have a spur to Virginia’s populous Hampton Roads area, near the coast.

But in the eyes of many in the mountainous region along the border of Virginia and West Virginia, the project would just mean destruction. The pipeline, mostly to be buried about 3 feet deep, would have a 125-foot-wide construction right of way. A coalition of nearly two dozen groups with concerns about the project has formed, calling itself the Allegheny-Blue Ridge Alliance.

Opponents of the pipeline argue that the area’s karst topography of limestone, susceptible to sinkholes, is an unstable place to build a pipeline, which could contaminate the drinking water.

They predict damage as the pipeline carves into the George Washington and Monongahela national forests, with the Southern Environmental Law Center, for example, saying it would threaten sensitive habitat. Some speak of fears for their children and the explosive potential of a highly pressurized natural-gas pipeline near schools. People whose land has been in their families for generations fear that Virginia-based Dominion Resources will use eminent domain to force the pipeline through.

“We’re just everyday people who feel like we are getting run over,” said Nancy Sorrells, who is on the Augusta County water and sewer board.

Chet Wade, vice president of corporate communications for Dominion Resources, argued that there’s a lot of misinformation about the project, including “completely fabricated” claims that the natural gas is meant for export. He said worries of polluted water were overblown and that pipelines were commonly built in karst areas. Schoolchildren have nothing to fear, he said.

The plan comes as utilities such as Charlotte, N.C.-based Duke Energy, which would own 40 percent of the pipeline, increasingly turn to natural gas made cheaper by the boom in hydraulic fracturing, known as fracking. Duke has retired half its 14 coal-burning power plants in North Carolina in the past three years, while opening five natural gas-fired plants.

Nearly all of the 1.5 billion cubic feet of natural gas a day that would run through the pipeline has been reserved by utilities such as Duke, Piedmont Natural Gas, Virginia Power Services Energy and Virginia Natural Gas. While the proposed pipeline may not lower energy bills for consumers, the utilities say it might prevent spikes during extreme weather.

Dominion asked the Federal Energy Regulatory Commission on Oct. 31 to start the process for approving the Atlantic Coast Pipeline.

The company hopes to begin construction in 2016, with the natural gas coming through two years later.

Wade said that more than 70 percent of the landowners along the planned route weren’t resisting Dominion’s efforts to survey. For those who are refusing, though, Virginia law gives natural gas utilities the right to survey on private property, Wade said, and the company intends to assert that right.

The company said it sent letters to 226 landowners in Virginia, West Virginia and North Carolina in a last-ditch effort to gain entry to properties for survey work before going to court. Once it’s time to obtain the land needed for the pipeline, Dominion would offer money to the affected landowners. Should they refuse to sell, the company is prepared to take their land through eminent domain, with a judge setting the value for the easement.

That doesn’t sit well with many in Virginia’s Blue Ridge Mountains. On a recent weekend, locals packed into the Blue Mountain Brewery in Afton, so many that workers had to direct traffic in the parking lot, with families munching burgers and pizza topped with bratwurst from the nearby Double H Farm. Adults sipped glasses of Full Nelson Pale Ale and Kolsch 151.

Brewer and co-owner Taylor Smack is jumping into the pipeline fight, arguing that it’s wrong for the government to give Dominion the right to seize people’s land.

“I understand and appreciate that this new fuel source is important for our entire country,” he said. “But this isn’t the government stepping in for the greater good; Dominion will make billions of dollars with this gas and foul thousands of citizens’ properties.”

Not far away, Powell stood on his land in front of a bale of hay that he said marked where the pipeline would run. His wife and grown son joined him in the cold, beneath the red and gold autumn blaze of the mountains, pledging to confront the pipeline developers.

“We’ll take it as far as it’s possible to take it,” Powell said.

Photo: Fred and Bonnie Powell stand on their Augusta County, Va., farmland that lies on the proposed route of the 550-mile Atlantic Coast Pipeline from West Virginia to eastern North Carolina, on November 1, 2014. The Powells are not allowing Dominion Resources to survey for the right-of-way. “We�re not against pipelines but the location for this is terrible,” Fred Powell said. (Sean Cockerham/MCT)