May 14--REPORTING FROM GREENVILLE, N.C. -- Duke Energy, the nation's largest electrical utility, pleaded guilty in federal court Thursday to nine criminal violations of the Clean Water Act for polluting four major rivers for several years with toxic coal ash from five power plants in North Carolina.
Under a plea deal that ended a federal grand jury investigation, the company is expected to be fined $102 million and placed on five years' probation for environmental crimes when a federal judge imposes the sentence Thursday afternoon.
U.S. District Judge Malcolm J. Howard approved the plea agreement Thursday morning following a 90-minute court session in which a Duke Energy lawyer repeated the words "guilty, your honor" more than 20 times.
The nine misdemeanor charges were filed against three Duke Energy subsidiaries, and the lawyer responded for each charge against each subsidiary. Howard found the utility guilty on all nine counts.
Environmentalists have complained for years that Duke has polluted waterways and groundwater with coal ash, and the company faces several civil lawsuits filed by environmental groups.
But coal ash pollution did not come to widespread public attention until February 2014, when a spill at a Duke coal ash lagoon dumped 39,000 tons of coal ash, and 27 million gallons of ash slurry coated the Dan River with thick sludge for 70 miles.
A federal criminal indictment said Duke "did fail to exercise the degree of care that someone of ordinary prudence would have exercised in the same circumstance with respect to the discharge of coal ash and coal ash wastewater." The $50.5-billion utility was charged with the "criminally negligent discharge of pollutants" and failure to maintain coal ash treatment equipment.
Four of the nine charges involved illegal discharges at the Dan River plant. Duke also pleaded guilty to coal ash discharge violations at power plants near Charlotte, Asheville, Goldsboro and in Chatham County in central North Carolina.
Duke will pay $68.2 million in fines and restitution and $34 million for community service and mitigation projects. The utility has said the money will come from shareholders, not customers.
Paige Sheehan, a Duke Energy spokeswoman, said outside the courthouse Thursday that the utility had immediately apologized for the Dan River spill. "And we said we would make things right. We have done that," Sheehan said.
In a statement, the utility said, "Duke Energy takes full responsibility for the Dan River coal ash spill and is taking the steps necessary to protect the environment at Dan River and all the communities it serves."
Federal prosecutors said they will comment on the case after sentencing Thursday afternoon.
Known as "coal combustion residuals," coal ash is the residue left after coal is burned to produce electricity. It is typically stored in unlined ponds or pits next to waterways. Coal ash slurry contains toxic arsenic, lead, mercury and heavy metals that can contaminate groundwater, streams and rivers while also polluting the air.
The Dan River spill focused public and political attention on Duke's 130 million tons of coal ash stored at 32 North Carolina sites, which environmentalists say have been polluting rivers, streams and groundwater with toxic ash for years.
State legislators responded to the spill by requiring Duke to clean up and safely store the ash in lined, dry pits that are monitored for leaks. The four coal ash ponds with the worst leaks must be cleaned up by 2019, and the rest by 2029. The legislation also requires testing of private wells near ash ponds.
In addition to lawsuits filed by environmental groups, Duke faces four coal ash lawsuits filed by state regulators. They have cited groundwater contamination and illegal seeps from earthen dams surrounding the coal ash ponds, also called lagoons. In December, Duke reported about 200 seeps that released up to 3 million gallons a day from the ponds into nearby rivers and lakes.
Some of the most serious pollution has come at Duke's H.F. Lee plant in Goldsboro, about 50 miles southeast of Raleigh, where concentrations of arsenic in groundwater were recorded at more than 60 times the maximum safe level for drinking water. High concentrations of arsenic can cause some cancers.
Duke was charged with failing to maintain treatment system equipment at the Dan River and at the Chatham County plant. In March, state environmental regulators cited Duke for pumping 61 million gallons from ash ponds into a stream near the Chatham County plant.
In court Thursday, federal prosecutors rattled off a long list of toxic heavy metals contained in coal ash, including arsenic, selenium, chromium and mercury. Howard asked a prosecutor to slow down and repeat the compounds, saying, "Tell me what those bad things were again."
A team of at least 18 federal lawyers and investigative agents, including an official from the U.S. Justice Department's environmental crimes section, faced off in court against five Duke Energy lawyers backed by a team of corporate public relations experts.
A federal grand jury investigated the relationship between Duke Energy and state environmental regulators, who have been accused by environmental groups of failing to adequately police Duke. Federal subpoenas issued to Duke and the state Department of Environment and Natural Resources requested records of any payments or "items of value."
U.S. Atty. Thomas G. Walker last year described the federal probe as a "criminal investigation of a suspected felony."
Nationally, the Environmental Protection Agency says it has documented 160 cases of air and water contamination from coal ash ponds, with 140 million tons of ash generated each year.
In December, the EPA issued the first regulations covering the storage and disposal of coal ash. But environmental groups complained that the regulations do not treat coal ash as hazardous waste, but more like household garbage.
The EPA rules do not cover all coal ash ponds at closed power plants or require that existing unlined coal ash impoundments be moved to lined, dry storage away from waterways.
The Dan River spill was the most extensive since a ruptured dike in Kingston, Tenn., dumped about 1.1 billion gallons of coal ash into the Emory River and across 300 acres of land in 2008. The Tennessee Valley Authority paid $11.5 million in state fines for the nation's worst coal ash spill.
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UPDATE
11:26 a.m.: This article has been updated with background and additional details from the court hearing.
This article was originally published at 10:21 a.m.
