In North Carolina coal ash spill case, feds eye Southern regulators

Federal authorities are investigating whether the relationship between Duke Energy and politically-connected state regulators in North Carolina contributed to a massive coal ash spill into the Dan River.

Did a cozy relationship between Duke Energy, America’s largest electric utility, and politically-connected state regulators in North Carolina contribute to the massive coal ash spill into the Dan River near the Virginia border earlier this month?

Judging by a series of federal subpoenas and affidavits, that’s an emerging line of questioning as US attorneys and the Environmental Protection Agency take a tough look at the regulatory environment in the Tar Heel State, and whether regulators went easy on Duke Energy with regards to its inventory of aging and seeping coal ash lagoons that now “threaten the long-term health of the Dan River” and other waterways, according to lawsuits now filed by the state.

Court documents refer to a “suspected felony” in the case.

“It’s an unusual case: federal authorities scrutinizing not only a company that polluted but also state regulators,” writes reporter Craig Jarvis, in the Raleigh News & Observer.

On Feb. 2, some 39,000 heavy metal-laced tons of coal ash spilled out of a holding pond and into the Dan River, which eventually flows into Kerr Lake, a critical reservoir on the Virginia-North Carolina border. The spill created a 75-foot-long “coal ash bar” near the broken pipe, and the US Fish and Wildlife Service says they’ve spotted evidence of the spill 70 miles downstream.

The federal investigation comes amid heightened awareness of major inland spills. A toxic mix of chemicals bled into West Virginia’s Elk River in early January, causing officials to warn residents against even washing their hands in tap water.

The US Fish and Wildlife Service says streams have become more, not less, pristine, over the last decade, but recent spills and questions about regulatory priorities have raised awareness that such water quality gains can be easily lost.

The North Carolina Department of Energy and Natural Resources, which regulates power plants in the state, have said they’ve done nothing wrong, and that they are actively pursuing fixes and fines from Duke.

The company meanwhile says it’s cooperating fully with the federal probe. “We feel like we’ve been forthright and prompt and transparent on this, and have done everything we could to accelerate the recovery process,” Duke spokesman Tom Williams told North Carolina newspapers last week.

But environmental groups say they’ve had to push the energy and resources agency numerous times to take action against Duke Power’s 14 coal ash holdings, some of which are now seeping into state waterways.

Just last week, the company was forced to cap another leaking pipe that spilled more coal ash into the Dan River. In at least three cases, state regulators didn’t take action against Duke until environmental groups threatened to sue.

Environmental regulations have long been seen as more lax in Southern states, where business advocacy sometimes leads to laissez-faire views on environmental costs of doing business, often when profit expectations squeeze expensive environmental protection or remediation requirements.

In that light, the federal probe into whether the company and regulators acted responsibly now “raises the stakes considerably,” Amy Adams of the conservation group Appalachian Voices told the Charlotte Observer.

Also notable is that the investigation is being led by US Attorney Thomas Walker, who has made a priority of prosecuting criminal cases of environmental pollution. Court documents do not make it clear whether Walker was investigating the relationship between Duke and state regulators before the spill.

Environmental groups allege Duke Power, founded by one of the state’s most powerful families, has long been given broad discretion by state regulators, even when there’s evidence of problems.

Piquing the federal interest is that the current chief of the state regulatory agency was appointed by Gov. Pat McCrory, who worked for Duke for 28 years.

Specifically, according to court records, federal prosecutors want detailed inspection records for the coal ash sites, as well as copies of all enforcement actions against those sites. More critically, investigators are trying to understand the connections between Duke Power officials and dozens of state regulators, and whether any graft ever took place.

This week, Gov. McCrory, a Republican and former mayor of the Southern banking center of Charlotte, briefly raised hopes among environmental groups when he told an audience that Duke should be forced to move the coal ash storage sites out of harm’s way, which is what environmental groups ultimately want.

Later in the day Mr. McCrory’s office said the governor meant that moving the sites – an extremely expensive proposition – was merely “one option” for Duke.