On January 27, 3.5 million gallons of raw sewage poured into the Haw River from a cracked main at a Burlington, NC wastewater treatment facility.  Residents were not notified of the breach until January 30, despite state law requiring public notification within 48 hours of any spill over 1,000 gallons. Tom Reeder, director of the Division of Water Resources, stated that the spill constituted only 1 percent of the water flowing through the Haw River at the time; therefore it had no major impact on the environment. Perhaps those who live on or near the river would beg to differ. Why the terrible breach? Most of NC’s water pipes are made of wood or corroding metal. “We have incredibly old infrastructure in North Carolina,” says Reeder. “The thing is it costs billions and billions and billions of dollars to replace all of this aging infrastructure.” And we know that no one wants to spend money on protecting the environment these days, especially in GOP-dominated North Carolina…

In February, the U.S. Attorney’s office in Raleigh opened a criminal investigation into a coal ash spill that resulted in 27 MILLION gallons of toxic sludge being dumped into the Dan River from a now defunct Duke Energy power plant. The public was not notified of the spill until the next day. It took six days to seal the ruptured pipe. It was a full ten days until state officials warned residents not to swim in the river or eat fish from it.

The spill was blamed on a corroded storm water drain that runs beneath the 27 acre (!) coal ash pond. Who puts a storm water drain under a toxic, unlined coal ash pond? Everyone, apparently!  There are no federal regulations regulating coal ash ponds, notes Tom Reeder. More than a dozen of the 31 Duke Energy coal ash ponds in North Carolina have been deemed unsafe and liable to fail at any time. That means that a tasty cocktail of benzene, mercury, lead, and arsenic could be leaching into groundwater from a coal ash pond near you.

Duke Energy Chief Executive Lynn Good said that customers would pay the cost if the state requires the company to empty its 31 coal ash ponds in NC. Duke Energy CFO Steve Young recently informed his investors of compliance costs on a Februrary 18 conference call:

“We currently estimate we will spend between $4.5 billion and $5.5 billion over the next 10 years, with $900 million expected to be spent in the 2014 to 2016 time frame…Approximately 85 percent of our expected environmental compliance investments will be in the Carolinas and Indiana. Both of these jurisdictions have a strong track record of allowing utilities to recover costs related to environmental compliance investments.”

In other words, the company fully expects that NC legislators will allow Duke Energy to charge its customers for the cleanup. Where on earth would they get that idea? From recent history, that’s where!

As a shareholder, Governor McCrory has profited directly from the company, whose profits for the past fiscal year were $2.7 billion. Shareholders enjoyed a 25% increase in earnings after the company’s controversial merger with Progress Energy, which created the nation’s largest utility company. Did you say monopoly? What monopoly? So, in a nutshell, profits are passed on to shareholders while costs are shifted to the ratepayer. Ah, business…the crony capitalist way!

Before the latest spill, NC environmentalist groups had tried three times in the last year to sue Duke Energy and force the corporation to clean up its toxic coal ash dumps. Each time, the Department of Environment and Natural Resources (DENR) blocked the lawsuits to assert its own authority over regulatory enforcement. The environmental groups were shut out of negotiations that resulted in a proposed settlement considered by many to be highly favorable to the company.

Environmentalists criticized the DENR for its seemingly cozy relationship with Duke Energy, noting the $99,111 proposed settlement fine for pollution from two previous coal ash pond leaks in Charlotte and Asheville constituted nothing but a slap on the wrist for the $50 billion company. The settlement would have required Duke to study how to stop contamination, but would not require the company to clean up the sites. Lawyers from the DENR have now asked judges to disregard their own proposed settlement after public scrutiny has caused backlash and criticism, in addition to the pesky federal probe. The investigation is focusing closely on the relationship between the regulators and the Duke Energy.

The Southern Environment Law Center obtained 400 pages of emails from the DENR as part of legal efforts to force shutdown and clean up of the state’s coal ash ponds. The emails show that DENR officials have known about the problem and have been studying it since at least 2008, after a similar spill in Tennessee. The DENR found that Progress Energy and Duke had not obtained required stormwater permits for several of the coal ash ponds. Attempts to request that the companies obtain proper permits were rebuffed. “Why we would do this when we are looking for a kinder gentler regulatory framework according to the Governor?” asked Duke environmental and legislative director George Everett in a 2011 email. Is seems that he was right to stall. All Duke Energy needed was a Republican-led legislature.

After budget cuts and a shift in focus, the DENR all but dropped its pursuit of permit enforcement. “The legislature has not created a culture where DENR feels like it can act aggressively, and that has gotten worse since the GOP took over the legislature,” said Democratic Rep. Pricey Harrison of Greensboro.

Governor McCrory has chided reporter’s questions about his relationship with Duke Energy as “disrespectful.” It is certain that he and other GOP lawmakers are scrambling to save face after the launch of the federal investigation. He defends his record, stating that “Our DENR under our administration has taken the most aggressive action in North Carolina history.” REALLY?

The relationship between lawmakers and Duke Energy warmed considerably after Governor McCrory took office. At least $1.1 million was contributed to the McCrory campaign by Duke’s PAC, executives, and their immediate families. Duke Energy shareholder and former employee McCrory appointed businessman and climate change skeptic John Skvarla, who has stated the dubious claim that coal is an infinite resource, to head the DENR. After his appointment, he stated that the environment was not his only concern. He characterizes those companies that he regulates as “customers” and the DENR as a “partner” to those entities. His duties, as he saw them:

“Protect the environment and help the economy because DENR has such a bad name. DENR is the number one obstacle to economic growth in the state of North Carolina for a long time.”

Skvarla, who had no experience in environmental regulation before his appointment, told the John Locke Society that if environmentalists had their way, “we’d live in lean-tos and wear loincloths.”

Michael Burkhard, a former senior specialist tasked with investigations into contamination, says that the environment within the agency took a turn after McCrory appointed Skvarla. He stated that his powers to regulate enforcement were weakened and that proposed penalties had to be submitted to Raleigh for ultimate approval before being levied on violators. “The message was that we shouldn’t hold anyone accountable or responsible…They told us that industry and business do a better job of regulating themselves than we do,” Berkhard told Salon. Other employees have stated that their jobs were threatened if they didn’t get with the program.

Legislators have been steadily chipping away at DENR jobs and funding since the 2008 recession. Under Skvarla, the DENR returned almost $600,000 to the EPA that was supposed to have been used to test waters that are potentially affected by fracking and for wetlands research, because the unit that would have handled the tests was eliminated. Legislators also cut the Clean Water Management Trust Fund, which was established to protect watersheds, from a $100 million fund to $11.5 million.

The DENR lost 30 positions in between 2009-2010, and since 2011 has lost 225 positions. The water resources unit has been the hardest hit within the DENR, constituting half of all job cuts since McCrory took office. 67 of those job cuts were since March 1, well after the devastating coal ash spill. The reduction in force was part of Skvarla’s broad restructuring of the agency that began last summer. Now seven regional offices must stretch dwindled resources to continue fulfilling its duties. Here in Asheville, a crew of 12 persons is tasked with monitoring 19 surrounding counties.

Rep. Mitch Gillespie, a seven-term Republican from Marion, NC, made it his mission to gut environmental laws after the GOP took over the General Assembly, in an effort to clear the way for hydraulic fracturing and other oil and gas friendly pursuits. One of those bills resulted in the famous law against sea level change, or rather, the way we measure it. Has he targeted DENR? Absolutely, he says:

“Now, are we targeting DENR? Well, I am. I’m actually targeting regulatory reform. It just so happens that DENR is the issue that I’ve been involved with all my life, as far as regulations go.”

Gillespie, who has received contributions from Duke, Progress Energy and natural gas company PSNC, says that DENR regulations have cost him tens of thousands over his years in the industry.

The Republican-led legislature has been very active in gutting environmental regulations, making deregulation and defunding a top priority. The Raleigh News and Observer reports on the disturbing trend:

“Three major bills that either streamlined or decimated – depending on your point of view – environmental regulations have been enacted since 2011. One such bill prohibits state regulations that are more stringent than federal regulations, and takes decision-making authority on disputes over regulations out of state agencies’ hands.

A 59-page bill enacted from last year’s session restricts local environmental ordinances, weakens groundwater protections around landfills such as coal ash ponds, and requires state agencies to review all their rules every 10 years and trim those that can’t be justified. The bill required DENR be the first agency to undertake the time-consuming process, beginning with some 500 water quality and wetlands rules, with its diminished staff.

Another bill enacted into law last session removed Democratic-appointed incumbents from state commissions, including the Environmental Management Commission and the Coastal Resources Commission, and replace them with Republican appointees, eliminating the expertise and continuity of the former members.”

A federal subpoena of the governor’s office, the DENR, and Duke Energy requires documents, emails, sampling results, and records regarding the Dan River Steam Station to be handed over for a Grand Jury to review beginning March 18.

***Fellow blogger and friend BTG has also written about the questionable relationship between regulators and Duke Energy on his blog, Musings of an Old Fart. Please visit and tell him I sent you!***

4 thoughts on “Politics, North Carolina Style. Coal Ash Pollutes NC Waters as Regulatory Body Endures Job and Funding Cuts: Duke Energy Promises to Pass Clean-up Costs on To Customers!

  1. Amaya, this is excellent, a much more thorough piece than mine. I read this and ask myself how do we let legislators with no scruples get away with things like this? Well done. BTG

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