Assistant Attorney General John C. Cruden Delivers Remarks on the Sentencing of Duke Energy Subsidiaries for Clean Water Act Crimes

I am happy to be here today in Greenville to announce a very important development in the criminal investigation into the February 2014 coal ash spill into the Dan River.  Today, the court accepted a plea agreement that holds Duke Energy accountable for this disastrous spill as well as other criminal violations and ultimately will lead to a safer and more environmentally responsible management of Duke Energy facilities in this beautiful state and other states where Duke Energy maintains facilities. 

I want to thank the U.S. Attorney for the Eastern District of North Carolina, Thomas Walker, for joining me here today, as well as Acting U.S. Attorney for the Western District of North Carolina, Jill Rose, Assistant U.S. Attorney for the Middle District of North Carolina, Stephen Inman, EPA Assistant Administrator Cynthia Giles and North Carolina SBI Deputy Director Janie Pinkston Sutton. 

Today, three subsidiaries of Duke Energy Corporation, pleaded guilty to nine criminal violations of the Clean Water Act at several of its North Carolina facilities.  At the plea and sentencing held here today, the court has accepted Duke Energy’s agreement to pay a $68 million criminal fine and spend $34 million on environmental projects and land conservation to benefit rivers and wetlands in North Carolina and Virginia. 

Four of the charges are the direct result of the massive coal ash spill from the Dan River steam station into the Dan River near Eden, North Carolina, in February 2014.  In that event, tens of thousands of tons of toxic coal ash spilled into the Dan River and lined the banks of the river for more than 60 miles downstream from the spill site and affecting two states – North Carolina and Virginia.

This massive spill was a crime against the people and the environment of North Carolina and Virginia and it was the result of repeated failures over years by Duke Energy’s subsidiaries to exercise proper oversight and maintenance over their coal ash basins.

More Clean Water Act violations were discovered as the scope of the investigation broadened based on allegations of historical violations at the companies’ other facilities.  Among the charges filed on Feb. 20, 2015, the Justice Department alleges violations of the Clean Water Act at several of Duke’s North Carolina facilities, including failing to maintain equipment at the Dan River and Cape Fear facilities and unlawfully discharging coal ash and coal ash wastewater from impoundments at Duke’s Dan River, Asheville, Lee and Riverbend facilities. 

The terms of these plea agreements will help prevent both the kind of environmental disaster represented by the Dan River spill and more persistent forms of pollution represented by the seeps at various facilities from reoccurring in North Carolina and throughout the United States by requiring Duke subsidiaries to follow a rigorous and independently verifiable program to ensure they comply with the law.

In fact, two of Duke Energy’s subsidiaries – Duke Energy Carolinas and Duke Energy Progress – must certify that they have the assets to meet their obligation to comply with the terms of the plea agreement as well as federal and state law with respect to their coal ash impoundments within North Carolina, obligations currently estimated to be approximately $3.4 billion.

In addition to the $68 million criminal fine, Duke Energy Carolinas and Duke Energy Progress will pay a $24 million community service payment to the National Fish and Wildlife Foundation for the benefit of the rivers and wetland ecosystems of North Carolina and Virginia.  The companies will also provide $10 million to an authorized wetlands mitigation bank for the purchase of wetlands or riparian lands to offset the long-term environmental impacts of its coal ash basins. 

The plea agreement also provides restitution for federal and local governments that responded to the Dan River spill but have not previously been reimbursed.

This agreement will not only bring justice to the people and environment of North Carolina harmed by the spill, it will also impact Duke Energy subsidiaries operating 18 additional facilities in five states, including 14 in North Carolina. 

Duke Energy will also be required to develop and implement nationwide and statewide environmental compliance programs to be monitored by an independent court appointed monitor and be regularly and independently audited.

To give you an idea of the scope of this independent monitoring program, approximately 108 million tons of coal ash are currently held in coal ash basins owned and operated by Duke Energy and its subsidiaries in North Carolina.  Duke Energy Corporation subsidiaries also operate facilities with coal ash basins in South Carolina, Kentucky, Indiana and Ohio.

Results of these audits will be made available to the public and overseen by a court-appointed monitor who will report findings to the Court and the U.S. Probation Office to ensure full implementation

In conclusion, the Department of Justice is committed to protecting our water for all Americans.  There are over 700 active coal ash basins in the United States.   This criminal prosecution should be a message to the owners and operators of those coal ash basins that they must be responsibly managed in compliance with the law.  Breaking the law will be costly for all who cut corners on their responsibilities.  

I am also grateful to the criminal investigation conducted by the Criminal Investigation Division and the Office of Inspector General of the Environment Protection Agency, the Criminal Investigations for the Internal Revenue Service, and the North Carolina State Bureau of Investigation with assistance from the Federal Bureau of Investigation and the Department of Defense Criminal Investigative Service.

Thank you.