A legal maneuver could absolve Duke Energy of its responsibility for coal ash dumps | News Feature | Indy Week
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A legal maneuver could absolve Duke Energy of its responsibility for coal ash dumps 

Duke Energy announced in November that the site of a former brick mine in Sanford would be among the future dump sites for coal ash from its power plants.

Photo by Jeremy M. Lange

Duke Energy announced in November that the site of a former brick mine in Sanford would be among the future dump sites for coal ash from its power plants.

In the television commercial, Paul Newton, North Carolina president of Duke Energy, strolls through a garden on a warm, spring day. A bee lands on a flower. Crickets chirp. A tree bathes in the sun.

Newton wears no tie or coat; the sleeves of his sky-blue shirt are rolled just above his wrists. Duke wants to be a good neighbor, he says.

"Because safely delivering reliable power and ensuring the well being of our customers and communities is important to me and to all of us at Duke Energy," he concludes.

"That's a bunch of crap," says Bobbie Mendenhall, who lives in Moncure, near an abandoned brick mine where Duke Energy plans to dump more than a ton of toxic coal ash. "He's just concerned with his big income."

Mendenhall can no longer stomach this commercial, part of Duke's public relations push to counter the bad publicity of the utility's February coal ash spill on the Dan River.

Like many of her neighbors on Moncure Flatwood Road, Mendenhall says there's little reason to believe Duke can be stopped from shunting its environmental disaster onto low-income communities in Chatham and Lee counties.

"It's something they'll get away with," she says. "They're looking out for themselves. And it doesn't matter what happens to the people."

Since the Dan River spill, Duke Energy has claimed it will accept responsibility for the mammoth disposal of roughly 100 million tons of coal ash over the next 15 years. However, if state regulators approve the utility's plans to dump 3 million tons of ash in Chatham and Lee counties, it might be absolved of legal liability for any harm it causes to human health or the environment, an INDY investigation has found.

In most cases, the landowner would be legally liable for such damages. But the owner of the abandoned brick mine is not Duke Energy; it's Green Meadow LLC, a new corporation led by the president of Charah Inc., a Kentucky ash disposal company contracting with Duke on the coal ash project.

Once Charah takes possession of the ash, Duke may not be responsible for the waste, legal experts say, a contingency that may be part of Duke's private contract with Charah.

And if Green Meadow or Charah does not have the money to pay damages emanating from a lawsuit, then county governments and the state—not Duke Energy—may be ultimately forced to pay, legal experts say.

"Someone has to be on the hook," says Lee County Manager John Crumpton. "It's a huge issue, and the legislature has left us exposed."

Standing atop broken glass, mildewed papers and a stripped fuse box, you can see nearly all of Lee County's abandoned General Shale brick mine, vacant since the company closed it more than five years ago.

Below loom 20-foot-high piles of broken brick. A faded General Shale sign reads, "Building the American Dream." Red veins of clay streak the scarred ground in all directions. And, in a rut hidden from nearby Colon Road, lie discarded industrial chemical barrels, filled with an odorless, bright green liquid.

A small subdivision, a two-story home and a trailer park hug the edges of the 400-acre property, which partially lies in a flood zone.

Much is at stake at this 42-year-old mine, and another deserted General Shale property in nearby Moncure. This is where Duke Energy wants to dump its coal ash, an industrial byproduct laced with carcinogens such as arsenic and cadmium.

Like most landfills, it would be fitted with a synthetic liner, with additional protection offered by natural layers of clay, the company says. Duke calls the project a "beneficial reuse" and a "reclamation" of the abandoned mine that is both safe and fast—the latter important to comply with the state regulators' deadline.

Duke Energy spokeswoman Jennifer Jabon calls the plan part of a "comprehensive" solution, the first phase of which includes the transport of about 5.1 million tons in the next two years.

Three million tons would land in Sanford and Moncure. Another 2.1 million tons is bound for sites in Asheville and Jetersville, Virginia, near the state line, Jabon said.

There are environmental risks to this approach. Over time, landfill liners often degrade, allowing the contents to leak into the groundwater. Groundwater is already a concern in Lee and Chatham, considered to be a likely destination for fracking in North Carolina. Fracking has been linked to widespread reports of groundwater contamination in the United States.

"The legal system for hazardous waste is supposed to be an airtight system," says Victor Flatt, an environmental law professor at UNC-Chapel Hill. "And in theory, somebody has to pay for it. But there's how things are supposed to work and then there's the real world."

Many Lee and Chatham county officials were furious last month when Duke surprised them with an announcement that their jurisdictions would become home to the coal ash.

"They get the profit and we get all the risk," says Jim Crawford, chairman of the Chatham County Board of Commissioners.

Several environmental lawyers in North Carolina note Duke's proposal moves the ash off the energy company's property. Avoiding legal liability could be why the utility chose not to pursue a different disposal plan, one supported by the Blue Ridge Environmental Defense League and the Haw Riverkeepers Association: Encase the coal ash in concrete and store it on Duke Energy property, near the 33 leaky retention ponds across the state.

"Once it's transferred, they're not going to own it anymore," says Flatt, a point confirmed by Duke Energy.


Jabon told the INDY that the company does not believe it is responsible for the ash's impacts once it leaves a Duke facility.

Asked repeatedly why Duke would seek to transfer liability for the dangerous waste, Jabon offered the same statement: "We feel a responsibility for the safe and permanent storage of the coal ash, which is why we've partnered with experienced vendors."

Instead, Duke is dumping the ash in these mines owned by Green Meadow LLC, a relatively unknown corporation formed in May in North Carolina. And while ownership of a limited liability corporation is not public record in North Carolina, state permit applications filed with the DENR show Green Meadow's president and chief executive is Charles Price, also the president and CEO of Charah Inc.

Green Meadow, according to state records, has no principal office and, until its first annual report to the Secretary of State's office is filed next spring, its list of officers is unknown, much like its assets.

"What is the financial security of this entity?" says Ryke Longest, director of Duke University's Environmental Law and Policy Clinic. "Clearly an investor-owned utility in the Fortune 500 is a far more viable defendant than a contractor."

One advantage of an LLC for a business owner is that it allows owners to separate their assets and, by extension, their risk. Therefore, environmental liability for Green Meadow is not necessarily liability for Charah. Connecting the liability to Duke could be even more difficult.

Representatives for both Charah and Green Meadow did not respond to requests for comment for this story. But in its promotional materials, Charah claims to have a history of assisting utilities in coal ash management, counting expertise in structural fill projects like in the General Shale mines, as well as coal ash conversion and ash pond management.

Charah's attorneys, Moore & Van Allen of Charlotte, also could not be reached for comment. The corporate firm is well known in North Carolina, chiefly because it hired Gov. Pat McCrory, a 28-year Duke Energy employee, as director of strategic initiatives between his two campaigns for governor in 2008 and 2012.

As of last week, neither company had completed their permit applications for the Sanford and Moncure projects. This year's coal ash bill includes the somewhat vague requirement that an applicant provide evidence of "financial assurance," either through a bond, financial reports or other unspecified means.

DENR Environmental Manager Ellen Lorscheider said Green Meadow and Charah have yet to provide any financial documents. Lorscheider said the agency will require financial backing as it would for most landfill companies, although most landfills do not contain such toxic materials.

If the responsible parties can't afford the damages, liability could eventually fall to the permitting agency, according to multiple legal experts who spoke to the INDY.

"Frankly, I would look to the state," said Longest. "You could say you cut this sweetheart deal to get them off the hook. And that was negligent."

A pending decision from the U.S. Environmental Protection Agency may also be key. The federal agency is expected to decide by Friday whether to classify coal ash as a "hazardous waste," a designation that carries increased liability regulations.

In that case, legal responsibility can be tracked back to the waste's generator, Duke Energy, Flatt said. However, he added the EPA may offer exclusions for such reclamation projects as the ones proposed for Sanford and Moncure.

No matter the EPA decision, Longest said North Carolina, and DENR, should ensure someone is ready to pay in the event of an environmental disaster, but he's not optimistic.

"For years, they've been willing to accommodate the producers of coal ash to do whatever was in Duke's best interests and not the interests of the neighbors across the street," he said. "I'm more worried about DENR than I am Duke Energy."

Donald Moore, a cantankerous resident of Sanford's Hearn Lane trailer park—which lies directly across the street from Duke's proposed coal ash dump—says the newspaper can't print what he has to say to Duke Energy.

"I would tell them where they can stick that stuff," he says. "They could stick it up their you-know-what."

A veteran, Moore has lived here since 1986. A noisy brick plant couldn't drive him away from his home in Lee County, but a coal ash dump might.

"All they're doing is creating a problem for us when they should be taking care of it where it is," he says.

Moore says General Shale's closing hurt this community, but what will hurt more is Duke Energy's plan. No matter what the company tells him, Moore says he does not believe Duke, nor Charah, nor Green Meadow, can contain the toxic ash.

"It's just not right," he says.

Jim Crawford, who was elected to the Chatham County Board of Commissioners last month, notes the Coal Ash Management Act does not require Duke to get permission from local officials for disposal. In fact, it requires Duke to get permission for this unprecedented project only from the state Department of Environment and Natural Resources, which has included former Duke Energy employees on its staff.

Nor is Duke Energy required to conduct an environmental impact study to assess potential health effects for the community. The legislation also bans local ordinances intended to regulate or block such projects and bypasses any local fees or permitting.

"It's a piece of special interest legislation written for Duke power," Crawford said. "And I wouldn't be surprised if their attorneys wrote it. It's just so self-serving."

John Crumpton, county manager in Lee County, agrees. Crumpton's county has struggled since the economic collapse of 2008, weathering double-digit unemployment and massive layoffs in its industrial sector. As of the 2010 census, 20 percent of its population of about 60,000 lived below the poverty line. "Everybody's making money off of this," he said. "Except for Lee County."

  • Photo by Jeremy M. Lange

For Duke Energy, speed is of great import. The energy giant must dispose of an estimated 100 million tons of coal ash by 2029.

The company's first priority will be 17.5 million tons stored in ponds outside plants in Eden, Mount Holly, Asheville and Wilmington. State lawmakers have deemed these facilities "high-risk" for environmental contamination. The Coal Ash Management Act requires those sites to be cleaned up by Aug. 1, 2019.

Groups such as the Southern Environmental Law Center have called on Duke to rid itself of leaky ash storage since 2008. But it took a 39,000-ton spill in Rockingham County's Dan River in February to prompt action from state lawmakers this year.

The bill, which was co-sponsored by state Senate President and Rockingham County resident Phil Berger, also established a Coal Ash Management Commission, which met for the first time last month. The commission is charged with recommending ash disposal regulations to legislators. This year's bill also sets an expedited permitting process for some disposal plans, which means dumping could begin within the next three months.

The liability loophole is one of a number of major shortcomings of this year's bill, opponents say. The legislation may give Duke the option to transfer its South Carolina ash deposits into North Carolina. Additionally, it's unclear what process the energy giant would have to follow if it pursues smaller ash dumps.

The legislation does not require financial assurance for structural fill projects involving less than 8,000 tons of coal ash per acre or less than 80,000 tons of total coal ash, indicating that such smaller projects would be "deemed permitted" by the state. Duke's Dan River spill, which may pollute the river for decades, would fall about 40,000 tons below that threshold.

"It needs to be cleaned up," says David Rogers, field director for the nonprofit Environment N.C. "These coal ash pits are leaking every single day in these communities' drinking water."

Some groups also pointed out that the legislation leaves major decision-making powers about ash dumps to the DENR, an agency widely criticized for its handling of the coal ash controversy.

Until the Dan River spill, the agency failed to require that Duke clean up its polluting ponds, despite evidence of groundwater contamination around the company's ash-producing plants in North Carolina.

DENR officials said they were simply following a more business-friendly approach in their dealings with Duke, but citizen groups noted the agency's actions have often directly benefitted the energy company.

When the Southern Environmental Law Center promised to file suit over water contamination at three ash sites last year, DENR moved to head off litigation, negotiating relatively paltry fines totaling less than $100,000 for the company, which reported earnings of $2.68 billion in 2013.

This week, SELC attorney Frank Holleman said Duke's proposals in Sanford and Moncure represent "tremendous improvements" over its current ash ponds. But he criticized the company for its approach.

"This is par for the course with North Carolina and Duke," Holleman said. "Duke finds it hard to get in the mode of being fully transparent."

Others are more wary of the plans for Sanford and Moncure. "To call it a reclamation is a joke," says Debbie Hall, a Lee County resident and member of the Blue Ridge Environmental Defense League. "It's a landfill. We all know it."

Representatives for Berger and newly chosen House Speaker Tim Moore, a Cleveland County Republican, did not respond to interview requests. Nor did Rep. Robert Reives, a Sanford Democrat representing both Lee and Chatham who voted for this year's coal ash bill.

But Crumpton said it might be too late to change the state's coal ash law because they could prompt a lawsuit from Duke Energy.

"They're essentially going to try to fill up every hole in this state with that stuff," Crumpton said. "But when the human element comes in, and mistakes are made, who pays?"

Sanford's General Shale brick mine doesn't seem closed. More like frozen in time, as if every worker abruptly walked off the site years ago, leaving their tools still in place. A dump truck, its bed poised in the unloading position, sits rusting near an abandoned warehouse.

Patricia McDowell finds it hard to look at. "It's sad to see what it's become," she says.

McDowell worked here for six years as a truck dispatcher. Her office, a squat, fenced-in building still stands, even though the access road is pitted and scarred.

When the U.S. economy collapsed in 2008, McDowell was one of many to lose her job at General Shale. The mine closed soon after. It's been vacant since.

McDowell's reminded of it every day from her home in the Hearn Lane trailer park in Sanford, across Colon Road from the site's main entrance.

Last month, like many in the community, she learned Duke Energy was targeting the old mine as a dumping ground for its toxic coal ash, a plan she calls "sneaky and underhanded."

At first, she was angry. But in the weeks since, her anger has faded. Now, she says she's more worried than anything else. Worried that Duke will spoil her home and her water. Worried that she has no power in that decision. And worried that no one will pay if things go wrong.

  • Photo by Jeremy M. Lange

The toll of coal Coal Ash Management Act (Senate Bill 729)

Primary sponsors: State Sen. Phil Berger (the Dan River spill occurred in his district) and Tom Apodaca, a powerful Republican from Hendersonville who chairs or co-chairs numerous appropriations committees.

Passed in August 2014, ratified without the governor's signature.

Among its key points:

• Establishes the Coal Ash Management Commission, composed of members appointed by legislature and governor, to recommend laws governing coal ash management

• Expedites permit reviews by the N.C. Department of Environment and Natural Resources for ash pond closures

• Requires state permits for disposal projects involving 8,000 or more tons of coal ash per acre or 80,000 total tons of coal ash. However, financial assurance is not required for smaller projects.

• Prohibits local governments from regulating coal ash management in their jurisdictions

• Requires quarterly progress reports from DENR on coal ash management

• Establishes a timeline for phasing out of coal ash, including conversion of power plants to dry ash by Dec. 31, 2017.

• Requires closure of certain "high-risk" ponds by Aug. 1, 2019.

• Requires DENR to establish a priority list for closure of coal ash ponds by Dec. 31, 2015.

Coal ash timeline

February 2014 A leak at Duke Energy's Eden coal ash pond spills an estimated 39,000 tons into the Dan River. Duke apologizes for the spill.

May 2014 Senate introduces the Coal Ash Management Act, ordering Duke to close all of its coal ash retention ponds across the state by 2029.

August 2014 After three months of debate and amendments, General Assembly approves the act. It becomes law a month later without Gov. Pat McCrory's signature.

November 2014 Duke Energy announces its plans for the first phase of coal ash disposal, including the transport of more than 5 million tons of ash to sites in Sanford, Moncure, Asheville and Jetersville, Virginia.

March 2015 Duke Energy to begin transporting and dumping ash by truck or rail, pending approval by the N.C. Department of Environment and Natural Resources.

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