Duke Energy Takes A Stand in North Carolina

Double Standards, Quadruple Fines

The escalation of federal, state, and local government overreach presents a constant threat that warrants oversight and accountability. Sometimes, however, these actions are so egregious that the impropriety is self-evident.

Last month, North Carolina’s Department of Environment and Natural Resources nailed Duke Energy for an unprecedented $25.1 million fine for coal ash contamination of groundwater near the company’s Sutton Plant. This sets a historic record as the largest fine in the state’s history, and quadruples the largest previous fine against the company.

To be clear, companies should be held responsible for environmental and economic damage caused by their activities, but government should be impartial in their administration and enforcement of those actions. Unfortunately, the state of North Carolina and the U.S. Department of Justice has instead viewed this as an opportunity to put their thumb on the scale, allowing them to pick winners and losers.

What Duke Energy is rightly contesting is the unprecedented “regulatory overreach” of DENR’s fine, which comes on top of the company’s $102 million negotiated plea deal with the U.S. Department of Justice. In concocting the $25.1 million figure DENR abruptly changed their criteria, eclipsing what was previously considered to be “large” penalties in the range of $1 million to $5.6 million. It’s hard not to see this as opportunistic cash grab by a revenue-strapped, power-hungry government agency.

By way of comparison, the government operated Tennessee Valley Authority saw a ruptured dike unleash 1.1 billion gallons of coal ash in 2008 (almost 37,000 times larger than the Dan River spill). The spill destroyed 40 homes and ruined Kingston’s Emory River, yet TVA escaped with only $11.5 million in fines from the state and nothing from the EPA. That’s less than half of the DENR’s fine, and roughly one tenth of the DOJ settlement with Duke Energy.

DENR’s actions are troubling for a number of reasons. North Carolina’s Chamber of Commerce put it well: “We worry this approach by the DENR discourages transparency, as opposed to working openly with businesses to correct problems.”

Duke Energy did not want to appeal the fine simply because it had been fined, but it was so large that the company simply could not back down and take it. As the Chamber also pointed out, it taints the reputation of the state as a whole because such absurdly large and unexpected fines discourage companies from expanding or locating to the state.

This is a case where Duke Energy freely admits blame and is willing to take responsibility. The state and federal government has every right to hold them accountable, but when those officials embark on selective and subjective enforcement that undermines regulatory stability, it is important that they be held accountable as well.

Erik Telford is the interim president at the Franklin Center for Government & Public Integrity.

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