On May 14, 2015, in a federal courtroom in Greenville, North Carolina, coal combusting giant Duke Energy pled guilty to committing 9 environmental crimes for its years of illegal discharge of coal ash pollution throughout the State of North Carolina. Duke Energy will also pay some $102 million in fines and restitution.1
So, a big win for the environment, right? Duke Energy will finally stop threatening the well-being of the people of North Carolina, right?
Not so fast.
Let’s first examine what Duke Energy did to get charged with these crimes, and then see whether we think the punishment is going to cause Duke Energy to change its polluting ways.
What Duke Energy Did
As part of its guilty plea, Duke Energy agreed that it had engaged in certain misconduct. Duke Energy’s agreement is documented in a “Joint Factual Statement” (between Duke Energy and the federal government).2 This is just some of the misconduct that Duke Energy agreed it had committed:
- For years, Duke Energy “failed to properly maintain and inspect the two stormwater pipes underneath the primary coal ash basin at the Dan River Steam Station in Eden, North Carolina. On February 2, 2014, one of those pipes [that was 60 years old] failed, resulting in the discharge of approximately 27 million gallons of coal ash wastewater and between 30,000 and 39,000 tons of coal ash into the Dan River. The coal ash travelled more than 62 miles downriver…”3 (emphasis added).
- From 1981 onward, Duke Energy either did not take seriously, or outright ignored, the repeated recommendations from its own consultants that these two pipes—including the one that failed, provoking an environmental disaster—be inspected for possible leakage and the possibility of failure.4
- Since 2011, Duke Energy denied the repeated requests of its own employees at the Dan River Station that these same pipes be inspected with cameras, to determine if they were leaking, or likely to fail. In fact, on at least two occasions, an engineer from the Dan River Station personally appealed to a Duke Energy vice-president, asking that the company pay for the camera inspections, so that the integrity of the soon-to-fail pipe could be determined. The vice president said, “no” each time, even after the VP was told that, “if one of the pipes failed, there would be environmental harm.” Duke Energy is a company worth $50 billion. The camera inspection would have cost $20,000.5 (emphasis added).
- Duke Energy also “failed to maintain the riser structures in two of the coal ash basins at the Cape Fear Steam Electrical Plant, resulting in the unauthorized discharges of leaking coal ash wastewater into the Cape Fear River.”6 (emphasis added).
- Duke Energy’s coal combustion facilities “throughout North Carolina allowed unauthorized discharges of pollutants from coal ash basins via ‘seeps’ into adjacent waters of the United States.”7 (emphasis added).
Will Duke Energy Change its Ways?
Maybe the most important question in all of this is whether the punishment—i.e., mostly, the $102 million in fines—is going to cause Duke Energy to stop treating the State of North Carolina like its own dumping ground. $102 million is a lot of money. Is it enough to make Duke Energy behave?
Don’t bet on it.
Here are other facts that tell us that this punishment—while it may, as a practical matter, have been the best that the government could do under these circumstances8—isn’t going to bother Duke Energy in any way that really matters:
- Misdemeanors Only. What were the crimes to which Duke Energy pled guilty for (among other things) knowingly and repeatedly ignoring its own employees’ and consultants’ advice to please test the pipes—an ignorance which evidently led to an unprecedented and catastrophic environmental disaster in North Carolina, that will likely require lifetimes to clean up? All misdemeanors. Not a single felony. A teenager caught with 1.5 ounces of pot can be charged with a felony in North Carolina.9
- No One is Going to Jail. The teenager with the 1.5 ounces of pot can get 3-8 months in jail. 9 But the serial polluter which caused an environmental disaster—scarring more than 60 miles of a state river with tens of thousands of tons of toxins1—after ignoring its own engineer’s warnings that if there was no pipe inspection, there might be “environmental harm”, got no jail time at all.
- Too Rich to Care. While $102 million is a lot of money, and is said to be the largest such fine in state history, it is but 5% of Duke Energy’s latest annual profit of $1.9 billion, and but 0.2% of its $50 billion net worth.1,10 In that context, $102 million doesn’t really even hurt; it’s merely the cost of doing business.
- Where’s the Regulator? The people of North Carolina are supposedly protected by the taxpayer-funded Department of Natural Resources (DENR). But DENR has been coddling Duke Energy for years, and much of Duke Energy’s serial dumping on the state has gone on right under DENR’s nose, if not with DENR’s approval. In 2013, despite having evidence from conservationists of Duke Energy’s groundwater contamination, environmental groups were “forced […] to sue Duke [three times] under the Clean Water Act” because DENR failed to act. 1 Is anyone at DENR going to pay a price for the agency’s failure to stop Duke Energy’s perpetration of environmental crimes? Is DENR going to have any incentive to not allow Duke Energy to do this again? Not so far, it seems.
When you measure the crimes that Duke Energy admittedly perpetrated on the environment and people of North Carolina, against the fact that this admitted conduct is labelled as nothing more than a misdemeanor, and cost Duke Energy no more than an amount of profit that the company can make in a couple of weeks, would you expect that anything at Duke Energy is going to change?
2 United States v. Duke Energy – Joint Factual Statement
3 United States v. Duke Energy – Joint Factual Statement – Paragraph 1
4 United States v. Duke Energy – Joint Factual Statement – Paragraphs 46-65
5 United States v. Duke Energy – Joint Factual Statement – Paragraphs 69-80
6 United States v. Duke Energy – Joint Factual Statement – Paragraph 2
7 United States v. Duke Energy – Joint Factual Statement – Paragraph 3
8 With this blog, I intended no criticism of the federal prosecutor or judge in this matter. I do not know all of the constraints within which they were operating. Rather, the point of the blog is to offer my opinion that the punishment here—even if the most severe available under these circumstances—is not likely to hurt enough to change Duke Energy’s environmental behavior.