Lawsuit alleges Duke flouted coal ash regulations before Dan River spill

Dive Brief:

  • A lawsuit filed by a Duke Energy shareholder against the utility's Board of Directors alleges the utility avoided compliance with environmental regulations through "improper influence" with the North Carolina Department of Environment and Natural resources. The allegation was made public in Duke’s quarterly Securities and Exchange Commission (SEC) filing, according to the Charlotte Business Journal.
  • Philadelphia-based shareholder Judy Mesirov filed the lawsuit in March, accusing Duke Board members and executives of wasting corporate assets and exposing the company to billions of dollars in liability over environmental problems they created. The allegations stem from issues with coal ash storage and disposal, such as Duke's 2014 Dan River spill
  • The SEC filing disclosed Duke may also be sued by another shareholder on the coal ash issue and a third over the dismissal of Progress Energy CEO Bill Johnson. The Board had committed to having Johnson head the merged Duke-Progress company but discharged him after the merger was completed. 

Dive Insight:

The sealed shareholder lawsuit was filed in the N.C. Business Court in late March. Mesirov and her attorneys were required to keep the complaints confidential because they were allowed to use internal Duke documents.

Duke's SEC filing for the first quarter of 2015 describes the allegations:

"The Mesirov Complaint alleges that the Duke Energy Board of Directors was aware of Clean Water Act (CWA) compliance issues and failures to maintain structures in ash basins, but that the Board of Directors did not require Duke Energy Carolinas and Duke Energy Progress to take action to remedy deficiencies."

The complaint also alleges that "the Board of Directors sanctioned activities to avoid compliance with the law by allowing improper influence of DENR to minimize regulation and by opposing previously anticipated citizen suit litigation."

One of the few other unsealed documents in the case alleges Duke “consciously and routinely endangered the lives and health of the public, wildlife and vegetation by exposing them to carcinogens and by polluting North Carolina’s and Virginia’s environment.”

Duke is seeking a six-month delay and did not comment on the specifics of the lawsuit. The utility says its Board and senior management team were doing coal-ash management and oversight before the 2014 Dan River spill, took immediate responsibility for the spill, developed a comprehensive ash-management plan, and are working to comply the N.C. General Assembly’s coal ash law.

A federal grand jury investigation into allegations of improper relationships between Duke and DENR produced a settlement in which Duke will plead guilty to nine Clean Water Act misdemeanor charges and pay $102 million in fines and restitution.

Filed Under: Generation Corporate News