Explainer: Duke Energy, Coal Ash, Lawsuits and North Carolina

Explainer: Duke Energy, Coal Ash, Lawsuits and North Carolina

When you notice a social media headline about how environmental activists oppose Duke Energy over “coal ash,” it might not mean much. But when you hear that the subject has brought lawsuits, they might strike you as noteworthy. But Duke Energy, its handling of coal ash and subsequent lawsuits have a significant impact here in North Carolina. Those existing headlines reflect significant changes in how Duke Energy treats coal ash here in the Tar Heel State. What should you know?

Duke Energy’s Impact in North Carolina and Around the U.S.

Most of the people reading this likely got a bill from Duke Energy this month. Duke Energy, headquartered in Charlotte, is one of the largest electricity companies in the U.S. It provides electricity to 7.7 million customers and approximately 24 million people nationwide. Nearly half of those customers—3.4 million—live here in North Carolina.

Despite its broad reach across North Carolina and the country, Duke Energy isn’t free from critics. Most notably, the company has spent several years at odds with North Carolina over coal ash.

Understanding Coal Ash

The U.S. Department of Interior describes coal ash as “a gray, powdery byproduct of burning coal to produce energy. It is composed of materials remaining after coal is burned, including fine sand (called silica), unburned carbon, various metals, and compounds that have potential to be Contaminants of Potential Concern (COPCs).” What does that mean more simply? Coal ash is the waste that remains when coal is burned.

The Natural Resources Defense Council describes coal ash as “a catchall term for several kinds of waste left over at power plants that burn coal, typically contain[ing] a number of substances harmful to human health—arsenic, chromium, lead, and mercury among them.” NRDC concludes that “[c]oal ash is incredibly dangerous.” It warns of harmful results of exposure to coal ash: the short-term effects (nasal irritation, dizziness, nausea, vomiting, and shortness of breath) as well as long-term effects (liver and kidney damage, cardiac arrhythmia and a variety of cancers).

Because of these dangers, many activists and organizations criticize the way that companies handle coal ash, including Duke Energy.

Duke Energy and Coal Ash in North Carolina

Duke Energy coal ash spill site
The Duke Energy station where the spill took place (image from U.S. Dept. of the Interior).

Ordinarily, coal ash is collected and dumped in a “pond” or “basin.” In 2014, a pipe running under one of Duke Energy’s ponds in Eden ruptured, causing 39,000 tons of coal ash and 27 million gallons of pond water to spill into the Dan River. The spill, the third-largest of its kind in U.S. history, potentially harmed wildlife, not to mention the ecosystems needed for animal habitats and recreational activities.

Even before the 2014 spill, Duke Energy and its critics disagreed over coal ash. Environmental advocates favor moving the ash from unlined ponds to dry, lined pits. Duke Energy, on the other hand, maintained that the coal ash could stay put without posing any health risks.

The fate of North Carolina coal-ash ponds remained up in the air until Governor Roy Cooper’s election in 2016. Gov. Cooper campaigned on protecting drinking water from coal ash, and he eventually made good on his campaign promise by ordering Duke Energy to excavate its remaining coal-ash ponds in Apr. 2019.

“DEQ rigorously reviewed the proposals,” DEQ Secretary Michael S. Regan said at the time, “and the science points us clearly to excavation as the only way to protect public health and environment.” He continued, “Today’s action sends another clear message that protecting public health and natural resources is a top priority of the Cooper Administration.”

Gov. Cooper’s Order and the Duke Energy Settlement

Gov. Cooper’s order gave Duke Energy until 2029 to completely excavate the ponds. But Duke Energy wasn’t originally willing to comply with the order without a fight.

Duke Energy challenged Gov. Cooper’s order with the Office of Administrative Hearings, raising a number of “significant concerns.” But, after a lengthy back-and-forth, Duke Energy, North Carolina and several environmental organizations came to an agreement at the end of 2019, which some comentators characterized as “an unmitigated win for the environment.”

In addition to these longstanding legal battles, Duke Energy also faced a legal battle with several insurers. In its lawsuit, Duke Energy seeks coverage for the claims against it. Duke Energy filed a lawsuit seeking coverage for the claims against it in March 2017. The suit is currently pending before Chief Judge Louis A. Bledsoe, III, of the North Carolina Business Court. Ultimately, Duke Energy is asking the insurers to pay at least $600 million for its coal-ash leaks in the Carolinas.

Although the lawsuit remains ongoing, Duke Energy scored several key wins on pre-trial rulings earlier this month.

Duke Energy Scores Early Win on Issue of Whether It Knew Coal-Ash Risks

Several of the insurers moved for partial summary judgment earlier this year. They asked Chief Judge Bledsoe to dismiss parts of Duke Energy’s claims. Why? They claim that Duke Energy intentionally and knowingly caused the environmental damage at its Mayo Steam Electric Generating Plant near Roxboro.

The insurers contended that Duke Energy was fully aware that its Mayo plant’s operations would result in groundwater contamination. Therefore, they claimed, the damage from coal ash was intentional. Conversely, Duke Energy contended that it did not know and could not have known about the potential contamination.

In his June 5 opinion and order denying the insurers’ motion, Bledsoe was persuaded that Duke Energy had presented sufficient evidence to refute the insurers’ claim that the company intended the contamination.

Bledsoe also emphasized a remaining dispute about how much groundwater contamination is necessary to constitute “property damage.” Ultimately, Judge Bledsoe opined that further litigation was necessary before Duke Energy’s claims could be resolved.

Duke Energy Secures Several Other Key Pre-Trial Wins

The three other opinions and orders issued by Bledsoe on June 5 also went largely in Duke’s favor.

In one, Bledsoe rejected the insurers’ argument that Duke Energy was not entitled to coverage. He asserted that Duke Energy’s liability—excavating the coal-ash ponds—was the result of legislation, not “adjudication or compromise” as required by the policies.

In the second opinion, Bledsoe determined that additional litigation (and maybe expert testimony) was necessary to address the timeline of the contamination. Specifically, he deemed more time necessary to determine whether the groundwater damage took place during periods which the policy covered.

Finally, he ruled that some of the insurers could be legally obligated to pay all sums that Duke Energy had to pay, not simply a pro rata (proportional) share of those costs.

Where Do Things Stand Now for Duke Energy and Coal Ash?

These decisions from Chief Judge Bledsoe are only pre-trial rulings and do not involve any factual determinations. Still, after fending off allegations that it knew of coal-ash risks but did nothing for several years, Duke Energy undoubtedly sees these wins as a much-needed change of direction for its legal disputes. Until the lawsuit moves into the next step of litigation, its full implications for Duke Energy and coal ash in North Carolina remain unclear.

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