Duke Energy Pays $102.2 Million in Fines

On Feb. 2, 2014, employees of Duke Energy noticed a leak from a 48 inch pipe, that was releasing coal ash into the Dan River in North Carolina. It took six days to cap the pipe which had drained 39,000 tons of coal ash into the Dan River. This ash mixed with the water to create a toxic mixture which traveled 70 miles up the river. A total of 27 million gallons of contaminated water were released, which is enough to fill 32 Olympic size swimming pools. This toxic sludge traveled upstream through the Dan River and into the Kerr Reservoir in Virginia. The bodies of water affected are inhabited by two endangered species and provide water for local agriculture and farm animals. However, it did not affect the drinking water of the region. According to the Environmental Protection Agency (EPA), the ash, a product of coal used to generate electricity, contained toxic arsenic, selenium, chromium and mercury. Duke Energy’s mistake endangered countless people and animals.

In February, Duke Energy announced on their website that they set aside $102.2 million to settle the coal ash spill case. The penalty decided was $68.2 million dedicated to fines and restitution and $34 million for to community service and mitigation. This may seem like a major loss for Duke Energy, but they have over $114 billion in total assets. They have announced that the fines are being absorbed entirely by the shareholders.

The EPA investigated Duke Energy after the spill and found that they violated the Clear Water Act and many other regulations. The company did not have a permit for the pollutants they were discharging through storm water. They were also violating regulations in water quality laws and conditions in association with the management of the coal ash pond. There were nine violations at the site, and Duke Energy has 13 other sites that are currently being investigated for groundwater contamination from coal ash dumps. These vast violations display their complete disregard of EPA regulations. This disrespect is not specific to Duke Energy. In 2010, a BP oil rig exploded and released 4.9 million barrels of oil due to regulation negligence. The companies’ carelessness that led to these situations demonstrates that they do not consider the penalties to be a threat. Due to this attitude, the EPA must establish methods to be taken more seriously.

Duke Energy’s coal ash spill was the third largest coal ash incident in United States history. This major occurrence only accumulated $102.2 million in fines, which is almost negligible when considering the company’s total assets. The EPA already bases its fines off of the size of the violation, but limits on fines hinder the impact the fines have on the company. The contravening company must be affected by the penalty in order to provide incentive to follow regulation. Higher fines would also encourage other companies who have not yet been subject to EPA investigation to follow protocol.

The fine money is dedicated to restoring North Carolina and Virginia through repairing the environment and community service. This is important because of the destruction the coal ash caused and the immense impact it had on its surroundings. However, the fines should be higher to pressure companies into following regulations, and the extra money should go to the EPA. This money should be used for inspections of facilities before major events like this happen.

There is hesitation in promoting higher fines because accidental errors and single incidences should not bankrupt a company; however, the lack of strict fines is putting people and the environment at risk. High fines also may be considered to promote big business because small companies cannot pay the larger fines that have been proposed. This can be resolved by having the size of the fine correlate to the size of the infringement. It is unlikely that a small company would have 39,000 tons of coal ash to leak into a river. The higher fines would not bankrupt companies, but they would pose a financial threat enough to create a situation where violating regulation is not worth the risk of the penalty.

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