The state Department of Environment and Natural Resources said in a statement that it would scuttle the proposed consent order to settle violations for groundwater contamination leeching from coal ash dumps near Charlotte and Asheville.
The decision comes after a Feb. 2 spill at a Duke coal ash dump in Eden coated 70 miles of the Dan River in toxic sludge.
North Carolina officials said they will now partner with the U.S. Environmental Protection Agency to pursue joint enforcement actions against Duke for Clean Water Act violations at Dan River and other sites.
Duke operates 14 facilities in North Carolina with leaky unlined coal ash dumps, all of which have been cited for polluting groundwater. Duke was also cited this week for illegally pumping 61 million gallons of contaminated water from two coal ash dumps into a canal leading to the Cape Fear River.
State officials touted the EPA's extensive experience from the ongoing cleanup in Kingston, Tenn., site of the largest coal ash spill in the nation's history in 2008.
"The state's goal is to clean up both the Dan River and to protect public health and the environment at the other Duke Energy facilities around the state, and we are pleased to announce that the EPA will join us as we address these important issues," said Gov. Pat McCrory, a Republican.
Before becoming governor, McCrory worked at Duke for more than 28 years. Records show the company and its employees have provided more the $1.1 million to McCrory's campaign and GOP groups that supported his candidacy.
The scuttled settlement was initially tabled Feb. 11, the day after The Associated Press published a story highlighting what environmentalists criticized as a "sweetheart deal" to the governor's former employer.
The state only took legal action against Duke after a coalition of environmental groups represented by the Southern Environmental Law Center filed notice in January 2013 that they planned to sue Duke over its coal ash pollution under the Clean Water Act. The McCrory administration then used its authority under the act to file state violations against Duke and then quickly negotiated the settlement — a move environmentalists contend was intended to shield the nation's largest electricity company from far harsher penalties it might have faced in federal court.
Federal prosecutors are now conducting a criminal investigation of the Dan River spill and probing the relationship between Duke and the state officials charged with enforcing clean water laws. There have been at least 23 subpoenas issued since the spill and a grand jury met this week at the federal courthouse in Raleigh
McCrory and officials at the state environmental agency, which is known by the acronym DENR, have ardently defended the proposed deal with the company, even as they abandoned it.
Frank Holleman, a senior lawyer at the Southern Environmental Law Center, welcomed what he termed as "a total reversal" of the state's position.
"We hope that DENR will now work with us to enforce the law and force Duke Energy to clean up its illegal coal ash storage and move the ash to safe dry storage in lined landfills away from our rivers," Holleman said. "It is a shame that it took the Dan River spill and a federal criminal grand jury to get DENR to change course and that a year was lost while DENR tried to defend this now-defunct settlement."
Weiss reported from Charlotte.
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