Update: This version of the story contains reactions from Duke Energy officials.

Groundwater contamination at Duke Energy’s Sutton Plant will be cleaned up on an accelerated schedule as the result of a settlement Tuesday between the N.C. Department of Environmental Quality and Duke Energy.

The settlement includes $7 million in fines and penalties for past groundwater contamination at all of Duke's 14 coal fired facilities, and an estimated $10-$15 million in accelerated remediation costs, according to a news release from Department of Environmental Quality (formerly known as the Department of Environment and Natural Resources). It also holds Duke Energy accountable for groundwater contamination at all of its 14 coal ash facilities and requires accelerated cleanup of groundwater contamination at four sites, including the Sutton Plant in New Hanover County. Duke Energy could pay as much as $20 million as a result of the settlement, according to state regulators estimate.

“This agreement holds Duke Energy accountable for past groundwater contamination and mandates that Duke Energy expeditiously clean up polluted groundwater near its coal ash sites,” Department of Environmental Quality (DEQ) secretary Donald R. van der Vaart said in the release. “Our chief goal is to protect the environment and public health while requiring corrective action to restore groundwater quality. This settlement resolves the issue of fines for past violations and allows DEQ to commit all of its resources to overseeing Duke Energy’s clean-up process.”

The agreement, including the $20 million payment, replaces the $25.1 million fine state regulators levied in March against Duke Energy for groundwater contamination from coal ash at the Sutton facility, according to the release.

Duke Energy spokeswoman Paige Sheehan said it would be accurate to state that the original $25.1 million fine had been reduced to $7 million, since the remaining money mentioned in the settlement is expenditures that Duke was already committed to paying for remediations at the four sites. 

She said that the $7 million penalty covers "past, present and future concerns at all plants." As for the rest of the estimated payout announced by the state, "These are costs we would be expending anyway," she said.

Work has begun at Sutton, Sheehan said, noting that construction to extend the municipal water line to the Flemington community, near the plant, is underway. An early estimate of the remediation costs at Sutton -- whose coal ash ponds have the greatest potential for environmental impact -- is $3 million to $5 million, she added.

Assessments of the other three plant sites -- in Asheville, Goldsboro and Belews Creek -- have just been completed, so good estimates for the cost of cleanup are not yet available, Sheehan said, but she added that Duke Energy expects the costs to be "far more modest" than what the state has estimated.

After state regulators levied the $25.1 million fine against Duke Energy in March, the energy company appealed the fine to the Office of Administrative Hearings, "citing a number of instances where evidence demonstrates that the regulator acted contrary to state law, the agency’s own rules, policies and procedures and the longstanding interpretation of the regulations," Duke Energy said in a statement Tuesday.

Duke Energy launched a court challenge to the department’s ability to issue fines for groundwater contamination, using a 2011 policy memo as the basis for its challenge.

“The 2011 policy memo, written by the Perdue administration, did provide for penalties to be assessed under certain circumstances. However, communication between the Perdue administration and Duke Energy discovered during the legal process makes it clear that the intent of the memo was to favor corrective action in lieu of fines,” the release from the Department of Environmental Quality stated.
 
State regulators said the McCrory administration will immediately rescind that 2011 policy to clarify that state government has all the tools required to enforce the law and penalize future polluters in addition to requiring clean up of contaminated sites.