MONCURE, N.C. -- Regulators in North Carolina cited Duke Energy on Friday for a crack in an earthen dam holding back coal ash slurry at a retired coal-burning plant, where the utility was cited March 20 for illegally dumping coal ash waste into the Cape Fear River.
The "notice of deficiency" is the latest allegation against Duke Energy, which was responsible for a massive coal ash spill Feb. 2 that left 70 miles of the Dan River coated with coal ash sludge in North Carolina and Virginia -- the third-largest such spill in U.S. history.
Regulators with the state Department of Environment and Natural Resources (DENR) said Duke Energy's repairs at the dam were sufficient to prevent a failure and that no water leaked from the impoundment because of the crack, about 4 inches wide and 40 feet long.
The utility, which reported the dam crack, said the fissure was repaired on March 25.
However, regulators warned that the utility would be responsible for any deaths, property damage or environmental harm if the dam fails and releases a torrent of slurry. The dam was built in 1985 and DENR said in a statement Friday that even with the crack repaired the dam "is considered a high hazard dam because of the potential environmental damage if it were to fail."
The agency told Duke Energy to submit engineering reports and an emergency action plan for public notification in the event of a dam collapse. The utility must respond by April 7 to avoid fines. It already faces fines of $25,000 a day for pumping coal ash waste into the Cape Fear from two ponds at the plant in Moncure, 30 miles southwest of Raleigh.
A Duke Energy spokesman, David Scanzoni, said the utility will provide a formal response to the state agency.
Federal officials have launched a criminal investigation into the relationship between Duke Energy and DENR. And last week, a federal grand jury met to investigate whether money or other items of value exchanged hands in relation to coal ash basins at 14 Duke Energy plants in North Carolina.
Environmental groups have accused DENR, under North Carolina's pro-industry Republican administration, of protecting Duke Energy and failing to enforce environmental regulations. They say coal ash has been seeping illegally into waterways from the utility's plants for years, with little enforcement by regulators.
DENR denies that it has been soft on Duke Energy, and the agency has moved aggressively against the utility in recent weeks.
One environmental group, the Waterkeeper Alliance, published aerial photos on March 10 that it said showed Duke Energy illegally pumping coal ash wastewater from two retention ponds at the Cape Fear plant.
State inspectors visited the plant the next day, and on March 20 cited Duke Energy for illegally pumping 61 million gallons of contaminated water into a canal that feeds tributaries of the Cape Fear River. The river supplies drinking water for several cities and towns in southeastern North Carolina.
Inspectors said Duke Energy had carried out illegal pumping for up to three months from the two ponds, including the basin with the earthen dam cited Friday. The agency said the utility misled inspectors about the nature and duration of the pumping.
Duke said the pumping was allowed under permits issued by DENR.
Friday's action was not the first time Duke Energy was cited for dam deficiencies at their plants. On March 6, DENR cited the utility for problems at two dams at the Cliffside Steam Station in Rutherford County, west of Charlotte.
The dam inspections are part of a review of all Duke Energy retired and operating coal-fired plants in the state in the wake of the Dan River spill. Coal ash is produced when coal is burned to create electricity.
DENR has issued notices of violations at coal ash ponds at six Duke Energy plants. On Thursday, the utility released a letter to state officials detailing actions that it said show the plants are in compliance with state laws. Duke asked DENR to withdraw the violation notices.
"Duke Energy respectfully disagrees with these allegations and the company believes the [notices of violations] were issued in error," the March 25 letter said.
On Feb. 28, DENR issued notices of violations against Duke Energy for the Feb. 2 spill, which dumped at least 39,000 tons of coal ash and 27 million gallons of contaminated water into the Dan River.
On Thursday, 19 institutional investors asked Duke Energy's board of directors to investigate the Feb. 2 spill to determine, among other things, whether senior management acted improperly.
"Duke's recent environmental problems suggest serious lapses in oversight as well as failures in risk management by the board of directors and are a substantial concern for investors," said Bill Dempsey, senior vice president of the Nathan Cummings Foundation, a social justice agency based in New York.
The foundation says it is a long-term investor in Duke Energy, with 1,320 shares.
Among the investors who signed the letter to the board is the California State Teachers' Retirement System, or CalPERS, which holds 1.8 million Duke Energy shares, according to the system's 2013 equity holdings report.
Duke Energy said Thursday it has commissioned an independent engineering assessment of all the utility's coal ash impoundments in North Carolina, to be completed by May 31.