The Spill at Dan River

The following is a script from "The Spill at Dan River" which aired on Dec. 7, 2014. Lesley Stahl is the correspondent. Shachar Bar-On, producer.

Every year coal-burning power plants generate not only electricity, but a staggering amount of leftover coal ash that contains heavy metals unhealthy to humans. Yet due in part to intense industry lobbying, there are no federal regulations on its disposal. It's left to the states to oversee some of the most powerful utility companies in the country.

So coal ash is often just dumped into giant pits that are dug by rivers and lakes, where toxins can leach into nearby water and soil. There are over 1,000 ash pits or ponds dotting the nation, many of them old, poorly monitored, all but forgotten. But every few years we are reminded that the status quo can lead to disaster --like the coal ash spill this past February into North Carolina's Dan River at a power plant owned by Duke Energy, the biggest utility company in the country.

The spill at Dan River happened when a drainage pipe that ran underneath an ash basin and dam, collapsed, sucking out six decades of waste and spewing gunk directly into the river.

Lynn Good: It was an accident. It didn't work the way it should have worked. It didn't meet our standards or our expectations.

Duke Energy CEO Lynn Good, then only seven months on the job, had a crisis on her hands.

Lesley Stahl: How many tons of ash, do you know, went into the river?

Lynn Good: Yes, we released between 30,000 and 39,000 tons of ash into the river.

Lesley Stahl: Wow.

"It was an accident. It didn't work the way it should have worked. It didn't meet our standards or our expectations."

Lynn Good: We moved immediately to repair the pipe and also begin cleaning the river. And we've used this as an opportunity at Duke to raise our standards, even higher, of all of our basins to insure and confirm that they were operating safely.

Once the water spilled out of the basin - this is what was exposed: canyons and ridges of industrial waste the size of 20 football fields, buried right by the river where people fish and swim and get their drinking water. But the accident at Dan River wasn't the first time a coal ash pond collapsed. It happened to another company six years ago in Kingston, Tennessee. That spill was more than 100 times larger, smothering homes in toxic muck and choking up the river.

Lesley Stahl: After Kingston in 2008, did Duke raise its vigilance? Did you heighten--

Lynn Good: Yes. There were inspections that went on throughout the industry, certainly at Duke where all the basins were reviewed.

Actually, inspections had been going on for years, including this one in 1986 that Duke itself paid for. It recommended "quantitative monitoring" of the very pipe that collapsed, saying it was "expected to have less longevity."

Lesley Stahl: So that first report urging Duke to watch that pipe was 30 years ago. But there were others: 1996, 2001, 2006, advising you to keep watching that pipe, over and over. 2009, the EPA warned about the pipe.

Lynn Good: Most of those--

Lesley Stahl: How could you neglect those?

Lynn Good: The results of those inspections indicated that we should monitor. And we were monitoring. And what we were looking for is that the pipe would leak before it failed. But it didn't fail in that way. It failed without leaking.

Pat McCrory: I don't think Duke even knew what was underneath some of their dams and knew the structural issues.

The spill infuriated Pat McCrory, the pro-business, Republican governor of North Carolina. He knows Duke well: having worked there for 29 years.

Lesley Stahl: How would you describe or rate Duke's record on dealing with coal ash disposal?

Pat McCrory: Well, actually there has been no record regarding coal ash disposal.

Lesley Stahl: They haven't done anything?

Pat McCrory: Very little, very little. I think the record's been quite poor. Because frankly, it's been out of sight, out of mind.

Lynn Good: Lesley, we have been generating electricity in this country from coal for decades.

Lesley Stahl: And that means coal ash.

Lynn Good: And that ash that has been produced has been stored in accordance with industry standards and practices for decades. We're at a period when the electric system and certainly Duke's system is modernizing. We're adding natural gas, we're adding renewables and we're closing some coal plants.

Fact is, Duke closed the Dan River plant in 2012 - and that perplexed the governor.

Pat McCrory: When I heard about the Dan River plant having a coal ash spill, my first reaction was, "Wait a minute. That plant's been closed for years. Why are we having a spill at a plant that's not even opened?"

That's because when they closed the plant, Duke just left the ash pond where it was. In an unprecedented program, Duke has closed half their coal plants in North Carolina in the last three years, blowing up one... after another... after another, as the company switches to natural gas. In all cases, they just left the coal ash ponds and basins behind.

Frank Holleman: This is no way to store industrial waste in large quantities in such a primitive way.

Frank Holleman, an attorney at the Southern Environmental Law Center, says it makes no sense to store coal ash - that usually contains toxins like arsenic, mercury, thallium and cadmium - in basins right next to waterways.

Frank Holleman: It doesn't take a rocket scientist to figure out if you dig an earthen, unlined hole in the earth next to a river, and you put in it a substance that has toxic substances, that is going to leak into the groundwater. It doesn't take a genius to figure that out.

Lesley Stahl: Your organization - you have been suing Duke Energy.

Frank Holleman: That's correct. What we have hoped is that we could convince Duke to get the coal ash out of these unlined pits, move it to safe, lined, dry storage away from the waterway.

"It doesn't take a rocket scientist to figure out if you dig an earthen, unlined hole in the earth next to a river, and you put in it a substance that has toxic substances, that is going to leak into the groundwater."

That's what Duke is already doing with most of its newly-generated ash, trucking it to dry, lined landfills away from waterways, or sending it off for reuse as building material. But the company's big problem is what to do with the 100 million tons of old coal ash it's accumulated in their 32 ponds in North Carolina -- some, like this one, up against people's backyards where children play.

Lynn Good: Lesley, we're committing to closing all of the sites.

Lesley Stahl: When you say "close," what do you mean by "close?"

Lynn Good: So there are various methods that can be used to close. Certainly excavating them to a lined landfill is one of the methods.

That method would cost up to $8 billion. But Duke is considering two other options: lining the bottom and top of the ponds but leaving the ash there which would cost somewhat less, or least pricy at 2 billion: "cap in place" which means just covering the top of the pond.

Lesley Stahl: With no lining on the bottom?

Lynn Good: And typically "cap in place" is not lined on the bottom. But we would not move forward with a cap in place unless we had a certainty that the water is safe. And so that's where the science comes in. That's where the study needs to be completed, so that we develop smart solutions.

Lesley Stahl: It's called cap in place?

Frank Holleman: Cap in place.

Lesley Stahl: Right. Now, would that satisfy your organization?

Frank Holleman: No, it would not. An unlined pit next to a river, a lake or a drinking water reservoir is, it stays wet. Only if you have a lining in it do you separate this industrial waste from the water table and the groundwater. So cap in place is only pollute in place.

Lesley Stahl: Obviously, I'm not a scientist, but shouldn't you just say, "OK, we're gonna line them all?"

Lynn Good: I'd love to tell you there is a simple solution to this. I'd love to tell you that ash--

Lesley Stahl: Well, why isn't that a simple solution?

Lynn Good:--that ash has been stored for decades can be solved quickly. We like quick answers. We like to pull our cell phone up and do research and get answers right away. But in order to do this right, we do need to do the study. We need to understand: What is the groundwater? Where is the groundwater? We need to understand the stability of the basin. We need to understand the soil type. I cannot immediately move 100 million tons of ash. It's not a response that makes any sense, doesn't make common sense. As much as I'd love to tell you there's a simple solution, it's one that requires study, it's one that requires time to complete.

But environmentalists say studying is code for stalling, because this problem isn't new. Duke has been conducting tests around their ash ponds for decades. And five years ago, when state regulators demanded to see the data, they found something alarming: the coal ash ponds in all of Duke's 14 plants were either leaking toxic chemicals into rivers and streams or contaminating the groundwater.

Lynn Good: Some of the readings that we have found are for elements like iron and manganese, which are naturally occurring.

Lesley Stahl: But nine of your plants have been found to have groundwater violations for contaminants including lead, sulfate, boron, chromium, thallium, selenium, and arsenic.

Lynn Good: So we have had exceedances. And when I said iron and manganese, Lesley, I was talking about the majority of them. We have had instances of other readings as well.

Lesley Stahl: Well, I'm citing your own monitoring statistics, which do say that there have been hazardous chemicals that have entered the groundwater or surface water, at all 14 plants, by your own admission.

Lynn Good: And what we have recommended, and will be moving forward with, and the state has recommended, is further assessments so that appropriate steps can be taken. (Lesley laughs) So, Lesley-- I think--

Lesley Stahl: Further assessments!

Lynn Good: I know, I think it's important to understand this. And I--

Lesley Stahl: But even you have to throw your head back and say, "Further assessments?" Yeah, but-- but these results go back years. And to say we need to study more, you know, is a very frustrating thing to have to hear. And I'm not even a citizen of North Carolina.

Lynn Good: We have very openly and transparently disclosed these results to work with the regulators to determine whether it really represents a risk.

Lesley Stahl: Does Duke's coal ash today pose any health risk at all?

Lynn Good: I believe our system is operating safely.

But local environmentalists showed us leaks from several of Duke's ash ponds - like this one at Cape Fear.

Kemp: This stream is like this, leaking coal ash into the river 24 hours a day, 365 days a year.

After we asked state officials about this particular leak, lab tests were done showing "notably elevated concentrations of sulphate, aluminum, iron, manganese, boron and strontium." The state says the leak doesn't impact the overall health of the river, but is illegal; a violation of the Clean Water Act. Yet environmentalists like Frank Holleman say that over the years the state never forced Duke to clean up its ash ponds, under both Democratic and Republican administrations.

Lesley Stahl: How powerful is Duke Energy in the state of North Carolina?

Frank Holleman: It's the most powerful entity in North Carolina. It spends millions of dollars on political contributions and it has traditionally had a very close relationship with the state regulators.

Just this year Gov. McCrory cut the budget and staff of the specific department that inspects the ash ponds. The state legislature did pass a law in August, requiring Duke to clean up its plants, but only after the company had already volunteered to do that. Earlier, when Holleman tried to sue Duke, he was thwarted by the state which stepped in and negotiated a settlement that allowed Duke -- you guessed it -- more time to study, and imposed only a paltry fine.

Lesley Stahl: Tell everybody how much the fine was.

Pat McCrory: I don't have that list, but again--

Lesley Stahl: It was $99,111--

Pat McCrory: That's correct.

Lesley Stahl: which does not sound like a big fine.

Pat McCrory: It wasn't a big fine.

All this has made federal prosecutors suspicious. They empaneled a grand jury to investigate whether Duke or the regulators has done anything illegal to get the state to go easy on the company.

Lesley Stahl: Virtually every newspaper in the State of North Carolina came out with editorials claiming that Duke was lax, and lawless, when it came to the environment. And acted like a bully with state regulators.

Lynn Good: I recognize that. I disagree with that characterization. There's been-- it's been a challenging time, a difficult time. Lots of voices weighing in. Certainly lots of scrutiny, and criticism.

Lesley Stahl: But you must take this to heart, if there's so much of it. You know?

Lynn Good: Of course we do. We take this very seriously. And we're using this as an opportunity to raise our standards even higher. To ensure that our operations are safe. It's our highest priority at Duke.

Later this month, the Environmental Protection Agency is set to announce whether coal ash will be regulated by the federal government as hazardous waste, meaning potentially much tougher disposal rules and oversight.