STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE SUPERIOR COURT DIVISION MECKLENBURG COUNTY 13 CVS 9352 STATE OF NORTH CAROLINA ex. rel. NORTH CAROLINA DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES, DIVISION OF WATER QUALITY, Plaintiff, RESPONSE IN OPPOSITION TO MOTION CATAWBA RIVERKEEPER FOR PROTECTIVE ORDER FOUNDATION, IN C., Plaintiff-Intervenor, V. DUKE ENERGY CAROLINAS, LLC, Defendant. The Catawba Riverkeeper Foundation (the ?Foundation?) submits this memorandum in opposition to the motion of Defendant to block discovery of information concerning its coal ash storage and illegal coal ash pollution at its Riverbend facility on Mountain Island Lake, the drinking water reservoir for over 800,000 people in the Charlotte region] Discovery of this information is essential to this civil enforcement proceeding and to protecting the drinking water reservoir from continuing pollution and the threat of another Dan River disaster. In no way will discovery hinder the Grand Jury investigation. Defendant?s position is based on the untenable proposition that because Defendant?s coal ash storage and its illegal coal ash pollution is so serious that it has become the topic of a I Defendant?s Motion apparently also seeks a protective order shielding it from discovery in all of the enforcement proceedings before this Court. No discovery has been served in the two global enforcement actions, but the same reasons set forth in this memorandum also justify denying Defendant?s Motion in all of the other actions as well. criminal investigation, the civil enforcement action to clean up the pollution should be delayed; that Defendant should be allowed to continue polluting in the meantime; and that the Court, the Foundation, and these State proceedings should be denied information withheld by Defendant concerning its coal ash storage and pollution of Mountain Island Lake. In fact, because Defendant?s coal ash storage poses such a severe threat to Mountain Island Lake and because Defendant?s pollution is so serious, it is all the more important that the Court and the Foundation obtain the needed information withheld by Defendant and obtain it expeditiously. Indeed, the requested discovery is nothing more than routine discovery in any civil proceeding. Defendant?s position would stand the law on its head. Defendant is attempting to use the pending Grand Jury investigation to shield itself from effective civil enforcement and a cleanup of its coal ash pollution on Mountain Island Lake. For the following reasons, Defendant?s motion for protective order should be denied. 1. The Proposed Consent Order Has Been Abandoned. Defendant?s motion is premised on the assumption that the only issue before the Court is whether the settlement proposed by DENR and Defendant in July 2013 and presented by them to the Court in October 2013 is ?reasonable and within the public interest.? Defendant?s Motion at 3. As the Foundation has set out previously, even to review that proposed settlement, it would be essential for the Court and the Foundation to have access to Defendant?s documents concerning its coal ash storage and pollution of Mountain Island Lake. However, events have surpassed Defendant?s motion. As of March 21, DENR has withdrawn the proposed settlement. Now, the proceedings before the Court are straightforward litigation, a civil enforcement action against Defendant?s illegal coal ash pollution and dangerous coal ash storage brought both by DENR and the Foundation, as intervenor. Normal discovery rules now apply, and the documents sought by the Foundation address the central issues in the enforcement proceeding and are well within the scope of discovery under the Rules of Civil Procedure. For the same reason, Defendant?s citation to the Magistrate udge?s recommendation in a related federal proceeding is of no consequence. Defendant?s Motion at pp. 6-8. The Magistrate Judge relied upon the proposed consent order, which is now a nullity. Further, the Foundation believes the Magistrate Judge?s recommendation was wrong for a number of reasons. The United States District Judge, who actually decides the motion, has refused to stay the pending federal action and has instead put in place a schedule for supplemental brie?ng on the motion, which will be heard by the District Judge therea?er. In other words, the Magistrate Judge?s recommendation has been superseded by events and is under de novo review by the U.S. District Judge. The need for this discovery is all the more severe because, to date, DENR has yet to propound any discovery to Defendant. For this case to move forward, Defendant must produce the documents and information sought by the Foundation concerning its coal ash stored on the banks of Mountain Island Lake and its consequent pollution of the drinking water reservoir. 2. Defendant Seeks to Impede this Civil Enforcement Proceeding. Defendant disingenuously states that its motion ?does not seek to stay this litigation.? Defendant?s Motion at 3. In fact, Defendant does seek to delay and in effect stay the litigation, because its motion would deny the Court and the Foundation information essential to the prosecution of the case. Defendant?s documents concerning its coal ash storage and pollution at Mountain Island Lake are at the heart of the issues to be decided by the Court. Defendant would have the Court and the Foundation denied access to these documents until the Grand Jury proceedings are concluded. This motion is a transparent attempt to shield Defendant from disclosing critical information concerning its coal ash storage and pollution at Mountain Island Lake and thereby to impede the prompt and full prosecution of this civil enforcement action. 3. The Foundation?s Discovery Does Not Seek Production of ?Grand Jury Materials.? The other basis for Defendant?s motion is it contention that the Foundation's discovery seeks ?Grand Jury materials? and that the discovery is ?inquiry into Grand Jury proceedings.? Defendant?s Motion at 3. That is not true. The oundation?s discovery requests do not contain a single inquiry into the proceedings of the Grand Jury. Indeed, they were written months before any Grand Jury proceedings had begun. The discovery requests seek only documents and information relating to Defendant?s coal ash storage and coal ash pollution at Mountain Island Lake. The fact that Defendant may also have been required to produce those documents which exist independent of any Grand Jury investigation and, almost entirely, predate the Grand Jury investigation to the Grand Jury does not convert them somehow into ?secret? documents that catmot be produced in a civil enforcement proceeding. In fact, the only reason that we know for certain that the Grand Jury has sought similar categories of documents from Defendant is because Defendant itself placed its Grand Jury subpoenas on the public record in ?ling this motion. The Foundation?s discovery requests do not inquire into the activities of the Grand Jury, nor do they seek Grand Jury materials or even any disclosure of which requested materials were also submitted to the Grand Jury. The discovery requests seek only documents in Defendant?s possession that relate to the issues in this case and that are routinely discoverable in a civil proceeding. The courts long ago discarded Defendant?s attempt to avoid normal civil discovery. In a case cited by Defendant, the defendant made exactly the same argument that production of documents to a Grand Jury shielded them from production in a civil enforcement proceeding. SEC v. Dresser Industries, 628 F.2d 1368 (D.C. Cir. 1980) (en banc). The Court rejected Defendant?s position: Dresser argues that enforcement of the SEC [civil] subpoena would undermine the secrecy protections of the grand jury because the SEC subpoena covers many or all of the Dresser documents that have already been subpoenaed by the grand jury. In this argument Dresser misconceives the nature of the secrecy protections of the grand jury. . . . [Rule 6 of the Federal Rules of Criminal Procedure] prohibits disclosure of ?matters occurring before the grand This serves to protect the identities of witnesses or jurors, the substance of testimony, the strategy or direction of the investigation, the deliberations or questions of jurors, and the like. It does not require, however, that a veil of secrecy be drawn over all matters occurring in the world that happen to be investigated by a grand jury. It is well established that when testimony or data is sought for its own sake for its intrinsic value in the furtherance of a lawful investigation rather than to learn what took place before the grand jury, it is not a valid defense to disclosure that the same information was revealed to a grand jury or that the same documents had been, or were presently being, examined by a grand jury. Id. at 1382-83 (emphasis added, citations omitted). As with the documents sought by the Foundation in this case: Dresser?s documents at issue here were created for an independent corporate purpose, not directly related to the prospect of a grand jury investigation. The SEC has subpoenaed them directly from Dresser, without mention of the grand jury. They do not reveal what has occurred before the grand jury; they reveal only what has occurred in Dresser?s foreign operations. Id. at 1383. And as here: ?In this case Dresser is obligated under the securities laws to provide documents to the SEC in obedience to a lawful subpoena. The existence of a grand jury proceeding neither adds to nor ?detracts from Dresser?s rights before the Id. In this case, Defendant fears that the public may learn information about its coal ash storage and pollution at Mountain Island Lake if it is required to produce documents in this proceeding. Defendant?s Motion at 13 (objecting to ?transparency? as to Defendant?s pollution of Mountain Island Lake). The Court in Dresser quickly rejected that concern: In essence, Dresser has launched this attack on the parallel SEC [civil] and Justice proceedings in order to obtain protection against the bare SEC [civil] proceeding, which it fears will result in public disclosure of sensitive corporate documents. The prejudice Dresser claims it will suffer from the parallel nature of the proceedings is speculative and undefined if indeed Dresser would suffer any prejudice ?om it at all. Any entitlement to con?dential treatment of its documents must arise under the laws pertaining to the SEC [civil proceeding]; the fortuity of a parallel grand jury investigation cannot expand Dresser ?s rights in this SEC enforcement action. Id. at 1384 (emphasis added). Here, Defendant is entitled to no secrecy under the rules of civil discovery. Instead, it is required to produce the documents the Foundation seeks. Consequently, it is not surprising that the courts in the decisions cited by Defendant have denied motions by parties facing criminal prosecution who seek to block civil discovery in civil enforcement proceedings. SEC 12. Dresser Industries (allowing discovery in civil proceeding of same materials sought by grand jury); Horn v. District ofColumbia, 210 F.R.D. 13, 14 (D.D.C. 2002) (rejecting 90-day stay of civil discovery sought due to pending criminal investigation, stating: ?the mere relationship between criminal and civil proceedings, and the resulting prospect that discovery in the civil case could prejudice the criminal proceedings, does not establish the requisite good cause for a stay?). In fact, cases cited by Defendant that delayed discovery are cases where a court prevented a party involved in a criminal investigation, like Defendant, from using discovery in a parallel civil proceeding to interfere with the pending criminal investigation. Defendant?s Motion at p. 15, ?ll 38. Typical is Larouche Campaign v. FBI, 106 F.R.D. 500 (D. Mass. 1985), where the presidential campaign of Lyndon Larouche ?led a civil proceeding in an attempt to obtain documents it could not obtain through discovery in a criminal investigation being conducted into the campaign?s alleged bank fraud. . This case presents exactly the opposite situation. Defendant, the party involved in the investigation, is seeking to stop discovery essential to a civil enforcement action that predates the grand jury proceedings. Further, the criminal prosecutors - in this case, the United States Department of Justice are not asking for any stay of discovery. Defendant is trying to impede legitimate discovery sought for civil enforcement against illegal pollution by using precedents which stop parties in a criminal investigation from using civil discovery to impede criminal enforcement proceedings. Again, Defendant would stand the law on its head. 4. There is No Fifth Amendment Concern. The discovery sought by the Foundation is the production of documents and information by Defendant, a corporate entity. There is no individual defendant in this case, only a single corporate defendant. As Defendant?s criminal counsel stated at the February 21, 2013 hearing, Defendant, as a corporation, has no Fifth Amendment rights. Further, the production of documents by Defendant would not raise Fifth Amendment concerns, in any event. The United States Supreme Court has de?nitively rejected Defendant?s position. In United States v. Kordel, 397 U.S. 1 (1970), the corporate defendant faced both civil and criminal enforcement proceedings, was denied a stay of civil discovery, and its officers were convicted. The convicted corporate officers appealed, objecting to the civil discovery of the corporation while a criminal investigation was underway. The Supreme Court ruled that the civil discovery did not violate either the self-incrimination or the due process provisions of the Fifth Amendment. The corporation, to which the interrogatories were addressed, had no self- incrimination privilege and was required to appoint an agent who could answer the interrogatories without fear of self?incrimination. Id at 8. To allow the corporation to avoid responding to the interrogatories by invoking the self?incrimination privilege of the individual officers would ?secure for the corporation the benefits of a privilege it does not have.? Id. at 8 (quoting United States v. 3963 Bottles of ?Enerjol Double Strength?, 265 F.2d 332, 335-36 (7th Cir.), cert. denied, 360 U.S. 931 (1959)). As well, in a case cited by Defendant, Walsh Securities, Inc. v. Crista Property Management, Ltd, 7 F. Supp. 523, 527 n.2 (D.N.J. 1998), the Court allowed document discovery to go forward, noting that document discovery did not raise signi?cant Fifth I Amendment concerns, and that the Government indicated that document disclosures would not interfere with an investigation. 4. The Criminal Investigation Is In Its Preliminary Stage. Defendant concedes, as it must, that courts give greater consideration to requests for stays of civil discovery only when indictments have been issued. Defendant?s Motion at 17. Of course, as of now, no indictments have been issued. Defendant cites one case where an opposed stay was granted at the request of the defendants when parties had not been officially indicted, but had been formally designated as targets of a criminal investigation and the government had informed the court that indictments of these targeted parties were forthcoming shortly. Ashworth v. Albers Medical, Inc., 229 F.R.D. 527 (S.D.W. Va. Defendant?s Motion at 17-18. Defendant does not contend that it or its officers have been notified as of yet that they are targets of the Grand Jury investigation. These cases also are beside the point. Apart from the facts that this is a civil enforcement proceeding, that the only defendant is a corporation with no Fifth Amendment rights, and that the discovery in question seeks only documents and information, the preliminary stage of the criminal investigation also demonstrates that no stay is justi?ed. 5. The Public Interest Demands that Discovery Move Forward in this Enforcement Action. This civil enforcement has been underway more than a year, since March 26, 2013, when the Foundation gave DENR and Defendant notice of its intent to enforce the Clean Water Act to require a cleanup of Defendant?s illegal pollution of Mountain Island Lake. Since that time, there has been a remarkable series of efforts to delay the enforcement of anti-pollution laws against Defendant?s illegal pollution of Mountain Island Lake. First, DENR brought this suit, which blocked the Foundation from bringing these claims on its own. Then, Defendant opposed the oundation?s intervention, and DENR argued to narrow the Foundation?s participation (since DENR was barred by law from opposing the Foundation?s intervention). Then, DENR delayed in responding to the Foundation?s public records requests and even delayed its compliance with the Court?s order to respond to the public 2 In Integrated Genetics v. Bowen, 678 F. Supp. 2004 (E.D.N.Y. 1988), the government sought the stay to stop the parties that were before the criminal grand jury, who were also the civil plaintiffs in an action they brought against the government, from using the civil proceedings to seek discovery not allowed under the federal Rules of Criminal Procedure. In White v. Mapco Gas Products, 1 l6 F.R.D. 498 (E.D. Ark. 1987), the government sought a stay, and the plaintiff did not object to the stay. Neither case is similar to this one, where the polluter?defendant is seeking the stay of document production, and the stay is opposed. 9 records request. Meanwhile, Defendant has fought against responding at all to discovery requests which are now 7 months old. Most egregiously, DENR and Defendant entered into a no?cleanup settlement which was overwhelmingly opposed by the public. After asking this Court to approve the settlement for a period of ?ve months (from its formal presentation in October of 201 3 until February of 2014), DENR ?rst asked the Court to suspend consideration of the settlement and on March 21, 2014 almost a year after the Foundation sent its notice under the Clean Water Act DENR withdrew the proposed settlement entirely. Meanwhile, the Riverbend lagoons have continued to leak and seep and pollute the Mountain Island Lake drinking water reservoir. While DENR and Defendant effectively blocked the progress of this enforcement action and did nothing to clean up Defendant?s polluting coal ash storage at sites across North Carolina, all of which are all the subjects of the enforcement actions before this Court, the Dan River disaster occurred. Understandably, the public and elected officials across North Carolina have called for action to clean up Defendant?s coal ash lagoons, including speci?cally the lagoons at Mountain Island Lake. Now, facing a criminal grand jury investigation, Defendant asks that this enforcement action be further impeded by blocking production of documents and information that deal directly with Defendant?s pollution of Mountain Island Lake and its primitive storage of coal ash there. This is an obvious attempt to further delay this enforcement proceeding and deny critical information to the Foundation and the Court while the public and its water supply continue to be harmed by Defendant?s unlawful pollution and threated by Defendant?s primitive coal ash storage. 10 Courts have rejected this kind of ploy by civil defendants facing criminal investigations for activities that could also violate civil laws. is the very first case cited by Defendant in its motion, SEC. v. Dresser Industries, 628 F.2d 1368 (D.C. Cir. 1980) (en banc). The Court of Appeals emphasized the imperative that normally civil and criminal enforcement actions should proceed forward without one delaying the other: Effective enforcement of the securities laws requires that the SEC [civilly] and Justice [criminally] be able to investigate possible violations simultaneously. Dissemination of false or misleading information by companies to members of the investing public may distort the efficient workings of the securities markets and injure investors who rely on the accuracy and completeness of the company?s public disclosures. If the SEC suspects that a company has violated the securities laws, it must be able to respond quickly: it must be able to obtain relevant information concerning the alleged violation and to seek prompt [civil] judicial redress if necessary. . . . The SEC cannot always wait for Justice to complete the criminal proceedings if it is to obtain the necessary prompt civil remedy . . . . Id. at 1377. Indeed, Ful?llment of the civil enforcement responsibilities requires this conclusion. [T]he SEC must often act quickly, lest the false or incomplete statements of corporations mislead investors and infect the markets. Thus the Commission must be able to investigate possible securities infractions and undertake civil enforcement actions even after Justice has begun a criminal investigation. For the SEC to stay its hand might well defeat its purpose. Id. (emphasis added). Likewise, the Supreme Court in United States v. Kordel, 397 US 1, 11 (1970), concluded: The public interest in protecting consumers throughout the Nation from misbranded drugs requires prompt action by the agency charged with responsibility for administration of the federal food and drug laws. But a rational decision whether to proceed criminally against those responsible for the misbranding may have to await consideration of a fuller record than that before the agency at the time of the civil seizure of the offending products. It would stultify enforcement of federal law to require a governmental agency such as the FDA invariably to choose either to forgo recommendation of a criminal 11 prosecution once it seeks civil relief, or to defer civil proceedings pending the ultimate outcome of a criminal trial. Here, the public interest demands prompt civil enforcement to require a cleanup of Defendant?s unlawful pollution. The Dan River disaster shows the awful consequences of delay. Prior to that disaster, the Foundation warned that there were 14 disasters waiting to happen across North Carolina, and unfortunately one has occurred. Meanwhile, less visible but nonetheless unlawful and harmful spills occur every day, as Defendant leaks coal ash pollutants into groundwater and spills it into lakes, rivers, and drinking water reservoirs across the State. DENR has confirmed, under oath, in the four pending enforcement actions that Defendant is unlawfully polluting at every site where it stores coal ash across North Carolina. The public interest cannot tolerate ?arther delay by Defendant in addressing this critical threat to the citizens of the State and the State?s natural resources. In the cases cited by Defendant," the accused lawbreakers themselves brought civil actions which threatened to interfere with criminal proceedings brought against them or the civil plaintiffs were seeking personal relief, and the Courts sometimes concluded that various aspects of civil proceedings could be stayed without harming the public interest. But those cases are entirely different from Dresser Industries, Kordel, and this case where the public interest is continuing to be harmed every day until the law is enforced and an effective remedy is put in place. 6. The Existence of Other Activities Is No Reason to Delay This Civil Enforcement Proceeding, and 21 Protective Order Will Preiudice the Foundation. Defendant argues that because there are other legal proceedings underway such as proposal to modify NPDES permits this civil enforcement proceeding is not necessary and discovery should be limited. 12 It should be emphasized that this proceeding is the primary legal action to obtain a remedy for the unlawful pollution of Mountain Island Lake. The State of North Carolina, through DENR, filed this action in May of 2013 before any other effort was underway. By ?ling an official enforcement action, DENR thereby prevented the Foundation from initiating its own. All other activities whether permit modifications, notices of violations, EPA investigations, or the grand jury came later and are not proceedings to direct Defendant to take action to correct its violations of law and put in place remedies for its unlawful pollution. Further, despite the ?urry of activity by DENR and Defendant since they received federal criminal grand jury subpoenas, nothing has been done to stop or clean up Defendant?s unlawful pollution of Mountain Island Lake. Not one ounce of ash has been moved, and not one ounce of pollution has been cleaned up. The effort to enforce the law at Mountain Island Lake has been underway for over a year, yet Defendant has yet to take any effective action to clean up its unlawful pollution, and it has yet to provide any discovery whatsoever. Indeed, DENR has yet to even submit discovery to Defendant. The activities of DENR and Defendant in this proceeding stand in stark contrast to the results that the Foundation achieved when it was able to bring its own enforcement action against on the same river, the Catawba?Wateree River. As discovery began in earnest, the Foundation obtained a settlement in August of 2012, only eight months after ?ling suit, that requires to clean up its polluting coal ash on the banks of the River outside Columbia, S.C. As of January of 2014, one?quarter of the ash had been removed. Yet, on the same River .at Mountain Island Lake, DENR and Defendant have yet to take any cleanup action whatsoever. As the Court found in granting the Foundation intervention as of right, DENR and other government agencies cannot adequately represent its interests or enforce the civil laws for it. 13 The Foundation and its members are being harmed by Defendant?s ongoing pollution and risk of catastrophic failure at Mountain Island Lake, and delay of discovery will necessarily delay the relief they seek. The series of events in North Carolina has shown without doubt that citizens cannot depend upon DENR or other government agencies to protect them from Defendant?s unlawful pollution. Only if the Foundation can expeditiously pursue this enforcement proceeding and obtain the necessary documents from Defendant can the Foundation and the public have faith that the law will be enforced effectively and that Defendant will be required to stop and clean up its unlawful pollution of the region?s drinking water reservoir. 7. Defendant?s Other Arguments Are Unavailing. Defendant makes a litany of other arguments in trying to avoid production of documents, including its claim of a burden from the production and its claim that judicial efficiency would be served by barring production of documents by Defendant. Defendant?s Motion at 19-33. These arguments are in large part premised on the baseless claim that the Foundation seeks discovery of ?Grand Jury materials.? As set out above, that assertion is wrong. Defendant will suffer no burden from this production. Defendant is the largest utility in the United States and has teams of attorneys, from at least two of the state?s largest law ?rms, working on this case and related ones. It cannot claim as a ?burden? its obligation to respond to a civil enforcement proceeding resulting from its unlawful pollution. Further, there is no demonstration whatsoever that this production will unfairly affect any criminal prosecution it may face. If there is a criminal prosecution, the federal courts are well equipped to ensure that the Defendant receives a fair trial. There is no judicial ef?ciency in Defendant hindering enforcement of civil laws designed to protect the public from unlawful pollution. Defendant has made frequent motions to delay this 14 proceeding and may well make more. But Defendant?s litigation strategy and the consequent delays imposed upon the Foundation and the Court are no reasons for the Defendant to seek protection from document production. Finally, Defendant is understating the import of its litigation strategy in claiming that it ?seeks only limited protection.? Defendant?s Motion at 25. Defendant has succeeded so far in postponing its discovery by more than a year.? Defendant is resisting with all its might access to its documents concerning its unlawful pollution something that any other litigant would be required to provide. Defendant obviously does not want the contents of these documents to become available to the Foundation or the Court. These documents are important to the effective resolution of this case, and without them the Foundation and the Court would be making decisions without essential information. Defendant thus is seeking to hamstring this enforcement action. 8.. Defendant Has Distorted the Statements of the Foundation?s Counsel. Finally, and unfortunately, Defendant has engaged in the litigation tactic of trying to gain advantage by distorting the statements of opposing counsel. For the record, the Foundation responds as follows. First, contrary to Defendant?s representation, the Foundation?s counsel never indicated that the Foundation would seek discovery of ?Grand Jury materials.? Defendant?s Motion at 11. As set out above, courts have made clear that documents in the possession of a party do not become ?Grand Jury materials? simply because a Grand Jury has subpoenaed them. Instead, the oundation?s counsel was only responding to Defendant?s claim of a supposed ?burden? of this discovery and pointing out that Defendant?s counsel would be assembling documents that could be produced to the Foundation without any undue effort. 15 Indeed, the Foundation?s discovery requests were served in August of 2013, six months before any federal Grand Jury subpoena was ever issued. The Foundation could not have been seeking federal Grand Jury materials through discovery requests served long before any Grand Jury proceedings had begun. Nor did the oundation?s counsel state that ?the occurrence of a Grand Jury investigation while a civil enforcement action was ongoing was both unprecedented and unique.? Defendant?s Motion at 11. Of course, there are many situations where a party will get itself into legal trouble that has both civil and criminal consequences. The Foundation?s counsel was making the point that this case is unusual and, to Foundation?s counsel?s knowledge, unique and unprecedented in that the conduct of Defendant and DENR in handling the very civil litigation before this Court, and the very settlement they proposed that this Court approve, are subjects of inquiry by a federal criminal Grand Jury. This may have happened somewhere before, but the Foundation?s counsel is unaware of it. Nor did the Foundation?s counsel state that the Grand Jury or anyone else had yet found that a crime occurred. Defendant?s Motion at 12. The subpoenas to DENR and Defendant are accompanied by a letter from the United States Department of Justice stating that an agency of the United States and a grand jury are conducting an official investigation into a suspected felony. Further, DENR itself has stated under oath in its four enforcement proceedings that the Defendant is breaking the law at every site where it stores coal ash in North Carolina. The Foundation?s counsel made the point that the public interest cannot wait while Defendant and others prepare their defense and otherwise participate in criminal proceedings. That has been counsel?s position since the Grand Jury proceedings became publicly known. 16 As Well, the Foundation?s counsel has emphasized that it is important that the public have con?dence in the resolution of this case and that the Court and the Foundation have access to all the necessary information to make the appropriate decisions. Defendant?s Motion at 12-13. The Clean Water Act itself underscores the importance of the public in enforcing the Clean Water Act, including its requirement of public comment on proposed settlements (as happened here), its provision for citizen suits, and its requirement that there be a mechanism for citizen groups to intervene in state enforcement proceedings. Finally, it is a false, unfounded, and serious accusation that ?the Intervenors propose to use the processes of discovery in these civil cases to seek federal Grand Jury materials which they are barred from possessing under Federal law in order to make those materials public.? This is simply and clearly not true. As the courts have explained, Defendant?s documents do not become ?federal Grand Jury materials? because Defendant is required to provide them to a Grand Jury. Nothing in federal law prevents the Foundation or its counsel from seeking these documents and possessing? them through normal civil discovery. Defendant should retract this baseless allegation. 1 It may no longer be unheard of for litigants to put distortions like these in court ?lings. But it is important to point out that they are in fact distortions and without foundation. CONCLUSION Defendant?s Motion for a Protective Order misrepresents the nature of the Foundation?s discovery requests and the statements of its legal counsel, but most importantly, Defendant?s sweeping request directly contradicts the leading cases it cites, which hold that a criminal grand jury investigation does not permit a defendant to elude civil discovery that seeks information for its own sake. Indeed, Defendant cites no authority supporting its position in this case that a party 17 caught up in a criminal investigation in which no indictments have been issued may use that investigation to evade ordinary civil discovery requests submitted months before any grand jury was convened. Defendant?s attempt to delay the enforcement of clean water laws while it continues polluting and putting at risk the drinking water reservoir for the Charlotte metropolitan region should be rejected. For these and all of the foregoing reasons, the Foundation requests that Defendant?s Motion for a Protective Order be denied. Respectfully submitted, this the kday of April, 2 14. Fiagl-i s. H0lle\man 111 N.C. Bar No. 43361 fh0lleman@seZcnc. org Nicholas S. Torrey N.C. Bar No. 43382 nt0rrey@seZcnc. org Southern Environmental Law Center 601 West Rosemary Street, Suite 220 Chapel Hill, NC Telephone: (919) 967-1450 Facsimile: (919) 929-9421 9 Attorneys for Catawba Riverkeeper Foundation, Inc. 18 CERTIFICATE OF SERVICE I hereby certify that the foregoing Response in Opposition to Defendant?s Motion for Protective Order was served on all parties by depositing a true and correct copy in the U.S. Mail, first-class postage prepaid, addressed as follows: . Cooper Donald W. Laton Anita LeVeaux Jane Oliver N.C. Department of Justice PO. Box 629 Raleigh, NC 27602-0629 Fax: 919-716-6766 kcooper@ncdoj. gov a?Zatorz@ncdoj. gov aZeveaux@n cdoj. gov joZiver@ncdoj. gov Courzselfor State of North Carolina ex rel. North Carolina Department of Environment and Natural Resources Charles D. Case Hunton Williams, LLP P.O. Box 109 Raleigh, NC 27602 Fax: 919-899-3213 ccase@hum?on. com Frank E. Emory Brent Rosser Hunton Williams, LLP Bank of America Plaza 101 South Tryon Street, Suite 3500 Charlotte, NC 28280 Fax: 704-331-4222 femory@hum?orz. com brosser@hunron. com William Clarke Roberts Stevens Building, Suite 1100 One West Pack Square PO. Box 7647 Asheville, NC 28802 BCZarke@roberts-Stevens. com Cozmselfor Duke Energy Progress, Inc. A courtesy copy was provided to all parties by electronic mail as well. This of 8 2014. Nicholas s. 'r5?n~ey STATE OF NORTH CAROLINA IN THE GENERAL COURT OF IUSTICE SUPERIOR COURT DIVISION WAKE COUNTY 13 CVS 4061 STATE OF NORTH CAROLINA ex. rel. NORTH CAROLINA DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES, DIVISION OF WATER RESOURCES, Plaintiff, SIERRA CLUB, WATERKEEPER ALLIANCE, AND WESTERN NORTH CAROLINA ALLIANCE, Plaintiffs-Intervenors, V. DUKE ENERGY PROGRESS, IN C., Defendant. IN OPPOSITION TO MOTION FOR PROTECTIVE ORDER: PRODUCTION OF AND DISCOVERY INTO FEDERAL GRAND JURY MATERIALS AND PROCEEDINGS Duke Energy Progress, Inc. (?Duke Energy?) assures the Court that it is not seeking to stay the progress of this enforcement action; but by blocking access to essential discovery, Duke Energy certainly seeks to stall it. Duke Energy asks for a sweeping order preemptively barring discovery of any business records in its possession that it also has provided to the grand jury. (Mot. Prot. Order at 33.) The information requested by the grand jury subpoenas attached to Duke Energy?s motion overlaps extensively with issues central to this enforcement case. For example, the subpoena Duke Energy attached to its motion requires Duke Energy to produce NPDES permits, evidence of seepage, sampling results, communications between Duke Energy and DENR related to this very enforcement action, among other core issues. As a result, Duke Energy's request amounts to a prohibition on discovery of issues essential to resolution of these cases and protection of the French Broad River and groundwater contaminated by Duke Energy?s Asheville power plant. Duke Energy's motion is wholly wi?iout merit. Duke argues that a virtual stay of discovery is required to protect the secrecy of grand jury proceedings, but Federal Rule of Criminal Procedure 6 ?was not intended to cloak individuals under investigation in a protective mantle of concealment? and does not prohibit discovery of Duke Energy?s business records. United States v. (Under Seal), 783 F.2d 450, 453 (4th Cir. 1986). Duke Energy cites vague constitutional concerns but enjoys no right against self-incrimination, and the Supreme Court has rejected the notion that criminal due process is undermined by civil discovery in this context. Mot. Prot. Order 1] 52; Braswell v. United States, 487 U.S. 99, 102 (1988) entities are not protected by the Fifth Amendment?); United States v. Kordel, 397 U.S. 1, ll, 90 S. Ct. 763, 769, 25 L. Ed. 2d 1 (1970). Ultimately, Duke Energy?s worries about bad publicity and suggestion that Intervenors cannot be harmed by delay because they lack ?economic interests? fall far_short of its burden to show ?good cause? for a protective order. Mot. 1111 50-51, 48; see Transportation, Inc. v. Strick Corp., 291 N.C. 618, 626, 231 597, 502 (1977). ARGUMENT A. Duke Energy Cannot Meet the Standard for a Protective Order Although Duke Energy cites a litany of cases about staying discovery, courts have long recognized that such a ?motion to stay, in reality, seeks a protective order . . . and thus the petitioner must show good cause for such an order.? United States v. Any All Assets -of hat Certain Bus. Known as Shane 147 F.R.D. 99, 101 (M.D.N.C. 1992); The ?fauthority of trial judge to issue such protective order is not unquali?ed? instead ?such order may be issued only ?for good cause shown? and it may be issued only ?to protect a party or person from unreasonable armoyance, embarrassment, oppression or undue burden or expense.? Transportation, Inc. v. Strick Corp., 291 N.C. 618, 626, 231 597, 502 (1977) (?nding that the court was unable to issue a protective order due to a lack of ?good cause?); see N.C. R. Civ. P. 26(0). To establish ?good cause? a movant must show ?that disclosure will work a clearly de?ned and serious injury to the party seeking closure.? Pansy Borough of Stroudsburg, 23 F.3d 772, 786-787 (3d Cir. 1994).1 Where, as here, a court is considering overlap between civil and criminal matters, courts weigh a number of factors in evaluating a stay of discovery, including: the interests of the civil plaintiff in proceeding expeditiously with the civil litigation; (ii) the hardship to the defendant; the convenience of the civil and criminal courts; (iv) the interests of third parties; and the public interest. See In re Anderson, 349 B.R. 448, 458 (E.D. Va. 2006); Micro?nancial, Inc. v. Premier Holidays Int'l, Inc., 385 F.3d 72, 78 (1st Cir. 2004). Duke Energy ?bears the burden of establishing its? need? for a stay of discovery. See Clinton v. Jones, 520 U.S. 681, 708 (1997). That burden is a heavy one; denial of discovery is a ?drastic? remedy and ?should be used sparingly.? Strickland, 291 N.C. at 628, 231 at 604 (vacating the superior court order prohibiting a deposition). Instead, discovery ?should be liberally construed in favor of disclosure in order to accomplish the various purposes of 1 Subsection of N.C. R. Civ. P. 26, which applies to protective orders, is virtually identical to its federal counterpart in articulating the requirements for granting a protective order. In interpreting North Carolina Rule 26, North Carolina courts ?appropriately look to federal court decisions for guidance.? Harvey Fertilizer Gas Co. v. Pitt Cnty., 153 N.C. App. 81, 87, 568 923, 927 (2002) (applying same analysis to Rule 24); see Turner v. Duke Univ., 325 N.C. 152, 164, 381 706, 713 (1989) (?Decisions under the federal rules are thus pertinent for guidance and enlightenment in developing the philosophy of the North Carolina discovery, unless the request is clearly improper by virtue of well-established causes for denial.? ennessee-Carolina Inc. v. Strick Corp., See 291 N.C. 618, 628-29, 231 597, 604 (1977). Here, Duke Energy?s request to bar discovery of any material or subjects also before an ancillary grand jury proceeding lacks good cause, is drastic and overly broad, and violates discovery principles in favor of disclosure. B. Discovery in these Enforcement Cases Will Not Undermine a Legitimate Interest of Duke Energy. Duke Energy can identify no legal right that will be compromised by discovery in these cases and no practical harm, aside from prosecution of these enforcement cases and imposition of a remedy for its illegal pollution. l. The Federal Rules of Criminal Procedure Do Not Limit Discoverv in This Civil Enforcement Case. Duke Energy?s representation that Rule 6 of the Federal Rules of Criminal Procedure bars discovery of its business records simply because some of those records may also be provided to the grand jury cannot withstand even casual scrutiny. (See Mot. Prot. Order 1111 30, 35, ?Intervenors . . . seek federal Grand Jury materials which they are barred from possessing under federal law . . . First, Rule 6 does not apply to recipients of grand jury subpoenas, like Duke Energy. Rule 6 identi?es a discrete list of participants in the grand jury process who ?must not disclose a matter occurring before the grand jury.? See Rule 6. The rule is explicit that obligation of secrecy may be imposed on any person except? the individuals listed in Rule Rule That list does not include the recipients of grand jury subpoenas, like Duke Energy. See also United States v. Sells Eng Inc., 463 U.S. 418, 425 (1983) (?Witnesses are not under the prohibition. . . Second, Duke Energy?s business records are not matters ?occurring before the grand jury? that must be protected by Rule 6. Throughout its motion Duke Energy glosses over this distinction by con?ating the ?proceedings of the grand jury,? which are held secret under Rule and any ?material provided to it,? which is not. (See Mot. at 2.) But Rule 6(e) ?was not intended to cloak individuals under investigation in a protective mantle of concealrnen United States v. (Under Seal), 783 F.2d 450, 453 (4th Cir. 1986). Rule protects ?'om disclosure ?only the essence of what takes place in the grand jury room? and not materials developed ?essentially independent of the grand jury proceedings.? In re Grand Jury Subpoena, 920 .2d 235, 241-42 (4th Cir. 1990) (allowing release of materials collected by IRS criminal investigation operating parallel to but independent of grand jury proceeding). Contrary to Duke Energy?s representation, ?[t]he law . . . is clear that business records sought for intrinsic value are admissible, even if the same documents were also presented to the grand jury.? Kersting v. United States, 206 F.3d 817, 820-21 (9th Cir. 2000)). This straightforward interpretation of Rule 6(e) has been consistently applied by federal courts across the country? 2 See also Church of Scientology Int?! v. US. Dep't of Justice, 30 F.3d 224, 235 (1st Cir. 1994) (Protected grand jury materials are distinct from-?business records or similar documents created for purposes independent of grand jury investigations, which have legitimate uses unrelated to the substance of the grand jury proceedings?); United States v. Interstate Dress Carriers, Ine., 280 .2d 52, 54 (2d Cir. 1960) testimony or data is sought for its own sake? for its intrinsic value in the furtherance of a lawful investigation- rather than to learn what took place before the grand jury, it is not a valid defense to disclosure that the same information was revealed to a grand jury or that the same documents had been, or were presently being, examined by a grand DiLeo v. Commissioner, 959 F.2d 16 (2d Cir.) (rea?rming Interstate Dress?s status as the law of the circuit), cert. denied, 506 U.S. 868, 113 197, 121 L.Ed.2d 140 (1992); In re Grand Jury Investigation, 630 F.2d 996, 1000 Cir. 1980) (?The mere fact that a particular document is reviewed by a grand jury does not convert it into a ?matter occurring before the grand jury? within the meaning of Documents such as the business records sought . . . here are created for purposes independent of grand jury investigations, and such records have many legitimate uses unrelated to the substance of the grand jury proceedings?); United States v. Stanford, 5 89 F.2d 285, 290-91 (7th Cir. 1978) testimony or data is sought for its own sake for its intrinsic value in ?ntherance of a lawful investigation rather than to learn what took place before the grand jury, it is not a valid defense to disclosure that the same documents had been, or were presently being, examined by a grand Blalock v. United States, 844 F.2d 1546, 1551-52 (11th Cir. 198 8) (Rule ?does not protect ?'om disclosure information obtained ?'om a source other than the grand jury, even if the same information is later presented to the grand Senate of the Com. of Puerto Rico on Behalf of Judiciary Comm. v. U.S. Dep 't of Justice, 823 F.2d 574, 582 (D.C. Cir. 1987) (?We have never embraced a reading of Rule 6(e) so literal as to draw a veil of secrecy over all matters occurring in the world that happen to be investigated by a grand jury?); United States v. 6918 iljvron St., Charlotte, N.C., 672 F. Supp. 890, 896 5 2. No Constitutional Right Shields Duke Energy From Civil Discovery. Duke Energy bases its motion on the vague assertion that its rights under the ?the Fifth Amendment to the U.S. Constitution? may be in jeopardy. (Mot. Prot. Order at 2.) Duke Energy does not identify the Fifth Amendment right at issue, however, or how that right will be infringed. Duke Energy fails even to mention the Fifth Amendment outside of the Motion?s opening sentence, save several vague references to ?constitutional rights.? (Mot. Prot. Order 1[74, arguing that ?permitting discovery to proceed under these circumstances in light of the constitutional rights at stake? would create an unjust result.) In truth, Duke Energy Progress, Inc., enjoys no Fifth Amendment right against self incrimination. is well established that such arti?cial entities are not protected by the Fifth Amendmen Braswell v. United States, 487 U.S. 99, 102 (1988); see also In re Grand Jury Subpoena John Doe, No. 05GJ1318, 584 F.3d 175, 184 (4th Cir. 2009) (?Because [the Fifth Amendment] is a personal privilege, it cannot be asserted by a collective Neither can individual employees of the corporation assert their personal Fifth Amendment rights to protect corporate records they hold in their representative capacities, even if those records may tend to incriminate them. Wujkowski, 929 F.2d at 984; Braswell, 487 U.S. at 117-118. The same results hold under the provisions of the North Carolina constitution cited by Duke Energy. See, (W .D.N.C. 1987) (allowing discovery of documents presented to grand jury where the requester is ?only interested in the intrinsic value of the documents and not the grand jury's activities?); In re Search of I 441 6 Coral Gables Way, N. Potomac, Md., 946 F. Supp. 2d 414, 427-28 (D. Md. 2011) records or similar documents created for purposes independent of grand jury investigations, which have legitimate uses unrelated to the substance of the grand jury proceedings are not protected? under Rule United States v. Rosen, 471 F. Supp. 2d 651, 654- 55 (E.D. Va. 2007) disclosure of ?matters before the grand jury? must reveal some ?secret aspect of the inner workings of the grand jury? and does not include the results of investigation that is independent of a parallel grand jury investigation does not violate Rule In re Grand Jury Proceedings 503 F.Supp.2d 800 (E.D. Va. 2007) (?it is not the information itself, but the fact that the grand jury was considering that information which is protected by Rule . Mot. Prot. Order at 2; Stone v. Martin, 256 N.C. App. 473, 289 898, 901 (1982) privilege against self-incrimination is a purely personal In any event, the Fifth Amendment does not protect ?the contents or nature of the thing demanded,? rather, it is the testimonial act of producing the document that triggers the privilege. Baltimore City Dep ?t of Soc. Servs. v. Bouknight, 493 U.S. 549, 555 (1990) (emphasis added). Here, Duke Energy is not concerned about the testimonial act of producing existing documents, but explicitly seeks to shield the content and nature of those documents. Finally, the personal Fifth Amendment rights of an individual are triggered only if a ?witness reasonably believes [the disclosure] could be used in a criminal prosecution or could lead to other evidence that might be so used.? Kastigar v. United States, 406 U.S. 441, 444-45 (1972). But as Duke Energy notes in its motion, ?no showing of wrongdoing is required before a federal Grand Jury may issue a subpoena? and there has been ?no ?nding of probable cause that any crimes have even occurred? by Duke Energy or any of its employees. (Mot. Prot. Order 1} 29.) It is for this reason that ?an unindicted defendant who argues that going forward with a civil proceeding will jeopardize his Fifth Amendment rights usually presents a much less robust case for such extraordinary relief? as a stay of discovery. Micro?nancial, Inc. v. Premier Holidays Int 7, Inc., 385 F.3d 72, 79 This concern is even more remote with respect to Duke Energy?s employees; not only have they not been indicted, Duke Energy does not even assert that they have received subpoenas ?'om the grand jury. (See Mot. Prot. Order 1] 3 See also United States v. Hubbard, 2013 WL 1773575 (D. Md. Apr. 24, 2013) fact that Defendants have not been indicted counsels against the granting of a United States v. Private Sanitation Indus. Ass?n of Nassau/Su?blk, Inc., 811 F. Supp. 802, 805 (E.D.N.Y.1992) requests for a stay [of civil proceedings] are generally denied?); United States v. All Meat and Poultry Products Stored at Lagrou Cold Storage, No. 02 5145, 2006 WL 271 19, at*2 (N an. 4, 2006) generally issue stays to protect the interests of only those persons against whom an indictment has already issued?); Trustees of Plumbers Pipefitters Nat. Pension Fund v. Transworld Mech., 1110., 886 F. Supp. 1134, 1139 (S.D.N.Y. 1995) will generally not be granted before an indictment is issued?). 45, asserting only that ?it is reasonably anticipated that employees for Duke Energy could be called to testify before the Grand Jury.? [emphasis added]) Ultimately, even if the testimonial act of responding to civil discovery threatened to infringe upon Fifth Amendment right of an individual person in reasonable fear of criminal prosecution, no stay of discovery or other civil remedy is compelled by the Constitution.4 3. Respondmg to Ordin_arv Civil Discovery Will Not Harm Duke Energv. Duke Energy?s broad speculation that disclosure of material overlapping with the grand jury inquiry will harm its interests falls far short of the speci?c reasoning required to establish ?good cause.? Such ?[b]road allegations of harm, unsubstantiated by speci?c examples or articulated reasoning, do not support a good cause showing.? Pansy v. Borough of Stroudsburg, 23 F.3d 772,t 786 Cir. 1994); see also Gulf Oil Co. v. Bernard, 452 U.S. 89, 102, n.16 (1981) (establishing good cause requires speci?c demonstration of fact). A motion for protective order must be supported by ?a particular request and a speci?c demonstration of facts . . . as opposed to conclusory or speculative statement about the need for a protective order and the harm which would be suffered without one.? Brittain v. Stroh Brewery Co. 136 .R.D. 408, 412 (M.D.N.C. 1991)? Duke Energy?s motion raises the specter that Intervenors ?plainly see the Grand Jury Process as an opportunity to receive information to which they are not entitled . . . (Mot. Prot. Order 1151.) But if the requested materials are within the scope of ordinary civil discovery, they 4 See United States v. Kordel, 397 U.S. 1, 11 (1970) (observing that the Constitution does not provide parties blanket protection from the perils of contemporaneous criminal and civil proceedings); Keating v. OTS, 45 F.3d 322, 326 _(9th Cir. 1995) defendant has no absolute right not to be forced to choose between testifying in a civil matter and asserting his Fifth Amendment privilege?); Louis Vuitton Malletier S.A. v. LY USA, Inc, 676 F.3d 83, 98-99 (2d Cir. 2012) (?The existence of a civil defendant's Fifth Amendment right arising out of a related criminal proceeding thus does not strip the court in the civil action of its broad discretion to manage its docket?). 5 Citing Gulf Oil v. Bernard, 452 U.S. 89, 102 n. 16 (1981); and Deines v. Vermeer Mfg. Co., 133 F.R.D. 46, 48 (D. Kan.1990). are information to which Intervenors are entitled under the Rules of Civil Procedure. In any event, Duke Energy?s argument turns the law on its head. In the ordinary case, the concern behind a stay of civil discovery is not that civil litigants will gain access to Duke ?s records through discovery. Rather, ?the chief concern is the risk that civil discovery may afford [criminal] defendants an opportunity to gain evidence to which they are not entitled under the governing criminal discovery rules.? In re Royal Ahold N. V. See. Erisa Litig. 220 F.R.D. 246, 253_?54 (D. Md. 2004) (emphasis added); see also Twenty First Century Corp. v. LaBt'anca, 801 F. Supp. 1007, 1010 Neither is Duke Energy?s vague concerns that responding to civil discovery will deprive it of ?due process? a sufficient basis for the drastic relief it seeks. The Supreme Court squarely rejected this proposition in a case where the government brought criminal indictments against individual corporate of?cers and propounded interrogatories to them in a separate civil case. See United States v. Kordel, 397 U.S. 1, ll, 1970). Even in those circumstances, with the personal Fifth Amendment rights of individuals against self incrimination at stake, the Court concluded that ?we catmot agree that the respondents have made out a violation of due process . . . The Court noted the ?public interest in protecting? consumers and worried that would stultify enforcement of federal law to require a governmental agency . . . invariably to choose either to forgo recommendation of a criminal prosecution once it seeks civil relief, or to defer civil proceedings pending the ultimate outcome of a criminal trial.? Id. In truth, Duke Energy's chief concern is not revelation of civil discovery documents to the grand jury but, rather, dissemination of infonnation to the public. According to Duke Energy, discovery of information that incidentally overlaps the grand jury inquiry ?could be publicized and disseminated through the media . . . [and] will sensationalize the Grand Jury process? (Mot. Prot. Order at 3; see also 50-51, 56, describing concerns about public disclosure.) But federal courts taking up this question have made clear that fear of public disclosure ?may not be maintained in such a way as to thwart the purpose of the rules of discovery.? Metal Foil Products Mfg. Co. v. Reynolds Metals Co., 55 F.R.D. 491, 493 (favoring limited public disclosure of information rather than restricting discovery). Similarly, a leading North Carolina treatise has taken the view that discovery ordinarily should not be restricted from public view: ?Since a lawsuit is a matter of public record, access by the general public to discovery should not be restricted without a legitimate showing of the potential abuse.? C. Gray Wilson, N.C. Civil Procedure 26-31 to 26-32 (3d ed. 2007) In addition, allowing Duke Energy to continue to shroud this enforcement proceeding in secrecy will undermine public con?dence in any outcome. Duke Energy and DENR have repeatedly obstructed the efforts of Intervenors to gather information and urged the public and this Court to buy-in to a settlement negotiated privately behind closed doors without disclosing information to enable infonned review. Nearly a year after initiating the Asheville enforcement case in response to Intervenors? CWA Notice of Intent, DENR itself has ?nally abandoned the ill-advised agreement. The policy of public participation and citizen enforcement underlying CWA enforcement weighs in favor of transparency. See, Natural Res. Def Council, Inc. v. US. 859 F.2d 156, 178 (D.C. Cir. 1988) (discussing import of public participation in state CWA enforcement and citizen groups being treated as ?welcome participants in the vindication of environmental interests.? Even if Duke Energy?s concerns about public disclosure had any legitimacy, far narrower relief could be fashioned to allay those concerns. Duke Energy could identify speci?c discovery requests or de?ned_ categories of information it believes should be protected from public disclosure and lodge speci?c objections seeking to restrict dissemination of those particular materials. See Jane Doe I v. Swannanoa Valley Youth Development Center, 163 N.C. App. l36_, 152, 592 715, 718 (2004) (noting Defendants? ?arguments, dire predictions, and fears regarding ?public dissemination? of documents obtained through discovery were allayed by protective order prohibiting disclosure of the requested information to any person not associated with the case?); cf Britt v. Cusick, 753 351, 354 -355 (N .C. App. 2014) (?nding order that merely restricting the manner of discovery of highly material information but did not prohibit discovery of the information was not immediately appealable). A tailored approach, rather than an expansive prohibition, would address any legitimate concern of public disclosure raised by Duke Energy. Finally, Duke bemoans ?duplicative document production and extensive reviews? and the risk that ?intensive civil discovery may divert resources which may be necessary for defense of a possible criminal action.? (Mot. Prot. Order 111] 50, 49 (quoting White v. Mapco, 116 F.R.D. at 502) Duke Energy is a $65 billion Fortune 250 company with three law ?rms representing it in these civil enforcement cases. The inconvenience of simultaneously responding to a separate criminal inquiry is a grossly insuf?cient basis to shield such a defendant from the ordinary burden of civil discovery. - C. A Stay of Discovery Will Undermine Intervenors? Interests and the Public Interest in Protecting North Carolina Waters From "Coal Ash Pollution. The sweeping relief Duke Energy seeks will effectively block these enforcement cases from progressing towards a remedy and fundamentally undermine the interests of Intervenors and the public in protecting North Carolina?s waters ?'om coal ash contamination. See In re 11 Phillips, Beckwith Hall, 896 F. Supp. 553, 558 (E.D. Va. 1995) (a stay is improper if the opposing party demonstrates that it will result in genuine, substantial prejudice to its interests.) First, Duke Energy complains that Intervenors? discovery requests do not seek information necessary to inform the Court?s review of the proposed consent order and thus, that a stay of discovery will not delay this case. (Mot. Prot. Order 1] 57.) Now that DENR has withdrawn from the consent order altogether, of course, that objection is no longer relevant. Second, Duke Energy suggests that the information it seeks to conceal by its motion is not required for the prosecution of this enforcement case. To that end, Duke Energy mischaracterizes Intervenors? requests as a ?backward-looking inquiry that does not address the reasonableness of the science, the engineering, or any proposed resolution.? Id. This is spectacularly wrong. Intervenors? requests do not seek grand jury materials. Rather, they seek information related to science, engineering, and remedial options required to inform the merits of this enforcement case. For example, Intervenors seek information related to: seepage from the coal ash lagoons and sampling results; ongoing removal of ash to the Asheville airport; conversion to dry ash handling and installing a liner; groundwater remediation technologies considered; subsurface assessments of the lagoons; and analytical testing and leachate analysis on the ash. (Interrog. Nos. 3, 4, 12, 13; Supp. Document Req. No. 1.) This information is essential to the core issue in this litigation: the appropriate remedy for Duke Energy?s ongoing contamination of the French Broad River and groundwater.6 5 Indeed, Intervenors? discovery is submitted to sharpen and inform the issues in this enforcement case, consistent with the fundamental purpose of discovery. See Carpenter v. Cooke, 58 N.C. App. 381, 384, 293 630, 632 (1982) (?One of the primary purposes of the discovery rules is to facilitate the disclosure prior to. trial of any unprivileged information that is relevant and material to the lawsuit so as to permit the narrowing and sharpening of the basic issues and facts?); see also Willoughby v. Wilkins, 65 N.C. App. 626, 642, 310 90, 100 (1983) (?The goal of the discovery rules is to facilitate the disclosure, prior to trial, of any unprivileged information that is relevant and material to the lawsuit so as to permit the narrowing and sharpening of basic issues and facts to go to trial?), disc. review denied, 310 N.C. 631, 315 698 (1984). 12 New revelations following the Dan River catastrophe leave no doubt that Duke Energy maintains a signi?cant information advantage over Intervenors. The defunct settlement agreement Duke Energy asked this Court to approve did not impose any remedy at all. Duke Energy has since publicly represented that it plans to remove some portion of coal ash at the Asheville Plant and convert the plant to dry ?y ash handling, or retire that unit altogether.7 Duke further offers, through the factually unsupported assertions of counsel-, that it is beginning a ?comprehensive review of all ash basins and is developing a longer-tenn strategy.? (Mot. Prot. Order Contrary to Duke Energy?s assertion that Intervenors? discovery is ?not directly relevant to remediation of any risks from the ash ponds,??3 Intervenors? discovery is designed to elicit tangible information about the very plan Duke Energy has now broadcast to the world at large. Third, Duke Energy suggests that even if a protective order would undermine Intervenors? efforts to remedy its pollution, Intervenors would suffer no harm as a result. Duke Energy posits, wrongly, that a sweeping protective order would cause ?no prejudice? to Intervenors because they lack an economic stake or personal injury to be redressed in this litigation. (Mot. Prot. Order 1} 48.) But that question already has been extensively briefed and decided by this Court when it granted intervention. Ongoing contamination of the French Broad River and groundwater surrounding Duke Energy?s Asheville plant directly impacts Intervenors? interests in protecting the enviromnent and the interests of their members, including the owner of 7 See attached Letter ?'om Good, Duke Energy to Pat McCrory (Mar. 12, 2014) (referencing moving ash ?om the Asheville plant to a lined structure and converting to dry ?y ash handling or retiring the unit). 8 Mot. Prot. Order 1] 61. 13 a French Broad River kayak guide company and the operator of a French Broad River-themed middle school for boys, both of whom rely on the water quality of the river for their livelihoods.9 Duke Energy further denigrates the urgency of this enforcement case with the bald assertion that ?there is no allegation that the coal ash ponds at the Dan River facility (or throughout North Carolina) are not structurally unsound or secure.? (Mot. Prot. Order 11 22.) To the contrary, Intervenors warned that the proposed settlement between Duke Energy and DENR ignored the risk of catastrophic failure at these antiquated coal ash dumps long before such a catastrophic spill occurred. 10 In this very litigation, Intervenors ?agged that the consent order did not address structural problems and repairs at the Asheville Plant which experienced a massive and unpredicted internal dam failure in 2012. (See Supp. on Intervention at 3, discussing a recent dam failure in October 2012 that caused a 60?feet wide breach to an internal dike and required emergency dewatering within the 1982 lagoon.) In light of the Dan River catastrophe, the recent revelation of cracks in coal ash impoundments at Duke Energy?s Cape Fear power plant, and emergency inspections by DENR staff of dams statewide, it borders on absurd to suggest the structural security of Duke Energy?s primitive impoundments and the threat they pose to water quality is not in question. Finally, Duke Energy suggests that Intervenors? interests will be protected by others, even if Intervenors, for lack of basic discovery, are unable to participate meaningfully in this enforcement action. For example, Duke Energy suggests Intervenors have no role to play because government agencies including DENR and, apparently, the National Park Service and 9 See affidavits attached to intervention papers. 3? Intervenors? Comments on Consent Order (August 14, 2013) at 3-4 (?At a fundamental level, the proposed settlement ignores structural concerns with the coal ash lagoons and assumes, without inquiring, that the ash lagoons are actually a safe and reliable means of storing coal ash into the future.?) available at 14 a host of other federal agencies are on the job. (Mot. Prot. Order at 3.) But no federal agency will enforce North Carolina law being enforced in this proceeding. More importantly, this Court has already concluded that DENR does not adequately represent the interests of Intervenors in this enforcement proceeding and Duke Energy cannot collaterally attack that ruling through a protective order. Duke Energy speculates that under the protective order it seeks, Intervenors might still obtain access to documents voluntarily shared by Duke Energy with the state, but that is little comfort since DENR still has not issued a single discovery request to Duke Energy. In the same vein, Duke Energy argues that Intervenors? interests will be vindicated by the parallel grand jury proceeding. (Mot Prot. Order 1] 70.) But as Duke Energy takes pains to note, there is no criminal proceeding as of yet, only a subpoena seeking information. Nor does Duke Energy explain how a prosecution for past federal crimes will result in enforcement of North Carolina law to stop ?iture contamination of rivers and groundwater. CONCLUSION Stripped to its essence, Duke Energy?s motion is another play out of the playbook it has been working from the start of this enforcement case: obstruct Intervenors? access to information needed to enforce the law and avoid taking remedial action as long as possible. Duke Energy argues that its efforts to derail this enforcement case are of no consequence because the scale of the problem it has created with its coal ash dumps will take time to remedy (Mot. Prot. Order 1111 80-82), but the magnitude of this ever-worsening dilemma only underscores the urgent need to start the important work of ?xing it now. The motion lacks both a legal and factual support, and therefore, should be denied. This the day of April, 2014 15 Augn D. Gerken, Jr. N.C. State Bar No. 32689 Amelia Y. Burnette N.C. State Bar No. 33845 J. Patrick Hunter N.C. Bar No. 44485 Southern Environmental Law Center 22 S. Pack Square, Suite 700 Asheville, NC 28801 828-258-2023 digerken@se1cnc.or2 Counsel for Plaintigfilntervenors Sierra Club, Waterkeeper Alliance, and Western North Carolina Alliance CERTIFICATE OF SERVICE I hereby certify that the foregoing OPPOSITION TO MOTION FOR PROTECTIVE ORDER: PRODUCTION OF AND DISCOVERY INTO FEDERAL GRAND JURY MATERIALS AND PROCEEDINGS, was served on all parties by depositing a true and correct copy in the U.S. Mail, ?rst-class postage prepaid, addressed as follows: J. Cooper Donald W. Laton Anita LeVeaux Jane Oliver N.C. Department of Justice P.O. Box 629 Raleigh, NC 27602-0629 Fax: 919-716-6766 kcooper@ncdoj.gov dlaton@nodoj. gov -aleveaux@ncdoj. gov joliver@ncdoj . gov Counsel for State of North Carolina ex rel. North Carolina Department of Environment and Natural Resources, Division of Water Quality Charles D. Case Hunton Williams, LLP PO Box 109 Raleigh, NC 27602 Fax: 919-899-3213 ccase@hunton.com Frank E. Emory Brent Rosser Sarah Ann Santos Melissa Romanzo Hunton Williams, LLP Bank of America Plaza 101 South Tryon Street, Suite 3500 Charlotte, NC 28280 Fax: 704-33 1-4222 brosser@hunton.com ssantos@hunton.com mromanzo@hunton.com William Clarke Robert Stevens Building, Suite 1100 Asheville, NC 28802 James P. Cooney, Womble Carlyle Sandridge Rice, LLP One Wells Fargo Center, Suite 3500 301 South College St. Charlotte, NC 28202 cooney@wcsr.com Counsel for Duke Energy Corporation, Duke Energy Carolinas, LLC, and Duke Energy Progress, Inc. formerly Carolina Power and Light d/b/a Progress Energy Carolinas, Inc. A courtesy copy was provided to all parties by electronic mail as well. This the c9 "4 day ofApril, 2014. AMI DJ Gerken 18 ATTACH MENT _p?rp- -ruf- ?5 President, CEO Duke Energy corporation 550 South Tryon Street Charlotte, NC 28202 March 12. 2014 Mr. Pat McCrory Governor of the State of North Carolina NC State Capitol 1 East Edenton Street Raleigh, NC 27601 Mr. John Skvarla Secretary, Department of Environment and Natural Resources NC State Capitol 1 East Edenton Street Raleigh. NC 27601 Dear Governor Mccrory and Secretary Skvarla: This letter provides an update to my February 28 letter and delivers recommendations for near-term and longer-termactions at our ash basins in North Carolina. Taken together, these near-term and longer-term actions comprise our comprehensive ash basin plan. Our recommendations have been developed around guiding principles designed to prevent future events and to identify opportunities to improve ash pond management activities. We are committed to working with the State of North Carolina, the North Carolina General Assembly, the North Carolina Utilities Commission (NCUC) and all of our regulators as we develop an updated, comprehensive plan that protects the environment and provides safe, reliable and cost-effective electricity to North Carolinians. As we progress through implementation. we will continue to re?ne and expand these recommendations, including the design, engineering and cost estimates. We will also be working on these matters with our regulators in other states we serve. We have accepted responsibility for the Dan River ash discharge and have taken a number of immediate actions following the event: . We installed a permanent plug on the 48-inch stormwater pipe on February 8, and permanently plugged the 36-inch pipe on February 21. - Crews have removed coal ash in an area of the riverbed below the broken stormwater pipe's discharge point. We will continue to work with state and federal agencies as we determine next steps needed for the river. . Company representatives presented information about the Dan River ash release to the North Carolina General Assembly's Environmental Review Commission on February 17' and to the NCUC on February 24. .. We have worked with the North Carolina Division of Water Resources to redirect stormwater around the basins in a manner compliant with our National Pollution Discharge Elimination System (NPDES) permit, until a permanent solution is devised. - We, along with various agencies, have continually tested the water in the Dan River. The drinking water has remained safe. We will continue to work with you. your staffs and all appropriate regulatory agencies to ?nalize our work at Dan River. For more than a century, our company has provided reliable and affordable electricity to our customers. power plants produced a good portion of that electricity. Throughout the past few decades, we have dedicated signi?cant resources to the management and monitoring of our ash basins. We continue to place the safe operations of these ash basins as one of our highest priorities. We have formed a team dedicatedto strengthening our comprehensive_ strategy for managing all of our ash basins. John Elnitsky, most recently the company's vice president of project management and construction, is leading this effort. This team will focus on implementing our recommendations listed below as well as identifying and addressing ongoing improvement opportunities. This work will provide an opportunity for us to assess our ongoing storage techniques and will in?uence the ash basin closure strategies for our retired facilities, recognizing that any storage technique embodies cost and risk-reduction tradeoffs. We want to make certain that we, our regulators and other stakeholders can have a high degree of con?dence in the integrity of our ash basins. As stated above, our comprehensive plan is comprised of both near-term and longer- term actions. Our near-term actions set forth below address three speci?c retired plants. speci?c actions related to three active operating units (Cliffside 5 and both Asheville units), and an approach to reduce risk on remaining ponds at all retired plants. These actions are first steps in a more comprehensive plan that will address all retired sites (21 ponds? sites) and pond management at active sites (12 pondsl7 sites). Of course, implementing our near-term recommendations and longer-term plans depends on state and federal agreement that these are prudent. cost-effective and environmentally sound options. They are as follows, with associated time frames: - Permanently close the Dan River ash ponds and move ash away from the river to a lined structural ?ll solution or a lined land?ll. This work will be started immediately upon securing the appropriate ?ll solution or land?ll location and any necessary permits, with an expected completion thereafter of 24-30 months. - Accelerate planning and closure of the Sutton ash ponds to include evaluation of possible lined structural ?ll solutions and other options. A conceptual closure plan will be submitted to the North Carolina Department of Environment and Natural Resources (NCDENR) within six months, and removing the water from the ash basins wiil be completed in the next 18-24 months. - Move all ash from Riverbend away from the river to a lined structural ?ll solution or a lined land?ll. Work wili begin immediately upon securing the appropriate ?ll solution or land?ll location and any necessary permits, with an expected completion thereafter within 48-54 months. - Continue moving ash from the Asheville plant to a lined structural ?ll solution. We continue to look for ash reuse opportunities where such uses remain permissible under the upcoming coal ash regulations. or Convert the three remaining North Carolina units to dry ?y ash (Cliffside 5 and both Asheville units) or retire the units. Conversion work, if selected, will be completed within 30-36 months of receiving permits. a Minimize the potential risk of a discharge similar to Dan River by accelerating the removal of water from the ash ponds at all retired coal plants. Upon receipt of permits, dewatering will be completed within 24-36 months. In addition, we have taken immediate action to initiate a near?~term comprehensive engineering review of all of our ash basins to identify and address potential risks. This review consists of a risk-informed approach to con?rm the structural integrity of the ash basins and associated structures, as well as the characterization and evaluation of all stormwater discharges near ash basins. We expect this engineering review to continue over the next six-to-eight months. We are also developing a comprehensive longer-term ash basin strategy for all ash ponds in North Carolina and throughout our service territory. This strategy will include a review of active ponds, inactive ponds and closure strategies for the remaining retired plants, will be informed by outside experts, and will include a risk-informed, tiered approach. The work will include a review of the effectiveness of ash storage management programs and practices to con?rm that longer-term solutions are sustainable and lessons learned are captured for company?wide application. This comprehensive strategy will evaluate options up to and including complete conversion to ail dry handling. This work will be completed by year-end. We want to get the near-term and longer-term strategies right and implemented in a timely way. That will require close coordination with NCDENR andlor the United States Environmental Protection Agency (EPA) on permitting, as well as consideration of many factors including environmental and transportation issues for each community where coat ash is stored. We look fonrvard to working with and incorporating the input of those agencies, as wetl as your of?ces and the General Assembly, to accomplish these objectives. As our plans progress, it will be important to align our steps with upcoming federal regulations. The EPA issued a proposed rule on June 21, 2010, regarding federal regulation of coal ash. A ?nal rule is expected by December 19, 2014. In addition, the EPA issued a proposed rule June 7. 2013, for Steam Electric Effluent Guidelines that regulates wastewater streams from power plants. The ?nal rule is expected no sooner than May 2014. Our longer?term solutions must satisfy these rules. As we continue to re?ne our recommendations, we would like to meet to discuss the near-term items and our comprehensive strategy. Such a meeting should include technical expertise from the company and your agencies to listen to and challenge assumptions. Cost estimates to implement these recommendations are very dependent upon the actual disposal methods that are approved cap in place versus structural ?ll or lined land?lls). and we will work with the state to make estimates available as we narrow the range of options at each particular site. Low?cost power generation has fueled the development of our state over the last century. As scienti?c knowledge and technology have advanced, we have worked constructively with the policymakers and regulators of our state to develop cost-effective ways to continue providing reliable, iow-cost energy to our citizens while protecting public health and the environment. We look forward to continuing this work as we develop and implement these recommendations for both immediate and longer-term solutions to coal ash storage and disposal. J. Good President and Chief Executive Of?cer Sincerely.