Lawyer hired by NC in spill probe represented Duke

Mar. 24, 2014 @ 05:53 PM

The lawyer hired to represent North Carolina's environmental agency during a federal investigation into its regulation of Duke Energy's coal ash dumps once represented the utility company in a different criminal probe.

The state Department of Environment and Natural Resources has hired Mark T. Calloway of Charlotte to help respond to 20 grand jury subpoenas the agency has received after the Feb. 2 spill at Duke's Eden plant, which coated 70 miles of the Dan River in toxic sludge. Duke has been issued at least two subpoenas as part of that investigation.

The state regulatory agency, also known as DENR, has issued notice of eight environmental violations against Duke in the last month arising from the Eden spill and issues at the utility's other coal-fired plants, including the recent dumping of 61 million gallons of contaminated water into the Cape Fear River.

Environmental agency spokesman Drew Elliot said Monday that he saw no conflict of interest in Calloway's prior representation of Duke, the nation's largest electricity company.

Legal experts said Calloway's representation of the state agency likely doesn't violate ethics standards, as long as Duke doesn't object to its former lawyer now representing a client with potentially adverse interests in the current criminal probe.

"As far as the rules of professional conduct and the State Bar ethics rules that govern attorney conflict, it doesn't sound like an obvious violation," said Eric Fink, and associate professor at Elon University School of Law. "But for a reasonable person looking at this, it would raise eyebrows."

"It's a fuzzy area. I see real grounds for members of the public to question what this says about the state's independence of Duke," he added.

A former federal prosecutor who now specializes in white-collar criminal defense cases, Calloway represented Duke during a 2004 federal investigation into the company's accounting practices.

That probe began after a grand jury was convened after a 2002 audit ordered by regulatory commissions in North and South Carolina found Duke had underreported its profits by $124 million over a three year span. Duke was cleared of any criminal wrongdoing, but agreed to reimburse customers $25 million to settle the matter.

Records show other lawyers at the firm where Calloway is a partner — Alston & Bird — also defended Duke in a lawsuit filed by the company's retirees that was settled in 2011.

Elliot, the environmental agency spokesman, said Calloway's name was chosen from a number of lawyers for consideration and that he came with notable experience as a former U.S. Attorney.

"We are confident that the firm performed a check of any potential conflicts of interest," Elliot added. He referred further questions to Calloway.

Calloway said he was unavailable to immediately provide comment to The Associated Press, but indicated in an email he would be available later Monday.

In his biographical information listed on the firm's webpage, Calloway touts his representation of "a major energy company during a year-long federal grand jury investigation" as an example of his experience.

As part of its March 13 agreement with Alston & Bird, the state agency DENR agreed to pay an hourly fee of no more than $350 to the firm. The agency also agreed to waive any conflict that might arise from the law firm "representing another client or clients in a matter adverse to DENR," according to its contract.