North Carolina regulators say they have asked a judge to withdraw a proposed settlement that would have allowed Duke Energy to resolve environmental violations by paying a $99,000 fine with no requirement that the $50bn company clean up its pollution.

The state Department of Environment and Natural Resources said in a statement on Friday that it would scuttle the proposed consent order to settle violations for groundwater contamination leeching from coal ash dumps near Charlotte and Asheville.

The decision comes after a 2 February spill at a Duke coal ash dump in Eden coated 70 miles of the Dan River in toxic sludge.

The settlement was initially tabled last month, the day after an Associated Press story highlighting what environmentalists criticized as a “sweetheart deal” to Duke.