some text A truck sits in the sediment of the coal ash spill in 2008 that blanketed more than 300 acres surrounding the TVA Kingston Fossil Plant.
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NASHVILLE - The nation's largest public utility has agreed to pay $27.8 million to settle claims from Tennessee property owners who suffered damage from a huge, 2008 spill of toxin-laden coal ash sludge that drew national attention to coal ash and its toxic contaminants.

The spill happened when a containment dike burst at the Tennessee Valley Authority's Kingston Fossil Plant, releasing more than 5 million cubic yards of ash from a storage pond. The sludge flowed into a river and spoiled hundreds of acres in a riverside community 35 miles west of Knoxville.

U.S. District Court Judge Thomas Varlan ruled in 2012 that TVA was liable for the spill. He wrote in his opinion that if TVA had followed its own policies, the problems that led to the dike failure would have been investigated and addressed.

The settlement with more than 800 property owners was announced Friday. Varlan still has to approve it.

In a news release, TVA called the settlement a "significant milestone" and reiterated the utility's commitment to "completing the Kingston recovery project and restoring the community to as good as or better than it was before the spill."

The Environmental Protection Agency says coal ash contains toxic contaminants including arsenic, boron, cadmium, chromium, lead, mercury and other metals.

In 2010, the agency proposed a rule to treat coal ash in landfills and other storage areas as a hazardous material. That rule has never been finalized, however, so it was not in place six months ago when a spill at a Duke Energy plant in Eden, N.C., coated 70 miles of the Dan River with toxic sludge. State lawmakers there are divided over a bill that would require Duke to clean up 33 unlined ash pits that state regulators say are contaminating groundwater.

The EPA is under a federal court order to finalize the coal ash rule by Dec. 19, said Stephen Smith, executive director of the Southern Alliance for Clean Energy, one of the parties in the case.

Smith said the TVA settlement "closes a long overdue chapter with a number of people whose lives were significantly impacted. ...TVA should have settled with these people a long time ago. But it's done. It's good. We're hoping people can move on with their lives and put this chapter behind them. But the final chapter on coal ash hasn't been written."

In Kingston, TVA is spending $1.2 billion on the cleanup and restoration, which it expects to conclude next spring. So far, the utility has recovered $267 million from its insurers.

Before the deal announced on Friday, TVA already had settled more than 200 Kingston-related claims for about $80 million, purchasing more than 900 acres from affected property owners. TVA is converting some of that land into parks and green space that includes boat launches and walking trails. Another portion of the property has been donated to Roane County. TVA also gave $43 million to the Roane County Economic Development Foundation for community development projects.

An estimated 500,000 cubic yards of ash remain at the bottom of the Emory and Clinch rivers. In 2012, the EPA approved a plan to leave the remaining ash in place because dredging it would stir up contaminants.

TVA has agreed to monitor the site for 30 years at a cost of about $10 million. The utility is also converting its other wet-storage coal ash facilities to dry storage at a total cost of $1.5 to $2 billion, TVA spokesman Duncan Mansfield said. That work is scheduled to be complete by the end of 2022.

TVA has about 9 million customers in seven states, most of them in Tennessee.