Man Pleads Guilty to Illegal Dumping for Filling Wetlands in New York

Filling wetlands and lying to government agents are both potential criminal offenses.  Julius DeSimone of New York found that out the hard way.

DeSimone pleaded guilty today in federal court in New York for conspiring to fill wetlands in violation of the Clean Water Act and to lying to federal agents in an attempt to conceal his crimes.  According to the charges, DeSimone and his co-conspirators engaged in a multi-year scheme to illegally dump 8,100 tons of pulverized construction and demolition debris that was processed at New York and New Jersey solid waste management facilities and then transported to a farmer's property for disposal.

The defendants concealed the illegal dumping by fabricating a New York State Department of Environmental Conservation (DEC) permit and forging the name of a DEC official on the fraudulent permit.  DeSimone admitted in the plea agreement that once DEC and the EPA learned of the illegal dumping, he lied to federal agents.

DeSimone faces up to five years in prison and a $250,000 fine for each felony count, and may be ordered to pay for portions of the cleanup at the site.

Partial Deepwater Horizon Settlement Reached with MOEX

MOEX Offshore 2007 LLC has agreed to settle its liability in the Deepwater Horizon oil spill in a settlement with the United States valued at $90 million, amking it the largest settlement ever reached under the Clean Water Act.  Approximately $45 million of the settlement is going directly to the Gulf in the form of penalties or expedited environmental projects.

MOEX will pay $70 million in civil penalties under the Clean Water Act, and agreed to spend an additional $20 million to facilitate land acquisition projects in several Gulf states that will preserve and protect habitat and resources important to water quality and other environmental features of the Gulf of Mexico region.  At the time of the spill, MOEX was a minority investor in the lease for the Macondo well.  It no longer owns any share of the lease.

Of the $70 million in penalties, $45 million will go to the United States to replenish the Oil Spill Liability Trust Fund, where it will be available to pay for response actions, cleanup and damages caused by future spills.  The remaining penalty will go to Gulf states participating in the settlement ($6.75 million to Louisiana; $5 million each to Alabama, Florida, and Mississippi; and $3.25 million to Texas).

NC Hog Farm and President Sentenced to Pay $1.5M for Clean Water Act Violations

The U.S. Department of Justice announced that Freedman Farms was sentenced today in federal court to five years probation and ordered to pay $1.5 million in fines, restitution and community service payments for violating the Clean Water Act when they discharged hog waste into a stream that leads to the Waccamaw River.

The company's president was sentenced to six months in prison to be followed by six months of home confinement for his role in the violations.

According to evidence presented at trial, Freedman Farms discharged hog waste into a tributary of the Waccamaw River that flows through the White Marsh, a wetlands complex.  The farm had approximately 4,800 hogs.  The hog waste was supposed to be directed to two lagoons for treatment and disposal.  Instead, in December 2007, hog waste was discharged from the farm directly into the tributary.

We've been involved in CAFO cases, Clean Water Act cases, and potential criminal cases like this one many times.  Intentional discharges are no laughing matter, and can lead to jail time.

Iowa Building Owner Guilty of Improper Asbestos Removal

The owner of a building in Des Moines, Iowa, pleaded guilty in federal court today to conspiracy to violate the Clean Air Act and violating the Act's provisions relating to asbestos removal. The Act requires building owners to follow certain work practice standards to ensure that any asbestos in their buildings is removed safely. Required safety measures include notifying the appropriate regulatory agency before commencing removal activities, wetting the asbestos during the removal and before disposal, and properly disposing of the asbestos at an EPA-approved disposal site.

In the plea agreement, Bob Knapp admitted to overseeing the renovation project from 2006 through February 2008, which involved converting several floor of the building into luxury residential condominium units and renovating other floors to attract additional commercial tenants. He also admitted that he conspired with another defendant to remove asbestos-containing materials ("ACMs") from the building without complying with the Act's requirements. While Knapp was overseeing the project, ACMs were removed and disposed of in an uncovered dumpster.

Knapp will be sentenced to between 33 and 41 months in prison and may be required to pay a fine of up to $250,000. A sentencing date has not yet been set.

Two Lesson from EPA’s Office of Inspector General: Hire the Right Environmental Professional, and Have an Environmental Lawyer Review Phase I Site Assessments

In a report published February 14, 2011,[1] the EPA Office of Inspector General (“OIG”) flunked 35 of the 35 Phase I Environmental Site Assessments (“Phase I ESAs”) prepared by environmental professionals.  The reports had been used by EPA in support of approximately $2.1 million in brownfields grants.  Is this sampling typical of Phase I ESAs?  In our experience, yes.  And these deficiencies could place the landowner, purchaser or tenant at risk of incurring liability for the purchase or use of brownfield properties.  They could also lead to bad business decisions and improper or even dangerous decisions regarding uses of brownfield properties, possibly threatening human health and the environment.

In 2002, Congress amended CERCLA (the federal Superfund statute) to provide certain statutory defenses to liability for releases or threatened releases of hazardous substances that may endanger public health or the environment.  These so-called “brownfield defenses” are dependent upon the undertaking of an “all appropriate inquiries” (AAI) evaluation by an environmental professional[2], and for most of the defenses, a conclusion that there is no reason to believe that a release of hazardous substances has taken place and that there is not likely the potential for environmental contamination.  These reports are known commonly as Phase I ESAs and are a staple in commercial real estate transactions.  However, as the OIG recently reported, every single one of the Phase I ESAs they reviewed were deficient in some way.

The main problems that the OIG found were:

1. None of the 35 reports included the required statement certifying the qualifications of the Environmental Professional (EP) who conducted the investigation and prepared the report.  Sixteen of the 35 reports (46 percent) had a statement, but it deviated from the one specifically required by federal law.  Among the 16, either no statement was included or the required statement was abbreviated or modified.  The remaining 19 reports (54 percent) generally contained all three required sentences of the statement, but included inconsistent wording.  For example, several statements used the terms “we” and “our” when only one EP signed the qualifications statement.
2. Seven of the 35 reports (20 percent) did not include a statement regarding data gaps, which could result in the erroneous conclusion that there were none.
3. All 35 reports failed to include the required EP opinion statement in the conclusion section of the report.  Of these, 33 reports (94 percent) included deviations from the required opinion statement, such as missing, abbreviated, or modified sentences (“I” instead of the name of the environmental firm, or “general” conformance statements rather than definitive ones).  The remaining two reports generally contained all parts of the statement, but also included some minor deviations, such as rewording or additional wording and omissions that do not alter the meaning of the statement.
4. Most baffling of all, 9 of the 35 reports (26 percent) were not even signed by the responsible EP.

Users of a Phase I ESA usually just want to know if they have a “clean environmental report.”  They are placing a tremendous amount of reliance on the environmental professional to get it right.  As the OIG’s report illustrates, however, many EPs are not “dotting their I’s and crossing their T’s” when it comes to the Phase I ESA reports.  What if the EP gets the conclusion wrong?  What if there is, indeed, hazardous waste on the property?  Or what if the user knows there is contamination the property and purchases it anyway, expecting to take advantage of the bona fide prospective purchaser defense after conducting a risk assessment without digging anything up, only to find years later that the EP missed a massive plume of the same contaminant?

Is it the EP’s job – and ultimately their responsibility – to get these Phase I ESA reports right?  Absolutely.  However, if the EP is uninsured or underinsured, that may well be of little to no help to the user of the report.  In addition, most EPs attempt to limit their liability to a fixed amount in the fine print of their contracts, many times attempting to restrict their potential exposure to the amount paid for the report.  Whether these attempts by the EPs are successful or not is a topic for another day.  Nevertheless, it seems that users relying on these AAI reports are taking a risky gamble without a thorough review by an environmental attorney.  To be fair, most environmental professionals do a thorough job.  Most of the time, there was nothing wrong with the investigation they conducted or the conclusion they reached; but their reports were technically insufficient.  In some instances, the OIG was clearly nitpicking the reports, but lawsuits have been known to turn on less.  With these reports increasingly becoming a commodity, it is good for all concerned to have a trained set of eyes to review the work.  The cost of missing something could be crippling.

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[1] EPA Must Implement Controls to Ensure Proper Investigations Are Conducted at Brownfields Sites, Report No. 11-P-0107, EPA Office of Inspector General (“OIG”), February 14, 2011, http://www.epa.gov/oig/reports/2011/20110214-11-P-0107.pdf.

[2] “Environmental professional” is defined in EPA regulations, and the environmental professional conducting the ESA must meet the regulatory requirements.

Indiana Wastewater Treatment Operator and Managers Charged with Conspiracy and Violating the Clean Water Act

United Water Services Inc. (UWS), the former contract operator of the Gary Sanitary District wastewater treatment works in Gary, Ind., and two of its employees, were charged today with conspiracy and felony violations of the Clean Water Act (CWA) in a 26-count indictment returned by a federal grand jury, the Justice Department announced today.

UWS and employees Dwain L. Bowie, and Gregory A. Ciaccio, have been charged with manipulating daily wastewater sampling methods by turning up disinfectant treatment levels shortly before sampling, then turning them down shortly after sampling.

UWS entered into a 10-year contract to operate the Gary Sanitary District wastewater treatment works in 1998, in exchange for $9 million annually. UWS’s contract was renewed in May 2008. As contract operator, UWS handled the operation and maintenance of the treatment works, and was responsible for environmental compliance. To ensure compliance with the discharge permit, UWS was required to take periodic representative wastewater samples, including a daily sample to determine the concentration of E. coli bacteria in the wastewater.

According to the indictment, the defendants conspired to tamper with E. coli monitoring methods by turning up levels of disinfectant dosing prior to E. coli sampling. The indictment states that the defendants would avoid taking E. coli samples until disinfectants had reached elevated levels, which in turn were expected to lead to reduced E. coli levels. Immediately after sampling, the indictment alleges, the defendants turned down disinfectant levels, thus reducing the amount of treatment chemicals they used.

Dwain Bowie was UWS’s Project Manager for the Gary facility beginning in 2002, and was in charge of the Gary operation. Gregory Ciaccio joined Bowie’s staff in July 2003, and eventually was made the Plant Superintendent, in charge of day-to-day operations.

The CWA makes it a felony to tamper with required monitoring methods at a permitted facility like the Gary Sanitary District. If convicted, Bowie and Ciaccio face up to five years in prison on the conspiracy count and two years on each of the CWA counts, as well as a criminal fine of up to $250,000 for each count. The company may also face fines and/or probation.

The allegations in the indictment are mere accusations and all persons are presumed innocent until and unless proven guilty beyond a reasonable doubt in a court of law.

The case was investigated by the Northern District of Indiana Environmental Crimes Task Force, including agents from the Criminal Investigation Division of the U.S.E.PA., the FBI and the Indiana State Police. The case is being prosecuted by the U.S. Attorney’s Office for the Northern District of Indiana and the Justice Department’s Environmental Crimes Section.

The Carolinas' Water War May Be Ending

In January 2007, the North Carolina Environmental Management Commission approved up to 10 million gallons of water per day to be withdrawn from the Catawba and used by the North Carolina cities of Concord and Kannapolis, located in the Rocky River basin. That decision sparked intense opposition in South Carolina and led to the Supreme Court filing later that year – State of South Carolina v. State of North Carolina, No. 138, Original, in the Supreme Court of the United States.

In late August this year, the Catawba-Wateree River Basin Bi-State Commission unanimously approved a resolution supporting an effort to settle the dispute using Duke Energy’s comprehensive relicensing agreement. That document, formed during a three-year span using 58,000 stakeholder hours with interest groups, resource agencies and water providers from both states, serves as Duke’s hydroelectric license application to continue operations along the Catawba beginning in 2008.

On November 12, 2010, representatives from attorney general offices in South Carolina and North Carolina presented a plan to end the Catawba River water dispute – the Carolinas’ Water War. Members of the Catawba-Wateree River Basin Advisory Commission who heard the presentation supported the arrangement. Now N.C. Sen. Clodfelter and S.C. Sen. Wes Hayes will head an effort to reach a water-use agreement between Duke Power, which uses water from the river, and legal teams from both states. Duke Energy and Catawba River Water Supply Project, both interveners in the federal case, supported the arrangement as well. Once S.C. Attorney General Henry McMaster and N.C. Attorney General Roy Cooper sign the agreement the Supreme Court case will be dismissed. However, McMaster has indicated that South Carolina won’t end its lawsuit until the deal is struck.

In the agreement, all users of Catawba water including interbasin transfers are subject to drought response plans “no less stringent” than those of Duke’s Low Inflow Protocol system, a much-heralded conservation tool introduced by the relicensing agreement. Both states, along with the Catawba-Wateree Water Management Group, must update the Catawba-Wateree River Basin Supply Study on water conditions every 10 years for possible modifications. For the term of Duke’s license, or until 2058, neither state is allowed to file a Supreme Court action against its neighbor as long as conditions of the agreement are followed.