Clean Water Act Enforcement: Steps Producers Can Take to Reduce Exposure

By Lynn Kornfeld and Jess Phelps | April 15, 2010
Concerned about protecting the nation's waters, the Obama administration intends to take a more aggressive approach to enforcement of the Clean Water Act. The U.S. EPA followed suit by ratcheting up efforts to pursue action against CWA violators. As a result, ethanol producers have come under increased scrutiny. At least one has been the subject of parallel action by EPA and state agencies against violating facilities. Additionally, several citizens' groups have sued ethanol producers for wastewater discharge violations and other CWA permit violations. Therefore, ethanol producers should re-examine operating permits and prepare to respond to potential violations.

Most states can implement permitting programs under the CWA. However, EPA retains independent authority to directly enforce provisions or even "overfile" state actions. Corn Plus, a Minnesota ethanol producer, recently pleaded guilty to charges brought by both the Minnesota Pollution Control Agency and EPA. The court imposed a $100,000 fine and an additional $50,000 paid to the Minnesota Department of Natural Resources for a water quality project in the impacted watershed.

Citizens' Suit Provisions
Beyond agency enforcement, environmental groups are increasingly targeting ethanol producers under the citizen's suit provisions of the CWA. In Wisconsin alone, Midwest Environmental Advocates recently targeted two facilities. The first suit alleged that Utica Energy of Oshkosh committed at least 2,207 permit violations in one year relating to violations of its temperature; total suspended solids; and chlorine, zinc, oil/grease and phosphorus limits. Utica settled for $110,000, allocated toward environmental efforts in the receiving waterway and covering Midwest's litigation costs. Additionally, Utica paid $280,000 in forfeiture and fees and $200,000 to connect to the community's water treatment plant.

Midwest also filed suit against Didion Energy of Cambria for various wastewater discharge permit violations. A federal district court granted Midwest partial summary judgment finding that Didion violated its permit by discharging excessive levels of total suspended solids, certain water treatment additives, chlorine and sodium bisulfate, and floating solids. These suits demonstrate that citizen's actions against ethanol producers are on the rise and can potentially result in significant liability to operating facilities. (Domino v. Didion Ethanol LLC, 2009 WL 4067800; W.D. Wisc. Nov. 23, 2009)

Minimizing Exposure to CWA Liability
To prepare for potential enforcement action or citizen's suits, ethanol producers should fully comply with operating permits to eliminate or reduce any potential liability under the CWA.

Permits should be reviewed periodically to ensure compliance with the CWA and state programs in relation to the current status of the facility and whether the permit accurately reflects its conditions. Many CWA permits prescribe periodic sampling, the development of certain facility plans, reporting, and/or employee training requirements. Over time, an ethanol plant and the nature of its discharge can evolve, which can result in unanticipated violations.

EPA and several states have policies and laws providing immunity from prosecution or penalty mitigation for voluntarily disclosing violations discovered by an environmental audit, or as part of an environmental management system. Companies may benefit from performing a formal voluntary audit of its facilities. Consider performing an audit under the direction of an attorney to help protect audit information from disclosure.

Anticipate and respond to citizens' suits. Sixty days prior to filing a citizen's suit, a potential plaintiff must notify EPA and the producer, providing an opportunity to come into compliance. Even if an ethanol producer is unable to comply within this 60-day window, there is an opportunity to negotiate with the plaintiff(s) to reduce exposure—particularly litigation costs.

Lynn Kornfeld is a partner in the Denver office of Faegre & Benson, practicing environmental law and policy. Reach her at (303) 607-3697 or LKornfeld@faegre.com. Jess Phelps is a member of the Faegre & Benson litigation practice focused on international trade issues involving antidumping and countervailing duty litigation, working out of Des Moines, Iowa. Reach him at (515) 447-4721 or JPhelps@faegre.com.