IDEM pollution fines fall: Violators assessed lowest amount since '99, but Daniels administration speeds up process

March 27, 2006

Under Republican control for the first time in 16 years, the Indiana Department of Environmental Management in 2005 handed out $2.03 million in fines for pollution violations, the lowest annual assessment since at least 1999.

The 2005 penalties were down nearly $600,000 from a year earlier, when the department was under the administration of Gov. Joe Kernan.

But IDEM records show Gov. Mitch Daniels' team had comparatively little patience for unresolved cases, in which the commission and alleged violators couldn't reach a settlement. Such agreements are often the preferred way of resolving issues, with the violator typically agreeing to a fine amount and conducting an environmentally friendly project.

When speaking softly didn't work, IDEM Commissioner Thomas Easterly pulled out his agency's big stick: issuing 41 "commissioner's orders" last year that compel payment of a fine within 20 days, unless violators appeal to an environmental law judge.

Easterly issued more commissioner's orders in 2005 than the 36 during the preceding three years combined.

"We're not afraid to go to the mat ... we want to be predictable, consistent and speedy," said Matthew Klein, assistant commissioner for enforcement and compliance.

Gene Perkins, president of N.G. Perkins Co., uses another word to describe the agency: unmerciful.

IDEM wants his company, developer of the Cobblestone Estates subdivision in Greenwood, to fork over $34,250 stemming from a March 2004 violation. The state cited Perkins for runoff of silt into a stream, and says it failed to "properly install" silt fences.

Perkins thought he was on course to pay a $10,000 fine before receiving a commissioner's order in October. He said that by the time he received the order, the contractor he'd hired to prevent silt problems was "long gone." He's appealing.

"I just want to get a hearing about it one more time ... . The question is, 'Have I damaged anybody? Have I killed any fish?'"

Easterly's push to step up the use of commissioner's orders didn't come as a surprise to environmental attorneys, said Sue Shadley, a partner of Indianapolis law firm Plews Shadley Racher & Braun.

She said Klein sent letters to counsel last year, warning that clients ought to make progress in dealing with violation notices issued more than a year ago-or they'd better contact him. Violation notices warn that if a settlement isn't reached within 60 days, the commissioner might issue an order.

"Very rarely can you actually resolve something that quickly, but a year is not that unreasonable," Shadley said. Often under the previous administration, "they would never take it to the next step."

In some cases, she said, receiving orders was good for companies because they'd been at loggerheads with the state and struggled to reach a settlement.

At least the commissioner's order provides the mechanism to take the case directly to an environmental law judge, she added.

Resolving a case quickly can be good for a company, which may have to disclose to investors pending environmental litigation with state regulators.

But she said a commissioner's order isn't helpful when a client can't afford to pay an IDEM fine. At that point, the parties need to be flexible to work out a payment solution, Shadley added.

A review of Easterly's 2005 orders shows IDEM stands to collect more than $730,600 from commissioner's orders if they aren't overturned. That's in addition to the $2.03 million the department assessed in civil penalties through agreed orders.

Among the largest commissioner's orders last year was $64,625 against the city of Bloomington. IDEM cited the city for discharges of untreated sewage from its wastewater system. The department alleges Bloomington officials turned down an offer to enter into an agreed order in 2002. City officials couldn't be reached for comment.

The largest 2005 fine assessed under an agreed order was against Thyssenkrupp Waupaca Inc., an iron foundry in Tell City that agreed to pay $210,039 over allegations its air pollution devices were inadequate.

The largest fine in the Indianapolis area was against Citizens Gas & Coke Utility, for $92,000. IDEM cited the firm for leaking refrigerant at its liquefied natural gas storage facility on the northwest side. Citizens blamed faulty equipment.

Companies can reduce many of the financial penalties in agreed orders by conducting a supplemental environmental program. It may be as simple as using a less harmful ingredient in manufacturing.

The city of Elwood last year agreed to pay IDEM $80,850 for water discharge violations. The city can reduce that by $65,000 if it completes a SEP to provide water and sewer service to two subdivisions outside city limits.

SEPs generally cost more in the long run, though. In this case, Elwood plans to spend at least $129,360 on the service extension.

IDEM rules state a violator must spend $2 on a SEP to offset every $1 of civil penalty. Klein said money is better used in the community to improve the environment than handed to the state.

Last year, about $987,000 of the $2.03 million civil fines was assessed for air violations. That was followed by $465,000 for water, $354,000 for hazardous waste, and $226,000 in solid waste violations, according to IDEM.

In 2006, the enforcement division is focusing on underground leaking storage tanks, industrial storm water, auto salvage yard enforcement and combined sewer overflows.
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