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OAH Docket No. 3-2200-19572-2 |
STATE OF MINNESOTA
OFFICE OF ADMINISTRATIVE HEARINGS
FOR THE POLLUTION CONTROL AGENCY
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In the Matter of the Administrative Penalty Order Issued to Ryan Contracting Company
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FINDINGS OF FACT, CONCLUSIONS AND RECOMMENDATION
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The above-entitled matter came on for hearing before Administrative Law Judge Kathleen D. Sheehy on May 15, 2008, at the Offices of the Minnesota Pollution Control Agency, 520 Lafayette Road, St. Paul., Minnesota 55155. The OAH hearing record closed with the receipt of the last posthearing brief filed by the parties on June 2, 2008.
Lawrence W. Pry, Assistant Attorney General, Suite 900, 445 Minnesota Street, St. Paul, MN 55101-2128, appeared on behalf of the Minnesota Pollution Control Agency (MPCA). Paul T. Meyer, Attorney at Law, Hammargren & Meyer, P.A., 7301 Ohms Lane, Suite 360, Minneapolis, MN 55439, appeared on behalf of Ryan Contracting Company (Ryan).
STATEMENT OF ISSUES
1. Did Ryan’s discharge of storm water into a wetland violate the conditions of the construction storm water permit and violate Minn. R. 7050.0210, subp. 2 (2007)?
2. If so, was the violation serious, requiring imposition of a non-forgivable penalty, and was the assessed penalty reasonable or appropriate?
The ALJ concludes that Ryan violated the Permit terms and Minn. R. 7050.0210, subp. 2, and that the violation was properly determined to be non-forgivable, but that the assessed penalty is unreasonable in light of the statutory factors.
Based upon all of the proceedings herein, the Administrative Law Judge makes the following:
FINDINGS OF FACT
1. Ryan is a large construction company experienced in general contracting for projects of varying size.[1] Ryan has previously obtained approval for dewatering under the standards at issue in this proceeding.
2. Under Minnesota law, a National Pollutant Discharge Elimination System/State Disposal System (NPDES/SDS) storm water permit is required for construction activities that result in land disturbance equal to or greater than one acre.[2] The MPCA is the responsible authority for those permits in Minnesota.[3]
3. On June 1, 2007, Mattamy Homes (Mattamy) and Ryan submitted a written application to MPCA for coverage under MPCA’s NPDES/SDS General Storm Water Permit for Construction Activity (the Permit). The MPCA has a standard Permit for such activities, and the general requirements do not change from one project to another.[4] Ryan sought coverage under the Permit for construction activities as part of the Creekside of Savage Development (Creekside), located in Savage, Minnesota.[5]
4. Creekside is a 20-acre residential development located in the northeast quadrant of the intersection of County Road 74 (154th Street West) and Allen Boulevard South, within the City of Savage, in Scott County, Minnesota. As of August 2007, the site had been graded, but no buildings or streets had been constructed.[6] Part of the project involved the excavation and expansion to the west of an existing storm water pond, which itself is located immediately southwest of a wetland area.[7]
5. On June 7, 2007, MPCA approved coverage under the Permit, effective June 11, 2007, to Ryan and Mattamy for Creekside.[8] Under the terms of the Permit, Ryan and Mattamy were required to discharge any turbid water to a temporary or permanent sedimentation basin on the project site whenever possible. If water could not be discharged to a sedimentation basin prior to entering surface water, it must be treated with appropriate best management practices, such that the discharge does not adversely affect the receiving water. Discharge points must be adequately protected from erosion and scour. In addition, all water from basin-draining activity must be discharged in a manner that does not cause nuisance conditions, erosion in receiving channels, or inundation in wetlands causing significant adverse impact to the wetland.[9]
6. On August 13 and 14, 2007, the area around Creekside experienced exceptionally heavy rainfall, exceeding four inches over the two days.[10]
7. At 9:00 a.m. on August 15, 2007, Sam Lucido, Associate Civil Engineer for the City of Savage (City) received a report that Ryan was pumping surface water into a wetland.[11] Lucido passed the report on to John Wichman, Senior Engineer Technician for the City Engineering Division, who was at a nearby jobsite. Lucido also called the City’s MPCA contact regarding the discharge.[12]
8. Wichman drove to the construction area soon after the City received the initial call.[13] He observed a pump-and-hose dewatering system pulling turbid water from the storm water pond and discharging that water onto a vegetated area several feet up-gradient of the neighboring wetland. The diameter of the hose was about two and one-half inches. In addition, a four-inch hose was being used to pump clear groundwater from another area. The discharge from the two hoses came together near a silt fence and flowed through the fence downhill across a sparsely vegetated area into the wetland.[14]
9. Wichman observed scouring in the area where the pumped water entered the wetland. He saw muddy water running out of the hose into the wetland. He also observed material discoloration of the water in the wetland, which he attributed to the presence of excessive suspended solids. The discoloration was visible in an arc, centered on the point where the discharge was entering the wetland. Wichman concluded that the silt fence and sparse vegetation were insufficient to prevent the turbidity from affecting the wetland. Wichman instructed Respondent to immediately cease the discharge to the wetland.[15]
10. Wichman spoke to Tyler Enright, the responsible person for Ryan, who was authorized to control the activities of Ryan at the project site. Enright responded that the water was being discharged across vegetation and through a silt fence to address the turbidity. Wichman pointed out the discoloration of the water in the wetland, and told Enright that Ryan’s approach was not working and that the pumping must cease.[16] Ryan stopped the pumping at approximately 9:15 a.m.[17] Wichman assisted Ryan’s employees in moving the groundwater hose to a riprapped channel between the stormwater pond and the wetland to prevent scouring from the flow of groundwater.[18]
11. In the afternoon of August 15, 2007, Ryan created a berm along the western edge of the storm water pond to separate the area being excavated from the pond itself. Ryan then pumped water from the excavation area into the storm water pond. The effect of this added berm was to make the storm water pond a temporary sedimentation basin that meets the standards for dewatering under the Permit.[19] Wichman observed this arrangement and noted that it was compliant with the terms of the Permit.[20] Wickman and Lucido each observed that the clear groundwater being pumped into the wetland had lightened the color of the water, but the water was still turbid.[21]
12. At the request of Ryan employees, Wichman also observed runoff from another nearby construction project (the School Project), where discharge from the property was entering the wetland directly from a flared-end outlet that collected water from approximately three catchbasins and a tile system in an area where soccer fields were being constructed. At that point in time, there was no turf on the fields, and the entire area was muddy from the recent rain. Wichman observed that the water being discharged through the flared-end outlet was clear. Lucido observed some lightening of the turbidity of the wetland in the vicinity of the outlet.[22]
13. Lucido observed conditions on the site on the afternoon of August 15, 2007, and took photographs of the project and surrounding area.[23] Lucido noted that the entire wetland was turbid.[24]
14. On August 16, 2007, Brandon Finke, Pollution Control Specialist of the MPCA’s Construction Storm Water Compliance and Enforcement staff, visited Creekside and met with Mack (Ryan’s foreman for earthmoving operations, or “dirt foreman”), Wichman, Lucido, and Scott Orloff (Ryan’s specialist in dewatering operations). Finke inspected the Creekside project area, and he observed uniform discoloration of the wetland’s water column. City staff noted that the discoloration was less pronounced than the previous day, which they attributed to settling of suspended sediments. [25]
15. In addition to inspecting the Creekside project area, Finke observed the flared-end outlet of drainage from the School Project. He reached into the water and encountered an inch of sediment deposition in the outlet, extending up into the outlet farther than Finke could reach.[26] Finke followed the drain line to an open inlet on the soccer field that was surrounded by mud. There was no sediment protection installed at the drain site. One of the drain connections was equipped with a manhole, and Orloff descended to the bottom to show Finke the silt that was in the drainage system.[27] Finke concluded that the inlet was noncompliant and that sediment had also entered the wetland through the drain system of the School Project. Finke informed the manager of the School Project that the inlet was not compliant with the Permit conditions applicable to the School Project. The MPCA did not issue a citation to the School Project contractor or take any other action with regard to the violation by the School Project.[28]
16. In addition to photographs of the wetland, Finke took photographs of the drainage inlet in the School Project area described above. These photographs show a large volume of sediment surrounding and almost completely covering the inlet.[29]
17. On August 20, 2007, the MPCA sent an Alleged Violation Letter (AVL) to Ryan and Mattamy. The AVL cited the discharge of turbid dewatering effluent into a wetland resulting in material discoloration of the wetland as a violation of Minn. R. 7050.0210. The AVL also identified violations of the NPDES Permit. In addition to these notices, the AVL required that Ryan and Mattamy immediately cease all dewatering activities at Creekside. Dewatering could resume when Ryan and Mattamy developed a site-specific dewatering plan that met all Permit requirements.[30]
18. In addition, Mr. Finke prepared an Administrative Penalty Order (APO) Penalty Calculation Worksheet to be used in determining the appropriate penalty amount. The Penalty Calculation Worksheet incorporates the factors to be considered under Minn. Stat. § 116.072 and provides guidance for determining the appropriate penalty amount. In calculating the base penalty, the Worksheet uses a matrix to determine whether the potential for harm to humans, animals, air, water, land, or other natural resources was minor, moderate or severe (set out on the vertical axis of the matrix, labeled “Potential for Harm”), and whether the deviation from compliance was minor, moderate, or severe (on the horizontal axis of the matrix, labeled “Deviation from Compliance”):
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Deviation from Compliance |
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Minor |
Moderate |
Major |
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Potential |
Major |
$5,000 to $2,000 |
$8,000 to $3,500 |
$10,000 to $5,000 |
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For |
Moderate |
$2,000 to $500 |
$3,500 to $1,000 |
$5,000 to $2,000 |
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Harm |
Minor |
$500 to $0 |
$1,000 to $200 |
$2,000 to $500 |
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Base Penalty Range |
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19. The worksheet permits the base penalty to be adjusted (enhanced or mitigated) for willfulness or culpability, history of past violations, economic benefit gained from the violation, and other factors as justice may require. [31]
20. The MPCA uses a forum process in cases that may involve a non-forgivable penalty. The forum considered the information presented in the Case Development Form and the APO worksheet, and after determining that two violations had occurred, determined that those violations were serious, stating:
The violations are serious. The Regulated Parties failed to ensure permit dewatering conditions were met. The violations resulted in a direct impact to the environment via turbid water discharge to an off-site wetland northeast of the project.[32]
21. The forum determined that these were repeat violations, with Ryan and Mattamy each having a prior dewatering violation (on June 14, 2007, and July 18, 2007, respectively).[33] The forum also determined that the Potential for Harm factor should be rated as Moderate because:
Actual environmental impact to the off-site wetland northeast of the project was observed and later documented. The discharge water from dewatering activities was subject to some degree of treatment prior to entering the off-site wetland to the northeast. While the wetland’s water column was materially discolored due to the amount of suspended sediment present in the discharge water, the observed turbidity had markedly decreased by the day following discovery of the alleged violations. Deposition of the previously suspended sediment to the benthic zone was not of a degree to be readily observable. There is no evidence of dewatering discharge prior to the day the violations were discovered. The potential for harm is moderate.[34]
22. The forum determined that the Deviation from Compliance was Moderate because:
As stated earlier, the discharge water from dewatering activities was subject to some degree of treatment prior to entering the off-site wetland to the northeast. However, the treatment employed by the Regulated Parties was inappropriate and largely nonfunctional. Water was discharged to a vegetated area several yards up gradient from an off-site wetland northeast of the project. The vegetation was mainly temporary cover crop, which provided little erosion protection in an overland flow situation. The water flowed down the slope, through the silt fence, which was placed as perimeter sediment control to protect the wetland, and into the wetland. The deviation from compliance is moderate.[35]
23. The forum determined the base penalty for the violations using the range for moderate potential for harm and moderate deviation from compliance ($1,000 to $3,500). The forum set the total base penalty at $3,500, stating:
The penalty was moved to the top of the box because of the relatively high value and volume of the resource impacted (1/2 acre Type 3 Wetland — Palustrine, Emergent, Unconsolidated Bottom, Semipermanently Flooded), the proximity of the project and the wetland to the Credit River (approximately ¼.mile), and the failure of the Regulated Parties to monitor the appearance of the discharge water and its impact on the receiving resource.[36]
24. The forum addressed the enhancement or mitigation of the base penalty by considering the factors of willfulness/culpability, history of past violations, other factors as justice may require, and economic benefit. The forum determined that a 20% enhancement was appropriate due to Ryan’s history of a prior violation. No enhancement or mitigation was given for “other factors as justice may require.” The penalty was enhanced by the estimated $250.00 in labor and equipment that was required to create the compliant dewatering mechanism. That enhancement was categorized as a gain of economic benefit through the noncompliance. [37]
25. The forum determined that the penalty would be non-forgivable because the violations were serious.[38]
26. On November 21, 2007, the MPCA issued an APO to Ryan.[39] The APO found Permit violations and a violation of Minn. R. 7050.0210, subp. 2. Under Minn. Stat. § 116.072, the MPCA required Ryan to pay a $4,450.00 non-forgivable penalty and conduct no further dewatering activities until a site-specific compliance plan was developed, implemented, and submitted to the MPCA.[40]
27. Ryan completed the corrective action specified in the APO in a timely manner.
28. On December 18, 2007, Ryan appealed the APO and requested a hearing before an Administrative Law Judge. Ryan waived its right to an expedited hearing.[41]
29. On April 24, 2008, the MPCA issued a Notice of and Order for Hearing regarding this matter.
30. At the outset of the hearing, the MPCA agreed to withdraw the $250.00 penalty assessed for economic benefit arising from noncompliance.[42]
31. As noted above, no AVL or APO was issued to the responsible party regarding conditions observed at the School Project, even though the MPCA staff member concluded that a violation had occurred. At the hearing in this matter, MPCA staff maintained that this was because of “work load issues, no direct evidence of discharge or impact to the wetland,” and because the MPCA staff member “forgot about it ….”[43] The photographs at each end of the drainage system confirm that sediment entered the wetland through the flared-end outlet. The noncompliance at the School Project clearly contributed to the observed impairment of the wetland, for which Ryan was cited.
32. Any Conclusion of Law more appropriately considered a Finding of Fact is hereby adopted as such.
Based on the above Findings of Fact, the Administrative Law Judge makes the following:
CONCLUSIONS
1. The Administrative Law Judge and the Commissioner of the Pollution Control Agency have jurisdiction in this case pursuant to Minn. Stat. §§ 14.57 – 14.62 and Minn. Stat. § 116.072.
2. The Notice of and Order for Hearing in this matter was proper, and all relevant substantive and procedural requirements of law or rule have been fulfilled. The matter is properly before the Administrative Law Judge.
3. The Minnesota Pollution Control Agency has the burden to establish by a preponderance of the evidence that Ryan violated applicable laws or rules and that issuance of the Administrative Penalty Order was warranted. If the violations are established, the Administrative Law Judge may not recommend a penalty different in amount than that contained in the Administrative Penalty Order unless the amount of the proposed penalty is determined to be unreasonable, after considering the factors set forth in Minn. Stat. § 116.072, subd. 2(b).[44]
4. The MPCA proved by a preponderance of the evidence that Ryan violated Permit terms requiring the use of best management practices to prevent an adverse effect on receiving water and requiring that dewatering be conducted in a manner that does not cause nuisance conditions in wetlands.
5. The MPCA proved by a preponderance of the evidence that Ryan violated Minn. R. 7050.0210, subp. 2, by discharging storm water into a water of the state so as to cause a nuisance condition of excessive suspended solids.
6. Under Minn. Stat. § 116.072, subd. 3, an Administrative Penalty Order must include “a concise statement of the facts alleged to constitute a violation” and “a reference to the section of the statute, rule, ordinance, variance, order, stipulation agreement, or term or condition of a permit or license that has been violated.” The MPCA provided adequate notice of violations under this provision.
7. The Commissioner has the authority to assess penalties of up to $10,000 for violations of MPCA regulations. Pursuant to Minn. Stat. § 116.072, subd. 2(b), the Commissioner may consider the following factors in determining the amount of the penalty:
(1) the willfulness of the violation;
(2) the gravity of the violation, including damage to humans, animals, air, water, land, or other natural resources of the state;
(3) the history of past violations;
(4) the number of violations;
(5) the economic benefit gained by the person by allowing or committing the violation; and
(6) other factors as justice may require ….
8. Ryan’s prior violation of the dewatering provisions is relevant to the current APO.
9. For a repeated or serious violation, the Commissioner may issue an order with a penalty that will not be forgiven after the corrective action is taken, in accordance with Minn. Stat. § 116.072, subd. 5(b). The MPCA has shown that the present violation was serious, therefore a non-forgivable penalty is appropriate.
10. Based upon a consideration of all of the statutory factors, and for the reasons discussed in the Memorandum, the $4,200.00 penalty assessed by the MPCA against Ryan is unreasonable. A penalty of $1,200.00 is supported by the record in this matter.
11. Any Finding of Fact more properly termed a Conclusion is adopted as such. Any Conclusion more properly termed a Finding of Fact is adopted as such.
12. These Conclusions are reached for the reasons discussed in the following Memorandum, which is hereby incorporated into these Conclusions.
Based upon the above Conclusions, the Administrative Law Judge makes the following:
RECOMMENDATION
IT IS HEREBY RECOMMENDED: That the Commissioner AFFIRM the violations set out in the Administrative Penalty Order issued on November 21, 2007, to Ryan Contracting Company, but reduce the penalty to a non-forgivable penalty of $1,200.00.
Dated: July 1, 2008.
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s/Kathleen D. Sheehy |
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KATHLEEN D. SHEEHY Administrative Law Judge |
Reported: Digitally Recorded; Not Transcribed.
NOTICE
This Report is a recommendation, not a final decision. The Commissioner of the Minnesota Pollution Control Agency will make the final decision after a review of the record. The Commissioner may adopt, reject or modify the Findings of Fact, Conclusions, and Recommendations contained herein. Pursuant to Minn. Stat. § 14.61, the final decision of the Commissioner shall not be made until this Report has been made available to the parties to the proceeding for at least five days. An opportunity must be afforded to each party adversely affected by this Report to file exceptions and present argument to the Commissioner. Parties should contact Brad Moore, Commissioner, Minnesota Pollution Control Agency, 520 Lafayette Road, St. Paul, Minnesota 55155, 651-296-6300 to ascertain the procedure for filing exceptions or presenting argument.
If the Commissioner fails to issue a final decision within 90 days of the close of the record, this report will constitute the final agency decision under Minn. Stat. § 14.62, subd. 2a. The record closes upon the filing of exceptions to the report and the presentation of argument to the Commissioner, or upon the expiration of the deadline for doing so. The Commissioner must notify the parties and the Administrative Law Judge of the date on which the record closes.
MEMORANDUM
Ryan argued that the issuance of the APO was, under the facts of this matter, “arbitrary, capricious, and discriminatory.”[45] Ryan asserted that the absence of proof as to specific volumes of water and degree of sedimentation put into the wetland rendered the APO unsupported.[46] The Permit, however, does not require adherence to those standards; it does require that sediment control and dewatering be conducted in a manner that avoids negative impact to wetlands and other surface waters. The rule similarly precludes the discharge of storm water waste into any waters of the state so as to cause any nuisance conditions, such as the presence of excessive suspended solids. There is no requirement that the MPUC measure the amount of suspended solids either before or after a discharge into a wetland. The evidence offered here was that discoloration was visible in the wetland, emanating from the point where Ryan’s storm water discharge entered the wetland. This evidence clearly demonstrates a violation of the applicable Permit standards for dewatering and Minn. R. 7050.0210, subp. 2 (2007). The resulting impact to the affected wetland was serious, and therefore a non-forgivable penalty is appropriate.
The Administrative Law Judge considered the differing treatment of the two regulated projects (Creekside and the School Project), both of which had sediment discharges to the same wetland arising from the same storm event. In its testimony, the MPCA agreed that both projects committed violations, but only the Creekside Project was cited and fined.[47] Ryan’s conduct was active: it initiated the pumping of sediment-laden water into a wetland. The violation at the School Project was passive, in that it involved the failure to adequately protect the inlets from the significant rainfall that occurred over the previous two days. The different treatment of the two projects, both of which impacted the same wetland, does not rise to the level of discriminatory enforcement.
The MPCA failed to establish, however, that its calculation of the base penalty was reasonable based on the gravity of the violation, including damage to the affected natural resource. Its rationale for moving the base penalty “to the top of the box” (the base penalty range for a violation demonstrating moderate potential for harm and moderate deviation from compliance) was (1) the “relatively high value and volume of the resource impacted”; (2) the proximity of the project and the wetland to the Credit River; and (3) the failure of the Regulated Parties to monitor the appearance of the discharge water and its impact on the receiving resource.
With regard to the “volume of the resource impacted,” the forum appears to have assumed that Ryan alone caused all the discoloration apparent in the wetland. The only reference to the School Project in the Case Development Form is that “City of Savage staff observed ‘relatively’ clear water in front of the flared-end outlet and no discernable flow of water into the wetland at that time.”[48] The forum appears to have given little credence to Ryan’s contention that another source contributed to the impairment of the wetland, although MPCA staff conceded during the hearing that the School Project was clearly noncompliant and that sediment likely had entered the wetland through the flared-end outlet. In addition, the photographs document that a great deal of muddy water went into the inlet, and based on the amount of sediment left in the flared-end outlet, and the amount of rain, it is apparent that a significant amount of sediment must have entered the wetland from this source.
In addition, there is insufficient evidence in the record to support the amount of the penalty based on proximity to the Credit River. MPCA staff observed the Credit River and testified that it was running clear. There is no evidence that sediment from the affected wetland could move easily (or at all) into the Credit River.[49]
Finally, the third reason for moving to the “top of the box” was that Ryan had failed to monitor the appearance of the discharge water and its impact on the wetland. This reason would be more persuasive if the MPCA had also cited the School Project for its contribution to the impairment of the wetland.
Under these circumstances, the base penalty should have been set at the “low end of the box,” or $1,000.00. With the adjustment for the prior violation, the total penalty amount should be $1,200.00. The Administrative Law Judge recommends that the Commissioner affirm the APO, but reduce the penalty assessed against Ryan from a non-forgivable penalty of $4,200.00 to a non-forgivable penalty of $1,200.00.
K.D.S.
[1] Testimony of Scott Orloff.
[2] Minn. R. 7090.2010, subp. 1(A); Minn. R. 7090.0080, subp. 4 (2007).
[3] Testimony of Brandon Finke.
[4] Testimony of Finke.
[5] Exs. 3 & 17.
[6] Ex. 11 at 2.
[7] Ex. 17; Testimony of John Wichman.
[8] Ex. 3.
[9] Ex. 2 at 14-15; Testimony of Finke.
[10].Ex. 16.
[11] The identity of the reporter is subject to a Protective Order issued during the hearing.
[12] Testimony of Sam Lucido.
[13] Testimony of Wichman.
[14] Id.
[15] Id.
[16] Ex. 6; Testimony of Wichman.
[17] Testimony of Orloff.
[18] Testimony of Wichman. The groundwater was clear, and the MPCA does not maintain that the groundwater pumping violated any permit condition or rule.
[19] Ex. 2 at 15; Testimony of Finke.
[20] Exs. 8-1 through 8-5; Testimony of Wichman.
[21] Testimony of Wichman; Testimony of Lucido; Exs. 8-12 & 8-13.
[22] Ex. 8-18; Ex. 11 at 2; Testimony of Wichman; Testimony of Lucido.
[23] Exs. 8-1 through 8-24.
[24] Testimony of Lucido.
[25] Ex. 11 at 2; Testimony of Finke.
[26] At the hearing, he could not recall whether there was an observable delta of sediment running outward from the flared-end outlet. Testimony of Finke.
[27] Testimony of Orloff.
[28] Testimony of Finke.
[29] Exs. 9-5 & 9-7; Testimony of Finke.
[30] Ex. 10.
[31] Ex. 12.
[32] Ex. 12.
[33] Id. Ryan’s earlier violation was documented in Ex. 15.
[34] Ex. 12 at 2.
[35] Id.
[36] Id.
[37] Id.
[38] Id.
[39] The MPCA issued a similar APO to Mattamy, which was not appealed. Testimony of Finke.
[40] Ex. 1.
[41] Ex. 14.
[42] Hearing Recording, Statement of Fry.
[43] Testimony of Finke.
[44] Minn. Stat. § 116.072, subd. 6(c).
[45] Ryan Brief at 2.
[46] Ryan Brief at 3 (citing State v. Newstrom, 371 N.W.2d 525, 528 (Minn. 1985)).
[47] The Creekside Project was actually cited and fined twice (Ryan and Mattamy).
[48] Ex. 11 at 2.
[49] Ex. 17 (the topographic map of the immediate area) does not show any direct connection or low-lying area that would support the conclusion that there is a surface connection between the wetland and the Credit River.