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OAH
Docket No. 11-2200-20654-2654-2 |
STATE OF
OFFICE OF ADMINISTRATIVE HEARINGS
FOR THE POLLUTION CONTROL AGENCY
|
In the Matter of the Administrative Penalty Order Issued to Paint with
Prep, Inc. |
FINDINGS OF FACT, CONCLUSIONS AND RECOMMENDATION |
The above-entitled matter came on for
hearing before Administrative Law Judge Barbara L. Neilson on
Ann E. Cohen, Assistant Attorney General,
STATEMENT OF ISSUES
1. Did Paint with Prep, Inc., violate applicable laws and rules
by disposing of prohibited materials by burning, disposing of used sandblast
media on its property without a permit, failing to evaluate paint-related
wastes to determine if they were hazardous, disposing of solvents by
evaporation, mismanaging used oil, failing to apply for a hazardous waste generator
identification number and license, or failing to calculate potential to emit
and apply for an air quality permit and submit emissions inventory information?
2. If so, were certain of the violations serious, requiring
imposition of a non-forgivable penalty, and was the assessed penalty reasonable
and appropriate?
The Administrative Law Judge concludes
that Paint with Prep violated applicable statutes and rules with the exception
of disposing of solvents by evaporation and that certain of the violations were
properly determined to be non-forgivable, but that the assessed penalty is
unreasonable and inappropriate in light of the statutory factors.
Based upon all of the
proceedings herein, the Administrative Law Judge makes the following:
FINDINGS OF FACT
Background
1.
Paint
With Prep, Inc. (PWP), is a sandblasting, water-jetting, and painting business
that has been owned and operated by Jim Hernke since 1994. PWP does not perform metal plating.[2]
2.
Until
approximately 2002, PWP conducted some of its operations in a rented shop. Around 2002, Mr. Hernke built a shop on the
rural 7˝-acre property in
3.
As part
of its business, PWP at times prepares items for painting by sandblasting them. When sandblasting to remove paint or prepare
metal for painting, PWP uses a coal slag product called “Black Diamond” as grit
or “sandblast media.”[4]
4.
When
painting, PWP typically applies either latex paint or a “two-component” paint. Once a catalyst is added to a two-component
paint, it must be used within the next 8-12 hours. After that time, the paint becomes “cured” or
hardened, even in a closed container. The
paint manufacturer’s representative instructed Mr. Hernke that, as an
alternative, he could lay out paint for curing on a tarp. The representative informed Mr. Hernke that cured
paint could be disposed of as a solid waste.[5]
5.
Mr.
Hernke often uses a pressurized paint gun system when painting. To clean the paint out of the paint gun, he
cycles solvent through the hose and pump several times, and collects the
discharge in a container. He closes the
lid on the container immediately and allows the solvent to rise to the top. He later pours the solvent off the top and
re-uses it. He does not leave the lid
off of the container or otherwise cause the solvent to evaporate.[6]
6.
Paint
may contain lead or other hazardous substances such as cadmium and chromium.[7]
Evaluation is required to determine whether or not paint-related waste
is hazardous and decide the proper way to dispose of the waste.[8]
Solvents with a flash point of less than 140 degrees, such as the
thinner used by PWP, are considered hazardous in terms of ignitability.[9]
7.
PWP is
not certified for lead and does not use lead paint. PWP also does not sandblast items to which
lead paint has been applied. PWP asks
customers if an item has previously been painted with lead paint. If they do not know, PWP asks the length of time
the paint has been on the item and also tests the item for lead.[10]
MPCA
Inspection
8.
In
November 2008, a complaint was received by the Minnesota Pollution Control
Agency (MPCA) through
9.
On
10.
During the
inspection, Mr. Boeck observed an extinguished burn pile that included items
from both home and business, such as a garage door, a mattress, paint cans, painted
wood, fiberglass, oil filters, metal, paint buckets (one- and five-gallon),
hydraulic hoses, carpet, an aerosol can, shingles, and two tires. There also appeared to be paint shavings in
the pile. He estimated that there were approximately
20 cubic yards of ash and solid waste in the burn pile. Mr. Hernke told Mr. Boeck that he was burning
the items containing both metal and wood in order to recover the metal, and he
was later going to recycle the metal. In
Mr. Boeck’s experience, it is typically not legal to burn these types of
items. Items other than clean wood and
vegetation have the potential when they are burned to produce chemicals like
dioxin, which is a human carcinogen, as well as other toxic air pollutants.[15]
11.
PWP
uses Gibson Sanitation to handle its solid waste. A dumpster was located on the property on the
day of the inspection.[16]
12.
Mr.
Boeck did not observe any discoloration of surface water during his inspection.[17]
13.
Mr.
Boeck saw six unlabeled 55-gallon containers outside on the property that Mr.
Hernke informed him contained used oil.
Five of the containers were stored on a concrete slab, and the other
container was stored on a wooden pallet over bare ground.[18] Mr.
Boeck noticed oil on the side of one of the drums and a small amount of oil on
the concrete slab next to the drum.[19] Mr.
Hernke told Mr. Boeck that used oil was taken to an automotive business where
it was used as heating fuel. PWP did not
have any records relating to the disposal of used oil.[20]
14.
Mr.
Boeck observed a sandblasting pad with built-up sandblast media waste during
his inspection. Mr. Hernke informed Mr.
Boeck that PWP generated approximately 100-125 tons of sandblast media waste
each year on projects performed both on the
15.
Sandblasting
media is classified by the MPCA as an industrial solid waste, not as “clean
fill.” Accordingly, a property owner who
wants to use waste sandblast media as fill on his or her own property would
first be required to obtain a permit from the MPCA.[22] Although
sandblasting media is not hazardous in itself, it could become hazardous if it
is applied to items that contain hazardous substances (such as lead or other
heavy metals). Landfills often require
that used sandblast media be tested or impose other requirements to ensure that
it is not hazardous before they will accept it.[23]
16.
During
the inspection, Mr. Boeck asked Mr. Hernke how he managed paint waste. Mr. Hernke told him that he placed old paint
outside on a plastic tarp to allow it to cure, then disposed of the container in
the dumpster as solid waste. Mr. Boeck incorrectly understood that Mr.
Hernke also placed thinner outside on a plastic tarp to allow it to evaporate
prior to throwing the container away. Mr.
Hernke told Mr. Boeck that used paint filters were disposed of in the dumpster
on the property. He stated that he did
not dispose of the used fluid (mineral spirits) in the parts washer but re-used
it and continually added more fluid. The
material that settled down to the bottom of the parts washer (characterized as
“paint sludge” by the MPCA and “cured paint” by PWP) was managed as solid
waste. To clean paint guns, Mr. Hernke
indicated that he ran spirit thinner through the gun and sprayed it into a pail.
Mr. Boeck incorrectly understood that
Mr. Hernke then set the pail outside until the thinner evaporated.[24] In
fact, as noted in Finding No. 5 above, Mr. Hernke has never left solvent in an
uncovered can or laid out solvents so the contents would evaporate.[25]
17.
Mr.
Boeck noticed a small quantity of “floor dry” on the floor in the main
building. Although the floor dry
observed during the inspection had been used to absorb vomit and not oil, Mr.
Hernke also used floor dry to absorb any oil he spilled on the floor. Mr. Hernke told Mr. Boeck that he used one or
two bags of floor dry a year, and that he disposed of floor dry waste in the
dumpster on the property.[26]
18.
After
the inspection,
Alleged
Violations Letter and Response
19.
On
20.
The Alleged
Violations Letter required that PWP immediately cease burning solid waste and
cease disposing of any additional solid waste, including sandblast media, at
its
21.
PWP’s response
to the Alleged Violations Letter was received by the MPCA on
22.
With
its response to the Alleged Violations letter, PWP provided copies of Material
Safety Data Sheets (MSDS) for Black Diamond abrasives (all grades),
Sherwin-Williams Acrolon acrylic polyurethane, Sherwin-Williams Mineral
Spirits, and Sherwin-Williams Lacquer Thinner.
According to the MSDS information, the Acrolon acrylic polyurethane
hardener PWP used had a flash point greater than 200 degrees Fahrenheit and
waste from the product was not hazardous as defined under the Resource
Conservation and Recovery Act (RCRA).
The mineral spirits used by PWP had a flash point of 100 degrees
Fahrenheit and was classified as combustible.
The MSDS sheet indicated that waste from this product “may be hazardous”
as defined by RCRA and should be disposed of in accordance with applicable
federal, state, and local pollution regulations. The lacquer thinner used by PWP had a flash
point of 3 degrees Fahrenheit and was classified as extremely flammable. Sections 12-14 of the MSDS for the lacquer
thinner (relating to ecological information, disposal considerations, and
transport information) were not included in the copy of the MSDS provided by
PWP.[32]
23.
With
its response, PWP also provided a copy of an open burning permit that had been issued
to Mr. Hernke. The permit indicated that
Mr. Hernke could burn three piles of piled brush or other dry vegetative
material, less than 20-feet by 20-feet or smaller in size, and specified that
no more than three piles could be ignited at any one time. As part of the permit, Mr. Hernke agreed not
to burn any prohibited materials, which were defined by the permit to include “oils,
rubber, plastics, tires and chemically treated materials such as railroad ties,
treated lumber, composite shingles, tar paper, insulation, composition board,
sheet rock, wiring, paint, hazardous and industrial waste.”[33]
MPCA
Forum and Notice of Violation
24.
The
MPCA uses a forum process in cases that it believes are appropriate to consider
for enforcement. The forum with respect
to PWP was composed of MPCA staff working in the areas of solid waste,
hazardous waste, and air quality since all three areas were involved in the
case.[34] A
Case Development Form drafted by Mr. Boeck and Jon Gegen (a Pollution Control
Specialist and hazardous waste inspector with the MPCA) summarizing their
concerns relating to the November 19, 2008, inspection was distributed to forum
members on December 31, 2008.[35]
25.
The
initial forum meeting was held on
26.
On
February 2, 2009, the MPCA sent PWP a Notice of Violation letter alleging that
PWP had violated various
27.
The
Notice of Violation letter set forth a number of corrective actions that would
be required to address the alleged violations.
Among other things, the letter required PWP to immediately cease burning
solid waste for metal recovery or disposal; remove metal and ash from the burn
pile area and dispose of it properly; cease disposing of waste solvent from its
painting and paint gun cleaning operations by evaporation; and cease disposing
of floor dry that contained used oil as a solid waste. PWP was also required to submit to the MPCA within
45 days a plan and sampling schedule prepared by a qualified environmental
consultant describing how representative samples of the spent blast media located
on the Cannon Falls site would be collected and analyzed to determine if it were
hazardous waste. After the plan was
approved by the MPCA, the samples were to be collected and the results
submitted to the MPCA. PWP was further required
to develop and submit to the MPCA plans describing how all solid waste, spent
sandblast media, and other materials would be managed in the future, whether
generated on the
Omni
Report, PWP Corrective Action Plans, and MPCA Response
28.
PWP
retained Omni Environmental, Inc., for assistance in responding to the Notice
of Violation letter and implementing the required testing and corrective
action. PWP also engaged Leisch
Associates to handle the air quality permitting issues.[39]
29.
Omni
personnel sampled the ash pile and the sandblasting sand and submitted the
samples for laboratory evaluation for TCLP RCRA metals[40] and volatile organic compounds (VOCs). By letter dated February 12, 2009, Omni
submitted a report and the testing results to the MPCA. Omni stated that the ash pile would be
excavated and sent to an approved landfill after additional testing was
conducted.[41]
30.
With
respect to TCLP metals, the laboratory test results indicated that 1.1 mg/L of
barium was detected in the sandblasting sample, and 1.2 mg/L of lead was
detected in the ash sample. The lowest
concentration of these substances that could be detected by the analysis was
1.0 mg/L with respect to barium and 0.50 with respect to lead.[42] Small
quantities of VOCs were present in the ash sample, specifically toluene (1.6
ppm), m,p-xylene (2.9 ppm) and methyl isobutyl ketone (3.7 ppm). The lowest concentration of these substances
that could be detected by the analysis was 0.81 ppm, 1.6 ppm, and 1.6 ppm,
respectively.[43] In
its report and testimony, Omni indicated that the VOCs were barely above the
detectible limits, no significant metals were detected in the samples above
naturally occurring levels, and
31.
Omni’s February
12, 2009, report disagreed with the MPCA’s assertion that PWP had used evaporation
to manage solvent waste. According to
Omni, all paint-contaminated solvents used to clean the paint gun had been stored
in a closed system container (a 5-gallon bucket with lid). Once the solvent/paint mixture settled, the
solvent rose to the top and was skimmed off and reused, and very little
evaporation took place. Omni noted that
PWP had submitted an application to become licensed as a very small quantity
hazardous waste generator for the spent parts-washing solvent and would have a
certified disposal company pick up any waste.[45]
32.
Omni’s
report indicated that the sandblasting media that had been used on-site would
be further evaluated and disposed of at an approved landfill if necessary, and
the used sandblasting media from two future projects would be evaluated to
assure that the media was not a hazardous waste. In Omni’s opinion, the likelihood of the
blast media containing hazardous amounts of metals was slim unless PWP
sandblasted lead-based paint surfaces.
Attached to the Omni report was a summary of the PWP responses to the
required MPCA corrective actions, laboratory testing results, a calculation of
PWP’s potential to emit, information relating to abrasive blasting, and Material
Safety Data Sheets relating to the Black Diamond sandblasting media.[46]
33.
The two
Material Safety Data Sheets for Black Diamond abrasives submitted by PWP and
Omni indicated that, “[i]f material has been used for abrasive blasting, the
waste material may be contaminated from the blasting.” The sheets stated that the Black Diamond
material “[m]ay be disposed of in an approved landfill in accordance with all
EPA, state, and county disposal regulations,” but warned that “[d]isposal
requirements may change once material has been used for abrasive blasting.”[47]
34.
With respect
to the calculation of PWP’s potential to emit pollutants into the air, Omni
expressed the opinion that no permit was needed for outdoor painting and that
the potential to emit at the property line for the minor amount of particulate
used at the site for sandblasting was insignificant. Omni further indicated that four 55-gallon
drums labeled for paint filters, used oil, used oil floor dry and used oil
filters would be placed at the site.[48]
35.
On
March 3, 2009, Omni submitted a Corrective Action Response Plan on behalf of
PWP. The submission indicated that there
were two areas on the
36.
Omni
further asserted in the March 3, 2009, response that PWP only used 30 gallons
of paint/solvent mixture per year at the property, and as a result the amount
of VOCs emitted outdoors was insignificant and no air permit was needed.[50] Although
Omni acknowledged that an industrial storm water pollution prevention plan may
have been required at the site during times that sandblasting material was used
as fill at the site, it contended that such a plan would not be required once the
sand and ash were removed.[51] The
letter confirmed that PWP had obtained a hazardous waste identification number.[52]
37.
The
March 3, 2009, Corrective Action Response Plan also set forth PWP’s proposed
sampling and clean-up plan activities for MPCA approval. The submission indicated that the clean-up
date would be around
·
excavate
the ash pile and transport it to the SKB Landfill in Rosemount following
completion of a profile form, screen the ash for organic vapors using a photo
ionization detector (PID) at the request of the landfill, and conduct
additional VOC testing if PID readings indicate the presence of VOCs;
·
sample
the native soil after the ash was removed to ensure that no TCLP RCRA Metals or
VOCs had leached into the underlying soil;
·
ensure
that no evaporation of solvents occurred except what naturally evaporates when
loading paint guns;
·
label
and use 55-gallon drums for all hazardous waste generated at the site (used
oil, used oil-impacted floor dry, used oil filters, and parts-washing solvents
used for cleaning tools) and have the drums picked up when full and disposed of
by a licensed disposal company;
·
remove
sandblasting material used as fill in two areas of the
·
conduct
testing of one composite sample of material from each of the two areas to
assure the landfill that no metals were present and, if metals were detected,
collect two soil samples from each of the two excavation areas to confirm the
effectiveness of the excavation;
·
complete
an Option D Air Permit for the sandblasting material;
·
conduct
testing for TCLP RCRA metals in composite samples of the sandblasting material
at two off-site projects and one on-site project over the following six months;
·
submit
paint filters for TCLP RCRA metal analysis and, if they contain elevated levels
of metals, dispose of them as hazardous waste;
·
submit
a Notification of Regulated Waste Activity and become licensed as a very small
quantity hazardous waste generator;
·
contact
a certified disposal company to handle disposal of used parts-washing solvents;
·
place
all paint-related material and all paint-related waste generated as part of the
paint cleaning operation in containers that were properly labeled as hazardous
and store them in a secure location, and contract with Safety Kleen to handle
the disposal of parts-washing solvent and other hazardous waste;
·
have
Edel Waste Oil pick up used oil, used oil filters, and used oil-contaminated
floor dry and maintain appropriate documentation; and
·
remove
sandblasting material immediately following all future sandblasting events
prior to any rainfall, clean up sand immediately after each painting job, and
dispose of the sand in an industrial waste landfill.[53]
38.
After
requesting and receiving further information from PWP, the forum met again on
39.
On
March 16 or 17, 2009, PWP submitted to the MPCA pictures of the labeled waste
barrels it would be using for hazardous waste.[55]
40.
On
April 1, 2009, the MPCA sent a response to PWP commenting on certain portions
of the proposed March 3, 2009, corrective action plan and requesting some additional
information and documentation. Among
other things, the MPCA asked that PWP describe how VOCs came to be located in
the ash material, if known; requested that PWP submit additional information
regarding how its solid waste would be managed; and asked that PWP either
submit test results from the paint booth filters or agree to manage them as
hazardous waste.[56]
41.
At the
hearing, Omni acknowledged that methyl isobutyl ketone is found in parts washer
but noted that the VOCs detected in the ash sample could just as easily come
from fire-starting accelerants or laboratory contaminants. In Omni’s opinion, the levels of VOCs found
in the ash were very low and were insignificant in terms of human health risks.[57]
42.
On or
about
MPCA
Calculation of Penalty and Issuance of Administrative Penalty Order
43.
On May
6, 2009, the MPCA forum met again regarding PWP. At that time, the forum considered a draft Administrative
Penalty Order (APO) Penalty Calculation Worksheet prepared by Mr. Boeck and Mr.
Gegen to be used in determining the appropriate penalty amount. The forum made revisions that were
incorporated in the final version of the worksheet. The forum members determined that the failure
to obtain a permit would be included in the air quality violations, and PWP
would be required to submit information needed for that permit and also apply
for a hazardous waste license. The
allegations that PWP needed an industrial storm water permit and had to develop
a storm water pollution prevention plan were dropped.[59]
44.
The MPCA’s
Penalty Calculation Worksheet incorporates the factors to be considered under
Minn. Stat. § 116.072, subd. 2.
MPCA Appendix V-7 and Appendix II-13 also provide guidance for
determining the appropriate penalty amount.[60]
45.
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”):[61]
|
|
|
Deviation from Compliance |
||
|
|
|
Minor |
Moderate |
Major |
|
Potential |
Major |
$5,000 to $2,000 |
$8,000 to $3,500 |
$10,000 to $5,000 |
|
for |
Moderate |
$2,000 to $500 |
$3,500 to $1,000 |
$5,000 to $2,000 |
|
Harm |
Minor |
$500 to $0 |
$1,000 to $200 |
$2,000 to $500 |
|
|
|
{ |
||
46.
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.[62]
47.
As
finalized by the forum, the worksheet identified four groups of violations
committed by PWP.[63] The
forum deemed the violations as a whole to be serious for the following reasons:
In
the solid waste program, disposal of waste by burning is considered the most
serious unpermitted disposal violation because burning the waste causes air
pollution and because it generates ash that may contain hazardous
constituents. In this case, smoke from
the burning evidently caused nuisance conditions that resulted in a complaint,
and the material that was burned consisted of materials prohibited from
open-burning.
In
the hazardous waste program, failure to evaluate wastes to determine if they
are hazardous is a serious violation. In
this case, the Regulated Party failed to evaluate a number of different wastes
including waste paint related material, waste sandblast media, waste parts
washer solvent sludge and waste paint booth filters. Evaporating hazardous waste solvent is also a
serious violation. The hazardous waste
solvent should have been properly stored and it should have been managed by a
licensed hazardous waste transporter and disposed of at a facility that is
authorized to accept hazardous waste.
Failure to follow these measures could lead to environmental harm and
threats to human health.[64]
48.
The
forum did not consider any of the violations to be repeated in nature. In fact, the November 2008 inspection was the
MPCA’s first regulatory contact with PWP.[65]
49.
The
first group of violations related to PWP storing and disposing of solid waste
without first obtaining a permit. The forum
determined that the potential for harm associated with these violations was
moderate, for the following reasons:
Potential
for harm for operation of this unpermitted site is considered moderate
considering the amount of solid waste and ash observed. The Regulated Party has been operating this
site since 1994 and does not have documentation for any disposal of sandblast
media which it has been generated [sic] through the years. As a result, a considerable amount of waste
may have been buried/stored at the Facility or left at job sites. The amount of burnt waste observed also demonstrates
that a large amount of waste may have been burned and the ash left on the site,
although the burning has taken place on an intermittent basis. Burning waste, rather than properly disposing
[of] that waste at a permitted facility, poses danger to both public health and
the environment. The uncontrolled
burning of waste puts pollutants directly into the air, and in this case caused
nuisance conditions that warranted a complaint.
The
forum found that the deviation from compliance was major:
The
deviation from compliance is major because burning smoke-producing solid waste violates
both MPCA and DNR regulations. The
Regulated Party also left the ash on site.
The Regulated Party also left sandblast media on the site and at remote
sites where it was working.
The base penalty for the first group of
violations was found to be $3,500.[66]
50.
The
second group of violations involved PWP’s failure to evaluate potentially
hazardous wastes other than used oil (specifically, waste paint-related
material, waste sandblast media, waste parts-washer solvent sludge, and waste
paint booth filters) within 60 days to determine if they were a hazardous
waste. These wastes were stored on site,
evaporated, or disposed of with solid waste.
The forum found that the potential for harm associated with the second
group of violations was moderate:
The
potential for harm is moderate because the Regulated Party failed to evaluate a
number of wastes . . . and allowed solvent to evaporate as a management
method. In most cases, the unevaluated
materials were disposed of as solid waste, which has a lower potential for harm
than other uncontrolled forms of disposal.
However, solid waste is not managed in the same way as hazardous waste,
and (depending on the facility used) could result in a release of hazardous
waste constituents to the environment or exposure of solid waste management
personnel to hazardous wastes. The
Regulated Party’s employees were not aware they were handling a hazardous waste
and may have been exposed to hazardous waste constituents due to evaporation of
solvent waste. With regard to the evaporated
waste, a moderate potential for harm is appropriate because the Regulated Party
did reuse solvents, reducing the amount of waste solvent generated and
evaporated, and the amount was relatively small.
The
deviation from compliance was deemed to be major, for the following reasons:
The
Regulated Party failed to evaluate numerous waste streams resulting in
mismanagement to occur [sic]. The
Regulated Parties [sic] disposal of hazardous waste by evaporation is a major deviation from compliance
because the central goal of the hazardous waste management program is to ensure
the proper disposal of hazardous wastes.
The base penalty for the second group of
violations was determined to be $3,500.[67]
51.
The
third group of violations involved PWP’s mismanagement of used oil and used
oil-contaminated media, as well as its failure to apply for a generator
identification number and license. In
the worksheet, the latter violation is characterized as one that is a
“relatively minor and typically forgivable violation.” The forum found that the potential for harm
with respect to these violations was minor:
The
violation that had the greatest potential to affect the environment was the
failure to store a container of used oil on a surface that is relatively
impermeable to used oil. In addition,
small amounts of used oil floor dry was [sic] being disposed of into the solid
waste.
The deviation from compliance was found to
be moderate, for the following reasons:
The
Regulated Party did not apply [to] have a generator ID/license and was
therefore unaware of its regulatory obligations and did not comply with
numerous requirements for a number of years.
However, moderate seems appropriate because although the Regulated Party
failed to properly label its used oil and used oil filter containers, these
wastes were being stored in proper containers, and the used oil containers were
all stored closed. In this case, only
one used oil container stored was outdoors on a pallet over bare ground. The other used oil containers were stored on
a concrete pad and all of the used oil containers, although not labeled, were
stored closed.
A
base penalty of $600 was recommended for the third group of violations.[68]
52.
The
fourth group of violations involved PWP’s failure to apply for an air quality permit
and submit emissions inventory information.
The forum determined that this group of violations was minor in terms of
both its potential for harm and its deviation from compliance:
There
is a minor potential for harm associated with these violations. Although the regulatory thresholds are
triggered, the Regulated Party generates low volumes of air pollutants. The Registration Permit ensure[s] that the
MPCA is tracking the activities of the Regulated Party, but does not generally
change permitted emission levels.
Similarly, the deviation from compliance is considered to be minor for
the failure to get these types of approvals.
The recommended base penalty was $250.[69]
53.
In
finalizing the APO Penalty Calculation Worksheet, the forum also 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. They determined
that a 15% willfulness enhancement of the total base penalty of $7,850 (for all
four groups of violations) was appropriate for the following reasons:
The
solid waste violations should be enhanced because the Regulated Party knew or
should have known that it was not legal to burn solid waste or leave it on its
facility grounds. The Regulated Party
has stated that garbage service has been used at the Facility since 1994 and
therefore knows or should have known that solid waste requires proper
management. During the
54.
The forum
did not apply any further enhancement or mitigation based on “other factors as
justice may require.”[71]
55.
The forum
also enhanced the penalty by $313.86 to reflect economic benefit gained by PWP from
the violations. The Worksheet provided
the following reason for selecting this amount:
The
Regulated Party has avoided the disposal costs of bulky items (such as a
mattress) and some of the other solid waste in the burn pit. However, the Regulated Party will be required
to dispose of the ash and unburned waste (15 yards of ash). The difference between the avoided cost and
the ash disposal cost is the economic benefit.
The MPCA has estimated $545 for disposal as MSW - $231.14 (actual cost
to dispose of ash) = $313.86.[72]
56.
The forum
determined that the penalties for the first and second groups of violations should
be treated as non-forgivable since they are considered serious and “[t]he
uncontrolled burning of waste puts pollutants directly into the air and not
properly disposing of ash can contaminate surface water. A substantial amount of waste, including
materials prohibited from open burning, was burned at this site, potentially
over a large number of years.” The forum
found that the penalties for the third and fourth groups of violations should
be considered forgivable.[73]
57.
The
penalties were summarized in the Penalty Calculation Worksheet as follows:[74]
PENALTY
TABLE
|
|
FORGIVABLE |
NON-FORGIVABLE |
||
|
BASE PENALTY |
$850 |
$7000 |
||
|
WILLFULNESS/CULPABILITY |
%15 |
$127.50 |
%15 |
$1,050 |
|
HISTORY |
% 0 |
$ 0 |
% 0 |
$ 0 |
|
OTHER FACTORS |
% 0 |
$ 0 |
% 0 |
$ 0 |
|
ECONOMIC BENEFIT |
$ 0 |
$313.86 |
||
|
TOTAL
PENALTY |
$977.50 |
$8363.86 |
||
58.
On
·
PWP failed
to obtain a permit for disposal of solid waste, in violation of Minn. Stat. §
116.081, subd. 1, and
·
PWP failed
to collect and transport solid waste to a permitted solid waste facility, in
violation of Minn. R. 7035.0800, subp. 1;
·
PWP failed
to calculate its potential to emit from its paint booth and sandblasting
operation to determine if an air quality permit is required, in violation of
Minn. R. 7007.0150, subp. 4;
·
PWP failed
to apply for an air quality permit prior to constructing or operating its
sandblasting and paint booth facility, in violation of Minn. Stat. § 116.081,
subd. 1, and
·
PWP failed
to submit an annual emission inventory report for each year that air pollutants
were emitted and an air emissions permit is required, in violation of Minn. R.
7019.3000, subp. 1;
·
PWP failed
to evaluate its used oil-contaminated floor-dry prior to disposal, in violation
of Minn. R. 7045.0805 (A);
·
PWP failed
to label six 55-gallon used oil containers located outside its facility and
failed to store one of the containers on a surface that is reasonably
impervious to used oil, in violation of Minn. R. 7045.0855, subp. 2;
·
PWP failed
to evaluate waste paint-related material, waste sandblast media, waste parts
washer solvent sludge, and waste paint booth filters within 60 days of
initially generating the waste to determine if they are a hazardous waste, in
violation of Minn. R. 7045.0214, subd. 1;
·
PWP failed
to properly manage its hazardous waste paint-related material as part of its
paint gun cleaning operations, in violation of Minn. R. 7045.0208, subp. 1, and
7045.0665, subp. 1(B);
·
PWP failed
to apply for a hazardous waste identification number within 75 days after first
generating hazardous wastes, in violation of Minn. R. 7045.0221;
·
PWP failed
to obtain a hazardous waste generator license for its hazardous waste
generation activities, in violation of Minn. R. 7045.0225, subp. 1;
·
PWP failed
to store used oil filters in a leakproof container that was closed and labeled,
in violation of Minn. R. 7045.0990, subp. 3;
·
PWP failed
to test used oil that was to be burned for energy recovery to determine that it
is on-specification at least once per source, in violation of Minn. R.
7045.0840(A), 7045.0895, subp. 1, and 7045.0895, subp. 4; and
·
PWP failed
to keep records of every shipment of used oil leaving the generator site, in
violation of Minn. R. 7045.0855, subp. 4.
The APO listed eighteen Corrective Actions
to remedy the violations listed in the
Additional
Correction Action Plan
59.
By
letter dated
60.
The
MPCA raised no objection to the additional corrective action proposed by PWP. PWP was in compliance with all of the
corrective action specified in the
Additional
Findings
61.
On
62.
On
63.
PWP has
no history of prior violations of MPCA statutes or rules. The
64.
By the
time PWP appealed the
65.
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. This matter is properly
before the Administrative Law Judge.
3.
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 the alleged violations
under this provision.
4.
The
Minnesota Pollution Control Agency has the burden to establish by a preponderance
of the evidence that PWP 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).[83]
5.
Although
PWP did not concede that the violations set forth in the Administrative Penalty
Order occurred, PWP only provided evidence disputing the underlying factual
basis for one of the alleged violations--the allegation that PWP intentionally
disposed of solvent by evaporation. PWP
further challenges the reasonableness of the penalties imposed in the
Administrative Penalty Order.
6.
Minn.
R. 7045.0665, subp. 1(B), specifies that generators must not dispose of
hazardous waste by intentional evaporation.
The MPCA has not shown that PWP disposed of solvent by intentional
evaporation, and thus has not shown that PWP violated Minn. R. 7045.0665, subp.
1(B).
7.
The
MPCA has shown that the remainder of the violations alleged in the
Administrative Penalty Order occurred, and that PWP thereby violated the following
statutory and rule provisions:
·
Minn.
Stat. § 116.081, subd. 1, and Minn. R. 7001.0030, Minn. R. 7035.0800, subp. 1, and
7001.3050 (relating to Violation Group 1);
·
Minn.
R. 7045.0214, subp. 1, and 7045.0208, subp. 1 (relating to Violation Group 2);
·
Minn.
R. 7045.0805(A), 7045.0855, subps. 2 and
4, 7045.0221, 7045.0225, subp. 1, 7045.0990,
subp. 3, 7045.0840 (A), 7045.0895, subps. 1 and 4 (relating to
Violation Group 3); and
·
Minn.
Stat. § 116.081, subd. 1, and Minn. R. 7007.0150, subps. 1 and 4, and 7019.3000
(relating to Violation Group 4).
8.
Under
Minn. Stat. § 116.072, the Commissioner has the authority to assess penalties
of up to $10,000 for violations of MPCA regulations. Pursuant to subdivision 2(b) of the statute,
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 . . . .
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).
10.
The
MPCA has shown that Violations 3 and 4 (relating to PWP’s mismanagement of used
oil and used oil-contaminated media, failure to apply for a generator
identification number and license, failure to apply for an air quality permit,
and failure to submit emissions inventory information) were minor in nature and
that assessment of a penalty that was forgivable for these violations was
appropriate.
11.
The
MPCA has shown that Violations 1 and 2 (relating to PWP’s burning of a
substantial amount of waste over a number of years, failure to properly dispose
of ash, and failure to evaluate paint waste, waste sandblast media, waste paint
booth filters, and waste parts-washer solvent sludge) were serious and that assessment
of a penalty that was nonforgivable for these violations was appropriate.
12.
In assessing the base penalties and adjustments,
the MPCA did not reasonably or appropriately consider all of the factors listed
at Minn. Stat. § 116.072, subd. 2. Based upon a consideration of all of the
statutory factors, and for the reasons discussed in the attached Memorandum,
the penalties assessed by the MPCA against PWP are unreasonable. A nonforgivable penalty of $4,095 and a
forgivable penalty of $385 are supported by the record in this matter.
13.
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 May 20, 2009, to Painting With Prep, Inc. with the
exception of the alleged violation of Minn. R. 7045.0665, subp. 1(B), but reduce
the forgivable portion of the penalty to $385 and the nonforgivable portion of
the penalty to $4,095.
Dated: November 5, 2009.
s/Barbara
L. Neilson
_____________________________________
BARBARA
L. NEILSON
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
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
Legal
Standard
This matter arises under Minn.
Stat. § 116.072, which authorizes the Commissioner of the MPCA to issue orders
assessing monetary penalties for violations of applicable statutes, rules, and
permits, and requiring the violations to be corrected. The statute permits the party receiving an
APO to request a hearing to review the
Preliminary
Issues
The MPCA argued during the
hearing and in its post-hearing brief that only the reasonableness of the
penalty imposed could be addressed in this proceeding, and not whether the
alleged violations in fact occurred. The
MPCA points out that the
Mr. Hernke’s letter requesting
an administrative hearing did focus upon his objections to the amount of the
penalty and his view that the violations were not sufficiently serious to
warrant imposition of such a severe monetary penalty. However, it appears that he wrote the letter
before he retained legal counsel. In
addition, Mr. Hernke’s earlier response to the MPCA’s Alleged Violations Letter
(Ex. Q) and the letters and reports submitted by Omni Environmental to the MPCA
on PWP’s behalf (Exs. T and U) made it clear that PWP also disagreed with certain
of the Agency’s allegations, particularly the contention that PWP disposed of
solvent by evaporation. Under these
circumstances, the MPCA received adequate notice of PWP’s areas of disagreement
with the
PWP made the further argument
that, since all of the alleged violations have been corrected and none of the violations
were repeated or serious, the entire penalty previously levied by MPCA must be
forgiven. In the alternative, PWP
contends that the matter is moot because the violations have all been corrected,
and the penalty should be rescinded.
Minn. Stat. § 116.072, subd.
5(a), states in pertinent part, “Except as provided in paragraph (b), if the
commissioner . . . determines that the violation has been corrected or
appropriate steps have been taken to correct the action, the penalty must be
forgiven.” However, Paragraph (b) of the
same statutory provision states: “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.” Because, as discussed below, the Administrative
Law Judge agrees with the MPCA that certain of the violations are serious in
nature, the entire amount of the penalty need not be forgiven, and this matter
cannot be regarded as moot.
Violations
As reflected in the Findings above, the MPCA has shown by a
preponderance of the evidence that PWP violated a number of laws and rules
relating to air emissions and the handling and disposal of solid waste and
hazardous waste. Specifically, the MPCA
established that the following violations occurred:
(1) Violation Group 1: The MPCA demonstrated that PWP stored and
disposed of solid waste without first obtaining a solid waste management permit
and failed to ensure that solid waste was collected and transported to an
authorized facility. These violations
fell within two categories:
(a) First, PWP burned both business and household waste in a burn
pile located on the
(b) Second, PWP spread used sandblast media in two locations on the
(2) Violation Group 2: The MPCA established that PWP failed to evaluate potentially hazardous
wastes other than used oil to determine if they were, in fact, hazardous wastes. Instead, PWP stored the waste sandblast media
on its
PWP only provided evidence
disputing the underlying factual basis for one of the alleged violations--the
allegation that PWP intentionally disposed of solvent by evaporation.[87] As
noted in the Findings and Conclusions above, the Administrative Law Judge has
concluded that the MPCA did not show by a preponderance of the evidence that
PWP disposed of waste solvent by intentional evaporation. Mr. Hernke provided credible and convincing
testimony that he did not, in fact, leave solvent in uncovered cans, lay
solvents out so the contents would evaporate, or otherwise act to intentionally
cause the solvent to evaporate. After
running solvent through the paint gun hose and pump and collecting the
discharged paint/solvent mixture, Mr. Hernke indicated that he closed the lid on the container
immediately. Once the sediment sank to
the bottom and the solvent rose to the top, Mr. Hernke poured the solvent off
the top and re-used it. He did not leave
the lid off of the container or otherwise intentionally cause the solvent to
evaporate. Mr. Gikas testified that Mr.
Hernke had provided the same description of PWP’s approach to him after he was
retained as an environmental consultant by PWP.
Although PWP did not properly manage the remaining, hardened substance,
which likely contained a small amount of solvent, as hazardous waste, the
actions PWP took do not amount to intentional evaporation of solvent.
(3) Violation Group 3: The MPCA demonstrated by a preponderance of the evidence that, at the
time of the inspection, six containers holding used oil and used oil filters
were not labeled, one container of used oil was not stored on an impermeable
surface, PWP disposed of floor dry contaminated by oil with its solid waste, PWP
did not have a hazardous waste generator identification number and license, PWP
had not tested the used oil it had generated to ensure it met fuel
specifications for oil to be burned for energy recovery, and PWP did not
maintain records of shipments of used oil leaving its site.
(4) Violation Group 4: The MPCA established that PWP did not calculate its potential to emit air
emissions from its paint booth and sandblasting operation to determine if an
air quality permit was required, apply for such a permit before constructing or
operating its sandblasting and paint booth facility, or submit emissions
inventory information on a yearly basis.
Assessment
of Seriousness
The remaining issue presented is whether the amount of the penalty is
unreasonable based on consideration of the factors set forth in Minn. Stat. § 116.072,
subd. 2.
The MPCA has developed a penalty calculation guidance document[88] to guide its staff in assessing penalties. The document requires MPCA staff to first identify any violations that are serious or repeated in nature and thereafter calculate a base penalty for each violation, which is then adjusted for willfulness, history of past violations, economic benefit, and other factors as justice may require.
The MPCA decided that the
violations in the first group relating to unpermitted solid waste disposal,
particularly disposal by burning, were serious and should be the subject of a
nonforgivable penalty. This decision was
consistent with the MPCA’s solid waste standard guidance document, which
specifies:
Disposal
of solid waste without a permit is considered serious. Items to consider include the type and amount
of waste, the condition of the waste, the length of time the site has been used
for unpermitted disposal, and the knowledge the responsible party had. Burning of waste is generally the most
serious, followed by burial, and then surface dumping.[89]
The MPCA provided testimony and other
evidence (Ex. Z) that disposal of waste by burning is a significant source of
air pollution and generates ash that may contain hazardous constituents. By burning waste, PWP caused actual harm to
the environment. The amount of ash found
on the
The
MPCA also concluded that the violations in the second group (relating to PWP’s
failure to evaluate various paint-related waste streams at the facility to
determine if they are hazardous) were serious in nature and warranted
imposition of a nonforgivable penalty.
The Agency emphasized that PWP failed to evaluate waste paint-related
material, waste sandblast media, waste parts-washer solvent sludge and waste
paint-booth filters, and asserted that the failure to evaluate wastes to
determine if they are hazardous is a serious violation. The MPCA also alleged that “[e]vaporating
hazardous waste solvent is also a serious violation.”
Although, as discussed above, the
Administrative Law Judge finds that the intentional evaporation allegation was
not supported by the evidence, the Agency did establish that PWP otherwise did
not conduct proper evaluation of waste, including the paint-related sludge or
hardened material remaining after the paint guns were cleaned, to determine if
it was hazardous in nature. The
Administrative Law Judge agrees that this evaluation is essential to ensure
that hazardous waste is identified and managed in accordance with state and
federal law. It is evident that failure
to follow proper procedures in evaluating and handling hazardous waste could
lead to environmental harm and pose a threat to human health. Accordingly, the Judge finds that the MPCA made
a sufficient showing that the second group of violations was serious, and it
was within its discretion to assess a nonforgivable penalty for that group of
violations.
The MPCA’s further determination
that the third and fourth group of violations were not serious and that a
forgivable penalty should be assessed for those violations is also supported by
the evidence.
Calculation
of Base Penalty
A base penalty calculation matrix is used by the MPCA to assist staff in selecting a base penalty for violations. According to the MPCA’s APO Penalty Calculation Guidance document, the “[g]ravity [of the violation] is determined by the potential for harm (the vertical axis of the matrix) and the deviation from compliance (the horizontal axis of the matrix).”[91] The Guidance directs MPCA staff to rate each violation on each axis as major, moderate, or minor, and provides the following instructions for calculating the potential for harm and the deviation from compliance:
When calculating the potential for harm to humans, animals, air water, land, or other natural resources of the state, consideration should be given to the risk of actual harm caused by the violation or violations. Because many rules and regulations are preventive in nature, the focus is on potential for harm and not on actual harm. Where actual harm from a violation is observed, the potential for harm has been realized and the rating may reflect this fact.
When calculating the deviation from compliance, consideration should be given to the quantity or extent of the violation (i.e., how much, how far) or the extent to which the Regulated Party attempted to prevent the violation. When the position of the violation in the matrix is established, then determine a base penalty from within the applicable range. The amount chosen is discretionary because the matrix is intended to be only a guide.[92]
PWP contended that the emphasis on “potential for harm” to natural resources reflected in MPCA’s APO Penalty Calculation Guidance document is at odds with Minn. Stat. § 116.072, subd. 2, which sets forth the factors to be considered in assessing a penalty. In particular, PWP asserts that the reference in Minn. Stat. § 116.072, subd. 2(b)(2), to “gravity of the violation, including damage to humans, animals, air, water, land, or other natural resources of the state” must be interpreted to address only the “actual” damage to the environment posed by the violation, and not merely its “potential for harm.”
The Administrative Law Judge does not find PWP’s argument to be persuasive. The term “including” is not usually a word of limitation, but has the meaning of “in addition to,” suggesting that the examples given are simply an illustrative application of the general principle.[93] In a 1990 contested case decision involving the same argument made by PWP,[94] another Administrative Law Judge found that the use of the word “including” in Minn. Stat. § 116.072, subd. 2(b)(2), “does not limit a grave violation to one involving actual damage.” In the context of that case (which involved a large quantity hazardous waste generator), it was noted:
A contrary conclusion is unreasonable because it would not allow recognition of potential damage and the quality of the risk created when no actual harm results. The Agency [the MPCA] has rightly authorized a consideration of the quality of the risk created, potential damage, in its Administrative Penalty Memorandum. [Citation omitted.]
It is clear that the violations exposed
the environment and individuals near the facility to serious danger and
possibility of contamination. The wastes
were both flammable and toxic, the plant is located near a water source and
other structures are in the near vicinity.
Under such circumstances, the fact that no actual harm occurred is only
fortuitous. Palm Industries took no
precautions to preclude serious damage.
They should not now be heard to argue seriously that the lack of actual
damage changes the nature of the risk they created. The purpose of an
Accordingly, it is concluded that the MPCA’s approach in the present matter is consistent with the governing statute, and it properly took the potential for harm into consideration in calculating the base penalty.
With respect to the first group
of violations, the MPCA determined
that the potential for harm was moderate, based upon the amount of solid waste
and ash observed, the amount of burnt waste observed, the lack of records
regarding disposal of sandblast media generated since 1994, and the fact that
the uncontrolled burning of waste puts pollutants directly into the air. The MPCA determined that the deviation from
compliance was major because the uncontrolled burning violated both MPCA and
DNR regulations, PWP left the ash on site, and PWP left sandblast media on the
site and at remote sites where it was working.
Under the MPCA’s penalty matrix, a moderate potential for harm and major
deviation from compliance generally warrants a penalty in the $2,000 to $5,000
range. The Agency selected a base
penalty in the mid-point of that range ($3,500).
The MPCA asserted that the $3,500
penalty assessed in this case for the burning of solid waste was relatively
typical for the amount of burning involved.
It relied on the volume of waste, the length of time burning had
occurred, the burning of items that were identified as prohibited on the burn
permit issued to PWP, and the fact that a business was involved. In light of the actual harm to the
environment caused by burning and the dumping of unevaluated industrial waste
on the property, the Agency argued that it was appropriate to decide that there
was at least a moderate potential for harm.
PWP contended that it was
treated more harshly than others who have been cited for burning
violations. It pointed out that private
citizens who engage in open burning typically first receive a letter of warning
from MPCA and only receive an APO (typically a $1,000 forgivable penalty) if
they fail to correct the situation within 15 days. However, because the waste burned by PWP
included both business and household items, the Administrative Law Judge agrees
that it is reasonable to treat PWP differently than a private citizen. PWP also pointed out that Dyrdahl Lumber
initially received a letter of warning from the MPCA even though it was a
business.[96] The
MPCA explained that, in contrast to PWP’s case, the Agency knew of only one
occasion when Dyrdahl had engaged in burning at the time the letter of warning
was issued, and Dyrdahl had not disposed of used sandblast media on its
property.
The “moderate/major” base penalty
of $3,500 selected by the MPCA for the first group of violations is identical
to the base penalty assessed in three of the comparable cases cited by the MPCA
(Dyrdahl Lumber, Hammel Equipment, and Eagle Transport).[97] The
base penalty assessed by the MPCA in the Thielen Construction case ($2,250) was
somewhat lower than that assessed against PWP, based upon the Agency’s
determination that both the potential for harm and the deviation from
compliance were moderate. The Thielen
Construction case is distinguishable from PWP’s situation, however. The amount of burnt waste observed on
Thielen’s property was small and there was no sandblast media involved. In addition, Thielen did not dispose of the
ash on site but instead used a dumpster, which the MPCA noted was likely
protective of the environment. The MPCA
indicated that it would have characterized the Thielen violation as a major
deviation from compliance if the company had improperly managed the ash.
The Administrative Law Judge
concludes that the base penalty of $3,500 selected for the first group of
violations is reasonable.
The MPCA determined that the
potential for harm associated with the second group of violations was moderate
because PWP “failed to evaluate a number of wastes . . . and allowed solvent to
evaporate as a management method.”
Although the unevaluated materials were in most cases disposed of as
solid waste, which the MPCA acknowledged has a lower potential for harm than
other uncontrolled forms of disposal, the forum noted that solid waste is not
managed in the same way as hazardous waste.
The Agency believed that PWP’s “employees were not aware that they were
handling a hazardous waste and may have been exposed to hazardous waste
constituents due to evaporation of solvent waste.” With respect to its allegation that PWP
evaporated solvents, the MPCA determined that a moderate potential for harm was
appropriate because PWP did reuse solvents, which reduced the amount of waste
solvent generated and evaporated to a relatively small amount. The MPCA decided that the deviation from
compliance associated with the second group of violations was major because the
failure to evaluate numerous waste streams allowed mismanagement to occur, and
because the disposal of hazardous waste by evaporation is at odds with the
central goal of the hazardous waste management program. The base penalty for the second group of
violations was again set at $3,500, in the midpoint of the $2,000 to $5,000
range.
The MPCA demonstrated
that PWP did not properly evaluate a number of types of materials, including
used sandblast media, paint-related sludge, and used paint booth filters, to
determine whether or not they were hazardous.
PWP was engaged in the painting business, and knew or should have known
of the potentially hazardous character of these materials. Mr. Hernke, the only PWP employee working at
the
As noted above, the MPCA did not
show by a preponderance of the evidence that PWP intentionally disposed of
solvent waste by evaporation, and it mistakenly relied upon that allegation in
calculating the penalty. It appears that
the evaporation allegation was a significant part of the determination that the
penalty should be at the mid-point of the $2,000 to $5,000 range. With that violation removed, the
Administrative Law Judge finds that the base penalty for the second group of
violations is unreasonable. Accordingly,
it is recommended that the penalty for the second group of violations be
reduced to $2,000.
Regarding the third group of
violations, the MPCA determined that the potential for harm was minor but the
deviation from compliance was moderate because PWP was unaware of its
regulatory obligations and did not comply for a number of years. From the resulting penalty range of $200 to
$1,000, the Agency selected a base penalty of $600.
As the MPCA acknowledged, PWP’s
used oil and oil filters were stored in proper containers and the used oil
containers were all stored closed. In
addition, all but one of the containers of used oil were stored on a concrete
pad. The used oil container sitting on a
pallet over bare ground on the day of the inspection was awaiting pick-up by a
company that intended to burn it for energy recovery. There is no evidence that any oil had been
spilled on the ground from this container.
In addition, the forum noted that the requirement to apply for a
generator ID/license “is a relatively minor and forgivable violation.”[98] Moreover,
because Mr. Hernke was the only person who conducted painting work on the
For these reasons, the
Administrative Law Judge concludes that the forum should have found that the
deviation from compliance with respect to the third group of violations was
minor rather than moderate, and should have selected a base penalty of
$300. Because it is undisputed that PWP
took timely action to correct this violation, this portion of the penalty
should be forgiven.
With respect to the fourth group
of violations relating to the calculation of the potential to emit and the air
permit, the forum found that this group of violations was minor in terms of
both its potential for harm and its deviation from compliance, and selected a
base penalty of $250 from the matrix range of $0 to $500. The Administrative Law Judge finds the
selection of the base penalty for this group of violations to be
reasonable. PWP performed the required
calculation and applied for a “Registration D” air permit after this issue was
raised by the MPCA. Because it appears that PWP took timely
action to correct this violation, it should be forgiven.
Willfulness
The forum determined that a 15%
enhancement of the total base penalty for all four groups of violations was
warranted because garbage service was available but PWP chose to mismanage
waste by burning and/or burying it. The
MPCA found that PWP “knew or should have known that it was not legal to burn
solid waste or leave it on its facility grounds” and should have known that
paint-related wastes can be hazardous and must be properly managed. The MPCA
also emphasized that the burn permit identified the materials that could be
burned, and PWP knew or should have known that burning was not the proper way
to dispose of these items.
The
APO Calculation Guidance prepared by the MPCA includes the following
information regarding consideration of willfulness/culpability:
If
the violation seems willful/culpable, an upward adjustment may be
warranted. A violation is
willful/culpable if: the conduct was
apparently performed with knowledge that it was illegal; the Regulated Party
should have reasonably known that the conduct was illegal; or the Regulated
Party apparently proceeded with indifference or recklessness as to whether the
conduct was illegal. In addition to consideration of behavior
when committing the violation, consideration should also be given to the
Regulated Party’s response to the Agency after the Agency begins to seek
compliance.[99]
In
the view of the Administrative Law Judge, the 15% across-the-board willfulness
enhancement applied by MPCA is not reasonable, for several reasons.
First, it appears that the MPCA
did not follow the directive in the APO Calculation Guidance to take the
response of the Regulated Party into consideration. It is undisputed that PWP responded to the
MPCA in a forthright and cooperative manner both during the Agency’s inspection
and after it brought the violations to PWP’s attention. PWP immediately engaged Omni Environmental to
provide assistance in arranging for the testing of materials, proper disposal
of the waste that was present on the
Second, any enhancement for
willfulness should be restricted to the first group of violations. There is evidence of willfulness as to that
violation, since several types of waste burned by PWP were identified as prohibited
in its burning permit and in state law.
PWP knew or should have known of these restrictions. However, there is no convincing evidence of
willfulness with respect to the remainder of the groups of violations involved
in the
Finally, imposition of a 15% enhancement
for “willfulness” in this case is not in keeping with MPCA’s actions in the other
cases it identified in the Case Development Form as being comparable to PWP’s
case. For example, no enhancement for
willfulness was imposed by the MPCA in the Thielen Construction case, despite
the fact that the company had dumpsters available and still chose to burn plastic,
pop cans, and air filters.[100] Moreover,
in the Hammel Equipment case, only a 10% enhancement for willfulness was
ordered even though the company admitted it had been burning waste since 1980, there
was evidence that a mattress, buckets, metal, cans, chairs, cardboard, aerosol
cans, plastic and wood pallets, and other solid waste had recently been burned,
garbage service and dumpsters were available, and the property was located
approximately 100 feet from a DNR-designated trout stream.[101] Although
20% enhancements were ordered in the Eagle Transport and Dyrdahl Lumber cases,
Eagle Transport had first been warned by the Fire Department not to burn its
garbage, and Dyrdahl Lumber had received a Letter of Warning from the MPCA two
weeks earlier for failing to collect and transport solid waste to a permitted facility. In contrast, PWP never received any prior
warning and there is no evidence that it knew all garbage needed to be managed
exclusively through its garbage service.
Under these circumstances, the
15% enhancement of the total penalty for willfulness is unreasonable. The Administrative Law Judge recommends that
the enhancement be reduced to 10%, and be applied only to the $3,500 base penalty
assessed for the first group of violations.
History
of Past Violations
The statutory factors permit
consideration of the regulated party’s history of past violations and the
number of violations involved. In this
case, PWP had no past history of violations with the MPCA. The
Economic
Benefit
The statute allows for
consideration of the economic benefit gained by the person committing the
violation. The MPCA’s APO Calculation
Guidance states, “In order for a penalty to be an effective deterrent and in
order to ensure that a company or person (regulated parties) does not benefit
from violating environmental laws, the penalty amount must address the economic
benefit the violator realized from the noncompliance. Economic benefit typically results from the
delayed costs, avoided costs and/or competitive advantage of the
noncompliance.”[102]
In this case, by burning items
and retaining ash on its
Based upon the exhibits
introduced at the hearing, however, it is clear that PWP incurred actual costs
in the amount of $771.06 to dispose of both the ash and the used sandblast
media.[104]
Because the amount actually paid by PWP to properly dispose of these
materials exceeds the amount of avoided costs estimated by MPCA, it is not
reasonable to impose any additional charge for economic benefit. The recommended approach is also consistent
with the MPCA’s penalty calculations in the Eagle Transport, Dyrdahl Lumber,
Hammel Equipment, and Thielen Construction cases.[105]
Other
Factors as Justice May Require
The statute allows for
adjustment of the penalty for “other factors as justice may require.” The APO Calculation Guidance includes the
following information about this factor:
Individual
cases raise unique facts and issues.
Under this section, an adjustment to the base penalty may be made based
on those unique facts and issues. Under
this section the penalty may be enhanced or mitigated based on the applicable
“other factors”. If the adjustment of
the base penalty is based in whole or in part on “other factors as justice may
require,” then the factors must be specifically identified in the
The MPCA’s
In other cases, the MPCA has
applied this factor to reduce the penalty that is ordered. For example, in a case involving Birch Creek
Properties, LLC,[108] the MPCA reduced a $5,000 base penalty to
$3,500 because Birch Creek had no previous violations, was unlikely to
violate again, and the violations did not result in financial gain to
Respondent. The Administrative Law Judge
in that case noted that the MPCA had reduced the penalty due to mitigating
factors and had shown leniency for a first-time violator, and recommended that
the APO be affirmed. Similarly, in a
feedlot APO involving intentional discharge of industrial wastes from a farm
basin,[109]
MPCA staff lowered the penalty amount to approximately one-third of the
original base penalty because of the cooperation exhibited by the regulated
party throughout the MPCA’s investigation, his efforts to insure removal of the
waste from his farm basin, the size of his operation, his ability to pay, and
the precedent established in other cases.
Ultimately, MPCA staff lowered the base penalty amount by $5,250.00,
from $7,500.00 to $2,250.00. With a $750
enhancement based on the culpability/willfulness, the end result was
$3,000.00. The Administrative Law Judge
affirmed the resulting
Several mitigating factors are present here which, in the interests of
justice, must be taken into consideration to avoid imposition of an
unreasonable penalty. PWP is a small, individually-owned,
home-based painting business. Mr. Hernke
is the only full-time employee of PWP, and the only individual who works on the
After learning of the violations alleged by the MPCA, PWP promptly retained Omni Environmental to arrange for laboratory testing and provide assistance with corrective actions, and engaged Leisch & Associates as a consultant on the air permit issue. Based upon the testing of the ash pile, the soil beneath the ash pile, and the used sandblast media samples, these materials were determined not to constitute hazardous waste, and ultimately were accepted at a solid waste disposal facility.
Mr. Hernke was very
straightforward and cooperative with the MPCA throughout this process. He went to great lengths to ensure that the
ash and used sandblast media were removed from his property, he obtained all
necessary permits and licenses, and proper procedures were in place for the future
evaluation, handling, and disposal of potentially hazardous waste. It is highly unlikely that he will commit
repeated violations in the future.
Finally, PWP demonstrated that it has incurred substantial costs in
connection with this matter (approximately $15,000 by the date of the hearing)
and has experienced financial hardship due to the effects of the economic downturn and the cease and desist order
imposed by
Based on all of these mitigating
factors--the cooperation exhibited by PWP throughout the MPCA’s
investigation; its extensive efforts to ensure removal, testing, and proper
disposal of the waste from the property; the small size of its operation; its ability
to pay in light of the significant
costs already incurred in connection with this matter and the financial
hardship it has endured due to the cease and desist order; the absence of prior violations; and the
unlikelihood of future violations--the Administrative Law Judge recommends that
the total penalty imposed on PWP be reduced by 30%. As a result, the following modifications are
recommended to render the penalty reasonable:
REVISED
PENALTY TABLE
|
|
FORGIVABLE |
NON-FORGIVABLE |
||
|
BASE PENALTY |
$550 |
$5500 |
||
|
WILLFULNESS/CULPABILITY |
0% |
$ 0 |
10% on $3500 only |
$
350 |
|
HISTORY |
0% |
$ 0 |
% 0 |
$ 0 |
|
ECONOMIC BENEFIT |
$ 0 |
$ 0 |
||
|
SUBTOTAL
|
$550 |
$5850 |
||
|
OTHER FACTORS AS JUSTICE MAY REQUIRE |
30% Reduction (-$165) |
30% Reduction (-$1755) |
||
|
TOTAL
PENALTY |
$385 |
$4095 |
||
B. L. N.
[1] Those documents, consisting of Case Development Forms, Administrative Penalty Orders, and Administrative Penalty Order Penalty Calculation Worksheets relating to Thielen Construction Co, Inc., Eagle Transport Services, Inc., Dyrdahl Lumber, and Hammell Equipment, Inc., have been received into the hearing record as Exhibits 5-8.
[2] Testimony of Jim Hernke.
[3] Testimony of Cory Boeck, Hernke; Exhibits O, R.
[4] Testimony of Hernke, Boeck.
[5] Testimony of Hernke.
[6] Testimony of Hernke, Gikas.
[7] Testimony of Gegen, Gikas.
[8] Testimony of Gegen.
[9] Testimony of Gegen; see Material Safety Data Sheet for lacquer thinner attached to Ex. Q.
[10] Testimony of Hernke, Gikas.
[11] Testimony of Boeck.
[12] Testimony of Boeck; Ex. P.
[13] Testimony of Boeck; Ex. O.
[14] Testimony of Boeck; Exs. A-N.
[15] Testimony of Boeck; Ex. Z; see also Minn. Stat. § 88.171. The burn pile and ash are shown in Exs. J2, J4, K1-4, L1-4, M1-4, N1, N3, and N4.
[16] Testimony of Boeck; Exs. O, R.
[17] Testimony of Boeck.
[18] Testimony of Boeck. The used oil containers are shown in Exs. C4, H1, H2, and I3.
[19] Testimony of Boeck; Exs. H1, H2, and H3.
[20] Testimony of Boeck.
[21] Testimony of Boeck; Ex.O. The built-up area of sandblast media waste is depicted in Exs. C1, J1, J3, and J4.
[22] Testimony of Boeck.
[23] Testimony of Boeck, Gikas.
[24] Testimony of Boeck, Hernke; Exs. O, R.
[25] Testimony of Hernke.
[26] Testimony of Boeck, Hernke; Exs. O, R.
[27] Testimony of Boeck, Hernke.
[28] Ex. P.
[29] Ex. P.
[30] Ex. R at 15.
[31] Testimony of Hernke, Boeck; Ex. Q.
[32] Attachments to Ex. Q.
[33] Attachment to Ex. Q.
[34] Testimony of Boeck; Ex. R at 15.
[35] Testimony of Boeck; Ex. R at 15.
[36] Ex. R at 13.
[37] Testimony of Boeck; Ex. S.
[38] Testimony of Boeck; Ex. S.
[39] Testimony of Hernke, Gikas; Ex. U at 5.
[40] These metals include arsenic, barium, cadmium, chromium, lead, mercury, selenium, and silver. TCLP refers to Toxicity Characteristic Leaching Procedure, a federal EPA testing method used to characterize wastes as hazardous and nonhazardous. RCRA refers to the federal Resource Conservation and Recovery Act.
[41] Ex. T; Testimony of Gikas.
[42] Ex. T at 13.
[43] Ex. T at 15.
[44] Ex. T; Testimony of Gikas.
[45]
[46]
[47] Attachments to Exs. Q and T.
[48] Ex. T; Testimony of Gikas.
[49] Ex. U at 2.
[50] Ex. U at 4.
[51] Ex. U at 4-5.
[52] Ex. U at 5.
[53] Ex. U at 2-6.
[54] Testimony of Boeck; Ex. R at 13, 15.
[55] Ex. V.
[56] Ex. W.
[57] Testimony of Gikas.
[58] Ex. X.
[59] Testimony of Boeck; Ex. R at 13; Ex. DD. Ex. Y is the final version of the Penalty Calculation Worksheet as approved by the forum.
[60] Testimony of Boeck; Exs. AA and BB.
[61] Testimony of Boeck; Ex. Y at 6.
[62] Ex. Y.
[63] Ex. Y.
[64] Ex. Y at 1.
[65] Testimony of Boeck; Ex. Y at 2.
[66] Ex. Y at 2.
[67] Ex. Y at 2-3.
[68] Ex. Y at 3-4.
[69] Id. at 4.
[70] Id.
[71] Ex. Y at 4.
[72] Id. at 5.
[73] Id.
[74] Id.
[75] Ex. DD.
[76] Ex. DD.
[77] Testimony of Boeck; Ex. CC.
[78] Testimony of Boeck, Gegen, Gikas.
[79] Appeal letter is attached to the Notice of and Order for Hearing as Exhibit B.
[80] Testimony of Hernke.
[81]
See
[82] Testimony of Hernke.
[83] Minn. Stat. § 116.072, subd. 6(c).
[84]
[85]
[86]
[87] PWP demonstrated that the “floor dry” observed during the inspection had not, in fact, been used to absorb oil, as the MPCA inspector had assumed. However, Mr. Hernke acknowledged that he also used floor dry to absorb spilled oil and did not dispute that he threw that waste in his dumpster with other solid waste. Accordingly, the MPCA has adequately shown that this alleged violation occurred.
[88] Ex. AA.
[89] Ex. BB at 9.
[90] Exs. 5c, 6c, 7c, 8c.
[91] Ex. AA at 3.
[92]
[93] Black’s Law Dictionary 687 (5th ed. 1979); Argo Oil Corp. v. Lathrop, 72 N.W.2d 431 (S.D. 1955); Order on Motion for Summary Disposition in Joseph Bieker v. Novartis Nutrition Corp., OAH Docket No. 4-1700-12388-2 (2000). In addition, the canons of statutory construction set forth in Minn. Stat. § 645.17 (5) specify that, in ascertaining the intention of the legislature, the courts may be guided by the presumption that “the legislature intends to favor the public interest as against any private interest.”
[94] In the Matter of the Administrative Penalty Order to Palm Industries, Inc., OAH Docket No. 2-2200-5080-2 (1990) (.
[95]
[96] See Ex. 7c.
[97] See Exs. 6, 7, and 8.
[98] Ex. Y at 3.
[99] Ex. AA at 4 (emphasis added).
[100] Ex. 5.
[101] Ex. 8.
[102] Ex. AA at 5.
[103] Ex. Y at 5.
[104] The three load tickets attached to Ex. X show that PWP paid SKB Environmental $231.14, $259.85, and $280.07 for the ash and sand.
[105] Exs. 5-8. Despite the fact that garbage service was available to each of these companies, the MPCA did not impose any enhancement for economic benefit in the APOs that were issued. The penalty calculation worksheet for Thielen Construction stated that the reason for imposing no additional penalty was that Thielen “has paid to dispose of the waste.” Ex. 5c at 4. A similar rationale should be applied with respect to PWP.
[106] Ex. AA at 5.
[107] Ex. Y at 4.
[108] In the Matter of the Administrative Penalty Order Issued to Birch Creek Properties, LLC, OAH Docket No. 2-2200-17483-2 (2006).
[109] In the Matter of the Administrative Penalty Order Issued to Loren Snesrud, OAH Docket No. 6-2200-11685-2 (1998).