On May 12, 2016 federal and state authorities announced a major settlement of an environmental case involving alleged air and water quality violations associated with a Minnesota sugar beet cooperative operation located in Renville, Minnesota.

The U.S. Environmental Protection Agency (“EPA”) and the Minnesota Pollution Control Agency (“MPCA”) netted a $1 million civil penalty for alleged wastewater treatment system violations that occurred from 2009 until 2015. As part of the settlements the co-op agreed to implement plans for corrective action to prevent future violations. Federal and state authorities estimate that the cost to complete required corrective actions in response to the government’s request for injunctive relief is roughly an additional $5 million.

The Southern Minnesota Beet Sugar Cooperative, comprised of 500 shareholders that farm more than 100,000 acres in central Minnesota, also agreed to pay more than $49,000 to the Minnesota Department of Natural Resources (“DNR”) for an August 2013 fish kill in Beaver Creek near its Renville, Minnesota operation. The authorities alleged that in 2013, 28 million gallons of untreated wastewater was discharged from the co-op’s operations reached nearby Beaver Creek.

In addition, under the terms of a separate agreement the MPCA collected a $485,000 civil penalty from the co-op as a result of alleged air quality violations related to excessive hydrogen sulfide emissions that occurred during the period from 2012 to 2014.

Federal and state environmental laws provide the EPA and the MPCA with the authority to issue permits governing water and air quality emissions. When emission limits are exceeded, regulators can make noncompliance determinations. The case with the co-op represents one of the larger civil penalties collected in Minnesota in recent years. When violations are found, regulated parties, such as the co-op, are subject to inspection and enforcement action. Penalties can range from up to $10,000 or more per day of violation.

In this case the August 2013 fish kill likely triggered the attention of regulators who later conducted an inspection, review of permits and emissions and uncovered the pattern of alleged water and air quality violations that resulted in the penalty assessment.

Manufacturing, processing and production operations of all types are subject to environmental regulation. Maintaining compliance with environmental rules is challenging. At Hessian & McKasy we assist our clients in assessing their compliance status and correcting issues before they come to the attention of the governmental authorities. For example, if violations are discovered during an audit conducted under attorney client privilege, a company may be eligible for audit protection and may avoid the imposition of civil penalties. When penalties loom, we negotiate creative solutions.

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Joseph Maternowski

Hessian & McKasy, P.A.

(612) 746-5754

jmaternowski@hessianmckasy.com