On October 25, 2016 the Minnesota Pollution Control Agency (“MPCA”) announced a summary of its third quarter enforcement actions for 2016. In the third quarter of 2016 the MPCA, through enforcement actions, collected $273,840 in civil penalties in amounts ranging from $49,500 to $550. According to the MPCA, the 37 new completed enforcement actions bring the current total of enforcement actions in 2016 to 103 completed actions resulting in a total of $916,842.50 in civil penalties. The MPCA reports that it has 52 open enforcement investigations, 19 of which were opened as new cases during the third quarter of 2016. Not all investigations lead to penalties or other enforcement action.
The MPCA uses two primary types of enforcement actions to penalize companies in Minnesota for environmental violations – Administrative Penalty Order (“APOs”) or Stipulation Agreements. While both APOs and Stipulation Agreements have similar end results, businesses or individuals paying a monetary penalty for violating environmental laws, the process for issuing the penalties differs.
An APO is basically an agency order that requires both the payment of a civil monetary penalty and completion of corrective actions to resolve the non-compliance of the company. APOs, which carry a maximum monetary penalty of $20,000, are the MPCA’s preferred enforcement tool. APOs are used when the required corrective actions can be completed within 30 days. The penalties in APOs can come in three different forms: forgivable, non-forgivable, or a combination of forgivable and non-forgivable. As the name suggests, a forgivable penalty offers the company a chance to correct the problems without paying the penalty. APOs with penalties that are nonforgivable require the payment of the penalty in full and completion of the required corrective actions. In determining the penalty amount the MPCA takes into account the extent, duration, and number of the environmental violations. The MPCA will also look at the company’s knowledge of the regulations, its past enforcement history, any economy benefit that it may have been derived, and any costs saved related to the environmental violation. Since APOs are administrative orders, APOs can be appealed. A party receiving an APO may seek judicial review either before an Administrative Law Judge or in state district court.
Stipulation Agreements are typically used by the MPCA for more serious environmental violations. Stipulation Agreements often include civil penalties of greater than $20,000 and are used if the corrective actions to return the regulated party to compliance will take more than 30 days to complete. Stipulation Agreements also contain language that provides for additional stipulated penalties if a party fails to undertake required corrective measures in a timely manner. Stipulation Agreements are negotiated settlements between the company and the MPCA. A Stipulation Agreement resolves a matter and avoids the need for the State to file a civil action in state district court. Since a Stipulation Agreement is not an order, it is not appealable. As part of the Stipulation Agreement, a party may propose a Supplemental Environmental Project (“SEP”) to defray a portion of the penalty. SEPs are projects that a regulated party undertakes to mitigate the environmental impacts of its violations within the affected community.
For both APOs and Stipulation Agreements, the civil penalty process usually starts with an inspection or site investigation. An inspection may be triggered in many ways ranging from citizen complaints to document reviews conducted by the MPCA. If the MPCA finds alleged violations after conducting its inspection or review, the MPCA reviews the case and determines which enforcement tool it will use. At the conclusion of the investigative stage the MPCA may contact the party and invite the party to supply information regarding the alleged violation(s) and provide mitigating information. An APO is typically non-negotiable. When a Stipulation Agreement is proposed, the MPCA will offer a regulated party the opportunity to meet and negotiate a settlement including the level of civil penalty and the schedule for corrective actions.
Regardless of the type of pollution (to air quality, stormwater, solid waste, hazardous waste or water quality) APOs and Stipulation Agreements can carry large penalties. Under Minnesota law the MPCA has the authority to seek penalties of up to $10,000 per day of violation except in cases where there are hazardous waste violations where penalties of up to $25,000 per day may apply. In cases where the State determines that either “knowing” or “intentional” violations have occurred, the State may consider a referral for possible criminal prosecution. A prosecutor will review the matter and determine if criminal charges should be filed.
If the MPCA finds violations of regulations or statutes that it believes warrant either an APO or a Stipulation Agreement and the regulated party fails to respond or refuses to enter into a Stipulation Agreement, the MPCA may escalate its enforcement efforts. The MPCA may refer the matter to the U.S. Environmental Protection Agency (“EPA”). The EPA may then use its authority under federal law to order corrective actions or seek civil penalties under federal law. The MPCA may, in the alternative, choose to refer the matter to the Minnesota Attorney General’s Office for the filing of a civil action in state district court. In a civil action the Attorney General may seek an injunction requiring corrective actions, a court-ordered assessment of civil penalties and, in the case of willful violations, an award of its attorneys fees.
The MPCA issues quarterly reports summarizing final enforcement actions taken across the State. https://www.pca.state.mn.us/regulations/quarterly-summary-enforcement-actions Depending upon the circumstances, there are many different types of actions companies can take to try and limit their liability regarding enforcement actions. Many regulated parties conduct audits of their operations to determine their compliance status. Under Minnesota law companies that conduct audits that disclose violations may take advantage of audit protections and avoid civil penalties. For information about Minnesota’s audit program, see our recent blog: “Limiting Environmental Liability Through Audits” http://www.enviroattorney.net/limiting-environmental-liabilities-through-audits/
Please see the disclaimer at the bottom of this page that relates to limitations on this blog and to legal advice. At Hessian & McKasy we assist clients in responding to APOs, Stipulation Agreements or other MPCA enforcement actions. We also work with clients to evaluate whether their operations may qualify for protection under the MPCA’s Environmental Audit Program. For more information about our Firm and practice, please contact:
Hessian & McKasy, P.A.