November 28, 2011

In late November, 2011 a Minnesota farmer-owned ethanol operation pled guilty to a federal felony charge of falsifying air quality reports and paid penalties of $760,000 to federal and state environmental authorities. The ethanol operation must pay a $450,000 criminal fine levied by a federal judge and a $310,000 civil penalty to the state environmental agency, the Minnesota Pollution Control Agency (MPCA).

The federal criminal charges and penalties are not the first instances of environmental noncompliance for the ethanol facility. The facility had previously been assessed civil penalties of $891,000 by MPCA and a separate $150,000 criminal fine for a 2009 federal misdemeanor conviction. The previous violations stemmed from unpermitted wastewater discharges that were directed to a ditch that drained to nearby Rice Lake.

The ethanol plant, which is one of Minnesota’s first plants, was built in 1993, uses corn as a feedstock and produces ethanol which is blended into fuel. After discrepancies in reporting were discovered by the MPCA, the farmer owned cooperative launched an internal investigation, discovered additional issues and took action to terminate employees, including the former general manager and former environmental compliance manager. Under the plea bargain with the US Attorney’s Office in Minnesota current farm cooperative board members and employees will not face criminal charges. However, all current employees and directors must complete annual training including passing written tests. The plea agreement is silent as to the discharged employees, so they may be charged individually.

For more information on the case involving the ethanol operation, please see information from the U.S. Attorney’s Office at: and the following news accounts: and

The case involving the ethanol facility demonstrates that any party who is subject to environmental regulations – companies, businesses, units of government and individuals – needs to be vigilant about compliance with environmental laws. Federal and state environmental authorities have the authority to use criminal, civil and administrative means to address noncompliance.

Increasingly, federal and state authorities collaborate on cases. Prosecutors may choose to construct cases and file charges based on the most favorable laws. Criminal and civil remedies can be used simultaneously in parallel prosecutions. In cases with repeat violations or a history of noncompliance, governmental authorities can escalate the action seeking higher penalties and even criminal sanctions against business entities of all kinds. The threshold to file a criminal charge in an environmental case is often not that high as the government may assert that anyone in a particular business should have known that the offending conduct was prohibited and constituted an illegal act. Most importantly, the individuals who are personally involved in such conduct may face prosecution.

The attorneys at the Hessian & McKasy Environmental Law Attorney Practice Group advise clients on all aspects of enforcement and compliance of federal and state environmental laws. We counsel clients and provide direction as to environmental auditing that may help to prevent or mitigate violations from occurring in the first place. To receive blog updates and posts, we invite you to provide your email address in the space at the top of this page.

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