Noncompliance with DNR Consent Order Leads to Costly Civil Penalty

December 5, 2013 | Kristine Tidgren

Throughout a five-year period, the Iowa Department of Natural Resources (DNR) issued a salvage yard operator five notices of violations of Iowa Code chapter 455B relating to water quality, solid waste, and hazardous conditions. Although denying fault, the operator signed an administrative consent order, in which he agreed to take the specific remedial actions of (1) evacuating contaminated soil and disposing of it in a sanitary landfill, (2) disposing of all discarded appliances at an approved landfill, and (3) ensuring he did not have more than 500 passenger tires on his property without a waste tire stockpile permit.

During follow-up inspections, the DNR determined that the operator was not complying with the consent order. The DNR also required the operator to implement a written pollution prevention plan so that he could renew his expired National Pollutant Discharge Elimination System permit. After issuing numerous warnings and several extensions of time, the DNR referred the matter to the Iowa Attorney General.

The State sought civil penalties and injunctive relief against the operator for (1) failing to comply with the administrative consent order, (2) operating without a NPDES permit, (3) failing to operate a Storm Water Pollution Prevention Plan, and (4) failing to notify the DNR of a hazardous condition on three occasions. When the operator did not timely answer the State’s requests for admission, the State sought partial summary judgment on the issues of administrative consent order noncompliance, failure to notify the DNR of hazardous conditions, and failure to have a proper NPDES permit.

The district court entered partial summary judgment in favor of the State. After a trial, the district court granted injunctive relief, requiring the operator to comply with the administrative consent order, renew his NPDES permit, and pay the annual permit fees. The district court also assessed civil penalties of $40,260 against the operator, who had very little income due to business and farming losses.

On review, the Iowa Court of Appeals affirmed, first finding that the administrative consent order was a valid agency action that the court could construe as a contract. The right to seek enforcement and compliance was specifically granted by the consent order. The district court did not err in ruling pursuant to Iowa R. Civ. P. 1.510(2) that the operator had admitted those matters in the requests for admission which he did not answer. The Court of Appeals also ruled that the district court did not abuse its discretion in assessing the civil penalty. The consent order followed five years of asserted environmental law violations, and even then the operator failed to comply with its terms. In assessing the penalty, the district court properly considered the relevant factors of (1) costs savings to the operator, (2) maximum allowable penalty, (2) ability to deter future violations, (3) lack of deterrent effect of the consent order, and (4) the operator’s asserted inability to pay.  Iowa v. Passehl, No. 3-974 / 13-0106 (Iowa Ct. App. Dec. 5, 2013)