Saturday, March 24, 2012

IDEM's "Good Character" Disclosure Receives its First Legal Challenge

The Indiana Department of Environmental Management's (IDEM) "good character" regulations require Confined Feeding Operations (CFO) and CAFOs to disclose past violations of environmental laws when applying for an operating permit. IDEM's Commissioner has the authority, based upon the disclosed information in the application, to decide whether to grant or deny the permit. Though well-intentioned, the good character law is fraught with legal problems because it allows one person at a state agency to make a judgment call as to whether or not a farmer should receive a permit to operate. A recent case, New Fashion Pork v. Commissioner of IDEM, exposed just how difficult it is for IDEM to apply the "good character" law fairly. Josh Trenary, general counsel for Indiana Pork, explained the facts behind this case:

Beginning in 2010, New Fashion Pork, LLP (NFP) used Mike Veenhuizen from Livestock Engineering Solutions to complete and submit three applications for expansion at two different NFP production sites. NFP had an agreed order with IDEM on record in regard to a spill from 2009. Because of this violation, NFP checked “yes” in the box indicating that the company had a violation of state environmental law. However, further down the form, NFP did not check yes in the box indicating that the violation presented a “substantial endangerment to human health or the environment.” 
NFP and Dr. Veenhuizen considered it inappropriate to check “yes” to indicate the violation was substantial because based on the facts of the situation, the spill did not present a substantial endangerment. However, any spill, regardless of how minor, was considered substantial by IDEM merely by virtue of the fact that it was something greater than a paperwork violation.

IDEM denied the permit and NFP appealed to the Office of Environmental Adjudication (OEA). The issue before the OEA was whether NFP should have checked “yes” in the question that asked about whether it had caused a “a substantial endangerment to human health or the environment.”  Before the OEA, NFP presented evidence that the prior environmental spill was a "minor" violation, and thus did not present a substantial endangerment to health or the environment.  Without any contradictory evidence from IDEM, the OEA judge had no choice but to side with NFP.

What does this mean?

IDEM is going to have to rethink how it reviews good character disclosures. It cannot just deny a CFO or CAFO permit because someone checks “yes,” indicating that there has been a prior environmental violation. IDEM will have to do a more detailed analysis, determine whether there had been a "substantial" negative impact on the environment, and whether that means this farmer should be denied a permit to operate.

To read more about New Fashion Pork, see the Indiana Lawyer's article:  Disclosing Environmental Violations.   To learn more about IDEM's CFO/CAFO regulations, click here.

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