JANUARY 2009

Michigan wastewater treatment executives guilty of illegal discharge

A federal jury in Detroit, Michigan, has convicted three former managers of Comprehensive Environmental Solutions, Inc. (CESI), a company that operates an industrial waste treatment and disposal facility in Dearborn, Michigan, following a jury trial before U.S. District Judge Victoria A. Roberts.

Michael Panyard, of Pleasant Ridge, Michigan, the former general manager of the company, was convicted of nine counts, including one conspiracy count, two counts of violating the Clean Water Act and six counts of making false statements in connection with illegal discharges of millions of gallons of untreated liquid wastes from the facility. Charles Long, of Brownstown, Michigan, a former plant manager, was convicted of conspiracy and a Clean Water Act violation. Bryan Mallindine, of Carlsbad, California, the former chief executive officer, was convicted of one count of negligently bypassing the facility’s required pretreatment system, a misdemeanor violation of the Clean Water Act.

According to the evidence presented during the trial, CESI had a permit to treat liquid industrial waste brought to the facility from throughout the Midwest and Canada, through a variety of processes, and then discharge it into the Detroit sanitary sewer system. The facility contained 12 large above-ground tanks capable of holding more than 10 million gallons of liquid industrial wastes.

During the period of January 2001 to June 2002, facility employees routinely bypassed the facility’s treatment system in order to discharge untreated liquid wastes directly into the sanitary sewer system. During most of this time, the facility had no operable equipment to treat incoming liquid wastes and the 10 million gallon tank farm was full, with virtually no capacity to store additional liquid wastes. Nonetheless, the facility continued to accept more than 16 million gallons of liquid industrial waste-streams for purported treatment and disposal. Because the facility had no space available for this additional waste, nor equipment to treat it, company employees discharged nearly 13 million gallons of untreated liquid waste into the sanitary sewer in violation of the Clean Water Act, the facility’s permit and the consent order under which the facility operated.

Evidence at trial further showed that the defendants took steps to conceal the lack of treatment from customers and regulatory officials, including Detroit Water and Sewerage Department personnel, through false statements and tampering with legally required compliance samples.

An additional plant manager pleaded guilty earlier this year to violating the Clean Water Act and has not yet been sentenced.

On September 4, 2008, CESI plead guilty to related charges and agreed to pay a fine of $600,000 plus an additional $150,000 to fund a community service project for the benefit, preservation and restoration of the environment and ecosystems in the waters adjoining the Rouge River and the Detroit River. In addition to accepting responsibility for its past misconduct, CESI, which is under new management, has taken a number of steps during the last several years to install new equipment and systems to treat liquid industrial waste before it is discharged to the sewer.

As a condition of probation, CESI has agreed to abide by the terms of a consent order with the Michigan Department of Environmental Quality for the cleanup of the facility, at an estimated cost of about $1.5 million that includes the proper disposal of the liquid waste previously stored in the facility’s tank farm. CESI has further agreed to develop, adopt, implement and fund an environmental management system/compliance plan at its facility. This will include an annual program to train employees on environmental compliance and ethics, to ensure that all CESI employees understand the requirements imposed by the facility’s discharge permit.