STATE OF VERMONT
ENVIRONMENTAL COURT
} Secretary, } Vermont Agency of Natural Resources, } Plaintiff, } } v. } Docket No. 190-8-08 Vtec } Stephen Blood, } d/b/a Three Mountain Lodge Restaurant, } Respondent. } }
Decision and Order
On August 20, 2008, the Secretary of the Vermont Agency of Natural Resources
(ANR) issued an Administrative Order pursuant to 10 V.S.A. § 8008 regarding Stephen
Blood, d/b/a Three Mountain Lodge Restaurant, as Respondent.1 The Administrative
Order cited several violations involving Respondent’s failure to conduct water quality
monitoring and testing at the Three Mountain Lodge Restaurant. Respondent Stephen
Blood represents himself; the Secretary of the Agency of Natural Resources is
represented by John Zaikowski, Esq.
The Court extended the time for the hearing on the Administrative Order for
good cause, at the request of and by agreement of the parties, to accommodate
Respondent’s medical issues and the parties’ schedules, and while Respondent came
into compliance with the one remaining remedial requirement of the Administrative
1 On January 27, 2008, the ANR had issued an Administrative Order naming only Three Mountain Lodge as respondent. Litigation seeking enforcement of that order resulted in the ANR’s withdrawal of the January 2008 Administrative Order, see Docket No. 85-5-08 Vtec, and the subsequent issuance of the Administrative Order at issue in the present case. 1 Order. The Court also extended the time for the issuance of the decision for good cause.
No environmental harm resulted from any delay, as Respondent had come into
compliance with the remedial requirements of the Administrative Order and all that
remained for trial was the amount of an appropriate monetary penalty.
The statutes, rules, and permits applicable to this matter are 4 V.S.A. ch. 27
(Environmental Court); 10 V.S.A. ch. 48 (Groundwater Protection); 10 V.S.A. ch. 56
(Public Water Supply); 10 V.S.A. ch. 201 (Administrative Environmental Law
Enforcement); and the following sections of the Vermont Water Supply Rules (VWSR)2
and related federal regulations: VWSR Subchapter 21-6, § 6.6 and 40 C.F.R. § 141.21
(water quality monitoring for coliform bacteria); VWSR Subchapter 21-6, § 6.8 and 40
C.F.R. § 141.23 (water quality monitoring for nitrate); VWSR Subchapter 21-10, § 10.1
and 40 C.F.R. § 141, Subpart Q (public notice); and VWSR Subchapter 21-6, § 6.2.3
(microscopic particulate analysis for Ground Water Under the Direct Influence of
Surface Water determination). See 10 V.S.A. § 8012(c)(2) (requiring the Court’s decision
regarding an administrative order to include an “identification of the applicable statute,
rule, permit, assurance or order”).
Findings
Respondent owns the Three Mountain Lodge Restaurant (the Restaurant) in
Jeffersonville, Vermont, and had been operating it for 26 years as of the date of trial. At
least since the issuance of the Administrative Order in August of 2008, Respondent had
been experiencing some serious medical symptoms that, from time to time, made him
exhausted and reduced his stamina for addressing the normal stresses of running a
restaurant business.
2 Vermont Water Supply Rules (2005), available at http://www.vermontdrinking water.org/wsrule/Vermont%20WSR%20April%202005.pdf.
2 The Restaurant operates year round except for the month of November and the
month from mid-April to mid-May. The hours of operation for the Restaurant are from
4:00 p.m. to 9:00 p.m. daily. The Restaurant contributes to the economy; some of the
employees of the Restaurant have worked there as long as ten or twenty years, and
Respondent is current with his taxes. However, the state of the economy was such
during the year from August of 2008 to August of 2009 that Respondent testified that he
has “drained his bank account” in order to continue operating.
The Restaurant, which is licensed for occupancy of eighty people, serves a
transient population. The water source for the Restaurant is a drilled well, which
provides drinking water to more than twenty-five people per day during its operating
season. Therefore, the Restaurant water system is a public water system that is
classified as a “transient non-community water system” under the Vermont Water
Supply statute and rules, as it serves at least twenty-five individuals daily on at least
sixty days of the year, but is not used by year-round residents or by the same twenty-
five or more individuals for more than six months per year. See 10 V.S.A. § 1671; VWSR
§ 21-2 (Public Water System).
The Water Supply Division of the ANR (Water Supply Division) is responsible
for administering the Vermont Water Supply statute and rules that are applicable to the
Restaurant’s transient non-community water system.3 All transient non-community
water systems are required to perform certain monitoring of their water, including for
total coliform bacteria and for nitrate. Monitoring consists of collecting a water sample
according to a prescribed method, having the sample analyzed by a qualified
laboratory, and reporting the results to the Water Supply Division. Transient non-
3 The Vermont Department of Health is responsible for sanitary inspections of food and lodging establishments, which may also include the sampling and testing of the establishment’s water supply by the sanitarian.
3 community water systems must monitor for total coliform on a quarterly basis, and for
nitrate on an annual basis, in each quarter during which the system is serving water to
the public. As the Restaurant is open for operation during all four quarters annually,
Respondent is required to test for total coliform and report those results during all four
quarterly reporting periods. Respondent is required to test for nitrate and report on an
annual basis.
The presence of coliform bacteria in drinking water is of concern because they
are an indicator of the presence of harmful organisms that could cause disease, and may
indicate a problem with the water supply’s treatment system or distribution lines. The
presence of particular strains of coliform bacteria (E. coli) indicate that the water may be
contaminated with human or animal wastes. Infants, the elderly, and people with
compromised immune systems may particularly be at risk from contaminated water. If
a water system is contaminated with coliform, those responsible for the water system
are required to inform its users that the water must be boiled for at least five minutes
before being used for drinking, for the washing of fruits and vegetables to be eaten raw,
and for tooth brushing; bottled water must also be made available.
The presence of elevated nitrate levels in drinking water is a particularly serious
concern for infants below the age of six months, who can become seriously ill or die, as
their inability to process the nitrate deprives them of oxygen (so-called “blue baby”
syndrome). Nitrate contamination requires the use of bottled water, as boiling only
makes the nitrate more concentrated.
If the required monitoring for coliform and nitrate is not being done for a
particular water system, the operator of that water system is required to post or
distribute the same public notice as if the water had been tested and found to be
contaminated, and to notify the ANR that the public notice has been accomplished.
VWSR § 10.3. The purpose of public notice is so that the users of the system do not rely
on the general assumption that drinking water supplied to the public is safe to drink. 4 The public notice may be accomplished by posting, by radio, or by hand or direct
delivery, as appropriate to the particular water system. VWSR § 10.2.4. A so-called
template or form for satisfying the public notice requirement is provided with each
notice of alleged violation of the monitoring requirements that is issued by the ANR, as
well as a certification form that is required to be returned to the ANR to show that the
public notice has been accomplished.
Prior to some time in 2004, the ANR had only been requiring total coliform
sampling on an annual basis, even though the regulations had required quarterly
monitoring for coliform. Beginning in late 2003 or early 2004, to assist transient non-
community water systems in making the transition to quarterly reporting, the ANR’s
Water Supply Division engaged a contractor to go to the operators of these systems to
teach them how to sample and to inform them that sampling would now be required
quarterly.
All transient non-community water systems, including Respondent’s system,
were advised by letter dated December 23, 2004, that the collection and monitoring of
routine samples by the Water Supply Division contractor would conclude with the first
quarter of 2005, and that thereafter the water systems would be responsible for their
own compliance with the total coliform quarterly monitoring, annual nitrate
monitoring, and other routine and specifically required follow-up monitoring. Even if,
prior to this letter, Respondent had believed that the Department of Health governed
the testing of the Restaurant’s water supply, it was not reasonable to persist in that
belief after receipt of this letter, which explained the program and referred the reader to
the telephone numbers of several ANR employees if the reader had any questions.
Respondent was open for business but did not monitor for coliform after the first
quarter of 2005, throughout the remainder of 2005, through all quarters in 2006, and
5 through the first three quarters of 2007.4 Respondent sampled as required for coliform
beginning in the final quarter of 2007. The testing of the samples has revealed an
absence of coliform contamination.
Respondent failed to perform annual monitoring for nitrate for 2006, but
sampled as required for nitrate beginning in 2007. The testing of the samples has
revealed an absence of nitrate contamination.
During the period when Respondent did not comply with the sampling
requirements, he also did not post the required public notices regarding the potential
dangers of coliform or nitrates and did not send ANR the certification notices regarding
posting. He came into compliance with this requirement shortly after receiving the
January 2008 Administrative Order referred to in footnote 1, above.
The cost of water sampling for coliform is approximately $15 per sample. The
cost of water sampling for nitrate is approximately $60 per sample. Therefore,
Respondent’s avoided costs for the coliform and nitrate testing were $60 for the nitrate
sample for 2006 and $150 for the ten quarters of coliform samples, calculated as three
coliform samples in 2005, four coliform samples in 2006, and three coliform samples for
the first three quarters of 2007. The ANR did not present evidence of Respondent’s
avoided cost of the public notice and certification to the ANR.
In addition to the monitoring required of all transient non-community water
systems for coliform bacteria and for nitrate, water systems may be required to do
additional testing to determine whether the ground water source for the system is
4 The ANR submitted into evidence the warning letters sent to Respondent regarding his failure to monitor for coliform bacteria in the second quarter of 2005 and in the first quarter of 2006, as well as the separate Notices of Alleged Violation sent by certified mail to Respondent for failure to monitor for coliform bacteria for each of the second, third, and fourth quarters of 2006, and the first, second, and third quarters of 2007. The ANR also submitted into evidence the Notice of Alleged Violation sent to Respondent for failure to monitor for nitrate for calendar year 2006. The ANR resent the July 2007 notice by regular mail after Respondent refused the certified mail copy. 6 under the direct influence of surface water, sometimes referred to by the acronym
“GWUDI.” Although generally systems using drilled wells are not required to
undertake testing for this reason, this additional testing may be required by the ANR if
the monitoring results or other inspection observations suggest that the well may be at
risk for contamination by surface water. The additional required testing of such a
system is called a microscopic particulate analysis (MPA).
In 2003, the ANR determined that the Restaurant’s well was not under the direct
influence of surface water and did not require MPA testing. However, coliform
monitoring done in 2004 showed a positive coliform test result (indicating the presence
of coliform bacteria at that time). The construction details for the well, which would
reveal whether the well was properly sealed, were unknown to the ANR. A
representative of the Water Supply Division inspected the system on September 20,
2006, and observed that an intermittent stream was located less than 50 feet from the
well, and that the area around the well was wet. Respondent was present during that
inspection, which had been scheduled during the day at a time that was inconvenient
for him in light of the operating hours for the restaurant, but he did not provide
additional information about the well’s construction.
Based on the inspection, the 2004 coliform test result, and the absence of
construction details for the well, the ANR determined that the water system was at risk
for being under the influence of surface water. On February 2, 2007, the ANR sent
Respondent a written notice requiring him to perform microscopic particulate analysis
(MPA) testing between April 1 and June 1 of 2007, so that the ANR could determine
whether the system was or was not actually under the influence of surface water.5
5 Even if the Court were to consider the weather data and photograph submitted after trial by Respondent to suggest that the wetness near the well was due to rain, it was not unreasonable for the ANR to require the MPA testing, based on the lack of information about the construct of the well and the proximity of the well to surface water. In any 7 Respondent did not perform the required MPA testing until April of 2009; he had
the MPA testing done on April 7, 2009, and submitted the results to the ANR. Based on
those submissions, the Water Supply Division determined that Respondent’s water
source was not under the direct influence of surface water. The ANR did not present
evidence of the avoided cost of Respondent’s delaying the MPA testing from 2007 to
2009.
The costs of enforcement expended by ANR on this case consisted of
approximately thirty hours of one ANR employee’s time, at $26 per hour, plus
approximately five hours of another employee’s time at $22.27 per hour, for a total of
$891. The ANR did not present evidence of its attorney’s time expended on this case.
Conclusions as to Violation (10 V.S.A. §8012(c)(1)):
The statute requires this Court to determine whether a violation has occurred, 10
V.S.A. § 8012(b)(1), independently of reviewing and determining anew a penalty
amount under 10 V.S.A. § 8012(b)(4).
By failing to monitor for coliform during ten consecutive quarterly reporting
periods, from the second quarter of 2005 through the third quarter of 2007, Respondent
violated VWSR Subchapter 21-6, § 6.6 and 40 C.F.R. § 141.21, which mandate water
quality monitoring for coliform bacteria. By failing to perform annual monitoring for
nitrate for 2006, Respondent violated VWSR Subchapter 21-6, § 6.8 and 40 C.F.R. §
141.23, which mandate water quality monitoring for nitrate. By failing to perform
microscopic particulate analysis during the required April to June period in 2007 or
2008, Respondent violated VWSR Subchapter 21-6, § 6.2.3, which mandates microscopic
particulate analysis in order to make a Ground Water Under the Direct Influence of
Surface Water determination. By failing to post public notice, and by failing to certify to
event, Respondent did not then challenge the ANR’s requirement that he conduct the MPA testing. 8 the ANR that the posting had been accomplished, Respondent violated VWSR
Subchapter 21-10, § 10.1 and 40 C.F.R. § 141, Subpart Q, which govern public notice
requirements.
Determination of Order and Penalty (10 V.S.A. §8012(c)(3)):
The Administrative Order contained no remedial provisions to correct any past
violations. It did contain directives for future compliance, however, all the directives
for future compliance had been achieved as of the date of trial, and none of the
directives required continuing compliance in the future.6 The Administrative order did
impose a monetary penalty. Therefore, all that remains is for the Court to determine
anew an appropriate penalty amount for the violations by applying the criteria set forth
in 10 V.S.A. § 8010(b).
Penalty
The Administrative Order had imposed a penalty of $5150, and the Secretary’s
post-trial memorandum requested a penalty of $6101. A civil penalty must be basically
remedial in effect, rather than primarily punitive. See Town of Hinesburg v. Dunkling,
167 Vt. 514, 524 (1998) (“A civil penalty is remedial in nature, while a criminal penalty is
designed for deterrence and retribution.” (citing State v. Strong, 158 Vt. 56, 60 (1992)));
see also, e.g., Vt. Agency of Natural Res. v. Fern Hill Farm, Ltd., No. 129-8-03 Vtec, slip
op. at 13 (Vt. Envtl. Ct. Jan. 20, 2006) (Wright, J.) (stating that “for a civil penalty to
withstand constitutional scrutiny it must be basically remedial in effect, rather than
6 Compare Vt. Agency of Natural Res. v. Whitham, No. 29-2-08 Vtec, slip op. at 14–15 (Vt. Envtl. Ct. Mar. 2. 2009) (Wright, J.) (dealing with an administrative order that required the respondent to continue to take required action into the future, e.g., to “continue to conduct” monitoring and to “immediately contact the Water Supply Division” in the event that tests were not completed in a timely manner). 9 punitive”).
The methodology inherent in the statute and applied consistently by this Court
in imposing a penalty has been first to remove the economic benefit gained from the
violation, in order to carry out the statutory purpose of preventing the unfair economic
advantage obtained by persons who operate in violation of environmental laws, 10
V.S.A. § 8001(2) and § 8010(b)(5),7 and then to apply the remaining statutory factors to
determine what additional penalty is needed, or whether any mitigating factors should
reduce any element of the penalty. That is, the entire economic benefit first must be
removed to carry out a primary purpose of the Uniform Environmental Enforcement
Act: to make it less expensive to comply with the law than to violate it.
In addition to the removal of economic benefit as required by § 8010(b)(5),
§ 8010(b) requires the Court next to consider the following factors in determining the
amount of the penalty: (1) actual or potential harm to human health and the
environment; (2) the presence of mitigating circumstances, including unreasonable
delay on the part of the Secretary in seeking enforcement; (3) whether the Respondent
knew or had reason to know the violation existed; (4) Respondent’s record of
compliance; (6) deterrent effect of the penalty; (7) actual cost of enforcement; and (8)
length of time the violation has existed.
Potential for Harm to Human Health, 10 V.S.A. § 8010(b)(1)
Respondent’s failure to test the water and failure to warn the system’s users of
the potential for water contamination did not result in any actual harm to public health.
These violations are nevertheless important due to the potential for harm to human
7 Effective July 1, 2008, the recapture of economic benefit was separated from the § 8010(b) penalty factors, and now may be recaptured in addition to the maximum penalty amount. Compare 10 V.S.A. §§ 8010(c)(1), (2). As some of Respondent’s actions for which penalties are sought occurred prior to the date of this statutory change, 1 V.S.A. § 214 requires application of the prior statute; however, it makes no practical difference to the result in this case. 10 health from untested drinking water, especially if users of a water system are not
properly informed of the potential dangers from the untested water.
Mitigating Circumstances, 10 V.S.A. § 8010(b)(2)
Respondent presented some evidence of his medical problems, and of the
relatively adverse economic conditions of the Restaurant’s operation from August of
2008 through August of 2009. That evidence has been considered in the amount of the
total penalty imposed in this case and the amount necessary in this instance to achieve
deterrence and obtain compliance.
The financial difficulties of the Restaurant, however, do not excuse compliance
with the laws and regulations required to protect the public health any more than a not-
for-profit organization such as a museum or a hospital, or a public institution such as a
state agency, would be excused from compliance with such regulations in the operation
of a café, snack bar, water fountain, or state highway rest area.
No mitigation of the penalty is required due to ANR delay; the ANR sought
enforcement for the violations at issue within a reasonable time frame.
Whether Respondent Knew or Had Reason to Know the Violation Existed, 10 V.S.A. § 8010(b)(3) Towards the end of 2004, Respondent was made aware of the drinking water
testing requirements and the expected transition to Respondent’s responsibility for
carrying out and reporting the required testing beginning in April 2005. As to the
posting of notice, based on the attachments to the Notices of Alleged Violation,
Respondent had reason to know that he had to post notice and to provide certification
of posting to the Water Supply Division of the ANR. It was not reasonable for him to
refuse mailed notices or to maintain a belief in inapplicable information on the Vermont
Department of Health website, once the notices in early 2005 provided him with
information on the applicable ANR rules, and provided the ANR website with links to
the applicable rules. Although Respondent testified that he has experienced more
11 effective outreach from other state programs, such as those responsible for taxes and for
health inspections, once Respondent was informed of the ANR regulations and given
the information necessary to comply with them, it was his responsibility to come into
compliance.
Some 700 transient non-community water systems operate in Vermont, most in
compliance with these regulations. As a matter of fairness and respect for the many
people in Vermont who comply with these regulations, it is necessary to impose a
money penalty on those who fail to come into compliance after they have been advised
of the requirements of the regulations. See 10 V.S.A. § 8001 (purposes of Uniform
Environmental Enforcement Act include to “prevent the unfair economic advantage
obtained by persons who operate in violation of environmental laws” and to “provide
for more even-handed enforcement of environmental laws,” as well as to “foster greater
compliance with . . . environmental laws” ).
Respondent’s Record of Compliance, Duration of the Violation, 10 V.S.A. § 8010(b)(4),(8)
Respondent took ten quarters, spanning a period of 2½ years, to come into
compliance with the coliform testing requirements, one year to come into compliance
with the nitrate testing requirements, and two years to come into compliance with the
GWUDI testing requirements.8 Respondent also took 2½ years, from the second quarter
of 2005 until the January 2008 Administrative Order, to come into compliance with the
posting requirements. In recognition of the effort made by most of the other similar
water systems to comply with these regulations, an appropriate penalty must take
account of the time it took to obtain Respondent’s compliance with these requirements.
8 The duration of the GWUDI testing violation extends from early April of 2007, the earliest that the MPA test could have been done after the February 2007 letter, to April 7, 2009, when it was actually done. 12 Economic Benefit Gained from the Violation, 10 V.S.A. § 8010(b)(5)
Respondent’s economic benefit is represented by the avoided cost of doing the
coliform and nitrate testing, for a total of $210. No evidence was presented as to any
economic benefit to the Restaurant from the absence of public warning notices about the
Restaurant’s drinking water.
Deterrent Effect of the Penalty, 10 V.S.A. § 8010(b)(6)
Respondent has come into compliance with the coliform testing requirements,
and the nitrate testing requirements, and the system has been determined not to be at
risk from the influence of surface water, based on the MPA test results. The
Administrative Order does not contain any requirements for future compliance,
although Respondent now recognizes his obligation to continue to perform the required
quarterly coliform testing and the required annual nitrate testing. Although the penalty
must recognize the length of time it took to achieve Respondent’s compliance, the
penalty imposed in this case should be adequate to achieve deterrence, that is, to
achieve future compliance with the requirements.
Actual Cost of Enforcement, 10 V.S.A. § 8010(b)(7)
ANR’s actual cost of enforcement, exclusive of attorney time which was not
presented in evidence, was approximately thirty hours of one ANR employee’s time, at
$26 per hour, plus approximately five hours of another employee’s time at $22.27 per
hour, for a total cost of enforcement of $891.
Taking all of the foregoing factors into account, the imposition of a total penalty
of $3500 for the violations is appropriate in the present case. This penalty includes $891
in enforcement costs and $210 in economic benefit (avoided cost of compliance), as well
as an additional $2399 in recognition of the potential for harm to human health, the
relatively lengthy period of time it took to achieve compliance, the need for future
deterrence, and the other factors discussed above.
13 Prospective compliance
Paragraphs B and C of the Administrative Order required Respondent to issue
public notice to the system’s users for the failure to monitor for coliform and nitrate,
and to submit copies of the notices and the related public notice certification forms to
the Water Supply Division of the ANR. Respondent complied with Paragraphs B and C
in approximately January 2008, and also began the required monitoring for coliform
and for nitrate by that time. Paragraphs D and E of the Administrative Order required
Respondent to conduct MPA testing during the period between April 1, 2009, and June
1, 2009, and to submit the results to the Water Supply Division of the ANR by July 1,
2009. Respondent complied with paragraphs D and E as of April 7, 2009, so that the
system was ruled to be exempt from further requirements regarding GWUDI. No
further prospective compliance is required by the Administrative Order.
Accordingly, taking all these factors into account, and based on the findings,
conclusions, and reasoning of this decision, it is hereby ORDERED and ADJUDGED
that:
Paragraph A of the August 20, 2008 Administrative Order is vacated. On or
before June 8, 2010, Respondent shall pay a total penalty of $3500 for the violations, to
the State of Vermont, to be deposited in the general fund pursuant to 10 V.S.A. §8010(e).
Respondent and the ANR may discuss a payment schedule and propose it to the Court
as a modification of this order.
Paragraphs B, C, D, and E of the Administrative Order have been complied with
and do not require any prospective order. They are therefore affirmed, with the
recognition that Respondent has come into compliance with them and no prospective
order is required, other than to note that Respondent continues to be responsible for
future compliance of the water system with the regulations applicable to it. 14 Rights of Appeal (10 V.S.A. §§ 8012(c)(4) and (5)):
WARNING: This decision will become final if no appeal is requested within ten
(10) days of receipt of this decision. Respondent and the Secretary of the Agency of
Natural Resources have a right to appeal this decision. The procedures for requesting
an appeal are found in the Vermont Rules of Appellate Procedure (V.R.A.P.), subject to
the Vermont Rules for Environmental Court Proceedings (V.R.E.C.P.) 4(d)(6). Within
ten (10) days of receipt of this Order, any party seeking to file an appeal must file the
notice of appeal with the Clerk of this Court, together with the applicable filing fee.
Questions may be addressed to the Clerk of the Vermont Supreme Court, 111 State
Street, Montpelier, VT 05609-0801, (802) 828-3276. An appeal to the Supreme Court
operates as a stay of payment of a penalty, but does not stay any other aspect of an
order issued by this Court. 10 V.S.A. § 8013(d). A party may petition the Supreme
Court for a stay under the provisions of Vermont Rule of Civil Procedure (V.R.C.P.) 62
and V.R.A.P. 8.
Done at Berlin, Vermont, this 8th day of March, 2010.
_________________________________________________ Merideth Wright Environmental Judge