Lakeside Foods may face steep fine, fees

Wisconsin-based Lakeside Foods may soon face a six-figure administrative fine, following wastewater violations that happened between July 31 and Sept. 28 at the company’s Owatonna plant.

The company took over the decades-old facility on North Cedar Avenue when it acquired Chiquita Processed Foods in 2003.

During a Jan. 2 study session, city council members got their first look at a draft notice of violation and penalty prepared in consultation with St. Paul-based law firm Flaherty & Hood.

City engineer Sean Murphy said it took weeks to figure out the cause of the issue, which pushed the wastewater treatment facility to capacity for weeks.

“We’re just doing a lot of due diligence, making sure the evaluation we did … was all in line, fair and equitable,” he said, adding the law firm was consulted “to ensure what we’re doing was legal in all rights and means” following federal and state regulations, as well as the city’s own permit for treating wastewater.

The process, he said, follows the way the Minnesota Pollution Control Agency handles violations. And it’s apparently a first in Owatonna. 

“This is somewhat new territory for the city. We’ve never issued an administrative penalty order from a wastewater treatment standpoint as far as we know,” Murphy added.

The first sign of trouble, he explained, was that the wastewater treatment facility’s process “wasn’t working correctly.” Digesters and aeration basins that process wastewater were running at full capacity, which is not normal.

Tracking the problem, he said, took time, “because it could be caused by a number of things.” After a process that included testing at several lift stations and the use of dye tablets, city staff determined an old, illegal connection at Lakeside Foods was causing the problem.

“It was a buried manhole about three feet deep,” Murphy said. “What we surmise is that there was a bulkhead on that line that somehow came loose” because of time or as the result of Lakeside televising and jetting its system.

The manhole was closed off at the end of September, Murphy said.

City staff worked directly with a member of Lakeside Foods staff during the investigation. While the company has its own system of treating wastewater before it leaves the facility, the water coming out through the manhole was untreated.

The penalty for violations outlined in the city ordinance is $1,000 per violation.

In addition to the illegal discharge, Lakeside Foods also violated an ordinance provision for minimum sampling requirements and one that prohibits discharging wastewater in “significant quantity”.

Outside of the penalty, Murphy said, the city came up with a surcharge of $282,319.02 based on what Lakeside Foods typically pays in winter months when the company can’t spray wastewater on its fields west of town. The charge far exceeds what Lakeside typically pays, because the water was untreated.

City staff also calculated additional costs to the city such as staff time, sampling, resources, and trying to find the source of the problem, adding $85,000 to the bill.  

Murphy said the 216 violations for the period they were discharging would add up to a $216,000 administrative penalty.

All told, Lakeside Foods could face a total of $518,319.02 in surcharges, cost recovery, and fines. However, Murphy said staff recommends making the $216,000 penalty forgivable, provided Lakeside agrees to taking corrective action. He said there are ways the company could have identified the problem sooner.

“We’re more for running a business the right way, rather than trying to be punitive with this,” he said. “If we can get these (corrective actions) implemented, and implemented in a timely fashion, we’re much better off.”

Some council members agreed; others felt it was time to send a message to the company’s Wisconsin corporate headquarters. Council vice president Kevin Raney said the company had violated the rules before this.

“At the end of the day, they’re polluting our waters at our taxpayers’ cost,” he said. “At some point, you have to fine them, because if they continue to do it, tells me they don’t care.”

Murphy said, to be fair, the manhole was not a known connection, and it is probably more than 70 years old. He also said later both the company and the city have lost a lot of institutional knowledge with staff turnover.

The improvements–which could include mechanisms to understand and account for where the water is going as food is processed–would likely cost more than $216,000 fine, Murphy said.

He also noted that since this incident, the company had added another violation to the list. Murphy said the company drew down wastewater to check a problem with its pre-treating process and had a septic hauler take the untreated wastewater to the city’s dump station. City staff saw the hauler discharging and asked what they were doing, he said.

Asked whether it was a known infraction, Murphy said “the facility knew. Whether the people that did it knew that it was against the permit, I can’t verify that.” He added the infraction was “very insignificant”.

Schultz liked the idea of basing the administrative penalty on how the company responds, with forgiveness tied to corrective action. He said the city doesn’t want to make the penalty and improvements so costly that the company abandons the plant, and he hoped someone at the company would be willing to work with city staff.

“This isn’t an us versus them thing, this is an us together thing,” he said. “It’d be nice to have a rapport.”

Council member Nate Dotson suggested a 60-day window for presentation of an action plan from Lakeside Foods and leaving the door open to forgiving some of the $216,000 penalty.

Murphy said once Lakeside Foods receives the letter, the company could request a hearing, which pauses the action, and then may appeal the decision.

“If you want anybody in Wisconsin to pay attention to this, it has to be substantial,” council member Doug Voss said, adding the full fine would do that. “That might get their attention over there that they have to get over here to fix some things. Not all of this just happened, it’s been laziness over the years. They have to take care of their stuff.”

Murphy said MPCA typically allows for a forgivable portion of their penalties, with fees getting larger and less forgivable for repeat offenses.

Council members will consider a final draft of the three-page document at their Jan. 16 meeting.