Environment Investigations

Part I of a two-part investigation. Read Part II here.

Acrid smoke blanketed a neighborhood off Dixie Highway in Southwest Louisville on an unseasonably warm fall day last November. For more than 24 hours, a 30-foot-tall pile of tires burned at Liberty Tire, a tire recycling center on Bohannon Avenue. Those living within a mile of the site were urged to shelter in place.

From his command post a thousand feet away, Lt. Col. Brian Morgan of the Pleasure Ridge Park Fire District remembered fighting the fire into the wee hours of the morning.

“At one point you could see the flames,” he said, though later only thick black smoke was visible. “It was a pretty intense fire.”

Morgan said the Liberty Tire fire ranks as one of the biggest non-structure fires his department has seen in recent years. Regulators estimated the facility had more than a million tires on site, though it was only permitted to have 10 percent of that.

Even before the fire, the state Department for Environmental Protection knew the company was storing a dangerous and illegal amount of tires on site. Despite several visits and warnings, however, state inspectors didn’t force Liberty Tire to comply with the law or pay any monetary penalties until after the piles of tires went up in flames.

Matt Bevin’s election as Kentucky’s next governor last week has caused some hand-wringing among the state’s environmentalists, who worry key programs will be cut or scaled back.

But two decades’ worth of data obtained by WFPL via the Kentucky Open Records Act, as well as court documents and state publications suggest the programs are already in dire straights. The lax enforcement at Liberty Tire wasn’t an anomaly. Instead, it’s only one of numerous documented failures by state regulators to make companies follow the law.

Although pre-2004 state data is spotty and incomplete, in almost every measurable way, enforcement of the state’s environmental laws has dropped drastically over the last two decades.

A WFPL analysis found:

  • repeated budget cuts have reduced environmental protection programs to 60 percent of the capacity they were two decades ago;
  • there are twice the number of Kentucky permits to discharge wastewater into streams and rivers as there were in 1992;
  • despite that, there has been a precipitous drop in enforcement cases that enter the legal system. Under both Gov. Steve Beshear and his predecessor, Ernie Fletcher, fewer cases are referred to the cabinet’s attorneys, go to the cabinet’s Office of Administrative Hearings, and end up in Franklin County Circuit Court than during the administrations of Govs. Brereton Jones and Paul Patton;
  • the administrations of Beshear and Fletcher issued fewer Notices of Violation — typically the lowest rung on the enforcement ladder — for air, hazardous waste and solid waste infractions than the administrations of Jones and Patton;
  • And along with fewer enforcement actions, data suggest that some of Kentucky’s waterways are more polluted than they were a decade ago.

The result is a system where fines for environmental violations often aren’t high enough to compel companies to follow the law, and where budget cuts have translated into a lack of scientific data to back up legal cases.

WFPL News talked with seven former state environmental regulators — most of whom worked at high levels of the department — who say repeated budget cuts have sent the message that environmental enforcement is not a priority. They also cite a lack of political will to take tough actions against Kentucky companies that break the law.

Failure at Liberty Tire

Liberty Tire’s enforcement history started in February 2012, when inspectors noted the company was storing too many tires on site. They didn’t issue a violation but warned the company they would return in three months to reassess.

But inspectors didn’t come back until October, when they found there were still too many tires at the Bohannon Avenue business. This time, they issued a Notice of Violation. When they returned to inspect in December 2012, the problem had been resolved, they noted in a report.

The next time inspectors visited the site was a year-and-a-half later, on June 16, 2014. They found similar problems to what they’d discovered there in 2012. The inspectors issued a Notice of Violation for improper tire storage, giving the company two months to comply. But when inspectors returned in August and September, the company was still out of compliance. On Sept. 4, two weeks after the original deadline for Liberty Tire to reduce the size of its tire piles, inspector Jeff Salmon wrote that the company had made little progress, according to a copy of the violation obtained by WFPL via the Kentucky Open Records Act.

Liberty Tire in February 2012Courtesy DEP

Liberty Tire in February 2012.

Salmon’s report said Liberty Tire Operations Manager Scott Wilson promised the tire piles would be reduced by Oct. 1. But nobody from the state came back to check on the facility until Nov. 3, shortly after the fire started.

Department for Environmental Protection Commissioner Bruce Scott said his inspectors were doing their job by citing the company. He said tires often pose a problem; recyclers such as Liberty Tire tend to take in a lot of tires during the commonwealth’s amnesty events, which the state organizes to keep tires out of landfills and waterways. Scott said one option would have been for the state to confiscate the tires, and then spend time and money figuring out how to dispose of them.

“But the state doesn’t have those kind of funds to go in and do that,” he said. “So we have to get the responsible party — in this case, Liberty Tire — to deal with it. And so we tried. We pushed on them as hard as we could. We certainly wanted that problem to go away before it got worse. And ultimately, it got worse.”

But the DEP didn’t use all the tools it had available to prod Liberty Tire to comply with the law. Not even close. It didn’t issue any fines before the fire, nor did it take the company to court with a cease and desist order.

After the fire, Liberty Tire ended up paying $40,000 in fines to the state. A class action lawsuit filed by residents who live near the plant alleges health and property damage, and an environmental assessment of the site found polycyclic aromatic hydrocarbon (PAH) contamination in the soil there. Liberty Tire, through a contractor, is currently determining the best way to mitigate the damage. A public relations firm representing the company did not return calls requesting comment.

Budget Cuts Mean Fewer Regulators

Since 1992, the Department for Environmental Protection has endured budget cuts nearly every year.

The amount of money allocated from the general fund to the Department for Environmental Protection, adjusted for inflation, has decreased almost every year since 1992. That year, about $37 million was appropriated for the department from the general fund (in 2014 dollars); last year, the amount had fallen to just more than $21 million. That’s a 43 percent decrease in funding over 24 years.

The actual buying power of that money is likely even lower than it appears, thanks to rising fixed costs such as health insurance for employees. And although the DEP receives federal funds, as well as restricted funds such as fines and fees, Deputy State Budget Director John Hicks said the best barometer of the agency’s funding is the general fund appropriation.

Scott rejected the idea that the cuts have affected the agency’s key duties, which include enforcing state and federal environmental laws. Instead, he said the agency has been forced to consolidate some administrative functions, as well as rely more heavily on technology in some areas.

He claimed the agency hasn’t cut back in enforcement personnel; rather, he said he’s reallocated money to keep that department staffed.

“We have preserved those enforcement staff and have maintained that despite the budget cuts, and so we’ve had to take those [cuts] in other areas of the agency,” he said.

There is little pre-2008 data available on how the DEP’s staffing has changed. But since 2008, the annual reports published by the various divisions in the DEP show reductions in staff. The 2008 annual report shows 19 employees working in the civil enforcement side of the division (with another three positions vacant), and seven working on the compliance side. The most recent report lists 10 employees in each branch.

Enforcement also relies on field inspectors from the divisions of air, water and waste management. The Division for Air Quality’s annual report shows it went from 70 inspectors in 2008 to 64 in 2015.

The Division of Waste Management has seen a loss of about 13 percent of its positions since the beginning of the Beshear administration — from 274 funded positions in 2009 to 237 in 2015. DWM doesn’t indicate in its annual report whether any of those positions are field inspectors.

The Division of Water doesn’t provide consistent data in its annual reports as to the number of employees or inspectors. But even in the 2008 annual report, then-director Sandra Gruzesky wrote that the program had been cut to the point where it was struggling to perform its duties.

“The division has the budget to maintain 249 full-time permanent employees,” she wrote in the report. “The number of employees the division can maintain has decreased 15 percent since 2003 — a loss of 43 positions. This reduction in staffing has resulted in a severe strain on the remaining staff who struggle to provide adequate service to the commonwealth.”

The effect of budget cuts on the DEP has been noted by outsiders, too.

In an opinion on a settlement Scott’s DEP reached with coal company Frasure Creek, former cabinet secretary and current Franklin County Circuit Judge Phillip Shepherd interpreted part of Scott’s testimony to mean that the DEP could no longer do its job implementing the Clean Water Act.

“With only a handful of enforcement personnel, and a dwindling number of field inspectors, and with the position of Director of Enforcement unfilled since 2007, it is impossible for the Cabinet to effectively regulate permittees such as Frasure Creek, who systematically violate the obligations of the [Clean Water Act] for monitoring and reporting environmental violations,” Shepherd wrote.

Scott disagreed with that characterization, and he noted that Jeffrey Cummins has been serving as the director of enforcement for several years.

Tom FitzGerald of the Kentucky Resources Council has been working with — and occasionally litigating against — the cabinet since 1984.

“What you’re seeing in most of these programs is … the inevitable outcome of an agency that has been starved in its budget for several years,” he said.

Enforcement Dries Up

Those budget cuts have coincided with a drop in the number of enforcement cases that the Department for Environmental Protection pursues in administrative and legal courts.

According to records WFPL obtained from the Energy and Environment Cabinet’s Office of General Counsel, the Office of Administrative Hearings and Franklin County Circuit Court, it’s clear that the two most recent administrations — Beshear and Fletcher — are using the legal system significantly less than their predecessors.

Regulators might issue thousands of violations in a given year, but relatively few of them make it into the judicial system. It’s an expensive and time-consuming process, and Scott said it is in all parties’ interest to resolve violations outside of court.

“We try to do everything in our power to get that behavior change as quick as we can and as forcefully as we can without having to go [the legal] path,” Scott said. “But there are cases where we simply cannot avoid that, and there are situations that merit that. And the courts are effective in getting that done.”

That’s a sentiment shared by former regulators, too. But Bob Logan, who served as both deputy DEP commissioner and its commissioner for about a decade in the 1990s, said enforcement only works if regulators are willing to pursue companies, levy meaningful fines and file lawsuits.

“When you took [enforcement actions], you had to mean it, and you had to follow through with it,” he said. “And you had to make it significant so they understood that the noncompliance was not acceptable and had to be corrected.”

State data show that recent administrations have been less likely than their predecessors to pursue enforcement all the way to the courts.

In some cases, the difference is stark. Under Gov. Paul Patton, the environment cabinet’s legal office handled an average of 230 DEP cases each year he was in office. Fletcher’s handled an average of 73 cases per year, and Beshear’s about 78 a year between 2009 and 2014. The Office of General Counsel is on track to handle even fewer cases in 2015; as of Oct. 29, only 54 DEP enforcement cases ended up in the office.

The environmental enforcement agencies under Beshear (through 2014) and Fletcher sent an average of 25 and 26 cases a year, respectively, to the Office of Administrative Hearings. That’s compared with nearly 60 a year under Patton and 36 a year under Gov. Brereton Jones.

Under Fletcher and during Beshear’s first seven years in office, only about 16 and 14 DEP enforcement cases a year, respectively, ended up in Franklin County Circuit Court. Patton’s rate was more than twice that — about 29 a year — while Jones sent an average of 68 cases a year to the circuit court.

One logical reason for this decline in enforcement would be that there are fewer regulated entities than there were in the 1990s. But that’s not the case.

According to data provided by DEP, the number of hazardous waste permits has stayed relatively constant over the last decade, fluctuating between nine and 12. But there were double the number of active wastewater permits in 2014 that there were in 1992. This means that even though the cabinet’s data suggest there are more regulated entities now than in the 1990s, there are fewer enforcement actions. (DEP could only provide yearly totals for active wastewater and hazardous waste permits for companies operating in the commonwealth, not for solid waste or air permits.)

Fletcher did not respond to a request for comment. But both Jones and Patton told WFPL they took straightforward approaches to environmental enforcement while in office.

“My philosophy was that [the economy and environment] can and must coexist together. And it’s not overly complicated, quite frankly,” Jones said.

He added that he was confident his regulators did a good job enforcing environmental laws. “When we saw something was amiss, we tried to jump in the middle of it in a responsible way,” he said.

Patton echoed those sentiments.

“I had a pretty balanced approach to environmental regulation,” he said. “I just said, ‘Enforce the law.’”

It’s clear that under Fletcher and Beshear, the Department for Environmental Protection didn’t use the legal system as often as its predecessors. DEP Commissioner Scott said that could be because major environmental initiatives, such as the battles against open dumps and straight-piped sewage undertaken in the 1990s, have ended. He said it also could be a function of more efficient field inspectors, who gain compliance by issuing warnings and violations, negating the need for a case to end up in court.

“Thirty-two years of lens is what I come at this with,” Scott said. “So 30 years ago, 20 years ago, were there more bad actors than there are today? Yes. Awareness, environmental awareness, corporate awareness has improved. Citizen awareness has tremendously improved. And so you see by and large, people are more apt to do what’s right than perhaps what they did 30 years ago.”

Victor Flatt is the director of the Center for Law, Environment, Adaptation and Resources at the University of North Carolina School of Law. He disagrees that there was more intentional flouting of environmental laws in the past.

Rather, Flatt said the newness of environmental laws in the 1970s, 1980s and 1990s suggests more companies made errors by mistake. But he said regulators tend to settle those cases informally, by helping companies comply with the law, and it’s unlikely those cases would have ended up in the legal system.

Flatt said comparing one enforcement action across a long period of time gives an accurate picture of how a regulatory agency enforces the law.

“So in other words, if you’re looking at administrative and legal cases from 1992 and now, that is a fair comparison,” he said.

And Kentucky’s pattern of relaxed enforcement continues when looking at Notices of Violation. Although there was patchwork data available before 2004 — which means in some cases, there was only one or two years of statistics accessible for the Jones and Patton administrations — Beshear and Fletcher both issued fewer violations for air, hazardous waste and solid waste infractions than their predecessors.

Even though Patton and Jones used the legal system much more than Beshear’s DEP, they also issued more NOVs for air, hazardous waste and solid waste violations. There wasn’t enough consistent data for water to compare Patton’s and Jones’ NOVs with those of Fletcher and Beshear.

Falling Through the Cracks

Not included in the DEP’s numbers of formal enforcement actions — either as Notices of Violation or cases that ended up in the legal system — are the cases that fell between the cracks, where companies broke laws and polluted the air, water or land, and got away with it.

Without intervention from outside groups, Frasure Creek would likely have been one of those cases.

Frasure Creek was a coal mining company operating in Eastern Kentucky. Like every other coal operator in the commonwealth, the company was required to self-report its water pollution in quarterly Discharge Monitoring Reports, or DMRs.

DMRs are technical documents, including numerical water quality measurements. It would be extremely unlikely for the numbers to remain the same — down to the decimal point — from quarter to quarter.

But in 2010, that’s what a coalition of environmental groups found at Frasure Creek.

“It was very surprising to realize that the cabinet, for all intents and purposes, everything we could tell, was just taking these pollution data reports, stacking them up, never looking at them, never doing enforcement based on them,” said Mary Cromer, an attorney with the Appalachian Citizens’ Law Center who worked on both the Frasure Creek case and a similar one involving ICG.

Years of reporting from 2008, 2009 and 2010 showed thousands of violations from Frasure Creek and ICG coal mines in Eastern Kentucky. Sometimes, the companies self-reported violations. Sometimes, they didn’t turn in the required reports. And sometimes, they submitted identical data for several quarters of monitoring.

All were ignored by regulators. Tom FitzGerald of the Kentucky Resources Council said the errors should have been easy for regulators to catch.

“Even a cursory review would reflect that they were being fraudulently filed,” he said. “Because the idea you’re going to have identical samples taken over a three-month period is a little bit of a stretch.”

But would DEP have caught the violations without environmental nonprofits flagging the problem?

“That’s a good question,” Scott said. He wasn’t sure but said after DEP discovered the problem at Frasure Creek, it changed its process to try to catch other companies in similar schemes.

Regulators didn’t catch the obvious violations at ICG and Frasure Creek until environmental groups pointed them out, and they didn’t step in quickly or forcefully enough to prevent the inferno at Liberty Tire. Both cases — as well as data showing a clear trend away from strict enforcement — raise questions about the way the Department for Environmental Protection views its role as an enforcer.

States have options for enforcement, according to Victor Flatt of UNC. One is to use fines to promote deterrence. Another is to establish programs to help companies who violate the law achieve compliance — usually without monetary penalties.

Flatt said a combination of the two can work well. But there’s a caveat: Looking for lawbreakers and levying fines usually require more workers and cost more money. Flatt said for agencies that use both, shrinking budgets often swing the pendulum away from deterrence-based enforcement.

“Now, you can say you’re doing deterrence-based [enforcement] and cut funding, but if you don’t have the funding to do it, you can’t do it,” Flatt said.

“It’s something that we’re continually wrestling with: How can we achieve the largest percentage of compliance in the most efficient way with the resources we all respectively have.” —DEP Commissioner Bruce Scott

Like most states, Scott said the Kentucky Department for Environmental Protection uses both approaches.

“The objective is compliance. So how you get there isn’t always through some deterring enforcement action, albeit that’s still an important tool that we all have and must use,” he said. “It’s something that we’re continually wrestling with: How can we achieve the largest percentage of compliance in the most efficient way with the resources we all respectively have.”

It’s clear this approach isn’t working: Budget cuts and declines in enforcement have also coincided with decreases in water quality in some areas of the commonwealth.

Tomorrow, Part II of this series will examine how water quality has declined alongside lax enforcement of environmental laws. Read Part II here.

Erica Peterson reports on energy and the environment for WFPL. She is also Enterprise Editor.