Former Manager of Michigan Wastewater Treatment Company Sentenced to Prison for Illegally Discharging Untreated Liquid Wastes

WASHINGTON— Michael Panyard, the former general manager of Comprehensive Environmental Solutions Inc. (CESI), a company that operates an industrial waste treatment and disposal facility in Dearborn, Mich., was sentenced today to 15 months in prison by U.S. District Court Judge Victoria A. Roberts of the Eastern District of Michigan, the Justice Department announced. He was also sentence to two years of supervised release and was ordered to participate in a comprehensive drug treatment program.

Panyard of Pleasant Ridge, Mich., was convicted following a three week trial in October 2008, 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, Mich., also a former plant manager, was convicted of conspiracy and a Clean Water Act violation.  Earlier this month Long was sentenced to 24 months in prison followed by two years supervised release. Bryan Mallindine of Carlsbad, Calif., 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. In March 2009, he was sentenced to three years probation, including three months home confinement. Another former plant manager, Don Kaniowski, also was sentenced in March to three years probation following his plea to a felony Clean Water Act violation. Kaniowski provided substantial assistance to the government in the course of its investigation.

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.  Liquid industrial wastes were stored at the facility in twelve large above-ground tanks capable of holding more than 10 million gallons.

During the period from 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.

"Self-regulation is the backbone of all of our environmental compliance programs, including our Clean Water Act pretreatment and National Pollution Discharge Elimination System permit programs," said John C. Cruden, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. "Without good faith efforts at compliance with pretreatment requirements and honest reporting when violations occur, even our best efforts at preserving our nation’s waters ultimately will fail. The sentences imposed in this case emphasize the powerful deterrent value of criminal enforcement efforts aimed at ensuring compliance with laws and regulations designed to protect the environment."

Terrence Berg, U.S. Attorney for the Eastern District of Michigan said, "The Clean Water Act protects our waters from being dumping grounds for untreated waste.  Today’s sentencing demonstrates that the government or public will not tolerate those who choose to commit environmental crimes.  My office will continue to aggressively prosecute the intentional pollution of one of Michigan’s most sacred natural resources."

"The defendant made the decision to risk harming the environment and then lied about it, all in an effort to ‘cut corners’ and make illegal profits," said Randy Ashe, Special Agent in Charge of Environmental Protection Agency’s Criminal Investigation Division in Chicago. "His sentence is a clear reminder that managers of companies, as well as the company itself, will be prosecuted when they commit environmental crimes."

On Sept. 4, 2008, CESI pleaded 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.

The company, the last defendant to be sentenced in the case, has a hearing scheduled for May 11, 2009 at 2 P.M.

The case was investigated by special agents of the EPA Criminal Investigation Division, with the assistance of the Federal Bureau of Investigation, as a part of the Detroit Multi Agency Environmental Crimes Task Force.  The case is being prosecuted by Assistant U.S. Attorney Mark Chutkow, Senior Counsel James Morgulec of the Justice Department’s Environment and Natural Resources Division and EPA Regional Criminal Enforcement Counsel David Mucha.