                               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




                                            15
