Exclusive: National utility leads state in violation of green laws

sfretwell@thestate.comOctober 27, 2013 

— A toxin powerful enough to cause vomiting and even death swam silently in the drinking water at Lakewood Estates in 2011, exposing residents to a hazard many thought had been eradicated several years earlier.

The hazard was arsenic, and its discovery in the Chapin neighborhood resulted in the third state enforcement case in seven years against the subdivision’s utility service for failing to meet drinking water standards.

But the repeat offenses were nothing new for Utilities Inc., a national corporation that owns the Lakewood Estates water company.

In the past 20 years, state regulators have slapped Utilities Inc.-owned companies with 55 enforcement orders for water and sewer system violations, according to records kept by the S.C. Department of Health and Environmental Control.

That’s more than any other company or government agency in the state, including the U.S. military, an institution with a legacy of polluting the environment, according to state environmental enforcement records analyzed by The State newspaper. The 55 enforcement cases have resulted in more than $645,000 in fines against Utilities Inc. companies – including Carolina Water Service, one of the Columbia area’s most visible private utilities.

The large number of enforcement cases against Utilities Inc. companies highlights an issue that has long shadowed DHEC: whether the agency’s efforts to police environmental missteps and wrongdoing are adequate.

Statewide, nearly one-quarter of those fined for breaking environmental laws have done so multiple times, The State newspaper found in analyzing DHEC’s enforcement data base. All told, about 1,100 companies and governments have had multiple violations in the past two decades.

Eric Schaeffer, a former chief of the civil enforcement office at the U.S. Environmental Protection Agency, said big national companies often are not swayed by state enforcement efforts, in some instances because the fines for breaking the law are puny.

“If you’re seeing it over and over .... and they’re paying $2,000 here or $1,500 there or $3,000 there, it’s almost like they pay more than that to get into a ballgame if they have a skybox,” said Schaeffer, who now runs the Environmental Integrity Project in Washington. “You don’t want it almost to be a license to pollute, that you just pay your state fines and go on your way.”

In the case of Utilities Inc., more than half the 55 enforcement actions by DHEC resulted in fines of $5,000 or less, although a few exceeded $50,000. Each of the three fines at Lakewood Estates since 2004 was under $5,100, records show.

While conceding some limitations, DHEC director Catherine Templeton defended her agency’s enforcement efforts. The department isn’t interested in collecting fines, but in working with companies and governments to comply with laws to protect the air, land and water of South Carolina, she said.

Water worries

Utilities Inc. is one of the largest privately owned water and sewer businesses in the nation. Headquartered in Illinois, it has 75 subsidiaries in 15 states, mostly in the east but also in Arizona and Nevada.

The company, which first acquired holdings in South Carolina 40 years ago, owns and operates five private water and sewer utilities in the Palmetto State, including Carolina Water and the troubled Tega Cay system in suburban Charlotte. Utilities Inc. says it is the largest private water company in South Carolina. Utilities Inc. provides water and sewer services to about 24,000 locations in South Carolina.

Company officials insist their water systems are safe and the sewer systems are not having major environmental impacts. But they say they knew the systems needed improvements when Utilities Inc. bought them. The company acquired many of its South Carolina holdings more than a decade ago, although its first acquisition dates to 1972 in the Myrtle Beach-Florence area.

“When we acquired these facilities, they were in significant need of improvement,” said Rick Durham, a company regional vice president. “We’ve worked hard and made significant capital investments and will continue to make improvements to get these facilities up to standards.”

Asked about the 55 enforcement orders identified by The State in DHEC records, Durham said Utilities Inc. historically has acquired water and sewer systems that need upgrades. Its five South Carolina companies oversee 130 water and sewer systems, compared to municipal utilities that oversee a handful each, Durham said.

Recently, Carolina Water Service asked for a rate increase to justify improvements to its water and sewer systems. But some customers say the company needs better management – not more money. Utilities Inc. and its companies have had too many problems to ignore, and at some point, the company needs to fix the problems without hitting ratepayers, critics say.

“Every time someone gets sick, the question is, ‘Is this because of bad water?’ You have no way of knowing,” said Laura Valtorta, a lawyer who contends in legal documents that bacteria and other contaminants have tainted a water system at Forty Love Point at Lake Murray.

Of the 55 DHEC enforcement cases against Utilities Inc. companies, more than 20 were made against company holdings in the Columbia-area, mostly for drinking-water violations, agency records show.

Those violations include failing to supply enough water to some neighborhoods and not keeping radium levels down in others. Radium is a naturally occurring radioactive metal that is dangerous when it seeps into drinking water. Over time, people who drink water with elevated radium levels increase their chances of bone cancer and lymphoma, according to the EPA.

In the Columbia area, the issue at Lakewood Estates is of one of several concerns, company critics said. DHEC enforcement records show that arsenic exceeded safe drinking water standards by small to moderate amounts at one of the company’s Lakewood Estates water plants for much of a year beginning in April 2008.

After the company said it would install a filter to remove the arsenic, DHEC again learned that arsenic levels exceeded safe drinking water standards. The agency issued a $5,040 fine against Carolina Water Service in 2011 and ordered the company to correct the problem. Two earlier enforcement orders, one for arsenic and one for inadequate water supply, resulted in fines of under $5,000 apiece.

Durham said the arsenic issues at Lakewood Estates resulted from tighter federal standards on the naturally occurring metallic element. In recent years, the EPA has lowered the safe drinking water standard for arsenic from 50 parts per billion to 10 parts per billion, Durham said. But he said the arsenic problem now is resolved with the installation of new equipment.

Higher levels of arsenic are of particular concern in drinking water that comes from wells, such as those that serve Lakewood Estates. Arsenic can seep into groundwater from soil and cause well water to exceed safe drinking water standards. It also can give people upset stomachs if they are exposed to certain levels. Long-term exposure has been tied to lethal ailments, including bladder, kidney and prostate cancer.

“Stuff like this does concern me, especially when it comes to the children and grandchildren here,” said Dan Valentine, president of the Lakewood Estates Property Owners Corp. “My feelings are like everybody else in this neighborhood. We all bathe in (the water), but ain’t none of us drinking it. We’re all buying bottled water or getting water treatment systems.”

Leaking sewage

Carolina Water also has had repeat wastewater violations, including one case in Georgetown County that produced four DHEC enforcement orders without any resolution. DHEC has tried for 20 years to force Carolina Water Service to close the White’s Creek sewer plant and tie in with a local sewer district, but the company has failed to do so.

In seeking to stop sewage pollution from the White’s Creek system, DHEC fined Carolina Water Service $305,500 in 1994 and $16,000 last year. The most recent order said Carolina Water exceeded permit limits for lead, a toxic metal, while releasing too many substances that lower oxygen levels in rivers.

Carolina Water has said it wants to tie in with the local public sewer district and end the discharges, but DHEC says the company hasn’t followed through on the promise. Durham said that will happen pending approval by the S.C. Public Service Commission, which regulates private utilities. He blamed the problem on heavy rains that overwhelm the aging system.

“It’s more economical to abandon this plant and connect it to Georgetown,” he said.

Residents in the suburban Charlotte community of Tega Cay also are incensed these days about sewer spills into Lake Wylie, a popular swimming and fishing spot in the Catawba River basin. Some are so upset they’ve launched a website to decry Utilities Inc.’s operations. In Tega Cay’s case, DHEC hit the system with a $22,000 fine in 2004 and a $60,000 penalty in 2011. Templeton said she’s well aware of the problem at Tega Cay and has been working with Utilities Inc.

Templeton, DHEC’s director since 2012, did not directly address Utilities Inc.’s violations, but said stopping repeat offenses sometimes isn’t easy. The agency can’t always go after national corporations for violations made by companies it owns, she said, citing legal restraints.

“It is not uncommon for people to create (companies) to be the permit holders for something,” she said. “So they are set up structurally in such a way that I can’t reach them.”

The agency also has an enforcement policy limiting the circumstances in which it can use a past violation to justify stiffer penalties for later violations.

Congaree Riverkeeper Bill Stangler said repeat offenses are a concern. He said Carolina Water is aggressive about protecting its interests and has fought efforts through the years to make changes the public wants – and deserves.

“Carolina Water Service has a history of using legal and political maneuvering to continue to pollute rivers and make money,” Stangler said. “What surprises me is they are able to continue doing this over and over again. That doesn’t change.”

Aside from worries about repeat violations DHEC has identified, Stangler said he’s found evidence that some violations have gone unpunished. One Carolina Water Service sewer plant has committed violations of its discharge permit without a fine, he said.

That issue in the Saluda River is linked to a wastewater plant at Interstate 20 near West Columbia, Stangler said. Stangler said water samples from the plant show that it is violating its discharge permit.

At one discharge pipe from that plant, the company violated its pollution permit 19 times for fecal coliform bacteria, as well as for substances that suck oxygen from the water, according to Stangler’s research.

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