THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Sunday, December 10, 1995 TAG: 9512110204
SECTION: FRONT PAGE: A1 EDITION: FINAL
SOURCE: BY SCOTT HARPER, STAFF WRITER
LENGTH: Long : 265 lines
It began with a misspelled signature.
An inspector at the Virginia Department of Environmental Quality noticed the error nearly two years ago while scanning a routine water-pollution report from a sewage plant at Indian Cove Resort in Virginia Beach.
The facility owner's signature, required on the report, had been written in by someone else. DEQ checked more records and found faked signatures and other problems in the reports of at least four private sewage plants, state records show.
The discoveries have since sparked a federal grand jury investigation into possible criminal violations of the Clean Water Act. The inquiry, started this summer, involves the FBI, the U.S. Justice Department and the Environmental Protection Agency, records and subpoenas show.
The findings also have prompted new questions about what Smithfield Foods Inc., one of the largest meat-packing companies on the East Coast, has been discharging into the Pagan River.
At the center of the federal investigation, according to government officials and case records, is Terry Lynn Rettig, a Virginia Beach businessman who ran sewage plants and submitted reports across the region - including the one at Indian Cove and two at Smithfield Foods in Isle of Wight County.
DEQ officials say Rettig worked at six or seven local plants, although they were not immediately sure how many. Records show he ran at least four plants and had problems at each.
Rettig was fined $250 in May by a state oversight board. The board found him in violation of his license for falsifying signatures on several months' worth of pollution reports at two local sewage plants he managed - Twin Ponds Mobile Home Park in Suffolk and Indian Cove, records show.
Then in August, Rettig was asked to resign from Smithfield Foods. That was a full year after he told state inspectors that he had lost two years' worth of documents detailing how much slaughterhouse waste, toxics and chemical pollutants had been discharged from company plants into the Pagan River, records show.
Almost as soon as Rettig left his job as chief records-keeper, pollution violations at Smithfield escalated in number and severity, state enforcement reports show.
Reached at his home, Rettig declined to comment on Smithfield Foods or other former employers. ``I really can't talk about any of this right now,'' he said.
Since 1983, Rettig had been responsible for preparing and verifying monthly water-pollution reports to show compliance with environmental regulations. State inspectors rely almost exclusively on the integrity of the reports to determine whether a company has violated pollution rules.
Rettig's tenure included some of the stormiest years between Smithfield and state environmental officials. In 1989, company president Joseph W. Luter III threatened to move his entire operation and its 3,200 jobs to North Carolina because he believed Virginia's new pollution standards for phosphorus emissions were too harsh.
While Luter kept his headquarters in rural Isle of Wight County, in a town synonymous with meat packing, hogs and ham, the feud has simmered ever since.
The two company sewage plants, located at Smithfield Packing and Gwaltney of Smithfield, are antiques. Both were built just after World War II and have been modified countless times at a cost of millions of dollars, said Carl Wood, vice president in charge of engineering.
They discharge an average of about 3 million gallons of treated waste a day into the Pagan River. A shallow, snakelike waterway, the Pagan feeds the James River and ultimately the Chesapeake Bay.
The Pagan has been closed to shellfish harvesting since 1970 because of high levels of fecal coliform, a bacteria present in the feces of warm-blooded animals, according to the state Health Department.
In Smithfield's case, warm-blooded animals means hogs. About 18,000 hogs are killed each day at the company's slaughterhouse. Their blood, bone fragments, hair and other waste products are washed down drains, screened and treated in man-made lagoons and processed at sewage plants before being released into the Pagan.
Before Rettig lost his job at Smithfield, he was reassigned out of the plants in August 1994, and a new sewage manager was named, Wood said. Since then, the plants have violated their state pollution permits 20 times - including eight violations of fecal coliform standards, according to enforcement records.
Last September, for example, the worst month in the past two years, the Smithfield Packing plant registered fecal coliform counts 40 times the permitted level.
As violations piled up through late 1994, creating the potential for millions of dollars in fines, the DEQ opened negotiations for a settlement.
In turn, the company late last year purchased new equipment and made other improvements that helped correct some of the violations. Since January, the two plants have broken state rules only three times, with no violations for fecal coliform at the Smithfield Packing plant, records show.
Still unresolved, however, is what to do in the face of so many violations the past two years. The likely result will be some sort of fine, said Frank Daniel, regional director of DEQ.
It was during the negotiations that Smithfield Foods contributed $100,000 to a political action committee backing Gov. George F. Allen. The gift, first made public in an article by The Washington Post in October, caused a storm of protest in the weeks before the November state elections.
Unfazed by the publicity, company president Luter quickly announced another $25,000 donation, saying his intention was not to influence negotiations but simply to support a governor who shares his pro-business philosophy.
``I have no apologies to make to anyone about our environmental record over the last 10 years,'' Luter said in an interview after the hoopla.
Beneath the political bluster, the news of nearly two dozen violations just after Rettig left his post was not lost on investigators, who remained busy collecting records, letters, contracts and other background material.
``Theoretically, it's possible they're linked,'' Daniel said, tempering his comments by noting that such issues remain under investigation. ``It also could be that the plants were just deteriorating. . . . Until we've seen all the appropriate facts, we're making no definite decision.''
Since the mid-1980s, state environmental officials have adopted a more cooperative policy toward Smithfield Foods. Instead of blunt enforcement, officials have signed or modified six consent orders with Smithfield since 1986, records show. The orders are essentially quiet agreements to settle pollution problems outside a courtroom.
In addition, the state eased regulations on Smithfield's emissions in 1991 and November 1994, with an eye toward coaxing the company to change its overall sewage disposal system.
Under an agreement with Luter in 1991, the two sewage plants will stop discharging into the Pagan and instead send their wastes to the Hampton Roads Sanitation District, probably by mid-1996, officials now estimate.
The district is putting the finishing touches on a $16 million sewer line that, once completed early next year, will connect Smithfield Foods to HRSD's Nansemond treatment plant in Suffolk, said HRSD general manager James R. Borberg.
The line, stretching 17 miles and crossing five waterways, also will serve parts of Suffolk, Smithfield and Isle of Wight County, Borberg said.
To connect to the new line, Smithfield Foods will not have to spend upfront money for its construction - a deal HRSD extends to big industrial customers, Borberg said.
However, the company must spend about $3 million to improve its own waste treatment system, and then will pay an estimated $150,000 a month in sewage bills to HRSD, Borberg said.
To make room for so much new sewage, HRSD is tripling the size of its Nansemond plant. The massive project is expected to cost $48 million. As of late November, the expansion was only about 60 percent complete, Borberg said.
To hasten Smithfield's connection, HRSD is prepared to divert sewage at Nansemond to other facilities in its regional network.
This sewage-shuffling would allow about half of Smithfield's 3-million-gallon-a-day load to come to Nansemond by early 1996, with the rest arriving by the end of that year, Borberg said.
While workers complete the new line, laying some of its last links last week, investigators still are compiling background material, paperwork and other data on Rettig and his employers.
A Justice Department subpoena asked state environmental officials to hand over to a grand jury in Norfolk by Nov. 13 ``all letters, notes, logs, inventories, summaries, reports, analyses or other documents obtained from Smithfield Foods Inc., Smithfield Packing Inc. or Gwaltney of Smithfield Ltd.''
Likewise, the FBI last month confiscated records and documents from another former Rettig client, Frank's Trucking Center Inc. in Chesapeake, said manager W.N. Barlow.
``They took everything,'' Barlow said.
Barlow was one of three former clients who filed formal complaints earlier this year against Rettig with the state Board For Waterworks and Wastewater Works Operators in Richmond, according to board records.
He was joined by Bruce J. Williams, former owner of the Twin Ponds Mobile Home Park in Suffolk, and Berkhard Bremer, assistant general manager of Indian Cove Resort in Virginia Beach.
In all three cases, Rettig was accused of signing the names of Barlow, Williams and Bremer on pollution reports without their knowledge. Under state rules, the reports are supposed to be signed by two people: the sewage plant manager and a company representative.
It was Bremer's signature that Rettig misspelled, and the one that started the state looking into other plant reports that Rettig filed, according to a transcript of an informal hearing on the charges, held March 15 in Richmond.
Rettig did not show up for the hearing, despite repeated attempts by a board inspector to contact him by phone and certified letter.
``Once I talked to the inspectors, I was alerted to the fact that there were some wrongdoings somewhere along the line,'' Bremer testified, ``because some of the reports and samples didn't seem to match with the reports that were sent in.''
Rettig worked odd hours, usually arriving at Indian Cove early in the morning or late at night, Bremer noted.
``When he pulled his samples, no one was there,'' Bremer said. ``He was the sole responsible person for the entire operation of the plant.'' After firing Rettig, the resort's management hired two plant managers and took steps to ensure access to reports, Bremer said.
Williams testified in March that Rettig, hired to run his mobile home plant in 1990, brought the pollution reports by for a proper signature at first. But then the reports stopped coming.
``We had complaints from the manager that Rettig was not coming onto the site,'' Williams said at the hearing. ``She didn't think he was doing the testing on a daily basis. And she was concerned about some of the conditions of the plant and maybe odors coming from the plant, and also some of the products that were being pumped out and hauled away.''
Rettig used a laboratory at Smithfield Foods to analyze discharge samples from his clients. Wood, the Smithfield engineering vice president, said he was aware of this ``moonlighting,'' as he called it, but did not know the extent of his outside business.
``It seems he spread himself so thin, he didn't have the time or interest to pursue his regular duties,'' Wood said.
Rettig established his own company, A-T.R. Systems Management, in 1990, with him as its director and president, according to State Corporation Commission records. His home address in Virginia Beach was listed as company headquarters.
A-T.R. no longer is registered in Virginia, however, because Rettig did not renew his incorporation in 1994, a commission spokeswoman said.
Williams tried repeatedly in September 1994 to contact Rettig about problems at the plant and with several pollution reports ``that were not in line'' with test results.
Rettig never responded. Williams fired him via certified mail. ILLUSTRATION: Graphic
CHRONOLOGY
The following is a history of environmental troubles at
Smithfield Foods Inc., based on documents and interviews with state
regulators and company officials:
October 1983: Dozens of pollution violations at Smithfield result
in a lawsuit by attorney general and Chesapeake Bay Foundation. The
company later agrees to spend $1.65 million upgrading its plants.
Smithfield hires Terry Lynn Rettig to run its two sewage plants, at
Smithfield Packing and Gwaltney of Smithfield.
June 1984: At least 237 more violations noted, between 1978 and
1984, at Gwaltney plant. Environmental groups file lawsuit that
ultimately goes to U.S. Supreme Court. The sides eventually settle;
Smithfield fined $289,822.
1989: Smithfield president Joseph W. Luter III threatens to move
operations to North Carolina in a dispute with Virginia officials
over new pollution standards.
1990: Rettig starts own company, A-T.R. Systems Management, and
uses Smithfield lab to analyze data and process reports for outside
clients.
1991: State and Smithfield officials sign agreement temporarily
relaxing some pollution standards. The company promises to stop
releasing sewage into Pagan River by connecting plants to the
Hampton Roads Sanitation District when space becomes available in
mid-1990s.
May 1994 to present: Smithfield violates pollution permits 24
times. No fines, but discussions begin in effort to settle
problems.
May 16: State notifies one Rettig client, Indian Cove Resort in
Virginia Beach, that signature on pollution report is misspelled.
Signatures on that and other reports are found to be faked. State
asks to see Smithfield reports.
August 1994: Rettig reassigned at Smithfield after two years of
documents are reported lost and more violations are noted at plants.
A new plant manager is chosen.
Aug. 2, 1994: Rettig fails to show for a meeting with state
inspector at Board of Waterworks and Wastewater Works Operators to
discuss report discrepancies.
November 1994: State Water Control Board relaxes some pollution
standards for Smithfield. A-T.R. Systems Management no longer
registered as company with State Corporation Commission.
March 1995: State waterworks board holds informal hearing on
three complaints that Rettig falsified signatures.
May 1995: Smithfield Foods contributes $50,000 to political
action committee backing Gov. George F. Allen. Rettig found in
violation of his operator's license for forging two clients'
signatures, is fined $250.
Summer 1995: Federal government begins investigation, collecting
data and records for grand jury in Norfolk.
August 1995: Rettig resigns from Smithfield Foods.
September 1995: Smithfield gives Allen PAC $50,000 more.
October 1995: Subpoena issued to state Department of
Environmental Quality asking for records and memos on Smithfield
Foods; records delivered in November. Smithfield contributions to
Allen are widely reported; undeterred, Luter pledges $25,000 more.
December 1995: Crews near completion of sewage pipeline to
Smithfield, estimate connection to company by mid-1996. DEQ regional
chief says a fine is likely against Smithfield.
KEYWORDS: WATER POLLUTION HOGS SMITHFIELD FOODS INC. by CNB