DATE: Wednesday, June 4, 1997               TAG: 9706040470

SECTION: LOCAL                   PAGE: B1   EDITION: FINAL 

SOURCE: BY SCOTT HARPER, STAFF WRITER 

DATELINE: NORFOLK                           LENGTH:  107 lines

JUDGE DEALS BLOW TO SMITHFIELD FOODS

THE LAWSUITS: Smithfield Foods is accused in two multimillion-dollar lawsuits of polluting the Pagan River with hog wastes.

THE RULING'S IMPACT: Smithfield could be liable for up to 5,330 alleged water violations from 1991-1996 - even though an agreement between the company and the state allowed many of those discharges. The federal judge criticized the state's practice of negotiating such agreements with Smithfield and other companies accused of polluting. The process excludes the public and leads to lax enforcement, she said.

A federal court ruling Monday not only dealt a sharp legal blow to Smithfield Foods Inc., but could open a more aggressive chapter of environmental protection in Virginia, officials on both sides of the case say.

U.S. District Judge Rebecca Beach Smith ruled that the U.S. Environmental Protection Agency can pursue its case seeking as much as $125 million in fines for 5,330 alleged water pollution violations by the giant meatpacker since 1991.

In the process, she took aim at a long-standing practice in Virginia and other states - a kinder, gentler course also taken with Smithfield Foods - in which state officials privately negotiate agreements with companies accused of polluting air, water or soil.

Smithfield Foods, the largest pork processor on the East Coast, is accused of polluting the Pagan River in Isle of Wight County for years with hog wastes. It faces two multimillion-dollar lawsuits simultaneously - one from Virginia and one, which Smith will hear, from the Environmental Protection Agency.

Environmental groups have long criticized these closed-door, state-brokered agreements, known as consent orders, which often replace more stringent state pollution permits.

The groups argue that the negotiations foster a cozy relationship between regulators and polluters, while excluding meaningful public comment about penalties and future policies toward a problem company.

``You inevitably have a system that's more protective of dischargers than the public,'' said Roy A. Hoagland, chief attorney for the Chesapeake Bay Foundation in Virginia.

Smith, too, criticized these agreements for excluding public participation, such as from angry neighbors or environmental groups. She said they contribute to Virginia's environmental laws being ``virtually toothless.''

Smithfield Foods signed such an agreement with Virginia in 1991. Under its terms, the state agreed to relax standards for certain pollutants - most notably phosphorus, a damaging nutrient that flows from company slaughterhouses in Isle of Wight County.

In exchange, Smithfield Foods agreed to stop discharging all its wastes into the Pagan River, a Chesapeake Bay tributary. Instead, the company would pipe its 3 million gallons of hog wastes each day to a public sewage treatment plant in Suffolk - but only when the facility was upgraded and had enough room.

The Hampton Roads Sanitation District plant now has enough capacity, and Smithfield is hooking up. Connection is expected to be completed this summer.

But in her pretrial ruling on the EPA's suit, Smith said that pollution levels entering the Pagan still were too high during the years of the state agreement, from 1991 to 1996, and could be open to court debate as possible violations of the national Clean Water Act.

Therefore, she wrote, Smithfield can be liable for as many as 5,330 alleged water violations during those years, despite the state agreement that allowed many of those discharges.

Legal experts and environmental lawyers called the ruling a substantial loss for Smithfield Foods, which now faces the specter of as much as $125 million in fines when the case goes to trial Aug. 11.

``Obviously we are pleased with the court's decision allowing the EPA to pursue penalties from Smithfield Foods,'' said the EPA's regional administrator, W. Michael McCabe. ``The court has given the EPA the green light to fully enforce the Clean Water Act.''

The court did more than that, state officials and environmental lawyers agree. Smith sent shock waves through the business community by indicating that consent orders with the state - a key part of state enforcement - may not be safe.

``We're obviously deeply concerned'' with the message of Smith's ruling, said T. March Bell, a top official in the Virginia Department of Environmental Quality, which negotiates consent orders.

Bell said the Smithfield case is being closely watched by the hundreds of other companies under order by the state to correct an environmental problem.

Anthony Troy, a former state attorney general defending Smithfield Foods, put it this way: ``I assure you, if I'm representing corporations - which I do - with respect to consent orders, I'm going to be very hesitant to settle these issues through orders if the EPA is lying in the grass in wait.''

Troy predicted that Virginia may face longer, more confrontational conclusions to environmental cases if Smith's ruling is embraced as precedent.

As for this case, Troy said Smithfield Foods will likely appeal Smith's ruling. The question now, he said, is whether to appeal now or after the trial.

``The EPA's intervention undermines the DEQ's authority,'' the company said in a statement, ``and confounds those who must work with the DEQ to achieve compliance with the Clean Water Act.''

Environmentalists and a Justice Department lawyer scoffed at this argument.

John Cruden, a deputy assistant attorney general, said from Washington that the federal government rarely intervenes when a state takes action against a company. It only steps in, he said, when state enforcement is not sufficient to meet the standards of the Clean Water Act.

Added Hoagland, of the Chesapeake Bay Foundation: ``Many people have historically questioned how Virginia does this consent-order business. Judge Smith was absolutely correct in her ruling; she asks for a system that's not only fairer but better for the environment.''

That system, Hoagland said, would center on a state permit. When its limits are exceeded, a company should be penalized. Consent orders, if used at all, should at least be open for public involvement, he said. ILLUSTRATION: Color photo

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