White Collar Alert

Someone at local D.G. Yuengling and Son, Inc. could probably go for a cold one right now, as settlement negotiations with the U.S. Environmental Protection Agency (“USEPA”) have finally come to a head.   In a consent decree filed this week in Pennsylvania federal court, the local brewer, Pennsylvania’s oldest, will pay nearly $10 million – a combination of civil penalties and investments in its water treatment systems – to resolve a long-running investigation by the USEPA and the U.S. Department of Justice (“DOJ”).

The agreement requires Yuengling to pay a $2.8 million civil penalty for discharges from its Pottstown breweries to a local sewage treatment plant that did not meet standards imposed in its discharge authorization. The brewery is alleged to have discharged excessive amounts of organic materials – primarily water, yeast, and sugars left over from the brewing process – to a local sewage treatment plant. That local treatment plant has a federal NPDES permit issued under the Clean Water Act for its discharge to the Schuylkill River upstream of public water supply intakes.  Yuengling has a pretreatment permit which establishes treatment standards and limits for its discharge to the local treatment plant.According to the DOJ and USEPA, Yuengling violated Clean Water Act provisions numerous times between 2008 and 2015, and failed to fully respond to prior orders from the local sewer authority and USEPA to correct the problems that led to the enforcement action. Among the violations were dozens of instances in which Yuengling’s brewing facilities exceeded pretreatment limitations, as well as reporting failures and missed resampling and monitoring of the wastewater it was discharging to the treatment plant.

In addition to the seven-figure penalty, Yuengling agreed to continue to take remedial actions to upgrade its water pretreatment capabilities, in addition to nearly $8 million it has already invested in new technology.  The consent decree includes other provisions to ensure proper compliance and reporting into the future. In a statement released yesterday, Yuengling emphasized its “long term commitment to the communities [it] operate[s] in,” and the priority it places on “protect[ing] the environment for generations to come.” “As America’s Oldest Brewery,” Yuengling said it strives “to reduce [its] carbon footprint, recycling and reusing materials whenever possible as well as conserving water and energy.” In line with this pledge, the new system collects leftover organic materials and converts them into methane to be reused by the brewery as a fuel source for on-site power and heat. Yuengling’s press release also notes that other brewing byproducts are to be recycled. For example, the “spent” grain collected after brewing is sent to local dairy farms to be used as feed and soil fertilizer, and the yeast will be reused by food processers as a protein supplement.

Clean Water Act violations can result in significant penalties, both civil and criminal, meaning they can lead to substantial civil liability and possibly jail time. Most Clean Water Act permits include periodic and detailed self-reporting and compliance certification requirements,  often making non-compliance a matter of public record and easy to recognize when reviewed by governmental agencies like the USEPA.  Companies and their executives confronting such potential or ongoing investigations should understand the potential implications of non-compliance, which can include severe penalties and significant operational limitations.  Identifying non-compliance early on also allows companies to evaluate strategies such as self-reporting violations in exchange for reduced penalties. As for Yuengling, its agreement with the government is subject to a thirty-day public comment period, and must still be approved by the district court judge overseeing the legal action.