Pursuant to the Safe Drinking Water Act ("SDWA") § 1414(g)(3),42 U.S.C. § 300g-3(g)(3), the Respondents, Sunbeam Water Company,Inc., the Estate of Rodney Parrish, and R. Michael Parrish, areassessed a joint and several civil penalty of $9,000 for violatingan administrative order issued pursuant to the SDWA with respect totheir operation of a public water supply system serving the GardenGrove subdivision in American Falls, Idaho.

    By:        Andrew S. Pearlstein, Administrative Law Judge    Dated:     October 28, 1999Appearances    For Complainant:    R. David Allnut, Esq.                        Assistant Regional Counsel                        U.S. EPA Region 10                        Seattle, Washington    For Respondent:    Craig W. Parrish, Esq.                       Pocatello, Idaho

Proceedings

On December 11, 1997, the Region 10 Office of the UnitedStates Environmental Protection Agency (the "Complainant" or"Region") filed a Complaint against the Sunbeam Water Company("Sunbeam"), the Garden Grove Public Water System, Rodney Parrish,and R. Michael Parrish (the "Respondents"). The Complaint chargedthe Respondents with violating several provisions of anadministrative order that was issued to Respondents on September16, 1996 pursuant to the SDWA § 1414(g)(1), 42 U.S.C. §300g-3(g)(1)(the "September 1996 Order"). The September 1996 Order recited aseries of violations that the Respondents were found to havecommitted, mainly concerning their failure to conduct requiredmonitoring of the Garden Grove water supply for variouscontaminants. The specific violations cited in the Order arelisted in the Findings of Fact below. The Complaint charged theRespondents with failing to follow the compliance schedule setforth in the September 1996 Order. Pursuant to the SDWA §1414(g)(3), the Complaint seeks assessment of a civil penalty of$9,000 against Respondents.

In its Answer, the Respondents denied the material allegationsof the Complaint and requested a hearing.

The hearing in this matter convened before Administrative LawJudge ("ALJ") Andrew S. Pearlstein on September 22, 1998, inAmerican Falls, Idaho. The Region produced four witnesses, and theRespondents produced two witnesses. The record of the hearingconsists of the stenographic transcript of 308 pages, and 45numbered exhibits received into evidence. The parties eachsubmitted post-hearing briefs and reply briefs. The record of thehearing closed on April 1, 1999, upon the ALJ's receipt of thereply briefs.⁽¹⁾

Findings of Fact

1. The Sunbeam Water Company ("Sunbeam") is an Idahocorporation that owns and operates a public water system thatprovides drinking water, for a fee, to the residents of the GardenGrove Estates ("Garden Grove") subdivision in American Falls,Idaho. The Garden Grove drinking water system has 37 serviceconnections, 23 of which serve developed and occupied lots. Theresidents of Garden Grove served by the system include familieswith young children, and elderly people. The system is supplied bya groundwater source, from two wells located in the subdivision.⁽²⁾ (Exs. 1, 29; Tr. 227).⁽³⁾

2. The late Rodney Parrish was the President of Sunbeam at alltimes relevant to this proceeding, from 1991 to 1998. His son, R.Michael Parrish was Sunbeam's Secretary during that period. Beginning around late 1993, R. Michael Parrish generally exercisedday-to-day control over Sunbeam's operations. The Parrish familydeveloped the Garden Grove subdivision in the 1970s, and familymembers retain nine of the fourteen undeveloped lots. (Ex. 1).

3. Under the SDWA, the Region has delegated primaryenforcement authority over public drinking water systems to theState of Idaho, specifically the Idaho Department of EnvironmentalQuality ("IDEQ"). IDEQ has, in turn, delegated some of itsauthority over small water systems to local health districts. There are over 2100 public water systems in Idaho. The Regionoversees the IDEQ's administration of the SDWA by maintaining adatabase, receiving quarterly reports, and staying in frequentcontact with the IDEQ. The Region, the IDEQ, and local healthdistricts notify and coordinate SDWA enforcement actions among eachother. Generally, the Region will initiate enforcement of allegedviolations by sending a Notice of Violation ("NOV") to the IDEQ andwater system, allowing the system 30 days to come into compliance,or be subject to a State enforcement proceeding. If the State doesnot bring a proceeding, the Region is then authorized to issue anadministrative order ("AO") citing the violations and establishinga compliance schedule. Failure to comply with the AO then subjectsthe water system to a penalty action. (Tr. 34-41,90; SDWA §300g-3).

4. The federal database records some 66 violations at theGarden Grove public water system between 1979 and 1996. In the1990's the Region has received complaints from Garden Groveresidents of gastrointestinal problems which they attributed to the quality of the water. Since 1991, the Garden Grove watersystem has been the subject of a series of enforcement actions andother contacts by the Region, the IDEQ, and the Southeastern(Idaho) District Health Department ("Health Department"). (Ex. 22;Tr. 43, 91, 213).

5. The Health Department conducted sanitary inspections of theGarden Grove water system in 1993, 1996, and 1997. Thoseinspections identified deficiencies in the physical layout andmaintenance of the facilities. These included an improperlyfitting lid on the storage tank; a dirty storage tank; non-functioning pressure gauges; a horse grazing on the well lot; andstagnant, dead-end water lines. These conditions could causebacterial contamination of the water supply. These inspectionsgave rise, in December 1997, to an IDEQ enforcement proceedingagainst Sunbeam for penalties. (Exs. 11, 27, 29, 36; Tr. 215-216).

6. Between 1991 and 1996, the Region issued three Notices ofViolation and two final Administrative Orders to the Garden Grovewater system. The Region, IDEQ, and Health Department were infrequent contact with the Respondents during this period concerningthese compliance problems, via correspondence and telephone. TheSDWA violations at issue during this period included the failure tomonitor for bacteriological and chemical contaminants, exceedancesof the maximum contaminant level ("MCL") for total coliformbacteria; failure to conduct repeat monitoring after positivesample results; and failure to provide public notice of drinkingwater violations. (Exs. 4-24; Tr. 64, 82, 128).

7. Most of the Region's correspondence concerning the GardenGrove water system during this period was addressed to RodneyParrish, as the owner of record of Sunbeam in the State and federaldatabases. The Region had been informed that his son, MichaelParrish had assumed day to day responsibility for the system'soperations in late 1993. Generally from 1996 on, officialcorrespondence relating to the Garden Grove system was directed toR. Michael Parrish. (Exs. 18, 19, 22; Tr. 82).

8. The continuing problems with the Garden Grove water systemled the Region to issue a final Administrative Order to Sunbeam onSeptember 16, 1996 (the "September 1996 Order," or just "Order"),under authority of the SDWA §1414(g), 42 U.S.C. §300g-3(g). TheSeptember 1996 Order cited the system for the following eightviolations of the SDWA regulations:

(1) Exceeding the MCL for total coliform bacteria,in violation of 40 CFR §141.63;

(2) Failing to monitor for total coliform bacteria,in violation of 40 CFR §141.21;

(3) Failing to sample for inorganic chemicals, inviolation of 40 CFR §141.23;

(4) Failing to sample for organic chemicals andpesticides, in violation of 40 CFR §141.24;

(5) Failing to sample for volatile organicchemicals, in violation of 40 CFR §141.24(g);

(6) Failing to take initial tap samples for lead andcopper, in violation of 40 CFR 141.86;

(7) Failing to notify the state of the violations,in violation of 40 CFR §141.31; and

(8) Failing to notify persons served by the systemof the violations, in violation of 40 CFR §141.32.

The caption of the Order named Garden Grove Estates, Sunbeam WaterCompany, and Rodney Parrish, Owner, as respondents. The coverletter was addressed to R. Michael Parrish. The Region notifiedthe IDEQ of this action, and provided copies of the September 1996Order to the State authorities. (Ex. 24; Tr. 88-90).

9. The September 1996 Order ordered the Respondents to takethe following nine corresponding actions to bring the system intocompliance:

(1) Develop and submit a written plan to preventrecurrences of exceedances of the MCL for total coliformbacteria;

(2) Develop and submit to the Region a sample sitingplan for total coliform bacteria monitoring;

(3) Conduct regular monthly sampling for totalcoliform bacteria as required by 40 CFR §141.21;

(4) Conduct sampling for inorganic chemicals inaccord with 40 CFR §141.23;

(5) Conduct quarterly sampling for volatile organicchemicals in accord with 40 CFR §141.24(f);

(6) Conduct quarterly sampling for organic chemicals(e.g. pesticides) listed in 40 CFR §141.61(c);

(7) Conduct sampling for lead and copper in accordwith 40 CFR §141.86;

(8) Publish a public notice describing the GardenGrove system's violations in a daily newspaper, asrequired by 40 CFR §141.32(b); and

(9) Notify the IDEQ of the drinking water violationspursuant to 40 CFR §141.31.

The Order specified schedules for the required sampling, generallyto be commenced within 30 days of the Respondents' receipt of theOrder. The Order also required Sunbeam to submit copies ofsampling results to the Region and IDEQ, generally within 10 daysof receipt from the laboratory. The Order stated it would remainin effect until the Respondents satisfy its conditions and theRegion determined that the Garden Grove system had returned tocompliance with the SDWA and its regulations. Finally, theSeptember 1996 Order stated that violation of any of its terms maysubject Respondents to civil penalties under the SDWA §1414(g)(3).

(Ex. 24).

10. In general, the Respondents fulfilled only a portion of the sampling and monitoring requirements of the September 1996Order. As further described below, Sunbeam did most of therequired sampling for total coliform bacteria and inorganicchemicals; half of the required sampling for volatile organicchemicals; and less than a quarter of the specified sampling forsynthetic organic chemicals. Most of the laboratory reports of thesampling that was done were submitted late to the Region.⁽⁴⁾ TheRespondents also never submitted the written plans to addresscoliform bacteria control and sample siting required by the order,and did not publish notice of the violations in a newspaper. (Ex.1; Tr. 144, 147).

11. Sunbeam did not conduct routine monthly sampling for totalcoliform bacteria, as required by the Order, for the three monthsimmediately following the Order (September to November 1996). However, Sunbeam did then perform such sampling for every monthexcept one (December 1997), from December 1996 to July 1998.⁽⁵⁾ Ofthose 19 monthly samples, 7 yielded a positive result. On 6 ofthose occasions, Sunbeam did not follow up the positive resultswith four repeat samples taken within 24 hours, as required by theregulations. (Ex. 1, Table 1).

12. Respondents conducted the system's annual sampling forsome inorganic chemicals in February and March 1997, rather thanwithin the required 30 days of their receipt of the September 1996Order. Although the laboratory had the results at that time, theywere not received by the Region until February 1998, almost a yearlater. In 1997, Sunbeam sampled and had analyzed 9 of the 15required inorganic chemicals: nitrate, fluoride, barium, cadmium,chromium, mercury, nitrite, total nitrate/nitrite, and selenium. Sunbeam had not taken samples for the 6 remaining inorganicchemicals (asbestos, antimony, beryllium, cyanide, thallium, andnickel) as of the date of the hearing. The initial sample fornitrate tested at a level greater than 50% of the MCL for thatcontaminant, triggering a follow-up quarterly monitoringrequirement. Sunbeam did then take two follow-up samples fornitrate, but at semi-annual, rather than quarterly intervals, inOctober 1997 and March 1998. (Ex. 1, Table 2).

13. Similarly, Sunbeam conducted two semi-annual monitoringseries for the required suite of 18 volatile organic chemicals inthe Garden Grove system, rather than the quarterly monitoringrequired by the Order. The results from these samples, taken inFebruary and August 1997, also were not submitted to the Regionuntil February 1998. (Ex. 1, Table 3).

14. For synthetic organic chemicals and pesticides, theRespondents conducted a single round of monitoring in March 1997,rather than the quarterly monitoring required by the September 1996Order. On that occasion, Respondents sampled and had analyzed 26of the 33 required synthetic organic chemicals. Respondent did nottake samples of the following seven synthetic organic chemicals: aldicarb, aldicarb sulfoxide, aldicarb sulfone, diquat, endothall,glyphosphate, and dioxin. Again, the laboratory reports were notsubmitted to the Region until February 1998. (Ex. 1, Table 4).

15. Sunbeam took an initial round of tap samples for lead andcopper in the Garden Grove water system in February 1998, ratherthan within the required thirty days after its receipt of theSeptember 1996 Order. Sunbeam took another set of lead and coppersamples in September 1998. The Respondents had not submitted thefinal calculations of lead and copper levels required by theregulations to the Region as of the date of the hearing. (Exs. 1;2, Attachment L; Tr. 146).

16. Sunbeam saved at least approximately $3500 to $4000 by notdoing all the monitoring required by the September 1996Administrative Order. By far the most expensive monitoring is thatfor synthetic organic chemicals, which costs about $1000 per roundof sampling. While ordinarily such monitoring is required onlyonce every three years after the initial testing, the Orderrequired Sunbeam to perform quarterly monitoring for syntheticorganic chemicals. Since Sunbeam conducted only one round of suchmonitoring, about $3000 of its economic benefit were incurred byfailing to perform the testing for synthetic organic chemicalsduring the three remaining quarters during the period before thehearing. (Ex. 37; Tr. 148-151, 206-207).

17. During the spring of 1998, Sunbeam constructedimprovements to the Garden Grove water system that brought it intocompliance with the IDEQ regulations and resolved the IDEQenforcement action referred to in Finding of Fact #5 above. Respondents cleaned the water tank, installed a properly fittingcover and pressure gauges, flushed all water lines, and installeda chlorinator. Sunbeam obtained a grant from the U.S. Departmentof Housing and Urban Development to fund part of the cost of theseimprovements. These improvements have helped protect the systemfrom further bacterial contamination. (Ex. 36; Tr. 127, 274-275,294, 298).

18. On August 12, 1998, the Southeastern (Idaho) DistrictHealth Department issued a revised monitoring schedule and a seriesof monitoring waivers to Sunbeam. The cover letter stated thatthese schedules complied with minimum state requirements, but did not relieve the Respondents from other requirements that may beimposed by other state or federal authorities. If given effect,the waivers would relieve Respondents from conducting much of themonitoring required by the September 1996 Order for syntheticorganic chemicals ("SOCs"). The waivers, where monitoring isrequired at all for SOCs, generally require the sampling to be doneonly at long intervals (such as once every three years), ratherthan quarterly as required by the September 1996 Order.

19. As stated above ( in Finding of Fact #2), the late RodneyM. Parrish was the President of Sunbeam, and R. Michael Parrish(referred to as "Michael") was its secretary. Beginning in late1993, Michael Parrish assumed day-to-day responsibility foroperation of the Garden Grove water system. Before that, asuccession of residents of the subdivision were delegated theresponsibility for taking samples. They received free waterservice for performing this duty. Rodney Parrish was aware thatthe Garden Grove water system had problems and was the subject offrequent contacts from the IDEQ, Southeastern Health District, andRegion 10 of the EPA. In 1993, he delegated to Michael theauthority for dealing with the water system's problems on a regularbasis. (Tr. 272-273, 282-284).

20. In addition to Sunbeam, Rodney Parrish was also thePresident of the Parrish Company and another corporation calledParrish Realty. The family's main business, run by the ParrishCompany, is the ownership and operation of a retail and wholesalebuilding supply store located in Pocatello, Idaho. Michael Parrishworks there in a number of capacities, including as a salesman, aforeman, and as a bookkeeper. The Parrish Company had gross annualrevenues of approximately $350,000 to $400,000 in 1998. (Ex. 39;Tr. 280, 286, 297).

21. The Sunbeam Water Company derives its only regular incomefrom service connection fees. These average about $300 to $350 permonth. Total gross receipts from 1995 to 1997 ranged from about$3200 to $3900. The company usually operates at a loss, sinceyearly expenses for electric power, property taxes, maintenance,and water testing exceed Sunbeam's annual gross receipts. In orderto cover some of these expenses, Rodney Parrish, through ParrishRealty, loaned Sunbeam $5900 in 1996, and another $1200 in 1997. This $7100 debt (without interest) has not been repaid. MichaelParrish does not get paid by Sunbeam for the work he does at theGarden Grove water system. His salary is paid by the ParrishCompany, and is understood to compensate him for all his dutieswith respect to all Parrish family businesses. (Exs. 43-45; Tr.266-267, 274, 279, 287-290).

Discussion

Respondents' Liability

The SDWA §1414(g)(3)(A), 42 U.S.C. §300g-3(g)(3)(A), statesthat "[a]ny person who violates, or fails or refuses to complywith, an order under this subsection shall be liable to the UnitedStates for a civil penalty of not more than $25,000 per day ofviolation." Respondents do not dispute that the Sunbeam WaterCompany did not fully comply with the September 1996 Order. ThatOrder was issued under the SDWA §1414(g) and forms the foundationof this proceeding. As seen in Findings of Fact ("FFs") ##10-15,Sunbeam only fulfilled a portion of the monitoring and otherrequirements imposed by the order. For the most part, these factswere stipulated to in Exhibit 1. Hence, at least the corporateRespondent, Sunbeam Water Company, failed to comply with theSeptember 1996 Order, and is therefore liable for the allegedviolation of the SDWA §1414(g).

Respondents focus their argument on an attempt to avoidfindings of individual liability on the part of the individualRespondents, Rodney Parrish (now the estate of Rodney Parrish) andMichael Parrish. Liability attaches to any "person" who fails tocomply with an administrative order. The SDWA §1401(12), 42 U.S.C.§300f(12), defines "person" as follows:

The term "person" means an individual, corporation,company, association, partnership, State, municipality,or Federal agency (and includes officers, employees, andagents of any corporation, company, association, State,municipality, or Federal agency). (italics added).

Congress has expressly included officers, agents, and employees of corporations within the definition of "persons" for the purposes ofthe SDWA. Rodney Parrish was the president of Sunbeam, and MichaelParrish was its secretary during the relevant period. They bothacted as agents of Sunbeam during this period. Hence, based solelyon this statutory definition, Michael Parrish and the estate ofRodney Parrish may be held individually liable, along with Sunbeam,for the violation of the Order and the SDWA alleged in thisproceeding.

By including corporate officers and employees within thedefinition of "person" in the SDWA, Congress may have intended toexpand the liability of such persons beyond that which wouldordinarily apply under the standard principles of corporate law. "A corporate officer may be held liable, in civil as well ascriminal actions, for wrongful acts of the corporation in which heparticipated." 18B Am. Jur. 2d §1877. However, it is notnecessary to address the Congressional intent in formulating theSDWA definition of "person," since both individual Respondents inthis case are liable under the ordinary application of thecorporate law principle cited above. Respondents' argument intheir brief, which attempts to draw analogies to cases decidedunder the Comprehensive Environmental Response, Compensation, andLiability Act ("CERCLA"), does not change this conclusion.

Both Rodney and Michael Parrish personally participated in andhad actual knowledge of Sunbeam's failure to comply with theSeptember 1996 Order. Rodney Parrish received much of thecorrespondence from the Region and IDEQ concerning the Garden Grovewater system, and was fully aware of its continuing problems. He acknowledged being aware of a "blizzard" of correspondence from thefederal, state, and local authorities. (Tr. 282). Although RodneyParrish denied knowing that specific required monitoring was notdone, his testimony as a whole demonstrated a thorough awareness ofthe situation at Garden Grove and the need for more funds toconduct the newly required tests. Indeed, he loaned over $7000 toSunbeam expressly for that purpose. (Tr. 274).

Rodney Parrish delegated day-to-day responsibility foroperating Sunbeam to his son Michael, whom he also saw daily in thecourse of running the family businesses. Rodney Parrish (or hisestate) cannot escape liability although Michael Parrish had morespecific knowledge and daily involvement in the failure to complywith the Order. As president and primary officer of Sunbeam, Rodney Parrish had the ultimate authority to control thecorporation. The record amply demonstrates that both Rodney andMichael Parrish had knowledge of and participated in Sunbeam'sfailure to comply with the September 1996 Order.

By failing to conduct much of the monitoring required by theSeptember 1996 Order, both Rodney and Michael Parrish "violated" or "failed or refused" to comply with that order. (FF ##10-15). Theytestified that they did so due to a lack of funds. (Tr. 272, 289). The SDWA imposes strict liability for failures to comply with anorder, and does not make an exception for a purported lack offunding. Therefore, Michael Parrish and the estate of RodneyParrish are liable for the violations alleged in the Complaint,along with the corporate Respondent, Sunbeam.

The Region also contends that the Parrishes may be heldindirectly liable for violations by Sunbeam by "piercing thecorporate veil" of that corporation. Certainly, as testified bythe Region's expert witness Dr. Billy Joe Henderson, Sunbeam'scorporate tax returns are problematic. They do not show anyemployee compensation. They show deductions for property taxeswithout showing assets. They show the apparently non-interestbearing loan by Rodney Parrish or Parrish Realty, as the mainsource of capital. And the returns are unsigned. While this mightsupport a finding that Sunbeam was virtually the alter ego of theParrishes, it is not necessary to resolve this issue for thepurposes of this proceeding. Since Rodney and Michael Parrishparticipated in the violations, and were agents and officers ofSunbeam, there is already ample basis for finding them directlyliable for the violations alleged in the Complaint.

Amount of Civil Penalty

The Region proposes that the Respondents pay a $9000 civilpenalty for their violations of the September 1996 Order. Asquoted above, violations of orders issued under §1414(g) of theSDWA are subject to civil penalties of up to $25,000 per day. Under §1414(g)(3)(B), where the penalty sought exceeds $5000, butdoes not exceed $25,000, the case must be brought under theadjudicatory hearing provisions of the Administrative ProcedureAct, 5 U.S.C. §554. Thus the range for civil penalties in casesbrought by the Region before an Administrative Law Judge, such asthis proceeding, is from $5001 to $25,000.

In referring to enforcement cases brought in federal districtcourt (generally applicable where the total penalty sought exceeds$25,000), the SDWA provides that, in imposing a civil penalty, thecourt must take into account "the seriousness of the violation, thepopulation at risk, and other appropriate factors." The EPA hasnot promulgated a program-specific civil penalty policy for SDWAviolations. In calculating the proposed civil penalty, the Regionrelied upon the statutory penalty factors and the EPA's GeneralEnforcement Policy #GM-21, entitled "Policy on Civil Penalties,"dated February 16, 1984.

- Population at Risk and Seriousness of the Violation

The population at risk here consists of the 23 households inthe Garden Grove subdivision, and their guests, who use the Sunbeamwater supply. The residents include families with young children,as well as elderly persons. (FF #1). Although this is arelatively small number of people to be served by a public watersystem, they were placed at some risk to their health from theseviolations. The record shows that total coliform bacterialcontamination was detected in the system's samples on a number ofoccasions dating back to the early 1980s, and that routine andrepeat samples were not taken on many occasions. (Ex. 22). Whencoupled with the residents' complaints of gastrointestinalproblems, and the physical deficiencies in the Sunbeam water system(FF ##4,5), the seriousness of these violations becomes apparent. As testified by the Region's expert witness, Dr. Eugene MarkTaylor, any public water system's failure to comply with monitoringrequirements prevents making a valid assessment of the safety ofthe water supply. In this case, the failure to monitor is evenmore serious where bacterial contamination has been detectedrepeatedly in the past.

- Economic Benefit

In accord with the Policy on Civil Penalties, the Region alsoconsidered the economic benefit derived by the Respondents throughtheir failure to comply with the order. The Respondents saved atleast $3500 in out-of-pocket costs by failing to conduct much ofthe monitoring required by the September 1996 Order. (FF #16). The Region's witness, Shannon Cooper, suggested a somewhat higherfigure, but her estimate did not account for some tests thatSunbeam had conducted, but of which Respondents had not yetnotified the Region.

Nonetheless, the $3500 benefit from undone testing representsa minimum figure. It does not include the savings from failing tosubmit the site sampling plan; failing to publish notice of theviolations; delaying compliance; and from interest earned on thesavings. It is entirely appropriate that the civil penaltyassessed in this matter fully recover this economic benefit accruedto the Respondents from their noncompliance.

- Ability to Pay

The SDWA does not specify a respondent's ability to pay as afactor to be considered in assessing a penalty. Nevertheless, asrecognized in the general Policy on Civil Penalties, the ability topay should be considered as another "appropriate factor" inassessing a civil penalty under the SDWA.

It is difficult to place much reliance on the Sunbeam taxreturns received into evidence, for the reasons discussed above. Nevertheless, the record shows that Sunbeam's gross receipts arelimited to the water usage fees paid by the 23 connections, which,as shown on the returns, average less than $4000 per year. (FF#21). It is also reasonable to conclude that, as testified byMichael Parrish, normal expenses and maintenance, and routinetesting for total coliform bacteria, virtually exhaust thosereceipts on an annual basis. (Tr. 288). Sunbeam has also receivedfunds from loans from other Parrish family businesses. However,Sunbeam's assets and prospects are certainly limited. If it werethe only liable Respondent in this proceeding, some further inquirywould be required to determine if it alone could afford to pay acivil penalty of $9000.

However, as found above, the individual Respondents, MichaelParrish and the estate of Rodney Parrish, are also liable for theviolations. They did not present any evidence indicating theycould not jointly, along with Sunbeam, pay a civil penalty of$9000.

The Region presented a Dun & Bradstreet report which projectedannual sales of $2,250,000 for the Parrish Company in 1998. (Ex.39). Michael Parrish vehemently disputed that figure and testifiedthat its annual sales were only about $350,000 to $400,000. He wasunaware of any communication between the company and Dun &Bradstreet. (Tr. 296). As the bookkeeper for the Parrish Company,Michael Parrish has firsthand knowledge of these facts, and I haveno basis to question his credibility. Hence, I accept the lowerfigure as representing the Parrish Company's gross receipts. (FF#21).

However, regardless of the lower estimate of the ParrishCompany's income, neither Michael nor Rodney Parrish presentedspecific evidence of their respective individual abilities to paya penalty. The evidence on the Parrish Company presented by theRegion (and modified by the Respondents' testimony) constitutedsufficient "general financial information regarding therespondents' financial status which can support the inference thatthe penalty assessment need not be reduced." In re New Waterbury,Ltd., 5 E.A.D. 529, 542-543 (EAB 1994)(italics in original). IfRespondents intended to show they could not pay the proposedpenalty, it was then incumbent upon them to go forward withspecific evidence to that effect. New Waterbury, supra. This theyfailed to do. Hence, the record supports the finding that thethree Respondents, Sunbeam, Michael Parrish, and the estate ofRodney Parrish, can afford to jointly pay a civil penalty of $9000.

- Culpability and Compliance History

The long history of compliance problems at the Garden Grovepublic water system, which is indicative of the Respondents' pastuncooperative attitude, provides no support for reducing the amountof the proposed penalty. It is apparent that, at least untilrecently, the Respondents did not take their responsibility toproperly operate the water system in compliance with the SDWA. Indeed, Rodney Parrish testified that he thought the requirementsimposed on Sunbeam were a "joke." (Tr. 283). Respondents mustbear a high degree of culpability for these violations, which, forthe most part, can only be characterized as wilful. TheRespondents chose not to devote the necessary resources to bringingthe system into compliance until after this enforcement proceedingwas commenced.

The Parrishes have only themselves to blame for the situationthat resulted in this enforcement action. If they had seriouslyaddressed the Garden Grove system's deficiencies at any of severalearlier junctures, virtually all the ensuing notices of violation,administrative orders, and penalty actions, could have beenavoided. There is no reason that Sunbeam could not have obtainedthe IDEQ waivers earlier and limited the system's monitoringrequirements to a level that could essentially be covered by thewater service fees. The additional monitoring and accompanyingextra costs imposed by the September 1996 Order would not have beennecessary had the Respondents taken action to improve the system'sfacilities and conduct all required monitoring before 1996.

In Respondents', and particularly Michael Parrish's, favor, atleast it does now appear that the system has been improved and isnow operating satisfactorily. After issuance of the September 1996Order, Michael Parrish at least took virtually all routine totalcoliform samples. He also undertook at least some portion of eachrequired suite of chemical monitoring, at considerable cost, withthe loan from Rodney Parrish. After constructing the physicalimprovements to the Garden Grove system (FF #17), the fecalcontamination problem appears largely resolved. The system wasthen able to obtain State waivers from many of the chemicalmonitoring requirements imposed by the September 1996 Order. (Ex.40).⁽⁶⁾ Michael Parrish even evinced some pride in the currentoperation of the system and its protection from bacterialcontamination. (Tr. 298-299).

The long history of lack of cooperation and violations leadingup to this point, however, compels the assessment of a substantialcivil penalty. The proposed amount of $9000 imposed jointly andseverally on the three Respondents, is entirely appropriate. Thisfigure is actually at the low end of the $5000 to $25,000 range ofcivil penalties that can be imposed in administrative enforcementproceedings. In consideration of the seriousness of the violation,the population at risk, economic benefit, and the other appropriatefactors discussed above, the Respondents will be assessed a jointand several civil penalty of $9000.

Conclusions of Law

1. The Respondents Sunbeam Water Company, R. Michael Parrish,and the Estate of Rodney Parrish, are liable for violating the SDWA§1414(g)(3)(A), 42 U.S.C. §300g-3(g)(3)(A), by failing to complywith many of the requirements of an administrative order issued byRegion 10 of the EPA pursuant to the SDWA §1414(g)(1), 42 U.S.C.§300g-3(g)(1).

2. The individual Respondents, R. Michael Parrish, and thelate Rodney Parrish, are liable for this violation as officers andagents of the corporate Respondent, the Sunbeam Water Company, andas participants in committing the violation.

3. An appropriate civil penalty for this violation, assessedagainst the Respondents jointly and severally, is $9000.

Order

1. Respondents Sunbeam Water Company, R. Michael Parrish, andthe Estate of Rodney Parrish, are jointly and severally assessed atotal civil penalty of $9000.

2. Payment of the full amount of this civil penalty shall bemade within 60 days of the service of this order by submitting acertified or cashier's check in the amount of $9000, payable to theTreasurer, United States of America, and mailed to EPA - Region 10,P.O. Box 360903M, Pittsburgh, PA 15251. A transmittal letteridentifying the subject case and docket number, and Respondents'names and addresses, must accompany the check.

3. If Respondents fail to pay the penalty within theprescribed statutory time period, after entry of the final order,then interest on the penalty may be assessed.

4. Pursuant to 40 CFR §22.27(c), this Initial Decision shallbecome the final order of the Agency 45 days after its service onthe parties unless a party moves to reopen the hearing, a partyappeals this decision to the Environmental Appeals Board, or theEnvironmental Appeals Board elects to review the initial decisionon its own initiative.

_________________________
Andrew S. Pearlstein
Administrative Law Judge

Dated: October 28, 1999
Washington, D.C.

1. The briefing schedule was suspended for three months due to theaccidental death of one of the Respondents, Rodney Parrish, on November 7,1998. The caption of this proceeding has been modified to name his estate asa Respondent. This proceeding for a civil penalty action survives against hisestate as a "remedial," rather than "penal" action. See United States v. OneHundred Twenty Thousand Seven Hundred Fifty One Dollars ($120,751.00), 102F.3d 342, 344 (8^th Cir. 1996). This proceeding is based on an order requiringthe Respondents to remedy the deficiencies in their operation of a publicwater system, and is therefore primarily remedial in nature rather thanpunitive, although it also entails assessment of a civil penalty.

2. The "Garden Grove Public Water System" is named as a co-Respondent in thisproceeding. However, it is not a legal entity, and not a "person" as definedin the SDWA §300f(12). Garden Grove was nonetheless the name used by the IDEQin its database to refer to the water system operated by Sunbeam for theGarden Grove subdivision. (Tr. 48). Hence, for convenience, that name wasalso often used by the Region to refer to this water system, and may also beused for that purpose in this decision. The caption for this case will remainunchanged, but the Order at the end of this Initial Decision will only referto the other three co-Respondents, who are "persons" as defined in the SDWA.

3. Citations to the exhibits ("Ex.") and the stenographic transcript of thehearing ("Tr.") are representative only, and not intended to be complete orexhaustive.

4. The record does not definitively explain why most sample results weresubmitted late, or whether reports were sent to the IDEQ. It may be surmisedthat the Respondents thought the lab would forward them to the EPA, but thiswas not done until after the commencement of this enforcement proceeding. (Tr. 20-25).

5. Sunbeam apparently erroneously took an extra sample on November 30, 1997for total coliform, instead of in December 1997. (Ex. 1,¶6; Ex. 2; Tr. 200).

6. The Region's witness Dr. Taylor testified that the IDEQ waivers (Ex. 40)were issued contrary to EPA and IDEQ policy. (Tr. 230-233). However, theRegion has not sought to challenge the waivers in the context of thisproceeding.