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United States v. Acquest Transit LLC

United States District Court, W.D. New York

February 21, 2017


          JEFF SESSIONS, UNITED STATES ATTORNEY GENERAL, Attorney for Plaintiff, BRADLEY L. LEVINE, SCOTT BAUER, MEGHAN GREENFIELD, and ELIZABETH YU, Trial Attorneys Environmental and Natural Resources Division U.S. Department of Justice.

          SNELL & WILMER, LLP Attorneys for Defendants BRADLEY R. CAHOON, of Counsel.





         This matter, in which Plaintiff alleges violations of the Clean Water Act, was referred to the undersigned by Hon. William M. Skretny by Order filed April 6, 2010 (Dkt. 44) for all pretrial matters. It is presently before the court on Defendants' motion to compel and for an expedited hearing filed October 14, 2016 (Dkt. 232).


         On October 14, 2016, Defendants filed Defendants' Notice of Motion To Compel (Dkt. 232) together with the Attorney Declaration of Matthew D. Miller, Esq. (Dkt. 232-1) (“Miller Declaration”) attaching Exhibits 1-11 (“Exh(s). to Miller Declaration”), and Defendants' Notice of Motion For Expedited Ruling On Defendants' Motion To Compel (Dkt. 233), and the Attorney Declaration of Matthew D. Miller, Esq. (“Miller Declaration II”) attaching Exhibits 1 (Dkt. 233-1) and 2 (Dkt. 233-2) (“Exhs. to Miller Declaration II”). Also on October 14, 2016, Defendants filed Memorandum of Law In Support Of Defendants' Motion To Compel Discovery (Dkt. 232-3) (“Defendants' Memorandum”). On November 14, 2015, Plaintiff filed United States' Memorandum In Opposition To Motion To Compel (Dkt. 239) (“Plaintiff's Memorandum”) together with Exhibits 1-6 (Dkt. 239-1-6) (“Exh(s). to Plaintiff's Memorandum”). In a telephone conference call with the parties on October 17, 2016 (see Dkt. 235), the parties agreed to postpone the deposition of Mary Anne Thiesing, a United States environmental expert, scheduled for October 27, 2016 in Seattle, and David Pohle, an Environmental Scientist with the United States Environmental Protection Agency (“EPA”), then scheduled for November 10, 2016, in New York City, pending the outcome of Defendants' motion. On December 2, 2016, Defendants filed Reply Memorandum In Further Support Of Defendants' Motion To Compel Discovery (Dkt. 240) (“Defendants' Reply”). Oral argument was deemed unnecessary.


         The property, located at 10880 Transit Road, Town of Amherst, New York (“Amherst”), which is the subject of the instant action to enforce the Clean Water Act, 33 U.S.C. § 1251, et seq. (“Clean Water Act” or “the Act”), is a 96.6 acre parcel of undeveloped land purchased by Defendant Acquest Transit, LLC (“Acquest”) in January 2006 (“the property”). A consultant hired by Acquest determined that 44 acres of the property contained wetlands. The Acquest purchase price included a substantial discount to account for the presence of protected wetlands on the property. Defendant Huntress is an officer of Acquest and its principal owner. Acquest had earlier acquired a small parcel of undeveloped land, also in Amherst, located at 2190 and 2220 Wehrle Drive which is also the subject of a Clean Water Act action by Plaintiff in this court (“the Wehrle Drive property”) (United States of America v. Acquest Wehrle, LLC, 09-CV-637V(F)). At some point, prior to commencement of the instant action, the Army Corps of Engineers (“the Corps”) and the United States Environmental Agency (“EPA”) (together “the agencies”) began to investigate development activity at the Wehrle Drive property for which no permits required under the Act had been issued. In late October 2006, Acquest obtained a permit from the New York State Department of Environmental Conservation (“the DEC”) to allow for storm water discharges in connection with a planned development of a commercial nursery to be constructed by Defendants and completed August 1, 2007, on approximately four acres of the property at its northeast corner facing Transit Road, a major north-south thorough fare. The permit was issued by the DEC pursuant to the Act, specifically 33 U.S.C. § 1251(b), which authorizes a state to issue permits for discharges of pollutants, including storm water runoff otherwise prohibited by Section 402 of the Act, 33 U.S.C. § 1341 (“the October 2006 Section 402 permit”). In April 2007, a Corps employee observed earthmoving activities, including construction of a long gravel access road, on the western side of the property in an area adjacent to Millersport Highway, a heavily travelled road running parallel to the property, in a north-west-south easterly direction, on its northern (north-west) boundary line of the property, then believed by the Corps to constitute wetlands and waters of the United States, and a nearby sign on the property stating “Clean Fill Wanted” a considerable distance from and well outside the construction area for the nursery, construction of which was the subject of the October 2006 § 402 permit. In August 2007, the EPA conducted an inspection of the nursery site to determine compliance with the October 2006 § 402 permit which revealed several instances of non-compliance (“the August 2007 Inspection”). During the August 2007 Inspection, an Acquest representative informed the EPA inspector that other than in connection with Defendants' development of the nursery no earthmoving activity had occurred in any other area of the property which, according to the representative, was then being used for farming, and which the EPA was later informed by Acquest involved growing corn. Despite Acquest's representations and assurances, the EPA requested on October 2, 2007, Acquest's permission to enter the property to further investigate the matter particularly the observed construction activity in the western portion of the property, including building of the access road, which measured 24 feet wide and 1500 feet long, and the trucks dumping and spreading loads of fill on that area of the property. During this period the agencies learned Acquest had, through various contractors, hydro-axed brush and small trees on the property, created small ditches sidecasting excavated material into wetland areas on the property, dumped hundreds of truckloads of fill on the property, and bulldozed and graded the fill. On October 10, 2007, Acquest through its attorney, refused the EPA's request.

         One week later, on October 17, 2007, Acquest applied for and received from the DEC a second § 402 permit covering storm water discharges relating to construction activity on four acres of vacant brush land adjacent to the nursery site to create useable drain paths from field space because, as stated by Acquest, such construction related storm water runoff could discharge into the local Tonawanda Creek but also stating that the runoff nevertheless does not enter any roadside drain, swales, ditches or culverts. On October 26, 2007, the EPA issued to Acquest a request, pursuant to § 308 of the Act, 33 U.S.C. § 1318(a), which authorizes the EPA to obtain information as an aid in determining whether a person has violated any effluent limitation (“the October 2007 § 308 Request”), seeking information, inter alia, regarding construction and earth-moving activity on the property. Acquest's response to the October 2007 § 308 Request on November 27, 2007, was limited to asserting that portions of the western side of the property were then under lease to a local farmer for growing corn, that the road observed by the Corps was a farm road incident to such agricultural activity, and that the nursery remained under construction, but otherwise failed to respond to the October 2007 § 308 Request regarding the nature and dimensions of the property, details as to the observed earth-moving or construction activities, and the identity of persons involved in these activities. On December 12, 2007, EPA directed a second § 308 Request (“the December 2007 § 308 Request”) to Defendants requesting evidence of correction of deficiencies the EPA had noted in the August 2007 Inspection, and, based on the apparent inconsistency between Acquest's representation that other than the nursery project, no construction activity was taking place on the property, and the Corps' observations of such activity despite Acquest's assurances to the contrary, also requested Defendants to fully explain such observed activity and any resulting storm water discharges. On December 27, 2007, EPA obtained low-level aerial photographs of the property taken earlier that year purporting to show on-going earth-moving activity on the property by mechanized earth-moving equipment, filling of forested wet-land areas on the property, and construction of the gravel road into the property from Millersport Highway larger than would be reasonably necessary to support any farming activity on the property and a substantial distance from the area devoted to the nursery. On January 9, 2008, the EPA issued a third § 308 Request (“the January 9, 2008 § 308 Request”), repeating its requests issued in the October 2007 § 308 Request, then unanswered by Defendants, and requested information to support Defendants' representation that some part of the property was used to grow corn and a description of any dredging or filling activity on the property. On the same date, staff of the Corps observed further earth-moving activity on the Millersport Highway side of the property, including the filling, grading, and excavation or widening of a ditch, and that the soil and trees in that area of the property were consistent with the existence of wetlands.

         Acquest responded to the December 2007 § 308 Request on January 25, 2008, asserting, without documentation, it had remedied the deficiencies noted by the EPA by the August 6, 2007 inspection, failed to produce as required a Storm Water Pollution Prevention Plan (“SWPP”), but again asserted that other activity on the property was limited to agriculture, not construction. On February 8, 2008, Acquest responded to the January 9, 2008 § 308 Request stating the property, except for the nursery, was then leased to a business, a dairy farm, was being used for agriculture, i.e., growing corn, and that the EPA lacked jurisdiction under the Act over the property.

         On February 21, 2008, the EPA issued, pursuant to Section 309 of the Act, 33 U.S.C. § 1319(a), an order to Acquest directing Acquest to cease and desist all earth-moving activity on the property unless authorized by the Corps or obtaining a determination by the EPA that the property does not contain wetlands subject to the Act. The EPA issued another § 308 request for Acquest on February 26, 2008 (“February 26, 2008 § 308 Request”) directing Acquest to provide information it had failed to provide in response to the December 2008 § 308 Request specifically, evidence of Acquest's compliance with the § 402 construction storm water permit, documentation with regard to unauthorized construction and earthmoving activities on the property which had been requested by the January 9, 2008 § 308 Request but not provided by Acquest, and a full explanation of all activity on the property other than necessary construction in connection with the nursery. Acquest responded to the February 26, 2008 § 308 Request on March 14, 2008 and provided Acquest's SWPPPs stating that it had complied fully with the inspection deficiency report and reiterated that the rest of the property was devoted only to agriculture activity, admitted it had constructed a 24' x 1500' stone road on the property but failed to provide ownership or lessor identification for the western portion of the property as had been requested by the EPA.

         The EPA then conducted roadside inspections of the property on June 9 and 10, 2008, observing fill and sidecast dredged material on wetland areas on the property, the large gravel road entering the property from Millersport Highway identified by a sign stating the road was for deliveries to the nursery, and water runoff from the property to Tonawanda Creek, a navigable waterway, from the point where such runoff flows through Black Creek into Ransom Creek located on the western side of Millersport Highway through a connecting ditch adjacent to the property and culverts under the highway. On July 28, 2008, the EPA obtained an administrative search from Hon. Hugh B. Scott of this court and conducted a comprehensive inspection of the property on July 29-31, 2008 (“the July 2008 Inspection”). The result of the July 2008 Inspection confirmed the presence of wetlands over the entire property, consistent with Acquest's consultant's earlier determination and findings in 2005, based on the presence of wetland vegetation hydric soils, and wetlands hydrology. The inspection also confirmed the EPA's observation of the water flow from the property into Tonawanda Creek through the adjacent ditch, culverts, Black Creek, and Ransom Creek. The inspection further revealed large discharges of dredged and fill material into wetlands on the property which was used as fill material over 9.6 acres of the property plus an additional 2.6 acres of fill used as a pad for construction of the nursery, as well as smaller amounts of fill that had been discharged into a wetlands area immediately to the west of the nursery site, totaling over 13 acres of wetlands on the property into which fill had been discharged. Upon completion of the inspection, an Acquest representative informed the EPA the discharges would continue.

         Based on these findings, the EPA determined that Acquest failed to obtain a § 402 permit for storm water discharges resulting from Acquest's construction activities on the property, specifically, the clearing, grading or excavation on one or more acres on the western side, i.e., some distance away from the nursery, of the property. Additionally, the EPA determined that Acquest had caused the discharge of dredged or fill material into wetlands on the property without obtaining from the Corps a permit as required by Section 404 of the Act, 33 U.S.C. § 1344 (“a § 404 permit”). As a result of Acquest's activities with respect to the property as described above, the EPA determined Acquest was in violation of Section 301 of the Act, 33 U.S.C. § 1311, for its unauthorized and unlawful discharge of construction related storm water into waters of the United States, specifically Tonawanda Creek, through smaller tributary creeks, and the unauthorized discharged of pollutants of earthen fill and dredged material into waters of the United States in violation of Section 404 of the Act, 33 U.S.C. § 1344.

         On September 5, 2008, the EPA issued to Acquest a Cease and Desist Order, pursuant to 33 U.S.C. § 1319(a), in which the EPA recited the aforementioned factual background and, after noting the seriousness of Acquest's violations and lack of good faith efforts by Acquest to comply with the EPA's directions, directed Acquest to cease and desist from “all earth-moving work using mechanized earth-moving equipment in any portion of the property.” Dkt. 9 at ¶ 19, Exh. 6 (“the September 5, 2008 Cease and Desist Order”). The instant action was subsequently commenced by Plaintiff on January 15, 2009, and based on the affidavits of Ms. Thiesing and Mr. Pohle, which included the results of the July 2008 Inspection, Plaintiff sought and obtained from this court a preliminary injunction enjoining Defendants from placing additional fill or performing any additional earthmoving work at the property designated as tax parcel 16.00-5-23 in the Town of Amherst, New York. (Dkt. 26 at 20). Defendants were subsequently found in violation of the court's preliminary injunction, see Dkt. 76 and 83; Dkt.105. See United States v. Acquest Transit LLC, 2010 WL 6350470 (W.D.N.Y. Aug. 9, 2010) and 2010 WL 6350439 (W.D.N.Y. Aug. 25, 2010) (Reports and Recommendations) adopted by 2011 WL 1167754 (W.D.N.Y. Mar. 29, 2011).

         On June 13, 2011, Defendants served Defendants' First Set of Interrogatories and Document Requests. Plaintiff responded to Defendants' requests on October 5, 2011, including a lengthy (352 pages) privilege log (Dkt. 232-1 ¶ 21) (“October 5, 2011 Privilege Log”) referencing Miller Declaration Exh. 3, and September 6, 2013 privilege log (seven pages) (Miller Declaration Exh. 4) (“September 6, 2011 Privilege Log”). On November 17, 2011, the court stayed this action pending resolution of a criminal proceeding against Defendants Acquest Transit, LLC, Acquest Development, LLC, and Huntress based on charges of false statements, obstruction of justice and violation of the CWA, in connection with Defendants' activities on the property, representations to the EPA, and criminal contempt based on Defendants' violations of the preliminary injunction. The stay was vacated on June 29, 2015 as a result of a guilty ...

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