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Lost Valley dairy owner defends against contempt charge

Lost Valley Farm of Boardman, Ore., settled a lawsuit with the Oregon Department of Agriculture last spring by agreeing to limit its wastewater output, but the state says the dairy continues to violate the agreement.
Mateusz Perkowski

Capital Press

Published on July 27, 2018 6:15PM

Greg te Velde, owner of Lost Valley Farm near Boardman, Ore., testifies July 27 during a hearing on a contempt motion brought by the Oregon Department of Agriculture. The department says the dairy isn’t living up to the terms of a settlement it reached with te Velde on handling wastewater. Multnomah County Circuit Judge Kelly Skye, left, did not immediately rule on the motion.

Mateusz Perkowski/Capital Press

Greg te Velde, owner of Lost Valley Farm near Boardman, Ore., testifies July 27 during a hearing on a contempt motion brought by the Oregon Department of Agriculture. The department says the dairy isn’t living up to the terms of a settlement it reached with te Velde on handling wastewater. Multnomah County Circuit Judge Kelly Skye, left, did not immediately rule on the motion.


PORTLAND — The owner of a controversial Oregon dairy claims the state government wants to shut down the facility just as it’s about to comply with wastewater regulations.

Oregon farm regulators are seeking a court order to stop Lost Valley Farm of Boardman from producing wastewater — which would effectively halt operations — because it’s disregarding a previous legal settlement.

Greg te Velde, the owner, said there have been “some spills and splashes” at the facility but maintains they’ve been “nothing catastrophic.”

Though he acknowledged defaulting on the legal agreement, te Velde said he’d always intended to honor the deal despite facing “a steep learning curve.”

Upgrades to the dairy will soon mitigate wastewater problems, te Velde said during a July 27 court hearing in Portland.

“I think we’re on the cusp of having it all done,” he said.

In March, Lost Valley Farm of Boardman, Ore., settled a lawsuit with the Oregon Department of Agriculture by agreeing to limit its wastewater output to 65,000 gallons a day.

Since then, however, the dairy has violated the deal by exceeding that threshold almost daily and failing to maintain adequate capacity in manure lagoons, for which te Velde should be held in contempt of court, according to ODA.

“On most of these days, it’s a pretty significant excess use,” testified Wym Matthews, manager of ODA’s confined animal feeding operation program.

According to ODA’s estimates, the excess ranged from 19,000 to 375,000 gallons per day, he said.

The agency also estimates the amount of manure applied to six of seven nearby fields surpassed the agronomic requirements of crops, which is prohibited due to the possibility of nitrogen pollution.

“It consumes those nutrients so they don’t become pollutants, so that balance is critical,” Matthews said.

Although ODA is in the process of revoking the dairy’s “confined animal feeding operation” permit, it will take two months for that action to become final, or even longer if the order is contested by te Velde.

Because wastewater violations at the dairy haven’t ceased, there’s a “serious risk” of groundwater contamination unless the situation is brought under control this summer, the agency claims.

It’s “particularly important” for Lost Valley Farm to comply with CAFO permit conditions because it’s in the “environmentally sensitive” Lower Umatilla Groundwater Management Area, which already has elevated levels of nitrate contaminants, the agency said.

ODA is worried that pollutants from the dairy will eventually reach groundwater, even if they haven’t yet, said Matthews.

“Our concern is the operator is loading the soil,” he said.

If the soil continues to be loaded with nitrogen, pollutants would be expected to reach the groundwater within two years under water-saturated conditions, said Kirk Cook, a geologist and program manager of ODA’s pesticide stewardship program.

However, the nitrogen remains immobile when the soil isn’t saturated and the dairy is in an arid part of the state, he said.

The ODA has requested that Multnomah County Circuit Judge Kelly Skye issue remedial sanctions requiring Lost Valley Farm to cease wastewater production within 60 days and remove waste from lagoons to free up 75 acre-feet of storage capacity.

Of the all dairies inspected by ODA this year, the facility was the only one to have a lagoon overflow and the only one that didn’t turn over agronomic data, said Matthews.

The dairy began construction of a fourth manure lagoon to alleviate the storage problems, but it didn’t first notify ODA to ensure the construction complied with waste management plans, as required, he said.

“That is a general theme — showing up to find things we should have known about,” said Matthews.

An attorney for te Velde argued the government’s contempt case should be dismissed because it’s duplicative of the permit revocation process.

The judge denied that motion because the dairy cannot violate the earlier judgment regardless of those proceedings.

To reduce water usage, the dairy has installed water-saving nozzles and cut down on “flush times,” te Velde said.

A neighboring farmer has agreed to have wastewater applied to his fields and the dairy is installing piping that will deliver wastewater directly to crops, he said.

Improvements have been delayed by the company’s bankruptcy proceedings, since investments must be cleared by a judge and creditor committee, te Velde said.

Shutting down the dairy would be “a really extreme remedy” since te Velde has spent roughly $700,000 trying to comply with the legal settlement, said Elizabeth Howard, his attorney.

The state hasn’t shown “clear and convincing” evidence that he violated the deal “willfully,” which is necessary to prove contempt, Howard said.

Since starting operations last year, the dairy has repeatedly been cited by ODA for breaching the terms of its CAFO permit with unauthorized waste discharges and other problems.

Despite the ODA’s “exhaustive efforts” to bring Lost Valley Farm into regulatory compliance — including a fine of more than $10,000 — the violations have continued, the agency said.

“We’ve done everything a regulatory agency can do,” said Nicole DeFever, attorney for the state government.

Skye, the judge, said she will deliberate on the meaning of “willful” in this context.

The idea that unsuccessfully trying to comply with the deal shields te Velde from being held in contempt “doesn’t sit right with me,” she said.

“I don’t think merely making efforts for lengthy periods of time will keep you out of willful conduct,” Skye said.

While te Velde has filed for Chapter 11 bankruptcy protection, which shields his dairies from creditors foreclosing on property, that “automatic stay” doesn’t apply to regulatory actions aimed at remediating environmental hazards, according to ODA.

The bankruptcy petition was filed in April to stop Rabobank, the dairy’s major lender, from holding an auction to sell Lost Valley Farm’s cattle to recoup some of the roughly $60 million it loaned te Velde.

As part of bankruptcy proceedings, a subsidiary of the Tillamook County Creamery Association has filed a lawsuit to terminate its milk-buying contract with Lost Valley Farm, citing high bacteria levels in milk, reputational damage and unpaid debts.

More recently, the federal government filed a motion for a “Chapter 11 trustee” to take over management of te Velde’s company, which includes two other dairies in California, because he’s allegedly admitted to regularly gambling and using methamphetamine since filing for bankruptcy.

Appointing a trustee is also warranted because te Velde has withdrawn more money than allowed from his company and obtained a loan without authorization, according to the motion.



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