Department of Justice Seal

(202) 514-2007
TDD (202) 514-1888

Utility Company Admits It Conspired To Violate Clean Water Act,
Agrees To Pay $4.3 Million Fine

WASHINGTON, D.C. -- A private, Mississippi-based utility company operating sewage treatment and drinking water plants in six states today pleaded guilty to a conspiracy related to its failure to give Louisiana residents basic sewage treatment. Johnson Properties Inc. and six subsidiaries agreed to pay a criminal fine of $4.36 million and restitution of $165,000 to affected communities.

The companies admitted in U.S. District Court in New Orleans that they conspired to enrich themselves and their executives at the expense of customers, and they also admitted that they failed to properly operate and maintain six sewage treatment plants in Thibodaux and Houma, Louisiana. To further the conspiracy, the companies also admitted that they concealed the substandard operation of their sewage plants by giving the EPA and the Louisiana Department of Environment Quality false laboratory analyses.

"Today's guilty plea shows that enforcement of the Clean Water Act makes a real difference in people's daily lives," said Lois J. Schiffer, Assistant Attorney General for Environment and Natural Resources at the Justice Department. "These companies knowingly failed to provide sewage treatment services to the residents of these communities, jeopardizing their health and safety. They now pay the price, through fines and restitution to these people."

As part of the conspiracy, Johnson Properties and its subsidiaries bought undercapitalized facilities and then assured Louisiana regulators that they had the expertise and ability to manage and maintain the sewer systems in southern Louisiana. But from 1991 to 1998, Johnson Properties and its subsidiaries -- Utility Management Services, Inc., Johnson Utility Company, Inc., Seashore Utilities, Inc., Seashore Utilities of Louisiana, Inc., Thoroughbred Park Service Corporation, and Tara Development Corporation -- failed to spend the money necessary to properly operate the sewer systems.

"This case presents an excellent example of the federal law enforcement community working together effectively to secure justice for the residents of the Eastern District of Louisiana in cooperation with the State of Louisiana's environmental agency," said Eddie Jordan, U.S. Attorney for the Eastern District of Louisiana. "We will not tolerate businesses that place the residents of this district at risk to the unhealthy conditions of untreated sewage in order to reap illegal financial gains."

The guilty pleas entered today follow a November 1998 civil settlement that required Johnson Properties to bring its sewage treatment plants into compliance with the Clean Water Act. However, the defendant failed to adhere to the consent decree requirements, and in March 1999, U.S. District Court Judge Tucker Melancon appointed a receiver to operate Johnson Properties and 18 of its subsidiaries. The court found that this extraordinary relief was necessary to protect the health of the residents living near the plants as well as Louisiana's environment.

Inspections of 73 facilities following the November settlement revealed that none were in compliance with the decree, and the court found that the companies continued to discharge large quantities of potentially harmful pollutants into local waters, stream, and bayous. The court also found that on numerous occasions, raw sewage and sewage sludge was introduced into the environment at, near or around the companies' sewage treatment plants.

The Johnson companies collectively control the greatest number of privately-owned wastewater treatment facilities in Louisiana, and they operate more than 200 facilities in Mississippi, South Carolina, North Carolina, Tennessee, Louisiana and Pennsylvania.

The criminal case arose from an investigation by the Louisiana Department of Environmental Quality, and it was jointly prosecuted by the Environment and Natural Resources Division of the Justice Department and the U.S. Attorney's Office for the Eastern District of Louisiana. It was investigated by the U.S. Department of Transportation, Office of Inspector General; the Federal Bureau of Investigation; the U.S. Postal Inspection Service; the Environmental Protection Agency, Criminal Investigative Division; the U.S. Coast Guard Investigative Service; and the Louisiana Department of Environmental Quality, Criminal Investigations Section.