AP Enterprise: Egg farm owner was able to expand business despite being a ‘habitual violator’

Iowa approved egg farm tied to ‘habitual violator’

GALT, Iowa — The owner of an egg farm at the center of a massive salmonella recall was able to expand his egg empire despite being branded a “habitual violator” of Iowa’s environmental laws — a label that was supposed to ban him from building any more farms.

Documents reviewed by The Associated Press suggest Austin “Jack” DeCoster, one of the nation’s largest egg producers, got around the ban that lasted more than four years by having associates seek approval for the projects, only to assume control of the enterprise later.

State regulators approved a huge egg farm in 2001 even though it had suspected ties to DeCoster. The farm is now operated by Wright County Egg, which he owns, and is involved in the recall.

“He’s been trouble ever since he came here from Maine,” said former Iowa Gov. Terry Branstad, who said the 75-year-old DeCoster had unfairly hurt the reputation of Iowa farmers.

DeCoster expanded his business into Iowa in the 1980s from Maine, where he started egg farming as a teenager. He also had enterprises in Ohio and Maryland.

In 2000, DeCoster, who also ran some large hog farms, was facing several lawsuits that accused him of polluting Iowa rivers and streams with hog manure. To settle the complaints, he acknowledged being a habitual violator — the first and still only Iowa farmer to be branded with that official label.

The label banned him from establishing any more animal farms through October 2004. It also included stiffer punishment for any future violations, a $150,000 fine and a mandate that he improve his handling of manure.

But records show those penalties posed little obstacle to DeCoster’s ambitions. His associates won approval in 2001 for a huge egg farm that he started controlling after his penalty expired. Today, that site is one of the largest operated by Wright County Egg, which has recalled 380 million eggs linked to salmonella cases across the country.

Congress has subpoenaed DeCoster to testify about the salmonella outbreak next month. Lawmakers are asking him and the owner of a second Iowa farm to explain how eggs from their facilities were linked to more than 1,300 cases of salmonella poisoning.

Just weeks after DeCoster accepted habitual violator status, his associates founded a company called Environ Egg Production LLC. Its registered agent was a Des Moines lawyer who had represented DeCoster in the environmental lawsuits.

Soon, the company was pushing for approval of a project that would house 1.8 million hens near Galt, a tiny town north of Des Moines.

Residents fiercely opposed the project, saying they worried about possible air and water pollution. And several told the state Department of Natural Resources they were convinced that DeCoster was behind the operation.

Bill Drury, 59, who farms near DeCoster’s egg operations, said he recalled telling the DNR that DeCoster was behind the project and urging regulators to block it on environmental grounds. He said the decision to approve the permits was “ridiculous, but that was the law. They had no way of stopping it.”

Drury said many residents do not speak out against DeCoster because they consider him good for the local economy. He employs hundreds of workers and buys corn from local farmers to feed his chickens.

“He has not been a very good corporate member of Iowa. But there again, it’s a business. People work there. They buy a lot of corn, and so people tend not to go after him,” said state Sen. Gene Fraise, who heads a legislative committee on agriculture.

DeCoster did not respond to interview requests left by the AP at his home and office.

State environmental officials were aware that Environ “appeared to have the same address, same phone number, same agent and attorneys as DeCoster Farms of Iowa,” according to records. What’s more, a consultant who studied the soil where the confinement facility would be built listed “DeCoster Farms of Iowa” as his client in a report sent to county supervisors.

When the report reached the DNR, the client was listed as an Environ official named John Glessner, who had long worked closely with DeCoster’s businesses.

Sara Smith, a DNR official who helped review permit applications, warned Environ that DeCoster could not be involved, and that application materials must be “complete and accurate.”

But Environ officials insisted they had no connection to DeCoster, and the DNR granted the permit under the name of Glessner’s wife.

The permit was issued based on the information provided by Environ Eggs and the assumption that DeCoster was “neither constructing nor financing the project,” wrote Wayne Farrand, then a supervisor in DNR’s wastewater section.

In 2003, when the company wanted to more than double its capacity to 3.7 million birds, the DNR ignored any notion that DeCoster was involved. Such suspicions “should not affect the approval of the permit application,” Smith wrote.

Environ later transferred ownership to a company called Environ/Wright County Inc., which leases the site to Wright County Egg, which is directly owned by DeCoster. Company spokeswoman Hinda Mitchell would not say when that arrangement began.

In 2004, a check issued by one of his companies paid Environ’s annual compliance fee, records show. By 2007, DeCoster was signing documents listing himself as the site’s owner.

DNR spokesman Kevin Baskins said the agency was asking questions about DeCoster’s involvement but simply did not have enough evidence to deny the permits.

“It’s hard for us to act on suspicion,” he said. “There was obviously some things we saw worth questioning. In the end, there wasn’t enough hard evidence to pursue it much farther from a legal standpoint.”

He noted that Iowa DNR officials denied permits in 2000 to a company called Country Fresh Eggs, which wanted to build four chicken confinement facilities in Wright County. The department found DeCoster had donated 600 acres of land to the firm, accounting for 98 percent of its initial investment.

Iowa Attorney General Tom Miller said declaring DeCoster a habitual violator was effective because the agency received no more violations tied directly to him.

But records show that Environ and another company paid the DNR a $5,000 fine in 2004 for allegedly violating conditions of a stormwater permit. In 2006, a DNR specialist documented a “severe manure control problem” at the site. DeCoster’s son, Peter, disputed that finding but took steps to contain the waste.

DeCoster may have applied the same business strategy in other states.

In Ohio in 2004, state officials say DeCoster hid behind other farmers to get permits for an operation called Ohio Fresh Eggs. The permits listed two men who had put up just $10,000 apiece while DeCoster had pumped $126 million into the four farms, according to testimony in an administrative proceeding there.

Ohio officials yanked the permits after learning about that, but an environmental appeals panel overturned that decision.

In the 1990s, DeCoster battled with Maryland officials who tried to shut down an Eastern Shore egg facility owned by DeCoster, who was accused of violating a quarantine by selling contaminated eggs.

DeCoster successfully sued the state in 1992, arguing that Maryland could not stop him from selling across state lines. He later received a suspended $500 fine for selling eggs from quarantined henhouses. He left the state in 1993.

(This version corrects that ban on building farms lasted more than four years, not five years.)