Oregon’s second-largest dairy will be shut down and put up for sale by the end of March 2019, a California bankruptcy trustee for the dairy announced Wednesday.
Lost Valley Farm, which has been cited for hundreds of environmental violations since it opened near Boardman 18 months ago, needs to invest $35 million to $40 million to meet its pollution permit requirements, trustee Randy Sugarman wrote in a status report to the court.
“Going forward, it will be necessary to find a new owner, one capable of obtaining any future permits and funding critical capital improvements,” Sugarman said in a news release issued by a Portland public relations firm. He declined to comment further.
California dairyman Greg te Velde opened Lost Valley Farm in April 2017 to supply milk to the nearby Tillamook Cheese factory.
The dairy immediately began violating its wastewater permit, which regulates how it must dispose of manure. The Oregon Department of Agriculture has been trying to shut the dairy down since February 2018, through a civil lawsuit and by moving to revoke the dairy’s wastewater permit.
ODA officials did not respond to a request for comment Wednesday.
Te Velde declared bankruptcy in April 2018, to stave off a scheduled auction of Lost Valley’s cows as part of a bank foreclosure. In September, the bankruptcy court appointed a trustee to oversee Lost Valley, as well as te Velde’s two California dairies, saying te Velde’s drug use, overspending and pending criminal charges made him unfit to run them.
Sugarman said in his status report that he expects all unsecured creditors — which include the state of Oregon, Morrow County, and many Eastern Oregon businesses — to be paid in full or close to it.
Sugarman says Lost Valley’s wastewater system was poorly designed, defectively constructed and only partially completed when the dairy opened. Effluent is leaking from various parts of the system, and there is insufficient land on which to get rid of the manure.
Te Velde began operations without a scale or feed shed, without a hospital barn, without a maternity and nursery barn, and without understanding of how to operate and maintain the complex and partially defective waste management system, Sugarman said.
Other problems included significant worker safety issues, te Velde’s “unorthodox” animal husbandry practices, non-existent management of dairy workers, and troublesome leases.
“From the onset Mr. te Velde was under-capitalized to complete this massive project and never fully appreciated the true ultimate cost to complete the dairy and supporting crop land,” he wrote.
Last week, Sugarman asked the court to approve selling the cows at public auction. A hearing on that motion is scheduled for Oct. 31.
Reached on his mobile phone Wednesday, te Velde said he hadn’t heard about Sugarman’s decision to close the dairy. He blamed the dairy’s failure on the Statesman Journal’s coverage of its problems, particularly coverage of te Velde’s arrests on charges of prostitution, attempted bribery and meth possession.
That negative publicity prompted Tillamook to cancel its milk contract with te Velde, Sugarman told the court. Te Velde has filed a lawsuit claiming the contract cannot be canceled, and Tillamook continues to buy the milk.
Tillamook officials did not respond to a request for an interview Wednesday.
In August, a Multnomah County judge found te Velde in criminal contempt of court for failing to comply with the terms of a settlement in the civil suit brought by the state. She imposed remedial sanctions, ordering te Velde to lower the level of manure in lagoons, install monitoring equipment to ensure wastewater doesn’t reach the water table, and take other actions to improve environmental compliance.
Sugarman said he will comply with those sanctions to the extent he has the resources to do so.
“The trustee believes that whatever violations have occurred in the past, LVF is now in compliance with all applicable environmental laws and regulations through soils monitoring, containment and other measures, and that the estate has not caused any damage to the local environment,” he wrote.
Water woes also led to the dairy’s problems, Sugarman said.
Te Velde did not secure water rights before opening the dairy. He first used a legal loophole to tap an endangered aquifer, then trucked in water from the Port of Morrow.
Brian Posewitz, an attorney at WaterWatch of Oregon, said the dairy’s closure would improve water resources in the area.
“Among the many examples it set for bad planning by the owner and insufficient oversight by the state was its lack of an adequate plan to meet the enormous water demands of a dairy on that scale,” he said.
Other environmental groups also questioned state oversight of large animal confinement facilities.
“A permit never should have been granted for a facility that was only partially built, was so poorly designed and constructed, and which lacked the resources and permanent water rights needed to operate at such a massive scale,” said Ivan Maluski, policy director for Friends of Family Farmers.
“Oregon’s policy-makers need to take swift action to prevent this kind of thing from happening again, and before this troubled facility is simply sold to someone else,” he said.