Three and a half years after he was arrested for beating a man unconscious on a Belle Meade side-street, wealthy Nashville entrepreneur Rich Roberts has legal trouble again.
The City Paper has learned that the U.S. Environmental Protection Agency is investigating whether Roberts broke the law by building a large dam without state or federal permits on land he owns in Humphreys County.
EPA investigators are known to have interviewed persons with knowledge of the process that led to the dam's construction. A spokeswoman for the agency confirmed that it has referred the matter to the U.S. Department of Justice.
Roberts has built and sold two large companies in the field of electronic payment processing. With business partner Greg Daily, he started PMT Services Inc. in 1984 on less than $2,000 in capital. It grew into a publicly traded company that sold out for $1.3 billion in 1998. Roberts' next venture, Verus Financial Management Inc., was sold in 2006 for $325 million. It emerged in subsequent litigation that Roberts made more than $50 million from the Verus deal.
In 2005, Roberts faced a felony aggravated assault charge after an altercation with a pedestrian who had yelled at him to slow down while driving down Windsor Drive. Roberts stopped his car, got out and hit the man hard enough to fracture his skull and knock him unconscious. Just before he was to go on trial in November 2007, Roberts was allowed to plea down to a misdemeanor charge of simple assault while paying an undisclosed amount in restitution to the victim. The criminal case has since been expunged from his record.
From the perspective of an environmental regulator, Roberts has "knowingly and willfully conducted an unlawful activity that may permanently degrade" a pristine waterway. That's how an official from the Tennessee Department of Environment and Conservation, writing in a 2007 internal memo, described Roberts' decision to build a 70-foot-long dam in Egypt Hollow, on a more than 2,000-acre tract of farm and forest land located north of Interstate 40 along State Route 230.
Roberts had the dam built in 2005, creating a 58-acre lake. He had spent years in discussions with TDEC about how he might obtain a permit for the site, but he never got one.
The department declared in an April 2007 order that the dam had "caused flow in the Egypt Hollow tributary to be significantly reduced downstream," violating Tennessee's Water Quality Control Act. A copy of the order is available at this link.
TDEC also said Roberts failed to take erosion prevention measures, allowing water and sediment to seep from the dam. It ordered him to tear down the dam, return the land to its former state and pay a civil penalty of $200,000, with another $150,000 to be tacked on if he did not comply in time. Roberts complied with the erosion prevention mandate but filed an appeal against the rest of the order.
The appeal (copy at this link) called TDEC's action "arbitrary, capricious, excessive, an abuse of discretion, and in excess of statutory and regulatory authority." Roberts' attorney, J.W. Luna of Nashville, told The City Paper: "We believe the thing was built where it should have been built and that a permit wasn't needed there."
Three different environmental engineering consultants hired by Roberts have concurred that the dam and lake are exempt from permit requirements, said Luna, who served as the first commissioner of TDEC during the administration of Governor Ned McWherter.
"The lake is formed purely by rainfall runoff," the attorney said. "It's not influenced by groundwater."
Moreover, according to Luna, a TDEC representative told Roberts' farm manager in 2004 that if the dam were built further up the hollow than originally planned, it would require no permit because its basin would only catch rainfall and would not block any existing waterway.
The state disputes the farm manager's account. He has offered to take a polygraph test to substantiate it, Luna said.
The issues at play in the Roberts case have been the subject of much political wrangling during the Tennessee General Assembly's current legislative session, with several bills introduced to expand the rights of property owners regarding water issues and protect them against what some see as overreaching enforcement action by TDEC.
Adding fuel to the debate was a court verdict last month in Bedford County. Chancellor J.B. Cox, in a sternly worded ruling, slapped down an an attempt by TDEC to sanction a farmer for violating the same law it accuses Roberts of violating.
Cox found that members of the Tennessee Water Quality Board, a division of TDEC, "acted arbitrarily by applying their own views instead of the law that was applicable" in the case of cattle farmer Bill Lancaster. He had built a pond on his property without obtaining a permit, and the state sought to fine him nearly $10,000.
The Water Quality Control Act contains an exception for agricultural activity, stating that "nothing whatsoever" in the law applies to farm-related water usage unless it involves a discharge of polluted water. "'Nothing whatsoever' means nothing whatsoever," Cox wrote. "This language does not need outside interpretation."
Roberts, in his appeal of the TDEC order, has also cited the agricultural exception as one reason he did not need a permit for the dam. He keeps cattle on the property, though it is also a recreational getaway. Luna said Roberts is currently working with the Christian organization Young Life on plans to build a lakeside camp for handicapped children. He has also hosted a fundraiser on the property for Nashville's Charles Davis Foundation.
TDEC's website gives the status of its Roberts case as "suspended." Spokeswoman Meg Lockhart said the department had no comment on the case.
On the federal level, EPA has the authority to seek civil and criminal sanctions. When asked about the status of the Roberts case, Atlanta-based spokeswoman Dawn Harris-Young stated: "EPA is currently in negotiations to reach a settlement, and the matter has also been referred to the Department of Justice for resolution." She would not comment further on what the Department of Justice's involvement might signify.
"I'm surprised the EPA would say that," Luna said. "I haven't heard from them in a long time."
John F. Cooney, an attorney with Venable LLP in Washington, D.C. who has written about federal environmental enforcement procedures, said the Justice Department "typically will regard a case as a more significant situation if the landowner did not obtain a permit after a government agency told the person to apply."
"The regulatory agencies and the courts have struggled for the last decade to define exactly what constitutes a 'wetland' that cannot be dammed without a permit," said Cooney, who happens to be a Nashville native. "In some cases, the answer is obvious, but in close cases it can be hard to tell."
Asked whether there is a possibility the EPA will pursue criminal charges, Luna responded: "That's not for me to decide. We've been an open book on this thing. We've showed the site to anyone who wanted to see it. We're proud of it. It's a beautiful place. Our client saved it from clear-cutting. We think we did what we're supposed to have done."