SC Administrative Law Court Decisions

This matter is before the Administrative Law Judge Division ("Division") pursuant to a request for a contested case hearing by Jerry Glenn, owner of Glenn Dairy ("Glenn Dairy", "Mr. Glenn" or "Respondent"). Respondent appeals the decision by the South Carolina Department of Health and Environmental Control's ("DHEC" or "Department") to suspend DHEC Permit #10402 for alleged violations of Chapter II of Regulation 61-34.1. The hearing was convened on June 12, 2002.

The Department presented the prefiled testimony of several of its employees: Joe C. Neely, Manager, Dairy Foods and Soft Drink Protection Program; John W. Zion, Environmental Quality Manager, Dairy Foods and Soft Drink Protection Program; and Elizabeth Johnson, Supervisor, Milk and Food Laboratories. Also, the witnesses of DHEC gave direct testimony at the hearing and were available for cross-examination by Mr. Glenn. The Department also offered into the record the following exhibits, which were admitted without objection: (1) S.C. Regulation 61-34.1; (2) DHEC Form 1319, Raw Samples, Bureau of Laboratories, Results of Milk Samples collected 2/18/02 from Superbrand Dairy; (3) E-mail from DHEC laboratory notifying Joe Neely of positive antibiotic test on Glenn Dairy milk on 2/20/02; (4) Letter dated 2/26/02 from DHEC to Glenn Dairy; (5) Piedmont Milk Sales Statement showing amount of $494.64 deducted from payment to Jerry Glenn; (6) Laboratory certification for Elizabeth Johnson; (7) Form FDA 2400b-3 (3/01), Department of Health and Human Services, Public Health Service, Food and Drug Administration, Milk Laboratory Evaluation Form, Detection of Inhibitory Substances in Milk, Delvotest 5 Pack; (8) Test procedure for Delvo P 5 Pack; (9) FDA Memorandum M-a-85 (Revision #9), entitled "Beta lactam Test Methods for Use Under Appendix N and Section 6 of the Pasteurized Milk Ordinance (PMO).

Mr. Glenn represented himself as a witness at the hearing. He offered no other witnesses nor any documentary evidence.

PRETRIAL MOTIONS

The Department, through its legal counsel Cheryl Bullard, moved to dismiss the case pursuant to ALJD Rule 23. The Department argued that Respondent failed to comply with the Order of the Administrative Law Judge for Prehearing Statements by failing to effect service on the Department, failed to identify any witnesses, and failed to provide any evidence or indicate any intent to use any evidence at the hearing. The Department's motion was denied.

STATEMENT OF THE CASE

A laboratory analysis of a sample of milk was collected at Glenn Dairy on February 18, 2002. The testing found that the milk product was adulterated by animal drug residues or antibiotics. Since the adulteration of milk intended for human consumption is a violation of Section II of the S. C. Code Ann. Regs.. 61-43.1 and is considered an imminent health hazard, the Department suspended the permit and notified Mr. Glenn by telephone of the permit suspension on February 20, 2002. Further, Mr. Glenn was notified that milk from his farm would be withheld from sale pending further laboratory sampling proving that the milk was no longer adulterated.

On February 21, 2002, samples of milk collected at Glenn Dairy were found to be negative for the presence of animal drug residues. After a reinspection, Respondent's permit was reinstated by notification from Petitioner to Respondent on February 21, 2002. The reinspection confirmed that Mr. Glenn had corrected the initial problem that resulted in the adulteration of the milk product. Thereafter, Respondent sought review of the Department's determination which suspended its permit for two days, February 20-21, 2002.

BURDEN OF PROOF

The Department imposed a penalty on Respondent for violating S.C. Code Ann. Regs. 61-34.1. Basic principles of administrative law establish that an agency bears the burden of proof in establishing that the penalty is justified. See Peabody Coal Co. v. Talston, 578 N.E.2d 751 (Ind. Ct. App. 1991); Shipley, South Carolina Administrative Law § 5-79, 5-80 (1989). The caption, therefore, pursuant to an Order of the Division dated June 12, 2002, was changed to reflect the correct allocation of the burden of proof.

DISCUSSION

Regulation 61-34.1, Pasteurized Milk and Milk Products, regulates all Grade A milk manufactured, processed, and sold in South Carolina. In order to meet the requirements of this Regulation, at least four samples of raw producer milk must be collected every six months and analyzed in an FDA certified lab for bacteria, somatic cells, added water and drug residues. These samples are routinely collected by the milk haulers who are evaluated and permitted by DHEC as certified haulers/samplers of raw milk for pasteurization. A sample of milk must be collected from each farm tank by the milk hauler. These samples are collected by DHEC from the milk plant and transported to DHEC's certified laboratory in Columbia, South Carolina. On an infrequent basis, DHEC collects samples directly from a farm when the samples are not readily available at a South Carolina plant.

On February 18 and 19, 2002, DHEC collected all South Carolina producer samples of milk being received by Pet Dairy in Spartanburg, South Carolina and Superbrand Dairy in Taylors, South Carolina. An evaluation conducted on February 20, 2002 at the DHEC Laboratory of a sample taken from one tank at the Glenn Dairy revealed a positive drug residue (antibiotic) in that tank. In accordance with Regulation 61-34.1, the Grade A permit held by Glenn Dairy was temporarily suspended until DHEC could collect additional samples from the tanks at Glenn Dairy to determine whether drug residues continued to be present therein.

Additional samples were collected at the dairy by a DHEC representative and tested at the DHEC Lab on February 21, 2002. These samples were negative for drug residues. The permit was reinstated on February 21, 2002.

Mr. Glenn was informed in a letter dated February 26, 2002, that the two day permit suspension or equivalent was required to be imposed since he had been found to have adulterated milk ready for shipping in one of his milk tanks. The penalty was effective February 19 and 20, 2002. However, no monetary penalty was imposed.

Piedmont Milk Sales, the marketing company for Glenn Dairy, did impose indirectly a monetary penalty of $494.64 by purchasing the milk from Respondent as non-Grade A milk, instead of Grade A milk. The amount of the penalty was equivalent to the difference between the non-Grade A and Grade A prices for Respondent's milk. However, by reclassifying the milk, it was allowed to be shipped (sold) rather than the milk in the entire tank being destroyed and wasted. Consequently, Respondent was assessed a smaller penalty than he would have incurred otherwise.

FINDINGS OF FACT

After careful consideration and review of all the evidence, and having considered the credibility of the witnesses and the exhibits, by a preponderance of the evidence I make the following findings of fact:

• This Division has personal and subject matter jurisdiction.
• Notice of the date, time, place, and nature of the hearing was given to all parties.
• Jerry Glenn is the owner and operator of Glenn Dairy, which is located at 414 Blackmon Road, Pendleton, Anderson County, South Carolina.
• Glenn Dairy is the holder of DHEC Permit # 10402 issued by Petitioner, which authorizes the dairy to operate as a milk producer.
• Milk samples were collected from the two tanks at Glenn Dairy on February 18, 2002, and sent for testing at the DHEC laboratory in Columbia, South Carolina.
• The milk taken from Tank A at Glenn Dairy was found to be adulterated, testing positive for antibiotics, a prohibited substance in milk which is intended for human consumption.
• On February 20, 2002 DHEC notified both Mr. Glenn and the milk hauler, as well as the cooperative, of the test results from the milk in Tank A.
• At that time DHEC imposed an immediate permit suspension, and notified Mr. Glenn that no milk could be sold from his dairy until additional samples could be taken from the milk tanks which tested negative for antibiotics or other adulteration.
• DHEC staff arranged for the collection by a tanker of the milk in the tank which tested positive for alteration. This action allowed Mr. Glenn to continue to ship his milk, albeit as non-Grade A milk, during the period of the interim suspension.
• Additional samples from both tanks were collected by DHEC staff on February 21, 2002, were tested at its laboratory, and were found to be negative for antibiotics.
• Immediately thereafter, DHEC staff notified both Mr. Glenn, the milk hauler and the milk cooperative, that Mr. Glenn's Grade A permit had been reinstated on February 21, 2002.
• The Department did not impose a two day suspension against Glenn Dairy. If it had, it would have resulted in Mr. Glenn's inability to sell his milk at Grade A prices for two days, or the disposal or wasting of Mr. Glenn's milk collections for the period of the suspension.
• However, the milk marketing company for Mr. Glenn, Piedmont Milk Sales, imposed indirectly a monetary penalty of $494.64, which was the amount equivalent to the difference between the price Mr. Glenn would have received if his milk had been sold for Grade A, rather than Grade B, milk. This penalty was applicable to the milk collected on February 18, 2002, which was found to contain antibiotics.

• DHEC agreed that the monetary loss accorded Mr. Glenn by the milk marketing company was a sufficient monetary burden for Mr. Glenn.

CONCLUSIONS OF LAW

• The Administrative Law Judge Division has subject matter jurisdiction in this action pursuant to S.C. Code Ann. §§ 1-23-310 et seq. (Supp. 2001). Further, the Administrative Law Judge who tries a contested case issues a Final Decision and Order pursuant to the provisions of S.C. Code Ann. §§ 1-23-350 and 1-23-600(B)(Supp.2001).
• The standard of proof in weighing the evidence and making a decision on the merits at a contested case hearing is the preponderance of the evidence. See Anonymous v. State Bd. of Medical Examiners, 329 S.C. 371, 796 S. E. 2d 17(1998) (standard of proof in an administrative proceeding is the preponderance of evidence).

• The Department imposed a penalty for violating S.C. Code Ann. Regs. 61-34.1. Basic principles of administrative law establish that an agency bears the burden of proof in establishing that the penalty is justified. See Peabody Coal Co. v. Talston, 578 N.E. 2d 751 (Ind. Ct. App. 1991); Shipley, South Carolina Administrative Law § 5-79, 5-80 (1989).
• Pursuant to S.C. Code Ann. § 44-1-140, the Department of Health and Environmental Control may "promulgate and enforce reasonable regulations ... requiring and providing ...(3) [f]or the production, storing, labeling, transportation and selling of milk and milk products...."
• S.C. Code Ann. Regs. 61-34.1, Pasteurized Milk and Milk Products, effective March 19, 1993, sets forth standards relating, but not limited, to the following: adulterated milk and milk products, permitting of milk production facilities, inspection of dairy farms and milk plants, examination of milk and milk products, and other matters affecting the production and selling of milk and milk products.
• S.C. Code Ann. Regs. 61-34.1, Pasteurized Milk and Milk Products, Section I.A.1., provides that milk and products are "adulterated if the product contains any poisonous or deleterious substance in a quantity which may render it injurious to health."
• S.C. Code Ann. Regs. 61-34.1, Section II.A., provides, in pertinent part, that "no person shall, within the State of South Carolina or its jurisdiction, produce, provide, sell, offer, or expose for sale... any milk or milk product which is adulterated ...." Section II.A.5 provides that "when milk is found to be adulterated by the presence of drugs... or other poisonous substances, it shall be impounded and additional samples analyzed. Milk found to be adulterated shall be disposed of until analysis shows the product not to be adulterated and a two day permit suspension or equivalent will be imposed."
• It is imperative that adulterated milk containing drug residues be kept off the market so that the adulterated milk does not harm individuals with drug allergies and to help minimize drug resistance that occurs frequently with the careless use of antibiotics. For these reasons, milk drug residue screening programs meeting FDA requirements have been adopted by all fifty states and Puerto Rico.
• I conclude that the evidence in this record demonstrates that Respondent violated S.C. Code Ann. Regs. 61-34.1. Laboratory testing conducted on milk collected from Tank A on February 18, 2002 tested positive for antibiotics, rendering the milk adulterated with the presence of drugs.
• I conclude that the Department is authorized to impose a two day permit suspension or some other equivalent penalty for the violations of S.C. Code Ann. Regs. 61-34.1 committed by Respondent.
• I further conclude that the Department properly used its discretion to accept a penalty imposed by Respondent's milk marketing company as an equivalent penalty, in lieu of a two day permit suspension or additional monetary penalty.

ORDER

For all the foregoing reasons, it is hereby:

ORDERED that the penalty imposed by the Department against Glenn Dairy is proper and within the regulatory authority of the Department; and it is further

ORDERED that the administrative action by the Department is hereby affirmed.

AND IT IS SO ORDERED.

_______________________________

MARVIN F. KITTRELL

Chief Administrative Law Judge

July 31, 2002

Columbia, South Carolina