[CITE:
DNR v. Bruce Barnes, d/b/a Barnes Firewood & Logging, 8 CADDNAR 152 (2000)]
[VOLUME
8, PAGE 152]
Cause
#: 98-153F
Caption:
DNR v. Bruce Barnes, d/b/a Barnes Firewood & Logging
Administrative Law Judge: Lucas
Attorneys: Boyko; Bray
Date: August 15, 2000
ORDER
Civil penalties in the total amount of $3,100 are assessed in favor of the Department of Natural Resources and against Alfred Edward Barnes, also known as Bruce Barnes, and doing business as Barnes Firewood & Logging.
FINDINGS OF FACTS
1. On August 14, 1998, the Department of Natural Resources, Division of Forestry, (the "DNR") filed with the Natural Resources Commission (the "Commission") its "Complaint to Revoke Timber Buyer's License and to Impose Civil Penalty" (the DNR's complaint) against Bruce Barnes, doing business as Barnes Firewood & Logging. The legal name of the person referenced in the complaint as "Bruce Barnes" is "Alfred Edward Barnes." Bruce Barnes, Barnes Firewood & Logging, and Alfred Edward Barnes are referenced here as "Barnes." Filing of the complaint initiated this proceeding which is governed by IC 4-21.5 (sometimes referred to as the "administrative orders and procedures act" or "AOPA") and 312 IAC 3-1, a multi-section rule adopted by the Commission to assist in administration of AOPA.
2. The DNR's complaint requested the Commission to order under IC 4-21.5-3-8 that Timber Buyers License No. Z 380 and Agent's Registration Card No. 789, previously issued to Barnes by the DNR, be revoked. In addition, the DNR's complaint sought a civil penalty in the sum of $5,000 for five alleged violations of IC 25-36.5-1 (the "Timber Buyers Act") and 312 IAC 14 (rules adopted by the Commission to assist in administration of the Timber Buyers Act).
3. The Commission has jurisdiction over the person of the parties and over the subject matter of this proceeding.
4. During the course of the proceeding, Barnes surrendered Timber Buyers License No. Z 380 and Agent's Registration Card No. 789 to the DNR. With the surrender of these documents, they no longer have legal force and effect. The DNR's complaint is mooted with respect to its request that Timber Buyers License No. Z 380 and Agent's Registration Card No. 789 be revoked.
5. Barnes sought and was granted relief by the United States Bankruptcy Court, Southern District of Indiana, Indianapolis Division, in re Alfred Edward Barns, aka Bruce Barnes, d/b/a Barnes Firewood and Logging, Debtor, Case Number 99-03670-AJM-7.
6. In State of Indiana, Department of Natural Resources, Division of Forestry v. Alfred Edward Barnes, a/k/a Bruce Barnes, d/b/a Barnes Firewood and Logging, Adversary Proceeding No. AP-99-271, the DNR sought to contest the dischareability of potential indebtedness of Barnes attributable to any civil penalty determined in this proceeding. On October 28, 1999, the U.S. Bankruptcy Court approved an "Agreed Entry on Complaint Determining Dischargeability of Debt" that provided in part:
...
2. Administrative proceedings before the Natural Resources Commission under Administrative Cause Number 98-153F were indefinitely continued as a result of Defendant's bankruptcy filing. The amount of civil penalty to be imposed against Defendant [Barnes] has not yet been determined.
3. Defendant and Plaintiff [the DNR] agree that the automatic stay imposed under 11 U.S.C. 362 shall be lifted to the extent that the administrative proceedings of the Natural
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Resources Commission are allowed to proceed in order to determine the penalty amount to be imposed against Defendant.
4. All penalties imposed by the administrative proceedings referenced in the above paragraphs 2 and 3 shall be nondischargeable debts as defined under 11 U.S.C. Section 523(a)(7).
...
7. During a prehearing conference held on February 28, 2000, the parties agreed the sole issue remaining for determination is the amount of civil penalty, if any, to be assessed against Barnes based upon the DNR's complaint.
8. The statutory provision within the Timber Buyers Act that is most directly at issue is IC 25-36.5-1-13.5. The section provides in pertinent part that the DNR may impose a civil penalty not to exceed $1,000 for each violation of the Timber Buyers Act (other than engaging in business as a timber buyer without a license or acting as the agent of a timber buyer without a license.)[Footnote 1] Five separate "Counts" of violations are alleged to have occurred in the DNR complaint.
9. The Commission has adopted rules to assist in assessing civil penalties under the Timber Buyers Act. As provided in 312 IAC 14-4-3(c), the presumptive civil penalty is one-half the maximum authorized in the Timber Buyers Act. For each of the five Counts[Footnote 2] alleged to have occurred in the DNR complaint, the presumptive civil penalty is $500.
10. The Commission has also identified mitigating factors and aggravating factors that may be considered to decrease or increase the presumptive civil penalty. These are set forth in 312 IAC 14-4-3(d) and 312 IAC 14-4-3(e), respectively:
(d) Mitigating factors to be considered in assessing a civil penalty are as
follows:
(1) The person assessed a civil penalty has not
previously been adjudicated by the commission or a court to have violated IC
25-36.5-1 or this article.
(2) The violation appears to have been unintentional.
(3) The violation was an isolated occurrence.
(4) No timber grower has suffered harm as a result of the violation or, if harm
was suffered, full restitution was tendered promptly.
(5) Significant environmental harm was not suffered as a result of the
violation.
(e) Aggravating factors to be considered in assessing a civil penalty are as
follows:
(1) The person assessed a civil penalty has previously
been adjudicated by the commission or a court to have violated IC 25-36.5-1 or
this article.
(2) The violation appears to have been intentional.
(3) A pattern of violations has occurred.
(4) A timber grower has suffered harm as a result of the violation, and full
restitution for the harm has not been tendered.
(5) Significant environmental harm was suffered as a result of the violation,
and the harm has not been mitigated pursuant to a plan approved by the division
director.
11. In applying the mitigating and aggravating factors, the fact-finder should include practical considerations based upon common experiences and those peculiar to the commerce and trade of timber buying. Not every mitigating or aggravating factor will apply to every violation, either because the facts do not support finding an aggravating or mitigating factor or because a factor is irrelevant to a violation a particular nature.
12. A hearing was held as scheduled on June 1, 2000 to receive testimony and other evidence
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in determining the amount of civil penalty, if any, that should be assessed against Barnes. Each Count in the DNR's complaint is considered separately.
COUNT I
13. The DNR alleges in Count I that Barnes failed to maintain a surety bond under the Timber Buyer Act, after Bond Number PLI 1191687 was revoked by Old Republic Surety Company on August 8, 1998.
14. The evidence is unrefuted that this violation occurred. None of the aggravating or mitigating factors applies. The civil penalty for this violation should be in the presumptive amount of $500.
COUNT II
15. The DNR alleges in Count II that Barnes did not file and maintain an adequate surety bond or other security with the DNR as required in the Timber Buyer Act. The security required by IC 25-36.5-1-3 is $2,000 for an applicant who has paid timber growers $5,000 or less for timber during the immediate preceding year, and an additional $100 for each additional $1,000 or fraction of $1,000 paid for timber growers for timber purchased during the proceeding year, but not more than $20,000.
16. Barnes obtained Bond Number PLI-1191687 from Old Republic Surety Company in support of his application for renewal in 1998 as a licensed timber buyer. The bond was in the minimum statutory amount of $2,000 and based upon representations that he bought timber from Indiana growers in 1997 in the amount of $4,000.
17. Investigation by the DNR documented that Barnes purchased in excess of $120,000 worth of timber from Indiana growers in 1997. This amount is grossly in excess of thE $4,000. Barnes should have tendered a bond in excess of $13,000. In previous years Barnes had posted larger bonds than in 1998.
18. Barnes did not file and maintain an adequate security as required in the Timber Buyer Act. The deficiency was so fundamental, that coupled with his determination to tender a reduced bond amount for 1998, is found to have been intentional or with total disregard for the consequences. Those consequences were a reduction of at least $9,000 in the amount available to those intended by the Timber Buyer Act to have been protected by the bond-timber growers.
19. The preponderance of the evidence supports a finding that Barnes did not file and maintain with the DNR an adequate bond for the protection of timber growers. The degree of the deficiency resulting from a gross understatement of timber sales in 1997, particularly when considered in the context of larger bonds posted in prior years, supports a finding that aggravating circumstances should increase the civil penaltyfor the violation by $500. The amount of civil penalty for the violations described in Count II should be in the amount of $1,000.
COUNT III
20. The DNR alleges in Count III that Barnes made a false statement on his timber buyer license renewal application. As provided in IC 25-36.5-1-4(c), it is unlawful "For a timber buyer to willfully make any false statement in connection with the application, bond or other information required to be given to the Department as a timber grower."
21. Upon the facts, this violation is so intimately intertwined with Count II that to assess a separate civil penalty for both counts would result in a redundancy. The failure by
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Barnes to post an adequate security is based upon his misrepresentation as to timber sales in 1997. By illustration, had Barnes understated 1997 sales but tendered a $20,000 bond, the understatement would have had little or no practical impact. At least upon the facts of this proceeding, the violation results from the gross inadequacy of the bond. In effect, the violation alleged in Count III is an element of the violation alleged in Count II. A separate civil penalty is not supported for Count III.
COUNT IV
22. The DNR alleges in Count IV that Barnes failed to pay at least two timber growers as agreed for timber he purchased from them. In effect, Count IV states two separate allegations of wrongdoing.
23. As provided in IC 25-36.5-1-4(a), a timber buyer who fails to "pay, as agreed, for any timber purchased" violates the Timber Buyer Act.
24. In two previous proceedings, the Commission adjudicated that Barnes failed to pay timber growers for timber that he purchased from them. In Administrative Cause Number 98-096F, Allen Jackson and Vicky Jackson obtained a default judgment against Barnes in the amount of $11,529.27 for failure to pay a 50% share[Footnote 3] for timber cut on their property in the fall of 1997. In Administrative Cause Number 98-158F, John Harrison Thomas obtained a stipulated judgment in the amount of $8,000 for failure by Barnes to pay for timber cut in early 1998.
25. Both the Jackson judgment and the Thomas judgment evidence violations of IC 25-36.5-1-4(a). The presumptive civil penalty for each of these violations is $500 ($1,000 for both violations).
26. Two aggravating factors are found to be present with respect to these violations. First, a pattern of violations has occurred. Not only are there multiple victims of the failure by Barnes to pay landowners for the timber he cuts on their property, the harm is exacerbated by his failure to maintain adequate bond to aid in their compensation. Gary Gretter testified for the DNR that more complaints from timber growers were received with respect to Barnes than from "99% of timber buyers" and that Barnes is among two or three timber buyers demonstrating the worst performance record during Gretter's tenure with DNR's Division of Forestry. Second, timber growers have suffered as a result of the failure by Barnes to pay for timber cut by him, and full restitution for the harm has not been tendered. Barnes has made a serious effort to compensate Thomas for the losses he has suffered, and the effort is noteworthy. Yet the purposes of the Timber Buyers Act are to protect timber growers and to help assure the integrity of the profession of timber buyers. The harm to the Jacksons and to Thomas occurred when Barnes failed to make timely payment. Harm continues to accrue to both of these timber growers since full payment still has not been received. Perhaps equally important, the failures by Barnes damage perceptions of the integrity of the timber buying profession as a whole.
27. The DNR also urges in its post-hearing brief the Jackson judgment and the Thomas judgment are prior adjudications constituting aggravating circumstances. The judgments evidence the failure by Barnes to make timely payments but cannot constitute both the violations and aggravating circumstances for the violations.
28. No mitigating factors are found to be present. The mitigation language in the rule clearly has not been met. As provided in 312 IAC 14-4-3(d)(4), in order to achieve mitigation the fact-finder must determine "No timber grower has suffered harm as a result of the violation or, if harm
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was suffered, full restitution was tendered promptly." The facts in these proceedings do not support this finding. Barnes has made an effort toward restitution with respect to Thomas, and this effort properly lessens the aggravating circumstances as to him, but not to the level of a mitigating circumstance.
29. Aggravating circumstances should add $500 to the presumptive civil penalty as it pertains to the violation with respect to the Jacksons. Aggravating circumstances should add $100 to the presumptive civil penalty as it pertains to the violation with respect to Thomas.
30. The amount of civil penalty for the violations described in Count IV should be in the amount of $1,000 with respect to the Jacksons and $600 with respect to Thomas. The total civil penalty resulting from the violations described in Count IV should be $1,600.
TOTAL ASSESSMENT OF CIVIL PENALTIES
31. Civil penalties from all Counts should, upon the preponderance of the evidence, be assessed in favor of the DNR and against Barnes in the total amount of $3,100.
FOOTNOTES
1. A civil penalty not to exceed $10,000 may be imposed for conducting business as a timber buyer without a license or acting as the agent for a timber buyer without a license. The provisions authorizing enhanced civil penalties for these violations are not at issue in this administrative proceeding.
2. The DNR's Count IV contains two parts. What is described as Count V is not a separate allegation but rather describes application of the civil penalty provisions. The net result is five Counts.
3. Barnes testified he did not believe an
arrangement where he and a landowner shared proceeds derived from the sale of
timber, as opposed to a direct purchase by him of the timber, constituted a
transaction that is governed by the Timber Buyers Act. His interpretation is
specifically rejected. In writing the Timber Buyers Act, the Indiana General
Assembly clearly intended to include "shares" within the kinds of
transactions to be included. A "timber buyer" is a person engaged in
the business of buying timber. "Buying" means
acquiring an interest in property by the payment of a price, value, or other
consideration. IC 25-36.5-1-1. Clearly,
"buying" includes an agreement where the landowner and the person
cutting timber share in the proceeds of a sale to a third person. Where Barnes
entered an agreement with the Jacksons for "shares" in timber cut on
their property, he was engaged as a timber buyer under the Timber Buyers Act.