Report Details How EPA Lobbying May Have Reduced MGPI's Fine For Greendale Barrel Houses

According to E&E News, MGPI of Indiana had feared more than $100,000 in fines for not getting proper permits before building several new whiskey barrel houses in Greendale. But the company ultimately paid just $11,250 to the state.

A new storage warehouse at the MGPI of Indiana Distillery in Greendale, one of the nine for which the company was late to seek an air permit from the Indiana Department of Environmental Management. Photo by Mike Perleberg, Eagle Country 99.3.

(Greendale, Ind.) – The owner of the distillery in Lawrenceburg and Greendale has reached a settlement with the Indiana Department of Environmental Management over emissions from hundreds of thousands of whiskey storage barrels.

MGPI of Indiana, LLC will pay a penalty of just $11,250 to the Environmental Management Special Fund under an agreed order reached in August.

The case began in 2016 when the Obama-era U.S. Environmental Protection Agency’s Air and Radiation Division notified MGPI of Indiana that it was in violation of limits on emissions of volatile organic compounds, or VOCs, from nine barrel houses. According to the original notice of violation, the company had failed to abide by EPA rules by constructing and operating the barrel houses prior to receipt of the proper air permit.

Eight of the barrel houses were built 2014-2016 and another was to be constructed in 2018 in Greendale, although the company had not submitted to IDEM a significant source modification.

The VOCs in the case are ethanol which emits from barrels which sit by the thousands in warehouses as whiskey inside them ages. Part of the whiskey in each barrel evaporates through the barrel’s wood.

The presence of ethanol in the air allows a fungus called baudoinia compniacensis to thrive in areas surrounding a distillery or barrel house. The so-called “whiskey fungus” collects on homes, vehicle, trees and other structures as an unsightly, black, soot-like growth.

In all, the warehouses would house more than 439,000 barrels, enough to emit well beyond the permitted limit of 25 tons of ethanol per year.

The U.S. EPA decided in 2018 not to pursue the case, instead leaving it to IDEM.

A new report by E&E News, a publication for energy and environmental professionals, out Wednesday details how communications between a lawyer and EPA Chief of Staff Ryan Jackson may have helped persuade the EPA to step back from the MGPI case, in addition to multiple cases in other states.

Also included in the news report was a 2017 letter sent to then-EPA administrator Scott Pruitt by then-Indiana 6th District Congressman Luke Messer, a Republican. Messer claimed that the EPA’s Region 5 office was overstepping its legal authority in a move that could cost jobs at the distillery.

The $11,250 amount of MGPI’s settlement with the state is drastically less than the punishment the company may have feared when it first faced the wrath of the EPA. According to the news report, the company warned investors in 2017 that the violation of the Clean Air Act could net the company at least $100,000 in fines.

The City of Greendale has been attempting to get MPGI to reduce the ethanol emission, and thus cut down of the growth of whiskey fungus covering homes and businesses in the city. E&E interviewed Greendale Mayor Alan Weiss, who said he was only aware of MGPI’s lobbying of the EPA after being contact by the publication.

"It really didn't matter what we wanted," Weiss told E&E. "Nobody was listening to our concerns."

After being called out for the permit violation, MGPI submitted applications to IDEM for the proper permits of the Greendale warehouses in May 2018. The authorization for construction and operation of the warehouses and their VOC emissions was granted last December (PDF).

IDEM granted MGPI, in April, the necessary permit to begin housing up to 320,000 whiskey barrels at the former Deufol warehouse in Sunman, Indiana. The approval came despite uproar from area citizens about “whiskey fungus” impacting their properties nearby.

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