DATE: Monday, July 14, 1997                 TAG: 9707140071

SECTION: FRONT                   PAGE: A1   EDITION: FINAL 

SOURCE: BY SCOTT HARPER, STAFF WRITER 

                                            LENGTH:  171 lines

THE SMITHFIELD FOODS TRIAL SEEKING HOME RUN, STATE STRUCK OUT AN EXPERT'S BOBBLED REPORT LEFT STATE LAWYERS UNABLE TO PROVE THEIR ALLEGATIONS. AND CRITICS SAY POLITICS WAS A MAJOR PLAYER.

Anthony Troy looked awful. The lead attorney for Smithfield Foods Inc. had been listening to hours of damaging testimony Tuesday about destroyed records, botched environmental reports and ugly bacteria pollution.

Troy said nary a word on the second day of trial. His hair was a mess; his eyes sagged with fatigue.

On Wednesday, things changed big-time.

After the state stunned almost everyone by asking to bow out of its lawsuit against the meatpacking giant, Troy bounced around the Isle of Wight County courtroom like a spry boxer. He joked with the bailiff. He chatted with the press. He winked at his client.

His moods reflected how the state's case against Smithfield Foods went. On Monday and Tuesday, state lawyers presented powerful evidence of technical violations by the East Coast's biggest pork processor. But on Wednesday, the effort fell flat when lawyers pursued a broader attack, challenging the company's anti-pollution performance over the past decade.

The sudden collapse of the case, it seemed, made one thing clear: The state had bitten off more than it could prove.

Assistant Attorney General John Butcher wanted dearly to convince Judge Kenneth E. Trabue of what he could only allege.

``This is a spit-and-Band-Aid system,'' Butcher said, referring to the two waste plants that Smithfield Foods has used for decades to filter millions of gallons of hog wastes produced each day at company slaughterhouses.

The state wanted the judge to rule that these waste systems were inherently undersized and inadequate, and ultimately caused heavy pollution of the Pagan River, a small Chesapeake Bay tributary that for decades has acted as a catch basin for treated wastes from Smithfield Foods.

But in trying to prove this big assertion, Butcher could not rely on state environmental inspectors to help him. For, as Troy almost mockingly pointed out, Virginia's own inspectors had approved the waste system over and over again since 1985.

So the state turned to an outside expert. But its consultant, John Novak, a civil engineering professor from Virginia Tech, spent just three days studying the system before issuing a report on June 13.

Short on specifics and data, the report was ground up by experts hired by Smithfield Foods, who would have testified that Novak's recommendations would have increased water pollution from the plants, said James Ryan, another lawyer representing the meatpacker.

With time running out, the state asked Novak to amend his report to counter expected attacks from Smithfield Foods. Novak did so. And the report was turned over on July 3 - one working day before the state trial began.

Troy and his colleagues from the Richmond law firm Mays & Valentine objected to the report's being allowed as evidence. They argued that, under civil rules of trial, they had not had enough time to quiz Novak on his latest findings.

The judge agreed and barred the amended report.

At that moment Wednesday morning, before Smithfield Foods had ever called a defense witness, Assistant Attorney General Butcher stood up and asked that Judge Trabue grant the state a ``non-suit.'' It was over. Reporters looked at one another in confusion; state officials who had worked on the case for months were stunned.

To golfers, a non-suit is the equivalent of a mulligan. In child-speak, it's the same as a ``do-over.'' In short, the state asked that everything that had happened to date be forgotten and asked to be allowed another chance at suing Smithfield Foods.

Troy jumped to his feet and objected, wanting to move on, knowing the state was without evidence to prove its most potentially damaging point.

The judge sided with Butcher and granted the non-suit. Everyone packed up. What had taken months to prepare was over in minutes.

Why the state went for a home run against Smithfield Foods when it appeared to have plenty of evidence to score a clean single is a matter of speculation. To Troy, though, the question speaks to the heart of the state lawsuit: politics.

Since the state filed its suit last fall, company officials, environmentalists and several politicians have argued that Virginia was only trying to appear tough on the environment.

At the time, the state was being criticized as soft on polluters, and the administration of Gov. George F. Allen was accused of being too close to Smithfield Foods. After all, critics noted, Smithfield CEO Joseph Luter III had given Allen's political action committee $125,000 in campaign contributions.

So, filing a big lawsuit against Smithfield Foods, these critics said, would demonstrate that Virginia was serious about enforcing environmental laws.

Asked Wednesday if he thought Virginia would refile its lawsuit, Troy said: ``It depends on whether they still need to make a political statement.''

While Smithfield Foods escaped a civil penalty, the facts brought out early in the trial left a stark impression. Testimony drawn from nervous meatpacker employees and state officials showed that Smithfield Foods, for all its money and influence, did not exactly put environmental protection on the front burner.

After years of being sued, criticized and even hauled to the U.S. Supreme Court for its allegedly shoddy waste practices in Isle of Wight County, the $4 billion conglomerate still has just 14 people working at its two aging waste facilities, said the current wastewater director, Diane Carson. Those people were supposed to monitor, test, maintain and report on a sprawling maze of pipes, lagoons and chemicals that neutralize a river of thick wastes around the clock.

The company hired Larry Lively to be its environmental manager in 1991, but then made him watch over six other treatment plants it ran throughout the country.

Lively testified that he often commuted to Isle of Wight County from North Carolina, where he was busy trying to help start another slaughterhouse. As it turned out, the company hired a waste director there with bogus qualifications, creating another crisis that demanded Lively's time.

His wife, Lively said, was still in Chicago, and he only could fly to see her on weekends every few weeks or so. ``It was very stressful,'' he recalled.

In 1994, with an absentee environmental manager at the helm, state investigators became alerted to a serious problem. The wastewater director at the time, Terry L. Rettig, seemed to be falsifying pollution reports. Not at Smithfield Foods - but at other facilities Rettig was managing on the side. He also was using labs at Smithfield Foods to do so.

The investigators wanted to talk to Rettig, and asked to see similar reports he was filing for Smithfield Foods. Government officials rely on those reports to determine whether a company is complying with state pollution laws.

Rettig skipped the first meeting in June 1994. He showed up for the next one a month later, only to announce that three years' worth of reports were missing.

Carson testified that she and another employee, Henry Morris, saw Rettig that day dumping boxes into a trash compactor. Could they have been the records? Maybe, Carson said. But she and Morris decided not to say anything for fear of losing their jobs.

Rettig eventually pleaded guilty in federal court to destroying and falsifying records and illegally dumping excessive pollutants into the Pagan River. He is serving a 30-month prison term.

Lively promoted Carson to fill Rettig's post, even though she was not licensed at the time to run a wastewater system, and even though she did not know how much Smithfield Foods could legally discharge into the Pagan.

Carson testified Tuesday that only ``in the last year'' has she learned how to fully test for chlorine emissions. A state environmental official testified that Carson had been misreporting levels of this toxic chemical and did not understand when testing was supposed to be done.

Lively also described how in 1993 the company was going through a slump. Departments were asked to cut costs. So Lively recommended that the waste plants not be staffed at night and on weekends.

The plants, under state discharge permits, are supposed to be manned 24 hours a day, seven days a week.

``Did you understand the terms of your permit?'' Assistant Attorney General Roger Chaffe asked Lively.

``Yes,'' he said, ``but we were also continuously monitoring,'' a reference to a machine that automatically samples for chlorine.

The machine, however, ``was not exactly reliable,'' Carson testified later, and it was removed in 1995.

Lively, who suffered a heart attack in 1994 and is now nearing retirement, was demoted for not catching such chlorine problems at Smithfield Foods, he testified.

Throughout such testimony, Troy sat stoically at the defense table, his shoulders slumped. He had conceded that mistakes of this sort had been made and that Smithfield Foods was willing to pay ``an appropriate penalty'' for them.

Where the state alleged some 22,000 environmental violations, Troy countered that ``around 100'' violations was more accurate.

To penalize Smithfield for any of those, the state will have to refile its lawsuit within six months.

Whether or not the state refiles, Smithfield Foods still faces a stiff test later this month when another lawsuit challenging its environmental past is scheduled to come to trial.

The U.S. Environmental Protection Agency is seeking as much as $125 million in fines for some 5,330 alleged violations of the national Clean Water Act since 1991.

Asked about that case, Troy smiled. He motioned to the mountains of notebooks and documents and boxes strewn throughout the Isle of Wight County courtroom. ``You think you see a lot of paperwork now,'' he said. ``Wait until the federal trial.'' ILLUSTRATION: Color photo

Smithfield Foods KEYWORDS: SMITHFIELD FOODS FEDERAL LAWSUIT

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