A photo supplied by the Santa Clara County District Attorney’s Office shows where Monterey Mushrooms, Inc. used outflow pipes to illegally and intentionally dump toxic production waste into Fisher Creek from its Hale Avenue site in north Morgan Hill, according to authorities.

A national mushroom grower could be on the hook for millions of dollars worth of damages and penalties after local authorities accused the company of intentionally dumping toxic production waste from its Morgan Hill site into an adjacent creek.

The Santa Clara County District Attorney’s Office announced in a Dec. 27 press release that it has filed a $67 million lawsuit against Monterey Mushrooms, Inc. in relation to the illegal dumping allegations, which center on the company’s Hale Avenue farming and production site in north Morgan Hill.

The DA’s lawsuit claims Monterey Mushrooms has “on numerous occasions and for years, pumped wastewater from its water holding pond and process water holding tanks at the Morgan Hill facility into Fisher Creek,” reads the press release from the DA’s Environmental Protection Unit.

Monterey Mushrooms spokesman Bruce Knobeloch said in a statement the company is “shocked and disappointed” by the lawsuit, which follows recent “active communication and dialogue” with the DA’s office dating back to incidents that occurred during the “catastrophic winter storms” of 2016 and 2017—incidents the company claims were not intentional. Since those storms, Monterey Mushrooms has worked with county and state environmental regulators to prevent future incidents, reads the company’s statement.

Much of the illegally dumped wastewater contained toxic levels of ammonia, according to the DA’s Office. Fisher Creek flows into Coyote Creek, which flows into San Francisco Bay.

“Businesses should never make illegal and dangerous tradeoffs between pollution and profit,” District Attorney Jeff Rosen said after his office filed the complaint, which alleges dozens of unfair business practices and state Fish and Game violations. “We will vigilantly protect the health of our county’s waterways.”

The investigation started with leads from a local citizens group, which passed on information about potential illegal dumping to the California Department of Fish and Game, Deputy DA Denise Raabe said. Fish and Game officials contacted the DA’s office, and the two entities continued the investigation into Monterey Mushrooms’ Morgan Hill facility.

The intentional illegal dumping began in early 2016 and continued to spring of 2017, reads the DA’s press release. Monterey Mushrooms allegedly pumped harmful wastewater from its holding ponds into waterways in order to dispose of the waste without incurring additional costs.

The Morgan Hill facility also allowed contaminated stormwater from its compost processing and used compost areas to flow into the waterways, the press release continues. The grower is accused of using overflow pipes, culverts and hoses to divert wastewater into fields, and subsequently into Fisher Creek. Other pipes allegedly dumped wastewater directly into the creek.

A photo released by the DA’s office shows a pipe flowing with “production waste” into Fisher Creek.

On Jan. 7 and Jan. 8, 2017—two of “many” occasions documented by investigators—authorities estimated that Monterey Mushrooms pumped about 700,000 gallons of wastewater into Fisher Creek during a 48-hour period, the DA’s office said. On other occasions, investigators sampled the wastewater discharged into the waterways and tested for various toxic substances. In one instance, the wastewater contained ammonia as nitrogen at 90 milligrams per liter. The amount of nitrogen defined as “acute toxicity” is 17 mg/L, as set by the Federal Environmental Protection Agency.

The high levels of ammonia in Monterey Mushrooms’ production waste are created by the use of used horse stable hay and poultry manure in the company’s growing process, authorities said.

Coyote Creek is home to steelhead trout, California tiger salamanders and California red-legged frogs.

The statement from Monterey Mushrooms notes that during the times mentioned in the DA’s press release, winter storms flooded Coyote Creek from Anderson Dam north to San Jose and caused major damage to the Oroville Dam in northern California.

“Our Morgan Hill facility was inundated by these record storms and rainwater volume, which resulted in a record release of process water, primarily rainwater, leaving the property,” reads the company’s statement. “Due to this experience, the company has collaborated with county and state agents and spent millions of dollars to install additional storage, as well as engineer the separation of stormwater.”

The statement concludes, “Monterey Mushrooms has a long history being a responsible member of the community and is committed to the highest standards of environmental compliance.”

Monterey Mushrooms, Inc. is one of the nation’s largest mushroom growers. The company’s corporate headquarters are in Watsonville, and it has offices and production facilities in 12 states, including California, and Mexico.

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