Builder disputes DEQ violations at Philomath housing development

A Philomath homebuilder is challenging state environmental regulators over alleged methane safety violations at the Millpond Crossing residential development.

The Oregon Department of Environmental Quality issued a notice of violation in August against MPC Builders LLC, citing multiple failures to comply with a 2021 consent order put in place to protect residents from methane gas generated by decaying wood waste buried beneath the subdivision.

But in a Sept. 4 appeal, developer Levi Miller disputes nearly every allegation, claiming the company has spent millions addressing the problem.

At the heart of the dispute is a fundamental disagreement about whether methane levels at the 62-home development, located north of Chapel Drive between South 15th and South 16th streets, are improving or deteriorating.

Miller’s appeal emphasizes that his consultant has “conducted over 1,000 tests on occupied homes for methane and not once in any of those 1,000-plus tests has methane been detected.” He argues that soil monitoring shows methane levels declining naturally with some testing points dropping from the “mid-40% range” in 2021 to “0% methane” by 2025.

“The methane pockets that exist, the volume of gas are low and not under any sort of pressure to move and cover only small areas,” Miller wrote. “They are small isolated, low volume concentrated pockets with no pressure.”

DEQ said the most recent monitoring, conducted this past February, found methane above the lower explosive limit of 5% on Willow Street, which is just north of the development. The agency reports that it is an area where levels were previously much lower.

“Although methane at the site has been reported as generally localized pockets, methane gas in the subsurface can migrate due to many factors including groundwater gradient movement, barometric pressure changes and preferential pathways in the ground,” DEQ Public Affairs Specialist Dylan Darling said Wednesday. “If proper home mitigation measures are not installed, there is the possibility of methane entering crawlspaces as home foundations age.”

DEQ said all homes at Millpond Crossing are potentially affected and that proper safety measures are essential “to ensure safety for people living in the development going forward.”

The agency advises residents to “ensure fans in crawlspaces and methane alarms are operating and functioning properly.”

Oversight breakdown

DEQ’s Aug. 12 violation notice centers on MPC’s failure to maintain required third-party environmental oversight during remediation work.

The consent order requires supervision and documentation by an environmental professional (EP) for all methane mitigation measures. According to DEQ, several measures in Phase 2B homes and excavation of organic debris in preparation for Phase 3 occurred without oversight since September 2023.

Miller’s appeal contests this, however, stating that PBS Engineering and Environmental, his consultant, sent DEQ a status update on March 14, 2025, describing ongoing supervision of excavation work “in accordance with the Interim Remedial Action Measure Work Plan.”

But DEQ said the real reason for the oversight gap is simpler: “PBS stopped work because MPC Builders was behind on paying them.”

The agency said it has received no remedial documentation from PBS since February 2025 and that MPC has been notified about the oversight requirement “several times by DEQ since at least Aug. 12, 2024.”

Miller’s appeal doesn’t mention any payment issues with PBS, though he does note the company has spent $2.68 million on “direct methane-related work” and another $2.46 million in indirect costs.

Escrow dispute

Perhaps the starkest factual dispute involves a required remediation escrow account.

Under a June 2022 amendment to the consent order, MPC was required to deposit $75,000 into an escrow account for each Phase 2B home sold or leased to fund future methane monitoring and mitigation.

“The account was never funded,” DEQ’s Darling said.

Miller disputes the violation, but not because he’s made deposits. Instead, he argues the entire requirement is financially impossible and contradicts the consent order’s terms.

According to Miller’s appeal, the original consent order capped his financial contribution at $1.5 million with funds from a Business Oregon Brownfield Redevelopment Fund loan to be credited toward that cap. He claims the BRF loan “exceeded $1.5 million” and was “exhausted and spent by the end of 2023 before any homes were sold.”

Miller says he’s already paid $1.745 million total — $245,000 over the alleged cap — when including an additional $195,000 paid directly to PBS in 2024 and early 2025.

“If MPC was to deposit into escrow the additional $75,000 per house that DEQ is alleging it should have done, MPC total contribution would be an additional $1,425,000 totaling $3,170,000,” Miller wrote, an amount the equates to the sale of 19 homes. “This is not what the consent order says, it isn’t what MPC agreed to, and this is not financially feasible or possible.”

Overdue pilot study

Another violation involves a methane extraction pilot study that was due in early 2023.

The study is designed to test whether methane can be extracted from the subsurface at one of the site’s most concentrated locations. DEQ calls it “important” for determining the feasibility of long-term remediation.

Miller’s appeal questions the study’s value, noting that monitoring point MP-5 — the location where the study is planned — has already declined from mid-40% methane to 0%. With seven monitoring points now installed in the 5,000-square-foot lot, Miller asks: “What data will the pilot study provide that we already don’t have from the years of testing?”

Miller suggested in his appeal letter that “this pilot study is no longer needed or justified and has no clear and objective standard and goal.”

DEQ disagreed, saying the study remains a critical consent order requirement that MPC must complete.

In a phone interview Wednesday, Miller said that he agreed to do the pilot study once funding becomes available.

Monitoring cessation

Miller’s appeal also addresses DEQ’s allegation that required methane monitoring has ceased.

He argues the company fulfilled a one-year monitoring requirement under a November 2022 plan and conducted an additional round in February 2025. Based on more than 1,000 tests showing zero methane detection in homes, Miller said the company is “exercising its option per the approved testing plan to eliminate monitoring requirements as they are no longer necessary.”

The approved monitoring plan included language stating that “following a year of sampling PBS and MPC request to reduce the monitoring schedule to quarterly with the option to reduce or further eliminate monitoring requirements if they are no longer necessary.”

But DEQ said MPC was required to submit a methane monitoring assessment plan — a document that has never been provided. Without that plan and DEQ approval, the agency maintains monitoring cannot simply be eliminated.

Miller said Wednesday that he plans to submit an updated testing plan “that takes into account all the data that we collected, which is no detection, and to see where we can reduce, if not eliminate, the testing.”

What happens next?

DEQ’s notice requires payment of $4,000 in stipulated penalties for violating the consent order — $500 for the remediation work without proper oversight, $500 for failing to deposit funds into the escrow account, $2,500 for failing to fully implement the work plan that includes the pilot study, and $500 for failing to submit a monitoring plan and schedule for additional methane monitoring.

Miller is disputing the penalty and as part of the appeal requested a hearing, which has not been scheduled. The parties met Monday and DEQ gave MPC two weeks to provide an update on progress toward completing corrective actions.

“If MPC Builders doesn’t demonstrate a clear plan for coming into compliance, DEQ will take further steps to enforce its notice and the consent order, including referring the matter for a contested case hearing,” Darling said.

A contested case hearing process can take months. DEQ could also enforce the consent order in circuit court, issue a unilateral order requiring remedial actions, or assess additional daily or weekly penalties for continued noncompliance.

The episode is not the first enforcement action at Millpond Crossing. DEQ issued an $8,437 civil penalty to Millpond Crossing LLC in December 2021 for stormwater permit violations during initial construction. The penalty was reduced to $5,600 under a November 2022 settlement agreement.

Miller’s appeal suggests a breakdown in communication between the developer and regulators.

He notes that he sent DEQ a status email on July 28, 2025, requesting the agency’s help in getting withheld Business Oregon funding released to complete required work.

“DEQ never responded to that email, and except for receiving this notice of fine I have not heard from DEQ since that email,” Miller wrote.

He also references PBS’s March 14 status update, which he says DEQ didn’t acknowledge.

DEQ provided MPC two weeks from the Sept. 28 meeting to demonstrate progress, signaling the agency’s willingness to work toward resolution before pursuing a formal hearing.

‘No laws’ claim

Miller claimed there are “no laws, rules, or codes regarding methane soil gas in Oregon,” though Oregon Administrative Rule 340-122-0115 does classify methane “generated at a historic solid waste landfill” as a hazardous substance subject to DEQ regulation.

The consent order, adopted under an applicable state statute, gives DEQ clear authority to require methane mitigation or removal “to protect the public health, safety, welfare and the environment,” Darling said.

Miller emphasizes that DEQ has never required modifications to the 62 homes already built, never suggested homes be vacated “even temporarily (for even a minute),” and has stated in writing that it “does not have authority to grant (or deny) City of Philomath resident occupancy permits.”

“At no time in over five years have any homes been deemed unsafe, at no point in over five years has any methane been detected in a single home, at no point in over five years has DEQ required any modifications to any homes,” Miller wrote.

But DEQ maintains that ongoing monitoring and proper mitigation measures remain essential given methane’s ability to migrate and the recent detection of elevated levels near the development.

DEQ emphasizes that while methane itself is relatively nontoxic, the primary health risk comes from explosive potential at high concentrations, as well as asphyxiation if methane displaces oxygen.

Current measurements in crawlspaces and garages “do not indicate that residents are currently at risk from methane asphyxiation on site,” according to DEQ.

However, the agency stresses that proper home mitigation measures must be maintained, particularly as home foundations age.

The case now enters a waiting period to see whether MPC can demonstrate sufficient progress in the next two weeks to avoid a contested case hearing.

“I feel I’ve been compliant other than I’ve still got to go do that pilot test,” Miller said Wednesday. “I’ve never violated any laws … and we’ve proven over the past four years with thousands and thousands of testing that the site is safe. And I’m still committed to taking care of everything … I’m still committed to following the consent order.”