Landowner Jimmy Pflueger has agreed to pay $7.5 million to settle claims associated with the November 2001 mudslide from his property that flowed onto coastal reefs off Kaua'i.

The settlement will bring his potential outlay in the case to $12 million. It is by far the largest case of its kind in the state, and an Environmental Protection Agency statement calls it "the largest storm water settlement for violations at a single site, by a single landowner, in the United States."

Pflueger, a retired Honolulu auto dealer, has admitted he conducted grading without permits on his property at Pila'a. The work included grading on a coastal plateau, building a road just above the beach and creating a 40-foot cliffside cut mauka of the road.

In a rainstorm, large amounts of mud from the grading flowed from the cut road and down a neighbor's hillside driveway onto the shoreline. In continuing rains, mud ran repeatedly into the sea.

A key to the problems is that the grading work did not include measures to control stormwater in case of heavy rain, said Wayne Nastri, the EPA's administrator for the Pacific southwest.

Pflueger was sued by county, state and federal agencies as well as community groups and neighbors.

Yesterday, a settlement of most of the claims was announced by the U.S. Department of Justice; the Environmental Protection Agency; state Department of Health; Kaua'i County; and Earthjustice, representing the Limu Coalition and Kilauea Neighborhood Association.

"Every settlement involves compromise, but here we have a very robust settlement. I hope it sends the message that it's cheaper to do it right and comply with the law the first time," said Earthjustice attorney David Henkin.

Under the announced agreement, Pflueger will pay the state $2 million in penalties. He will pay more than $5.5 million for environmental restoration work at the site, and $335,000 for off-site environmental projects. The settlement is subject to a 30-day public comment period and the approval of the U.S. District Court.

"Those who violate our environmental laws must know that when they are caught, they will pay a very heavy price," said state Attorney General Mark Bennett.

A call placed to Pflueger's lawyer, Wes Ching, was not returned.

Previously, Pflueger was sentenced to a $500,000 fine after pleading guilty to 10 felony water pollution counts. He is appealing a $4 million fine issued by the state Department of Land and Natural Resources for damage to natural resources. And he has paid a county fine of $310,000 for coastal zone violations.

Reach Jan TenBruggencate at jant@honoluluadvertiser.com.