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A flood of penalties

By   /   Friday, October 2nd, 2009  /   Comments Off on A flood of penalties

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Businesses are some of the biggest water polluters in the Tri-Counties, and now they’re facing millions of dollars in penalties.

Power-generating stations, oil wells and a high-end resort hotel have all run into allegations from state regulators that they failed to report water quality data or discharged pollutants in amounts greater than they were allowed.

But some businesses seem to be caught up in byzantine permit requirements and what might be a push from the cash-strapped state government to draw some revenue from fines. One nonprofit group faced allegations that it racked up more than a quarter-million dollars in mandatory penalties for a well that never produced a drop of water.

Here’s a closer look at the some of the worst – and, perhaps, some of the unduly maligned – water polluters in the Tri-Counties.

The road to Mandalay

In coming weeks, Huston-based RRI Energy and state water regulators will make final a $111,000 settlement over pollutants released at its 560-megawatt Mandalay generating station.

In November 2008, state regulators alleged that RRI went over its monthly allotment 64 times in discharging metals such as lead, copper, silver, zinc and cadmium into the Pacific Ocean. The initial minimum penalty was $192,000.

But in May, state regulators canceled 27 of the charges. Most of them were rescinded because of a typo in RRI’s permit for the facility. The permit said 8.1 pounds of copper could be discharged in a day, but RRI argued that the state meant 81 pounds a day when it wrote the permit, and the regulators eventually agreed.

The fine was lowered to $111,000, and RRI took an early settlement rather than go through a formal hearing. RRI’s alleged violations go back to 2002, and a company spokeswoman said more recent data shows the company is in compliance with water laws.

“The events at Mandalay related to the pass-through of trace pollutants found in the plant intake water,” Laurie Fickman, head of RRI’s media relations, told the Business Times via e-mail. “Studies conducted within the Edison intake canal and Channel Islands Harbor confirmed that the Mandalay facility is not the source of these pollutants, and the California Regional Water Quality Control Board agrees with these findings.”

Four Seasons

In Eastern Ventura County, the Four Seasons Hotel Westlake Village – a project of Dole Food Co. owner and billionaire David Murdock that includes an executive well-being center – racked up more than 50 water quality violations.

The subset of discharge violations, which carry minimum mandatory penalties of $3,000 each, tallied up to $36,000 by late 2008. State regulators have sent Dole and offer to settle without a formal hearing, but the offer’s details or when it would become final haven’t been made public.

Dole Food Co. spokesman Marty Ordman said the violations all happened when the hotel was being built and resulted from some kinks being worked out. Many of the violations were for less serious pollutants such as slight overages on residual chlorine.

“There was a period of adjusting equipment to figure the correct dilution amounts to deal with the natural minerals in the water,” Ordman told the Business Times via e-mail. “Once the balanced level was determined there were no further violations. The water quality continues to be monitored on a regular basis with reports being sent to the appropriate government agencies. At no time was there any environmental or human risk.”

Settle or fight?

Many companies are taking the offer to settle early and avoid a lengthy hearing, said Steven L. Hoch, a Los Angeles environmental attorney with Brownstein Hyatt Farber Schreck. But they aren’t getting a discount on the fines.

“I can tell you that they’re not offering any deals from what I’ve seen,” Hoch said. “They’re looking to expedite the administrative burden of dealing with these things. By the time the client is done, sometimes they spent more on just following the damn thing through the process than the fines. That’s the point of the [settlement process] – just send the check in and be done.”

But not all companies have taken that route. In Santa Barbara County, Greka Energy has faced $8.6 million in fines for spilling hundreds of thousands of gallons of oil and processed water.

The company has fought the allegations at every step of the way, claiming that it was unfairly targeted by county and state officials and that it has taken steps to comply with their orders, according to reports in the Santa Barbara Independent. In July, state water regulators turned the case over to the California Attorney General, citing “complex legal and factual issues presented by this case.”

A state discharge

A flood of notices of violations and proposed settlements seemed to pour from state regulators late last year, state records show. That prompted some longtime water law professionals to speculate that perhaps someone, somewhere in the cash-strapped, budget-befuddled state government saw easy money in water quality fines.

“[The notices of violation] all came out in a relatively short period of time, especially in the Southern California region,” Hoch, the environmental attorney, said. “I got a lot of phone calls from a lot of different clients last year.”

The Westlake Lake Management Association, a nonprofit group that oversees the high-end community around Westlake Lake, was one of the groups that got a notice last year. It allegedly had racked up 115 reporting violations. For 86 of the violations that carried mandatory penalties, fines would have been a staggering $258,000.

But John Blindbury, the volunteer president of the nonprofit, said the alleged violations were related to a well that never produced any water. The well was capped and never used, he said.

“There was nothing to report,” Blindbury told the Business Times. “None of the water was ever pulled out and put into our lake. There’s a misunderstanding somewhere in there.”

Blindbury said he got in touch with state regulators to work things out. But the matter seems to have stalled.

“We’re hoping that an appropriate resolution will be reached,” Blindbury said. “We’ve been waiting for a response since the first of the year.”

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