LAKE COUNTY, Calif. – Companies that originally had faced up to $2.4 million in fines for alleged air quality violations during a 2010 south county paving project will pay $30,000 in a settlement negotiated by the Lake County Air Quality Management District and the Lake County District Attorney’s Office.
County officials, International Surfacing Systems of West Sacramento – a provider of rubberized chip seal and other seal coat product installations – and its parent company Basic Resources Inc., agreed to the settlement, the final version of which was filed with the Lake County Superior Court on May 19.
The companies' attorney, Ryan Wood of the law firm Stoel Rives, called the case “meritless,” and said the settlement did not include an admission of fault and required only a small amount of money be paid.
Under the settlement, International Surfacing Systems, or ISS, is permanently enjoined and restrained from constructing and operating any plants or equipment used in the production of asphalt rubber paving materials that emit any air contaminants in Lake County – except for driving a licensed motor vehicle – unless it has permits or authorization from the Lake County Air Quality Management District.
The complaint alleged that ISS failed to apply for a minor use permit for the operation of a rubberized chip seal production plant for the Highway 29 and Highway 175 chip seal project from Aug. 9 through Aug. 19, 2010.
Lake County Air Quality Management originally cited ISS for 33 violations for the chip seal production plant, located across the highway from the Hidden Valley Food Mart. The violations were for operation without a valid permit and proper emissions control equipment, and for failing to take corrective action once notified of the violations.
Air Pollution Control Officer Doug Gearhart said he notified the company on the first day of the plant operation that it did not have the proper permits, issuing the notice of violation the next day.
“They had state permits for their generators but none of the other equipment had permits” at either the state or local levels, he said.
The District Attorney's Office alleged that ISS operated for 10 days knowingly in violation of district rules and regulations.
Wood said Caltrans’ project specifications called for the use of a common asphalt product commonly known as “asphalt rubber,” so named because it blends recycled tire rubber with asphalt. He said it is also a “green” product in that it makes use of used tires, and keeps them out of landfills.
As a part of this project, Wood said ISS mobilized an asphalt rubber blending unit, transported by truck, to a staging area within Lake County. The blending trucks, as well as the pavement spreader trucks, he said, were all properly permitted through the California Air Resources Board’s Portable Equipment Registration Program.
Wood said local air districts such as Lake County Air Quality Management District may not regulate the equipment in any way based on state Health and Safety Code.
Gearhart said ISS violated Lake County Air Quality Management District rules and regulations, the operation resulted in significant impacts to a nearby residence and constituted an unfair business advantage. It did not, however, have a serious impact on a large community.
Based on the initial citations, ISS had faced potential fines of between $825,000 for negligence or up to $2,475,000 for knowingly and willfully violating the law, Gearhart said.
“That's what was filed for, up to the maximum,” Gearhart said.
Under California Health and Safety Code, Gearhart said fines are up to $25,000 for each negligent violation and up to $75,000 for each knowing and willful violation.
Gearhart said that not only was the company in violation of local permitting requirements, “They were in violation of their Caltrans project as well, but Caltrans was not enforcing that.”
“We require the contractor to obtain all permits that are required. But we do not audit the permits,” said Phil Frisbie Jr., Caltrans' public information officer for Lake and Mendocino counties.
He said ISS had a statewide permit and didn't realize it needed to apply for specific permits in Lake County. “They had not done work in Lake County before,” Frisbie said. “They thought they were covered.”
Ultimately, community members were upset with the quality of that south county chip sealing project. Caltrans accelerated a paving project in the area and found additional funds to address the quality issues, Frisbie said.
Frisbie said the chip seal project was within Caltrans' specifications, and was meant to offer better traction in winter weather. “We were experimenting. It wasn’t any fault of the contractor.”
Wood said ISS disputed the county's notice of violation and provided proof of its state permits. He said Lake County Air Quality Management District took no further action until two days before the three-year statute of limits, when it filed a lawsuit against ISS and Basic Resources Inc.
He said nothing in the complaint alleged that ISS did not have the proper permits, which he asserted was because officials were aware that the law didn't support the county's attempt to regulate the state-permitted equipment. Instead, it alleged that ISS had unlawfully admitted air contaminates into the air.
Robert Nichols, a California District Attorneys Association circuit prosecutor specializing in multijurisdictional cases, handled the case on behalf of the Lake County District Attorney's Office.
Nichols said the nature of the law in this case was complex, with the court needing to take into account a number of factors, including the extent of the deviation, company size, the period of time during which the inappropriate conduct was taking place and danger to the public.
He said getting experts proved difficult, but the biggest challenge was that a citizen witness in the case had moved out of state.
The issue of the statewide permit “certainly was a central issue in the case,” which Nichols said ultimately was resolved without litigation.
Wood argued that the case didn't make it to trial because of its “complete lack of merit,” which he said was revealed in depositions in pretrial discovery.
Based on depositions of Lake County Air Quality Management staff, Wood said they didn't have the necessary evidence to meet the burden of proof. He said ISS was prepared to defend the case through trial, and present the court with expert testimony that ISS’ equipment does not contaminate the air.
“There’s always things we can do better,” said Gearhart, adding, “This is the first major case that we’ve had in a long time.”
Nichols said he wouldn't have moved forward with the case if he thought it didn't have merit.
He added that as a prosecutor in a wide variety of cases – from misdemeanor petty thefts all the way up to homicides – for 33 years, he's never had a case where he wouldn't have liked to have some additional evidence. But just how much evidence you'll have and how strong it will be often aren't known definitely until time for trial.
Nichols said the case Gearhart and his staff put forward was presented in a comprehensive fashion. “It was a good investigation.”
The real issue from the prosecution's perspective, said Nichols, was how to gain compliance to stop such problems from arising in the future.
Wood said that, as a result of settlement conferences, ISS agreed to pay a small sum of $30,000, rather than incur potentially more cost in attorney’s fees to defend the case through trial.
ISS also agreed – by way of the injunction – to work with Lake County Air Quality Management District to get permits in the event it ever returns to do work in Lake County, Wood said.
Wood said ISS made no admission of fault in the settlement with the county air quality district, “and was innocent of any wrongdoing at all times.”
Nichols said ISS' willingness to concede that they will have to check and obtain permits in the future in order to be in compliance with local rules – either in Lake County or elsewhere – was “a significant thing.”
“In some counties they could have done exactly what they did and it wouldn’t have been a violation of law,” Nichols said.
Gearhart said he's had no indication that ISS plans to do any other projects locally.
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