targeting metal recyclers and auto wreckers are working their
way across the country like a flu epidemic, and the only
apparent trend is that the symptoms will worsen. Companies
targeted in court claim the cases are nothing more than
financial fishing expeditions, while those bringing the cases
contend they have an environmental responsibility.
A landmark decision by
a federal appeals court dealt a blow to recyclers and suggests
that more legal action will follow.
In 2010, the
California Sportfishing Protection Alliance (CSPA) sued Chico,
Calif.-based Chico Scrap Metal Inc., alleging that the
recyclers three facilities were violating the Clean Water
Act by discharging polluted waters.
The case was thrown
out by the U.S. District Court because a local district
attorney was already pursuing legal action against the company,
but the 9th Circuit Court of Appeals reversed the dismissal in
July, ruling that private groups may take legal action when the
state does not.
We hold (it)
does not apply because the state has commenced no action in
court to require compliance with the stormwater
permit and because the state has commenced no administrative
penalty action, the appeals court said.
Similar litigation has been filed by Inland Empire Waterkeeper,
Los Angeles Coastkeeper, Orange County Coastkeeper, San
Francisco Baykeeper and Ventura CoastKeeper in California,
Chesapeake Bay Foundation and Baltimore Harbor Waterkeeper in
Maryland and Keyport, N.J.-based Raritan Baykeeper. This year,
the CSPA has filed 12 cases, settled 24 and has 16 pending, and
federal records reportedly show that over the years it has
filed more than 220 environmental lawsuits.
environmental safety coordinator and manager Kim Scott
questioned the validity of the cases sheerly on the volume of
lawsuits being filed. After successfully suing in the Bay
Area, the CSPA moved north and sued us, the city of Chico and
the local landfill, Scott said. CSPA spends its
time going to local water boards, trolling, reading reports and
looking for any exceedances. An exceedance is simply a
guideline for best management practices; it is not a violation
of the law.
CSPA president Jim
Crenshaw confirmed that it does look at local water board
reports in search of violators. However, the majority of cases
are launched after tips from scrapyard employees who actively
contact the nonprofit group, he said.
Chico Scrap has spent
$300,000 defending itself. You need proof of harm to try
a case. We are defending ourselves (because) there is no proof
and no specific examples of anyone or anything actually
harmed, Scott said. Unfortunately, they just have
to make an allegation and you are stuck in court.
Moneys awarded to the
CSPA go to pay legal fees and to the Rose Foundation for
Communities and the Environment, an Oakland, Calif.-based
nonprofit environmental advocacy group. The bottom line
is, if there werent polluters we wouldnt be suing
them, Crenshaw said. We dont make the laws
but we are helping to enforce them, and this will be
that CSPAs efforts have resulted in money being
distributed to other fishing and environmental organizations.
We dont make any money. It goes to attorneys or to
the Rose Foundation to do a restoration project. Sometimes you
cant do a restoration project, so you do something
else, he said.
income tax filing indicates that its revenue totaled $1.5
million, including $14,543 in membership fees. The organization
spent $1.2 million in legal fees, contributed $37,200 to the
Rose Foundation and $35,000 to two other foundations. The Rose
Foundations tax filing for the same year shows its
revenue totaled $3.8 million, and it listed grants including
one for $46,720 to the CSPA.
Crenshaw noted that
the CSPA has no paid positions. The Rose Foundation, however,
does pay its leadership: Its executive director earned $91,250
in 2011, with an additional $40,362 in other compensation.
An attorney for Chico
Scrap, Therese Cannata of San Francisco-based law firm Cannata,
Ching & OToole LLP, said the recycler was proactive
when state regulators first called for possible environmental
Chico Scrap identified
some areas where stormwater management improvements were needed
when the U.S. Environmental Protection Agency, along with the
California Regional Water Quality Control Board, inspected the
facility, she said.
immediately worked and corrected each area of concern, and no
fines were assessed over the initial inspection because the
company acted in good faith.
Chico Scrap said it
reached out to the CSPA, which was threatening to sue, to
indicate that it had satisfied the concerns, Cannata said.
A few days later, without calling, inquiring or
inspecting, CSPA filed this lawsuit.
Cannata was critical
of the environmental groups tactics.
CSPA engages in
tactics of false accusations, and threaten fines, penalties and
having to pay CSPAs attorneys fees if the company
loses the case. It is, quite frankly, a well-executed
bluff, she said.
Cannata said the
appeals court decision means she has to defend her client,
which is compliant and has done nothing wrong. Chico
Scrap has repeatedly advised CSPA that there are no violations
of the Clean Water Act to pursue here. Chico Scrap has done
exactly what is required under Californias general
permitÑit samples, tests and reviews data with its
consultants to continually evolve and improve its stormwater
discharges, she said.
Each lawsuit filed by
the CSPA contains the same language and contends it has been
forced to take action because the federal EPA and state
agencies have turned a blind eye to alleged environmental
violations. The lawsuits ask the court to force a company to
gain compliance and seek fines of $32,500 per day per violation
for all violations occurring between March 15, 2004, and Jan.
12, 2009, and $37,500 per day per violation for all violations
since. At $32,500 per day, a potential penalty could top $11.8
million a year.
Actual outcomes have
been far less, but still pricey. In June, the CSPA settled with
Santa Rosa Stainless Steel Fabricators Inc. for $68,000, which
included $25,000 in legal and investigatory fees, $35,000 to
the Rose Foundation and $8,000 to a CSPA compliance monitoring
Santa Rosa Stainless
Steel bookkeeper Debbie Ferronato said the company settled to
avoid litigating the matter.
When you are a
small company like us it hurts everyone. It has been a big
circle of injustice. We did nothing wrong, but settled because
it would cost too much too fight, she said.
that many companies decide to settle rather than drag the
matter through court. The only way a defendant can get
attorneys fees if they win is to prove bad faith, and
that is very hard to do. Litigating is very expensive, so most
make a decision to just settle. It is cheaper in the long run
to pay money than to litigate, she said.
The mindset of the
state of California makes it difficult to fight these issues,
Cannata said. We are dealing with a terribly written law
that has not been reformed, and if you dare to criticize you
are not green.
A company facing
litigation from any environmental group throughout the country
should insist on a settlement agreement and not a consent
order, she said.
In a settlement
agreement you dont agree to set effluent limitations,
whereas in a consent order you establish specific guidelines
that you will be held accountable to, she said.
Cannata, who has
handled many such cases, said that settlements should be modest
in nature. A nominal settlement ranging from $15,000 to
$25,000, depending on the size of the company, is enough,
As for the Chico Scrap
case, Cannata is confident the company will prevail in court
for numerous reasons, noting that the recyclers
stormwater does not flow into a waterway.
ends up on agricultural land and is exempt, as it does not meet
navigable waters, she said, and the company will be shown
to be engaging in best management practices.
opinion, the CSPA is more of a business these days than an
environmental group. It had a decent mission years ago,
but they have essentially lost their way. They sue everyone but
offer no program for advising. Where is the program where
people can call CSPA for advice?