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‘Awful’ legal threat turns small boatyard upside down
By Deborah Bach on March 5th, 2010
‘Awful’ legal threat turns small boatyard upside down
Deborah Bach | Three Sheets Northwest
Patti Segulja-Lau, general manager of Dunato's Marine Service in Seattle
The Puget Soundkeeper Alliance’s threat to sue five boatyards has sparked an intense reaction among boaters and environmentalists. Yesterday, Three Sheets Northwest talked with the man behind PSA’s controversial move. Today, we look at the toll the legal action has taken on one small boatyard.
Sitting in her office in an old converted house on a recent afternoon, Patti Segulja-Lau looks tired.
She’s slept little over the past month and has lost 10 pounds. The general manager of Dunato’s Marine Service in Seattle, Segulja-Lau describes the events of the past few weeks in a single word: surreal.
“It’s awful,” she said. “It’s just been awful. I don’t sleep anymore.”
For Segulja-Lau, life was turned upside down shortly before Christmas, when Dunato’s and four other local boatyards received letters of intent to sue from Puget Soundkeeper Alliance (PSA) over alleged violations of the federal Clean Water Act.
Segulja-Lau was stunned by the letter. The boatyard had done everything according to the law, she thought, even installing two water treatment systems over the past few years to reduce the level of copper and other pollutants flowing from the yard into Puget Sound.
The yard’s discharges of lead had consistently been below the limits specified in the Boatyard General Permit governing yards in Washington state. And Dunato’s had kept up on filing discharge reports as required with the state Department of Ecology.
The one exception was its Level 3 report, an extensive engineering report required when yards exceed allowable levels of pollutants. Like other boatyards, Dunato’s hadn’t filed the report because Ecology, PSA and the Northwest Marine Trade Association, which represents boatyards, agreed in July 2008 to hold off on the reports while a new permit was being developed. Ecology subsequently made it known to boatyards that it wouldn’t be accepting any Level 3 reports until the new permit is issued, likely in April.
That didn’t matter to PSA. As far as the environmental watchdog group is concerned, the state doesn’t have the authority to waive conditions of the boatyard permit. So Dunato’s got the report done, turning it into Ecology within the 60-day time limit after which PSA said it would file lawsuits against Dunato’s and the other boatyards.
Segulja-Lau figured that was it. But PSA wasn’t relenting. And as the attorneys went back and forth, the fees ratcheted up. Segulja-Lau had two choices: reach a settlement with Puget Soundkeeper Alliance or face a much costlier litigation.
“The more I argued, the attorney’s fees just kept going up and up,” she said. “(PSA) would not give in. It became clear that nothing was going to satisfy them.”
Dunato's Marine Service, open since 1970, was one of five Seattle-area boatyards that receive intent to sue letters from Puget Soundkeeper Alliance.
Segulja-Lau lay awake at night, unable to sleep and wondering what to do. She considered fighting the PSA in court. Then she thought about what that would mean financially for Dunato’s, a small boatyard in operation since 1970 that’s been struggling through the recession. She thought about the yard’s 14 employees, who rely on their jobs to make ends meet. And after another sleepless night in February, she decided to settle.
“I have three little kids. I don’t have a lot of money,” she said. “I knew I had to get out of this or I was going to get physically sick. We had to make a practical decision. It’s a business decision. But it just doesn’t seem right.”
Under the settlement, Dunato’s must pay $12,000 in legal fees to PSA’s attorney Smith & Lowney—a Seattle firm that specializes in environmental litigation—plus about $5,500 to its own lawyer. Additionally, the yard must provide PSA with all reports and correspondence sent to Ecology for the next three years. To escape having to pay a penalty fee, Dunato’s had to turn over its financial statements to PSA to demonstrate financial hardship, a requirement Segulja-Lau found humiliating.
Segulja-Lau said Dunato’s annual budget won’t accommodate close to $20,000 in unanticipated legal costs, so she might have to cut hours or lay someone off.
The four other boatyards—Yachtfish Marine, Yarrow Bay Marina and CSR Marine’s two boatyards on Lake Union and the Ballard ship canal—are in various stages of settling with PSA. CSR owner Scott Anderson said his company is still in discussions with PSA, which has proposed a penalty payment that would go to an environmental project conducted by a third-party organization. He declined to specify the amount of the proposed payment before the settlement is finalized, saying only that it’s thousands of dollars.
Anderson said it doesn’t make sense to go after CSR, which participated in a boatyard-based pilot study involving PSA and the NMTA to evaluate the effectiveness of various water treatment systems. CSR has continued testing potential treatment systems since then, Anderson said, but hasn’t found one that has reduced pollutants to acceptable levels.
CSR’s ship canal yard has been the site of a shipyard for a century, Anderson said, which has created legacy pollution issues. The company has implemented procedures to help reduce pollutants in its stormwater runoff, Anderson said, and has been a willing partner with PSA.
“We’ve been on the front lines with PSA, going to these meetings, participating and doing this pilot project,” he said. “This is just a huge waste of everybody’s time and energy when we are doing the right thing.”
The PSA action against the boatyards came after the departure of former executive director Sue Joerger, who helmed the organization for a decade and had worked extensively and collaboratively with the NMTA and boatyards. Over the past five years, PSA has launched about 150 suits against entities ranging from local governments to food processors—but not boatyards.
Within weeks of new executive director Bob Beckman taking over the organization last August, that changed. In September, a letter from Beckman was sent to boatyards around the state, advising them that they had to file Level 3 reports, regardless of what Ecology said, and warning them that PSA may sue yards that were out of compliance.
The Clean Water Act, passed in 1972, enables individuals (or environmental organizations) to bring citizen lawsuits against polluters. Segulja-Lau feels that going after small boatyards—which account for just 0.3 percent of copper in Puget Sound, according to a recent study—instead of big-scale polluters is not how the law was meant to be used.
Segulja-Lau emphasizes that she agrees with the need to take care of the environment. It’s not PSA’s mission she has a problem with; it’s the approach. She wonders why PSA is targeting boatyards instead of focusing on motor vehicles that leach harmful heavy metals, or on getting rid of copper-based bottom paint used on boats. Anti-fouling bottom paints contains biocides, or toxins, designed to leach slowly into the marine environment to prevent organisms from attaching to the paint.
“I’m not saying boatyards can’t improve. I’m not saying that at all,” Segulja-Lau said. “But a boat that has bottom paint on it pollutes 24/7. Copper paints have to go. To me, that’s the answer and then you keep focusing on the yards, making sure we’re continuing to improve.”
Ultimately, she points out, Dunato’s will spend close to $20,000 settling the PSA suit, with not a penny of that going toward water improvement.
“The environment didn’t win in this,” she said. “Nobody really won except the attorneys.”
Attorney Jeff Kray is a partner in Seattle firm Marten Law, which has represented close to a dozen organizations involved in PSA suits. Kray also questioned PSA’s use of the citizen lawsuit provision, given Ecology’s directive not to file Level 3 reports.
“The provision was intended to open the door for citizens to challenge regulators, not to challenge regulated parties when the regulated parties were acting consistently with the regulators’ direction,” he said.
“This is a unique case, and I think it will test that proposition,” Kray said. “But it takes resources to litigate, and none of these five have those resources, so we’ll probably never see this as a test case.”
Segulja-Lau wants to put the situation behind her. But she also wants the public to know what PSA is doing and the difficult position boatyards were put in by its recent action.
“People need to understand why everybody settles,” she said. “A little boatyard like me can’t afford the attorneys, the expert witnesses, the time, all of that that’s required to go to court. The most practical, cheapest way out is to just simply pay.”
“It’s surreal,” Segulja-Lau said. “I can’t believe this could happen in this country.”
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