California agency failed to collect $100 million for cleanup of contaminated sites

Published: Thursday, May. 30, 2013 - 12:00 am | Page 1A
Last Modified: Wednesday, Jun. 19, 2013 - 12:02 am

A California agency spent $100 million in public funds over the past 26 years to clean contaminated property for which polluters were liable but never were sent a bill, officials said Wednesday.

The neglected reimbursement stemmed from 1,700 sites ranging from junkyards to small businesses, said Deborah O. Raphael, chief of the Department of Toxic Substances Control, which oversaw the cleanups.

"It's not a pretty picture, and it makes me mad as a resident and as a director," she said.

No list of polluters was released Wednesday, so it was not clear how much California taxpayers spent on each cleanup project or what percentage of the $100 million was spent in recent years. Military bases or massive contamination sites eligible for federal Superfund money were not involved.

But Raphael's department provided a handful of examples, including that of a former midtown Sacramento junkyard, Orchard Supply Co., at which lead-acid batteries and agricultural chemicals were among items stored. The state spent $1.5 million on cleanup after the firm went bankrupt in 1989, said Tamma Adamek, DTSC spokeswoman.

The largest project for which a bill was not sent involved a $9.4 million cleanup of contaminated property of the Chemical & Pigment Co. in Bay Point, Contra Costa County. The firm went bankrupt in 1998, Adamek said.

Some cleanup projects involved major corporations but relatively small sums of money: Chevron, one project of $64,000 and two of $3,000; Boeing, a $5,000 cleanup; and Aerojet, an uncollected $228,000 debt, Adamek said.

Besides the roughly $100 million for which bills never were sent, the department has identified $45 million for which bills were sent but money was not collected and nearly $40 million that is tied up in litigation, bankruptcy or other legal matters, Raphael said.

Senate President Pro Tem Darrell Steinberg reacted quickly Wednesday, noting that the law is clear that polluters must pay cleanup costs – and agencies have a duty to act aggressively on taxpayers' behalf.

"If that hasn't happened, there's only one thing to do: Fix it," Steinberg said. "If there's money owed, collect it."

Bill Magavern, policy director for the Coalition for Clean Air, said that he's "shocked but not surprised, because I've gotten some indications that the practices in this department were shoddy in that area."

"It sounds like it's been going on a long time," Magavern said. "I do think that director Debby Raphael is trying to put the house back in order. This is an indication of how steep a challenge she faces."

Lisa Tucker of Consumer Watchdog, who wrote an investigative report characterizing the agency as troubled, pro-business and weak in enforcement, said the disclosure of $100 million in neglected reimbursement deserves a "full-scale independent financial audit."

"This is basically acknowledging a terrible mess that's costing the state an incredible amount of money at a time when kids can't get basic health care coverage or adequate teachers," said Jamie Court, president of Consumer Watchdog. "This goes straight to the top of the agency."

Raphael said that shortly after she joined the Department of Toxic Substances, in 2011, she was puzzled by an agency report detailing about $70 million in uncollected reimbursement since 2004.

She asked staff for more information, leading to Wednesday's disclosure of the $100 million in neglected reimbursement, Raphael said. The sum represents a fraction of the $1.4 billion spent on cleanup during the 26-year period.

"We believe we have our arms around the problem now," she said.

Raphael said the failure to send bills apparently stems from numerous systemic failures, including a lack of clear rules, paperwork mistakes and decisions by local administrators that funds for various cleanup projects were uncollectible.

Agency directors apparently were unwilling to crack down in years past, although "the problem has been clear to this department for a number of years," Raphael said.

"It's so pervasive and has gone on for so long under so many administrations and so many supervisors that it would be hard to pin it on any one person," she said.

Even with aggressive collection, not all of the $100 million could have been recouped because some polluters declared bankruptcy, or died, or had insufficient assets to pay the debt, Raphael said.

"But we didn't do our job – we didn't send a bill, for whatever reason," she said.

Since discovering the problem, Raphael said her department has created a "cost recovery team," plans to hire a special assistant to spearhead improvements, is refining department policies, will conduct a site-by-site analysis for potential billing and has restricted the ability of local project managers to decide that cleanup costs are uncollectible.

Sen. Jerry Hill, a San Mateo Democrat who chairs the Senate Environmental Quality Committee, said the issue extends far beyond the $100 million debt.

"It's critical to hold people responsible for pollution. If they don't take responsibility, what's the incentive for them not to do it again?" he said.

Call Jim Sanders, Bee Capitol Bureau, (916) 326-5538. Follow him on Twitter @jwsanders55.

© Copyright The Sacramento Bee. All rights reserved.

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