Suit Seeks to Blame Port for Allowing Tenant’s Pollution

The San Diego Unified Port District has the reputation of a government agency short on controversy and long on the knack of making lots of money as landlord of about 1,200 acres of tidelands leased out to hotels, shops, manufacturing firms, marinas and shipyards along San Diego Bay.

Now it may be time to add something else to the image: The port as a polluter.

Local water pollution officials are considering an unprecedented move that would hold the port district liable as a primary contributor to copper concentration in the bay at the 24th Street Marine Terminal in National City.

So far, all eyes have turned to Paco Terminals Inc., the shipping firm that loaded copper ore at the National City terminal between 1979 and 1986, and which leases its land from the port.

After finding copper in nearby sediment at levels nearly 2 1/2 times greater than normal, the Regional Water Quality Control Board last year fined Paco $50,000 and ordered the firm to begin planning a massive cleanup that could cost as much as $100 million.

But now board members face a proposal to hold the port district equally responsible for the pollution because, as the firm’s landlord, the public agency failed to do enough to make sure the tenant was more careful with the copper concentrate, which was stored in mounds near the pier and storm drains running into the bay. The board is expected to vote on the issue this month.

As regulators wrestle with this question, port district officials fear approval of the proposal would have far-reaching and expensive implications. It could put the governmental agency in financial jeopardy every time one of its tenants pollutes the bay, they say.

“If that rule were applied to the port district, a good argument could be made for that situation that any tenant could create (pollution) liability on the part of the port district,” said attorney David Hopkins, who has been retained by the port for the Paco case.

In the Paco case, the idea of going after the port came from the firm’s attorneys, who contend that the port’s laissez-faire attitude as a landlord is partly to blame for the environmental mess.

“They (the port district) had knowledge of what was going on, the knowledge of the environmental concerns at the project . . . and they permitted it,” said attorney John J. Lormon.

The argument received support in January in a written opinion from the water board’s own attorney, who found that the legal precedent and conditions exist to officially designate the port as a primary polluter.

Action Called Smoke Screen

“The regional board can conclude that the port district permitted copper ore to be discharged into San Diego Bay, creating a condition of pollution in the bay,” the legal opinion said.

Port officials, however, say Paco’s attempt to have the public agency named as co-polluter is a smoke screen sent up by the company so it can escape some, if not all, of the blame and cleanup costs.

“I think they’re looking for someone with deep pockets, is what I think,” said Port Director Don Nay.

If any governmental entity has such deep pockets, it is the port, which is charged by state law to “promote commerce, navigation, fisheries and recreation” on the 2,600 acres of tidelands under its jurisdiction.

Made $43.6 Million

Less than half of that--1,200 acres--are designated for commercial and industrial use, and the port makes money by granting 400 master leases for a variety of uses. Those leases, along with the operation of Lindbergh Field, helped the port make $43.6 million last year, according to the agency’s 1988 annual report.

Port district officials have concentrated on getting the highest return for their commercial and industrial land, leaving environmental considerations up to other agencies, such as the regional board, said a port spokesman.

But pressure is now being applied on the port to become more environmentally conscientious in the wake of a series of pollution cases involving its tenants.

One involved Teledyne Ryan, a major port district leaseholder that was fined $75,000 by the board last April for allowing cancer-causing polychlorinated biphenyls to escape into the bay. Last month, Southwest Marine was tagged for $15,000 for allowing raw sewage and sandblast residue to fall directly into the bay.

But one of the biggest pollutions involves Paco, which was cited for 31 spills or discharges of copper ore into the South Bay between April, 1985, and Dec. 29, 1986--the date the firm discontinued its ore-loading operations.

The runoff, thought to occur mainly during rainstorms, raised copper levels in sediment near the 24th Street terminal to 2,400 parts per million (ppm). The company was fined $50,000 and told it must remove the pollution to bring the copper concentration down to 1,000 ppm. The company drew up a plan to dredge the nearby sediment and dump it far off into the ocean.

Estimates of the cleanup costs ranged from $600,000 to more than $100 million--a sum far more than Paco could afford, said Lormon, who was hired by the company in mid-1987.

Faced with that bleak financial reality, the company decided last year to see if it could persuade the regional board to also find the port primarily liable for the cleanup costs because it allegedly permitted the pollution, Lormon said.

“We are performing a public service, in a way,” Lormon said.

Lormon said that environmental law provides cleanup costs to be extracted from any person “who caused or permitted” an unlawful discharge into state waters. As Paco’s landlord, the port district falls into that category because it failed to keep closer watch on the company, although there were early concerns about copper runoff when Paco first took its lease of 2.3 acres in 1979.

“Ultimately, they had the right to shut us down,” Lormon said. “They could say to us, ‘If you don’t cease and desist from this operation, we will shut you down.’ ”

Not a Passive Role

But the port was far from a passive co-polluter, Lormon asserts. Since Paco’s lease did not abut the shoreline, its employees had to traverse a 122-foot-wide strip of port district-owned land to load the ships.

Paco also rented a port district-owned crane to lift the copper concentrate to the waiting vessels. At times, Lormon said, the crane bucket--which traveled on a long arm that extended over the pier--would shake and accidentally open to spill copper concentrate into the water. The port was aware of this and did not immediately fix the crane when the problem was reported by the company, he said.

In addition, Lormon said, the port stood to benefit from increased shipping by Paco, which paid an “incentive” fee to the agency for everything it shipped over a minimum of 137,500 tons a year.

“It was almost a joint venture, in a sense,” he said.

A Standard Lease

Port district officials, however, said they did not consider their relationship with the company to be so close, characterizing it instead to be similar to other commercial leaseholders. The incentive fees, for instance, are a standard feature of a commercial lease.

As for the defective crane, port district officials said it was run by Paco employees. “Did they have to use the crane if they knew it was broken?” asked port district attorney David Hopkins during a water board hearing.

“The answer is no,” Hopkins told commissioners. “They used it for one reason--it’s huge. It handled lots of copper.”

Hopkins said the port retained control of the 122-foot strip of land because it didn’t want to grant an exclusive lease to a valuable berth, opting instead to keep it open to a number of leaseholders.

The real question in determining who should be liable for pollution is “who controlled the cargo,” Hopkins said. The burden rests solely on Paco, which Hopkins said assured port authorities it could keep the concentrate from blowing or washing into the bay.

“Paco is trying to duck its liability under the order or, at the very least, mask its non-compliance,” Hopkins told board members, adding that the port could be left holding the bag for the full cleanup if named co-polluter.

Higher Standard

After the meeting, Hopkins said that although environmental law provides for going after “passive” landowners in pollution cases, water authorities have usually reserved a higher standard of proof when the landowner is a public agency.

“I believe the reason for the stronger test is that you want to resort to public funds for the cleanup only as a last resort,” Hopkins said. But regional board members are showing more interest in placing blame on the port district as a responsible party for pollution in the bay.

In a recent case against four Shelter Island boatyards, the regulatory agency named the port district as a “secondary” responsible party. The designation would put the public agency on the hook for cleanup costs only if the boatyards fail altogether to remove contaminated sediments caused by their sandblasting operations.

The Paco case, however, is more serious because the designation of “primary” source would move the port from a backup to a co-equal with Paco in its responsibility to clean up the bay around the 24th Street terminal.

Decision Mood Uncertain

“This is the first time that it is suggested that the port district be named as a primarily responsible party and this is the first time the regional board is voting on that question,” Hopkins said.

How the board will go is uncertain. Board member Norma Sheuneman of El Cajon said that Paco’s assertions sound like a bank robber who blames an unarmed security guard for letting him get away with a crime.

But board member Mary Jane Forster of San Juan Capistrano said she saw some value in Paco’s arguments, especially in light of the recent pollution orders against port district leaseholders.

“When I first read this, I was incensed because I thought (Paco) was trying to push away from its responsibility,” Forster said at the meeting.

“But I do see the value of what you’re trying to do, as we look at what’s happening around the bay, in making the port more responsible,” she said.