Lawsuit threat pushes boatyards to brink

Jan 29 2010 in Environment by Deborah Bach

With many boatyards struggling to stay in business and facing costly new requirements for stormwater treatment systems, the last thing they wanted was the threat of a lawsuit from an environmental watchdog group.

The Puget Soundkeeper Alliance (PSA) is targeting five Seattle area boatyards for alleged violations of the federal Clean Water Act, demanding settlement fees to avoid a potentially costlier court case.

The move has sparked fear among owners that the costs of lawsuits and other proposed environmental regulations could bankrupt the industry, leading boatyards to close their doors and sending the costs of boat maintenance skyrocketing.

“It’s legal extortion,” said Scott Anderson, the owner of CSR Marine, one of the yards that received the letter. “Our financial situation (is bad). I’ve never seen it like this. And these guys kick us in the teeth.”

The PSA recently sent notices of intent to sue to CSR Marine’s two boatyards on Lake Union and the Ballard ship canal, Dunato’s Marine Service and Yachfish Marine in Seattle and Yarrow Bay Marina in Kirkland.

The PSA contends boatyards have not done enough to prevent copper and other pollutants harmful to marine life from getting into stormwater runoff and flowing into Puget Sound. The group plans to file lawsuits against the boatyards following a 60-day period after the letters were sent in mid-December, and is currently in talks with the boatyard owners about reaching out-of-court settlements.

The other boatyards that received letters from the PSA did not respond to requests from Three Sheets Northwest for an interview. But Anderson said he can’t afford to install a costly water treatment system needed to reduce pollution and meet state water standards, and until new state water regulations take effect next year, he doesn’t even know what the new standards will be.

Anderson and others say boatyards are being unfairly targeted, since they contribute only a small amount of the pollution entering Puget Sound. A recent study conducted by consulting and engineering firm Arcadis U.S., Inc. found that boatyards contribute just 0.3 percent of the copper entering the Sound through stormwater runoff. The vast majority of copper in the water comes from motor vehicles and other sources.

Regardless, the PSA, which has led the effort to crack down on water pollution around the region, said the boatyards were aware before the economic downturn that they were exceeding water pollution benchmarks in place for several years. While a few boatyards have installed the water treatment systems, the PSA accuses others of dragging their heels.

“If you’re not meeting the old standards, what are you waiting for?” said Bob Beckman, executive director of the PSA. “Some of the boatyards have chosen to get ahead of the curve. For those who put it off until we fell off the cliff economically, that was bad business.”

The state Department of Ecology is expected to release new water pollution limits for boatyards next year.

Beckman said the PSA identified the five boatyards by reviewing discharge monitoring reports filed by boatyards with the state Department of Ecology. While some yards had reduced their pollution levels, Beckham said, others were consistently and significantly over the allowable benchmarks. The five that were sent letters were the worst offenders, he said.

The Clean Water Act allows the PSA to bring citizen lawsuits and levy penalties of up to $37,500 per day—much steeper than the $10,000 Department of Ecology’s maximum daily fine. Beckman said the PSA is “not going to be punitive,” and is willing to work with the individual boatyards to come up with a solution that will bring them into compliance.

That solution is expected to involve out-of-court settlements in the form of payments from the boatyards to help fund environmental projects. Over the past five years, the PSA has launched citizen suits against 150 entities ranging from ports to cities, state agencies to industrial companies.

None of the suits has gone to litigation, Beckman said. All have been settled out of court, with the PSA collecting about $1.2 million in settlements ranging from $500 to $100,000. Beckman said all of those funds have been given to third-party organizations to fund environmental remediation projects.

“We don’t keep any of the settlement money,” he said. “That has been our board policy from the beginning of our enforcement work.”

The settlement amounts being discussed with the five boatyards are rumored to be in the $50,000 range. Beckman wouldn’t comment on specific amounts, but said the settlements will be less than $100,000.

“Some of these folks are claiming economic distress, and we’ll take that into account,” he said. “We’re not trying to drive anybody out of business.”

Boatyards considering options

But the specter of a lawsuit launched by the PSA has already had a chilling effect on other boatyards—even those with deeper pockets. Marla Kempf, deputy director for the Port of Edmonds, said the port commission will be considering whether to continue operating its small boatyard, after getting an estimate of $114,000 to install a water filtration system.

“We don’t make a lot of money from our yard. We pretty much charge what it costs to run it,” she said. “If we have to raise our rates to deal with all of these environmental issues, especially when it comes to frivolous lawsuits … it just may not be worth it.”

“It’s a very frustrating issue for those of us who want to do the right thing for the environment,” Kempf said. “This is our business. But we’re being pressed pretty hard.”

The Northwest Marine Trade Association (NMTA), a group that represents all facets of the recreational boating industry, said the PSA’s actions could well put the boatyards out of business.

“They’re already struggling a lot and laying off employees,” said Marina Hench, director of government affairs for the NMTA.

“My fear is that faced with all these potential costs, (boatyards) would just decide to fold up and go out of business. That doesn’t help the industry at all. The fewer boatyards that there are in the state, the more expensive it is going to be for boaters to get work done.”

“A notice of intent to sue is very expensive,” Hench added. “Wouldn’t it be better to put those resources toward a technological solution or best management practices?”

New standards uncertain

Copper, a common component in antifouling paint used on boat bottoms, can be released into stormwater drains from the sanding, pressure-washing and scraping done to prepare boat bottoms for painting.

The metal is enormously effective in preventing barnacles and other marine life from growing on boat bottoms, but it has harmful effects on salmon. Even at very small levels, copper can diminish a salmon’s sense of smell, leaving it vulnerable to predators and less able to locate prey.

Boatyards face costs of up to $156,000 annually for a water treatment system that would reduce pollutants in stormwater runoff.

In the early 1990s, conservationists concerned about the declining health of Puget Sound identified boatyards as a source of pollution. In response, the Washington State Department of Ecology in 1992 issued the first Boatyard General Permit to limit the amount of chemicals in boatyard stomwater runoff.

The permit was reissued in 2005 and set copper limits of 229 ppb for boatyards on saltwater and 77 ppb for yards on the freshwater ship canal in Seattle. It was appealed by the NMTA, which argued that the permit went too far. The PSA also appealed, saying the permit wasn’t strict enough.

The NMTA, the PSA and Ecology reached a settlement in 2007 which led to a boatyard-based pilot study of three water treatment systems. The resulting agreement, based on the results of that study, proposed to limit copper discharge to an average of 14 ppb per year, with a cap of 29 ppb for any single sample—much stricter than what was originally proposed.

But the current boatyard permit expires in November of this year and Ecology officials say they haven’t yet determined the copper benchmarks for the new permit, expected to be issued in draft form in February 2011.

An Ecology study estimates it could cost boatyards between $52,000 and $104,000 annually to install, operate and maintain a water treatment system. When monitoring, best practices and reporting are factored in, the cost could jump to $156,000 annually, the study found.

Gary Bailey, Ecology’s water quality permit specialist, said the analysis shows that about half the boatyards in the state can’t afford to install the treatment systems. A better solution, he said, would be to eliminate marine paint containing copper.

“If we can find an alternative, let’s go to the alternative and reduce the use of that toxic product,” he said. “I think that’s the direction we’d like to see with the boating community.”

Bailey acknowledged that moving away from copper paint is likely to be a slow process. In the meantime, he said, “We certainly don’t want to put these boatyards out of business. We know boating creates a lot of economic vitality for the state.”

A costly solution

Among the water treatment systems studied in the 2007 pilot project is StormwateRX, whose parent company is headquartered in Portland, Ore. The technology emerged from the pilot project as the preferred alternative and has been installed at several boatyards around Puget Sound, including Seaview Boatyard and Canal Boatyard. 

StormwateRX founder and president Cal Noling acknowledged that the company’s treatment system studied in the 2007 pilot project won’t consistently get copper levels below the allowable amounts. A more complex treatment system called AquiPlus, which was not part of the pilot study, will bring copper levels to allowable amounts, Noling said. But it would cost boatyards almost twice as much to install, around $80,000 an acre.

Noling said boatyards would be better served by installing a less costly filtration system and using protective measures to reduce pollution as much as possible. “You have to give it your best shot, and I believe most businesses haven’t given it any shot,” he said. “Doing nothing is not the right thing.”

CSR owner Anderson said he’s tried three different filtration systems and none have brought copper levels to allowable levels. Without knowing what the standards in the new permit will be, he said, there’s no easy solution.

“There’s no definitive answer,” he said. “We’re trying. We’re doing everything we can.”

Editor’s note: the original version of this story was changed to clarify that settlement payments stemming from citizen lawsuits launched by Puget Soundkeeper Alliance are made directly to third-party organizations, rather than being funneled through PSA. 

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