LAKE COUNTY, Calif. – A company that completed a disputed road project in the south county is facing millions of dollars in fines due to its alleged failure to get the proper air quality permits.
International Surfacing Systems, which has offices around California and Arizona, was cited earlier this fall by Lake County Air Quality Management District for several violations, according to Air Pollution Control Officer Doug Gearhart.
However, James Love, International Surfacing Systems' air quality compliance manager, countered that the company believed it had the proper permits based on state air resources laws.
International Surfacing Systems' West Sacramento office was hired by Caltrans to complete two chip seal projects on Highways 29 and 175 in the Middletown and Cobb areas, at a total cost of about $2.1 million, as Lake County news has reported.
Residents in the area were so unhappy with the results – they complained of large rocks, a rough and unsafe road surface, excessive road noise and other issues – that county Supervisor Jim Comstock helped organize an Oct. 12 meeting at which Caltrans and International Surfacing Systems representatives tried to answer questions about the work.
But complaints about the quality of the work have turned out to be the least of the company's issues.
While the work was taking place, the company located a temporary chip seal production plant across the street from the Hidden Valley Food Mart, Gearhart said.
He said the company had state permits for a generator but nothing else, which he alleged violated state and local air quality rules.
The emissions that come out of the plant “are fairly significant and very odorous,” Gearhart explained.
Gearhart said there are three primary issues in the case – operating without a valid permit, operating without proper emissions control equipment and failure to take corrective action.
Those three issues yield a total of 33 separate violations, because International Surfacing Systems is alleged to have operated for 11 days, Gearhart said.
He said his agency cited the company on day two of operation. The company is alleged to have continued operating another nine days after the citations were issued.
Lake County Community Development Director Rick Coel said the company also didn't obtain a permit from his department for the chip seal plant.
“By the time we learned about it, the plant was up and running and the project under way,” he said.
Coel said processing a minor use permit would have taken at least six weeks. He said if International Surfacing Systems had checked in advance, the department would have been able to process the minor use permit and assure that Lake County Air Quality Management District permits were obtained.
Coel said his department didn't end up citing the company, as the project was almost done by the time the violations came to light, and his bigger concern was that they got the necessary air quality permits, which they allegedly didn't.
Regarding the 33 alleged violations, Gearhart said the potential penalty allowed under California Health and Safety Code is up to $25,000 for each negligent violation and up to $75,000 for each knowing and willful violation.
“This yields a potential penalty liability of up to $825,000 if only negligent and up to $2,475,000 if they knowingly and willfully violated the law,” Gearhart said.
The costs for the required permit would have been $755, plus a public notice period that would have required an assessment and legal notice, he said.
“There is a potential that we will end up in court on this,” Gearhart said.
The county sent the company a settlement offer, which proposed a total settlement with fines of less than 10 percent of the penalty liability for negligence, he said.
James Wilson, project manager on the south county projects for International Surfacing Systems, and Roy Balentine, another company official, both appeared at the Oct. 12 meeting in Middletown, but neither responded to numerous interview requests via phone and e-mail about the project or the resulting fines.
However, Lake County News was able to reach Love, who acknowledged that the company received the settlement proposal and had been reviewing it.
He said the company believed that a statewide permit it had was sufficient to cover the temporary plant's operations.
Love referred to state Air Resources Board permitting guidelines that the company believed covered portable plants.
“That's where the misunderstandings lies,” he said.
Love said that the company had never experienced these kinds of issues for its portable plants.
Gearhart said International Surfacing Systems was supposed to respond to the offer by Nov. 17. That day Gearhart and his staff received a fax dated the previous Friday.
“They requested a meeting with us and their lawyers to discuss details of the case,” a meeting to which Gearhart agreed.
If those discussions don't end up yielding an agreement, Gearhart said he would forward the case to county counsel for civil litigation.
Because Caltrans is the responsible contracting agency, its District 1 and headquarters offices received a copy of the settlement proposals, Gearhart said.
Caltrans spokesman Phil Frisbie said the agency had believed all permits were in place for the project.
“Our people were shown a permit that covered the plant,” he said.
Friday Ululani, the Caltrans construction contact for air districts, told Lake County News that the agency has received information about the issue with the permits, but that is not involved with the settlement agreement discussions between the company and the county.
Coel said the situation with International Surfacing Systems illustrates the need for better communication between the county Community Development Department and Caltrans.
He said in the future he plans to contact Caltrans whenever he hears of a project that will likely necessitate a temporary plant or large amounts of grading and dirt export.
“The contractors that bid on these projects seem to forget to check on local requirements for siting of their construction yards, permits for exporting large amounts of dirt to private properties and the asphalt plant permitting,” he said. “At least this way Caltrans could give the contractor a heads-up before they mobilize.”
A history of issues
The county of Lake has had issues with International Surfacing Systems prior to the recent problems with permits and the chip seal project.
At its Sept. 14 meeting, the Board of Supervisors came out of a closed session and voted 4-0 – with Supervisor Jeff Smith absent – to approve a release of retention agreement to resolve a tort claim International Surfacing Systems had filed against the county, according to county documents.
Agendas for the board showed previous legal discussions regarding the company during the board's Jan. 12, June 8 and July 20 meetings.
County Counsel Anita Grant told Lake County News that International Surfacing Systems filed a tort claim against the county alleging a trade secret violation due to testing a county employee did for a cape seal coating project the company was doing in the Clear Lake Keys. County documents show that the company bid $387,458.20 for the project.
Grant said the county had enough of its own concerns about the project that it was considering beginning litigation, but the Sept. 14 vote settled both issues, with the company dropping the tort claim and the county agreeing to pay for the work that had been done on the project.
“What the county achieved was getting the contract satisfactorily completed,” she said.
County documents also show that the release of retention agreement included a stipulation that the company would complete corrective work in the Clear Lake Keys.
Public Works Director Brent Siemer went to the board on Oct. 12 – the same day as the community meeting on the Highway 29 and 175 projects – to ask for approval of a contract change order for the company's final corrective work.
Supervisor Denise Rushing said she didn't like the work the company did in the first round, adding, “I don't like this firm.”
That was a sentiment shared by other board members, including Rob Brown, who noted, “I want 'em out of here, too” adding there will probably be in a lawsuit with them due to poor workmanship.
The board ended up voting down the change order request 5-0.
At the board's Nov. 23 meeting, Siemer updated the board on the project, noting the repair work – which included making sure the roads were properly sealed and grinding off large rock along some of the seam – went well and had been completed during the “unseasonably warm weather.”
In addition to its work locally, International Surfacing Systems has done a number of state and federal projects around California.
According to ProPublica's (www.propublica.org) Highway Stimulus Contractor Database, the company has received approximately $8,998,138 in stimulus funds for pavement improvement projects in Santa Clara, Contra Costa, Lassen, Modoc, Mono and Sonoma counties.
Caltrans records show that from June 2006 to this past April, International Surfacing Systems has been awarded 14 projects around the state, including the two chip seal projects in the south county. The total for all 14 projects is just over $12.4 million.
As for future projects, Frisbie said Caltrans follows California contracting law, which makes it difficult to ban a firm from applying for projects, even if it has complaints or alleged permit violations like those lodged in Lake County.
He said a person or firm just has to show that it's capable of performing the duties in order to be considered for a construction contract.
E-mail Elizabeth Larson at This email address is being protected from spambots. You need JavaScript enabled to view it. . Follow Lake County News on Twitter at http://twitter.com/LakeCoNews , on Facebook at http://www.facebook.com/pages/Lake-County-News/143156775604?ref=mf and on YouTube at http://www.youtube.com/user/LakeCoNews .
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