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Where Crime Pays 

Is the DA's Office bungling the biggest pollution case in Bay Area history?

Wednesday, Oct 23 1996
Laden with copper, lead, and nickel, the sand pile stood 6 feet tall and covered the equivalent of one football field on the shoreline across the cove north of Candlestick Park. A legacy of sandblasting at the Hunters Point Naval Shipyard, the toxic mound poisoned the ground with heavy metals and likely contaminated the bay. But rather than pay the money necessary to properly dispose of the waste in a special landfill -- as state law required -- Triple A Machine Shop Inc., a San Francisco-based company that ran the shipyard for 11 years under a lease from the U.S. Navy, decided to abandon it in 1987 when the firm closed and moved to Contra Costa County. Triple A did the same with untold thousands of gallons of bilge water it discharged onto the ground at Hunters Point. The water contained petroleum waste and polychlorinated biphenyls (PCBs), a known carcinogen. Paint residues and chunks of brittle asbestos were also left behind.

Tipped to the pollution by a company whistle-blower, the S.F. district attorney at the time, Arlo Smith, filed a civil lawsuit against Triple A. The suit sought to block Triple A from selling off assets during its 1987 move, and to exact civil fines and cleanup costs. Two years later, DA Smith brought a separate criminal action, charging Triple A with five felony counts for illegal disposal of hazardous waste.

The two-pronged prosecution proved prescient. On Aug. 3, 1992, a jury returned guilty verdicts on all five felony charges, and the judge hit Triple A with a record $9.2 million in criminal fines. Although the state appeal court would reduce the penalty in 1995 to a paltry $115,000, the criminal conviction set the company up for far heavier penalties in the still-pending civil case -- perhaps $25 million in fines. With the conviction, state and federal authorities also were dealt a stronger hand were they to separately pursue the company for a piece of the $300 million price tag for cleaning up pollutants left by both it and the Navy around the entire shipyard.

Today, however, Triple A is benefiting from one contingency Smith didn't anticipate: his re-election defeat.

In a major shift playing out entirely behind closed doors, the new DA, Terence Hallinan, is on the verge of settling the case, according to knowledgeable sources, and on terms highly favorable to Triple A. Worse, the undisclosed deal amounts to a retreat from the goal of punishing Triple A in any meaningful way and almost certainly will release it and its insurance carriers from ever being pursued by the state -- or the city for that matter -- for Triple A's share of the cleanup.

A sure sign of a blown opportunity came last month when a key prosecutorial consultant walked away in disgust. "All the details of my communication with the district attorney are privileged," says Steve Castleman, who retired from the S.F. DA's Office after gaining the criminal conviction of Triple A in 1992. "But, suffice to say, I was no longer comfortable with his [Hallinan's] approach to the case."

Conversely, Marc Topel, who is Triple A's defense counsel, sounds euphoric. Although he refuses to talk specifics, Topel confirms the existence of a tentative deal: "It is something we are extremely pleased about."

Hallinan's Triple A play is tethered to a century of historical, legal, and community context surrounding the Hunters Point shipyard.

Jutting into the bay at the southeast edge of San Francisco, the 493-acre shipyard was a private enterprise from the turn of the century until the early 1940s. California ceded control to the Navy during World War II to service the Pacific fleet, which had been decimated at Pearl Harbor by Japanese bombers on Dec. 7, 1941. In 1976, the Navy in turn leased the facility to Triple A to repair Navy and private vessels for the next 11 years.

Today, two of three shipyard dry-docks at Hunters Point are idle. A colony of artists, a smattering of machinists and metal salvage operators, and a skateboard-parts manufacturer occupy various shipyard structures. Under a pact signed after the shipyard joined the national priorities list of Superfund sites in 1989, a five-phase cleanup is under way.

Funded by the Navy, and monitored by the California Environmental Protection Agency's Department of Toxic Substances Control, the cleanup -- soil and water testing, plus equipment, tank, and earth removal -- is guided by S.F.'s land-use plans for the shipyard. Those plans call for residential, commercial, and recreational development of the land. The Navy estimates it could take $300 million to make the entire shipyard property safe for development, with the polluted shoreline (where Triple A dumped material)accounting for half that total. As for the community context, no segment of the city has more of a stake in the cleanup -- and getting the polluters to pay up -- than the poor, disenfranchised residents of the adjacent Bayview-Hunters Point community.

In an interview last week, Hallinan said settling the case against Triple A would prove defensible if a deal nets S.F. enough money. He said nothing would necessarily be lost, because the U.S. Justice Department would maintain jurisdiction to sue Triple A in federal court to collect on its share of the cleanup.

"I've got to fulfill my commitment to the [city] budget," said Hallinan, who has pledged to make white-collar prosecution pay as a source of revenue for local government. "In my opinion, we are going to come out with the most we are able to."

Cashing in and passing the buck to the feds might make fiscal sense to Hallinan, but it raises doubts about prosecutorial savvy at the DA's Office.

Under the state hazardous waste laws, Triple A could have faced a penalty of $25,000 for each day of dumping and each day since it left the substances on the ground -- if the Hallinan administration had pressed the civil suit to trial.

About The Author

Chuck Finnie


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