US v. Walsh, C89-1263Z.

• Decision Date: 27 November 1991
• Docket Number: No. C89-1263Z.,C89-1263Z.
• Citation: 783 F. Supp. 546
• Court: U.S. District Court — Western District of Washington
• Parties: UNITED STATES of America, Plaintiff, v. James WALSH, Defendant.

783 F. Supp. 546

UNITED STATES of America, Plaintiff, v. James WALSH, Defendant.

No. C89-1263Z.

United States District Court, W.D. Washington, at Seattle.

November 27, 1991.

Susan L. Barnes, U.S. Atty.'s Office, Margaret Bernice Silver, U.S. E.P.A., Seattle, Wash., Richard M. Gladstein, U.S. Dept. of Justice, Land & Natural Resources Div., Environmental Enforcement Section, Washington, D.C., for U.S.

Rhys Alden Sterling, Halinen & Vander Wel, Bellevue, Wash., for James Walsh.

COURT'S FINDINGS OF FACT AND CONCLUSIONS OF LAW

ZILLY, District Judge.^*

Let me start by thanking the lawyers for the excellent briefs that have been presented prior to trial and the thoughtful proposed Findings of Fact which were presented by both sides, as well as the presentation during the course of the trial. The Court has benefited from both the written materials that have been submitted as well as what has been presented here during the course of the trial.

I must say at the beginning that I have been concerned about the nature of the case in the sense that the government has brought its full force, three lawyers participating in the trial, we're in our fifth day of trial, originally seeking over $825,000 from a defendant who has essentially no assets. And I have to tell you that I've been concerned as we've gone through this trial with the appropriateness of proceeding under all of those circumstances against this particular defendant.

I do recognize, as I think all the participants and the people who have observed the case recognize, there are important issues of law, important principles that need to be established. And this Court is here to hear those issues in the appropriate case and to decide those issues, and I intend to do so.

This memorandum opinion that I am rendering will be intended to be my opinion. My Findings of Fact and Conclusions of Law pursuant to Rule 52 will be incorporated into my opinion today. I will not be issuing separate or additional Findings of Fact or Conclusions of Law.

This matter comes before the Court after trial. The EPA seeks civil penalties and injunctive relief against the defendant, Mr. James A. Walsh, for violation of the Clean Air Act and its regulations arising from work performed by Savage Enterprises on four jobs during the period 1986 and 1987.

Savage Enterprises, Inc., a Washington corporation, as well as Mr. James Savage have both settled with the EPA and the lone remaining defendant in this case is Mr. Walsh.

I incorporate by reference all of the admitted facts contained in the Pretrial Order and they will be facts found for purposes of my opinion.

The real question presented here is whether Mr. Walsh's activities make him liable for the alleged violations and, of course, were there sufficient violations to subject Mr. Walsh to liability. The regulations impose liability on an owner or operator. These regulations define owner or operator as, "any person who owns, leases, operates, controls or supervises a stationary source," 40 CFR 61.02. Each of the four locations in question, in my opinion, constituted a stationary source.

I have already ruled that even if Mr. Walsh were not an owner, and nobody contends that he was an owner, he could be responsible if he was an operator if he supervised or controlled the work. I also stated in May of this year as a result of motions for summary judgment that because the statute and the regulations in question impose strict liability, the Court would be reluctant to impose liability unless it was clear that Mr. Walsh was substantially in control or substantially supervised the various projects in question.

I recognize the government contends that there is nothing that has to be substantial about that supervision, but I believe that what was intended here was a person having significant or substantial or real control and supervision over a project before he or she could be found liable under these regulations if they were not an owner. And it is my intention to apply that test in determining the liability of this defendant.

Of all Mr. Walsh's job titles, he was vice-president for a period of time, he was president beginning, I believe, in about March of 1987 through about November of 1987, although those titles and his signing of various documents is some indication of his responsibilities and authority, I believe a job by job analysis is necessary before a decision can be reached.

I must say before reviewing those four jobs in question that I found on the whole Mr. Walsh's testimony to be very credible. I also found in contrast Mr. Savage's testimony to be not credible. It differed substantially from his prior deposition testimony. And its lack of specificity brings this Court to conclude that little, if any, reliance can be placed on Mr. Savage's testimony during the course of the trial.

I also would like to note the problem in dealing with a small business of ten to 15 people. Savage Enterprises had approximately ten to 15 employees. That included the owner, Mr. Savage, and the other people who served in some management capacity. These small companies don't organize like large companies, and the lines of authority and who is responsible and who is not responsible is much more difficult in a small operation.

I would also point out, of course, on the other hand, the EPA is seeking to impose penalties, and each employee seeks to point to the other employee and say they're responsible. It's kind of like a shell game. The peanut is under one of the shells and everybody is pointing at the other shell and saying they are not responsible.

Mr. Savage was the owner of the business and obviously was responsible. The question is whether Mr. Walsh is also responsible. Mr. Walsh was an estimator during his employment period with the company. Between May of '86 and February of '87, he served as vice-president, and from March of '87 to November of '87, he served as president. Mr. Savage always continued to be the ultimate person in control as evidenced by the fact that he fired Mr. Walsh at one point in the summer of 1988 and Mr. Walsh terminated his employment with the company. As is the case with many small companies, the title given to the person is not necessarily indicative of a person's authority or lack of authority.

Let's turn now to the four projects in question. The first project I want to discuss is the Sea-Tac project. It involved work at the Port of Seattle during the period approximately January 4, 1986, through April 15, 1986. Both Mr. Savage and Mr. Walsh estimated the job. Mr. Walsh wrote the letter proposal of January 4, 1986, which is exhibit 6, to the Elan Construction Company, the general contractor for renovation work at Sea-Tac.

Mr. Walsh's letter indicated that dry removal may be used around the perimeter walls of the work. There is a dispute as to how much of the perimeter would be subject or possibly subject to dry removal. Mr. Walsh has testified that he intended it to be 12 inches, but then he also intended not to use dry removal. I would point out that the letter also states that the work would be done in strict compliance with all governmental rules and regulations. Mr. Walsh also signed the Notice of Intent to Remove, exhibit 4, and the Amended Notice, exhibit 5.

Between January 20 and April 15th, the Savage Enterprise employees conducted removal of asbestos from the Sea-Tac Airport project. During the project, Kent Slater, the foreman, testified he discussed the work with Mr. Walsh, took directions from him and Mr. Walsh directed dry removal of asbestos around the perimeter of the work area. I find that testimony to be credible and make that finding. Mr. Slater also testified and I find that dry, friable material capable of crumbling with hand pressure was removed from the Sea-Tac project.

Mrs. Nolan of the Puget Sound air control authority, whose testimony I also found to be very credible, met with Mr. Walsh at the site about February 4, 1986, and discussed various problems. Mr. Walsh suggested various solutions and alternatives. Mrs. Nolan went back on February 11th and prepared an inspection report, exhibit 72, which outlines the violations including the removal of dry, friable asbestos, asbestos not adequately wetted and a large pile of asbestos inside the containment area.

Three notices of violation were issued on February 11th, exhibits 65, 66 and 67, and they were sent to Jim Savage as the person responsible, the owner or the agent of the owner. Samples were taken and tested positive for asbestos as contained in exhibit 64. Subsequent notices and orders of civil penalties were sent to the Savage company, exhibits 68 and 69. Mr. Walsh signed the Notice of Appeal, exhibit 7, appealing these notices. A portion of the penalty was later affirmed, I believe in the amount of $500.

Ms. Carolyn Rankin, a Port inspector, also inspected the project, dealt with Mr. Walsh and testified that friable material was present at the jobsite in violation of the various regulations. Mr. Walsh was the primary contact with Ms. Rankin on several occasions. I found her testimony to be very credible and supported by her inspection reports as well as her diary notations.

I find and conclude under all the facts that were presented in connection with this particular project that Mr. Walsh, although he only had the title of estimator at the time, was, in fact, the Savage Enterprises employee responsible for the overall supervision and control of that project. He had the ability to correct work, he was the person having the necessary control to be an operator under the statute. I also find there were serious violations of work practices under 40 CFR 147 which will support liability against Mr. Walsh arising from the Sea-Tac project.

The next project I want to discuss is the Woodinville School project. Between June 26th and July 3 of 1986, Savage Enterprises conducted removal of asbestos at the Woodinville School located ...