Businesses Accuse Environmental Group of Blackmail.

When representatives of the Santa Monica environmental group BayKeeper showed up at Jay Lite's scrap-metal business in South Central Los Angeles last year, he had no inkling that there would be trouble. But there was, and the trouble has gotten worse.

"They had an engineer with them and he said that everything looked fine," recalled Cynthia Lite, Jay's daughter and vice president of Sun-Lite Salvage Inc. "But it turned out they were planning to sue us all along, because they had the letter ready."

The letter was a notification that the group was planning to file suit against the company for alleged violations of the Clean Water Act. Cynthia Lite says that BayKeeper offered to settle out of court for $9,000, but her father refused to settle, because he considered it extortion. That started a long and tortuous litigation process that could drive the Lites out of business.

And they're not alone.

Over the last few years, numerous autowrecking yards and scrap-metal recyclers along Alameda Street - many of them mom-and-pop operators with limited financial resources - have been targeted by the Santa Monica BayKeeper, a nonprofit environmental group that is part of a national network dedicated to protecting oceans and waterways. In many cases, BayKeeper found that the businesses were violating the Clean Water Act by not having adequate storm-water runoff provisions in place, and in some of the worst cases, BayKeeper sent businesses a letter of its intent to sue.

Targeting businesses

"These guys are obviously not the Exxon Valdez," said Steve Fleischli, executive director of the Santa Monica BayKeeper. "But in Los Angeles, the No. 1 cause of water pollution is runoff - not from one source, but from thousands and thousands of small, industrial facilities. So if you want to fight water pollution at its source here, you will need to target these individual businesses."

That doesn't sit well with many of the affected business owners, who believe they are in compliance with the Clean Water Act and that the BayKeeper is, in effect, blackmailing them.

"They got you by the shorts," said one owner of a scrap-metal yard who settled out of court with the BayKeeper after receiving a letter of intent to sue, and who did not want to be identified. 'They make an accusation and it is your job to prove in court that they are wrong, and who knows what the outcome of that is going to be?"

Because violations of the federal Clean Water Act are tried in federal court, which involves substantially higher legal costs than municipal courts, most business owners choose to settle rather than fight.

"When they started doing this, BayKeeper was looking for out-of-court settlements in the $4,000-to-$5,000 range," said Wayne Rosenbaum, an attorney with Higgs Fletcher Mac, which represents Carson Auto Dismantling in its dispute with BayKeeper. "If you consider that it takes a legal budget of between $100,000 and $200,000 to fight a case in federal court, the decision to settle was not very hard. Then (BayKeeper) started to seek initial settlements of as high as $50,000, and the choice became fighting them or going out of business."

Mom-and-pop operations

So far, there has not been a single ruling in favor of the industry, said Rosenbaum, and Sun-Lite is no exception.

"The judge basically changed the law on us," said Jay Lite.

His lawyer, Jeffrey Smith, said the judge agreed with BayKeepers' interpretation of a provision of the Clean Water Act, which Smith asserts would require runoff to meet the same standards as drinking water.

At this stage, BayKeeper is seeking a $600,000 settlement from Lite, and Smith is trying to negotiate a resolution.

Such large amounts are a matter of concern for industry defenders.

"Most of these businesses are small mom-and-pop operations, and after paying off the BayKeeper, they have nothing left to implement the changes they need to make to be in compliance," said Marvin Sachse, a principal with environmental consulting firm Brash Industries. "The problem is that these companies have had to figure out for themselves how to implement the provision of the Clean Water Act, and many of them simply did not know what was required of them."

Fleischli, however, is unapologetic about BayKeeper's insistence on financial settlements to keep a case out of court.

"The U.S. Department of Justice signs off on these settlements, and there are standards and guidelines that we adhere to in seeking these amounts. We don't operate in a vacuum," said Fleischli. "Whether or not we will go so far as to send a letter of intention to sue and' seek a settlement will depend on what type of site it is the significance of the violations, the owner's ability to pay, and whether they show a genuine concern to be in compliance and clean up their facilities. There are plenty of cases where we've just said, 'Hey, you've got some serious violations here. What are you going to about them?"'

As for Jay Lite, Fleischli is not too concerned.

"He has been an extremely bad actor throughout. From the start, he has been unwilling to reach any kind of an agreement," Fleischli said.

BayKeeper does not pocket the money it receives through these settlements. The money is forwarded to charitable organizations, minus BayKeeper's legal expenses.

Under the Clean Water Act, private citizens can sue alleged violators in federal court. This provision was intended to make up for the inability of under-staffed and under-funded local enforcement agencies to keep track of all polluters.