Shuttered Berkeley Steel Foundry's Toxic Footprint Poses Risk for Workers

BERKELEY (KPIX 5) -- You've probably seen it as you drive past Berkeley on Interstate 80: A sprawling, old steel foundry at the edge of the freeway. Neighbors say that, for more than a century, it has been polluting their environment so when it finally shut down last December there was a collective sigh of relief. But, KPIX discovered, the saga isn't over.

Jake Cherry had no idea what he was getting into when he leased a yard in Berkeley for his computer recycling business.

It used to be part of Pacific Steel Casting, an 83-year-old foundry that shut down last year after going bankrupt. The foundry had a history of pollution violations but Cherry says that, when he leased his section, "We were told that the property would be safe to move onto."

"[I'm] really scared for my employees, for myself, for my employees' families," Cherry said.

A report commissioned by the landlord, HFR Properties, found high levels of heavy metals inside a structure called a baghouse on the premises, where the foundry used to dump its hazardous waste. According to the report "the materials in these baghouse areas are contained and pose no substantive threat to occupants of the site."

After he moved in, Cherry noticed suspicious dirt collecting under the metal structure so he paid for his own testing.

"We tested directly underneath each one of these openings from the baghouse that had been cut away and that, essentially, showed the same levels of toxins that were inside the baghouse are now on the ground surface," Cherry said.

Arsenic, chromium, lead and other heavy metals, well above safe limits, lay on the ground where employees for Cherry's company, Universal Waste Management, had been working for a year.

"Our greatest fear is that one of us gets sick as a result of the toxins on site," Cherry said..

When he turned to the city of Berkeley for help, Cherry said "the answer came back, our department is not responsible for this, please talk to the next department."

KPIX discovered why it may be a sensitive subject for Berkeley.

When Pacific Steel went out of business it signed a closure plan with the city to clean up the toxic materials left behind but that process was never completed. In fact, in Cherry's yard, it was never begun.

"It's kind of on hold right now just because of the bankruptcy," said Karl Busche who, as head of the city's toxics management department, is in charge of overseeing that closure plan. Despite Pacific Steel's reputation as one of the worst polluters in Berkeley, Busche says he trusts the report the landlord commissioned which shows the site is safe.

"Their ultimate report made it clear that there was no worker safety health hazard and so that's what we're going by right now," said Busche.

But the county disagrees.

After visiting the site, the Alameda County Department of Public Health posted a public warning letter to Pacific Steel and Cherry's landlord which says, in part: "Existing analytical data confirm that the site appears to pose a risk to human health and the environment."

KPIX asked Berkeley's Karl Busche if that concerns him, especially considering that a recycler and its employees worked onsite there for more than a year. He apparently didn't know about the warning letter, even though he was cc'd on it.

Then KPIX asked him how the city of Berkeley could have allowed the recycler to get a permit at the location, considering the pollution there. But, before he could respond, Berkeley's media relations spokesperson Matthai Chakko started to interrupt, asking us what business and what license we were talking about.

Christin Ayers (KPIX): "Let me re-phrase: How is it that ... this recycling company was allowed to operate on an area that has so many problems with pollution?"
Matthai Chakko: "The city does not have discretion to not issue that business license, the city has to, is required to, there is no choice there."
Ayers: "I am not asking how the business got a license. I am asking how a business was permitted to work on a site that is very clear has a toxic pollution problem."
Chakko: "You are asking the question in a very biased way. When you talk about the site you are talking about a very vast portion, you are not talking about which part of which location."
Ayers: "I gave the address of the location I am talking about. As someone who is over this department what do you have to say to people who have been exposed to toxic substances while working on that site?"
Karl Busche: "That is definitely a biased question."
Ayers: "There are people who work on that site who may have been exposed to toxic substances. What do you say to those people?"
Busche: I am not a toxicologist. I couldn't tell you that."

Back at the recyling yard, Jake Cherry is taking matters into his own hands. He says county officials have told him, in no uncertain terms, he needs to leave. A crew from KPIX caught up with him as he and his employees were packing up and closing shop. "We are feeling angry, disappointed, overlooked, let down and at risk," Cherry said.

The county is holding Pacific Steel Casting and Cherry's landlord, HFR Properties, responsible for the cleanup of the site and has requested to meet with them and the bankruptcy trustees involved in person.

Meanwhile, HFR Properties is suing Cherry for non-payment of rent. He tells KPIX that he is planning to countersue over exposure to toxic materials.

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Statement from HFR Properties Regarding Unlawful Detainer:

Unwaste leased the Premises from HFR beginning in late 2017. The Premises is not the site of the main foundry of the former Premises tenant Pacific Steel Corporation ("PSC"). Rather, PSC's foundry was on an adjacent site not owned by HFR. Nonetheless, and in response to concerns raised by Unwaste and to investigate HFR's possible claims against PSC, HFR retained a third party lab to conduct environment testing of the Premises, and those test results evidence that the Premises does not pose an environmental threat to human health.

The Premises contains a fixture constructed and owned by PSC called the "Bag House," which collected airborne residue from PSC's foundry operations. HFR has never had an ownership interest in the Bag House. PSC was obligated to remove the Bag House when PSC's lease of the Premises terminated, but PSC failed to do so.

Accordingly, in structuring the Lease for the Premises, and with the Bag House's existence on the Premises known to Unwaste at that time, the parties structured their Lease as a ground lease only, i.e., a lease of the land only without the right to use the existing building improvements. Unwaste's pre-Lease knowledge of the Bag House came in part from pre-Lease meetings attended by representatives of PSC and Unwaste and the involvement of Unwaste's lawyer and its real property broker in that discussion. The important point to make is that landlord never agreed to undertake any work of improvement for the benefit of UnWaste as it is apparently now claiming.

Despite this record and its ongoing and present use of the Premises for its business operations, Unwaste has failed and refused, despite demand, to pay rent to HFR since August 2018. Unwaste contends it does not have to pay such rent because of alleged environmental contamination in connection with the Bag House, in disregard of the environmental testing discussed above showing no contamination on the Premises dangerous to human health and despite Unwaste's knowledge of the Bag House and related circumstances when it signed the Lease.

HFR contends Unwaste is using the excuse of the Bag House's existence and of alleged environmental contamination in refusing to pay the rent owed. Unwaste's position lacks merit given it continues to operate its business on the Premises. In other words, it appears that Unwaste is not truly concerned about the environmental conditions of the Premises and is instead voicing that concern as a red herring in its refusal to pay the rent owed.

With Unwaste making commercial use of the Premises for nearly a year without paying rent and without preventing its agents from being on the Premises, HFR finally decided to initiate the Action to evict Unwaste from the Premises because of its rent default.

Based on this record, the Action is not about environmental contamination on the Premises and will simply adjudicate whether Unwaste may remain in possession of the Premises in light of its rent default.