BEFORE THE ENVIRONMENTAL QUALITY COMMISSION

STATE OF OREGON

IN THE MATTER OF:

JOHN PATRICK LUCAS, LEHMAN

DEVELOPMENT CORPORATION,

and LEHMAN HOT SPRINGS, LLC,

Respondent

CLOSING ARGUMENT OFRESPONDENT JOHN PATRICKLUCASOAH Case No. 1002077

DEQ Case No. WQ/D-ER-09-082

Respondent Lucas adopts and incorporates by this reference, the closing

argument submitted by Respondents Lehman Hot Springs, LLC and Lehman

Development Corporation.

This Oregon Administrative Hearing is the last ditch effort to legitimize the

overzealous prosecution of Repsondents Lehman Hot Springs, LLC, Lehman

Development Corporation and John Patrick Lucas. This was a failed attempt by former

Oregon Attorney General John Kroger to make an example of Respondents to further

his political career by “cracking down on environmental polluters”1 John Kroger

promised “a tough new approach to environmental enforcement,” The problem is, he

shot from the hip and did not do his homework, nor did anyone in his “environmental

crimes unit”. Lehman Hot Springs was quoted in John Kroger’s 2009 Annual Report as

1 Camilla Mortenson, Attacking Ecocrime, Stomping out Oregon’s Polluters, EUGENE WEEKLY, Nov. 26, 2008,available at http://www.eugeneweekly.com/2008/11/26/coverstory.html.

the second most “significant case” right behind the Hanford Nuclear Cleanup. Really?

The problem with the State’s Case is that they don’t have one based on fact or

scientific evidence, but rather pure speculation. They made false claims to the media

that they then tried to legitimize through failed civil hearings in which Umatilla County

Circuit Court Judge Gary Reynolds found no evidence of pollution. They then filed

dozens of criminal charges in an obvious attempt to coerce Respondents to

acquiescing, much like being tortured by the Viet Kong into a “confession.” The State

called Respondent Lucas’ partners, bankers, lenders, city officials and even spoke at a

Washington County business alliance meeting and at the University Club in Portland in

an effort to damage Respondent Lucas’ through Tortious Interference. They pumped

up this case in order to get a press release saying that Respondents were fined

$532,000 for violations that did not happen. This whole fiasco was more about trying

respondents in the media then in the court of law.

In the Spring of 2009, John Kroger was just sworn into office and was looking to make a

name for himself in Oregon. Lehman Hot Springs admittedly had other minor issues

with the DEQ in the past and the DEQ has a long history of abusing its power against

Respondent. I will go into more detail later in this response. The point is, Kroger saw

this as a significant opportunity to further his political career. He is known for making

bold media announcements of his self perceived successes, he even writes books

about them.

The problem in the Lehman case is that Kroger made bold press releases and did not

bother to check the facts before releasing them. The DOJ and DEQ then had to go to

extraordinary levels to try and “prove” their case. There is a complete absence of any

scientific evidence or testing to support the state’s charges.

To wit:

Barry Norris: The states witness that claimed in the civil hearings that there were holes

in the liner of the ponds and therefor the water would leak out and erode the dikes, that

would in turn fail and cause catastrophic failure and potentially kill people (he really said

that in the civil trial).

If Barry Norris was so concerned about the safety and integrity of the dikes, why did he

not go up to the Lehman site after April 2010 when Repsondent Lucas invited Judge

Reynolds to come up and see for himself? (Tr. Vol 1, pg 73 $ Tr. Vol 2, pg 222) In fact,

Barry Norris did not ever go back up there, (Tr. Vol 1, pg 74) even though the upper

pond still had over a 1.2 million gallons of waste that, if the liner had holes in it, would

have surely escaped to the creek. (Tr. Vol 1, pg 65) He didn’t go back up because

Respondents did not own the resort anymore and it was no longer an “issue”. It was

never about the environment.

Barry Norris was the expert in charge of the catastrophic failure of the J. R.

Simplot waste water pond in which 90 million gallons of waste water DID escape and

discharge into the Umatilla River and kill livestock and fish. The report submitted to

DEQ has pictures to prove it. (R 51) J.R. Simplot was fined $9,600 for discharging

nearly 100 million gallons of untreated waste! Repsondents were fined $532,000 for

NO DISCHARGE. Heidi Williams was the representative from DEQ who was in charge

of the J. R. Simplot spill. ( R 51)

The state has produced no pictures of any waste water over-topping the berm or

dikes. Not a single one. They have produced not a single water sample that shows

wastes leaving through the dikes, seeps, or any other means. Not one.

The state withheld evidence from Respondents.

The State withheld exculpatory evidence from Respondents in the civil proceedings and

the criminal proceedings. To wit: In the criminal proceedings we were provided a disk

showing the approved plans, as built drawings and photographs of the construction of

the upper lagoon before Respondents purchased the property. (Tr. Vol 1, pg 71,72)

Respondents were told by DEQ that they did not have any plans from the original

construction of the upper lagoon, yet both Barry Norris and Heidi Williams admitted in

this OAH hearing that they had in fact had the plans and pictures all along (Tr. Vol 1 pg

71,72). The plans clearly show a french drain under the lagoon that was designed to

remove groundwater from beneath the upper lagoon. Barry Norris admitted that he

knew the french drain pipe was under the lagoon. (Tr. Vol 1 pg 72) He therefor had to

have known that the source of his 21,600 gallon per day “sewer discharge” was nothing

other than snow melt. DEQ and DOJ therefor made false press releases and false

accusations and are the false basis for part of this OAH fine. That is why they did not

test the water for e-coli, because they knew it was not sewer water, but rather storm

water runoff. That is why it stopped flowing in the summer months even though the

upper lagoon was still full.(R1, R2, R52) Yet DEQ as a major part of this OAH case uses

the amount of the 21,600 in calculating their penalty. That is why the dye test

performed by Heidi Williams and EPA came back negative.(Tr. Vol 2, pg 142) They

wanted their accusations to be true and went to great lengths to prove a negative. All

failed. (Tr. Vol 2, pg 156)

Heidi Williams testified that she turned over a report from the EPA to the DOJ, but the

DOJ did not provide it as evidence in either the civil hearings or the criminal trial. (Tr. Vol

1)It was actually in their 79 page privilege log. More exculpatory evidence that was not

turned over because of the marching orders from John Kroger.

Heidi Williams admitted that she took at least five e-coli samples but they were not

provided as evidence because they were, in her opinion “dilute” (Tr. Vol 1, pg 207, 208)

Because the state did not have any water samples from the seeps that would prove that

sewer was leaking from the lagoons, it went to extraordinary lengths to try other means

to “prove” the ponds were leaking including a “Piper Diagram” of chemical makeup of the

water. They tried to show that the water coming out of the seeps was the same water

that would have been coming from the lodge, and therefore leaking from the sewer

lagoons.

The problem is that they don’t know the source of the water from the lodge. (Tr

Vol 1 pg 212, 238, 239) There are actually three sources. (Tr Vol 2, pg ) Also, why

would they test the chemical makeup but not test for organic to see if sewer water was

present in the sample as testified by states witness Richerson? (Tr Vol 1, pg 240,241)

The reason is that they knew it was not organic. The Piper Diagram is nothing more

than a Hail Mary Pass because they knew their were no contaminants in any of the

“seeps”.

The video evidence speaks for itself. (R 52) When the ponds were completely drained,

they showed that the ponds did not have ANY holes below the waterline. Heidi Williams

stated that she went back up there, after not being there for 11 months, but didn’t take

the time to even look at the liners (Tr Vol 1, pg 192). She was so convinced that the

ponds were leaking due to holes in the liner that she didn’t even bother to look to see if

she was correct, or, she simply wanted plausible deniability when cross examined by

Respondents.

Sewer Collector line was plugged on April 15th, 2009 so no more influent going into pond

as of that date (R 10).

Evaporation test performed by Civil Engineer Douglas Ferguson concluded that their

was no leakage of either lagoon. (R 30) While DEQ does not accept the report, at no

time did they conduct any study of their own.

Dye study shows no leak. In fact, Heidi Williams from DEQ requested the Dye test and

was helped by Rob Gardinealli of EPA on the dye test that came back negative (Tr. Vol

1, pg 142). The state then went to great lengths to downplay the results of the test (Tr

Vol 1, pg 58-59&68. Even though they were the ones that performed it. If they would

have come back positive you can bet your bottom dollar that it would have been the best

scientific evidence ever derived. But because it was negative it was downplayed. The

results of the test were never put in a written report and submitted as evidence in the

civil, criminal or OAH cases. The only reason we know about it is one of Respondents

employee was present when the test was performed and Heidi Williams has been asked

about it under oath. (Tr Vol 1, pg 142) How many other tests or samples were performed

that were not provided to Respondents? Respondents should be allowed to see all of

the evidence since much of it was withheld from Respondent.

There are over 800 items in the privilege log that were not provided to Respondent.

Elevation survey showing 1997 as built and 2009 show no settling from 700 data points.

At first Barry Norris says that he agrees with the results (Tr. Vol 1, pg 69, 70) then on

recross from Sara Wheeler he toes the line and goes the other way (Tr Vol 1 pg 70,71 )

whatever suits the state agenda, forget about the science.

EPA water samples show no leak (R 31) In fact, the EPA took water samples from the

sewer inside the sewer pond and it shows an e-coli level of 43 ppl (part per liter) yet the

allowable level in Oregon Streems is 418 ppl. ( R 31, Tr Vol 1, pg 208) So, even if the

entire contents were to enter the creek at once, it would still be only 11% of the

allowable level. Perhaps this is why the state never took e-coli samples from the seeps

because by the states own rules, it would still be well under the allowable level. Perhaps

this is why they did the Piper Diagram trying to show other ways that could possibly

show that the ponds were leaking?

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US Fish and Wildlife email “sorry to disappoint, but there is no smoking gun. Fish are

thriving” Oh, move along, nothing to see here. We wont trust the judgment of THE head

biologist from the US Fish and Wildlife, what does he know....

We pumped 600,000 gallons of water out of the ponds and hauled by truck to Ukiah,

which incidently, doesn’t even have a pond liner. (R 12)

We repaired the sewer collection line and it past inspection as of May 2009 (R10) so the

complaint asking for money to fix the collection system is mute, it was repaired prior to

the complaint and DEQ was provided a copy of the results. (R 10) DEQ did not reject

any of the engineering test done on the soundness of the system, they simply plugged a

number in there that equates to completely replacing the line. The person that did the

estimate has zero experience in sewer line construction techniques or associated costs

and does not have a civil engineering degree, Respondent Lucas has over 20 years

experience. (Tr Vol 2, pg 225-232)

Repsondent Lucas has a long history of environmental stewardship. (Tr. Vol 2, pg 198-

199) Repsondent Lucas’ other entity, Pacific III, LLC actually purchase a former leather

tannery and battery manufacturing plant, entered into a Prospective Purchaser

Agreement (PPA) with DEQ and performed significant environmental cleanup in excess

of $1.4 million in remediation costs alone. In addition, Respondent paid DEQ over

$80,000 in over-site costs and was successful in obtaining an NFA (No Further Action)

from the Oregon DEQ.

Under the terms of the PPA, Respondent Lucas was entitled to seek

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reimbursement from the Potentially Responsible Party (PRP) for Respondent's cost for

remedial actions taken on the PRP behalf. Unbeknown to Respondent Lucas, DEQ

entered into a settlement agreement with the PRP's on the neighboring site to Frontier

Leather, and as part of the settlements legal description, included the portion of the

former leather tanning and battery manufacturing plant that Respondent Lucas paid to

clean up. The DEQ then entered a Consent Judgment barring Respondent Lucas from

being able to seek reimbursement from the PRP. In other words, DEQ took credit for

what Respondent paid for, and then abused its authority by entering a CJ, while

Repsondent Lucas was not a party to any of the settlement negotiations or even invited

to them. Respondent has a current appeal at the Oregon Court of Appeals regarding

the entry of the Consent Judgment. In the settlement agreement between DEQ and the

PRP, it specifically names Respondent's company and states that if Respondent

appeals their settlement, that the settlement money would be placed in escrow, awaiting

the outcome of the appeal, and if Respondent was successful, the money would be

returned to the PRP's so that they could settle with Respondent Lucas. Currently $2.6

million is in escrow, of which 1.4 million is money spent and rightfully due to Respondent

Lucas. Respondent Lucas has claimed an offset against that money should the OAH

case require Respondent to pay any fine associated with this OAH case. (See answer)

The State of Oregon DOJ and DEQ did everything they could to inhibit Respondent from

accessing capital needed to perform repairs and comply with DEQ demands in a timely

manner, yet Respondent was successful in almost every effort. At no time was the

environment harmed. DOJ attorneys John Dunbar and Karen Moynahan, or their

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associates, actually called Respondent's banks and financial partners on unrelated

projects in order to instill fear and make it difficult for respondent to acquire the

necessary capital needed to comply on a timely basis. (Tr.Vol 2, pg 100-101)

This pattern of litigious conduct is borne of punitive and vindictive zealotry, not

objective protection of the public health and safety. DEQ’s evidence and arguments

must be viewed skeptically.

CONCLUSION

Respondent Lucas adopts and incorporates by this reference, the closing

argument submitted by Respondents Lehman Hot Springs, LLC and Lehman

Development Corporation.

DATED: September 28, 2012.

John Patrick Lucas

_____________________________

John Patrick Lucas16004 SW Tualatin-Sherwood Rd #432Sherwood, OR 97140

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