Ruling Could Be Death Knell For Halaco, Group Says

A federal bankruptcy judge gave the green light to an environmental group to proceed with federal lawsuit against Halaco Engineering Co., a metal recycling business.

ChannelKeeper of Santa Barbara said the ruling could spell the demise of a company, which environmentalists and others have accused of polluting the air and water at Ormond Beach in Oxnard.

"We're thrilled," said attorney Drew Bohan, executive director of ChannelKeeper.

Judge Robin L. Riblet in July temporarily stopped the federal lawsuit, which seeks to have the company clean the site and stop polluting the air and water. The judge gave Halaco more time to resolve its financial affairs with creditors.

On May 29th, Riblet denied Halaco attorney's request for additional time.

Halaco filed for Chapter 11 protection in bankruptcy court last year in Santa Barbara. The Chapter 11 filing came in the heels of failed mediation efforts between Halaco and environmental groups to settle the 2-year-old federal lawsuit, which was filed by the Environmental Defense Center on behalf of ChannelKeeper.

Bohan said Halaco's bankruptcy came at a time when ChannelKeeper and the Environmental Defense Center were winning some battles against Halaco in federal court. He said he believed the groups were close to getting a summary judgment from a federal judge that would have had more teeth than the state's cease-and-desist order.

Bohan said he will file a motion for a summary judgment against Halaco in early July. He expects a ruling this fall. Bohan said Halaco could end up paying millions if the judge rules that it violated federal clean air and water laws. The company also would have to pay court costs, he added.

"It's really going to be the beginning of the end for Halaco," Bohan said. "We're just ready to move forward in this case."

Halaco attorney David Shemano said company officials are disappointed with the judge's decision to lift the stay.

"If we have to do it now, we'll do it now," he said. "We are confident that we'll be successful in the district court. We are disappointed that (the judge) ruled that way because it is going to delay payments to creditors."

Halaco lawyers said the company filed for protection because it needs the time and money to focus on its business and to comply with a state cease-and-desist order issued in March 2002. The order requires Halaco to clean up its slag pile within 10 years; allow the waste water in its settling ponds to evaporate and stop discharging waste water by November 2002. The federal suit also seeks to have the slag pile protected from storm water, which could carry contaminants to wetlands and the beach.