Energy Consultant Admits Wrongdoing, Settles Lawsuit

FOR IMMEDIATE RELEASE April 14, 1998

CONTACT:   Doug Allard, (805) 961-8853 or  Terry Dressler, (805) 961-8829

GOLETA, CA ? Santa Barbara County Air Pollution Control District (APCD) and the Office of the Santa Barbara County District Attorney announced today the settlement of a lawsuit against E. Bruce Falkenhagen, an independent energy consultant.

Falkenhagen illegally operated power generation machinery without required air pollution control equipment and permits over a period of six years, and lied to the APCD to conceal the operation. Electricity generated by this equipment was sold to Pacific Gas & Electric Company (PG&E) for a total of $ 894,000, as reported by American Cogenics, Inc. (ACI), the company that paid Falkenhagen to handle equipment operation and air pollution requirements. ACI and two other companies have already paid $55,000 in penalties due to their liability for Falkenhagen?s actions.

APCD Director Doug Allard said, “Assuming the site was generating power for most of six years without pollution controls?and the information we have, including Falkenhagen?s records, suggests this is the case?hundreds of tons of nitrogen oxides (NOx) were produced, enough to classify this site as among the top stationary sources of air pollution in the county. And this was deliberately concealed from us.” Allard noted that most of this pollution would have been avoided if the required pollution Controls had been in place.

He added that Los Alamos Energy Corporation, which took over the site in September of 1996, has obtained the needed permits, and is currently operating the equipment with the necessary pollution controls. Testing confirms emissions are currently well below permit limits.

In the settlement filed today, Falkenhagen admitted he knowingly operated the generators without the permit and appropriate pollution control equipment. He admitted to making eleven false statements to the APCD “knowingly, willfully, and with an intent to deceive.” Falkenhagen agreed to pay the D.A.?s Office and the APCD $100,000 over a ten-year period, and an additional $55,000 in suspended civil penalties in the event of any similar violation. He also agreed to issue an apology to the business community and the public to be published in newspapers throughout the county.

“This was an egregious violation?certainly the worst of its kind that I?ve ever seen,” said Deputy District Attorney Jerry N. Lulejian, in charge of prosecuting the case. The D.A.?s office agreed to settle with Falkenhagen for less than his economic benefit, said Lulejian, “because we felt his public statement and apology would go a long way towards deterring others from this kind of activity. That was our inducement to settle.”

According to records kept by Falkenhagen, ACI, and PG&E, Falkenhagen was operating one or more generators on the Rancho El Roblar property near Los Alamos between April of 1989 and April of 1995. The generators burned excess gas from the nearby oil and gas facility located on the Blair Ranch. Electrical power produced by the generators was sold to PG&E, and fed to the PG&E grid via a transmission line located along Highway 101. Falkenhagen?s records show that on at least five occasions he shut the generators off prior to APCD?s arrival to inspect the adjacent facility, and turned them on again after the APCD inspection.

On April 10, 1995, in a conversation with the property owner, APCD first learned the generators had been operating. The owner reported that he was not aware that Falkenhagen was not using pollution control equipment and had not obtained the necessary permits. The owner gave APCD permission to conduct a surprise inspection on April 12, 1995.

Over the next several months APCD investigated the matter, and California Air Resources Board issued subpoenas collecting information from the companies and individuals involved, documenting the equipment operation and electricity sales. APCD received a warrant to conduct another inspection and search on October 13, 1995, when additional evidence was collected. APCD turned the case over to the District Attorney?s Office for prosecution.

Said Allard, “I want to thank the District Attorney?s Office for the time and effort spent in prosecuting this suit. Air pollution laws are there to protect the public health. I think that the vast majority of businesses and individuals we work with understand that, and are truthful and responsible in their dealings with us.”

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