News
Update: December 6 , 2005
Gordon Clark's Letter to His Customers
December 5, 2005
Dear ,
For owning and operating Clark Foam I may be looking at very large fines, civil lawsuits, and even time in prison. I will not be saying more than is in this letter so I hope you read it carefully. I do not
want to be answering questions about my decisions for the next few years.
Effective immediately Clark Foam is ceasing production and sales of surfboard blanks.
I would like to give a lot more details but keep in mind that I may have both fines and criminal charges pending at this time or in the
future. Therefore I have been advised by my attorney to say as little as possible. I do not want this document to be used as an admission
of wrongdoing nor am I going to help the government prosecute me. I
do, however, feel I owe everyone some sort of explanation – even if it
is incomplete and not a full disclosure of my problems.
The short version of my explanation is that the State of California
and especially Orange County where Clark Foam is located have made it
very clear they no longer want manufacturers like Clark Foam in their
area.
The main concern of the state and county government is a toxic
chemical we use called Toluene Di Isocynate commonly called TDI. Some
of the other concerns are the use of polyester resin, dust, trash,
some of the equipment I built or was built to my specifications, and
numerous safety concerns both for employees and the local community.
The way the government goes after places like Clark Foam is by an
accumulation of laws, regulations, and subjective decisions they are
allowed to use to express their intent. Essentially they remove your
security, increase your risk or liability, and increase your costs.
This makes the closing of Clark Foam and similar manufacturing an
accumulation of issues and not a single issue. They simply grind away
until you either quit or they find methods of bringing serious charges
or fines that force you to close.
Since the main issue is TDI, I will cover this first. Over the years
almost all of the TDI users have left California. The government
attack on TDI has been going on for decades and California was not the
only State to attack its use. It was a billion pound per year
chemical in the United States. In the last few years about one third
of the United States TDI production capacity has been closed. I
believe one of the reasons was the opening of very modern TDI plants
in Asia that cost much less to build and operate. It also appears
they have built a better infrastructure for handling the raw materials
such as natural gas terminals and refineries.
About 20 years ago OSHA came down on our TDI use very hard and more or
less tied one arm behind our back when it came to competing on the
international market. We survived this and worked very hard with that
agency to meet all of their requirements for using TDI. This is a
Federal program and in my judgment OSHA is far better managed than
other agencies.
A little over 10 years ago the Orange County Fire Authority changed
their inspection methods. California also passed some new laws on TDI
use. The Fire Authority also had signed up 23 cities plus the
unincorporated areas of the County. They are one of the largest, most
powerful Fire Departments in the United States. They set extremely
tough standards and have informally asked Clark Foam to move.
In 1999 the Federal Environmental Protection Agency copied parts of
the California Law on TDI and implemented a weaker version of the
California Law. California then added to the new Federal Law and
their version is considerably tougher. The interpretation of this law
is quite flexible and the local Fire Authority has taken a very tough
line and added extra regulation that could be focused on closing Clark
Foam.
Since the Fire Authority first showed an interest in TDI and today I
estimate the physical changes they have required for my factory took
two people less than a week to build. The cost of paperwork,
engineering studies, and time to satisfy their demands for our TDI
processing equipment has cost in excess of $500,000.00. This is many
times the original cost of the equipment. They are still not
satisfied and continue raising new issues or go over old issues that I
assumed were closed.
Another tactic used by the Fire Authority is to report us to other
government agencies. This is probably a correct action on their part.
For the TDI use this has become quite serious.
Based upon a complaint by the Orange County Fire Authority and
information that was almost 100% supplied by the Orange County Fire
Authority, the very strict Ninth District of the Federal Environmental
Protection Agency (EPA) issued Clark Foam a 10-page, very serious
citation. This has never been resolved. The EPA has hired a private
safety engineer to pursue their citation and I believe this process is
still taking place. The seriousness of their citation could mean that
I could have to go to prison and be fined an astronomical amount of
money. (A personal friend just paid a $4,000,000.00 EPA fine and
barely got out of going to prison.) It is my understanding that the
EPA is very slow, are difficult to deal with, and Federal Judges
almost always agree with the EPA. Essentially they refuse to directly
communicate with Clark Foam.
I do not know if it was the Fire Authority's intent but by asking for
Federal help they essentially killed any chances of moving to another
State.
The Fire Authority has reported our TDI process to the South Coast Air
Quality Management District (AQMD) several times over the years. Each
time they supply information and then they openly disagree with the
AQMD findings. This tends to stir up the AQMD. The last go-around
with the AQMD based on TDI cost quite a bit of money in engineering
fees. (The AQMD issued us a permit for our existing equipment but the
Fire Authority was not pleased with this action. Therefore, they went
to the Health Department.)
The Orange County Health Department operates through the State
Department of Toxic Substance Control and the State Environmental
Protection Agency. In this case the Fire Authority escorted them to
our premises and made their case. This is a series of hazardous waste
issues both in definition and methods of disposal. This is very
serious stuff and evidently subject to a lot of arbitrary
interpretation.
We are emitting TDI fumes into the air.
A large part of the Fire Authority's focus has been TDI spills. This
is very well documented. A few years ago I realized that any spill
would create a massive response by the Fire Authority and I doubt they
would know how to properly neutralize the spill or know when the spill
was no longer emitting toxic fumes. To protect myself I purchased a
$50,000,000.00 spill or release insurance policy with a $500,000.00
deductible. This was only necessary due to the current regulatory and
legal environment in California. When we have gotten to this point it
is a good sign that the game is almost over. (Furthermore, I doubt
that $50,000,000.00 would do much more than pay the legal fees. Look
up the 6,000-pound spill by General Chemical in Richmond California.
The billed attorney's fees were reported to be in excess of
$900,000,000.00.)
We did our last research into new foams in 1993. What we did was, in
a large part, illegal even then. Today, almost any attempt at
research would be very illegal due to TDI (or any isocyanate)
handling. The cost of the required permits would be much higher than
the cost of "outsourcing" or doing the work in other countries.
There are two future TDI issues. First there is a good chance that
the AQMD or California will require a TDI fume "scrubber" sometime in
the future. This would be a roughly 250 horsepower, giant unit
costing over a million dollars. Second, there is legislation being
proposed in the State government that our TDI supplier has told us
would result in them withdrawing 100% from the California market.
(This has already happened with TDI storage. One supplier moved out
of California in one day and was trucking in from out of State. Now
they quit altogether.) If this proposed legislation passes it appears
TDI will essentially be banned in California.
The above covers some of the TDI issues. Next I will move to the AQMD.
We have had AQMD permits since the 1970's. Recently they declared the
polyester resin use for the center stringers is really an "adhesive"
and fits into different rules. One method of calculation put us into
a category of a large refinery and required massive controls, permits,
etc. They did some testing that substantiated some of their claims.
While it appears they are wrong, they have not responded. We do emit
over 4,000 pounds of styrene fumes per year. It appears they will
call for a "scrubber" at some time in the future. This will cause a
serious problem, as we must keep fume levels within the OSHA limit.
(OSHA inspects us for styrene fume levels.) Therefore, we are looking
at a massive unit in the million-dollar range.
When reviewing our AQMD compliance with our consultants it appears we
are out of compliance in several other areas.
The next issue is ironic. When the Surfrider Foundation was just a
Volkswagen Bug and a couple of guys I gave them $10,000.00 being the
seed money to get started. Now the Surfrider Foundation is a leading
advocate of the storm water runoff legislation. Three agencies
inspect us. We have been cited several times. While we are currently
in compliance, I do not believe anything but a 100% indoor facility
could ever comply with what the law requires. The Surfrider
Foundation would have us closed down.
The Fire Authority really ripped into us over 10 years ago. We had to
remove our outdoor fire sensors, have a licensed mechanical engineer
certify our steel tube racks for strength, put up about 50 signs,
build in-rack sprinklers, add a bunch of sprinklers, and do a lot of
other stuff. (This was just a few years after they forced us to quit
making slab foam.) It appears the forthcoming issues could be aimed
at cutting our production capacity. This is nothing new, but simply
an ever tightening of the screws. There is also another complete
section of our processing equipment they have not addressed. So far
they have only played around the edges of these issues. I read the
Fire Code and they could shut us down very fast. It is a terrible
feeling when one person walks in and says what you are doing is wrong.
Now and then it is OK, but when an agency does it over and over you
finally get the message.
The above are only some of the government agencies that inspect Clark
Foam. It was put well by an expert in these areas when he said:
"ignorance of the law is no excuse – but try to find the law".
Our official safety record as an employer is not very good. We have
three ex-employees on full Workman's Compensation disability –
evidently for life. There is another claim being made by the widow of
an employee who died from cancer. According to the claim, the
chemicals or resins at Clark Foam caused the cancer. A few years ago
we had one of those horror stories one hears about lawyers. Almost
$400,000.00 in lawyer's fees and the ex employee suing Clark Foam got
$17,000.00. The Judge in the lawsuit advised me "this is just a cost
of doing business (in California)".
We have had no problems with the local city government. The Fire
Authority has reported us for violations several times with no
consequences. A long-range problem might be a city master plan that
wants to eliminate manufacturing at our location and build offices for
uses like Lawyers and Doctors. While the local city government has
said nothing it appears we are also violating of a number of current
buildings, electrical, fire, and land use codes.
There will be questions about the future of the Clark Foam
manufacturing facility and equipment. I will answer them below:
Another owner or tenant cannot use the buildings without bringing them
up to current code. This is impossible so the buildings will probably
be torn down. There is no sense discussing the issue of permits or
using the Clark Foam facility further.
In addition, you could build many blank making facilities outside of
the United States for just the cost of permits in California.
The equipment and process issue is based on a term frequently called
"standards". This is a difficult legal concept and will be difficult
to explain. I will try my best but warn my explanation may not be
accurate or correct from the point of view of a lawyer.
Hobie Alter and Dave Sweet independently showed that a polyurethane
foam surfboard was possible. Rodger Jennings, Chuck Foss, and Harold
Walker pioneered the first successful commercial blank business
selling blanks directly to surfboard builders. A lot of other people
were involved including myself. All of the resins, supplies,
processes, and equipment were very original innovations.
Upon founding Clark Foam I begin using different foam formulations,
processing methods, and equipment than the other blank manufacturers.
Today my plant is almost all original designs, built in-house by our
staff and myself. The small amount of equipment purchased outside of
Clark Foam was built to my specifications or modified by me for our
unique process. To sum this up no one in the United States or for
that matter the rest of the world uses equipment and a process like
mine. It is very unique and there was nothing on earth ever built
this way before.
This is just an extension of the methods everyone used when the first
foam boards were built. I continued merrily along assuming this was
the way things worked. No one copied much of my process or equipment
and it was very successful. I used no outside engineering firms or
other experts for the majority of Clark Foam.
The Federal Environmental Protection Agency used lawyers to prepare
their citation. They used the word "standards" a lot. I finally
realized with shock that the EPA has determined that my equipment does
not meet acceptable or accepted "standards".
Looking back this has been the same complaint of the Fire Authority
and others. They are not as articulate as the EPA lawyers and I did
not understand their points. A lot of the $500,000.00 I spent trying
to satisfy the Fire Authority was engineering studies to determine if
my equipment met "standards".
The EPA and the Fire Authority have only been interested in a small
part of my equipment that handles TDI. Most of the rest of my
equipment also does not meet any established "standard".
Upon pursuing the matter with experts in the law I found that for the
majority of my equipment and process I am the "standard". This means
I am legally liable for everything I designed, built, modified, or
used in my unique process.
Some years ago I read that the old communist Russian tractors had a
negative economic value. They were so poorly built that the raw
material used to build them was worth more than the tractor that would
rarely work.
I find that due to this "standards" thing my equipment and process has
a negative economic value. Why sell something for a dollar when you
are risking a lawsuit that could cost you anywhere from the dollar to
everything you own? Since I am the "standard" I am liable for
everything that was built to my "standard". Therefore, I am not going
to sell any of this equipment or the process. The liability is far
too great. Furthermore, most of the equipment can be dangerous if it
is not operated properly.
In closing this letter I will make several comments.
First, Clark Foam's customers have several well-known and
well-publicized options for making their surfboards. I will not
comment on any of them nor give advice or opinion.
This letter gives a wealth of advice on isocyanate based foam
manufacture and some other manufacturing issues particular to Orange
County or California. I do not want to clarify any of these issues
further than this letter due to both pending and potential civil and
criminal liability. In sum, do not bother asking me questions.
When Clark Foam was started it was a far different California.
Businesses like Clark Foam were very welcome and considered the
leading edge of innovation and technology. Somewhere along the way
things have changed.
The State of California and Orange County California are trying very
hard to make a clean, safe, and just home for their residents. This
is commendable and I totally support their goals. It is my
understanding their plan is to remove selective businesses to make way
for new, better jobs that will be compatible with the improved
environment. They are putting an incredible amount of resources into
their effort. This is a tough job and they are doing a good job of
meeting their goals.
The only apology I will make to customers and employees is that I
should have seen this coming many years sooner and closed years ago in
a slower, more predictable manner. I waited far too long, being
optimistic rather then realistic. I also failed to do my homework.
What will I be doing in the near future? There is a very good chance
that I will spend a lot of time in courtrooms over the next few years
and could go to prison. I have a tremendous cleanup expense to exit
my business. I have the potential for serious fines. My full time
efforts will be to extract myself from the mess that I have created
for myself.
In closing I want to thank everyone for their wonderful support over
the years. This has been a great ride with great people. I have
loved this job and the people I worked with.
Thanks,
Gordon Clark
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