Scottsdale's Drinking Problem

It's crystal clear that the city of Scottsdale served its citizens water laced with a suspected carcinogen. But did city officials do it on purpose?

Early in 1995, Mary Simmerer stumbled upon an alarming situation.
Simmerer, who manages a section of the Arizona Department of Environmental Quality that monitors compliance with drinking-water regulations, discovered that on one day--November 24, 1994--the city of Scottsdale served approximately 70,000 of its citizens drinking water containing illegal levels of a suspected carcinogen--trichloroethylene, commonly known by its acronym, TCE.

Although the effects of TCE on human health continue to be debated, credible scientific studies link the chemical to heart defects and leukemia among children whose mothers consumed TCE-contaminated water during pregnancy. Other studies say the chemical is dangerous in drinking water only when large amounts of it are consumed over long time periods.

But scientists have shown enough connection among TCE and a number of life-threatening illnesses that the Environmental Protection Agency and DEQ have chosen to err on the side of extreme caution in regulating consumption of the chemical, typically used as an industrial cleaning solvent.

The state of Arizona requires cities to notify their citizens and state regulators almost immediately if drinking-water TCE levels exceed either daily or annual limits set by the government.

By Simmerer's calculations, on November 24, 1994, Scottsdale exposed tens of thousands of its citizens to more waterborne TCE than those citizens should have encountered in an entire year.

Such a test result would normally trigger an immediate telephone call or fax to state regulators, as well as notification of the public through television, radio and newspapers. Ordinarily, that result would also force the city to shut off the source of the contaminated water--in this case, a treatment plant designed to strip TCE from polluted groundwater.

Scottsdale had done none of these things.
When Simmerer met with Scottsdale officials in February 1995, they blamed the high TCE reading on an error committed by the environmental lab hired to test the water from the treatment plant. That lab, Westech Laboratories Inc., subsequently submitted a "corrected" report to Scottsdale, which showed the amount of TCE in the water to be roughly one third the amount initially reported.

According to state regulations, even the corrected result represented a violation that required immediate notification of regulators and residents.

But Scottsdale would not alert the public.
"They [Scottsdale] refused to do public notice and told us they would fight us every inch of the way," Simmerer testified earlier this year in legal proceedings against Westech.

Eventually, public records show, Simmerer's efforts to determine if Scottsdale had violated state drinking-water regulations led to an investigation of the city's water department by the Arizona Attorney General's Office. State telephone records show that the criminal-investigations section of the Environmental Protection Agency also investigated Scottsdale's water department, but it is unknown whether the EPA was conducting its own probe or simply assisting the state attorney general.

State documents also reveal that Simmerer prompted the state Department of Health Services to conduct a third investigation, this one focused on Westech's laboratory practices. That probe, in turn, has resulted in a DHS effort to revoke Westech's state laboratory license based, among other things, on the allegation that it had falsified water-testing data, including Scottsdale's. A hearing on that revocation is now under way.

Officials at DEQ, DHS and the Arizona Attorney General's Office have declined comment on Scottsdale's TCE-reporting problems until the Westech license case is resolved; a decision in that case may not come for months.

But the available public record raises serious questions about the city of Scottsdale's reaction to its drinking-water problems:

Why did the city of Scottsdale delay in submitting some high-TCE test results to state and federal regulators, not for days, or for weeks, but for months?

Why didn't the city immediately inform citizens of tests that showed TCE levels were above health limits 17 times during a six-month period?

Why did Scottsdale choose Westech, a lab that had done work for Motorola Inc., a company suspected of polluting underground water reserves, when other labs without apparent conflicts of interest were available?

Why, when the state initially moved to revoke Westech's operating license, did high-level state officials, including Governor J. Fife Symington III, intervene on Westech's behalf?

Taken together, those questions raise another: Did the city of Scottsdale knowingly serve contaminated water to its own citizens, because doing so was financially and politically expeditious?

An attorney for the city of Scottsdale claims any assertion that the city intentionally violated drinking-water regulations or endangered public health is "absolutely false." Scottsdale officials claim the failure to report high TCE readings stemmed from an honest misunderstanding of how to calculate TCE limits.

But there are reasons to question the city's claims. Many of those reasons are contained in public files relating to the operation of a testing firm known as Westech Laboratories Inc.

In 1955, James Warne Jr. started Engineers Testing Laboratories, Inc., and, as Phoenix grew, and the needs for environmental testing increased, Warne and his firm prospered. By 1995, the family business empire included a drilling company, a company that repairs testing equipment and Westech Laboratories. The Warnes became a prominent and respected family in Arizona.

The Warnes formed Westech in 1990. William Gartner, who had owned and operated a laboratory firm in Illinois, was named president of the company. In 1993, Gartner left Westech to run Bolin Laboratories, another Phoenix environmental lab.

Michael English, who had worked for Warne companies since 1985, stayed at Westech and continued as managing director of the lab. English, according to his resume, was responsible for "all aspects of work performed by the laboratory on a day-to-day basis."

Westech developed many prestigious accounts. It worked for the U.S. Bureau of Indian Affairs, the Arizona National Guard and the U.S. Park Service. It was engaged by Motorola to conduct soil-gas tests related to the North Indian Bend Wash Superfund Site. It tested water for the cities of Flagstaff, Kingman, Prescott, Safford, Paradise Valley, Wickenburg, Lake Havasu City, Peoria, St. Johns and Scottsdale.

Scottsdale hired Westech to do environmental testing in 1990. At the time, Scottsdale was working closely with companies that were constructing a plant to strip TCE from groundwater beneath the city.

By 1992, however, Scottsdale was having problems with Westech, records show. On occasion, Westech had not delivered timely reports to the state and, from Scottsdale's perspective, the firm's data did not always seem accurate.

But the city decided to renew its contract with the company.
In 1994, according to a city memo, city officials worried that Westech had performed "very poorly . . . so much that the city can be considered in non-compliance by ADEQ officials."

Several months later, the city told Westech in a letter that "unsatisfactory laboratory test services may result in a determination of regulatory noncompliance" or possibly expose the city to lawsuits.

Even so, the city continued to use the laboratory.
"We talked to other cities," says Jim Nelson, a Scottsdale water official who was then Scottsdale's coordinator for the treatment plant. "We found out this was a typical experience people were having with any lab at the time. We didn't figure it was enough to say, 'Hey, we're not going to hire you anymore.'"

Under its contract with Scottsdale, Westech analyzed all of the city's drinking water for contaminants, but the water that most interested environmental regulators was produced by an $8 million treatment plant Scottsdale had operated since March 1994. The plant had been built and paid for by Motorola and several other electronics firms.

Decades earlier, the companies had dumped TCE into an area known as the North Indian Bend Wash, where it seeped into Scottsdale's underground drinking-water reserves. North Indian Bend Wash is now a federal Superfund site, and the Scottsdale treatment plant is an integral part of the overall Superfund cleanup plan. It was designed not only to remove TCE from Scottsdale's drinking water, but also to stop contaminated groundwater from flowing toward Paradise Valley's supplies.

For the first 18 months the plant was in operation, it failed to fully accomplish either goal, records show.

Scottsdale had reason to hope that Westech's analyses would show the plant was effectively purging TCE from the water. If the Superfund plant had to be shut down because it was producing unhealthful, TCE-laced water, Scottsdale would be unable to use the groundwater under North Indian Bend Wash, which composes one third of the city's drinking-water supply. To make up the resulting water deficit, Scottsdale would be forced to buy clean water from the city of Phoenix at a cost of about $250,000 each month.

The treatment plant's success was also of economic interest to Motorola and other alleged polluters of the groundwater beneath Indian Bend Wash.

Those firms were saddled with a new expense--constructing a multimillion-dollar treatment plant for a Paradise Valley water company--while still under obligation to pay for costly repairs and other expenses if the Scottsdale treatment plant failed to work properly.

In 1990, city of Scottsdale officials say, they severed a long-standing relationship with another testing lab and hired Westech because it submitted the lowest bid for the city's water-testing contract. But Motorola's spokesperson and city officials deny the company asked the city to hire Westech. City officials claim they did not know Westech had previously worked for Motorola.

Once it gained the city contract, Westech regularly dealt with Jim Nelson, the Scottsdale water department official who was in charge of the treatment plant.

All of Westech's data relating to the treatment plant were sent to Nelson's attention. Another Scottsdale water official, Michelle De Haan, had the responsibility for copying Westech's results and sending them to DEQ and EPA, Nelson says.

Westech also was required to send data directly to DEQ and EPA.
But that data raised serious questions.
For instance, on one occasion, Westech sent the state several days' worth of test results performed by another lab working for Westech. The test results sent to the state showed substantially less TCE in the water than the test results sent to the city.

In another case, high TCE test results for samples collected in August 1994 were not made known to regulators until the following year. Yet Nelson acknowledges that "preliminary reports" showing those same high test results arrived at his desk months before. But he didn't forward those results to the state.

"We asked Westech to go back and evaluate their lab work because it did seem out of line," says Nelson.

DEQ did not get the high-TCE reports until the next February--six months after the tests were conducted.

In fact, EPA records obtained by New Times show that Scottsdale's drinking water contained TCE above state limits on 17 occasions during the six-month period from August 1994 through January 1995. But Scottsdale officials did not notify state or federal regulators of some of those test results for months.

And the city did not tell its own citizens about some of these "exceedences" for a year.

In September 1994, the Arizona Department of Health Services Office of Laboratory Licensing conducted a routine audit of Westech. Auditors said they found improper lab practices, especially in the organics section, which measures the levels of chemicals such as TCE in drinking water.

Westech was told to temporarily shut down the organics section until the deficiencies were worked out.

English, the lab director, informed De Haan, the Scottsdale water analyst, about the audit over lunch, according to a memo De Haan later wrote.

". . . Mike [English] wanted to assure me that if and when they are back on line, Westech will make extra efforts to meet our needs. . . . I greatly appreciate Westech's openness and honesty and feel that they are bending over backwards to help the city in every way possible."

English subcontracted with Bolin Laboratories to temporarily handle the Scottsdale testing account. At the time, Gartner, the former president of Westech, was president of Bolin. Another former Westech staffer, Ivo Hrabovsky, worked in Bolin's organics section.

Bolin detected TCE in 11 water samples taken from Scottsdale's North Indian Bend Wash treatment plant, records show, and reported those results to Westech, which reported to Scottsdale.

But the reports Bolin sent to the state's Department of Environmental Quality were different. Those reports showed the lab had found far less TCE in the water.

Later, Bolin would tell the state that a secretary had made "typographical errors including transcription errors" on the state reports. The lab then sent accurate reports to the state.

Scottsdale officials say they didn't learn of the problem until a year later. "At the time, we didn't know [of] it," says Nelson. ". . . I had no reason to think they would have sent different data.

"Maybe that was naive, but I've never had that problem before."

In early 1995, after investigating Westech off and on for two months, Steven Baker, the manager of the lab licensing unit of DHS, recommended to the agency's director, Jack Dillenberg, that Westech's license be revoked. Baker believed revocation was appropriate because, state records allege, the company had falsified data and failed "to report the detection of contaminants in drinking water."

At first, Dillenberg seemed to agree to the revocation. Then he changed his mind, Baker later testified in legal proceedings against the firm.

According to Baker, "at least one senator" and members of Governor Symington's staff pressured Dillenberg to be more lenient with Westech. In his testimony, Baker did not give the senator's name. He refused comment for this story, citing the pending hearing.

Westech also hired Ted Williams, a former director of DHS, to lobby the agency.

Clearly, the Warne family had political clout. And the family had personal, financial and legal reasons to fight hard for Westech's license.

If the laboratory's license were revoked, the company could lose lucrative federal and state contracts and might face legal liability if data it produced for those clients were questioned. According to the EPA, Westech has tested the drinking water of more than 300 Arizona cities and towns and performed environmental analyses for numerous federal facilities.

Also, New Times has learned, Westech's management, including former lab director Michael English, was under criminal investigation by the Attorney General's Office. No charges have been filed, and the company officials have denied wrongdoing. But losing the licensure case could hardly be expected to aid anyone being eyed by criminal investigators.

Through a spokesman, Dillenberg declined comment for this story, noting that it is his responsibility to decide whether Westech's license should be revoked.

But in January of last year, the DHS director decided to follow the suggestion of the Governor's Office and others requesting leniency for Westech. Rather than revoke Westech's license, Dillenberg merely suspended it, assigning the lab another, "provisional" license designed to give DHS more oversight over its operations.

In subsequent news releases, Dillenberg attemped to comfort both the public and Westech.

The releases said Westech had reported incorrect trichloroethylene levels in Scottsdale drinking water and had "artificially reduced . . . actual TCE readings" in tests on Scottsdale's drinking water.

But one release also said, "The action against Westech does not mean that water provided by Westech's clients is not safe to drink."

And he added: "I anticipate that Westech, with the department's guidance, will correct the deficiencies and remain a viable testing laboratory in the state. Westech's owners have demonstrated a willingness to cooperate."

Actually, Westech's president, James Warne III, was outraged by the suspension. In an affidavit filed later in connection with the case, Warne said Westech had made every effort to cooperate with DHS, which had "publicly executed" the company without giving it sufficient time to respond to charges.

Warne would not comment for this story, citing the ongoing hearing.

In a recent interview, Scottsdale officials offered a detailed, wide-ranging denial of wrongdoing in regard to TCE testing for the North Indian Bend Wash treatment plant.

In the city of Scottsdale's view, not a drop of the water served to the public exceeded TCE health limits. And under its interpretation of state regulations, the city was not legally required to tell the public about the TCE test results it received.

Scottsdale assistant city attorney Barbara Goldberg says the city never asked Westech to skew TCE test results. And, she claims, no one on the city staff ever tried to hide high TCE results from the state or federal regulators.

Conflict over the TCE results, Goldberg says, stemmed from a "good faith difference in interpretation" between the city of Scottsdale and Simmerer, the head of DEQ's drinking water compliance unit. That difference of interpretation, Goldberg says, involved the mathematical formula used to calculate the safe limit--technically known as the Maximum Contaminant Level--of TCE in drinking water.

In a nutshell, the state formula for figuring out the limit is more stringent than the formula Scottsdale used. Scottsdale wanted to be able to average TCE levels over long periods of time; state regulations did not allow such long-term averaging of contamination levels.

Goldberg claims that DEQ approved the city's more lenient formula in a January 1994 letter written by an engineer in the drinking-water unit. Such a letter does exist. But Simmerer has said DEQ told Scottsdale to use the state formula in 1993, and state regulations clearly do not allow the type of TCE averaging the city claims it used.

Last year, the city still wanted to use long-term averaging to calculate the safe limits of TCE in Scottsdale drinking water.

In late May 1995, Scottsdale asked DEQ for permission to use a formula for calculating TCE levels that was even more lenient than the formula the city had previously used and that Simmerer had already vigorously questioned.

"It is a reasonable allowance under the new DEQ drinking water rules because they do not address a facility like the [treatment plant], and some provision must be made for this type of operation if the state wants other cleanup plans like this to go forward," Nelson wrote.

By the time Nelson wrote his letter, however, Scottsdale's drinking water had already repeatedly exceeded state health limits, and the city's failure to report those TCE spikes had prompted investigations of both the city and Westech.

The only other Superfund TCE treatment plant in Arizona is located in Tucson. Officials at the Tucson plant say they have always adhered to the state's formula for calculating the health limit of TCE--five parts TCE per billion parts water. If the plant were to produce water with even 5.1 parts TCE per billion parts of water, Tucson officials say, the city would shut down the plant and immediately notify regulators and the public.

In January 1995, Scottsdale shut down its TCE-treatment plant for routine maintenance.

The plant was not turned on again for 11 months--at the insistence of the EPA. In fact, the EPA would not allow the plant on line until Scottsdale had signed a consent decree that spelled out, among other things, exactly how to calculate acceptable TCE levels in drinking water.

Late in 1995, Scottsdale signed such an agreement. By agreement with the state, the city cannot deliver drinking water with TCE above state health limits. The agreement prohibits the type of annual averaging of TCE levels that Scottsdale has tried to claim as acceptable in the past, but permits Scottsdale to do more averaging than the original state formula allowed.

In their detailed denials of wrongdoing, Scottsdale city officials were unable to offer any explanation for one anomaly. They could not explain why the state claims that Scottsdale had submitted different TCE test results to state regulators than were found in city files.

Scottsdale officials simply say the state's claims are unsubstantiated. Of DEQ's complaints, Ron Miller, the city's water resources director, says: "We can't explain their files."

By early 1995, Simmerer had discovered what became the famous November 24, 1994, TCE spike and had notified her superiors.

In a May 1995 memo to Ed Fox, who was then the director of DEQ, Simmerer wrote damning bureaucratese: "Other violations may have occurred, but the information was not given to ADEQ. Instead, data was sent to the city of Scottsdale showing possible violations, but data submitted to ADEQ by Scottsdale did not reveal violations."

In other words, the testing lab had given Scottsdale TCE results above the legal limit for drinking water--and the city had not submitted those results to the state as required by law.

Simmerer suggested that an assistant attorney general be assigned to the Scottsdale matter "due to the possible criminal actions in this case."

Simmerer's memo resulted in an investigation of the Scottsdale Water Department by the Arizona Attorney General's Office. State records show assistant attorney general Linda Pollack was assigned to the case.

As late as May 1996, the EPA criminal investigation division in San Francisco also was looking into the water department, state phone records show.

Neither the attorney general nor the EPA will comment on the criminal investigations.

Upon learning that New Times had seen Simmerer's memo to Fox and her deposition for legal proceedings against Westech, a Scottsdale official wrote an angry letter to Russell Rhoades, the current director of DEQ, demanding a meeting.

In the letter, Roger Klinger, the city's water resources general manager, calls Simmerer's allegations to Fox "unsubstantiated."

In June 1995, Simmerer asked Steven Baker, the manager of the DHS lab licensing unit, to look into Westech's lab methodology for the November 24, 1994, test. Baker later testified that up until Simmerer's request, he believed Westech had shaped up and was following the terms of its provisional license, which Dillenberg had granted the previous January.

Baker's subsequent investigation proved disastrous for Westech.
Westech called it an "extraordinarily limited and extraordinarily backward-looking" probe. But Baker concluded that Westech had not lived up to its promises to produce reliable test results. Dillenberg decided to take formal steps to revoke Westech's license in August 1995.

The state and federal government temporarily barred Westech from doing contract work.

The Warnes were outraged. They denied any wrongdoing. In a sworn affidavit, James Warne III said the company had worked hard and spent nearly $1 million to "comply with every DHS directive."

Westech hired well-known environmental lawyers to represent it at the license-revocation hearing. So far, those lawyers have managed to persuade a state hearing officer to throw out some of the state's claims against the firm. The revocation hearing is expected to last for weeks.

No one really knows for sure how much TCE Scottsdale residents drank in the water that came from the North Indian Bend Wash treatment plant.

The city of Scottsdale maintains there has never been a day when residents were served unhealthful amounts of TCE--even taking into account "exceedences" turned up by recent state and federal investigations.

"Public health and safety are the city's primary concern," city water analyst Michelle De Haan wrote in a November memo to New Times. ". . . If there were or is ever any threat to public health, in cooperation with EPA and DEQ, we would immediately notify citizens. We would never intentionally withhold information about this.

"It is our policy that we serve only water that meets federal drinking water standards and state drinking water rules. The City believes that there has not been a violation of these rules and regulations or any threat to public health."

The health threat of the TCE exceedences was studied in 1995 by an EPA toxicologist who concluded that citizens who drank the water probably weren't harmed.

But a Boston University medical doctor who specializes in the health effects of TCE says no one can say whether citizens were damaged.

"I agree that the risk is low," says David Ozonoff, chairman of the university's department of environmental health.

"But I don't like TCE at all, even at three parts per billion. You don't have to drink it for 70 years to get sick. One day could do damage. It's not likely, but it could."

The city of Scottsdale incurred enormous expenses during the time the North Indian Bend Wash treatment plant was shut down.

Water to replace the plant's production was purchased from the city of Phoenix; that water cost Scottsdale $3 million. Motorola and the other companies that built the treatment plant agreed to pay about half of that sum. Scottsdale taxpayers picked up the rest of the tab.

The city of Scottsdale terminated Westech's contract in August, shortly after it learned Dillenberg filed his notice to revoke Westech's license.

Recently, the city hired a former DEQ drinking water compliance officer to replace Jim Nelson as the treatment plant manager for the North Indian Bend Wash site. After extensive work, Scottsdale's treatment plant is consistently producing drinking water with TCE levels well below state limits.

Jim Nelson has been reassigned to the city's wastewater department.

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