San Benito Foods sues Hollister over permit, claims extortion

Hearings delayed twice as Judge Steven Sanders steps aside over conflict; Judge Omar Rodriguez takes over the case Aug. 5.

Vancouver, Washington-based Neil Jones Food Company, owner of the San Benito Foods tomato cannery, filed a lawsuit in San Benito County Superior Court against Hollister alleging the city violated the California Environmental Quality Act (CEQA), as well as the Brown Act, committed a breach of contract, and asked for declarative and injunctive relief.

In a court filing, San Benito Foods accused the Hollister City Council of “extortion of fees” for removing sludge from pond #2 at the city’s industrial wastewater treatment plant, which the cannery uses to dispose of its wastewater, and that it is in breach of an agreement between the city and the company. 

The City Council originally told San Benito Foods they would have to pay $4.5 million to be permitted, but reduced the number to $2.5 million after negotiations. San Benito Foods employs 90 workers year-round and as many as 445 during peak summer season.

Sludge is a semi-solid slurry produced by various industrial processes, including water treatment, wastewater treatment or on-site sanitation systems.

The cannery stated in the complaint that it has already paid $25,000 annually for three years to remove sludge as part of the permit process. San Benito Foods is asking the judge to vacate and “set aside its [the city’s] improper approval of conduct in furtherance of the project.”

A hearing before Judge Steven Sanders was scheduled for July 20. He delayed it until July 23 because he has a conflict as a city resident who uses its water and sewage systems, and any judgment he might render could be seen as an economic benefit to him, according to attorney David Weiland of Fresno-based Coleman & Horowitt LLP representing San Benito Foods.

Weiland said Sanders asked both parties to sign a waiver of the conflict in order for him to continue. Otherwise, the case would be handed off to Superior Court Judge Omar Rodriguez, who does not live in the city. The July 23 hearing was delayed and the case will go before Judge Rodriguez on Aug. 5 at 1:30 p.m.

Hollister Mayor Ignacio Velazquez said the issue is not about fees, but about the company’s refusal to invest in upgrades to the cannery’s well to meet CEQA standards and pay $2.5 million to remove sludge from the holding pond.

Sludge is an issue because of its pathogen content, making it a potential health and environmental hazard, city Management Services Director Mike Chambless said. The contaminants can then percolate into the groundwater basin.

San Benito Foods claims it is not solely responsible for the sludge because storm waters go into the same pond that carry contaminants from other companies and the city. It also claims in the complaint that it “cannot afford to pay the millions of dollars demanded by the city in order to obtain the 2020 permit.”

It’s the city that holds the permit, according to Chambless, and the city aims to relinquish it to the tomato cannery in 2021 “in order to get out of the middle between San Benito Foods and the [Central Coast Regional Water Quality Control Board].” 

Chambless told BenitoLink there are two issues: the removal of sludge in pond #2 that has built up over the past 70 years, and the water from the cannery’s well that contains excessive levels of total dissolved solids and nitrogen. He said San Benito Foods needs to have its own reverse osmosis system at the cannery in order to comply with CEQA regulations.

“As it stands, they do not have a permit,” Chambless said. “They have a court order requiring us to take the effluent on an emergency basis. If they had a permit and they violated the standards, the water board would expect us to shut them down until they can comply.”

He said the water board has been fining the city for CEQA violations for a number of years and even though the city has paid them, the water board has not shut down the operation. The latest fine, issued Dec. 11, was for $181,110 with half of that liability paid to the State Water Pollution Cleanup and Abatement Account and the other half suspended pending the city’s completion of an Enhanced Compliance Action project that will reallocate pond #2 to the storm water use. 

“It exceeds the state standards, so it is an ‘enhanced’ project brought about by a compliance action [tomato spill into the San Benito River],” Chambless said. “State law allows us to use up to half the fine amount to complete the project—in this case, $90,000—with the other half of the fine going to the water board.”

Matt Keeling, a spokesperson for the Central Coast Regional Water Quality Control Board, told BenitoLink that while some of the sludge in the ponds may be associated with storm waters, the primary source is “associated with the historical San Benito Foods cannery discharges to the industrial wastewater treatment facility.” 

Keeling said cannery operations and associated discharges to the wastewater treatment plant “are seasonal during the summer months and portions of the [plant] serve as a storm water collection facility during the winter months for a very limited area consisting of a couple of blocks tributary to the combined storm water and cannery discharge line.” He added that the city is ultimately responsible for the operation and maintenance of the wastewater treatment plant and any fines associated with violations of state water board requirements.

“However, as is customary and reasonable for wastewater municipalities, the city can relay associated costs to dischargers through source control requirements via ordinances and permitting agreements (between the municipalities and dischargers) and associated fees,” Keeling said.


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John Chadwell

John Chadwell is a BenitoLink reporter and an author. He has many years' experience as a freelance photojournalist, copywriter, ghostwriter, scriptwriter, and novelist. He is a former U.S. Navy Combat Photojournalist and is an award-winning writer who has worked for magazine, newspapers, radio and television. He has a BA in Journalism and Mass Communications from Chapman University and underwent graduate studies at USC Cinema School. John has worked as a script doctor and his own script, God's Club, was released as a motion picture in 2016. He has also written eight novels, ranging from science fiction to true crime, which are sold on Amazon. To contact John Chadwell, send an email to: [email protected]