Locus President Receives The Business Journal’s 1998 Silicon Valley Entrepreneurial Award, The Business Journal/Special Supplement

Founder of Locus Technologies has made his mark in the environmental cleanup arena

MOUNTAIN VIEW, Calif., 27 June 1998 — Entrepreneurial Award Finalist – Emerging Category

Mary Duan
Special to the Business Journal

 

When someone comes looking for the services of Locus Technologies, it is because they have a problem that company co-founder and CEO Neno Duplancic likens to cancer.
But it is not an anomaly of the human body that Locus seeks to cure. Rather, its target anomalies in the air, water, or soil that leads people to the Mountain View-based company.

“If you get to cancer early enough, there is a chance you will survive and get out of it. But if you let it go too long, your chances of survival are minimal,” Mr. Duplancic said. “It’s the same with environmental contamination. If you get to the source early and move aggressively to contain, chances are it would be a major headache and you won’t have to spend a lot of money to remediate. But if you wait until next quarter and then the next quarter, it’s going to cost more and more.” Locus Technologies was founded in April 1997, at a time when nobody, its founders included, thought it was a good time to start an environmental firm. Indeed, Locus found its origins in the failure of another environmental firm where Mr. Duplancic and the seven others who comprise Locus’ management team once worked. Two factors led to the rocky times for the environmental industry. First, environmental regulations that created significant market growth in the 1980s diminished demand in the 1990s.

When Congress enacted Superfund regulations in 1980, an army of engineers and geologists switched to environmental work But that work began to grind to a halt in the 1990s because while a lot of money had been spent investigating remediation, not all that much remediation actually took place.

Second, merger mania began sweeping through the industry.

Mr. Duplancic’s previous employer was acquired by a group of investors, whom he said underestimated the financial needs of the company while at the same time overestimating their management abilities.

“The company found itself in a serious financial crisis,” said Mr. Duplancic. “But we had a good team and good clients and we split to form the new company.”

Meanwhile, the previous employer fell into bankruptcy.

Mr. Duplancic founded Locus with one goal-engineer the lowest cost remedy at its clients’ sites while satisfying regulatory environmental standards. The company helps clients minimize environmental liability by using pure science and renegotiating site remedies with regulatory agencies.

Chevron Oil, for example, was facing a $45 million fee for remediation at the Purity Oil site, where companies dispose of used oil. Chevron officials were somewhat skeptical when Locus told them they could take a different approach.

After conducting studies, Locus was able to come up with a remedy that cost Chevron less than $10 million.

“Better, faster and cheaper. Everything starts with a single bore hole in the ground,” Mr. Duplancic said. “Clients hope we will hold their hands and get them out of trouble. They just want the cheapest and safest way out and that’s where we come into play.”

Mr. Duplancic gained his knowledge of the environmental industry during his years at IT Corp., which eventually became the largest environmental company in the United States, and at D’Appolonia Consulting Engineers in America and Europe. There, he was responsible for nuclear power plants and offshore platform projects in Belgium, Italy, the Netherlands, Spain, Germany, the Mediterranean and the Middle East.

Like many startups, Locus operated on a tight budget at its outset. Startup financing came from six of the founding partners and a Bank of America line of credit.

Mr. Duplancic said within its first two months, Locus landed several major contracts, negotiated favorable payment terms with its major client, and negotiated to rent office space from two major clients.

In its fifth month, Locus became profitable. Initial revenues for 1997 are estimated at $10 million.

Companies from Xerox to Schlumberger, which bought Fairchild Semiconductors and inherited its contaminated sites, have turned to Locus Technologies since its founding. In so doing, some of these companies have found Locus was able to solve problems that had confounded other environmental firms.

Xerox, for example, had been trying for some time to obtain a letter of closure from the Regional Water Quality Control Board for a site in Hayward it wanted to vacate.

When Xerox retained Locus, engineers conducted an environmental audit and found contaminants in a shallow groundwater aquifer and a small area of the unsaturated soil above the aquifer. The water contamination was not a threat to public water supplies, but the soil required remediation. Using a conventional method – a soil cap – would have required a maintenance lifetime of 200 years to keep the Environmental Protection Agency happy.

Using a new policy that was about to come into effect, as well as newer technology to reduce the soil contamination, Locus eliminated the need for a soil cap. Within three months after landing the project, Locus obtained the letter of closure for Xerox.

The Xerox project was Locus’ first job and it remains a favorite story of Mr. Duplancic’s.

“This was a case where no matter what Xerox did and how they did it, none of it made a difference because they couldn’t get that letter,” Mr. Duplancic said. “Xerox had used many consultants there, they called us on short notice and we were able to figure out how Xerox could use this new policy.”

Mr. Duplancic’s involvement with Schlumberger dates to 1982, when he was with a previous employer.

He and members of his team were retained by Fairchild Semiconductors to address the now-infamous South San Jose site, which at the time was considered to be a small project.

When Schlumberger acquired Fairchild, it also acquired the company’s problems, which snowballed so much that Mr. Duplancic’s team now manages all of Schlumberger’s contaminated sites in California and one in New York.

“They didn’t know at the time they had such a problem. But they are very responsible corporate citizens,” he said. “They are trying to prevent the spread of contaminants and we are applying some pretty exciting technologies.”

Tom Jones, who manages contaminated sites for Schlumberger, believes that not using Locus is a mistake most companies can’t afford to make.

“In environmental cleanup technology, disciplines are intertwined. I don’t know if it was by happenstance or design, but Locus has each of the disciplines represented in its group,” he said.

Barbara Jagiello, a San Francisco attorney who met Mr. Duplancic at a Croatian-American event, finds that people are drawn to Mr. Duplancic not only because of his impressive credentials, but because he doesn’t spend a lot of time talking about himself.

“He listens a lot and watches a lot and he seems to have a good sense of people and how they are likely to respond,” she said.

Mr. Duplancic is watching how his company is likely to grow in the coming years. Most likely, he said, expansion is in the future.

“We know what we do well and we are good at it,” he said. “Our goal is to put a couple of more points on the map, where our primary growth will come from, and then we will try to go international.”

Automatic Savings, Civil Engineering Magazine

Read the Press Release Here

Walnut Creek, Calif., 1 June 1998 — In the last several years, growth in the environmental remediation industry has slowed. One reason is that at many contaminated sites remedial construction activities have been completed and the operation and maintenance (O&M) phase has begun. However, this slow growth, accompanied by increased competition, does not necessarily translate into cost savings for the owners of contaminated sites with long term O&M requirements.
Long-term O&M costs often dwarf engineering and remedial construction costs, but they don’t have to. By negotiating with regulators for adequate cleanup standards, reducing labor through automation and standardizing environmental reporting and record keeping, site owners often can shut down a system early or reduce the long term operating costs of environmental treatment systems by 30% to 50%.

Construction of a $1 million groundwater treatment plant operated for 30 years or more, for example, typically would be preceded by five years of consulting, regulatory negotiation and engineering costs. These initial costs would total about $300,000. After construction, the O&M phase might continue for 30 years. If the initial O&M cost is $40,000 per year and the inflation rate is 3%, the true future cost of O&M exceeds $2 million, which is substantially higher than consulting, engineering and construction costs combined (see Remedy Total Cost). Even a 10% reduction in O&M costs can produce enormous savings in the long run. The following four strategies can help to lower overall O&M costs:

  • Negotiate with regulators to reduce O&M requirements
  • Design a system that will require less servicing
  • Automate the system so that human factors play a minimal role in routine tasks
  • Computerize environmental data management and reporting

The ability to influence overall project costs is greater at the early stages of development. The engineers and scientists involved in the project need to establish a scientific approach to determining when to shut down in situ remediation systems, such as groundwater treatment or soil vapor extraction processes. These processes typically provide an initial rapid decline in contaminant concentrations, followed by a gradual flattening of removal efficiency over time.
Contaminant levels eventually get so low that the system can no longer reduce them. In many cases, the contaminant concentration may be higher than the cleanup standard, but continued operation of a treatment process in this situation is unwarranted, wasteful and ineffective. No discernable benefit can be obtained.

A policy for shutting down a treatment process that is based on the rate of change of the concentration versus time could save millions of dollars in cleanup costs. This would be consistent with Californian’s Containment Zone Policy. The policy, adopted in October 1996, recognizes the futility of trying to remediate groundwater to drinking water standards without considering technological and economic limitations.

In addition, a shutdown standard based on science could justify an impracticability waiver from the U.S. Environmental Protection Agency, based on the inability of the system to achieve required cleanup levels using available remedial technology. This approach offers the owner an opportunity to shut down a system early and renegotiate sampling and reporting frequency. When a system can no longer significantly reduce the concentration of contaminants, groundwater concentrations change slowly. Frequent well sampling and monitoring are unjustified and wasteful.

Locus’s Superfund Success, San Jose Mercury News

After a 15-year groundwater cleanup, San Jose’s Fairchild site is deemed safe enough to be reborn as a shopping center

Paul Rogers, Mercury News Staff Writer 9 September 1997 — Imagine building a supermarket on a Superfund site.

That’s right, shoppers: Milk, lettuce and lunch meat sold on land that remains classified by the U.S. Environmental Protection Agency among the nation’s most serious hazardous waste sites.

An episode of the Simpsons?

Hardly. It’s an upcoming possibility in San Jose.

On Wednesday, the San Jose planning commission is scheduled to consider zoning changes to allow Mountain View businessman Ray Ferrari and his brothers to build a Lucky supermarket and strip shopping center at the former Fairchild Camera and Instrument Corp. property at 101 Bernal Road in South San Jose.

The site made headlines in 1981 when workers discovered that chemical solvents had leaked from underground storage tanks there and contaminated groundwater. During an exhaustive 15-year cleanup, the property has remained fenced off and abandoned since the Fairchild plant closed in 1983.

If given the go-ahead by the planning commission and San Jose City Council next month, the Ferraris may oversee the first Superfund-to-supermarket conversion in the United States.

But before you rush to call Woody Harrelson or Greenpeace in outrage, consider this: The government regulators charged with cleaning up Superfund sites in the Bay Area say the plan is perfectly safe.

The science is good, they say. The measurements don’t lie.

After $40 million in cleanup work and billions of gallons of groundwater pumped and treated, the stigmatized site is so clean now they say they’d take their own kids to shop there.

“It will be a safe place to shop,” said Loretta Barsamian, executive director of the San Francisco Bay Regional Water Quality Control Board, based in Oakland. “There’s no risk unless you’re going to let your kid dig through the parking lot down 50 feet deep.”

 

 

 

Anyone worried about shopping one day on the Fairchild site should worry more about paint thinner in the garage first.

Then they should fret about their liquid paper and WD-40, which expose them to higher concentrations of the same types of solvents that exist in Fairchild’s groundwater, said Stephen Hill, an environmental specialist with the regional water board.

“It would be impossible to be exposed to an unsafe level of solvents at this site because of all the work that has been done,” said Hill.

Yet although scientists from the EPA and the regional water board say the Fairchild site is safe enough to be reborn as a supermarket, those same regulators also say that Fairchild isn’t ready to be removed from the Superfund list just yet.

In fact, it might be decades until it comes off the list, said Hill.

How can that be?

The rules are tough. Some say too tough.

The Fairchild paradox — that a property can be clean enough for a supermarket yet not clean enough to leave the Superfund list — dramatically highlights what critics describe as the unrealistically strict, costly and confusing regulations that govern EPA’s Superfund program.

But environmentalists maintain that polluters should be forced to return contaminated soil and water to their original state, regardless of the cost, as a deterrent.

In December 1995, the regional water board, which oversees most of the 28 Superfund sites in the South Bay, agreed with private engineers and said that trace amounts of solvents in groundwater at the Fairchild site do not present any human health risk.

Yet the Fairchild site remains trapped on a federal Superfund list that includes such infamous toxic horror stories as the Rocky Flats nuclear plant in Colorado, and the dioxin-laced communities of Times Beach, Mo. and the Love Canal neighborhood of Niagara Falls, N.Y.

“It’s very frustrating,” said Tom Jones, a Mountain View environmental engineering consultant who has worked on the Fairchild site for 15 years.

“There are some sites in the United States that are going to be contaminated for 50 or 100 years,” he said. “Those are toxic dump sites. You wouldn’t build on them. You wouldn’t take your kids to them.”

A sense of exasperation creeps into his voice.

“But we’re not talking about that here,” Jones said.  “We’re talking about groundwater. And this site has been cleaned up.”

San Jose’s city environmental compliance officer agrees.

 

 

 

“There’s nothing irrational of being afraid of chemical exposure, but people need to recognize relative risk,” said Gary Lynch. “In this case, it’s so low, we can’t even calculate it.”

Lynch, a San Jose State University professor with a master’s degree in public health and a doctorate in environmental engineering, said many people have a phobia of concepts like Superfund and chemicals because they don’t understand science enough to differentiate between types, amounts and exposures.

Nor does the public often consider all types of risks, he said.

“The average person gets in a car, smokes a cigarette and drives without a seat belt to go to the store to buy a bottle of bottled water,” said Lynch. “When you look at the risks, it’s laughable.”

Nearly two decades ago, the Fairchild leak touched off a major controversy and led to tough new laws about hazardous chemicals in California.

After the leak was first discovered in 1981, investigators found that a public drinking water well run by Great Oaks Water Co., had been contaminated.

A 1985 state health department study indicated a higher-than-normal incidence of birth defects and miscarriages the South San Jose neighborhood near Fairchild from 1977 to 1983, but found no conclusive link between the contamination and health problems.

Nevertheless, about 500 residents sued Fairchild and other defendants. In 1986, Fairchild and the others agreed to pay them an undisclosed, multimillion-dollar settlement. Today, Fairchild Semiconductor is headquartered in Maine, and owned by National Semiconductor.

The contaminated Great Oaks drinking water well was sealed long ago and no other public drinking water has been affected.

Meanwhile, Fairchild’s underground plume of contaminated water has shrunk substantially because of pumping and natural decomposition.

The main chemical solvent that leaked — a substance similar to paint thinner — remains in trace amounts roughly 50-75 feet below the ground.

Known as TCA, or trichloroethane, the chemical was used at Fairchild to clean semiconductors and other electronics parts.

After the contamination was discovered, workers dug up the leaking storage tank and removed it in 1982. Then crews hauled away nearly 500 dump trucks full of contaminated soil. Afterward, they built a clay containment wall, three feet thick, and sunk down to 100 feet, around the perimeter of the site, to keep solvents from moving.

“I don’t think there’s any piece of ground in California — if not the nation — that’s been put through so much remedial cleanup work,” said Ferrari.

Since then, wells have pumped the groundwater 24 hours a day and removed the TCA in a process known as “air stripping,” which blows air through the contaminated water to speed up the evaporation of solvents.

 

 

Two wells pump and treat 100 gallons of water a minute. That adds up to more than 50 million gallons of water a year — enough to fill 2,000 backyard swimming pools. That clean water is then rejected into the ground on the other side of the containment wall.

After 15 years, samples taken this summer show that in almost every area around the abandoned old plant, the groundwater is so clean it now meets state drinking water standards. A few spots near the tank site show higher levels of TCA.

But none are good enough to meet government rules.

Fairchild’s cleanup order, issued in 1989 by the regional water board and approved by EPA, says that solvents in the groundwater must be cleaned around the site to an almost pristine level — a standard the agency’s own regulators today concede may be impossible to meet.

Inside the plant’s 22-acre boundary, the groundwater must be cleaned to California drinking water standards — even though no one is proposing drinking it. And underneath the neighboring lots, the groundwater must be made four times cleaner than the drinking water now coming out of millions of Bay Area faucets, even though, again, no one is proposing drinking that underground water either.

Officials for Schlumberger Ltd., the French oil equipment company that bought Fairchild in 1979 in what proved to be a disastrous business move, say that after spending $40 million, they are still spending $483,000 a year to squeeze the final parts per billion from groundwater no one drinks.

“If this site was discovered now in its present form, it wouldn’t be added to the Superfund list,” said Elie Haddad, a consultant with Locus Technologies of Mountain View, the firm overseeing the cleanup. “It has been a great success.”

Dozens of other high-tech companies across Silicon Valley, inlcuding Intel, IBM and Hewlett-Packard, are caught in similar debates over tainted groundwater on their property and are growing increasingly frustrated.

Of the 28 Superfund sites in the South Bay, all but two are cases in which high-tech companies leaked solvents into groundwater during the 1960s, 1970s and 1980s. Many of the solvents have been replaced by soapy water or citrus-based liquids in modern-day chip operations, and new laws require stricter handling of hazardous chemicals.

Yet the EPA and the regional water board has never removed one South Bay site from the Superfund list.

EPA officials say the standards are not unreasonable.

“Even though that groundwater isn’t being used now, it could be in the future,” said Lois Grunwald, a spokeswoman for the U.S. EPA in San Francisco. “Water is a valuable resource, especially in the West.”

Many environmental groups say tough standards are sometimes the only way to make companies clean up their acts.

“It may be an expensive endeavor, but what we’re trying to get across to corporations is that they should be thinking about this on the front end,” said Denny Larson, a program director with Communities for a Better Environment based in San Francisco. “They need to be thinking about the tremendous cost of cleaning pollution up before they pollute.”

The debate is nationwide.

 

There are 1,200 Superfund sites in America, but only 130 have been removed from the list since Congress and President Carter created the program in 1980.

Critics argue that Superfund program wastes money.

“An industrial park does not need to be as clean as a playground,” argued environmental analyst John Shanahan in a 1995 report by the Heritage Foundation, a conservative Washington D.C. think tank.

On average, EPA has estimated that it takes companies 12 years and about $25 million to clean up Superfund sites nationwide, Mort Mullins, vice president of the Chemical Manufacturers Association, noted last year at a toxics conference.

“America put a man on the moon in less time than it takes to put a Superfund site back into productive use,” he argued.

The law also requires that “polluters pay,” an idea popular with the public. But often, pollution was caused over decades, by dozens of companies, sometimes dating back to the 1800s. Cleanup has been delayed at hundreds of sites while various companies and the EPA have sued each other.

California Gov. Pete Wilson and President Clinton have worked to ease some of the programs’ burdens.

Under a new state policy designed to help return contaminated properties to productive uses, last February the regional water board promised not to hold American Stores liable for cleanup costs if it buys six acres of the Fairchild site for the Lucky supermarket. That liability stays with Schlumberger.

Ferrari had trouble getting loans for his project because of the infamous reputation of the Superfund list. Now, he said, he hopes city leaders will view the old Fairchild site as an opportunity for renewal.

“We’re getting rid of an old building, and bringing in a community shopping center,” he said. “This is the best thing that could happen for the neighbors’ property values.”

From Superfund to Supermarket

Read the Press Release Here

Stop Superfund Stagnation

Read the Press Release Here

Hazardous Data Explosion

Read the Press Release Here