Pinedale accepts settlement in water testing lawsuit


PINEDALE — To regain its image, large expenses and relief from federal water quality regulations, the Town of Pinedale filed a civil complaint June 30 against former water-quality lab Zedi US Inc., claiming “professional negligence” led to inaccurate, expensive and negative results when its 2018 tests seemed to show Fremont Lake raw water was tainted. 

The complaint was filed in 9th District Court and assigned to Judge Marv Tyler – and as of Aug. 26, nothing else was filed to further the case. 

However, following a closed executive session during the Aug. 24 Pinedale Town Council meeting, a motion was approved to accept the settlement agreement with Banded Iron, Zedi for $175,000. 

“I think it’s been the town’s position that there have been errors in the lab tests that triggered the actions by the EPA and the Fremont Lake Study,” Mayor Matt Murdock said following the meeting. “The purpose of the lawsuit was to recoup some of the costs and repay the town.” 

The settlement agreement was not filed in the court but should be completed in September when it will be made available to the public, Murdock said. 

Following a review by the town’s legal counsel, Murdock released a statement. 

“After the completion of the Fremont Lake Watershed Study, the Town of Pinedale was firmly convinced that Zedi Labs had made an error in its initial sampling in 2018, which led to the erroneous report that there were fecal coliforms in Fremont Lake which led to the EPA ruling and significant expenditures by the Town,” the statement said. 

“Based upon that conviction, the Town filed suit against Zedi and the companies who purchased its assets. Prior to filing any lawsuit, the Town attempted to settle with Zedi, which took the position there was no negligence or liability on its part and refused to offer any settlement,” the statement said. 

The sale of the company posed additional problems for recouping any losses. 

“It was discovered that Zedi (which had been acquired by a company named Banded Iron) no longer has a United States company or United States assets and the company (which is in Canada) was being dissolved. It was also discovered that the company’s insurance policy (that was in effect at the time) did not cover water testing – only oil and gas,” the statement said. 

“After review of the formal lawsuit that was filed, but without acknowledging any fault or liability, Zedi made an ultimate settlement offer of $175,000. This offer was accepted by the Town. It is expected that the money will begin to reimburse costs to the Town and the State Land and Investment Board (SLIB) which provided essential emergency funding, as well as for attorney’s fees incurred in litigating the matter,” it states. 

Town officials were mystified when Zedi, located in Pinedale until October 2018, began showing noncompliant fecal coliform tests and the Environmental Protection Agency demanded expensive solutions – which Pinedale officials did their best to address. 

“The town is required by the EPA to test its water for total coliform analysis and fecal coliform analysis,” the complaint says, and Fremont Lake “historically exhibited higher levels of total coliform at the same time each year (July-September due to higher temperatures.)” 

But even with high coliform levels in the summer, “no fecal coliforms above EPA requirements were observed in the previous 14 years of monitoring Fremont Lake.” 

“In July, August and September 2018 (Zedi, later known as Banded Iron US Inc. and acquired by SPL, Inc.) testing detected noncompliant fecal coliform in the water samples taken from the town’s raw water intake testing site from Fremont Lake,” states the complaint written by attorney Elizabeth Greenwood. 

The lab never isolated E. coli from the samples, which “supports a finding that the fecal readings are invalid as it is highly unlikely that E. coli isolates would be absent,” it states. 

Zedi’s reports “were highly probable false positives due to the negligent testing and lab conditions maintained by (Zedi) in 2018.” 

During the summer, it says, Zedi did not keep its waterbath “broth” at the recommended consistent temperature of 44.6 degrees Fahrenheit, did not follow its standard operating procedures and also left open its doors to allow oil and gas vehicles to go in and out and bring temperature changes, it states.

Even as town officials worked to correct the situation and isolate the potential source, Zedi kept reporting high fecal coliform levels in the water samples, the complaint states. 

Tests seemed to show that all of Fremont Lake was being contaminated simultaneously by a single source, it says.

In October 2018, Zedi closed its lab and referred the town to its Riverton lab, which officials learned could not get EPA-certified to test for fecal coliform, “reportedly having failed at least two proficiency tests.” 

It wasn’t until the town sent samples from August and September to Zedi and another lab – Energy Laboratories in Billings, Montana – that Zedi’s test processes and analyses came under the microscope, the complaint states. The town since set up its own lab and has certified staff for testing the town’s water samples and other samples submitted by the public. 

The town gathered water samples in late August and September 2018 and sent some to Zedi and some to Energy Laboratories. Some arrived in an eight-hour window; others that arrived late at Energy Lab’s Billings location were not used for an official comparison, the complaint says. Regardless, Energy Labs detected no fecal coliforms. 

Both labs were asked to do tests at the same time and again, Zedi reported fecal coliform while the Energy Labs’ test did not. Neither reported E. coli counts. 

“(Zedi) did not even obtain the supplies for confirming fecal coliforms until late October 2018,” it states. When Zedi “performed its single confirmation test in October 2018, it came back as negative for a fecal coliform.” 

However, the past test results had already “triggered EPA action against the town,” requiring Pinedale to remediate the results “with extremely expensive options.” 

The first was installing expensive filtration equipment on Fremont Lake with a $16-million cost. 

The second option required Pinedale to develop another water source and disconnect Fremont Lake’s public water system. 

The third option required a watershed study to identify fecal coliform sources at intakes, modify and mitigate the sources and write a description of how these measures would mitigate the sources. The town chose this option at a cost of nearly $400,000, the complaint states. 

The complaint asks for a six-person jury trial to determine if the “samples had been properly tested,” whether or not the “false images” of Fremont Lake’s water for drinking and recreation would have resulted. 

It also asks for damages to cover costs of duplicate testing, EPA requirements and the impacts of the “highly probable false negative” results to Pinedale’s reputation and that of Fremont Lake. 

Through the end of July, Pinedale Town Clerk Maureen Rudnick said the town has paid legal fees to Greenwood Law for more than $10,700 to litigate the lawsuit and she anticipated at least one more invoice. 

“We’re grateful for the help and support of SLIB and the many agencies that contributed to our Watershed Study, and to Branded Iron/Zedi for doing their best to make up for our loss,” Murdock said in his statement.

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