Default Notice Issued as Stormwater Contamination Battle with Fort Bragg Escalates

Fort Bragg's failure to respond to allegations by the mill site owners adds a new twist in $10–50 million lawsuit over allegedly toxic stormwater and dioxin contamination.

The Mendocino Railway presents its mill site development plans to Fort Bragg residents a day after winning a default judgement against the city. (Photo by Elise Cox)

1:53 p.m. Sept. 12, we fact-checked the story at the request of Mendocino Railway and added specific details around how Mendocino Railway became owner of the mill site and what was known about the presence of dioxins in the pond sediment at the time the property purchased through a so-called “friendly eminent domain” transaction. We also clarified that Scott Hockett was the only new councilperson elected in 2024.

Sept. 11 our story was edited to clarify that the railways acquired the majority of the mill site in a friendly eminent domain transaction and to clarify that the default was entered by a clerk, not a judge. The spelling of Robert Pinoli’s name was also corrected.

A court clerk on Tuesday entered a default notice in response to a request by the Sierra Northern Railway and Mendocino Railway in a case they filed against the city of Fort Bragg.

The railways sued the city in federal court in August 2024 over ongoing contamination of Mill Pond 8, located on the site of the former Georgia-Pacific lumber mill, by hazardous substances including dioxins and furans. (Both Mendocino Railway and Sierra Northern Railway are subsidiaries of the Sierra Railroad. Mendocino Railway transferred the area of the mill site containing Pond 8 to Sierra Northern Railway three years ago.)

According to the railways, the city discharged untreated, hazardous stormwater onto their private property for years, effectively transforming the eight-acre pond into an unlicensed toxic waste dump.

The companies are seeking between $10 million and $50 million for investigation, remediation and cleanup.

The judgment comes amid a long pause in litigation between the city and the railways. The lawsuits date back more than four years, when the Mendocino Railway and Georgia-Pacific first agreed to a transaction that transferred 292 acres of the mill site owned by Georgia-Pacific to the railway.

The lumber company had previously sold 77 acres to the railway to Mendocino Railway in 2019. The operator of the famous heritage train known as the “Skunk Train,” Mendocino Railway purchased the railroad’s assets out of bankruptcy in 2004.

On August 11, 2021, Mendocino Railway filed a complaint for eminent domain for an additional 292 acres of the mill site owned by Georgia Pacific. Eminent domain is the government's power to take private property for public use. It is governed by the Fifth Amendment to the U.S. Constitution, which establishes a constitutional responsibility that the government must provide "just compensation" when it takes private property for "public use." A public utility that maintains infrastructure for an essential public service can also use eminent domain.

The eminent domain process typically involves an appraisal and an offer. If the offer is not accepted, the government or public utility can file a lawsuit.

In its August 11, 2021 eminent domain lawsuit, Mendocino Railway said it required the land in order to construct and maintain railroad facilities necessary for its “ongoing and future freight and passenger rail operations.”

Georgia Pacific responded on September 9, 2021. The lumber company challenged Mendocino Railway’s attempt to condemn its property and asserted the the project described by the railway was “not a public use.” The lumber company alleged that the railway’s use of eminent domain violated Article 1, Section 19 of the California Constitution and Section 1240.010 of the Code of Civil Procedure.

On October 28, 2021, Fort Bragg filed its own lawsuit. The city sought a ruling on a single question: could the Skunk Train operator be considered a public utility? The city also asked a judge to require the railway to comply with municipal ordinances and regulations.

On November 17, 2021, Mendocino Railway and Georgia Pacific ended their dispute with a stipulated agreement that provided Georgia Pacific with $1.2 million from Mendocino Railway. In the agreement, Georgia Pacific stipulated that Mendocino Railway’s proposed project was a “public use” and that the railway was entitled to use eminent domain to condemn its property.

The agreement cited a state remediation order (California Department of Toxic Substances Control Site Investigation and Remediation Order HAS-RAO 06-07-150) as justification for the “fair market value” of the mill site “in its environmental and physical condition as of said date.” The order, dated 2007, notes the presence of dioxins in pond sediment (1730 pg/g — a very high level, hundreds of times above natural background levels and likely to pose ecological and possibly human health risks). The report also noted that Pond 8 “receives stormwater from the City of Fort Bragg.”

The California Coastal Commission joined the city’s case against Mendocino Railway on Oct. 27, 2022. Mendocino Railway responded by suing the city and the commission in federal court, requesting an injunction to prevent interference in its operations. A federal judge dismissed that lawsuit, and a federal appeals court upheld the dismissal on Aug. 29, 2024. The decision is on appeal to the Supreme Court.

On Nov. 25, 2024, following the election of a new councilmember — Scott Hockett — the city and the railway jointly asked for a 90-day stay in litigation to explore settlement terms. The stay, which did not apply to the stormwater runoff case that had been filed four months earlier, has since been repeatedly extended while the two sides negotiate a master development agreement.

Meanwhile, the lawsuit over the stormwater has continued. The railways filed their first complaint in August 2024, then filed amended complaints in November and December. Fort Bragg responded in February 2025, arguing that the railways had no cause of action under the Comprehensive Environmental Response, Compensation and Liability Act. The city said the claim was not tied to actual remedial action and that the railways themselves were potentially responsible parties, further disqualifying their claim.

Because the railways had already amended their pleadings twice, the city argued that further amendments would be “futile.”

The railways went ahead and filed a third amended complaint on Aug. 4, 2025. When the city did not respond, the railways filed a motion for default judgment, which was entered into the record on Tuesday.

On Wednesday, city officials joined the public and the Coastal Commission on a mill site tour offered by the railways to coincide with the commission’s September meeting, being held this week in Fort Bragg. A Mendo Local editor informed City Manager Isaac Whippy of the default during the tour. We will add the city’s statement when it is available.

Robert Pinoli, president and CEO of Mendocino Railway, acknowledged the ongoing cooperative efforts between the city and the railways in an interview with Mendo Local during the tour, but he says the railways believe the city should pay. “The fact of the matter is that there continues to be a discharge of stormwater into the very ponds and area that people want remediated,” he said. “It’s one thing to say, ‘OK, landowner, go remediate the property,’ but if the very next day more pollutants are coming out, then the remediation is for nothing.”

Read more stories related to the legal battles over the former Georgia-Pacific mill site:

Federal Railroad Agency Affirms Mendocino Railway’s Carrier Status