JUNEAU—Gov. Sean Parnell may have cleared a potential buyer of the Flint Hills refinery from responsibility for groundwater contamination by the North Pole plant, but he is not going to be letting Flint Hills off the hook any time soon.
In a letter sent Monday to Flint Hills President and CEO Brad Razook, Parnell said the state will not bend the rules for Flint Hills on the cleanup by lowering environmental standards or clear the company of responsibility in return for Flint Hills’ offer to pay for 10 percent of a piped water system for the affected properties.
“At present, I have no direct evidence that a purchaser for the refinery actually stands waiting in the wings. Still, I have taken a giant step to clear a path for such a buyer, while protecting the interests of Alaskans,” Parnell wrote. “FHR will remain responsible for contamination after the sale, but the state has made a path for a new buyer of the refinery. The buyer would not be burdened with the liability that FHR holds.”
The letter is in response to one sent by Flint Hills last week that stated it had “a number of inquiries” from parties interested in buying the plant. The letter outlined an argument that former owner Williams Alaska, under which much of the spill is believed to have occurred, and the state, which owned the land at the time, should be held responsible.
The Koch Industries Inc.-owned Flint Hills announced plans earlier this year to shutter the plant and lay off 90 employees, citing the ongoing costs of the sulfolane cleanup as a primary driver for the decision. In last week’s letter Flint Hills said it had so far spent $75 million on the cleanup and mitigation, $25 million of which was outside insurance. It has been delivering bottled water to the affected residents.
About 550 homes and businesses have received some form of clean water assistance from Flint Hills.
Parnell rejected what he termed Flint Hills “attempts to shift all responsibility to Williams and the state.” He said the same court decision that found Williams Alaska couldn’t be sued by Flint Hills because the issue was time-barred also suggested that “the migration and impacts of the sulfolane contamination would not have been as great had FHR followed through with its responsibilities at the site.”
Parnell wrote that the spilled sulfolane continues to spread, along with concern about the contamination of drinking water in the area. Parnell said the state will not commit to lowering its environmental standards but said it does “have the ability to allow contamination to remain in the ground or in the groundwater above cleanup levels” if people can be kept safe with clean water alternatives.
That touches on Flint Hill’s proposal included in last week’s letter to pay for 10 percent, capped at $25 million, of a public water system for the area in return for being cleared of all future costs of the cleanup.
Parnell addressed that proposal, saying there’s still a number of outstanding concerns with building a piped water system. Firstly, he said such a decision was too early because Flint Hills has not yet completed a study to determine whether a cleanup is feasible or not. Regardless of the timing, Parnell said that such a proposal simply might not fly with local residents.
“While we recognize a piped water system can be a solution, it is not clear that a piped water system is something impacted Alaskans will accept,” he wrote. “The state and/or local government would need to contribute a significant portion of the cost of design and constriction of a piped water system. The local government or community would need to pay for the ongoing operations of a piped water system.”
Despite the harsh reminder that the state will continue to look to Flint Hills as the responsible party for the cleanup, Parnell said he’s working with the Department of Law and the Department of Environmental Conservation to assess the scope of the environmental liability, the feasibility of a cleanup and the possibility of an alternative water source.
“With a clear path for a willing buyer, there is no reason for FHR to hold up any potential purchase of the refinery,” he said. “And, with a path to resolve environmental contamination through negotiation and public engagement, we should be able to provide some certainty on environmental contamination caused by both Williams and FHR.”
Flint Hills spokesman Jeff Cook declined to comment on the letter, saying the company would respond directly to Parnell.
Contact staff writer Matt Buxton at 459-7544. Follow him on Twitter: @FDNMpolitics.