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State files lawsuit over North Pole refinery contamination

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Posted: Saturday, March 8, 2014 12:12 am | Updated: 5:53 pm, Fri Jul 18, 2014.

JUNEAU — The state has filed a lawsuit against the current and former owners of the Flint Hills refinery in North Pole, charging that the two caused and failed to stop the spill and spread of chemicals into the area’s groundwater.

The lawsuit filed by the state Attorney General’s office on Thursday alleges that current owner Flint Hills Resources and former owner Williams Alaska are responsible for sulfolane plume seeping from the North Pole refinery and should foot the bill for the cleanup and mitigation for the spill.

The lawsuit holds that the two “have caused or permitted the release of sulfolane” at the refinery, “rendering the ground water impure and unfit for human consumption or use.” It charges that both “have not taken reasonable efforts to contain and clean up the releases of sulfolane promptly after learning of the releases.”

It also seeks to hold both financially responsible for the cleanup, any clean-water system needed if a cleanup is not feasible, the state’s legal costs and ongoing research on the chemical.

A statement released by the Department of Law on Friday explained the lawsuit’s ultimate goal is to determine where exactly the responsibility for the cleanup and mitigation of the groundwater contamination rests:

“Yesterday, the State filed a complaint in Fairbanks Superior Court seeking to allocate responsibility for contamination at the Flint Hills refinery pursuant to the State’s environmental laws. Resolution of this matter will help ensure that the contamination is properly cleaned up and advance the sale of the refinery to a new operator.”

Responsibility for the spill has been a contentious issue. Flint Hills has shouldered the costs of mitigation so far, contributing $25 million of its own money and $50 million of insurance money. The Koch Industries Inc.-owned Flint Hills Resources, however, has argued that it shouldn’t be responsible because the spill occurred under the refinery’s ownership of Williams Alaska, when the land was being leased from the state.

That was reiterated by Flint Hills spokesman Jeff Cook in response to the lawsuit Friday.

“We view this as a positive development. We have said from the beginning that the contamination was caused when the refinery was owned and operated by Williams and the land under the refinery was owned by the state of Alaska,” he said. “We consider Williams and the state of Alaska to be the responsible parties in this matter. We look forward to our day in court.”

The court documents detailing the history of the soon-to-be-closed plant paint a more complicated picture.

The court documents filed in Fairbanks Superior Court outline the history of the refinery from its opening in 1977 under Earth Resources of Alaska, its 1970 sale of the refinery to MAPCO, the 1998 purchase of MAPCO by Williams of Alaska and the 2004 sale of the refinery to Flint Hills. 

During that time, it references nearly 400 documented spills of petroleum products at the refinery, 177 of which occurred under the past 10 years of Flint Hills’ ownership and 126 that occurred during Williams’ six-year ownership. It notes that Williams is believed to have intentionally under-reported its spills.

The court documents say sulfolane was discovered in the on-site testing in 2001 by an environmental consultant hired by Williams Alaska. At that time, little was known about the chemical, but the company continued to monitor sulfolane levels.

Flint Hills purchased the refinery in April 2004, keeping Williams Alaska’s environmental consultant and reportedly “agreed to take responsibility for the sulfolane that was ‘existing, known and disclosed.’”

In 2006, the environmental consultant delivered a report stating that sulfolane levels were increasing, suggesting that it was a continuous leak. Flint Hills took another two years to react, according to the documents, opting to hire a second consultant that returned the same report.

When Flint Hills finally moved into action in 2008, the sulfolane had migrated off-site and started to affect the local water supply. Some 550 properties have received clean water from Flint Hills since 2009.

While the court briefing doesn’t directly link Flint Hills’ gap in action as the source of its responsibility for the spill, it was a point addressed by Gov. Sean Parnell earlier this week to Flint Hills. Parnell rejected an offer to settle Flint Hills’ responsibility in return for the company to pay 10 percent of a piped water system.

“This appears to support the argument 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,” he wrote.

Flint Hills CEO Brad Razook fired back on Tuesday to say that he believes “Alaska has no interest in seeing this refinery operate in the future without extracting unreasonable concessions from Flint Hills.”

Cook declined to comment on the state’s allegations.

However, both the Department of Law and Flint Hills appeared to believe that a settlement is in the cards.

The Department of Law statement said, “Alaska Attorney General Michael Geraghty has notified the parties of the filing. They expressed interest in sitting down with the state to find a path forward.”

Cook pointed to that language, too.

“There’s always a chance for a settlement, so certainly we’re open to that,” he said.

Flint Hills announced plans to shutter its refinery in North Pole earlier this year, citing the cost of cleanup and mitigation for the site as the key factor in the decision. The move would eliminate 80 jobs and the decommissioning of the facility is expected to begin in May.

Flint Hills has since signaled that it has a number of buyers interested in purchasing the refinery to keep it operating but has requested the state find a way to release Flint Hills and the purchaser from legal liability for the spill. Flint Hills offered to pay 10 percent, capped at $25 million, for a distributed water system for the affected properties, some of which would need to be annexed into the city of North Pole or a service district.

Parnell declined the offer for a piped water system, saying such a decision is premature because Flint Hills has not yet completed a feasibility study of the cleanup. He also cited the political challenges of forcing people into a tax district to pay for the ongoing operation of the piped water system. Parnell did, however, clear any potential buyer of the plant by agreeing not to sue as long as a potential purchaser continues efforts to stop any further chemicals from leaking off-site.

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