Flint Hills Refinery

Flint Hills Resources North Pole Refinery, shown here Friday, April 13, 2012, announced earlier in the week its plans to idle one of its two operating refinery units, a move that will result in layoffs for roughly a quarter of its local employees.

FAIRBANKS—The previous owners of the Flint Hills refinery can be held at least partially responsible for a chemical spill that has contaminated the groundwater of some seven square miles in North Pole, the Alaska Supreme Court ruled Friday.

The Supreme Court reversed a Fairbanks Superior Court decision that found Williams Alaska Petroleum and its parent company couldn't be held responsible for spilling sulfolane. The lower court ruled Flint Hills filed its claims after the time limits set by state law and the sale contract.

Flint Hills purchased the refinery from Williams in 2004, knowing about the sulfolane spill but not that it had migrated off the refinery land. Sulfolane was unregulated at the time, but it came under the scrutiny of the Alaska Department of Environmental Conservation almost immediately after the sale.

Flint Hills began formal monitoring efforts in 2008 and was sued in January 2010 by a neighbor for contaminating his drinking water. Flint Hills filed a cross-claim against Williams in May 2010, seeking financial help with the cleanup and remediation efforts.

The Supreme Court ruled that the lower court applied incorrect state laws and an incorrect reading of the contract. The high court's decision means Flint Hills can recoup costs through measures contained in the contract, up to a limit set by the contract, and that state law holds Williams responsible for the sulfolane plume that migrated off the Flint Hills refinery land.

The decision Friday doesn't settle any of the actual payouts required by the decision. That matter will be determined in Superior Court, where the justices remanded the case.

During oral arguments before the Supreme Court last year, Kathleen Sullivan, an attorney representing Flint Hills, said the company has spent "tens of millions of dollars" providing clean drinking water and conducting cleanup at the refinery.

Flint Hills applauded the decision as a victory in the long-running battle over the responsibility to clean up decades of spilled sulfolane, a water-soluble chemical used in the refining process.

"We are still studying the opinion, but overall we are pleased with the decision of the Alaska Supreme Court," Flint Hills spokesman Jeff Cook said in a prepared statement. "We look forward to our day in court when these and other claims can be resolved."

Cook declined to discuss the case further, citing the ongoing litigation.

Flint Hills has been supplying water to some 1,500 households affected by the groundwater contamination but has offered no publicly available figures on how much that has cost.

Flint Hills remains legally responsible for cleaning up the refinery land, the Supreme Court ruled, finding the two-year limitation applied by the lower court was correct. Flint Hills argued that a six-year statute of limitations applied and that Williams therefore should be held responsible for the on-site cleanup.

According to the Department of Environmental Conservation, the cleanup is underway, with the installation of an upgraded groundwater filtration system and onsite soil excavation and disposal last summer.

No off-site cleanup has been conducted, the Department of Environmental Conservation confirmed Friday. Flint Hills has sparred with DEC over cleanup requirements for sulfolane. That's largely because sulfolane is considered an emerging pollutant and there's little scientific research or understanding of its potential health impacts.

The National Toxicology Program launched a two-year study on sulfolane at the request of the DEC in May 2015.

During oral arguments, the attorney representing Williams Petroleum was critical of Flint Hills for its slow response to the sulfolane spill. Court records show Flint Hills, despite warnings by both state regulators and its own contractors, didn't confirm that the sulfolane had spread off the refinery land until it finally drilled wells in 2008.

"Despite the advice to go out and find the sources, it doesn't appear that Flint Hills has done much to find the sources," said Randy Jones, the attorney representing Williams, during the arguments. "So for four years of being told to look for sources, they didn't look for sources."

Jones argued the three-year statute of limitations for breach of contract should have started then, not when Williams rejected Flint Hills' request to pay for the clean up in 2010.

Justice Daniel Winfree said that the response to the spill wasn't the issue in front of the court, but, instead, very narrowly was the statute of limitations surrounding the case.

"The record is pretty clear that neither company did very well in terms of looking for this problem," he said, "but that's not the issue."

Contact staff writer Matt Buxton at 459-7544. Follow him on Twitter: @FDNMpolitics.