FAIRBANKS -- The legal and administrative fight over pollution near the Flint Hills refinery is poised to spread, just like the solvent sulfolane in the groundwater that has traveled three miles from the North Pole refinery.
While one confrontation centers on how much the owner and the former owner would be assessed for cleanup costs, the other deals with a more practical concern -- if the cleanup level proposed by Flint Hills Resources wins the day, only a handful of homes would continue to receive alternate supplies of drinking water. Only three wells off the refinery property, in an area three miles long by two-and-a-half miles wide, have shown a sulfolane concentration above the level that Flint Hills says is safe.
About 550 homes and businesses have received some form of help with water, including water tanks, treatment equipment or bottled water. It may be impossible to remove the chemical from the deeper parts of the aquifer, the state says, which means that the definition of "safe" exposure levels will determine whether long-term alternate water supplies will continue. There is no formal agreement to provide that service.
Flint Hills said it has spent $13 million on alternate water supplies, including providing a "point of entry" individual treatment systems -- systems installed to treat water entering a single home or business -- on 158 properties, as well as 113 bulk water tanks and 48 garden water tanks. It provides bottled water to 32 properties on a long-term basis and temporarily to 240 properties that are near areas where sulfolane has been found. The company said it plans to spend $2.3 million this year on these various water projects.
One challenge facing any entity that might consider taking over the refinery after Flint Hills pulls the plug is that the financial issue of addressing the sulfolane problem will have to be resolved for good. The higher level of allowable sulfolane contamination proposed by Flint Hills would ease that burden and eliminate the need for more water projects. But the question of how much sulfolane is safe for drinking water is not settled.
On the financial front, Flint Hills lost a Superior Court case in November against Williams Alaska Petroleum, the former owner of the refinery, because the judge said the statute of limitations to raise claims about the sale contract had run out. Flint Hills disagrees and will keep trying to collect from Williams, which owned the facility when most of the sulfolane entered the ground. The sale took place in 2004.
Could state be on the hook for cleanup costs?
The state also plans to try and collect from Williams, a diversified energy company. In pollution cases, the state typically identifies "potentially responsible parties" that can be pursued to recover cleanup costs. In this case the potentially responsible parties include the state, which used to own the land, as well as the current and former owners of the refinery.
"Like any other landowner under the circumstances, the state is a potentially responsible party (PRP) under our statutes. However, that has played no role in the process," Alaska Attorney General Michael Geraghty wrote in an email response to a question about why the state has not gone to court over the matter.
"As you know (Flint Hills Resources) was litigating its claims against Williams to allocate responsibility for the contamination but the trial court has ruled FHR is time-barred. The state has been in the process of preparing a complaint to determine ultimate responsibility amongst the PRPs for the situation at the refinery and we expect to file that within the next 30 days," he said.
A state DEC presentation prepared for review by a legislative subcommittee Thursday said the state has spent about $2.9 million so far on oversight work and has recovered $1.8 million.
Flint Hills has announced plans to shut down the refinery in the spring, which has prompted some Fairbanks leaders to consider ways to get a new operator in place and retain the industrial operation, which has provided jobs, tax revenue and fuel for decades. The company blamed rising costs in its decision to shut down the refinery, saying that the price of removing sulfolane from North Pole groundwater is part of the problem.
Other 'potentially responsible parties'
Mapco Alaska bought the refinery in 1980 and Williams bought Mapco in 1998, holding onto the North Pole operation until the 2004 sale to Flint Hills Resources -- a subsidiary of Koch Industries, one of the enterprises controlled by billionaires Charles and David Koch. The state owned the land until shortly before the sale to Flint Hills, so the state may face some liability for the cleanup.
The Tulsa-based company Williams has said its liability could "range from an insignificant amount up to $32 million, although uncertainties inherent in the litigation process, expert evaluations and jury dynamics might cause our exposure to exceed that amount."
Meanwhile, Flint Hills has appealed a DEC decision on the proper cleanup target for the North Pole area. If the state approves the higher level of pollution proposed as safe by Flint Hills, the cost of cleanup would decline. Of the 800 wells tested in the area, 354 showed levels of sulfolane, but the state says only three were above the concentration that Flint Hills believes is safe. The company says a target of 362 parts per billion of the chemical should be the cleanup target, while the state proposal is for 14 parts per billion.
In 2012, the federal Environmental Protection Agency published a peer-reviewed report advocating a cleanup level of 16 parts per billion. The state used the value proposed by EPA and not by Flint Hills. Both the low and the high numbers relied on the same principal study for justification, the state says, and had the same critical endpoint for lab tests, a decrease in the total and differential white blood cell count in female rats.
The big differences between the two studies, however, are that the state used a higher margin of error and a lower starting point for an acceptable of pollution.
Varying cleanup standards
In other areas, there is a wide range of what is deemed acceptable level of sulfolane contamination. In Texas, a cleanup level of 320 parts per billion was selected before the EPA study and in a site where drinking water is not an issue.
In Canada, a level of 90 parts per billion has been approved, based on the same EPA study, but with different uncertainty factors. Delaware has a 1.6 parts per billion level, while Indiana chose 16 parts per billion, both based on the EPA screening levels.
After the cleanup level is established, the next step is to determine what measures would be required if it cannot be met, such as the provision of drinking water over the long term.
Flint Hills Resources says it has "borne the sulfolane problem on its own, without any meaningful participation from the party that caused it or the state of Alaska."
The state estimates that the recorded amount spilled is about 300 gallons. But the solvent has also spilled in other ways, mixing with millions of gallons of groundwater and becoming highly diluted, but still detectable. There are no known ongoing leaks. The chemical is still used in the making of gasoline.
The groundwater flow is north-northwest in the spring and more northerly in the summer and fall, creating a sulfolane plume up to three miles long. Flint Hills has submitted research challenging the DEC position that 14 parts per billion is an acceptable cleanup target for the groundwater.
"Flint Hills has spent over $55 million to address sulfolane issues since 2009," the company told the state in its appeal. "Some of those costs, but certainly not all of them, have been reimbursed through insurance. Even so, Flint Hills has depleted a valuable resource: the insurance is gone and unavailable for any other purpose."
The cleanup level will determine the scope of groundwater monitoring and the degree of work that will be done on the soil. The court proceedings will determine how the costs will be apportioned among the parties.
The DEC says that one of the ways sulfolane got into the groundwater over a period of many years was that the wastewater lagoons had numerous holes in their liners. The wastewater could have had sulfolane concentrations of 35,000 parts per million.
It's not clear why the repairs were not made. Holes were reported in the lagoon liners over a period of years going back to the 1980s. There were also problems with drain lines and sumps, the low spots where fluid was collected.
Flint Hills is extracting groundwater from wells at the refinery, pumping 155 million gallons in 2013, a system that is to be expanded this year. This system "is capturing the bulk of the sulfolane-impacted groundwater," it says.