Heartache from Flint Hills closure; complicated technical, legal debate

As lawmakers learn more about the planned closure of the Flint Hills refinery, they are starting to define their positions on the matter without making firm accusations of blame.

A recent House Finance Committee hearing on the issue showed lawmakers questioning whether the state was being too onerous in its regulations, whether legal proceedings were obscuring the need to take immediate action and whether a solution could be found.

The Alaska Department of Environmental Conservation pushed back, saying it must pursue legal and technical solutions — no matter how complicated those might seem.

The hearing was among the first thorough legislative discussions of the matter since Flint Hills Resources Alaska LLC announced in early February that it would stop refining petroleum products at its North Pole facility by the middle of this year. The company cited ongoing economic troubles as well as a dispute over groundwater contamination.

The contamination incident involves a sulfolene leak from the days when Williams Alaska Petroleum Inc. and its predecessor companies owned the facility and the state owned the land under the facility. The state and the company discovered the leak between 1999 and 2002, before Williams sold the facility and the land to Flint Hills in 2004.

When monitoring detected the chemical in surrounding wells in 2009, Flint Hills undertook a program to replace water supplies for nearby homeowners. Now, the state and the company disagree on how to resolve the matter for the foreseeable future.

Uncertainty factors

The technical dispute spurred the debate. While research suggests long-term exposure to sulfolene can harm the liver, kidney or spleen in animals, the impacts of the chemical on human health is poorly understood, according to Kristin Ryan, director of the Division of Spill Prevention and Response within the Department of Environmental Conservation.

State regulations include acceptable levels for many chemicals, and the SPAR uses those levels to determine whether a cleanup effort is satisfactory, Ryan told lawmakers. For all other contaminants, the parties use a risk assessment to determine acceptable levels.

To determine a level, the assessment takes the best information available on the impact of the chemical on animals, and adds “uncertainty factors.” Those factors include the difference between animals and people, the differences between children and adults, and the difference between fleeting exposure and chronic exposure. While DEC and Flint Hills agree on which study to use as the starting point and what health impacts would be acceptable, they disagree on how to get from the former to the latter, according to Ryan.

Specifically, SPAR started with a more stringent benchmark, applied considerably more uncertainty factors and used a different set of controls than Flint Hills, Ryan said.

As a result, the SPAR reached a more stringent cleanup level than Flint Hills, she said.

The difference caused the regulatory problems.

Flint Hills appealed the decision. The matter is currently before DEC Commissioner Larry Hartig, who told the committee he must reach a decision soon, by statute. While keeping mum on his inclinations, Hartig said he could remand the decision back to SPAR, could refer the matter to a higher administrative office or could deny the appeal, at which point Flint Hills could appeal the matter to the Superior Court, if it wanted.

Those debates blossomed among lawmakers, too.

Ryan said acceptable sulfolene levels range from 320 parts per billion in Texas to 16 parts by billion in Indiana to 1.6 parts per billion in Delaware. Those standards, though, use different criteria and refer to different enforcement actions, she said. Rep. Pete Higgins, a Fairbanks Republican, questioned the Delaware standard and referred to an independent study suggesting acceptable levels much below what SPAR prefers. Ryan said she was unfamiliar with the study and would need to research it before responding.

A costly problem

Currently, Flint Hills is supplying drinking water to 312 homes, according to Ryan. At the standard Flint Hills wants to employ, only three would require long-term solutions, she said, but more than 230 homes would require solutions under the state standard.

Under state law, Flint Hills is responsible for cleaning up the spill, even though it occurred when Williams owned the facility and the state owned the land under the facility, according to Ryan. The law focuses responsibility for the cleanup on the current landowner, but allows the current landowner to seek damages against other parties.

While Ryan praised Flint Hills for responding so quickly when the contamination became known in 2009, the state and the company disagree on how to permanently solve the problem. Hartig believes the impasse is the result of two factors. Flint Hills apparently lost a case against Williams last fall because it missed a statute of limitations, and Flint Hills recently used up an insurance fund created during the sale, according to Hartig.

Now, the state is pursuing Flint Hills as the “responsible party” under the law, but the Alaska Attorney General is also planning a case against Williams, Hartig told lawmakers.

While Flint Hills cited the issue among its reasons for closing up shop in Alaska, Ryan questioned the link, saying Flint Hills would still be responsible, even if it left the state.

Lawmakers target Williams

While Hartig believes Flint Hills is “clearly liable,” lawmakers saw things differently.

“We have a responsibility to the citizens of this state to protect them, and if you have two entities that, for whatever reason, cannot pay for it, or if you’re looking for a superfund cleanup that you can’t get, then it’s going to be on our shoulders to fix the problem. And you can hide behind the lawyers if you like, but that’s not what we should do,” Higgins said, adding that while he felt the state should be responsible for getting clean water to the homeowners, he also felt that the two companies should have to pay their “fair share.”

As the protector of the public and the landowner at the time of the spill, Higgins said the state should take responsibility for ensuring that people get clean water, but Rep. Scott Kawasaki, a Fairbanks Democrat, pointed a finger at Williams, saying that every “three-year-old” knows the rules: “If you spill it, it’s your responsibility to clean it up.”

House Majority Leader Lance Pruitt, an Anchorage Republican, took an even harder line.

“I am very pro-development, but you’re not going to come into my state, rape the land and then leave. If they’re responsible for it, we need to go after them,” he said.

State law requires the responsible party to clean up the spill. If the spill is impossible to clean up, or even prohibitively expensive, the responsible party must take other measures to provide long term drinking water supplies. Those could include bringing rural homeowners in the area onto the existing water treatment grid, which would require annexation or a local improvement district to cover maintenance and construction costs.

The state keeps a fund for spill response. When Rep. Tammie Wilson, a North Pole Republican, asked whether it was sufficient to solve the current problem, Hartig said that the fund is limited to immediate problems, and the state is reluctant to “drain” it. “If we spend money out of it, we want to get money back from the responsible parties,” he said.

Asked about how the state could prevent a similar legal tangle, Hartig said prevention was more important. “When you get to a response, you’ve lost the war,” he said.

—Eric Lidji