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Energy & Environment

Past, Present Owners of North Pole Refinery Clash Again in Court Over Groundwater Contamination

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Alaska Department of Environmental Conservation
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Teams of lawyers representing the past and present owners of the North Pole refinery are preparing for the next round in court while awaiting rulings by a Fairbanks judge after a weeklong hearing in the long-running legal fight over who’s responsible for tainting North Pole’s groundwater with an industrial solvent, and who should pay for helping area residents whose drinking water has been fouled by sulfolane.

A half-dozen lawyers argued for five days over arcane legal issues in the latest proceeding of a case pitting North Pole refinery owner Flint Hills Resources-Alaska against the previous owner, Williams Alaska Petroleum – a case that’s outlined in 25 thick volumes of documents, perhaps the biggest case file at the state courthouse.

Superior Court Judge Michael McConahy summed up the issues when he said early on that the focus of the proceeding week before last was “What did you know and when did you know it?”

Williams’ lawyers argued that Flint Hills cannot force Williams to compensate Flint Hills for what Flint Hills officials say was “tens of millions of dollars” in remediation and payments to dozens of area residents in cash and in the form of payments to provide a clean source of drinking water.

The Williams’ lawyers say that’s because Flint Hills officials knew in 2004, when they bought the refinery from Williams, that an industrial solvent known as sulfolane had leaked from the refinery and infiltrated the area’s groundwater. The lawyers say that McConahy should dismiss the case because Flint Hills sued years after the state’s statute of limitations deadline.

But Flint Hills spokesman Jeff Cook says the company didn’t know much about the extent of the sulfolane contamination until five years after the purchase.

“When Williams sold their refinery to Flint Hills in 2004, Williams told Flint Hills that sulfolane in the groundwater was limited to an area on the refinery property,” Cook said. “It was not until 2009 that Flint Hills discovered that sulfolane was actually offsite at the time of the sale and had been for years.”

Cook says Flint Hills officials argue that the statute of limitations doesn’t apply because they say Williams knew, but didn’t reveal, the full extent of the contamination when it sold the refinery.

“Williams did not disclose everything to Flint Hills when it sold the refinery, because it did not disclose any offsite contamination,” he said. “Williams is arguing that a jury should not be allowed to hear the case, because Flint Hills should have discovered the true extent of the contamination earlier.

A spokesman for Williams declined to comment, citing company policy against talking about ongoing legal issues.

According to the state Department of Environmental Conservation, sulfolane leakage was first detected during a two-year study that began in 2000.

Cook says Flint Hills wants Williams to reimburse the company for the remediation and to compensate it for the diminished value of the refinery caused by the sulfolane contamination.

Experts don’t yet know enough about the health effects of sulfolane to label it as for example a hazardous substance, but as a precaution the DEC in February approved a very low cleanup threshold of 14 parts per billion. Some area wells have shown sulfolane levels exceeding 400 parts per billion.

So far, only one person has sued over the potential health threat posed by the sulfolane contamination – that’s North Pole resident James West, who settled his case in May 2011 for an undisclosed sum.

Fairbanks lawyer Jason Weiner, who represented West, says it’s not unusual that the Flint Hills vs. Williams case has gone on so long, because oil companies often undertake expensive and lengthy litigation.

“When you’re dealing with, like, the Exxon Valdez case, people ask ‘Well, why would the (companies) spend so much money?’” Weiner said. “And the fact is, let’s say they were spending a million dollars a year for attorney’s fees. If they’re still fighting over $600 million, and you’re going win a $200 million reduction, it still worth it to fight it for 10 years. Because, I mean, economically it makes sense.”

Cook says Flint Hills officials think the case will go to trial next year.

While the two companies battle in court, one area resident, Robert Bradley, says he and many others who’ve also been affected by sulfolane contamination will be keeping an eye on the case.

“Well, as a matter of fact, we’re following it quite closely,” he said.

Bradley is a 60-year area resident who owns 70 acres in North Pole, which includes six houses and two rentals, and he says the sulfolane contamination has caused his property values to fall. Bradley says he won’t be accepting the remediation payments offered by Flint Hills, because they require homeowners to forego suing the company.

“I for one haven’t settled,” he said. “And I know of numerous other individuals who haven’t settled either. So we’re waiting and watching, and our attorneys are doing the same thing.”

That may well mean that sulfolane cases will be argued in court for years to come.