"The fund is not as big as it could have been because the phosphate
industry persuaded Gov. Jeb Bush and the Legislature in 1999 to reduce
the tax."


http://www.sptimes.com/2003/07/06/Ta...ion_mess.shtml

A $140-million mess
That's the bill Florida is stuck with because the state didn't follow
its own rules in dealing with wastewater cleanup problems at the
fertilizer plant.
By CRAIG PITTMAN, JULIE HAUSERMAN and CANDACE RONDEAUX

published July 6, 2003

PINEY POINT - The warning signs were clear: The Piney Point fertilizer
plant was headed for disaster.

State regulators knew in 1995 that the owner, Mulberry Corp., was
struggling. If it went under, the state would be stuck with hundreds
of millions of gallons of highly acidic wastewater in towering gypsum
stacks perched on the edge of Tampa Bay.

A review of hundreds of files by the St. Petersburg Times found that
the state, instead of intervening, bent the rules by not closing the
gypsum stacks as the law requires and by not acting on warnings that
the owner was in financial trouble.

A bad situation soon become dangerous. State officials finally took
control in 2001 - after the owner walked away.

Now a top state regulator calls Piney Point "one of the biggest
environmental threats in Florida history." State officials fear the
waste will spill into Tampa Bay, killing millions of fish and
destroying plant life for miles.

So this week they plan to launch a desperate solution: Treat the
waste, load it on a barge, spray it into the Gulf of Mexico and hope
for the best.

Phosphate executives say the state was too slow to act.

"Did they have enough authority to shut Piney Point down? I think they
did," said Bob Hugli of the Florida Phosphate Council. "I don't know
why they waited so long."

Critics say the Department of Environmental Protection was coddling
the company when it should have been protecting the environment.
Because of DEP, "these CEOs got their money and left the state holding
the bag," said state Rep. J.D. Alexander, R-Lake Wales.

DEP officials deny they gave Piney Point any breaks. They say state
law tied their hands.

"We did all we could do under the existing phosphate regulations," DEP
Deputy Secretary Allan Bedwell said while touring the plant last
month.

After the takeover, DEP officials underestimated the urgency of the
cleanup and relied on untested technology that has not lived up to
expectations.

The potential disaster for Tampa Bay worsens with every driving rain,
and the cleanup cost keeps growing. The latest estimate: $140-million.

Cleaning up the mess has drained a state fund financed by a phosphate
tax intended for restoring strip-mined land. Thousands of acres will
not be restored unless the Legislature acts.

Location, location
It seems an ideal spot for a fertilizer factory: nearly 700 acres in
Manatee County on U.S. 41, across from a rail line and Port Manatee.
But the location is the problem. A mile away lies Bishop Harbor, a
sensitive aquatic preserve on Tampa Bay.

A subsidiary of Borden, the milk company, built the plant in 1966.
Within a year Borden was caught dumping waste into Bishop Harbor. More
dumping occurred in February 1970, creating a series of fish kills
that extended through the summer.

The plant changed hands at least four times. No matter who owned the
place, toxic leaks sickened workers, killed cattle and drove neighbors
from their homes.

The one constant: mountains of radioactive waste that grew to tower
over the landscape.

Factories producing fertilizer from phosphate also churn out a
radioactive byproduct called phosphogypsum. To dispose of it, the
phosphate industry stacks it up into white sandy mountains. Piney
Point's two phosphogypsum stacks - gyp stacks for short - are 50 to 70
feet high.

Making fertilizer requires lots of water. As it comes out of the
factory the water is hot and as corrosive as battery acid. First it
goes into cooling ponds, where some evaporates. Then it's pumped to
the top of the stacks. Rainfall adds millions of gallons more, but an
active plant can reduce that with reuse and evaporation.

The stacks at Piney Point were built with no liner underneath,
allowing waste laden with radium and heavy metals to seep into the
underground aquifer. In 1994 DEP fined the company $135,000 for the
contamination, but agreed over three years to whittle that down to
$12,000.

The company also owned a similar plant near the small Polk County town
of Mulberry. During heavy rains in December 1997, a dike broke and
55-million gallons of the water poured into the Alafia River. The
spill killed more than 1-million fish.

Mulberry Corp. promised to spend millions to make up the error.
Instead, it went out of business.

Flooding disaster
Every gyp stack in Florida is a ticking time bomb. If the water gets
too high, disaster results.

Federal rules require owners to make sure that if an exceptionally
hard rain falls, the dikes won't overflow. If the water creeps too
high, the owners are supposed to treat it with lime, then dump enough
in the nearest waterway to drop it to the safe level.

In the past decade, Piney Point was one of two stacks where that
happened. In 1998, DEP allowed millions of gallons to flow into Bishop
Harbor.

When a fertilizer plant is running, the gyp stack water is easy to
control. The plant reuses the water, heating it up. The amount lost to
evaporation usually balances out any gains from rainfall.

But Piney Point was idle for most of the 1990s, so there was little
evaporation. Maintaining safe water levels in an idle gyp stack
requires crews running pumps 24 hours a day. If the pumps stop, Piney
Point's tainted water would likely overflow the ponds, spilling into
Tampa Bay.

During a Piney Point bankruptcy in 1991, a DEP official worried that
the stacks might not be maintained anymore. Sam Zamani, a phosphate
regulator in DEP's Tampa office, suggested to his superiors that the
state file a court claim for $10-million to close the stacks
permanently.

Instead the state waited. In 1993 a new owner took over. Led by
investors Judas Azuelos and Philip Rinaldi, Mulberry Corp. promised to
resurrect the plants. It didn't happen.

State rules say a stack that sits idle for more than a year should be
closed permanently, the water drained off, the top covered. Yet DEP
officials never enforced the rule at Piney Point because the company
promised to revive the plant.

In 1995, state officials drew up new rules requiring gyp stack owners
to pass an annual financial test. Flunk and the state would refuse
permits. The test was based on the cost of closing the stack, though
not the millions to dispose of the water.

Even so, DEP employee Phil Coram noted then that Mulberry Corp. would
probably flunk the new test, calling the company "problematic in terms
of providing financial responsibility."

More than once in the late '90s, DEP let Mulberry executives postpone
for months filing their audited financial statements, giving them time
to cut deals that made them appear viable.

By January 2000, the illusion of viability had vanished. Mulberry
executives told creditors that they had shut down all operations.
Still DEP officials did nothing, baffling phosphate industry
officials.

"We were not surprised they failed," CF Industries executive Stephen
Wilson wrote DEP later, "and would like to understand how they could
possibly have met the present financial responsibility standards."

State records show DEP bent the rules.

In April 2000, Mulberry senior vice president Robert Stewart wrote to
DEP's top mining regulator, Joe Bakker, conceding his company had laid
off employees and stiffed creditors. So Stewart was "all the more
appreciative of the fact that your group has been working with us
during these difficult times..."

Stewart wrote that he gave Bakker financial statements showing
Mulberry passed the test. No auditor checked Mulberry's statements.

"You indicated that the use of the unaudited statements was most
likely acceptable to the DEP as long as certified financials were
forthcoming," Stewart wrote Bakker.

Stewart promised to submit audited statements by June. Months passed.
In December 2000, DEP notified Mulberry it would lose its permit. The
company was just weeks from bankruptcy.

Stewart, who now works for a phosphate company in Texas, did not
return calls for comment. Bakker was unavailable. His boss, DEP
director of water resource management Mimi Drew, said she did not
recall anything about Mulberry's statements.

DEP attorney Jonathan Alden denied his agency bent the rules or agreed
to accept the unaudited financial statements. He said DEP staff had
"continual conversations" with Mulberry executives about getting the
audited statements, though a Times search of DEP files in Tallahassee
and Tampa turned up no records of such conversations.

As for the delays, Alden said, "a lot of companies file their
financials late. But we were pushing to get the financials from
Mulberry."

Actually, Mulberry didn't file audited statements because it could not
afford it, said Herb Donica, the Tampa lawyer handling the bankruptcy.

"If you don't have the money to pay for an audit," he said, "it's the
same as going to a business meeting with somebody and they're wearing
one shoe."

DEP unprepared
Former Piney Point employees say they saw the writing on the wall a
year before the collapse.

"You start hearing that vendors aren't being paid," said ex-employee
Ivan Nance. "The power company isn't getting paid and you know."

A DEP inspection in late December 2000 found that Piney Point was on
the verge of having its power cut off for nonpayment. No power meant
no pumps circulating the water. Still, DEP did nothing.

On Jan. 30, 2001, the company walked away.

Though the crisis had been looming for years, DEP officials were
unprepared. The U.S. Environmental Protection Agency took charge the
first two weeks.

When DEP finally took over, the first contractor it hired to operate
Piney Point went bankrupt. The contractor that took over followed
suit, DEP records show. A DEP official joked in a memo that "this
project was really cursed."

Initially the DEP, mindful of the Alafia River spill, focused on the
Polk County stacks, where the water levels were too high. Piney Point
seemed safe.

In July 2001, though, engineers warned that Piney Point couldn't
handle a heavy storm. A three-year drought had kept the stacks from
overflowing.

Had DEP taken over Piney Point before 2001, the drought might have
given the state time to close the stacks. The drought ended shortly
after the takeover, though, and in the fall Tropical Storm Gabrielle
inundated the area.

With too much water in the stacks, DEP turned to the same solution
Borden had used: It dumped millions of gallons of waste, with elevated
levels of acid and nitrogen, into Bishop Harbor in late 2001.

Nobody knew, not even the DEP staff at the aquatic preserve. But when
local officials found out, they complained the dumping was ruining
Tampa Bay.

The Florida Wildlife Federation urged DEP to seek federal Superfund
status. But Bedwell, the DEP's deputy secretary, said the agency had
"a more cost-effective and faster" alternative.

In July 2002, DEP launched that alternative: running the waste through
reverse-osmosis filters, the same process that turns salty water into
fresh.

But reverse osmosis was an untested solution. The filters and
membranes clogged repeatedly, slowing processing. Meanwhile the
screened-out impurities were being dumped back into the ponds, making
the pollution even more concentrated.

Still, between that and trucking the waste to various sewer plants,
DEP officials thought Piney Point was in good shape. Then, on New
Year's Eve 2002 came the kind of a storm that hits once every 500
years. It dropped 16.5 inches of rain and wiped out all the gains the
state had made the previous year.

So in January, DEP officials notified the EPA they were considering
the unthinkable: dumping into the gulf. Although unprecedented, it
would be the only way to get rid of a lot of waste before hurricane
season filled Piney Point to the breaking point.

The EPA asked Florida to consider alternatives, but DEP said all were
impractical or too costly. Bedwell blamed the state's budget
shortfall, but said Florida is no skinflint.

"Some think that Florida is pursuing barging as a "cheap' solution for
the threat at Piney Point," he wrote. "This is obviously not the case:
Gulf dispersion is the highest cost water management option for the
site. The lowest cost option is discharging into Bishop Harbor and
Tampa Bay. ... DEP is willing to pay a higher price for gulf
dispersion to protect lives and the environment."

In April, the EPA agreed to the gulf dumping.

Price soars
The money DEP is spending on Piney Point is staggering. In just 13
days during July 2001, the lead consultant billed the state for
$1.1-million. One company charged $49 an hour for its secretaries'
work.

DEP officials persuaded a judge to put the plant in the hands of a
receiver, Lutz lawyer Louis Timchak. He hired another law firm to
help. When Timchak ($175 an hour) talks to his attorneys at Fowler
White ($175-$325 an hour), all the bills go to DEP. Timchak estimates
the cleanup and closure cost at $140-million, nearly 10 times the
amount DEP estimated in April 2001.

The money has come from a tax on the phosphate industry. It was
supposed to be spent to restore 27,000 acres of Central Florida marred
by strip-mining. But Piney Point is draining it all. Unless the
Legislature replenishes the fund, that strip-mined land will always
resemble a moonscape.

The fund is not as big as it could have been because the phosphate
industry persuaded Gov. Jeb Bush and the Legislature in 1999 to reduce
the tax. Now the lawmakers want to raise it.

Lawmakers this spring proposed a higher tax and criminal penalties for
any executive who files false financial statements. It went nowhere.

Its sponsor, Rep. Alexander, worries about a disaster bigger than
Piney Point. Phosphate companies are struggling, noted Alexander, a
staunch ally of the industry.

"We could end up with a multibillion-dollar cleanup cost that may well
end up on the taxpayers," he said. "There's the potential that some of
the companies could not close the stacks they have, and we'd be in a
mess."