Dreams of new industry go up in smoke

  WILLISTON, N.D. - An empty warehouse, a crooked smokestack and a few tons of hazardous waste in a decayed industrial district on the edge of town are all that remain of a company that five years ago opened to fanfare. This isolated Missouri River town of 14,000 people on the northern prairie had welcomed Dakota Catalyst Products with open arms; after all, the company promised 60 jobs recycling metals.


Now that the company has pleaded guilty to two violations of federal environmental laws, critics question whether government policies kept the company afloat far too long, despite citizen complaints.


"Our city was and still is so short on economic development that they're willing to do basically anything for the dollar," concluded Julie Palmer, a working mother. She was moved to activism after her daughter became sick and Palmer connected her problems to air pollution from the plant.


The many environmental impacts from the operation, which burned oil refinery wastes in an attempt to recover valuable metals, are just now becoming public. This June, Dakota Catalyst Products admitted to illegally relabeling hazardous waste stored on site as nonhazardous, and to dumping a truckload of water contaminated with the carcinogen benzene into Williston's wastewater treatment system. In addition, the state recently took the company to task for storing far too much hazardous waste on site, and allowing chemicals and metals such as arsenic, selenium, lead, zinc and chromium to leach into groundwater. The recycling plant was built less than a mile from an elementary school and residential neighborhoods.


This was not the outcome that boosters in Williston and in Bismarck, the state capital, expected when Texas entrepreneur Robert Howard came to North Dakota in 1990. The Ph.D. petroleum chemist had just patented a process that he said could safely burn and recover metals from an oil refinery by-product known as "spent catalyst." The metals could then be sold to industry, Howard said.


Howard found the Williston business climate to his liking. "You had an unbelievable level of cooperation between the city, the state, and the federal government," he recalled last year.


Still reeling from the 1980s oil bust, which left bankruptcies and empty neighborhoods, Williston officials offered Howard $100,000 in public money to put his plant in their town, which is a farm and oilfield service center not far from Canada.


A taxpayer-funded state economic development fund then came up with a $550,000 investment in Howard's business. State and local banks also weighed in to loan a total of $4.6 million to the company, with the debt guaranteed by the federal Farmer's Home and Small Business administrations.


Investors were attracted to the company because of the size of its potential market. Each year, America's oil refineries produce millions of tons of spent catalyst. Most is landfilled in special hazardous-waste dumps at a disposal cost of $150 to $1,000 a ton.


"It makes no sense to landfill," said Ralph Meeks, a member of Mobil Oil's environmental health and safety group in Fairfax, Va. "There's an awful lot of recycling going on - it's the right way to go."


In theory, Howard's company would have two sources of income: Refiners would pay Howard's company to take the waste, and then his firm would make money by selling the metals extracted from the waste. Aluminum oxide, the major product, was to be sold to the refractory and abrasives industry. Cobalt, molybdenum, nickel, tungsten and other recovered metals were to go to high-grade steel manufacturers.





A clear conflict of interest


The company's recycling claims not only attracted business from oil companies, but won the cooperation of environmental regulators.


Company president Howard recalls receiving "encouragement" from the U.S. Environmental Protection Agency, but federal officials say they relied on the permitting abilities of North Dakota's health department. That's where critics say the regulatory process broke down. Julie Palmer and other members of the Dickinson-based grassroots citizens' group, Dakota Resource Council, say that North Dakota regulators, aware of the state's substantial investment in the plant, and of Williston's high hopes, were guilty of a clear conflict of interest.


Dr. John Rice was the head of North Dakota's health department when citizen complaints were the loudest. Once the EPA had ceded regulatory authority over Dakota Catalyst to the state, he was the public official ultimately responsible for its safe operation. He denied that the state's ownership interest in DCP influenced his decisions, but acknowledged that factors other than public health were involved.


"I think the community had a large investment in that operation," said Rice last year. "We encouraged the business to continue to function. The only way it could function was to make money, and to make money it needs to continue to operate and make product, so we did encourage it to continue."


That perspective nearly caused Rice to be shouted out of a Williston public meeting by angry citizens last year when he suggested allowing the company to store more waste on site. He assured townspeople that nothing harmful was coming out of the company's smokestack, but later said that Dakota Catalyst's method of incineration was such a fluid process, that "if you test it today, what they're doing a week from now may not be the same sort of thing.


"Continued monitoring of a plant like that is almost impossible," Rice added, due to high costs.


That explanation didn't wash with Palmer and other members of the Dakota Resource Council. "How could the state have half a million dollars to invest in the company, but not enough money to test their smokestack more than once in four years?" asks Palmer.


Palmer was outraged when, after the plant shut down, the North Dakota District Attorney's Office found evidence that the company had burned certain kinds of hazardous wastes without a permit.


Palmer, who said her requests for information and enforcement from the state health department went nowhere for over a year, was "ecstatic" when a team from the U.S. Environmental Protection Agency's criminal division came to Williston. Investigators spent a week seizing documents and taking samples at Dakota Catalyst. Their work eventually led the company to plead guilty on June 23, 1998, to two violations of federal environmental laws. It was assessed a $700,000 fine.


But Palmer says she does not feel vindicated. "Being fined $700,000 for a company who's already bankrupt, what is that going to accomplish?" Palmer asks. "I don't feel it's going to be a deterrent, because there was nothing really done for the damage that they caused."


"This is one of those strange criminal things where, although it is a criminal case, the defendant is a corporation. It isn't anybody you can put in prison or anything," said John Schneider, the U.S. attorney in Fargo, N.D., whose office negotiated the plea agreement with Dakota Catalyst. "I guess I'm as pleased with the settlement as I could be under the circumstances."


Schneider doubts the federal government will ever see the fine paid, but he says the legal action helped put Dakota Catalyst out of business. American State Bank of Williston, which foreclosed on DCP, now owns the site and is responsible for cleanup. The oil companies that generated the waste are removing the hundreds of barrels they shipped to the site.


Critics say the company wasn't scrutinized enough at the start. What was billed by the company as a "recycling" operation should have been regulated under tougher hazardous-waste incineration rules, says Rich Fortuna, a Washington, D.C.-based hazardous-waste industry consultant and an EPA critic.


Officials at the EPA's regional office in Denver say they didn't require the tougher waste incineration permit because they believed that DCP's "primary intent" was to recycle and not merely incinerate the waste. "We knew they were out there without (the stricter permit)," said Max Diaz, an EPA official in Denver, "but they had state permits and air-pollution control devices."


In retrospect, said Carl Daly, an environmental engineer with the EPA in Denver, "maybe we dropped the ball," in not requiring the company to comply with the stricter rules.


"I guess we didn't have the resources to go out and study them," said Diaz. But Fortuna feels the EPA is far too willing to take companies that claim to be recyclers at face value. He also criticizes the agency's willingness to turn regulatory authority over to the states, which too often are more interested in creating economic wealth than protecting the public health.


"Dakota Catalyst is a harbinger of things to come," warns Fortuna. "It's an example of a broader problem that's occurring with increasing frequency throughout this country, which is communities being victimized by bad recyclers because of the EPA's inattention to the dark side of recycling."





* Eric Whitney





Eric Whitney followed this story for the High Plains News Service in Billings, Montana.





You can contact ...


* Dakota Resource Council, 701/227-1851;


* North Dakota Department of Public Health, 701/328-5150.