D-I-V-O-R-C-E….Is the Frisco-Exide Settlement On the Rocks?

by jim on March 10, 2014

divorceAfter a brief honeymoon, is it Splitsville for the 2012 clean-up agreement between Exide and the City of Frisco? And if their shotgun marriage is breaking apart, what are the implications for Frisco residents and the surrounding area, including Lake Lewisville, a source of drinking water for Dallas that sits directly downstream of what now may become a Superfund site?

On February 25th, Channel 11 broke the story that, after almost two years of assuming the settlement would guide clean-up efforts, the City of Frisco doesn't "know if the company will stick with the deal or walk away from it until the company files a reorganization plan by the end of May."

That's a big deal. Having declared bankruptcy last year, Exide is now dealing with thousands of creditors with competing claims. Frisco is only one of them, and only one of a half dozen closed or operating lead smelter sites that are also suffering from contamination. If the City's deal with the company can't survive the bankruptcy process, all the current planning for clean-up and redevelopment of the outer ring of Exide will be derailed. And that's important because the settlement has been the Frisco City Council's justification for not opening up the fate of the property to more public discussion, like whether residents would prefer building a toxic landfill and keeping Exide's waste in town, or cleaning up the entire sire and hauling off all contamination to allow for normal development. 

It's also important because without the city's deal in place, and Exide in bankruptcy court, there is no Plan B to prevent the entire site from becoming an EPA federal Superfund site, exactly the same way the still languishing RSR lead smelter site in West Dallas ended up as as Superfund site in the early 1990's after that company went belly up. It's a designation that Frisco officials are known to dread.

There have been signs of trouble with the agreement for months now.  According to documents filed by the City of Frisco in federal bankruptcy court last December, Exide is in default on its agreement with the City, and risks further claims of breaches, as well as “fraud in the negotiation, execution, and performance” of the settlement.

The historic 2012 settlement arranged for a swap of 179 acres of Exide-owned land in Frisco in return for $45 million from the Frisco Economic Development Corporation and the Frisco Community Development Corporation. Passed unanimously by the Frisco City Council with only a week’s public notice and no public hearings, the agreement closed the smelter earlier than expected but is based on an elaborate series of conditions and clean-up standards.  

It’s at least one of those conditions, the required demolition of “all above-ground structures” in a section of the smelter site the city is purchasing called the “Bowtie Parcel,” which appears to be the center of the default claim by Frisco. Specifically, it’s the continued presence of a specialized building involved in the treatment of the smelter’s wastewater known as “The Crystallizer,” that prompted the legal tension.

Last August, Mack Borchardt, the City’s Special Assistant in charge of monitoring the Exide clean-up, wrote a letter to the company disputing the Agreement’s demolition provision had been fulfilled as long as the Crystallizer remained standing:

“Frisco disagrees with your assessment that the demolition activities on the Bowtie Property have been completed and demand that you retract Exide’s notice immediately. For example, the Master Settlement Agreement requires (A)ll above ground facilities on the Bowtie Parcel…” to be removed from the Bowtie Parcel as part of  Demolition Activities.” The above ground facilities include the Crystallizer which has not been removed and it has not been approved in writing by Frisco to remain standing. If you fail to immediately withdraw Exide’s notice, Frisco reserves the right to pursue all available remedies.”

By December 9th, when a Bankruptcy Court deadline required the City to file its claims against Exide, Frisco City Hall was adamant that “Exide has not demolished and removed all above ground facilities…. As a result, Exide is in default on its performance obligations under the Master Settlement Agreement.” But along with that outstanding claim, City lawyers also added a new list of possible Exide violations, both civil and criminal:

“Finally, Frisco may also have additional contract and/or tort based claims against Exide, including,without limitation, breaches of the Master Settlement Agreement, nuisance, quantum meruit, money had and received, breach of fiduciary duty, negligence and gross negligence, conspiracy, and claims based on fraud and fraud in the inducement and/or negligent misrepresentations relating to the negotiation, execution, and performance of the Master Settlement Agreement.”

If the deal between Frisco and Exide comes apart, there’s nothing to guarantee that any of the smelter property gets cleaned-up or redeveloped the way the City’s been promising.

Although the entire Exide smelter site and surrounding property is full of toxic hot spots, the facility at the center of the latest legal dispute, “the Crystallizer,” has been a source of particular regulatory concern. As part of the final processing of contaminated waste water at the smelter, it condensed filtered liquids into sodium sulfate solids.

In a December 2009 report, EPA inspectors at Exide observed, “Uncontrolled salt laden runoff from the Crystallizer plant was observed as salt deposition on the concrete aprons around this process area at the plant. The ‘frac’ tank used for holding purge water from the crystallizer plant was leaking at the time of viewing.” This crystallized substance tested high for toxic metals content and testing of the contents of the frac tank showed toxic levels of selenium and cadmium.

In September 2010 inspectors again found  “uncontrolled salt laden runoff from the Crystallizer plant and also that the frac tank was leaking.”

In July of last year the Texas Commission on Environmental Quality reported that “the levels of sulfate in soils surrounding the Crystallizer unit are much higher than in other areas” and “drums of PCBs were noted in the Crystallizer area.” PCBs, or Polychlorinated biphenyls, were once widely used as cooling fluids, but have been banned in the US since 1979 because of their persistent toxicity.

Because of its use of chlorine in treatment of waste, the Crystallizer could also be one of the major reasons Exide became one of Texas’ largest Dioxin polluters. In 2009, the Frisco facility was ranked as the 9th largest source for Dioxin pollution in Texas, surpassing all other North Texas facilities, including the Midlothian cement plants.  Dioxin is one of the most potent toxins ever tested by EPA, and is measured in grams, not pounds. 

Despite this history, no testing for Dioxin contamination has ever taken place at the former Exide smelter site by any regulatory agency, and that’s a point of contention for critics of the smelter clean-up.

Exide’s choice to risk an agreement that could give it $45 million in much-needed cash over the demolition of one remaining structure is curious. And it’s one that poses a challenge to the entire future the City of Frisco has laid out for the smelter site. If the City doesn’t buy the 179 acres of Exide property surrounding the smelter, it’s fate will be tied to the company’s and it might either become part of a future Superfund site or languish in a kind of real estate purgatory for a very long time.

That would more than double the size of the economic black hole the core plant site already poses for central Frisco. Frisco City Hall has come out in favor of locating a permanent toxic dump for Exide waste on that core property, but residents who are members of the local group Frisco Unleaded says there’s no reason to believe an Exide landfill would be run any better than an Exide smelter.

There's already been documentation of extensive lead contamination up and down Stewart Creek from the Exide property, through Grand Park and all the way to Lake Lewisville. Although the City of Dallas Water Utilities Department says that's not a threat to the city's drinking water because of its treatment facilities, the presence of a large landfill and/or Superfund site poses a danger of catastrophic releases that an operating smelter doesn't. And of course, recreational users of the Lake are being routinely exposed.

On February 26th, the Dallas Morning News identified competing plans for the clean-up of Stewart Creek as another source of tension between Frisco and Exide.

The only good news from this great unraveling is that it provides a chance to restart the public debate about what to do with the Exide site – a debate that was short-circuited by the council's settlement agreement that made everything seem like a done deal, even though its obvious now there were a lot of unanswered questions. There continues to be a need for a bottom-up, community wide discussion of what Frisco residents want to see happen with the site. Events in May might make that a more pressing priority.

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