HRK knew of tearing problems before Piney Point spill

jsalman@bradenton.comJuly 6, 2012 

PALMETTO -- HRK Holdings LLC notified environmental officials of a storage liner tear at Piney Point three months before a similar leak last summer gushed 170 million gallons of toxic water into Bishop Harbor, new records show.

It is unclear why the state Department of Environmental Protection still allowed the dredge material from Port Manatee to be deposited in the storage facility.

"We didn't know anything about it," said Larry Bustle, port authority chairman. "We were all operating under the assumption that everything happening as it happened, while we were dredging ... I can't image staff would bring (the dredging) recommendation before us unless they thought all was well."

The port authority board was tasked with approving the dredging contracts after they were approved by the state DEP.

A 6-inch tear along a seam in the southwest corner of the reservoir was discovered Feb. 21, 2011, after a crane had fallen onto the gypsum stack, according to HRK documents. Although the tear wasn't a result of the crane incident, it was detected when the Florida DEP ordered a complete inspection of the massive 350-acre structure, according to emails between company officials and the state.

The tear wasn't fully resolved until mid-April, just weeks before the liner was used to store material from the Port of Manatee's Berth 12 dredging project.

A similar rupture in the liner in early May then caused the dredging to halt, spilling 2,700 gallons of toxic water a minute into nearby ditches, ultimately seeping into Bishop Harbor.

It's unclear whether the port was ever informed about the initial tear before dredging had begun, but port officials were not included in the email correspondence obtained by the Herald. Those emails were exchanged between HRK engineers, repair technicians and DEP officials.

Attorneys representing Port Manatee didn't return phone calls seeking comment. Port staff also refused to discuss the topic. The state DEP water resource manager involved in the project was vacationing and couldn't be reached.

A study commissioned by HRK, obtained by the Herald on Thursday, found that the massive spill should have been anticipated since the seams were never effectively bonded and heat-induced stress cracks had penetrated the gypsum stack liner months before it ever was filled with water.

The documents may become key points of evidence in HRK's bankruptcy case, the company's fight with Port Manatee over financial losses and a subsequent lawsuit against the manufacturers and installers of the seawater storage system.

The Manatee County Port Authority has been pursuing financial damages from HRK for its role in the dredging of Berth 12, which had months of delays due to leaks in the pipes and storage sites that housed the dredged material at Piney Point, a former phosphate facility owned by HRK.

Although the tear discovered in February and the one that resulted in the toxic spill were at different locations in the gypsum stack, the causes of both were blamed in part to improper welding, documents show.

Stress cracks at many of the welds also had been building for several months prior to the dredging, including the failed seam responsible for the spill, according to the report funded by HRK.

HRK Chief Executive Jordan Levy Thursday confirmed the February tear, but he refused to draw a correlation to the leak just months later.

The dredging project had the approval from the DEP, which had a hand overseeing all repairs from the February rupture. The manufacturers of the gypsum stack also assured all parties involved that the chances of a leak were nonexistent, Levy said.

"Since the dredging project was completed, HRK has worked closely with world-renowned experts to diagnose the cause of the leak," he said. "Our findings have been universally disappointing in terms of the engineering, construction and quality control of the work performed on the site under the DEP's oversight -- especially when considering the strong representations made to HRK, Port Manatee and Manatee County before the project began."

Port Manatee's Berth 12 dredging project officially opened South Port, the focus of a $200 million decade-long expansion allowing for larger ships and cargos.

The dredging was completed in October, but the environmental fallout delayed the project for at least a month and greatly inflated the overall cost.

Because the port signed an independent contract with HRK, the port was responsible to pay damages to Great Lakes Dredge & Dock, a Michigan contractor that had filed suit over the $4.8 million in added expenses.

HRK officials claim the port still owes their company about $1.5 million for the dredging work. The port, meanwhile, is aggressively seeking repayment from HRK on a settlement that will send Great Lakes $3.28 million.

The losses tied to the spill forced HRK to file for Chapter 11 bankruptcy protection last week, with the next hearing scheduled for July 12.

In the filing, HRK lists nearly 60 creditors including the DEP, IRS, Port Manatee, Florida Department of Revenue and Manatee County Tax Collector. HRK's total debt is estimated at $21 million, court records show.

"Our attorneys are aware of the filing, and they're evaluating our options and will advise the authority on the best course," Steve Tyndal, senior director of trade development and special projects at Port Manatee, said last week.

He has declined to comment further.

HRK has signed a contract with Pennsylvania-based Air Products to sell 32.5 acres of land at the 675-acre Piney Point site for $5.8 million, which the company believes can heal many of its financial wounds. That deal is expected to close early next week.

The company also has filed a lawsuit against the manufacturers of the gypsum stack, engineers that installed the system, and the firms that released analysis showing the liners were structurally sound.

Representatives from Ardaman & Associates declined to comment. The engineering consulting firm was responsible for the design, construction and modification of the gypsum stacks to house the dredged material.

"HRK knew in February and March there was problems with the liners," said Jim Mikes, whose company is owed $250,000 from HRK. "They (the liners) sat out there with no cover in the sun for years, and that's why they went bad. The connections were getting old and brittle."

Josh Salman, Herald business writer, can be reached at 941-745-7095. Follow him on Twitter @JoshSalman

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