PALMETTO -- HRK Holdings LLC has failed to satisfy state maintenance requirements from last year's toxic spill at its Piney Point facility, opening the potential for future environmental damages at the site.
The Florida Department of Environmental Protection has ordered the embattled firm to immediately address eight deficiencies ranging from high levels of ammonia in a drainage ditch to watershed that's still contaminated with dredging sediment.
Damage to structures near the gypsum stack liner tear last summer that gushed 170 million gallons of toxic water into Bishop Harbor remains unrepaired.
The maintenance violations could result in the discharge of untreated stormwater by the conclusion of the rainy season Oct. 1 -- potentially further harming the surrounding environment, according to documents and emails obtained by the Herald.
The DEP warning was issued June 15 -- before Tropical Storm Debby dumped almost 11 inches of rain on North Manatee a week later.
Questions have been raised over how HRK, now battling bankruptcy, will fund those repairs and ultimately close the facility safely by the May 1, 2013 deadline.
"We will make sure HRK does what it's expected to do at the site," said Calvin Alvarez, deputy director of the DEP's water management division in Tallahassee. "This is HRK's site. We believe they're accountable, and we're going to hold them accountable."
Piney Point is a former phosphate facility purchased by HRK in 2006 with the sole purpose of housing disposal from Port Manatee's Berth 12 dredging project.
The dredging officially opened South Port, the fo
cus of a $200 million decade-long Port Manatee expansion to allow for larger cargo ships in accordance with the Panama Canal extension. The dredging was completed in October.
But while the work was in progress in May 2011, liners and pipes that housed the dredged material at Piney Point sprung leaks, gushing 2,700 gallons of water a minute into Bishop Harbor on Tampa Bay.
HRK filed for Chapter 11 bankruptcy protection in late June over the expenses tied to the environmental fallout.
But a series of Bradenton Herald reports show the disaster could have been averted had the state stopped the dredging project when a tear was discovered in the liner months before the work began, or applied a commonly used protective dirt cover on the exterior of the gypsum stack.
State officials have acknowledged they never notified port staff of any previous problems before the toxic spill.
Now stakeholders are scrambling to get the site properly closed to ensure no further environmental damages occur. Documents obtained by the Herald reveal there's a long way to go.
HRK Holdings CEO Jordan Levy did not return phone calls or emails seeking comment. In a statement issued at the time of the bankruptcy filing, he vowed the site is safe.
"HRK is monitoring the site and reporting regularly to the DEP," Levy said in the statement. "The site poses no imminent threat to public health or safety at this time."
The DEP assumed responsibility for the property -- and another like it in Polk County -- in 2001 after then-owner Mulberry Phosphates Inc. abandoned them in its bankruptcy.
State lawmakers allocated taxpayer money to help safely close the fertilizer facility. But when that process was under way in 2005, HRK approached the environmental agency about a potential purchase. The company had a tentative agreement with Port Manatee for storing dredging disposal there, records show.
Now a decade since DEP was first engineering an exit strategy for Piney Point, the state finds itself again dealing with a bankrupt company at risk of walking away.
Only this time, 170 million gallons of toxic water have already polluted Bishop Harbor.
Following a recent inspection, the DEP sent a letter to HRK dated June 15 that warns the company of violations in its maintenance agreement.
n A lined freshwater ditch south of the stack was subject to pressure from the leak, changing the configuration of the drainage system, and leaving high levels of ammonia in an adjacent ditch.
n To relieve pressure from toxic water during the emergency tear, HRK punctured the liner, which has not been fixed.
n The liner used to contain dredged soil has been compromised, allowing salt water to infiltrate the stack and contribute to the high inventory levels of processed water.
n Large sections of freshwater watershed are contaminated with salt water and significant deposits of dredging sediments.
HRK must reduce water inputs at the site by 153 gallons per minute to avoid exceeding the system's storage capacity -- discharging potentially unsafe runoff to the surrounding areas, the DEP letter states.
Normal rainfall projections indicate that would happen by Oct. 1.
HRK has yet to submit a water management plan for the site, which was due Feb. 1.
"Water balance deficiency could be a significant problem if not remedied before wet season starts," said Thomas Reese, a St. Petersburg environmental attorney. "The liner is still not repaired."
In 2006, HRK issued a $1.65 million letter of credit from Regions Bank to satisfy the state's interim financial assurance mandate. Once the closure period for the site ends May 1, 2013, HRK will be required to put up additional monetary safeguards.
But with Chapter 11 bankruptcy hearings now under way, many stakeholders question whether the company will be defunct by then.
A court battle for HRK's remaining assets is brewing from 60 creditors owed $21 million by the firm. A full disclosure of HRK's assets has yet to be released by the court.
Even if the company ultimately goes under, Regions Bank is legally responsible to pay the $1.65 million on HRK's behalf, although the lender could then go after HRK for default.
Neither HRK nor the state would release cost estimates for the total cleanup left at Piney Point.
"Something unexpected happened, and we're going to do the right thing and follow up," said John Coates, bureau chief for the DEP's division of solid and hazardous waste, who oversaw water management during the time of the toxic spill.
"If there's anything we can learn and apply, we will absolutely do that."
Josh Salman, Herald business writer, can be reached at 941-745-7095. Follow him on Twitter @JoshSalman.