Taxpayers’ Toxic Tenant

<p>The Metropolitan Water Reclamation District is supposed to safeguard our water supply. But it’s been leasing land to polluters, including an oil company with a history of chemical spills.</p>

Chicago Sun-Times

Last February, federal inspectors were looking into the cleanup of an oil spill on government land in Stickney leased to a company called Olympic Oil when they came upon a far more dangerous hazard.

Fifty thousand gallons of a greenish liquid — immediately recognized as antifreeze — had been spilled on 8.7 acres Olympic Oil has leased for more than three decades from the Metropolitan Water Reclamation District of Greater Chicago. That’s the government agency that’s supposed to safeguard the area’s waterways from pollutants and toxins such as antifreeze, which is deadly to people, animals and fish.

No one reported the spilled antifreeze — apparently caused by two broken pipes that spewed 340,000 pounds of ethylene glycol, the active ingredient in antifreeze on Sunday, Feb. 8 — until federal inspectors discovered it three days later on Feb. 11, a Wednesday.

It was Olympic Oil’s fourth reported spill since 2006 — and it came in the wake of the company’s mishap last summer that left a sheen of oil floating on the Sanitary and Ship Canal that flows into the Des Plaines River.

Illinois Attorney General Lisa Madigan is suing Olympic Oil, accusing the company of violating state environmental regulations. Madigan says in the suit filed in Cook County Circuit Court that the company "has created and is maintaining a substantial danger to the environment and public health."

She’s seeking more than $450,000 in fines from Olympic Oil for violations including failure to report the February antifreeze spill that flowed toward, but not into, the canal.

Olympic Oil is fighting Madigan even as it continues to clean up years of pollution that has accumulated on the water reclamation district’s property.

undefinedOlympic Oil's parent company, Greif Inc. of Ohio, says in a filing with the U.S. Securities and Exchange Commission it "intends to vigorously defend" itself against the lawsuit and Madigan’s threatened fines.

Olympic’s lawyer Thomas Dimond says the antifreeze spill resulted in "no environmental impact'' and that last year's oil spill had only "extremely minor environmental impact." And he says the company wasn’t legally required to report the ethylene glycol spill because most of the chemical was contained on site.

The oil company’s history of spills points up a troubling conflict for the water reclamation district, says Meleah Geertsma, a lawyer for the Natural Resources Defense Council, an advocacy group that’s battled the agency over pollution issues, including the district’s releases of raw sewage into Lake Michigan during heavy rains.

"We have here an agency whose mission is to protect the water quality, and for it to be leasing land to companies that have problematic records is troublesome," says Geertsma. "It causes some serious issues when it has this landlord mission that’s in conflict with its mission. As a landlord, you want to make sure your tenants aren’t breaking the law."

The water reclamation district leases out 10,000 acres it owns along city and suburban waterways. Its tenants — which paid a combined $16.9 million in rent last year, a fraction of the agency’s $1.2 billion budget — include park districts and a private school. But they also include oil refineries, asphalt plants and antifreeze manufacturers.

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Over the past 15 years, the Illinois attorney general's office has filed five other lawsuits against the district’s tenants, collecting more than $300,000 in fines for environmental violations.

Eight years ago, the Illinois Environmental Protection Agency threatened to sue the water reclamation district over two of Olympic Oil’s spills. That prompted the district to threaten to break its lease with Olympic Oil. But it ultimately didn’t. And the state ended up taking no legal action against either the district or Olympic Oil.

Olympic Oil’s lease requires the company to obey all environmental laws set by the U.S. Environmental Protection Agency and the Illinois EPA, which enforces the federal laws.

"At present, it’s our understanding that Olympic Oil is complying will all corrective actions required by U.S. EPA,’’ says district spokeswoman Allison Fore. "Consequently, there is no need for the MWRD to take any further action at this time."

Water reclamation district board president Mariyana Spyropoulos refused repeated requests for an interview. The board’s seven other members — all elected by Cook County voters — didn’t respond to written questions.

The district’s executive director, David St. Pierre, says he doesn’t think Olympic Oil or the agency’s other tenants need extra oversight by the district. St. Pierre points out that tenants with recent leases are required to adhere to environmental regulations. Many tenants, though, operate under leases signed generations ago.

"We want [Olympic Oil] to take steps so it doesn’t happen again," St. Pierre says. "The best tool of monitoring is the contracts because the contracts have a legal requirement" against polluting.

The water reclamation district monitors the Chicago River and the Sanitary and Ship Canal for bacteria and chemical contamination. But it doesn’t monitor pollution by tenants on the land they lease, nor does it check to see whether such pollution ends up in the adjacent waterways.

"Our people are looking for anything that needs to be corrected," St. Pierre says. "We don’t up that effort for specific tenants on our property."

Since 1983, Olympic Oil has been blending and packaging antifreeze and lubricants at 5000 W. 41st St. in Stickney on the property it leases from the water reclamation district on the south side of the Sanitary and Ship Canal.

watchdogs-083015-2.jpgOlympic Oil pays $175,000 a year in rent under a 39-year lease signed with the water reclamation district board in 2004. The rent isn’t much more than the property-tax bill, which cost the company $143,841 this year.

At the time the district signed that lease, Olympic Oil was engaged in an environmental cleanup stemming from a leaking underground storage tank on the property that had been removed in 1993. According to documents Olympic Oil filed with the district earlier this year, the cleanup from the tank was still going on.

On June 19, 2006, about 16 months after its current lease took effect, Olympic Oil notified Illinois environmental officials a tanker truck had spilled 1,000 to 1,500 gallons of two-cycle motor oil — commonly used in lawnmowers — on the water reclamation district-owned property.

State inspectors noted "there is significant soil and groundwater contamination on the site" — the same area where the leaking underground storage tank had been removed 13 years earlier. The inspectors noted that the cleanup from the leaking tank had yet to be completed.

"It appears that since Oct. 21, 1993, Olympic Oil has failed to address the site contamination in a timely fashion,’’ according to an Oct. 27, 2006, report by IEPA inspector Christopher Holy.

Holy was still investigating that spill when Olympic Oil reported another accident, saying someone had overfilled a storage tank, spilling 5,900 gallons of "neutral base oil" on the ground at noon on Dec. 18, 2006. The oil surrounded a storage tank that had a storm water line leading into the Sanitary and Ship Canal. At the time of the spill, the storm line was closed, and the oil was confined to a containment area, officials said.

On Jan. 27, 2007, the IEPA issued a "violation notice" to Olympic Oil as well as to a trucking company and to the water reclamation district. It threatened legal action if the spills weren’t properly cleaned up, including the removal of the contaminated soil.

IEPA eventually withdrew its threat against the water reclamation district. Kim Biggs, a spokeswoman for the environmental agency, says the case against Olympic Oil, though, was forwarded to the attorney general’s office for prosecution. But Madigan spokeswoman Annie Thompson says the attorney general’s office never received the case from the IEPA.

Olympic Oil entered the state’s "voluntary remediation" program and, in March 2012, received a letter from the IEPA that said "no further remediation" of the property was needed.

Then, last summer, the U.S. Coast Guard spotted the oil floating on the Sanitary and Ship Canal in the aftermath of a mishap on July 28, 2014, when heavy rains caused a storage tank to overflow, spilling as much as 1,000 gallons of motor oil onto the district’s land, according to what Olympic Oil told inspectors.

Over the next several weeks, state inspectors found the ground stained with oil, oil leaking from a concrete barrier around a truck-loading center and "pooled oil and water . . . still present in the wharf," according to the lawsuit Madigan filed last fall.

State inspectors were still monitoring that cleanup on Aug. 22, 2014, when they found another oil sheen on the canal. The oil sheen apparently grew over the next three days as Olympic Oil skimmed and removed 1,650 gallons of oil from a retention area on the property.

The company hired K-Plus Engineering — co-owned by Terrence O’Brien, the former president of the water reclamation district who signed the current lease with Olympic Oil — to evaluate the property’s environmental problems and recommend solutions.

O'Brien, who gets an annual pension of $67,901 from the water reclamation district after retiring in 2012, says his company began working for Olympic Oil last year but says he has no direct involvement with that work.

K-Plus was working on its report when the federal inspectors discovered the ethylene glycol spill last February. K-Plus then began monitoring ground water for the key antifreeze ingredient.

By April 23, O’Brien’s partner, Daniel Caplice, reported to the U.S. EPA that "there is no imminent and substantial endangerment to human health or the environment at this site."

"This conclusion is based on the general low levels of contamination detected in the soil and ground water, the effective operation of the recovery wells, and the significant evidence that the clay soil at the site has significantly retarded and prevented migration of any ground water or contaminants at the site."

Since the K-Plus report, Madigan has amended her suit against Olympic Oil, now demanding further monitoring of the land and ground water in the wake of the antifreeze spill.

About the Author

Brett Chase

Brett Chase investigates waste, fraud and corruption in a number of areas, including the environment, housing, health care and transportation. A former reporter and editor for Crain's Chicago Business, the Milwaukee Journal Sentinel and Bloomberg News, Chase has covered government and business for more than 20 years.