A Leeward metals recycling company is accused of allowing ash contaminants from the city’s HPOWER plant to leach into a drainage ditch near Campbell Industrial Park, and soil testing in the drainage ditch shows high levels of lead, mercury and other metals, according to Circuit Court records.

A lawsuit filed in Honolulu accuses Island Recycling Inc. of violating the Hawaii Clean Water Act by allowing metals associated with ash from the HPOWER incineration process to find their way into a drainage channel on the perimeter of the company’s recycling yard. That flood control channel leads from Island Recycling’s yard to the ocean several thousand feet from Barbers Point Beach Park.

Island Recycling has a contract with HPOWER operator Covanta Honolulu to recycle leftover metals after the plant burns Honolulu’s municipal solid waste, and those metals are coated with ash from the plant’s combustion chamber.

Island Recycling receives an average of nearly 2,000 tons of metals per month, or up to 10 shipping containers a day from HPOWER, and repackages the scrap at its Campbell Industrial Park yard at 91-140 Kaomi Loop before selling it on the world market. Both Covanta and the city get a share of the revenue from the sale of the scrap metal.

This year, Schnitzer Steel Hawaii Corp. obtained a court order allowing it to test soils in the drainage channel on the Island Recycling property, and soil tests done by Schnitzer’s consultant showed lead levels in the drainage ditch that are 85 times higher than "environmental action levels" established by the state Department of Health, according to a court filing by Schnitzer.

Tests in another section of the ditch showed mercury levels 40 times higher than the environmental action level. Samples taken farther downstream from the Island Recycling plant "similarly contained high levels of contaminants," according to court documents filed this summer.

However, the state Health Department says in court filings in the case that most of the metals are within the allowable level for an industrial park. The department also says there is no water in the ditch, and there have been no discharges into the ocean.

Schnitzer is Island Recycling’s primary competitor in the local scrap metal recycling market, and the two companies have been locked in a bitter business rivalry as well as a yearlong legal battle over Schnitzer’s allegations that Island Recycling is violating environmental laws.

Island Recycling states in its court filings that the lawsuit is part of Schnitzer’s strategy to shut down its main competitor. James G. Nutter, president of Island Recycling, said in an interview that his company is "perfectly legal, and (is) doing exactly what Department of Health wants us to do, and what HPOWER wants us to do."

As for the Schnitzer allegations, "they are trying to paint a dirty picture of us that is totally wrong," Nutter said.

In court filings, Island Recycling denies it violated state laws that regulate management of solid waste or prohibit water pollution, and argued in a July 22 filing that it should not be forced to clean up the drainage channel or its recycling site because state regulations do not require a cleanup.

HPOWER ash is considered "nonhazardous solid waste," and the fact that soils are found to have lead or mercury that exceed some state environmental action levels does not automatically require a cleanup, the company said.

In any event, Island Recycling contends the soil testing done by Schnitzer "has been rendered irrelevant" by a large fire that broke out in the company’s recycling yard on July 4.

"The Honolulu Fire Department used large quantities of water to extinguish the fire that mysteriously occurred while the (Island Recycling) facility was closed," according to the company’s court filing. Firefighters sprayed water on that fire, and the water collected on the concrete pads in the scrap yard and drained into drainage areas where the soil samples were taken, Island Recycling said.

"It is likely that the fire suppression water affected the surface soils in the drainage easements in some manner," the company said in its filing. Nutter said the cause of the fire has not been determined, but described the blaze as "suspicious."

Schnitzer is also suing the state Department of Health in an attempt to compel the department to crack down on Island Recycling because Schnitzer alleges the department has failed to properly enforce state anti-pollution laws on Island Recycling.

The Health Department denies that, pointing out the department fined Island Recycling $66,100 this year for alleged violations related to mismanagement of the HPOWER ash, and for permit violations at the Campbell industrial site and another company site.

Island Recycling is currently contesting those fines, which Nutter said stemmed in part from an incident where the company left burned metals from HPOWER on the ground overnight because it was short on shipping containers. State records show that incident involved about 120 tons of burned metals from HPOWER that were piled in the open without dust controls, which prompted the state last year to issue a "notice of interest in a release or threatened release of hazardous substances."

Nutter said his company was also fined in connection with two other incidents in which employees inadvertently left about a cubic yard of burned HPOWER scrap on the ground.

The state, meanwhile, says the Schnitzer lawsuit misrepresents the data from the soil testing because the environmental action levels Schnitzer cites are only supposed to apply to residential neighborhoods. The standard for commercial and industrial areas is more lenient, and Schnitzer should have cited those industrial environmental action levels, according to a court filing by the state Attorney General’s Office.

"The vast majority of the metals found in the soils in the ditch do not exceed the (action levels) for this industrial area," the state filing said.

Health officials also say they have never seen water in the flood control ditch where Schnitzer took its soil samples, and "there have been no actual discharges from the drainage ditch into the ocean" a quarter-mile away, according to the filing on behalf of the department and Health Director Virginia Pressler.

Nutter said the alleged metals contamination in the ditch is within the allowable limits for the industrial park, which includes facilities such as HPOWER.

"Where that light contamination came from, a lot of it is just found in the ground," he said. "You could probably go anywhere in all of Campbell (Industrial Park) and get the same results. It’s not like we polluted it, but they are choosing this venue to try to put us out of business."

Environmental activist Carroll Cox said he has been monitoring Island Recycling’s activities since there was a fire at the company’s former scrap yard on Sand Island more than a decade ago, and said he has tried repeatedly to get the state to punish Island Recycling for alleged violations of environmental laws.

Cox, who heads the nonprofit Envirowatch, contends the ash from HPOWER is "very toxic," and argues the state should do its own scientific testing of the entire Island Recycling site.

He also argues the city is responsible for what happens to the ash after it leaves the HPOWER plant because the city owns the plant, and "because they are generating the waste." That is particularly true when the city is profiting from the scrap metal that Island Recycling is selling, he said.

"The city can’t collect the money and then turn around and say, ‘It’s not our responsibility,’" Cox said.

Nutter said his company has historically paid about $400,000 per month or about $4.8 million per year for the scrap metal from HPOWER, and that money is divided up between Covanta and the city. He said Island Recycling has about 100 employees.

Timothy Houghton, deputy director of the city’s Department of Environmental Services, said the city contracts with Covanta for the sale or disposal of metals from the HPOWER process, and it is Covanta that contracts with Island Recycling for the handling of the scrap metal. Houghton also noted it is the state that issues the solid waste management permit for Island Recycling, and the Health Department oversees that permit.

"It’s the state that regulates them, and in that sense as long as the state has given them and they maintain a valid permit, even though there may be other issues going on related to that, then the contract would still be appropriate," Houghton said.

Cox insists the city has an obligation to ensure the HPOWER scrap metal is handled properly.

"The city cannot have materials that are harmful to the environment and hand them off to some other party in a contract, and then say, ‘Well, it’s between you and the state Health Department.’ It doesn’t work that way," Cox said. "You are responsible for it, period."