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September 17, 2014

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County in quandary over chemical plants

The Apex Industrial Park 20 miles northeast of Las Vegas and the Basic Management Inc. complex near Henderson coexist as the yin and yang of heavy industry in Clark County.

They are two sides of the same coin -- one would not exist without the public safety concerns raised by the other.

But because Apex lacks the two key ingredients for chemical reactions -- cheap water and cheap electricity -- it has failed to fulfill a promise to the public to lure chemical plants out of the densely populated valley.

County officials are hoping to renew interest in Apex under a proposal with a consortium of real estate marketers and construction companies to make Apex more attractive to heavy industry.

Meanwhile, Henderson residents concerned about their safety are questioning a recent rash of chlorine leaks from a plant at BMI.

But BMI officials said their companies, which have operated at the same site for 50 years, have no interest in moving anytime soon. In fact, they're planning to sink millions into plant upgrades and renovations, and build a light industrial complex around the plants to shield them from view.

"I don't ever think there was a desire to move the plants out to Apex," said Dan Stewart, general manager for BMI, the entity that provides water and power to four major chemical plants at its complex.

A blue ribbon panel appointed after a tragic chemical explosion near Henderson in 1988 led the public to believe otherwise.

Following four explosions and a fire at the Pacific Engineering & Production Co. plant that killed two workers and injured 350 others, then-Gov. Richard Bryan appointed a committee to investigate the incident and make recommendations on improving public safety.

The committee -- which included then-Lt. Gov. Bob Miller and County Commissioner Bruce Woodbury -- recommended the removal of hazardous chemical plants from the Las Vegas Valley. The committee also helped draft legislation to create the Apex Industrial Park.

"The governor's committee recommendation was to relocate as many businesses out there as possible," Assistant County Manager Jim Ley said.

That's always been the subtext, Woodbury said. However, even the committee members knew it would cost hundreds of millions to relocate the plants.

"None of them really approached this seriously about relocating," Woodbury said. "And there's no way the government can force it."

Without water or a desire to spend millions on relocation, Apex development has ground to a halt after luring only one chemical plant out to its site west of Interstate 15.

"I don't think anyone would say we got as far as we hoped with Apex or as fast as we hoped to get there," said Doug Bell, manager of the Clark County Community Resources Management Division.

Dawn of Apex

Under a 1989 law, the federal Bureau of Land Management gave Clark County a 10-year option on 21,000 acres of mountainous land for a heavy industrial park to relocate hazardous industries from the Las Vegas Valley.

Specifically, the federal act required PEPCON and Kerr-McGee Chemical Corp., two producers of ammonium perchlorate, an ingredient in solid rocket fuel, to move their operations to Apex.

"They were hoping to develop a contract with the U.S. government to expand and move their operations to Apex," Ley said. "They didn't get that, and the Department of Defense made an arrangement with PEPCON to build a plant in Utah."

Kerr-McGee did move part of its operation -- its storage and mixing facility -- to a 3,400-acre site at Apex, but continues its chemical manufacturing at the BMI complex.

"The bill included language to direct the county to sell the land for the Kerr-McGee site," Bell said, but beyond that the county had no authority to order any other companies out there.

"Apex is open to anyone," Bell said. "But we can't compel anyone to move. The whole BMI complex has firms that sunk millions into capital investment, improvements. You just can't move a chemical plant."

The county had a choice in what role it would play in shaping Apex: to develop the property itself for an industrial park or act as a real estate agent for companies that wanted a chunk of the land.

It chose the latter role, not wanting to commit precious millions of taxpayer dollars to make the property suitable for industry.

The only other company to make the move since 1989 is Silver State Disposal Service, which has the garbage disposal contracts for Las Vegas, Henderson, North Las Vegas and unincorporated Clark County. Silver State bought 2,300 acres from the BLM through the county to build a new landfill.

Nevada Power Co. also has a cogeneration plant at the site.

The county has since had no offers or interest from other companies wanting to move to Apex.

Said Commissioner Paul Christensen: "The county has not been good promoters."

Explosion proof

Too bad, say planners today.

The isolated location is ideal in several ways because it is over the mountains and outside the Las Vegas Valley's air quality basin -- an important feature for Woodbury, who represents Henderson and created the county's Air Quality Control Plan.

"We are going to need a place for growing industry to be near us," Woodbury said. "Apex gets it out of the valley, away from the residential areas and the air basin, but close enough to benefit the community."

Also, the surrounding mountains would shield the rest of the county from any blasts or chemical accidents, Bell said.

"That's a plus for us if you have a hazardous facility explosion," Bell said.

From those mountains, Chemical Lime (formerly ChemStar) mines tons of gypsum for the production of wallboard at an adjacent Georgia-Pacific mill.

But without cheap and abundant water, development at Apex has ground to a halt.

County planners had envisioned a different future for the site, with a 20-mile pipeline that would be financed by Kerr-McGee and the county. A preliminary 1989 study calculated such a pipeline would cost at least $6 million.

Commissioner Jay Bingham recalled that Kerr-McGee reneged on the water deal, and the board allowed the company to use well water instead.

After that, Bingham said, "Nobody wanted to develop. How could they without water?"

But Bell said Kerr-McGee was never intended to be the master developer of the Apex site, nor was it supposed to build the water line.

A 1991 follow-up study by engineering consultants G.C. Wallace estimated building a pipeline would be too costly, Bell said, because three pumping stations would be needed to get water up over the mountains to Apex.

Coincidentally, the county was re-evaluating its water commitment policies at the time the decision was made to discontinue the pipeline, Bell said.

That policy left developers on their own to find water, which meant digging wells and building reservoirs to satisfy Clark County Fire Department code, said Richard Brinner, a fire protection engineer for the department.

"Those are very expensive propositions when you talk about putting in water tanks," Brinner said. "When you're in town, you just hook up to the water district. At Apex, you have to bring water lines out, or build tanks for storage. It's a very complicated process."

The lack of water only added to the cost of relocation, a problem county officials seem to understand. In fact, no county official has ever actually asked the other chemical plants at BMI what it would take to get them to move.

"You can't force businesses to move," Ley said. "What other incentives can you provide? Our tax rates are already next to nothing."

Also, the companies said they would not be competitive internationally with their products, Ley said.

"There's very little we can do to force them to move as long as they comply with zoning and safety codes," Ley said.

A short list of the chemicals brewed at the BMI complex includes some of the most hazardous materials around, said Brinner of the fire department.

The Pioneer Chlor plant produces hydrochloric acid, chlorine and sodium hydroxide, which are then used by Kerr-McGree to manufacture even more hazardous materials, such as hydrogen sulfide, Brinner said.

Kerr-McGee also makes ammonium perchlorate, used in rocket fuel; magnesium dioxide, used in batteries; and boron trichloride, an alloy used in tennis racquets and computers.

Chlorine supplied to Titanium Metals Corp. through a pipeline from Pioneer is mixed with titanium ore to get titanium tetrachloride, which when zapped with electricity turns into titanium metal and magnesium chloride, Brinner said.

The metal is used in airplane parts and for the space shuttle. The magnesium chloride is a harmless dust suppressant.

Toxic neighbors

BMI is lucky to have its own pipeline tapped into Lake Mead, and is the only consumer in Nevada hooked up to Hoover Dam, Stewart said. Both features guarantee cheap and plentiful supplies of water and electricity, necessary for the reactions used in the chemical manufacturing process.

History may also be playing against any impetus to relocate. Henderson wouldn't exist without those chemical plants, built in 1942 for the war effort by a company original called Basic Magnesium Inc., Christensen said.

"It would be difficult to move a plant out of a town when it built the town," Christensen said.

Across from Lake Mead Drive, the original factory worker homes built by BMI still stand, and the people who have lived there for five decades understand the risk of living across from a chemical plant.

But that isn't the case with the people who have moved into the neighborhoods surrounding the plants in recent years.

Over the span of half a century, Henderson has grown around BMI into a thriving city of 130,000 people -- the fastest-growing city in Nevada. A string of chlorine leaks at the Timet plant since Oct. 15 have made residents keenly aware of the toxic chemicals and hazards of living near the BMI complex.

"Any time you have incidents regarding chlorine leaks or some other industrial incident, there's always a rise in concern," Henderson City Manager Phil Speight said.

The Timet leaks sent up to 86 pounds of the hazardous chemical into the air, sending a dozen children at a nearby elementary school home with nausea and headaches.

Timet was fined $10,000 and ordered to install new safety features to prevent future leaks, and the Clark County Health District is planning to monitor the plant more closely in the future.

To address the concerns of homeowners, BMI has created a 20-member citizens committee called the Henderson Industrial Citizens Advisory Panel, BMI's Stewart said.

"This is not the industry's panel," Stewart said. "This is a panel of citizens the plants want to interact with, to be able to engage in responsible interaction with these folks to help educate people as to what the plants are doing, and more importantly, what the concerns are out there in the community and how we as an industry can alleviate those concerns."

It isn't the first time a chlorine leak at BMI sent people running.

Five years ago, a 42-ton chlorine leak escaped from the Pioneer Chlor Alkali Co. plant. It still stands as the nation's second-largest chlorine leak.

The largest was when a train derailed in Baton Rouge, La., and four 60-ton tankers burst.

Some critics have wondered how so much residential development could have been allowed to spring up around the BMI complex, which sits on a 5,000-acre county island surrounded by the city of Henderson.

County planners said they have been approached several times by people who wanted to develop the outlying BMI lands as residential, but county guidelines prohibited it.

"What we have done in the county is to stick with our original master plans ... which all called that area to be industrial," Comprehensive Planning Director Richard Holmes said.

Woodbury recalled telling developers he couldn't support residential growth in the area near BMI, "but if they were going to do anything like that, they would have to annex into Henderson and see if they would allow that. That's what they did, and Henderson allowed it."

The residential growth is a concern, Woodbury said, but it also has a beneficial effect. BMI has to make substantial aesthetic and safety improvements "for that kind of development to continue and for the people to feel comfortable buying residential units in that area," he said.

Annexation blues

Henderson officials said there's been no encroachment on a deserted buffer zone between the chemical plants and the surrounding community.

"The houses closest to BMI are the original townsite homes built by the factory owners in the old days," city spokeswoman Vicki Taylor said.

Any homes and apartments built more recently are no closer than Henderson officials have previously allowed, BMI's Stewart said.

"We haven't sold any ground for residential use that's closer than existing residential," Stewart said.

Woodbury said he would like to see the entire BMI complex annexed into Henderson.

"That area is affected by the benefits and problems of that whole complex," he said. "Phase by phase that has happened, and we may see the acceleration of the whole area considered for annexation."

Stewart said that's the game plan.

"Our plan is to annex into Henderson as other acreage is developed," Stewart said. "It won't be done all at once."

About 900 acres of the original BMI site west of U.S. 95 was annexed into Henderson about 18 months ago, Stewart said. About 100 acres became the Valley Auto Mall, 200-300 acres is light industrial and the rest is residential, Stewart said.

That brings us back to the core complex -- 1,500 acres bounded on the north by Warm Springs Road, on the east by Boulder Highway and Water Street, on the south by Lake Mead Drive and on the west by U.S. 95.

Stewart said the plan is to develop 400-500 acres of the outer property into light industrial uses to hide the plants, which are going through renovations themselves, he said.

City officials will only permit future annexation after the BMI plants do a massive cleanup on their own dime, officials said.

"We have been working with the state and the companies in recent years in an effort to clean up the property," Speight said.

Speight said the blue ribbon panel after PEPCON also recommended eventual annexation of the entire area into the city.

Apex redux

Hoping to renew some interest in the remaining 7,700 acres that can be developed at Apex, the county has hired a consortium of developers and investors to develop the site as a heavy industrial complex and market it to industries.

But even that agreement is hung up at the Bureau of Land Management solicitor's office in Sacramento, where questions have been raised about whether the development agreement follows the intent of the federal Apex law.

"A contract has been entered into at the direction of the board, and a draft of the contract has been sent to the BLM," Ley said.

Bell said the three-member consortium team of AML Realty, Las Vegas Paving and Southern Nevada Paving is on hold for now. "We have to get the BLM's blessing before we go too far down the road," he said.

For better or worse, the BLM has been a silent partner in the development of Apex. The federal agency gets 50 percent of any profit the county makes from land sales at Apex, Bell said.

The county basically acted as middle man for Kerr-McGee and Silver State Disposal, Bell said, losing money to the BLM that could have gone into site development.

By selling the remaining 7,700 acres to a master developer, the county hopes to get around the 50 percent BLM cut. Once the agreement is approved, and the land is sold, the master developer team can sell land and keep the profit or use it to make improvements on the property.

"We hope they'd be willing to take the risk government is not willing to take, ultimately bringing water to the site, developing a distribution and storage system," Bell said.

To make the plan work, two strategies are needed, Bell said: to provide a place for heavy industry to move, and find whatever pressure points are available to push them out.

"Not too much has been done on either end," Bell said.

While the county can't make the existing companies move from BMI, it has passed air quality standards that prohibit any new power plants or heavy industrial activity from locating in the Las Vegas Valley.

Woodbury hopes that once the issues with the BLM are settled, Apex will be a viable site for heavy industrial activity.

"We're going to need a place for growing industry to be near us," Woodbury said. "Ultimately, if and when any BMI industries find it financially feasible to relocate, that would be a possible site for them."

As for the future of the BMI complex?

"At some point, they're going to outlive their usefulness at that location," Woodbury said, "but for now there doesn't seem to be any plans to move."

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