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Austrian Pipeline Maker Faces Texas Trial Over Pollution

Bloomberg logoBloomberg 9/18/2020 Jonathan Tirone
a sign on the side of the road: Voestalpine Stahl Donawitz GmbH plant in Donawitz, Austria. © Bloomberg Voestalpine Stahl Donawitz GmbH plant in Donawitz, Austria.

(Bloomberg) -- A steelmaker that helped make Russia’s Nord Stream 2 pipeline is facing an environmental trial in Texas for allegedly polluting a Gulf Coast city.

Voestalpine AG said it’s preparing to fight the allegations made by residents of Corpus Christi. The Austrian company, which manufactured the steel for both of Gazprom PJSC’s Nord Stream natural gas pipelines, finished building the world’s biggest sponge-iron plant four years ago at the Texas port that has become a key hub for U.S. oil and gas exports.

The allegations have come to light as political tensions have risen over the Russian-built pipeline that has been heavily criticized by U.S. and European lawmakers over its ties to President Vladimir Putin.

In addition to the lawsuit, the company is facing continued state investigations in response to some 250 complaints that had been filed against Voestalpine with the Texas Commission on Environmental Quality by the start of September.

State investigators documented how clouds of metallic dust emitted from the company’s plant contaminated local property.

“Voestalpine Texas contests and has actively defended against the various allegations in the lawsuits, including suggestions for unwarranted and unnecessary injunctive relief measures and against claims for punitive damages, and will continue to do so,” the Linz, Austria-based company wrote in an Sept. 16 emailed reply to questions, adding that no provisions for potential damages have been made.

a sign on the side of the road: Voestalpine Stahl Donawitz GmbH plant in Donawitz, Austria. © Bloomberg Voestalpine Stahl Donawitz GmbH plant in Donawitz, Austria.

Voestalpine said it’s already made “substantial improvements” to eliminate dust and is working with Texas investigators to clarify other issues. The company has offered “house-and car-washing programs” to address dust complaints.

Corpus Christi residents are seeking damages -- and won a judge’s permission in June to potentially force upgrades to the $1 billion factory. A trial is scheduled for May 17 in federal court in Corpus Christi.

The 18 plaintiffs bringing the suit want the company to reduce flaring, minimize tower emissions and install new monitoring equipment. They have “health concerns from breathing in the “black material” allegedly being emitted from the factory, according to a copy of their suit. They have until Dec. 18 to present additional expert environmental reports.

The company has also faced complaints alleging that iron briquettes have been observed on fire “from days to months” at Voestalpine storage areas are still being investigated, as are suspicions that plant pollution may be behind “fish kills” in The Gulf of Mexico.

“Citizens have been unable to have normal use and enjoyment of their property due to the accumulation of the iron ore dust on and in their residences, in their pools, in their yards, on their children’s outdoor play equipment and in their vehicles,” state investigators wrote in a 338-page report issued a year after the plant opened.

Lawyers representing the plaintiffs didn’t respond to several attempts to contact them for comment on the progress of the lawsuit.

Excess industrial emissions lead to at least $150 million in health damages every year in Texas, according to a 2018 study published in the Environmental Science & Technology journal. Formosa Plastics Corp. last year agreed to pay a record $50 million to end a private lawsuit, the biggest settlement in U.S. history from a citizen environmental suit.

Voestalpine signed a record contract to supply 300,000 tons of steel plate to the Kremlin-backed Nord Stream 2 project just months before it began making hot-briquetted iron, or HBI, in Texas in 2016. Some of the iron produced in the Corpus Christi was subsequently shipped back to Voestalpine workshops on the banks of the Danube River in Linz, Austria.

Nord Stream 2 “will do serious damage to the economic and national security interests of the U.S.,” Texas Senator Ted Cruz told the Senate Foreign Relations Committee on July 30, a day after the pipeline came up in “considerable depth” with Donald Trump on a cross-country flight to aboard Air Force One.

(Adds pipeline background in the 14th paragraph)

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