On October 20, two investigators with the Texas Commission on Environmental Quality climbed a smokestack at the Gulf Chemical & Metallurgical Corp. plant in Freeport. The plant takes spent catalysts from oil refineries across the globe and recovers valuable metals from them. For years, state regulators at the TCEQ’s regional office had tried to figure out how much pollution the facility was emitting. Neighbors had often complained that Gulf Chemical spewed dangerous heavy metals into the water and air. The company had long failed to conduct accurate testing, and the October 2010 stack test had been repeatedly delayed. Just a few months earlier, in June, the company had pleaded guilty to 11 felony counts of illegally discharging toxic wastewater into the Old Brazos River and paid a $2.75 million fine. Surely the company, chastened by a rare criminal prosecution for pollution, would now be on its best behavior.

Not exactly.

As the TCEQ employees, wearing flimsy $8 dust masks, climbed the stack, they suddenly smelled an odor like a firecracker had just exploded. Soon, a molten material—the company would later call it “magma”—erupted from the stack and began raining down on them.

The TCEQ employees hustled off the stack to safety, but two contractors working on the test weren’t so lucky. Company officials made no effort to bring them down, and one contractor was burned by the magma, according to internal company emails and state records obtained by the Observer.

The TCEQ investigators later learned they had been exposed to extremely high levels of ammonia and sulfur dioxide—in the case of the sulfur dioxide, the levels were 16 to 20 times higher than those considered immediately hazardous to life and health, according to state records. One of the inspectors later emailed the company to say that two days after the incident a doctor had found bleeding and yellow crust in his nose.

The company’s safety director, Richard Funesti, blamed the incident on the inspectors, writing to TCEQ that he had “incorrectly assumed that your Investigators understood our processes and were adequately prepared for the potential risks. As such we deferred to the Agency’s expertise and permitted free access to the stack platforms.”

For those familiar with Gulf Chemical, including employees, it was just business as usual. The company’s Freeport plant has an impressive record of flouting the rules.

In one instance, the company kept two sets of books on water pollution—an “official” one presented to TCEQ and an “unofficial” one used by the company— a practice revealed only when a whistleblower tipped authorities in 2009.

In 2006, inspectors discovered that Gulf had in 1994 filled a “pond” 10 miles from the facility with four million cubic feet of alumina concentrate, which had been leaching metals into the groundwater unbeknownst to the agency. Gulf had been speculating that the market might turn and make the stuff valuable. Inspectors discovered, too, that Gulf had failed to mention to the agency that the alumina concentrate, handled by their workers without proper breathing gear, is hazardous, and can contain chromium, cobalt, lead, molybdenum, nickel, vanadium and benzene. One constituent compound, nickel carbonyl, is dangerous even at the extraordinarily small concentration of one part per billion.

The air permit that TCEQ issued to Gulf in 1994 legally allowed the company to emit hazardous metals at twice the agency’s own health standards. That generous standard apparently wasn’t high enough. The agency would later find that the Freeport plant was grossly exceeding even the lax limits of its permit.

But for a long time, the agency didn’t know how much pollution Gulf Chem was producing. Instead of a pollution-monitoring system bolted to the stacks, Gulf was allowed to have its own employees gaze at the sky for a few minutes every day and jot down observations. In other words, company officials were allowed to literally eye-ball their pollution—a practice one former Gulf executive calls inadequate and ripe for abuse.

Gulf Chemical may be the most brazen polluter in Texas. An Observer review of thousands of pages of court records and internal agency documents, and interviews with a former company executive reveals a company that operated outside the law for almost four decades, even as citizens, activists and TCEQ’s own investigators pleaded for action. The records and interviews show a facility that held its pollution control equipment together with duct tape and routinely pumped out hazardous metals including nickel, vanadium, and molybdenum in quantities considered potentially harmful to nearby neighborhoods and an elementary school less than a mile from the plant. A former Gulf executive and a former TCEQ official described to the Observer how the company blatantly polluted for years and got away with it.

While some executives inside the company tried to convince Gulf Chemical to clean up its act, residents on the other side of the facility’s fence-line suffered. Though accustomed to living around the petrochemical industry, many in Freeport describe Gulf Chemical as an exceptionally bad actor. In the neighborhoods nearest the plant, residents link health problems from nosebleeds to cancer to the hazardous metals they have tasted and breathed for decades. Gulf didn’t respond to three requests for comment for this story.

After nearly 40 years of pollution, the company’s record caught up with it in 2010. Even in a state with a notoriously lax attitude toward polluters, environmental regulators eventually recognized that Gulf Chemical was going too far. “This is only one of a handful of companies in the state that worries me,” wrote TCEQ’s chief toxicologist, Michael Honeycutt, in a 2007 email to another official. “They have a long, sordid history.”

What may have finally tipped the balance is a leak from within Gulf Chemical. An employee told TCEQ in July 2009 that the company was deceiving the agency about its wastewater discharges, going so far as to keep two sets of books in its effort to skirt environmental regulations. In February 2010, based on that tip, the environmental crimes units of seven different agencies converged on Gulf Chemical’s administrative offices. By May, the company had pleaded guilty in the criminal case. Gulf’s environmental and health services manager, Rajani Vadlamudi, pleaded guilty to a misdemeanor felony, and he paid a $5,000 fine.

By November, David Pacella had stepped down as Gulf Chemical’s president, a move “meant to signify a new chapter” for the company, according to a press release.

Then, in March 2011, Texas Attorney General Greg Abbott filed a civil suit against Gulf, alleging 77 violations of the Clean Air Act and the Water Quality Control Act. The 168-page suit accuses Gulf Chemical of running a “band-aid operation.”

Last year, the state secured a temporary injunction that requires Gulf to make considerable changes to its operations and facilities. But Linda Vasse, who was regional TCEQ director in Houston before leaving the agency in April, says she thinks the state’s civil case was a missed opportunity. Vasse said the regional office recommended tougher treatment, including “a real and immediate reduction in emissions” and possibly a temporary shutdown of the plant. “For over eight years, the emissions have been both uncharacterized—with the facility unable to tell us exactly what’s coming out of their stack—and unquantified, how much of the stuff is coming out.”

Indeed, it’s not clear whether the company has really opened “a new chapter.” Documents show that Gulf is still pumping out more pollution than its permit allows, and TCEQ has once again sent a case to the Attorney General seeking civil penalties. The company has missed a deadline for putting a system in place to monitor its stacks’ emissions in real-time.

Some residents and regulators wonder whether the recent state crackdown will be enough to rein the company in. Some residents suspect that neither convictions nor fines will be enough to prevent Gulf Chemical from continuing to pollute their community.

Industry gave birth to Freeport. The name itself comes from the Freeport Sulphur Company, a mining concern that established what were then the world’s largest sulphur mines near Freeport in 1912. Over time, the company evolved into Freeport-McMoRan, a global corporation that owns a notorious gold mine in Indonesia. Dow Chemical arrived in 1940 and began extracting magnesium from seawater to aid the war effort. (Magnesium is a key ingredient in incendiary bombs.) To accommodate the thousands of workers pouring into town during World War II, Dow and the federal government built “Camp Chemical,” temporary housing for 5,500 workers. As early as the late 19th century, the forces of industry had begun reshaping the Brazos River delta—a dynamic expanse of salt grass marshes, oxbow lakes orphaned from sluggish streams. The main stem of the Brazos was wrenched from its meandering course through southeast Texas, straightened and diverted into the Gulf of Mexico three miles down the coast from its original mouth. The “Old” Brazos River was then dredged and jettied, married to the Intracoastal Waterway, and transformed into a deep-water port for Dow’s Plant A. Today, Freeport is home to more than a dozen industrial facilities, including Dow Chemical’s two gargantuan campuses. It is a petrochemical kingdom built on marshland.

The town suffers from a version of the “oil curse” endemic to oil-rich Third World nations: An enormously profitable resource seems to have done little for many of the people that live in the shadow of its exploitation. Executives and engineers and well-paid employees don’t live in Freeport; they live in nearby Lake Jackson, with its stately red-brick homes and whimsical street names like “This Way” and “That Way”. (A search of the Texas Board of Professional Engineers’ database found just nine engineers who live in Freeport; 151 call Lake Jackson home.)

Gulf Chemical, a subsidiary of the French multinational Eramet, arrived in 1973. From the beginning, Gulf Chemical proved to be nettlesome. For years, state regulators tried in vain to get basic information about the company’s operations. In particular, the Texas Air Control Board wanted Gulf to test its stacks to see what pollutants were going into the atmosphere. The company either ignored the regulators or employed methods described by the board as “tremendously in error,” according to contemporary state records. When investigators toured the plant in 1976, they found a “sloppy operation” with 55-gallon drums stacked two and three deep in an area larger than a football field. Catalysts were spilled out willy-nilly and oily substances slicked up the ground. Ammonia and hydrogen chloride fumes had eaten large holes in one building, according to state records. By the end of 1976, the state lost patience and decided to sue. “The [Texas Air Control Board] staff has been extraordinarily considerate of GC&M’s needs throughout the long history of the facility,” one document reads. “It is apparent that GC&M has no intention of complying” with the law.

“The plant really was just completely out of control,” says Matthew Tejada, executive director of Air Alliance Houston. Although it is just a fraction of the size of, say, Dow Chemical, or your typical oil refinery, “its size does belie the fact that it is a hazardous waste reprocessing facility. It’s handling the dirtiest of the dirty and the most dangerous of the dangerous.”

In a sense, Gulf Chemical is a high-end recycling center. Oil refineries and petrochemical plants use catalysts to help make gas, jet fuels, plastics and other products. Over time, catalysts are poisoned by accumulating amounts of the metals found in oil—principally nickel, vanadium, cobalt, arsenic and molybdenum. These metals are valuable, and spent catalysts are so environmentally dangerous that nations including the U.S. ban them from dumps. Refineries from across the globe—Venezuela, Canada, China, Europe—ship their spent catalysts to Gulf Chemical for recycling of their metal content. The recovery process is complicated, but the plant itself, says a former Gulf Chemical executive, is based on equipment from the 1950s. The furnace designs date to the 1800s, he said.

For decades, Gulf received little more than slaps on the wrist for its routine violations. The biggest fine amounted to $155,000—peanuts for such a highly profitable company. Worse, TCEQ gave Gulf Chemical wide latitude to pollute—legally. In the ’90s, the agency learned that Gulf Chemical had failed to disclose components of the plant that were emitting unauthorized and unknown amounts of hazardous metals and other pollutants into the air. “Less than a mile away, those materials likely were being breathed in by first-graders enjoying recess on the playground at O.A. Fleming Elementary School,” noted The Facts, the local paper, in 2004.

But rather than punish the company, “there was no follow-through by this agency, and the facility has for 10 years continued to store and emit these dangerous compounds without any controls,” officials in the Houston regional office wrote to TCEQ headquarters in Austin in 2004. Perhaps it was no surprise then, in 2009, when a mobile monitoring team from TCEQ measured “unacceptably high” concentrations of metals downwind of the Gulf plant. Arsenic, for example, was three times the state’s health-based standard for short-term exposure. One sample detected nickel at 13 times the limit. Even short-term exposures at those levels can cause wheezing, coughing, respiratory irritation and chest pain. Over time, exposure to nickel and arsenic may cause cancer.

Johnny Kouches, 54, is ringing up customers—some shirtless—at his family’s store, Freeport Grocery, making small talk as they buy beer, cigarettes and sodas. His father, Charles, is seated in a chair behind the counter, flipping through a scrapbook. The purpose of the scrapbook is to document the family’s long effort to get Gulf Chemical to clean up its act. The plant lies about two-thirds of a mile north of the store. In Kouches’ scrapbook are hand-written letters to officials pleading for action, a petition with hundreds of signatures, letters from members of the Kouches family complaining of headaches, nose bleeds, asthma and cancer.

Charles lingers longest over some old photos. A snapshot of the Brazos Queen, a diesel-powered paddleboat that once plied the Old Brazos River. A photo of shrimp boats that kept the white flag—the universal Gulf Coast symbol for fresh shrimp—flying at Mitchell’s, the family’s marina. “We had a beautiful thing going,” says Charles, a 92-year-old man in suspenders who’s lived his whole life in Freeport. “What we worked for all our lives, we just lost it.” Not exactly all of it. The Kouches divide their time between this small convenience store and a bait stand. But the paddleboat, the pier and the shrimp are all gone.

The Kouches blame the collapse of shrimping in Freeport and the disappearance of tourists who once flocked to Mitchell’s, as well as their family’s health problems, on Gulf Chemical. A small facility by Texas petrochemical standards, the Gulf Chemical plant has nonetheless had an outsized impact on the people of Freeport, especially those who live in the East End, a largely Latino and black part of town.

For years, the Kouches couldn’t suss out the precise source of the pink metallic dust that corroded the boats docked at Mitchell’s, killed the shrimp in their aerated tanks, and burned their throats and lungs. Nor did they know the provenance of the pollution that was scorching the marshes and wiping out marine life.

Then one night about 10 years ago, Johnny was driving over the Old Brazos River on the Pine Street Bridge, tall enough to let sailboats pass under and offering a clear view of Freeport’s residential area and nearby industrial zones. Looking down, he could see a torrent of chemical-laden water leaving the Gulf Chemical plant and flowing into the river. Later, he watched as a plume of black smoke left the company’s stacks and drifted toward town. He’d identified the culprit.

Shortly thereafter, Johnny convinced a Gulf Chemical supervisor to visit Mitchell’s. Johnny showed him the dead shrimp and talked about the family’s health problems. “He said, ‘there’s nothing we can do for you,’” Johnny recalls. “‘We’ve got a permit from the [Texas Commission on Environmental Quality].’”

Between the summer of 2009 and early 2011, residents filed more than 50 complaints against Gulf Chemical. Some were very detailed. “The complainant understands that the smoke is arsenic and nickel powder”; “The plume, which was not steam, measured at least one mile long, and when emissions passed overhead, it was estimated to be greater than 200 feet in diameter”; Gulf is “emitting heavy acidic fumes creating a haze, acidic odor and irritating the citizen’s eyes.”

Soil tests conducted by the TCEQ have found elevated levels of aluminum, antimony, arsenic, barium, beryllium, cobalt, copper, lead, manganese, nickel, selenium, strontium, tin, vanadium and zinc in residential areas.

“We saw this stuff,” Charles says. “We’d breathe it and it burned like hell. But we didn’t know it could hurt you.”

John Metric is a whistleblower in a company town. Originally from Wisconsin and an engineer with a MBA, Metric worked for Gulf Chemical from 1995 to December 2009, when his career came to an abrupt end. For two years, Metric has been muzzled by a nondisclosure agreement—a condition of his severance package—that recently expired. In interviews with the Observer, he described how the company operated.

What happened, according to Metric, is this: In 2009, the then-executive discovered something fishy: Gulf had been intentionally manipulating the way it calculated and reported important water-quality data for about 10 years. In essence, Gulf was keeping two sets of books on the effluent it was pumping into the Old Brazos River. On Wednesdays and Thursdays, the company would slow production, so the effluent would be less contaminated. Those “clean” samples were reported to TCEQ. The company was also taking “unofficial” samples of the effluent on other days and recording them in a separate spreadsheet. On those “unofficial” days, Gulf was ramping up production and flushing wastewater into the Old Brazos River that was dirtier than the company’s permit allowed.

“They felt they were tip-toeing inside the letter of the law,” Metric says, “and were willing to pay a fine if eventually anything were to come up, because, up to that point, the fines hadn’t been very high.”

Metric says he told upper management in Freeport, including president Dave Pacella, that the two sets of records needed to be squared right away. He was rebuffed. Then, in early summer 2009—he’s not sure of the exact month—he flew to Paris, where parent French company Eramet is headquartered, to meet with Gulf Chemical’s chairman and CEO, Alain Pradoura. When he raised the pollution issue, he was met with a chilly response: “John, we’d prefer you not to bring this up to us.”

At that point, Metric said, he could “see the writing on the wall”—he was going to be canned. Sure enough, by the end of the year, Metric was offered a deal to exit the company quietly.

Meanwhile, one of Metric’s colleagues in Freeport, Lori Lord, confronted plant manager Mike Gretschel, environmental and health services manager Vadlamudi, and Funesti in a meeting in late June. With the lights dimmed, she gave a PowerPoint presentation showing precisely what Gulf had been up to. Gretschel told her “she should not put information discussed at the meeting in writing,” according to a search warrant. On July 6, she quit and called TCEQ.

Though he’s angry about losing his job, Metric says he has no interest in “crucifying” Gulf Chemical. Metric’s not too impressed with the state’s lawsuits either, which he characterizes as focusing on nit-picky record-keeping violations. “It’s like Al Capone got convicted for tax evasion, not actual crime,” he says. Even the $2.75 million fine leaves him unfazed. “For a company that makes [tens of millions] a year, it might have been a good bet.”

In fact, he reserves most of his criticism for TCEQ. Water-quality violations, he says, were right under the agency’s nose for years. “It could’ve been [discovered] if they hadn’t sent 26-year-old kids straight out of school,” he said, referring to the agency’s inspectors.

He also scoffs at the ways the state tried to enforce its environmental regulations. One of the most frequent complaints from Freeport citizens has been plumes of metallic-smelling black smoke—composed of tiny soot particles and metals—descending on their neighborhoods and leaving them with bloody noses, breathing difficulties, dizziness, headaches and nausea.

Occasionally TCEQ investigators, responding to complaints, would catch the company in the act. But for the most part, it was left to Gulf Chemical’s own personnel, trained “smoke readers,” to make a visual inspection each day. A smoke reader is trained to estimate the opacity of the emissions against the backdrop of the sky. Anything over 20 percent opacity is out of bounds.

The problem with visual inspections, Metric says, is that they’re worthless on rainy days or at night. And night is when things get really cranking.

“It’s a night operation,” Johnny Kouches said. “We told [TCEQ] that. They know.”

Johnny recommended that I drive over to Gulf Chemical shortly after dark. Sure enough, grayish smoke was pouring from the stacks. After a TCEQ investigation in 2004, the Kouches’ attorney wrote the agency that the action had “prompted Gulf Chemical to reduce its emissions during day operations. However, the problem has worsened during the night hours.”

Folks on Freeport's East End are hopeful that the state’s recent crackdown will force a permanent change in Gulf’s operations. The state’s civil suit requires Gulf to install real-time pollution monitoring on its stacks and do extensive soil sampling in and around the plant. Scrubbers capable of reducing sulfur dioxide emissions by 95 percent—a project delayed for years—are supposed to come online this year. Gulf’s new leadership, meanwhile, is trying to escape its criminal past.

But many have the feeling that justice hasn’t really been done. Freeport’s city manager, Jeff Pynes, is the town’s former chief of police. “I’m a city manager with a gun,” he says. He views Gulf as a potential repeat offender. “We’re an industrial community. But that doesn’t mean you can treat us like an industrial plant. ... We’ve been very bold about stating that we’re going to stand up to whoever pollutes our community.”

Pynes is frustrated that the $2.75 million fine that Gulf paid doesn’t stay in Freeport; $2 million goes into Travis County’s coffers, and the rest goes to TCEQ. He points to the millions that BP spent promoting tourism and fishing after the Deepwater Horizon spill in 2010. “Who’s out there assisting us to repair damage Gulf did to our community?”

Across the street from city hall sits Freeport’s new publicly financed $10 million marina on the Old Brazos River. The yachts docked there have a nice view of Gulf Chemical. Pynes says the marina has had trouble attracting customers because of the town’s reputation for fouled air.

Meanwhile, two separate teams of attorneys are gathering plaintiffs in Freeport for possible civil litigation. But so-called toxic torts have become extraordinarily difficult because of recent Texas Supreme Court rulings. “It’s about as tough as its gets,” said Adam Friedman, the lead attorney researching the case with Blackburn & Carter, an environmental firm in Houston. Plaintiffs attorneys have to prove that a particular chemical from a particular source caused a particular person’s health problems. The Gulf Chemical situation is attractive, from a plaintiff’s point of view, because it presents a unique toxic footprint. No other company in the area emits nickel, vanadium or molybdenum—metals that are linked to the medical problems reported by citizens on the East End. Still, it’s almost impossible to conclusively establish that one victim’s cancer or asthma was caused by exposure to metals. Maybe it was their genes, or a result of diet, or something emitted by Dow or BASF.

For some citizens in poor health, such plausible deniability is frustrating. Victoria White, 44, who’s lived in the East End of Freeport since 1996, complains of vomiting, rashes, dizziness and nausea. White is awaiting the results of a metals screening test conducted by the Texas Department of State Health Services. She’s one of 353 people in Freeport whose urine is being tested for nickel, cobalt and molybdenum. She’s fed up with the state’s soft regulation—that despite all its transgressions, Gulf Chemical is still polluting her neighborhood. “For 30 or 40 years, it’s been the same cotton-picking crap.”