A construction company renovating the former Copper Lounge exposed workers and the public to asbestos before the building collapsed last year, violating federal and state laws for removing the hazardous material.

Hultgren Construction did not file legally-required paperwork prior to removing asbestos from the downtown construction site beginning in October 2016. The material ended up in the Sioux Falls Regional Landfill's general construction waste area and not properly disposed of as hazardous waste.

The asbestos, which workers rolled into plastic garbage bags, had been trucked through town and illegally buried at the landfill, according to an interview with state officials.

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Landfill officials "unknowingly accepted" the bags of asbestos, said Chad Babcock, an environmental specialist with the South Dakota Department of Environment and Natural Resources.

The illegal disposal and removal occurred despite previous correspondence between Hultgren Construction President Aaron Hultgren and DENR regarding asbestos requirements. Those conversations began as early as 2012 on previous projects.

Hultgren Construction is under federal criminal investigation for its role in the Dec. 2, 2016 Copper Lounge collapse that killed Ethan McMahon, a Hultgren employee.

Federal officials have declined to identify the focus of their investigation. David Ganje, an environmental lawyer, said there are several federal laws and regulations that address asbestos removal from buildings and grounds. Violations of those laws can result in criminal action.

“Asbestos fibers if airborne can be inhaled and are shown to be the cause of several diseases such as lung cancer, asbestosis and others,” Ganje said.

The city signed a deal with Legacy Developments this month to build a $50 million hotel and parking ramp project adjacent to where the Copper Lounge stood. Aaron Hultgren is an officer with the company, as is Norm Drake. Legacy Developments was the developer on the Copper Lounge project and Drake was identified in a state investigation as the manager for an investment group that owned the Copper Lounge.

The state investigation into the asbestos removal ended in May but was not publicly announced. The Argus Leader obtained documents Wednesday, which show the state levied a $20,000 fine against Hultgren Construction.

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City Councilor Greg Neitzert said the Council wasn't made aware of either the criminal investigation or asbestos being illegally dumped in the landfill prior to approving the parking ramp agreement with Legacy Developments. Hultgren is a guarantor on the project.

"I don’t know if it would have changed my decision because Hultgren Construction was not building any part of this development," he said. "But it would seem that it would be material and I'd have liked to know to at least consider it."

On the day of the catastrophic failure, Ron Bell, the city’s former building services director, contacted DENR officials to determine if required asbestos records had been filed with the state. After learning they had not been, he contacted Hultgren and was told there was no asbestos inspection information available.

On the same day, a DENR official contacted GeoTek Engineering and Testing Services to obtain a previous inventory of asbestos that was done on the building in 1999. That report documented asbestos wrap used to insulate basement pipe.

But that material was gone when DENR inspected the building on Dec. 6 and Dec. 7. The investigation found remnants of the pipe wrap that could be crumbled, pulverized and reduced to powder by pressing it with a hand, according to the state’s inspection. Based on the previous inventory and public building plans, Babcock estimated that at least 380 linear feet of wrap had been removed from the Copper Lounge basement.

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The employees who removed the wrap sprayed it with water and used utility knives. They were wearing body suits, including rubber gloves and goggles, and using respirators, but they were not certified to remove asbestos, which is against the law.

Between Oct. 5 and Dec. 2, 46 loads of material were transported to the landfill by Hultgren Construction. Babcock said he believes that most of the rubble containing asbestos was in two loads.

Landfill Superintendent Dustin Hansen said Wednesday city officials assisted the DENR in its investigation, during which they were made aware asbestos had been illegally dumped by Hultgren Construction.

It's unclear if the city levied any penalties against Hultgren Construction or Aaron Hultgren related to asbestos being illegally dumped at the landfill.

The City Attorney Wednesday did not immediately respond to emailed questions.