Intel’s failure to disclose fluoride emissions at its Washington County factories has embarrassed the company and, in its own estimation, cost it neighbors’ trust. It’s also brought the threat of a lawsuit by environmental watchdogs and closer scrutiny from state regulators.

Observers and the company’s critics agree the fluoride flub won’t ultimately derail Intel’s two new, multibillion-dollar Hillsboro research factories, collectively known as D1X. But for the first time, environmentalists and regulators are raising the possibility the issue could briefly delay operations and construction at the site.

“We’re scoping out a lot of things, including that,” said David Monro of the Oregon Department of Environmental Quality.

Environmental groups say they hope their actions will lead to closer monitoring of Intel’s operations, perhaps including regular disclosure of its atmospheric emissions. But they say a brief delay in Intel’s plans may be an unavoidable side-effect of Intel fouling up its fluoride disclosure.

“Nobody wants Intel to leave Washington County or Oregon,” said Aubrey Baldwin, an attorney with the Earthrise Law Center, who sent a letter to Intel this week on behalf of her group and other environmental organizations, warning of a pending lawsuit. “The ideal outcome is one that successfully protects public health and the environment and allows Intel to continue to expand its manufacturing.”

The trigger for the suit dates back to October 2010, when Intel applied for state approval to begin the first phase of its expansion in Hillsboro. At the time, the company didn’t disclose its fluoride emissions. Without that information, the company required only a letter of approval from the Oregon Department of Environmental Quality to move forward.

Intel said it discovered last year that it should have been disclosing fluoride emissions all along, and the Department of Environmental Quality disclosed the omission this fall, just as operations began in the first phase of D1X, where Intel is starting to craft a new generation of microprocessors due to begin production two years from now.

The fluoride itself isn’t a health hazard, according to both Intel and the DEQ. Studies of fluoride’s atmospheric effects find that health impacts are usually confined to the people who are actually working at the site.

But the absence of disclosure could have major regulatory implications. The DEQ is still sorting through things, evaluating whether Intel should have given public notice and undergone more rigorous emissions vetting before beginning construction three years ago. In short, the company may have needed a permit for its expansion rather than just a letter of approval.

The DEQ has said it may take months to review whether it issued Intel the correct permit and, perhaps most challenging, how to remedy any mistakes. If Intel needs a new permit, Baldwin said, the law would require Intel to stop operations in phase one of D1X and halt construction in the second phase for a short period – perhaps 90 days – while Intel’s application works its way through the public-comment process.

“It’s not the delay that we’re interested in. We’re just interested in them complying with the law,” Baldwin said. “They need a permit they don’t have.”

If activists don’t push for a delay in court, George Davis, a DEQ environmental engineer working on Intel’s permit, said that his agency doesn’t foresee one.

Intel moves to a new generation of smaller processor circuitry on a tight, two-year timetable, based on technology developed in its Hillsboro research factories. The company prides itself on operating like clockwork, a process it calls “tick-tock.” So even a short delay could be hugely disruptive, and give competitors the opportunity to catch up.

Intel says it won’t comment on pending litigation. Neighbors for Clean Air attorney John Krallman – who signed on to Tuesday’s letter along with Baldwin – said he’s not specifically pushing for a halt to construction, though that’s an option the group is keeping open. He said the prospect of legal action against Intel is about holding the company to higher emissions standards and involving the public in the process. Fines may be part of that, Krallman said, but it’s mostly a dialogue the group is seeking.

“Our hope is we can engage with Intel and put pressure on them to engage with the community,” Krallman said. “That’s what we’re really asking for.”

Intel employs 17,000 people in Oregon, more than any other business. Its Ronler Acres site near Hillsboro Stadium is its main research site, where the company develops each new generation of microprocessor technology. It’s a heavy industrial operation that abuts tightly packed residential development.

Ongoing construction of the two new factories has brought a daily parade of heavy-duty trucks and traffic into the neighborhood, jamming streets and inflaming ongoing concerns about the pace and nature of development in what was, until recently, largely a rural community. That work intensified when Intel began construction of the second phase of D1X a year ago.

So far, public concern about Intel’s environmental record has been limited to a small but passionate group of Hillsboro residents and environmental activists who have spearheaded the effort to impose stricter controls on the company. Just 55 residents submitted comments to the DEQ, most calling for more emissions testing. County and city officials have been mum on the issue.

If the issue festers, though, or other environmental issues arise, it could poison Intel’s relations with its neighbors and undermine confidence in state regulators who failed to catch the company’s fluoride emissions on their own.

“It really makes people feel like they don’t know who’s taking care of their interests,” said Baldwin, from the Earthrise center.

Intel has asked for a series of meetings with community organizations and says it will offer a comprehensive response once it has a thorough understanding of neighbors’ concerns. The company has said it’s open to more testing and disclosure.

“As we work through this process, our goals are to ensure that the community has a voice in the process, we provide greater transparency around our emissions and controls and we are held accountable to our permit requirements in order to sustain our operations in Oregon,” Intel spokeswoman Chelsea Hossaini said in a written statement.

Federal law allows citizens to sue to prompt enforcement of environmental rules. The law requires 60-day notice before legal action, and subsequent enforcement by government agencies can pre-empt the citizen suit. So this week’s notice effectively creates a deadline, or a little less than two months, for the state and Intel to work out a solution to the permitting muddle and to begin placating neighbors alarmed by the fluoride issue and other environmental worries.

It’s an open question whether a court would actually force a halt to Intel’s operations and construction, according to Douglas Morrison, founder of Environmental Law Northwest, a firm near Seattle that represents businesses in air-quality issues.

While Intel may be in violation of its permit, he said there’s no evidence of ongoing harm from its emissions.

“There’s a technical argument that they could be shut down under the law,” Morrison said. “But the equitable arguments under these facts are all in favor of Intel.”

Intel could also face financial penalties, potentially in the millions of dollars if a court found that violations date back to the letter of approval Intel received when it started construction on D1X in 2010. But fines on that scale are exceedingly rare.

“You typically start with a much, much lower penalty, even for negotiation purposes,” Morrison said.

If a company takes steps to mitigate its emissions or improve atmospheric monitoring, regulators may consider the cost of those actions when deciding whether to impose a financial penalty.

Environmentalists and industry advocates agree that it’s exceedingly unlikely that Intel would be compelled to stop production for an extended period.

“It would have to be an ongoing violation,” Morrison said, “and it would have to be pretty darned serious.”

Much more typical would be some kind of negotiated settlement that provides a mechanism to ensure a company meets environmental standards, and a set of consequences if it does not. In their notice of a pending lawsuit this week, the environmental groups suggest such a possibility and invite Intel to “discuss settlement.”

Hillsboro resident Jim Lubischer was among a nucleus of residents who were vocal at public meetings and a subsequent public hearing on the permit.

For his part, Lubischer said he would like to see the company’s toxic emissions reduced to zero. He lives in the Orenco area of Hillsboro, near Intel’s campus, and is concerned about what the emissions will mean for his health. He would also like to see more responsiveness from the company.

“I know Intel does provide a lot of jobs, but quality of life does matter,” Lubischer said.

“The end result will tell us,” he added, how seriously Intel takes resident concerns.

Intel permitting timeline

1990s: Intel receives an air-quality permit for emissions from its Oregon computer chip factories. In time, its Ronler Acres campus in Hillsboro grows to become the company’s primary research site.

2010: Intel announces plans to build a new, $3 billion, 1.1-million-square-foot research factory at Ronler Acres, called D1X. At the time, the company seeks approval from environmental regulators to expand the facility. Construction begins before the end of the year, when new federal limits on greenhouse gas emissions took effect.

2012: Intel announces plans to build a second phase of D1X, just as large as the first. Additional support buildings associated with the new factory bring the total footprint of the expansion to 2.5 million square feet.

2013: Construction wraps up on the first phase of D1X and Intel begins developing its next generation of microprocessor technology in the factory. State environmental regulators, reviewing a new air quality permit for Intel, report that the company had failed to disclose fluoride emissions under its existing permit.