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HUNT COUNTY Officials in Hunt County are puzzled about the cause of a mysterious fish kill several miles upstream from part of the Dallas water supply.

It's near Callaghan Enterprises, a local metal refiner under investigation for dumping pollutants. The company says it is doing nothing wrong.

Earlier this month, Hunt County officials took soil and other samples from the vicinity of the business, located in a self-storage unit off Interstate 30 just south of Greenville.

The business uses a process called 'aqua regia,' in which hydrochloric and nitric acids are used to chemically harvest precious metals from scrap such as metal aircraft parts.

The owner of Callahan's used to be an employee of Industrial Precious Metals Recovery in nearby Royse City.

IPMR closed last year when its vice president and operations manager, William Lafon Musgrove, pleaded guilty in federal court to negligent release of extremely hazardous substances. He was also fined $10,000 and put on three years' probation.

According to documents filed in that case, IPMR used up to 40 household slow cookers to heat aircraft parts in a stew of chemicals to extract precious metals. Instead of using an air scrubber, the business let nitrogen oxide waft out its open door. Nitrogen oxide also comes from vehicle emissions and helps form ozone.

'The chemicals used in that, and then the mixing of them together, it's very toxic and it's very corrosive,' said Hunt County Homeland Security manager Richard Hill.

Officials believe that Callaghan Enterprises is also polluting its surroundings.

'This is not just a case of accidental lackadaisical dumping,' Hunt County Judge John Horn said. 'This is about as close to a case of environmental terrorism as one could see.'

About three weeks ago, employees of Tugger Trailers noticed a foul odor coming from what they later discovered was Callaghan Enterprises in the storage facility next door. Landlord Zach Portman reported it to authorities.

'At first it was thought to be contaminated,' Portman said. 'And then they came back and told us, 'Yes, it is hazardous.''

State officials have taken core samples, soil samples and water samples. They've discovered elevated levels of arsenic, cadmium and lead.

Water from the site drains into Caddo Creek, which flows into Lake Tawakoni located a few miles away. The lake is a water source for both Greenville and Dallas.

'I'm worried because I drink the water,' Hill said. 'I live in Commerce, Texas. I drink the water from Lake Tawakoni.'

Walter James, Callaghan's attorney, said his client's business has been going for 13 months. He wouldn't talk about the way the company operates, but said county officials are exaggerating the pollution levels on the site.

'It's irresponsible for them to call these high numbers when, in fact, they're not high numbers,' James said.

County officials say soil and water samples show levels of arsenic, cobalt, cadmium, lead, mercury and silver exceed state standards.

James said that aerial photography of the property from 1995 shows it used to be a junkyard. He said the metal refinery scraped up sections of the property's topsoil and put it into trash containers when notified of the county's concerns.

Two containers are on the site, wrapped in plastic. But county officials say Callaghan has removed soil off-site.

'We have tracked down where that soil went,' said Richard Hill. 'Three dumpsters of it.'

No charges have been filed, and no one has been accused of any wrongdoing. The county estimates cleanup costs could possibly reach $1 million.

E-mail bharris@wfaa.com

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