Contract Contact

Council considers additional public review of GPT scoping

Wednesday, February 12, 2014

A minor constitutional crisis erupted this week as Whatcom County Council considered a change to the way the county administration renews a contract for environmental review. County Executive Jack Louws said the contract amendments are within his authority to sign without council approval, an authority the county legal department agrees he has. Council’s tension was amplified an order of magnitude because the contract under discussion was the environmental review for the proposed Gateway Pacific Terminal.

Whatcom County Council Chair Carl Weimer introduced a resolution requesting the executive forebear on additional contract amendments with the environmental consulting company CH2M Hill until council’s role may be clarified. CH2M Hill was selected by the lead agencies Whatcom County, the Washington Department of Ecology and the U.S. Army Corps of Engineers to help prepare the required Environmental Impact Statement (EIS) for the Gateway project.

“Whatcom County Council recently learned that the County Executive has amended a contract regarding the project to increase that contract by nearly $900,000 without consulting the County Council,” Council Chair Carl Weimer noted in his brief resolution.

Weimer proposed a minor amendment to the County Code. The code already states that contracts entered into by the County Executive in amounts over $10,000 must be reviewed and approved by the County Council. The Council’s approval authority currently excludes “pass-through moneys,” or contracts where an applicant reimburses the county. The Executive may approve such contracts—even when contracts are in amounts of millions of dollars—without council review. Weimer’s amendment would close that loophole and treat “externally funded pass-through moneys” in the same manner as council’s oversight of other large contracts.

“I think it has become clear that sometimes those contract amendments are for huge amounts of money, and some times they create policy shifts,” Weimer explained. “And it has become clear, at least to some who have looked at this, that we aren’t capturing all of the county money that is paid for the the environmental review.”

While presented as an effort to improve transparency and oversight of county expenditures on an environmental review for the proposed coal pier that could exceed a million dollars, Weimer’s proposal drew sharp criticism from supporters of the project who view council’s oversight as another hurdle for GPT to clear. Council holds the ultimate permitting authority for the export facility that could ship as much as 52 million tons of coal per year to Asian markets.

And while the majority expressed interest in improving the way the county bills and is reimbursed for services, Council was unenthusiastic about making changes to the way this particular contract is reviewed, expressing concerns that their review could draw a legal challenge.

Louws agreed with their concern. “The contract renewals have to do with scoping issues and with the interlocal agreement we have with the Dept. of Ecology and the U.S. Army Corps of Engineers,” he said. “The decision I made to handle these renewals administratively is to provide to the council, when this is all done, a body of information that is as clean as absolutely possible that does not involve the council touching it.”

Louws said he believes the county is covering its costs in planning, but the costs of legal staff reviewing and issuing opinions is not normally billed in a contract, and is therefore not captured. “The amount of legal review the county has done on this project to date is to my knowledge not more or less than in any other legal review,” he said. “A contract has its basic structures.”

Concerns that council’s involvement in reviewing the contract could draw a legal challenge appear grounded. Attorneys for the project applicant filed an advance letter in protest of council’s proposed action.

“The resolution would directly engage the County Council in contract amendments relating to CH2M Hill’s work on the Gateway Environmental Impact Statement (EIS). We believe that the resolution is contrary to the State Environmental Policy Act (SEPA), contrary to the County Charter, and actually works against the concept of ‘open transparent government,’ which is the stated purpose of the resolution,” attorney William Lynn wrote on behalf of his client, Pacific International Terminals, a subsidiary of SSA Marine, the project applicant.

“Anti-jobs activists on the council intend to introduce a resolution at this meeting that attempts to usurp the Whatcom County Charter, take power away from the Executive and give it to the far left Whatcom County Council,” Whatcom County Republicans fumed. “Creating yet another stumbling block to the Gateway Pacific Terminal is absurd.”

Ostensibly, the GPT project applicants cover the costs related to preparing the EIS. Some observers, however, believe the county is not appropriately billing for direct and indirect costs related to the EIS, resulting in a public subsidy for the controversial project.

As of January, Whatcom County—the lead agency to prepare a comprehensive environmental impact statement for the Gateway project, had billed just $59,931 in the 18 months of working on this project. Whatcom County has not billed for attorney time, and the county Public Works department has charged just 4.7 hours of time. There have been no charges for administrative staff time.

Louws said he believes the county is accurately billing staff hours spent on GPT according to contract, at a revised rate of $100 per hour.

“The county has already signed two amendments to the original EIS reimbursement contract and the legal conclusion has been reached and affirmed that the contract authority lies wholly with the County Executive,” Lynn noted. “It is deeply troubling that the proposal has been made to interfere with this separation of powers that arises out of the County Charter. It certainly finds no support in the name of ‘open transparent government.’”

“The statement that the County Executive has authority for these contract amendments because the costs are 100 percent paid by Pacific International Terminals is simply not true,” David Stalheim noted in reply. Stalheim is the former planning director for Whatcom County and ran for the position of County Executive in 2011. “When Whatcom County fails to charge for the time of their attorneys, secretaries, records and technology department, or the staff in the county council and executive offices, it is not getting 100 percent cost recovery. The county will also be required to defend the entire EIS process in court, and Pacific International Terminals will not cover those costs,” he wrote.

“Mr. Lynn’s letter is inaccurate in its accusation that the resolution is contrary to the State Environmental Policy Act (SEPA) and the County Charter,”  “In fact,” Stalheim said, “the resolution does not even discuss the SEPA scoping process, but requests the County Executive refrain from entering into the contract with CH2M Hill without Council approval.

“The purpose of an Environmental Impact Statement (EIS) is to ‘inform decision makers and the public of reasonable alternatives, including mitigation measures, that would avoid or minimize adverse impacts or enhance environmental quality,’” Stalheim cited. “For major project permits in Whatcom County, the decision maker is the Whatcom County Council. For reasons unknown, the Whatcom County Council is the only decision maker in the permitting of this project that has not been consulted with respect to the scope of the EIS.”

“There should be no conceivable issue about transparency on the Gateway project,” Lynn commented. “Pacific International Terminals actually encouraged the preparation of an entirely new EIS for the Gateway project as now envisioned. The county has taken “unprecedented steps to involve the public at every step along the way, and this project has drawn interest and comment from the public, not only in Whatcom County, but well beyond the county lines.”

An expanded scoping process was initiated after project regulators rejected a proposal by SSA Marine to extend permits from an earlier, smaller pier proposal approved for the site in 1995. The earlier pier plan did not propose to ship coal and the proposal was abandoned in 1998.

“There is an irony to this matter,” noted representatives of the Northwest Jobs Alliance, an advocacy group that supports the terminal. “The need for this contract amendment is to advance the desires of those who sought an unprecedented expansion of the environmental review for the Gateway project.

“Although the proposed resolution mentions ‘open transparent government,’ its own content violates this principle,” Brad Owns and John Huntley, co-chairs for NJA, commented. “Nowhere does the resolution’s author use language that references his target, which is the Gateway Pacific Terminal project, to which he has long been opposed,” they noted of Weimer.

“The public does not have ready access to correspondence regarding this project,” Stalheim observed. “On the correspondence page, it says, ‘We are currently working on updating 2013 emails.’ There are just five documents shown, three of which are letters of support for the project and two from public agencies. There is not any correspondence shown with the applicant, consultants, or others, that the public might be interested in with respect to the contract negotiations that are apparently happening without county council approval. The page was last updated on June 20, 2013.

“The Whatcom County Council approved the contract for consultant services on June 5, 2012. Since that time, the executive has signed three contract amendments well over the limits that require county council approval,” he said. “The executive has also entered into three amendments with Pacific International Terminals and BNSF for cost reimbursement.”

Council expressed interest in improving the county’s billing and cost recovery on the environmental review.

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