EDITOR’S NOTE: This is the first of two stories in a two-part series about the creation of the Harbor-Works Public Development Authority.
PORT ANGELES — Rayonier Inc. was in discussion with city officials as far back as April about transferring liability for cleanup of its Port Angeles site to a public development authority, two documents and an e-mail obtained by the Peninsula Daily News show.
The Harbor-Works Public Development Authority — which was formed in May by the city of Port Angeles and the Port of Port Angeles with $150,000 from each — is intended to acquire and redevelop Rayonier’s 75-acre former mill site on the Port Angeles Harbor.
Acquiring the property would make Harbor-Works, an entity supported by public funds, a liable party in the environmental cleanup of the Rayonier site, which will likely cost tens of millions of dollars, said Marian Abbett, Rayonier site manager for the state Department of Ecology.
Assuming full liability
The documents, which go as far back as April, refer to a public development authority assuming full liability for the cleanup of the soil and water contamination that Ecology finds the company responsible for.
That could include Port Angeles Harbor, and soil outside of the Rayonier property.
The Rayonier property is “moderately contaminated” with toxins created during the 68 years the mill operated there, the U.S. Environmental Protection Agency said in 2000, saying it rated perhaps a 2 or 3 on a scale of 10.
It has pockets of PCBs, dioxins, arsenic, cadmium, mercury, lead and other hazardous contaminants.
The mill closed in 1997. The cleanup process began in 2000.
The documents also say that Rayonier would negotiate with the public development authority its role, “if any,” in future cleanup.
As a public entity, Harbor-Works could apply for an Ecology grant that would cover about 50 percent of the cleanup cost.
A document attained by the PDN through a public disclosure request called “Proposal from the city and [port] for the Rayonier site” says, “[the public development authority] will enter into a liability transfer agreement with Rayonier to acquire all of the Rayonier property and take on the environmental cleanup liability . . .”
The document was included in an e-mail from Don Schwendiman, Rayonier attorney, to City Attorney Bill Bloor on April 24.
In the e-mail, Schwendim had returned the document with some revisions regarding the city’s right to obtain a large water tank on the Rayonier property for its combined sewer overflow program.
The document, which sets out the terms for negotiations between the public development authority and Rayonier for transfer of ownership of the property, says that the public development authority board would be “free from political influence,” assume liability for the cleanup site, and would relieve Rayonier from its obligations with the Lower Elwha Klallam tribe, which is a partner in the cleanup project.
It also says that Rayonier would pay the public development authority a lump sum equal to the net present value of its share of the estimated cleanup cost, pay environmental insurance premiums, and any residual cleanup liability in excess of the insurance coverage.
A draft purchase and sale agreement that Rayonier presented to city staff at a meeting on June 25 in Seattle says that Harbor-Works would resolve all of the company’s liabilities with the property, including legal obligations.
That document says that Rayonier and Harbor-Works would negotiate the company’s share of the estimated cleanup cost after agreeing to a “reasonable estimate” of those costs.
In terms of environmental insurance, this document says that Harbor-Works and Rayonier would negotiate insurance policies relating to the property and other contaminated areas, but does not mention payment of insurance premiums or residual cleanup liability.
Not acted upon
Bloor said the purpose of the draft purchase and sale agreement was to lay out Rayonier’s “needs and wants,” and was not acted upon.
He said the document is sitting on the side until Harbor-Works can begin its own negotiations.
Charles Hood, Rayonier vice president of corporate affairs, said the purpose of the discussions between the company, city and port was to sort out and identify any issues that would come up with a property transaction with Harbor-Works.
He added that any of the details would have to be negotiated with Harbor-Works before anything is finalized.
“If a transaction were to take place, it is helpful to know where all the issues are,” he said.
“It helped with understanding all of the movable parts in a transaction.”
Orville Campbell, Harbor-Works board chairman, said the five-member board, appointed by the city and port on May 20, was briefed on the June 25 meeting, though he was not aware of the document.
Bloor said none of the five members of the Harbor-Works board members were present because they had just been appointed a month before, and did not have the background knowledge of the previous discussions.
Campbell shared the same point of view, and said it would be the role of Harbor-Works to pick up where the city and port have left of with the negotiations.
Tribe objects
Larry Dunn, cleanup project manager for the tribe, said the tribe should have been brought into negotiations.
“A lot of this behind-doors stuff with the city should cause question,” he said.
“We would have certainly like to have known about it, and brought into the meeting, so we can say if you want to do this, here are the concerns the tribe has with the property.”
A Klallam village, known as Y’innis, inhabited the mill site at least through the 1850s, Dunn said, and its remnants are buried under the property.
Frances Charles, tribe chairwoman, and Dunn said the tribe was never notified by the city or port that a public development authority was being created.
Port commissioner John Calhoun said the tribe wasn’t asked to be involved because the city and port felt that its role as a regulator of the cleanup of the Rayonier site did not extend to having participation in Harbor-Works itself.
When asked why the tribe wasn’t notified, Calhoun responded by saying there was no reason for Ecology not to notify the tribe as partners in the cleanup.
Campbell has said Harbor-Works intends to involve the tribe in negotiations it has with Rayonier, and the board plans on meeting with the Tribal Council as soon as possible.
Monday: Port Angeles inquired about Rayonier’s wastewater tank in 2007.
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Reporter Tom Callis can be reached at 360-417-3532 or tom.callis@peninsuladailynews.com.
