by Sandy Robson

Most of the public attending the September 13, 2016 Whatcom County Council Finance and Administrative Services Committee meeting, and the Council members themselves, appeared to buy the story being sold to them that day by Whatcom County Executive Jack Louws and his Deputy Executive Tyler Schroeder, about the then-proposed Contract Amendment No. 5.1 that would extend the suspension of the preparation of the Environmental Impact Statement (EIS) for the coal export terminal project at Cherry Point, Washington.

That contract amendment for suspension of the EIS contract would provide the project applicants an extension for a period of six months, until March 13, 2017. At that time, the EIS had already been suspended for over five months, after having been abruptly halted on April 1, 2016, by project applicant Pacific International Terminals (now known as Pacific International Holdings LLC), a subsidiary of SSA Marine.

During the presentation to the Council, Schroeder and Louws gave the Council, and committee meeting attendees, the impression that the contract amendment was going to enable the EIS consultant to close-out the contract for the EIS that was being prepared for the project.

In Schroeder and Louws’ pitch to the Council members, a primary reason showcased for extending the contract was the enticement that this extension was a means by which Whatcom County could obtain, at no cost to the County, copies of technical reports and portions of reports currently in the possession of GPT consultants, such as CH2M Hill.

‘A significant misunderstanding by the County’

However, Dave Sturtevant, Vice President at CH2M Hill, the company preparing the EIS for the proposed Gateway Pacific Terminal (GPT) project, saw things differently than Executive Louws’ and Deputy Executive Schroeder’s framing of Contract Amendment No. 5.1, during the committee meeting that day. According to email records obtained from Whatcom County, Sturtevant told Schroeder, that based on CH2M Hill’s review of the Council meeting’s audio recording, “it appears that there is a significant misunderstanding by the County regarding the expected deliverables and public access to project information at the conclusion of the Amendment 5.1 work.”

Sturtevant had sent a September 16, 2016, email to Schroeder, responding to the Deputy Executive’s September 14th email regarding modifications made to Contract Amendment No. 5.1, a contract amendment to Contract No. 201205028, the original June 2012 contract between CH2M Hill and Whatcom County, for preparation of the EIS for the GPT and Custer Spur Modification project. Those changes to Contract Amendment No. 5.1 had been made and approved by the Whatcom County Council, at its evening Council meeting, on September 13, 2016.

In his September 16 email to Schroeder, Sturtevant went on to say, “Delivering our work products and data for release to the public is not included in the ‘Ramp-Down Plan’ scope of work, but was clearly the expectation of County Councilmembers at the September 13 meeting. There is a significant difference in the consultant level of effort required ‘to ensure that work is closed out in an orderly fashion and can be efficiently resumed at a future date’ (which is what the Exhibit A scope language states) and ‘closing out the contract,’ as Councilmembers discussed.”

Three days before this email comment from Sturtevant, at the September 13th Council Finance committee meeting, Deputy Executive Schroeder had presented the then-proposed Contract Amendment No. 5.1 to Council and meeting attendees, followed by a lengthy back and forth discussion between Council and Schroeder, and Executive Louws who had joined in the discussion frequently, especially during times when his deputy executive was getting hard-pressed by Council’s questions.

Deputy Executive tells Council that Contract Amendment 5.1 completes and closes-out the EIS contract

During his presentation and the subsequent discussion, Schroeder put forth to Council and the public listening, that the proposed contract amendment would complete and close-out the EIS contract between CH2M Hill and the County. In the closing paragraph of his presentation, he said, “So, you see this contract amendment is really to kind of close-up some loose ends that CH2M Hill has. Complete and close-out the contract.”

Reiterating that idea a little later on while addressing Council’s questions, Schroeder stated: “I wanted to be clear that this is contract completion. And, and, and, as it was being developed, since April ’til today, as well as some of the verbiage that was used in the old and past contract amendments you could read some of those sections, but this is contract completion.”

During the discussion, Council member Carl Weimer pointed out to Schroeder that while Contract Amendment No. 5.1 talks about EIS technical reports that were still under development (at the time the EIS was halted) which will be delivered to the County as a result of the contract amendment language, he did not see anything in the deliverables in the contract amendment language that stated the eleven EIS technical reports that have already been reviewed would be included. Weimer asked Schroeder if a clause could be added to the language in the deliverables, and asked the question: “Will everything, the eleven [EIS technical reports still under development] and the thirteen [EIS technical reports already reviewed] be available to the public?” Schroeder indicated that it should be, although his response was not wrapped in much clarity.

Executive Louws piped-in on the subject, saying that Section 31.1 in the contract amendment already states that the County has ownership of every scrap of work produced by CH2M Hill for the EIS. Section 31.1 is contained in every contract and subsequent contract amendment that the County signed with CH2M Hill regarding the EIS preparation for the GPT project.

Louws added:

“Now I believe that we have the ability to ask for the documents, and if we don’t get them, and we want to do that, I think that we have a legal recourse to get there. That’s what it’s there for. I believe that we’re covered through the amendments, the amendment doesn’t change that particular language at any point through and we’re going under the assumption that we do, we own it. It’s one of the reasons that I feel that it’s appropriate for us to uh, ramp this down. In, you know in discussions with Tyler, um, you know PIT did request a suspension in the contract and I says no, there’s no way that we’re gonna take a suspension of a contract, this big of a contract, and keep all those consultants online through a possible federal appeal. You either need to finish it, or complete it and start over at sometime. I believe completing it’s probably the right decision, based on everything it’s the one they decided to, and, but I do believe we have the right to the information, therefore, um, I think moving forward with it is the correct action.”

The federal appeal that Louws was referring to is the potential for appeal that GPT applicant PIT/PIH has been threatening, regarding the May 9, 2016 GPT permit denial by the U.S. Army Corps of Engineers. The Corps determined its agency cannot permit the GPT project because the potential impacts from the construction of the GPT facility would be greater than di minimis to the Lummi Nation’s Usual and Accustomed treaty fishing rights, and the Lummi maintain their objections to the proposal. The Lummi Indian Business Council had sent a January 5, 2015, letter to the Corps, asking the agency to immediately deny PIT’s permit application for the proposed GPT, based, inter alia, on the project’s adverse impacts on the treaty rights secured to Lummi people by the Treaty of Point Elliott of 1855.

Council member asks Deputy Executive why EIS consultant had not provided work already produced 

During the Council’s September 13th Finance committee meeting, some additional discussion between other Council members and Deputy Executive Schroeder, occurred regarding Section 31.1 in which it’s stated that the County has ownership of the work produced by CH2M Hill for the EIS, and regarding the deliverables in the proposed Contract Amendment No. 5.1. Then, Council member Ken Mann asked the question: “So, why haven’t they [CH2M Hill] provided the writings, programs, data, etc., for the eleven things that they’ve completed thus far?”

Deputy Executive Schroeder replied: “Because at this point there is some additional work that needs to be done to get them understanding where they’re at, and, and, and, and what level of, whether it’s in SharePoint or not, to provide it.”

Mann said he would feel better if there were to be language in the deliverables stating that the work product is the County’s, and then asked Schroeder, “has there been any indication from these guys [CH2M Hill] that they don’t want to provide any of that information?”

That was an important question, to which, Schroeder answered in what sounded like the most round-about, non-answer possible: “And, and I continue and are in close communications with CH2M Hill in regards to the deliverables and the need for public disclosure and information that the County clearly owns.”

In his response to Mann’s critical question, Schroeder had failed to inform Mann, the rest of the Council, and the audience, that CH2M Hill had claimed (as recently as August 25, 2016) that its company was owed over $300,000 by GPT applicant PIT/PIH for work done on the EIS.

EIS consultant sends County invoice for $313,000 hoping to prompt payment from GPT applicant

Email records obtained from Whatcom County show that CH2M Hill Vice President Dave Sturtevant, sent an invoice on August 25, 2016, to Whatcom County Executive’s Office (to Deputy Executive Tyler Schroeder’s attention) for what the consultant says is an outstanding balance due of $313,000. Those email records also show a May 3, 2016 email communication chain between PIT/SSA Marine’s Bob Watters, and Schroeder, in which, Watters expressed serious concerns about “cost overruns for the past four months [at that time]” and CH2M Hill’s management of the EIS work process and contract. Watters also requested that Whatcom County require CH2M Hill have an “independent audit of the hours and costs to prepare the EIS to date performed at no cost to Whatcom County or the project proponents.”

It does not appear that an independent audit (outside of CH2M Hill), as requested by Watters, was ever conducted. Schroeder responded in an October 19, 2016 email, responding to an October 10th email inquiry from this writer: “An internal CH2M review by project controls, project accountant, and project administration concludes all costs in his [sic] invoice to be fair and reasonable. I am not aware of additional discussions on the topic.”

County Executive Office’s failure to inform Council 

Responding to this writer’s September 26, 2016 email inquiry asking if there have been GPT EIS documents, reports, studies, etc., that its agency had requested from CH2M Hill that the consultant did not provide, EIS co-lead Washington State Department of Ecology’s Regional Director Josh Baldi, explained in an October 10, 2016 email reply that the co-lead agencies were attempting to get all the materials associated with the environmental review, but that it was difficult “given the contract dispute and CH’s [CH2M Hill’s] position that transferring the data will cost them time and money (which it will).” Baldi went on to say in his response that “the manner in which the EIS process was suspended (i.e., ‘pencils down’ in the middle of the most intensive work), created a number of challenges” that the co-leads are trying to resolve.

So, Deputy Executive Schroeder, and co-lead on the EIS, the Department of Ecology, were aware of what was described as a “contract dispute,” yet Schroeder did not bother to inform the Council about this critical fact during the discussion at the September 13th Council committee meeting, prior to the Council’s vote on Contract Amendment No. 5.1.

Email records obtained from Whatcom County also show that CH2M Hill Program Manager Craig Lenhart, sent an October 31, 2016 email to Schroeder, which included an invoice letter from CH2M Hill Project Accountant Rachel Stith, for the amount of $313,000, with an invoice date of “5/24/16,” directed to the Whatcom County Executive’s Office, attention Tyler Schroeder.

In his email, Lenhart said he understood that the County is not able to make a payment on the $313,000 invoice because the GPT “applicants did not have the authority to load funds” into Contract Amendment No. 6. From reviewing the email records, it appears that CH2M Hill, in early 2016, was working on tasks associated with Contract Amendment No. 6 that had already been drafted, but had not yet been signed by all parties. Prior to having a signed contract in place for Contract Amendment No. 6, when applicant PIT suspended work on April 1, 2016 for the EIS, that action by PIT created a difficult situation for all parties involved. Apparently work had been done on Amendment No.  6 by CH2M Hill, but that work was not authorized per a signed and fully executed contract. Lenhart asked Schroeder if he would consider a response to CH2M Hill’s October 31st email letter, so that they could then close the issue.

Schroeder sent a November 29, 2016 reply to Lenhart’s October 31st email, explaining that “Whatcom County has no contractual authority nor responsibility, and is not at fault for the additional expenditures.” Schroeder closed his letter by saying the County respectfully requests that CH2M Hill close this accounts receivable issue.

In listening to the audio recording of the September 13th Finance committee meeting, Schroeder, in advising the Council to approve the contract amendment, said, “…but if we don’t give, if Council decides not to approve this contract, then there is no guarantee on where the information is. What monies may have to be expended from the Council, or what legal process the County has to go through to get this information…”

Louws and Schroeder advise Council not to add additional protective language in contract 

The deputy executive’s statement above seems to contradict Executive Louws having told the Council that Section 31.1 in the contract amendment sufficiently covered any potential question regarding the County’s ownership of the EIS work product. Basically, Schroeder told the Council that if they didn’t approve the contract amendment before them, the County might have to go through legal means and/or expend monies to obtain the information. Yet, he and Louws both claimed there was no reason for the Council to add language in the contract deliverables stating that the EIS work product is the County’s when some Council members had expressed a desire to add that language.

At the September 13th Council Finance committee meeting, Louws told the Council:

“…I will commit to you is, before we release the $51,000 to CH2M is, we’ll put the request in so the full body of information, and then we’ll have it at that point. I mean that’s the way the contract works, uh, it’s there, and uh, it’s stated, it’s not stated in the Scope of Work, but it’s stated in the, uh, in the preambles to it and it is a, uh, it is a legal obligation from them to provide that for us and if they don’t those are the things that we need to watch and what takes time in closing the contract out is to make sure that we have that. So, Deputy Executive is right as is that there’s been a lot of time spent on this. I would encourage the Council not to add language on that ends up being redundant to what we already have in the contract and allow us to move forward with it…”

If the County’s EIS preparation contract with CH2M Hill already provided adequate protection of the County’s ownership of the EIS work produced by CH2M Hill, as Louws stated, then why was CH2M Hill not turning over the work product to the County which had been requested?

Louws claims County won’t ‘hold this contract in’ as active for years, yet clause in contract allowed for extension of up to three years

The discussion closed and moved to a vote after Louws said: “In this particular instance is, is what you’re saying is, is we’re going to allow $51,000 to allow this contract to be complete because I’ve made it very clear through Tyler and through everybody is, is this is it, we aren’t going to, we aren’t going to sit through years of holding this contract in, uh, uh, as an active contract, uh, based on what they may or may not do. We either need to finish it or close it. This closes it.”

Contrary to Louws’ dramatic closing statement, the reality is, that in the version of Contract Amendment No. 5.1 proposed to Council that Louws and Schroeder both urged Council to approve, there was a clause (10.2) that allowed for the parties, by mutual consent, to extend the EIS contract “for a period of up to one year at a time, and for a total of no longer than three years.” So, in fact, Louws was perfectly willing to allow a clause in the contract amendment that would afford the parties up to three more years of, as he referred to it, “holding this contract in” as an active contract.

In the end, Council Member Weimer did put forward a revision/amendment to remove clause 10.2, and this revision, along with a few other Council-approved changes, were included in the amended version of Contract Amendment No. 5.1, which was approved by the County Council on September 13. The critical nature of the removal of clause 10.2 is evidenced in the opening sentences of a November 18, 2016 email from Tyler Schroeder, to CH2M Hill Program Manager Craig Lehnart:

“Please see the signed version of the GPT contract amendment 5.1.  As we have discussed, the County’s contract has recognized that CH2M work on preparing the DEIS [Draft Environmental Impact Statement] deliverables will not be going forward and that the scope of the contract is to close out the contract in an orderly fashion.  This is due to the Whatcom County Council removing the ability to provide for an extension of the contract beyond 5.1.”