GPT EIS contract Q & A between County Administration and Whatcom County Council; and the $313,000 EIS consultant claimed it’s owed by GPT applicant

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Click on the graphic to view a transcript of Q&A between county executive officials and county council members on the GPT EIS preparation contract at the September 13, 2016 Whatcom County Council Finance and Administrative Services committee meeting

October 12, 2016  Sandy Robson

During the September 13, 2016 Whatcom County Council Finance and Administrative Services Committee meeting, County Deputy Executive Tyler Schroeder, gave a presentation to Council about proposed contract Amendment 5.1 to the June 2012 Environmental Impact Statement (EIS) preparation contract for the Gateway Pacific Terminal (GPT) and interrelated Custer Spur Modification projects.  Gateway Pacific Terminal is a 48 million ton per year coal export terminal proposed at Cherry Point by Pacific International Terminals (PIT), a subsidiary of SSA Marine. County Executive Jack Louws joined in the question and answer dialogue between Schroeder and the Council.

In his presentation, Schroeder made it appear as though the County needed to be allowed access to the EIS technical reports—and that the then-proposed contract Amendment 5.1 would do just that. However, according to clause number 31.1, in the June 2012 EIS preparation contract (and all subsequent contract amendments), the County already has sole ownership of all of that work product done during the preparation of the EIS.

(Link to a transcription of most of the question and answer section of the September 13th committee meeting with this link: https://noisywatersnw.files.wordpress.com/2016/10/revised-transcript-of-finance-meeting-091316.pdf )

In listening to the audio recording of the September 13th committee meeting, Schroeder seemed to give the impression to Council and audience that the Council needed to approve contract Amendment 5.1 in order to have access to the work product prepared by CH2M Hill, the consultant hired to prepare the EIS.

What is not clear, is whether CH2M Hill was somehow actually refusing or reluctant to provide that work product to the County, or whether Schroeder’s presentation and responses to questions simply gave the impression that the County was having difficulty obtaining access to that work product. Either scenario is not good.

Email records obtained recently from Whatcom County show that an April 15, 2016 email and letter from CH2M Hill Project Manager Craig Lenhart and Parametrix’s Jenifer Young, sent to Tyler Schroeder, referenced an April 12th conference call regarding the proposed work plan for contract suspension and the unbilled costs incurred on the GPT/Custer Spur EIS as of the contract suspension date (April 1, 2016).

Participating in that conference call were Tyler Schroeder; Washington State Department of Ecology’s Josh Baldi and Meg Bommarito (the DOE is a co-lead on the GPT EIS); SSA Marine’s Ari Steinberg; CH2M Hill’s Craig Lenhart, Dave Sturtevant, and Kirsten Smids; and Parametrix’s Jenifer Young (who had formerly worked for CH2M Hill for a little over 20 years).

The letter reiterated that during the call the participants discussed a document that detailed the costs for the “ramp-down” work plan, and the charges incurred by the CH2M Hill team through the date of contract suspension, but not yet invoiced. The letter noted that SSA Marine’s Ari Steinberg, had requested a copy of that document, and stated that it includes both the “ramp-down” work plan and a summary of unbilled costs, along with a request that Amendment 6 be executed with a limited notice to proceed in order to fund those costs.

The April 15th letter went on to discuss that in December 2015, CH2M Hill submitted a scope of work and budget request for Amendment 6 to the GPT phase 2 contract, which was to fund completion of the Draft EISs. The letter stated that Amendment 6 was reviewed and approved by the co-lead agencies, and by PIT and BNSF [that “approval” is not confirmed by PIT or BNSF in later email communications], and that PIT requested that Whatcom County proceed with approval of Amendment 6 to enable the consultant team to complete the scope in accordance with schedule. It further stated that as of March 2016, the consultant team was working on elements of the Amendment 6 scope of work.

In the letter, under the section, “Overall Budget Status through April 1,” it was stated that an accounting of project expenditures through April 1st shows that the Amendment 5 budget had been exceeded by approximately $307,411, and that based on discussions with Whatcom County and the applicants, CH2M Hill was expecting to recover this overage when Amendment 6 would be executed. There was a table displayed in the letter which showed that the total of the overage and activities proposed for the “ramp-down” work plan was $358,496. That total includes the $307,411 CH2M Hill said it is owed by PIT, and the $51,085 which is the cost attributed to the “ramp-down” work that would be performed according to contract Amendment 5.1.

CH2M Hill stated in its April 15th letter that the company assumed that charges related to the “ramp-down” work plan, along with charges incurred by the CH2M Hill team through the date of contract suspension, but not yet invoiced, would be paid either (a) when CH2M Hill is notified that the contract suspension had ended and work on the EISs may resume, or (b) when all parties agree to extend the suspension beyond the initial 45-day period. It was further stated that if Amendment 6 had been signed by that time, then CH2M Hill assumed that the new charges would be paid from Amendment 6. If Amendment 6 has not been signed, it was assumed that interim funding would be authorized to pay the invoice and that the Amendment 6 budget would be reduced by the invoiced amount.

The letter further stated that with respect to interim funding, CH2M Hill requested that Whatcom County would approve Amendment 6 with limited notice to proceed—the limited notice to proceed would be constrained to the costs necessary to cover the current invoice (at that time) through April 1, plus the costs associated with proposed work plan for “ramp-down” activities. This, the letter explained, would allow CH2M Hill to submit an invoice and pay their subcontractors in a timely fashion.

So, in seeing the April 15, 2016 letter referenced above that mentioned the  $307,411 outstanding balance CH2M Hill claimed its company is due, and reading through the transcription of the Council question and answer session with Deputy Executive Tyler Schroeder after he presented information about proposed contract Amendment 5.1, during the September 13, 2016 County Council Finance and Administrative Services Committee meeting brings some questions to mind.

From reading through the transcribed dialogue, Schroeder seems to give the impression, albeit vague, that the County was having difficulty gaining access to the EIS work product held by CH2M Hill—even though according to the contract between the County and CH2M Hill, the County has sole ownership of that work product.  Does the fact that it appears that CH2M Hill has not yet been paid the over $300,000 outstanding amount, by applicant PIT as of August 2016, according to records reviewed, have any bearing on whether CH2M Hill may have been being less than cooperative in handing over all of the EIS work product to the County?

Council member Ken Mann had asked Schroeder during that September 13th discussion, why hadn’t CH2M Hill provided the writings, programs, data, etc., for the eleven reports that they’ve completed thus far?

Schroeder answered: “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 asked Schroeder if there had been any indication from CH2M Hill that they didn’t want to provide any of that information.

Schroeder did not respond to that question with a direct answer, and instead, gave this vague reply: “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.”

Schroeder failed to mention that CH2M Hill claimed (as of August 26, 2016) that its company is owed over $300,000 by GPT applicant Pacific International Terminals for work done on the EIS.

Email records obtained from Whatcom County show that CH2M Hill Vice President Dave Sturtevant, sent an invoice on August 26, 2016, to Whatcom County Executive’s Office (to Deputy Executive Tyler Schroeder’s attention) for what the consultant said is an outstanding balance due of $313,000, owed by PIT.

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May 3, 2016 email communication between SSA Marine’s Bob Watters, and Whatcom County Deputy Executive Tyler Schroeder

Those email records also show a May 3, 2016 email communication chain between SSA Marine’s Bob Watters, and Tyler Schroeder. In Watters’ email to Schroeder, he 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 our 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.”

In reading the transcribed dialogue from September 13th meeting, it is clear that Council tried to ask the right questions, but the answers from both Tyler Schroeder and County Executive Louws were often vague, misdirections, or in the instances when Council asked for specific language to be added to the then-proposed contract Amendment 5.1, the responses from Schroeder and Louws were excuses, either why the County Administration felt it unnecessary, or too much trouble, to add the requested language to the contract.

Council should have either demanded the specific language they wanted, or rejected the contract Amendment 5.1 that was before them. But, they did neither. Instead, they approved the contract amendment which basically continues the suspension of the contract for EIS preparation for the GPT project until March 13, 2017, and enables the “ramp-down,” which according to the contract amendment, means to package things up in a more orderly fashion “so they can be efficiently resumed at a future date,” if PIT would desire to move forward with the EIS.

It is stated right in the contract amendment that the “ramp-down” work will be delivered in 8 weeks after the agreement is signed, yet the Council approved the contract amendment giving a six-month extension to the contract suspension.

Email communications involving contract edits during the process of drafting Amendment 5.1 show that PIT requested that any language which referred to contract Amendment 6, and to the over $300,000 amount that CH2M Hill said was owed to their company, be removed out of contract Amendment 5.1.

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