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Port of Vancouver, Tesoro-Savage meeting raises questions

Records suggest 2013 executive session may have violated state law


The Port of Vancouver, already facing one lawsuit accusing it of violating Washington’s open public meetings law, has left the public in the dark more than once in landing one of the largest financial deals in its history, an investigation by The Columbian has found.

Public records obtained by the newspaper show that the port’s three-member elected commission met privately on April 9, 2013, with officials from the two companies proposing an oil transfer terminal at the port. That gathering occurred about two weeks before Tesoro, a petroleum refiner, and Savage, a transportation company, publicly announced their joint venture to develop the Northwest’s largest oil transfer terminal at the port.

The stated purpose of that closed-door meeting: to discuss a minimum price for land the port would sell or lease for the oil terminal, a legally acceptable reason for a closed session. In reality, public documents show that Tesoro and Savage executives pitched the port commissioners on Tesoro’s “high-performing culture” and “safety and reliability,” Savage’s focus on “giving back to the community,” and a wide range of other topics that filled a 51-page slide presentation.

Port Commissioner Brian Wolfe, while saying he doesn’t recall the meeting, acknowledged after reviewing the slide presentation last week that it “doesn’t seem like there would have been any harm at all” in having the public there. The other two commissioners are Jerry Oliver and Nancy Baker.

An oil-by-rail terminal at the Port of Vancouver handling an average 360,000 barrels of crude per day. The companies filed an application in August 2013 with the state's Energy Facility Site Evaluation Council. The application is now under review.

Records show:

The Port of Vancouver held the April 9, 2013, closed-door executive session "for the purpose of discussing real estate matters" according to Revised Code of Washington 42.30.110(1)(c).

But there could be harm in illegally excluding the public. Columbia Riverkeeper, one of three environmental groups pressing the existing open public meetings suit against the port, said Friday it expects to expand that complaint to include additional allegations of illegal secret meetings about the oil terminal. Michele Earl-Hubbard, a widely recognized expert in the state’s public meetings law and principal of Seattle-based Allied Law Group, said contracts and bond measures have been nullified in other cases when elected officials have unlawfully discussed the public’s business in private. And members of governing bodies may also face civil penalties.

An oil-by-rail terminal at the Port of Vancouver handling an average 360,000 barrels of crude per day. The companies filed an application in August 2013 with the state’s Energy Facility Site Evaluation Council. The application is now under review.

Records show:

The Port of Vancouver held the April 9, 2013, closed-door executive session “for the purpose of discussing real estate matters” according to Revised Code of Washington 42.30.110(1)(c).

Executive sessions, such as the one the port commission held on April 9, must be used narrowly, with local governments erring on the side of transparency, Earl-Hubbard said. In the case of the commission’s closed meeting with oil terminal proponents, it doesn’t necessarily matter that port commissioners later received public testimony and took a final vote on the lease deal in public, she said. The public meetings law defines “action” as not just a final vote, she said, but also the discussions and considerations that led to it.

The public has the right to see how a governing body’s vote was influenced, Earl-Hubbard said, including “all of the people who talked to you leading up to that vote.”

‘Other factors’

Experts in the state’s open public meetings law, who reviewed the April 9 slide presentation and other documents at The Columbian’s request, say the closed meeting was at best questionable and at worst illegal. That’s because the state’s public meetings law, through its very language and several previous court decisions, required the port to stick to the minimum price issue.

“It appears clear (the port) discussed something they did not want the public to know in executive session” using an “inapplicable exception as its excuse,” Earl-Hubbard said.

When governing bodies inappropriately use executive sessions, she added, they’re either misreading the law or ignoring it.

Nancy Krier, Washington’s assistant attorney general for open government, reviewed the slide presentation for The Columbian. She said she could find no mention of a minimum price. “It gives me pause,” she said. With executive sessions, Krier said, “you have to stick to the subject.” Such meetings have “sideboards on them, on the content of what you discuss.”

Wolfe, a private attorney elected to the port commission in 2005, said the port’s legal counsel, Lisa Lowe — an attorney with the Vancouver offices of Schwabe, Williamson & Wyatt — takes a broader view of the minimum price issue. “She believes that there are other factors that go into setting the price other than the dollars and cents,” he said.

He added that if Lowe, who attended the April 9 executive session, “thought it was inappropriate she would have said so.”

Lowe did not respond to The Columbian’s repeated requests to comment for this story.

In an email to the newspaper, the port issued a statement from Todd Coleman, the port’s CEO, that it said also reflects its legal counsel’s response: “We are confident we are using executive session appropriately. All three of our commissioners are committed to transparency, and we take the open public meetings law very seriously. Our staff and legal counsel are also committed to ensuring all rules are followed and we stay within the specific parameters provided in the (law). Those same rules apply regardless of who participates in executive session.”

Coleman also said: “Executive session is a tool that we’re able to use to perform our due diligence and make good decisions for the port and our community. We take that responsibility very seriously, which is why we adhere to both the letter and spirit of the law.”

Nevertheless, with what others believe is yet another violation of the state’s public meetings law, the port may have exposed itself to further legal challenges. A Clark County Superior Court judge allowed three environmental groups to pursue part of their lawsuit alleging the port violated public meetings law when commissioners held an executive session on July 22, 2013 — the evening before their first unanimous vote on July 23 to approve the oil terminal lease.

In his ruling, Judge David Gregerson said there’s a “public benefit” to allowing the groups to enter a pre-trial discovery phase to gather information about the legality of the port’s July 22 executive session.

That suit remains active. It could be broadened, in light of the questionable April 9 executive session. Or the port could face a new lawsuit over the April 9 meeting. “It could lead to the (oil terminal lease) itself being voided,” Earl-Hubbard said.

Brett VandenHeuvel, executive director of Columbia Riverkeeper, which has called on the port to revoke the oil terminal lease, said Friday the groups are “moving to expand our lawsuit to show more of the port’s illegal activities.” He added, “Based on our discovery, we’ve obtained documents showing additional illegal and secret meetings.”

An ‘introduction’

Wolfe and Baker say they don’t remember the April 9 executive session. Oliver declined to discuss what happened during it, saying he doesn’t remember the specifics. In any case, he said, he’s confident “we have legal counsel there to be sure that we proceeded on valid grounds.”

Minutes of the meeting show all three commissioners were there. In an email to The Columbian, Jennifer Minx, a spokeswoman for Tesoro, said executives from both companies “met with the Port on April 9, 2013.”

Wolfe initially told The Columbian he didn’t want to see documents associated with the April 9 meeting that might jog his memory. Then he consented to review the slide presentation and other documents. Afterward, Wolfe said company executives were “presumably” in the room, too. Considering the slide presentation now, he said, he doesn’t “have a good reason” to exclude the public from the meeting.

The port was arranging the April 9 private gathering on March 28, public records show.

In an email to Mark Smith of Tesoro and Kent Avery of Savage, Curtis Shuck, the port’s then-director of economic development and facilities (he’s now the port’s senior sales director) asked Smith to consider a visit to the port on April 9 “for an introduction with the Port Commissioners and discussion with them in Executive Session (which is closed to any public) regarding the project. I have made the same request of Savage.”

That Shuck’s stated purpose for the executive session was an “introduction” of company officials with commissioners is reason enough alone to doubt the private meeting was ever meant to discuss a minimum real estate price, according to Toby Nixon, president of the Washington Coalition for Open Government. At The Columbian’s request, Nixon, who’s also a Kirkland City Council member, reviewed the slide presentation. “This entire presentation should have been done in a public meeting,” he said.

Minutes of the April 9 closed-door session show Oliver convened an executive session to discuss the minimum price issue. The meeting lasted about three hours — from 8:33 to 11:31 a.m., with a brief recess.

Tesoro and Savage executives spoke to commissioners about many topics, according to the slide presentation, dated April 9, 2013, and titled: “Port of Vancouver USA Board of Commissioners Executive Session Presentation Tesoro-Savage Joint Venture.”

Tesoro’s topics included: “safety and reliability”; “shareholder value”; a “high-performing culture”; “production outlook” of the Bakken shale formation; its oil-train operation in Anacortes; the “California regulatory environment”; and its “marine response memberships.”

Savage’s subject matter included: its “innovative supply chain solutions”; that “safety is a core value” at the company; that it anticipates “50-80 high-quality jobs created (not including multiplier effect)”; that the project reduces “reliance on imported crude oils”; and that the company is “focused on giving back to the community,” including that it participates with nonprofits such as United Way, holiday and school drives, and food banks.

Said Nixon, the Coalition for Open Government president: “You’re only allowed to discuss the topic that you announced (as an executive session), nothing else.” He added: “Everything in that presentation was illegal” under the state’s open public meetings law.

‘An awkward thing’

Another question emerges: If the port commissioners really were meeting only to discuss the port’s minimum lease price, they wouldn’t also have tipped their hand by inviting the companies to listen in, according to Earl-Hubbard. “That hurts the public because the buyer will never make an offer above that dollar figure,” she said.

Wolfe said he’s not exactly sure when the port had a fix on the lease price. But by the time of the April 9 executive session, he said, it’s likely the port had a good sense of it. Wolfe said he guesses the slide presentation was meant to show commissioners “what a good bunch of guys” the companies are.

The port has already back-pedaled on how it handled a closed-door session last summer.

In October 2013, facing charges and concerns it violated public meetings law in connection with the commissioners’ July 22 executive session, the port announced the first vote to approve the oil terminal lease — taken on July 23 — was ineffective.

As a correction, port commissioners held a second public hearing to discuss the lease and to take another vote. At that point, the port had no lease with Tesoro-Savage.

During that Oct. 22 public hearing and re-vote, Coleman, the port’s CEO, defended the legality of the July 22 executive session. He also apologized to the packed hearing room, saying “we like to do things professionally, and in this case we fell down on that a little bit, and we had the opportunity to correct it, and for that I apologize, because I had the opportunity to correct that and didn’t take that opportunity for whatever reason.”

Later, the three commissioners once again voted unanimously to approve the oil terminal lease — worth at least $45 million over an initial 10 years.

Although the port may see itself as having moved on from a mistake, it still faces a public meetings lawsuit. And, in light of the April 9 executive session, the possibility of another legal challenge looms.

The Port of Vancouver is overseen by three elected officials and partially funded by property taxpayers. But Nixon said public ports tend to want to run themselves as a private business, which gets them into trouble with the state’s open public meetings law.

As long as they’re public entities, he said, “they should be accountable to the people fully.”

Wolfe acknowledged the tension.

“These private companies don’t necessarily want to make a public presentation,” he said. “It’s an awkward thing because we are a public entity. We have serious conversations with some of those folks. They aren’t used to that.”