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Sept. 24, 2022

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Cheap oil prices delay state’s environmental cleanup projects

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BELLINGHAM — Several major cleanup projects in Whatcom County have been put on hold as low oil prices have severely undercut state cleanup grant accounts. 

Nearly $14 million allocated to $28 million worth of cleanup projects in Bellingham and Blaine in the state’s current biennial budget are in the lurch until lawmakers, who start their session today, decide to shift money around or approve another way to fund those projects. 

Washington’s toxics cleanup program is funded with a voter-initiated rule called the Model Toxics Control Act, which places a 0.7 percent (70 cents per $100) charge on the wholesale value of hazardous materials that enter the state. That money is then divided into three accounts. 

Because MTCA funds are based on the value of hazardous materials (primarily crude oil), as prices drop, so does the revenue that could go to prevent contamination or clean it up. 

Crude oil prices have dropped nearly 50 percent since June, with the price per barrel closing below $34 on Friday.

In October, the Bellingham Port Commission heard that its upcoming projects would not have funding from state toxics program manager Jim Pendowski.

“We have about $14 million available to us to spend on $65 million worth of remedial action projects right now,” Pendowski told the three-member commission at its Oct. 6 meeting. “That means the projects the Port of Bellingham had in the queue — you had about $11 million worth of projects that we won’t be able to fund right now.”

One of the major MTCA accounts pays for “remedial action” grants to fund cleanup projects such as the Port of Bellingham’s complete overhaul of a dozen sites throughout Bellingham that have been contaminated by historical industrial use.

Remedial action grant money operates as a 50 percent match, requiring investment from communities that benefit from the state’s help, and making projects on the order of tens of millions of dollars possible for communities that might otherwise be forced to leave contaminated sites idle. 

Bellingham’s Maritime Heritage Park, built on a former landfill, is an example of how the cleanup fund can put contaminated sites back to use.

The port was expecting funds to pay for cleanup at Fairhaven’s Harris Avenue Shipyard, part of the former Georgia-Pacific Corp. pulp mill site, and the Blaine marina tank farm, but it doesn’t appear the money is there. 

The city of Bellingham also was expecting $3 million in state grant money for cleanup on the RG Haley site.

As a consumer, low gas prices are fantastic, said Seth Preston, a spokesman for the state Department of Ecology’s toxics cleanup program, which is charged with distributing MTCA money as directed by the state legislature. 

“But when I stop at the pump, I almost cringe because I know the end effect on my program,” Preston said. 

Gov. Jay Inslee’s proposed supplemental budget would provide $25.5 million in bonds to pay for 36 projects that were supposed to get a piece of the pie before oil prices slumped. 

The Port of Bellingham plans to lobby in Olympia this session to get funding restored, potentially through use of bonds, as Inslee has proposed, and/or through legislative changes to reallocate money that was moved from the cleanup accounts when oil prices were much higher. 

Bellingham’s projects can serve as examples of how public MTCA money can be leveraged to get private investment to develop sites once they have been cleaned up, port spokesman Mike Hogan said. 

Already-funded work, such as the first phase of the Whatcom Waterway cleanup, and work on the northern portion of the G-P site are not impacted, but represent projects that would not have been possible without the state’s help, Hogan said.

The former Weldcraft Marine site and a former municipal landfill that is now Maritime Heritage Park are great examples of how MTCA money can put contaminated sites back to use, Hogan said. 

Even if bonds are approved to support cleanup, only the Harris Avenue Shipyard project would receive funding under Inslee’s proposal, unless other changes are made. 

That project was expected to get about $6 million this biennium, and the Port of Bellingham already had to move a major partner in that project — All American Marine — to another port property or risk losing their business.

“This project didn’t make the cut this year, which is a huge problem,” Hogan said. 

Ferndale Sen. Doug Ericksen, the Republican chairman of the state Senate’s Energy, Environment and Telecommunications committee, said he does not agree with the idea that there is not enough money to pay for remedial action grant projects.

“I would argue that there is less money to spread around the operating side, and plenty of money to fund the remedial action grants,” Ericksen said. “People should not be giving up on this. These are important projects for cleanup and development, and they will get funded in the upcoming legislative session.”

When the state’s general fund suffered during the height of the recession, oil prices were well above $100 per barrel, making the MTCA funds an appealing place to look for spare cash. 

Some MTCA money was moved to pay for noncleanup programs that were previously paid for by the general fund, and that money hasn’t been returned to MTCA, Ericksen said.

“What we’ll be focusing on is rededicating, bringing those monies back to the capital fund,” Ericksen said. “I’m not trying to say the amount of money coming into MTCA has not gone down, it’s gone down significantly. … But what I’m saying is a lot of these programs that were started with MTCA money should not be funded, and that could be put into cleanup projects.”

Until the budgeting discussions take place, the Department of Ecology’s toxics cleanup program has had to delay projects, Preston said.

“It’s going to be a very fluid situation,” Preston said. “I think everybody acknowledges that this is a revenue problem, it’s not something we have created here at Ecology and in the toxics cleanup program. It’s something that’s out of our control. The question is how is that going to be addressed?”

If the accounts continue to suffer in coming years, all of Bellingham’s cleanup projects have the potential to be impacted in one way or another, said Brian Gouran, the port’s director of environmental programs. The projects will need more than $89 million in remedial action grants.

Gouran and Hogan said they were thankful that local legislators were aware of the issue and supportive.

“It’s good they’re confident they can fix those problems,” Gouran said. 

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