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News / Business

State Court of Appeals judges uphold DNR’s denial of Millennium sublease

By Mallory Gruben, The Daily News
Published: August 21, 2019, 8:53am

LONGVIEW — Millennium Bulk Terminals years-long proposal to build a coal terminal in Longview received another blow Tuesday after a state appeals court sided with the state Department of Natural Resources’ 2017 decision to deny the company a sublease needed to build a dock in the Columbia River.

The decision reversed a previous decision by Cowlitz County Superior Court Judge Stephen Warning that DNR acted “arbitrarily and capriciously” in denying Millennium sublease for aquatic lands leased by Northwest Alloys Inc.

But the state appeals court said DNR’s consideration of Millennium’s financial condition and business reputation was “expressly authorized under the lease” with Northwest Alloys, according to court documents.

“And the additional information DNR sought from Millennium, which Millennium failed to provide, was relevant to DNR’s inquiry. Accordingly, we conclude that DNR’s denial of consent to sublease was not arbitrary and capricious,” the judges wrote in an opinion published Tuesday.

Northwest Alloys is a subsidiary of Alcoa, which bought Reynolds Metals Co. and its Longview aluminum plant in 2000. In 2008, DNR renewed the aquatic lands lease with Northwest Alloys, and the lease barred Northwest from subleasing the land without the DNR’s consent.

The $680 million project cannot move forward without the sublease.

Northwest Alloys requested a sublease for Millennium in 2010, but DNR denied it in January 2017, citing Northwest Alloys’ failure to provide DNR with essential information it requested about Millennium.

That included financial documents, which DNR representatives say would have shown whether Millennium was financially fit to take care of the aquatic property, according to court documents. DNR noted that the previous subtenant, Chinook Ventures, “failed to obtain the required state and local regulatory permits for its petroleum coke business and failed to provide adequate environmental controls,” the court opinion says.

Millennium appealed the 2017 denial in Cowlitz County Superior Court, where Judge Warning sided with company. He ruled that DNR acted “arbitrarily and capriciously” when it denied the permit.

Soon after, several environmental groups and DNR appealed to the State Court of Appeals. The groups argued that DNR’s denial was fair because Northwest Alloys refused to provide adequate information about Millennium’s finances and business reputation.

The state appeals court judges reversed Warning’s ruling and ordered the Superior Court to issue a new order affirming DNR’s sublease denial.

In a prepared statement issued late Tuesday afternoon, Millennium stated, “We disagree with the Court of Appeals decision. … The Court of Appeals got it wrong and we will explore all available remedies, legal and otherwise, to continue to move our project forward.”

The statement continued: “Lost in this decision is the fact that Millennium has already spent millions of dollars to clean up the site and remedy violations from the previous tenant – Chinook Ventures. Our company’s financial commitment to the site cleanup, and the recent growth in new revenue-generating business activities on the site, demonstrates our strong financial position and our commitment to creating shared value with our local community,” according to the statement, attributed to Kristin Gaines, Millennium’s senior vice president of regulatory affairs.

DNR representatives could not be reached for comment Tuesday.

The sublease is one of several obstacles Millennium faces in its quest to build a coal terminal in Longview. The company has also been denied key permits for the project, though Millennium is appealing several of those denials in four other pending court cases.

Millennium representatives remain optimistic that the coal project will come to fruition. In the meantime, the company is running several operations, including shipping coal by rail to Nippon Dynawave and subleasing property to other businesses.