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April 4, 2020

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Audit dings state, county oversight of quarry

Contractor improperly handled material at Livingston site, it says

By , Columbian political reporter
Published:

A new state report says the Washington Department of Natural Resources and Clark County have failed to keep an eye on Livingston Quarry, allowing a contractor to improperly handle material while potentially depriving the state of revenue used to fund schools and other government functions.

Those are the conclusions of an accountability report released by the state auditor Thursday, which points to more problems at a quarry that’s been the subject of complaints from neighbors and scrutiny from the department.

In its response to the auditor’s report, the Department of Natural Resources did not dispute the findings and pointed to steps it’s taken to better control the quarry.

“In regards to Livingston Quarry, neighbors raised concerns — and they were right,” said Commissioner of Public Lands Hilary Franz in a statement. “So we acted swiftly.”

In the statement, Franz pointed to a stop-work order the department issued in January to Clark County and Tower Rock, the company contracted to operate the quarry. The order identified violations regarding rock extraction, improper stockpiling of material, lack of proper insurance by the company, problematic reclamation methods and other issues.

Since 2011, Clark County has contracted with Tower Rock Products, a subsidiary of Tapani Inc., to operate a portion of the quarry owned by the county. The status of the contract has been in dispute since it expired in December 2017.

Livingston Quarry is one of the most depleted mines in Clark County, with only 15,000 cubic yards of material left, according to a consultant’s report released last year. It’s not clear when extraction operations will resume.

Julie Olson, the county council’s vice chair, said that the county is close to reaching an agreement that she expects will be voted on publicly. She said that the growing county needs rock for economic development. But she also said contracts need to be followed.

“You know, honestly, I think Clark County could have done a better job and we’re working on that right now,” she said.

While records show that progress has been made toward resolving contract issues, outstanding issues remain between the department and Tower Rock.

“If mine operations are to resume, they will only do so under strict oversight and accountability,” said Franz. “It is a privilege to lease state lands, and we expect our lessees to meet our high standards.”

The audit

The quarry, located east of Vancouver, is divided into two sites and operated through contracts between governments and companies hired to mine it. One site, Livingston Mountain Quarry, is owned by Tower Rock. The Department of Natural Resources owns the other site, Livingston Quarry, and leases it to Clark County. The county, in turn, has contracted with Tower Rock to mine that portion of the quarry. Tower Rock contracts with J.L. Storedahl & Sons to operate both sides of the mine.

According to the auditor’s report, Clark County and the department entered into a contract in 2007 allowing the county to remove about 50,000 tons of rock annually from Livingston Quarry for public works use. The Department of Natural Resources manages resources land, including Livingston Quarry, to generate revenue for public schools, county services and other state functions. The contract requires the county to submit monthly reports documenting the amount of material removed and to pay a $1.25 per ton royalty. From July 1, 2016, to Jan. 16, 2019, the department collected $723,980 in royalty payments from the county.

“We confirmed the department received monthly production summaries and royalty payments from the county, but did not perform procedures to verify the accuracy of the information,” reads the auditor’s report.

According to the report, the department didn’t perform enough site visits to monitor operations nor did it have a manager in place to ensure the contract was properly followed.

Due to the lack of monitoring, according to the report, the contractor removed rock outside of the boundaries of Livingston Quarry’s surface mining permit and commingled product from the privately owned quarry with product from the publicly owned side. The report also found that the contractor stockpiled privately owned rock products on state-owned land.

“Without an adequate system of internal controls in place to verify the accuracy of the contractor’s extraction information, the department cannot ensure it receives all revenue to which it is entitled,” reads the report.

Clark County Public Works didn’t respond to requests for comment.

“Tower Rock remains committed to meeting all required and clearly-defined contractual and legal obligations at Livingston Quarry, and is looking forward to resuming operations in coordination with regulatory authorities,” reads a statement from Tower Rock. “This quarry will continue to supply area construction and infrastructure projects with quality local rock while supporting local jobs, schools, and government.”

In its response to the report, the department noted it was working on a plan to authorize stockpiling of private rock on state land as well as compensation of $350 per month for unpaid usage from November 2018 to the stop-work order in January.

The department has also collected $50,000 in minimum annual rent payments, $12,168 for three years’ worth of stockpiling rent and $13,743 for rock removed outside the surface mining permit boundary.

Bo Storedahl, a manager at J.L. Storedahl & Sons, was traveling outside of cellphone coverage, but wrote in an email that many of the issues have been addressed and that the state has been compensated. He also downplayed the audit, pointing out that the site has been out of operation.

‘Pyrrhic victory at best’

Public records obtained by The Columbian show that the Department of Natural Resources has had ongoing concerns about the management of Livingston Quarry, including issues identified in the audit. Records also reveal how attorneys for the county and Tower Rock have negotiated over the contract.

In email messages, LeAnne Bremer, attorney for Tower Rock, wrote that the company exercised its option to renew the contract when it expired in December 2017. She also wrote that if the county would recognize the extension, the state would lift the stop-work order.

“While there may be those who rejoice in less trucks currently coming out of the Livingston Mountain quarries, this is a Pyrrhic victory at best,” Bremer wrote to the county’s attorney, Bill Richardson. She wrote that the closure of the quarry resulted in longer truck trips to other sites to meet demand for gravel. She also wrote that the county had limited leverage over the contract because it’s still obligated to meet its obligations under its lease with the Department of Natural Resources, including the $50,000 annual rent.

Richardson has disagreed that the contract is renewable and has instead argued that the company had been operating on a month-to-month tenancy. Previously, Richardson wrote to Bremer about “significant public complaints about Tower Rock’s operations at the site.” Specifically, he mentioned a requirement that the company provide written notice of any short-term peak production. Records show that the county has pursued amendments that would give it more control over the trips to the quarry. The draft contract would also require Tower Rock to remove all rock-crushing equipment from Livingston Quarry by June 30, 2021 before beginning reclamation.

Kenny Ocker, spokesman for the Department of Natural Resources, said in an email that the stop-work order will be lifted once issues identified by the department are addressed. He said that so far Clark County paid $13,743 to compensate the department for improperly removed rock, J.L. Storedahl & Sons has provided the department with a gate key for the quarry and there’s a stormwater management plan in place.

He said the outstanding issues include a finalized contract between J.L. Storedahl & Sons and Tower Rock, as well as plans for surface mine reclamation, operations and revegetation. He also wrote that sand brought in from outside of the mine and stockpiled is being tested for contamination.

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