Newport City Council to discuss matter during

Aug. 3 executive session



The six-month effort by the 10-member Georgia-Pacific Effluent Pipeline Task Force to forge a workable right-of-way agreement between the City of Newport and G-P’s pulp and paper mill operation in Toledo went down the drain Wednesday when G-P officials verbally notified City Attorney Penelope McCarthy they were rejecting the agreement city council approved on June 15.

A formal written response from G-P is pending.

“The letter we received from the city attorney was basically a take-it-or-leave-it ultimatum,” Tom Picciano, the Toledo mill’s communications manager, told the News-Times Wednesday afternoon. “We have no choice but to leave it.”

McCarthy, who was attending a conference in Bend, told the News-Times during a Thursday morning telephone conversation that city officials are “disappointed that G-P has decided not to honor our request,” but haven’t yet had time to effectively discuss their response. City Manager Jim Voetberg has scheduled an executive session following the council’s Monday, Aug. 3, work session to specifically focus on the issue.

Until then, McCarthy said any further response from the city is “premature and speculative.”

McCarthy allowed the News-Times reporter to read the letter she crafted and sent to G-P by e-mail (along with a copy of the agreement) and certified mail (letter only) on July 9, but hesitated to release a copy since it derived from an executive session discussion.

According to Oregon statutes, a public record includes any writing that “contains information that relates to the conduct of the public’s business,” among them letters and e-mails. And Oregon’s public meetings law states that the media can report on information “gathered independently from executive session, even though the information may be the subject of an executive session.”

G-P provided the News-Times with a copy of the body of the letter sent to G-P representative George Ragsdale.



Take it or leave it?

The letter opened by thanking G-P for efforts to work with the city on an agreement regarding the pipelines that carry effluent from the Toledo mill through Newport to the ocean. Then it went straight to the heart of the matter.

City officials rejected an alternative agreement sent via e-mail by G-P’s representative George Ragsdale on June 23.

“It is unfortunate that we have not yet reached an understanding,” McCarthy stated. “The council believes the final product recommended by the task force represents a compromise on the various concerns and opinions expressed by the members of the task force and the public. The council will not re-negotiate its terms.”

City council members, she noted, often must make difficult decisions in carrying out their obligation to the public.

“G-P’s refusal to sign the agreement recommended by the task force and adopted by the council leads us to just such a difficult decision,” McCarthy wrote. “The pipelines we believe are currently operated by G-P (the ‘north’ and ‘south’ pipelines) are used without appropriate governmental protections and authorizations in place. This is not an acceptable situation to the council.”

The letter asked G-P officials to sign and return the agreement by Aug. 1, or the city would consider the agreement “off the table for signature.”

In addition, given the city’s “responsibility to protect, control, and administer city rights-of-way,” the letter would serve as notice from city council for G-P to “cease and desist use of the south pipeline” by no later than Aug. 30.

The city attorney’s letter - as directed by the city council - took a stern stance toward any requests G-P might make pertaining to the pipelines after the Aug. 1 deadline. If G-P officials return to council asking for further negotiation on an agreement governing the use of the pipelines, or requesting emergency use of the south pipeline, or any other council action contained in the council-approved agreement, they “should expect, prior to any council action, to sign an agreement similar to the already approved agreement, or with more stringent terms, and an increased license fee.”

From G-P’s perspective, the proposed fee - or more specifically, proposed fines - is one of four deal-breakers within the city-sanctioned agreement.



Piping up

The 10-member task force presented their recommendations during the city council’s June 1 session.

By an 8-2 vote (with G-P representatives George Ragsdale and Franz Cosenza opposed), they recommended that the city adopt a 10-year agreement that covered both the north and south pipelines, and expired Dec. 31, 2019 unless terminated earlier for cause. Cause for termination included violations of “permissible effluent” terms, insurance provisions, or material or repeated defaults. The effluent must be “the by-product of normal and customary paper or pulp operations at the Toledo mill, and generated solely at the Toledo mill,” and meet all applicable laws and regulations, including the waste discharge permit issued by the Oregon Department of Environmental Quality (DEQ).

A penalty clause would allow the city to either terminate the agreement or levy a fine of up to $5,000 per day if G-P violates the effluent provisions.

The fee was set at $55,000 for 2008, $56,650 for 2009, then rose three percent each year afterward. The fee applied only to the south pipeline, and termination of the agreement would not end or replace any of G-P’s existing legal rights, including the north pipeline rights.

It also featured room to renegotiate halfway through the term.

In 2014, either the city or G-P could ask to renegotiate the agreement fees and/or fines, or a change in material circumstances or new information related to the effluent and its effects. Failure to reach an agreement through negotiation or non-binding mediation by Dec. 31, 2014 would allow either side to terminate the agreement, effective Dec. 31, 2015.

G-P representatives objected to the fees and fines, including both pipelines in the agreement, and the 10-year term.

That hasn’t changed, Picciano said.

While they’re “not that far apart” on the fee aspect, penalties for effluent infractions are, Ragsdale said at the June 1 session, “beyond the jurisdiction of the city.” Picciano said the mill operates under DEQ’s “qualified, scientific-based” oversight, with effluent “permitted and strictly regulated” by DEQ, and stiff penalties and fines already in place for any violations.

“As a business, we need some type of certainty,” Picciano said, noting that the 10-year term with a re-opener after five years, plus additional re-openers “for obtaining additional information” puts the agreement on a foundation of shifting sand, rather than the firmer footing of former 10-year renewable franchise agreements.

G-P officials say the original charge of the task force was to focus on the south line, and inclusion of the north line, which has a “perpetual no-fee easement,” is unacceptable.

Picciano noted that in 1993, G-P granted a perpetual easement for the electric and telecommunication utilities for Newport’s pump station on the Siletz River, and prior to that, granted perpetual easements for the water pipeline connected to the pump station.

“We hoped to continue with such mutually beneficial agreements,” Picciano said.

Other task force members said the results of the six-month effort were negotiated, drafted, re-negotiated, and re-drafted many times over, and represented a consensus of the task force members. They also said all the protections built into the agreement would “go away” if the north pipeline isn’t included.

Council members delayed their decision on the matter until June 15 to allow time for a G-P response and more public input.

At that session, Picciano said two council members asked G-P officials what they didn’t like about the agreement, and to submit a “red-lined agreement” highlighting what they “would like to see changed.” That led to the June 23 submission from G-P legal representatives that city officials rejected.



Moving forward

The task force also recommended that the city establish a technical advisory committee to assist the city in developing a plan to scientifically monitor the effluent released off of Nye Beach, and make the information derived from such monitoring public.

They also suggested that city council use most or all of the G-P payments to fund the monitoring.

“The council is moving ahead with the appointment of technical task force to assist the city in implementing attesting and monitoring plan for the G-P effluent outfall,” McCarthy’s letter stated, noting that they would like to include a G-P representative “if we have a signed agreement in place” by Aug. 1.

G-P officials did agree to provide current maps of all G-P pipelines within Newport’s boundaries. The city’s maps date back to 1983, and city officials want a map that shows “all pipelines currently in use and/or abandoned.”

Both sides expressed a willingness to find a resolution.

“We’re still ready, willing, and open to talking with the city about this,” Picciano said. And McCarthy ended the letter by noting that the city “looks forward to resolving these issues, and continuing to move forward with G-P as a community partner.”



Terry Dillman is the assistant editor of the News-Times. Contact him at (541) 265-8571, ext 225, or terrydillman@newportnewstimes.com.



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