Officials from both parties to meet in mid-September at Newport City Hall



Newport City Attorney Penelope McCarthy informed the city council on Aug. 17 that right-of-way lease agreement negotiations with Georgia-Pacific have been re-opened.

The Toledo containerboard mill has two pipelines that can release effluent into the ocean off Nye Beach. The north pipeline is covered under a perpetual easement, while a right-of-way agreement with the city for the south pipeline expired some time ago.

A task force approved by Newport City Council recommended a replacement agreement, which council adopted on June 15.

G-P declined to sign, and provided councilors with an altered, red-lined agreement that the company felt was acceptable.

Council opted not to negotiate further, and the city issued an ultimatum. G-P would have to shut the south pipeline down by the end of August should the city’s original agreement remain unsigned.

McCarthy informed council last week that she had recently paved the way for further negotiations.

“I contacted Georgia-Pacific attorney George Ragsdale and asked that he and another G-P representative meet with me and Councilor Lon Brusselback, who served as council liaison to the task force, at a mid-September date at Newport City Hall,” McCarthy said.

“George responded positively, and the city is waiting for confirmation. In anticipation of the meeting, the city also offered to extend the date of the discontinuance of the south pipeline to Sept. 30.”

Communications Manager Tom Picciano said that G-P is happy to reopen conversations with the city.

“We are very pleased that the city has invited us to sit down and discuss the license agreement, and we look forward to meeting with the city in mid-September,” Picciano said last week. “We feel this is a positive development. We’ll get back to the city with a confirmation.”

As far as the extended deadline to shut down the south pipeline, Picciano said, it’s a little too late for G-P to take advantage of the offer. “The south pipeline is already shut down. We flushed it under DEQ protocol and shut it down on both ends.

“If we cannot come up with a reasonable agreement, we’ll leave it shut down.”

The company would like to have the flexibility of having both lines, Picciano said, but it’s not absolutely essential. The north pipeline is older than its southern counterpart, but the company can simply replace it with new pipe.

“The easement on the north pipeline gives us the rights to maintain or replace the pipe within the easement,” Picciano said. “We have regularly shut the line down in the past to make repairs and perform maintenance on the line.”

Newport Attorney Dan McCarthy was appointed to the G-P Pipeline Agreement Task Force months before his wife, Penelope, was hired as city attorney.

Speaking for himself, and not as a representative of the city or task force, replacing the entire north pipe may not be that easy, McCarthy said.

“Easements give the holder certain rights to the use of the land, however, there may be other rules, regulations, ordinances, court orders or agreements that further define the circumstances and conditions under which the land can be used,” he said.



Red-lined agreement



G-P representatives said they had four areas of concern with the city’s proposed agreement.

Most importantly, the terms of the recommended agreement include both pipelines, when the original agreement concerned only the south pipeline.

“We are not interested in giving up any of the rights that we have under the perpetual easement for the north line,” Picciano said.

All references to “the pipelines” were changed to read “the southern pipeline” in G-P’s red-lined agreement.

Dan McCarthy said the original written charge of the task force was provided by Newport Mayor Bill Bain.

“I specifically questioned the mayor’s suggestion that the task force was only to consider the south pipeline,” McCarthy said. “The mayor responded in such a way that we could consider the north pipeline and include it if we felt it appropriate. [Former city attorney Gary] Firestone followed this up by stating that ‘nothing is off the table’.

“This is simply G-P’s attempt to manipulate the city into a situation where it could never in the future object to G-P’s usage of the north pipeline.”

The second-most objection G-P had to the city’s version of the agreement is an opening that allows for renegotiation halfway through a 10-year term, or under specific special events.

“Really, it’s a five-year agreement.” Picciano said. “And if any significant new information is received, the agreement can be opened at any time. ‘Significant information’ could mean anything.

“When you’re in business, you need to have some certainty. This gives us no certainty.”

G-P red-lined the agreement to reflect a 10-year term and added that “at the end of the initial term, this agreement shall automatically be extended without any action whatsoever by either party” for an unlimited number of 10-year periods if G-P has not breached a material term of the agreement.

McCarthy said that agreements generally cover limited durations. Nothing is certain except death and taxes, he said.

“Ten years, in my mind, is a very long term,” McCarthy said. “What other aspects of business life guarantee virtually no change for 10 years?

The real issue to G-P, McCarthy said, is the re-opener provision.

“The task force felt that the citizens of Newport have both a right and a need to know the impact on marine life of 50-plus years of G-P dumping effluent into the ocean,” he said. “To avoid the issue by not permitting the agreement to be re-opened despite possibly damning evidence from monitoring simply perpetuates the head-in-the-sand approach that we have used on this issue for 50 years.”



More objections



G-P’s third objection, Picciano said, is a penalty clause that would allow the city to either terminate the agreement or levy fines up to $5,000 per day if G-P violates effluent provisions.

“The definition of ‘violation’ is loosely defined,” Picciano said. “DEQ regulates many aspects of our business with some scheduled inspections as well as some surprise inspections.”

Fines are beyond the jurisdiction of the city, Ragsdale told council at its June 1 session. The mill already operates under DEQ’s oversight, and stiff penalties and fines are levied by the state for any violations.

McCarthy responded that task force members felt the city needed a tool to be able to protect the community from violations of the proposed agreement. The provisions do not override or infringe on DEQ’s authority in any way, he said.

“The majority of the task force felt that the ability to levy a relatively substantial fine was required in the event of relatively substantial violations,” he said.

Picciano said that G-P’s fourth problem with the agreement is the suggested yearly fee, although he said the subject wasn’t as big of an issue as the mill’s other objections.

G-P’s red-lined agreement named a figure of “$40,000 per each year,” with no increases.

McCarthy said the task force arrived at its fee figure after consulting two independent cost analyses.

“Members decided to average the values that each firm arrived at, leading to a first-year fee of $55,000, and to apply a reasonable annual increase of 3 percent,” he said. “A vote was then conducted in which all 10 task force members, including two G-P employees, agreed to adopt this pricing and the annual increase.”

The mill also deleted the phrase that the effluent could only be “the byproduct of normal and customary paper or pulp operations at the mill [that] is generated solely at the mill.”

“Our permit with DEQ already provides that we can’t release effluent from other counties, which was a win-win-win situation,” Picciano said, referring to a former agreement with Marion County.



Contact Kate Rowland at krowlandstayton@gmail.com.

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