Portland Harbor is a critical economic engine stalled by the uncertainty and stigma of being a Superfund site. It will take decades to restore the Lower Willamette River and the transition will be unpleasant, expensive and complex. And crucial.
At first glance, the vacant 50-acre property next to the railroad bridge looks like an ideal stage for creating jobs, with a deep-water channel to the Pacific Ocean, rail access and a broad expanse of level, cheap land. Situated in the heart of Portland’s industrial harbor, it occupies an enterprise zone as well as an Urban Renewal Area, meaning government incentives are available for investors.
Yet nobody is investing, because nobody wants to inherit the liability. Groundwater monitoring wells dot the property, and workers out in the muddy field take samples and record data as part of a seemingly endless cleanup that is a prelude to bigger and more expensive cleanups to come.
The Arkema site, as this property is known, is Ground Zero of the complicated mess known as the Portland Harbor Superfund site. Industrial pesticides including DDT were manufactured here, and toxins drained straight into the Willamette River. A drainage ditch from another long-closed chemical plant that used to make Agent Orange added to the toxic soup. A nearby lake is so contaminated that it needs to be drained and capped. Plans call for a huge underground barrier wall to stop the flow of groundwater into the river, combined with extraction wells to pump out dirty water and treat it. Two massive corporations, Arkema (which recently spun off from the French multinational company Total) and Sanofi-Aventis (the fourth-largest pharmaceuticals company in the world), are fighting over liability. The larger effort to clean up the Lower Willamette River is on hold until they clean up their messes because no one wants to spend hundreds of millions of dollars to clean up a 10-mile stretch of river, only to have it recontaminated.
Superfund is not a process anyone wants to go through twice.
Industrial employers such as Schnitzer, which exports scrap steel to China, boost Oregon’s economy by bringing traded sector revenue into Portland.
Both upstream and downstream from the abandoned Arkema property, at far livelier waterfront properties throughout the harbor, workers are welding barges and railcars, manufacturing steel pipes and silicon wafers. Trucks haul trash to the transfer facility, parts to factories and finished products to market. Freight trains rumble through sprawling rail yards. Gasoline gushes in from the pipeline that connects Portland with the refineries of Cherry Point, Wash. Huge ships import Toyotas and televisions and export wheat and soda ash, the principal ingredient used to make glass.
The basic industries on which Portland was built continue to hum along even after two years of recession, as vital to the regional economy as ever. “We have a manufacturing base in this city that most mayors would give their left arms for in terms of who’s operating here and how successful they are,” says Mayor Sam Adams.
Schnitzer Steel’s Ann Gardner, spokeswoman for the Working Waterfront Coalition, calls the harbor “an irreplaceable economic resource.”
About 38,400 people work in Portland Harbor. For job seekers who don’t have college degrees, these jobs are often the best option available, with healthy wages and full benefits. They are also jobs with heavy economic impact, because many are within the traded sector — products manufactured locally and sold elsewhere — bringing fresh income into the regional economy and driving prosperity.
But the harbor has lost 3,600 jobs since 2000 according to the most recent figures from the Portland Bureau of Planning and Sustainability. One reason for that stagnation is the uncertainty and stigma of Superfund. A six-mile stretch of the Willamette was listed as a Superfund site in 2000, and the boundaries have expanded to include 10 miles of river from the Broadway Bridge to Sauvie Island. While no one can predict with confidence exactly how long it will take to clean up the lower Willamette to the specifications of the Environmental Protection Agency and how much that effort will cost, few doubt that it will take decades and cost hundreds of millions of dollars.
Sprawling waterfront properties such as the Arkema site are expected to remain vacant well into the future given that level of risk, even as business groups clamor for more industrial land. “As soon as you just mention that word Superfund, people start to quiver,” says Bill Wyatt, executive director of the Port of Portland, the largest property owner in the harbor. “These are not properties for the meek at heart.”
The fear can lead to costly paralysis. According to a 2008 report paid for by the Portland Development Commission, failing to redevelop key harbor properties such as the Arkema site over the next 10 years could cost the region $320 million in investment, $81 million in annual payroll and 1,450 jobs.
In addition to the cost of doing nothing, there is the expense of the Superfund process itself. “Every year that this process continues costs us a tremendous amount of money in outside lawyers, outside consultants and all of the accoutrements that go along with something this big,” Wyatt says.
Every dollar harbor businesses spend on lawyers, consultants and settling tribal claims, is a dollar not spent on research and development, workforce training, and equipment. And there will be many more dollars spent before the Superfund process is resolved.
Taxpayers have spent $55 million to clean up the former McCormick and Baxter Creosoting Company.
Portland was built on the Willamette River, and the city’s 150-year history has forever altered that body of water. The West Coast’s first navigation channel enabled timber and grain exports starting in the 1850s. The railroad followed in the 1880s. After a lull during the Depression years, the harbor shifted into full gear during World War II, as workers built Liberty Ships for the Navy and rail cars for the Soviet Union.
Since the war years, healthy business clusters have developed in international trade, ship repair and metals manufacturing. Little thought was given to the ecological health of the river until the 1970s, when Gov. Tom McCall campaigned against pollution in the Willamette and spearheaded efforts to clean up Oregon’s defining waterway. But by then much of the damage had been done. It was just a matter of time before the pollution bill came due. City and state officials attempted to keep the federal government out of the picture by promising a voluntary cleanup, but in the end the EPA prevailed. The Superfund listing leaves more than 100 harbor businesses and property owners facing potential liability, including major employers such as the port, Gunderson, Schnitzer Steel, Daimler, Siltronic, NW Natural, United Pacific Railroad, Vigor Industrial, Sulzer Pumps, Esco and Evraz.
Much of the pollution in the Willamette can be traced to businesses that no longer exist in the harbor. The Arkema site, formerly known as the Atofina factory, is one example. It shut down its Portland operation in 2001 and is now one of many vacant and contaminated properties controlled by the chemical company that spun off from the 180 billion euro French oil and chemical company Total Fina Elf. The Department of Environmental Quality issued a press release in 2005 saying that Arkema had agreed to clean up the property, but the actual work still has yet to begin.
Another example of the daunting challenges of Superfund can be found directly across the river from Arkema, at the 43-acre McCormick and Baxter property. This former creosoting plant was named a Superfund site eight years before the rest of the harbor, and it has taken a Herculean effort to clean it up. About 33,000 tons of highly contaminated soil and debris were dug out of the ground here and transported by rail to the landfill in Arlington in 1999. Contractors built an 18-acre subsurface barrier wall to keep the creosote out of the river in 2003 and added a 23-acre sediment cap and a six-acre riparian soil cap in 2005. More than $55 million has been spent to clean up the property, and it still has not earned a clean bill of health.
All of that money has come from taxpayers. That’s because McCormick and Baxter is an “orphan” site, meaning its owners are insolvent. The “Superfund” after which the federal program is named no longer exists, because oil and chemical companies stopped paying into the fund long ago. The system is designed under the principle that the polluter pays, but when the polluter can’t pay things get tricky — and risky.
The University of Portland, which sits on the bluff above the McCormick and Baxter property, has been considering buying it for years and nearly signed a contract several years ago. But fears of inheriting onerous liability have slowed that deal to a glacial pace, even though it would seem like a bargain for the university and the neighborhood around it. A year ago the University expanded down to the waterfront by buying a 35-acre former shipbuilding facility and lumberyard adjacent to McCormick and Baxter, but that transaction proved neither fast nor smooth. UP assistant vice president James Kuffner estimates the university has invested $10 million over five years in a multi-agency effort to push the deal through. He says the university is excited to develop sports fields, salmon habitat, rowing facilities and environmental labs along the river, but the intensity of the process and the number of attorney hours required made him hesitant about a second acquisition.
Kuffner’s doubts about the deal grew more urgent after a consultant showed him that one of the groundwater monitoring wells on the McCormick and Baxter property was pumping out inordinately hot water, indicating that something unusual was going on chemically with the material under the cap. “I’m no expert, but I certainly didn’t like seeing water 110 degrees underneath a property we could become liable for.”
Pollution from city-owned sewer outfalls contribute to the pollution of the Willamette River.
For all of the challenges and setbacks of the McCormick and Baxter site, public officials still hold it up as evidence that a better future could lie ahead for the harbor. UP, a 100-year-old, 600-employee institution with an annual economic impact of $169 million, has been trying for years to expand without disturbing its neighbors, and its move to the waterfront will eventually create construction jobs, open space and a vibrant new gathering place.
That’s better than stagnation. When the harbor was first targeted by the EPA, key players vowed to avoid the delays and bickering that have turned so many other Superfund cleanups into multi-decade wars of attrition. The port, the city and a dozen key harbor businesses joined to form the Lower Willamette Group and predicted they would have a Record of Decision (ROD) in place by 2006, laying out a clear plan for cleanup. That deadline has come and gone, and the ROD is nowhere near completed because the remedial investigation laying the groundwork for eventual cleanup took much longer and cost much more than was expected. The investigation was supposed to take just a couple of years, but it ended up lasting eight years and costing $75 million. The study is so detailed that the cost of simply printing it out is $3,000. The next step of devising a cleanup plan based on that science is sure to be similarly complex and expensive.
“Seventy-five million dollars, and not a dollar of that went to cleanup,” says Wyatt. “If you are a private party thinking of investing in the harbor, these figures aren’t lost on you. It really does have a chilling effect.”
Wyatt, who served as chief of staff to Gov. John Kitzhaber when the EPA moved to list the harbor, has been involved with the Superfund process from day one. He says the slow pace is probably inevitable considering the complexity of the harbor, with more than 100 potentially responsible parties, 10 miles of river plus upland properties that drain into the river, the Endangered Species Act listing of migrating salmon, the rights of tribes with historic fishing rights, and a 150-year history of development under constantly evolving environmental laws.
“You don’t want to come to a conclusion too quickly and leave something out, because that could lead to serious litigation and further delay,” says Wyatt. “Everybody wants to be sure that we only do this once. It’s just too expensive and too disruptive to do it again.”
But complexity is just one factor contributing to the delays. Attempts to unite the business community to pursue a common solution have run into resistance. Major players in the harbor including Schnitzer Steel, Arco, Oregon Steel (now Evraz) and Burlington Northern Santa Fe Railroad refused to sign key documents with the EPA. A second business group led by Schnitzer and ExxonMobil, the Blue Water Group, has formed in addition to the Lower Willamette Group, and the relationship between the two groups has been contentious because the Lower Willamette Group has been much more proactive in funding the investigation. The litigation has already begun, and many more lawsuits will follow once it finally comes time to decide how to clean up the mess and how to pay for it.
Another factor contributing to delays is the pollution itself. Arkema isn’t the only waterfront property that still poses a threat to the river. Industrial solvents have been detected in the river near the Siltronic silicon wafer plant and the Gunderson barge and railcar plant. NW Natural’s former Gasco site, which burned coal and oil to illuminate the city in Portland’s early years, is extensively polluted with petroleum waste. Schnitzer’s auto recycling operation is a source of PCBs from plastic parts being shredded. Pollution from the Rhone Poulenc site inland from Arkema has seeped all the way down into the basalt zone.
Early initiatives to clean up these properties have cost companies millions but produced mixed results. Until these high-priority sites are contained, the broader cleanup of the river is on hold. In the meantime, the EPA has forbidden maintenance dredging in the Willamette, and the channel is filling in to the point where extra-large ships cannot navigate it while fully loaded. This has not posed a big problem yet because marine traffic is down, but it could prove significant once the economy rebounds.
Nine years into the process, it is far from decided what the ultimate remedy will be for cleaning up the river. The port’s preferred strategy would involve building an in-water “confined disposal facility” for storing toxic sediments. This approach has received positive reviews at similar restoration sties throughout the nation, but it has generated more than 10 letters of criticism for every letter of support in Portland.
Whatever the solution ends up being, actual cleanup is unlikely to begin for a very long time. Steve Gunther, an environmental contractor who resigned from the harbor’s Community Advisory Group in frustration, says, “This is a billion-dollar project with no timeframe, no budget, no vision and no accountability. How long do you have to study this thing before somebody finally goes in there and pulls the trigger?”
Gunther calls Superfund process “a jobs program for lawyers, lab rats and consultants.”
It is also a process capable of generating monstrous piles of paper. A document cataloging the Portland harbor documents that the EPA has on file in Seattle runs 2,000 pages. And that’s just the index.
Maritime trade and jobs are both down throughout the harbor.
Even as concerns over environmental liability have spread fear and delayed deals, investment in the harbor continued — at least until the recession took hold. City planner Steve Kountz says harbor businesses invested $400 million from 2003 to 2007. Several companies expanded their operations, and at least one newcomer, Advanced American Construction, the contractor that built the Eastbank Esplanade, purchased a waterfront property and set up operations near the St. Johns Bridge. Other promising local companies such as Nexion, which refurbishes wind turbines, have expressed interest in moving to the harbor, and the Portland Development Commission is searching for innovative ways to help these deals go through, in spite of the burden of Superfund.
But other once-promising deals have fallen victim to Superfund angst. The port had hoped to work out a deal with a biodiesel company at Terminal 4 north of the St. Johns Bridge, but the company backed out after considering the environmental risk.
The PDC is working to avoid a similar failure at the 25-acre Linnton Plywood site in North Portland. The mill there shut down in 2001 when the market for plywood collapsed, and the worker’s cooperative that owns the property has been trying to sell it for seven years. For the 200 or so members of the co-op, mostly aging retirees, a comfortable retirement depends on the sale of this property. A number of potential buyers have considered investing, most recently Arco/British Petroleum, which operates a neighboring facility and has proposed a LEED-certified expansion onto the Linnton property.
A new investment at Linnton Plywood could bring a big boost to the effort to revitalize the harbor. The property is not nearly as contaminated as many others in the harbor, the seller is motivated and the buyer is proposing ecological restoration and new jobs. But uncertainty has kept the deal on hold, and the deadline is nearing.
“I’m not sure we can save the transaction, but we have to try,” says William Hutchison, a partner at the Roberts Kaplan law firm who represents the co-op. “This is an urgent situation. I worry that if we’re not able to deliver a solution soon, some of the members may not live to get the benefits they are due.”
International trade, tank farms and heavy industry compete with the public’s desire for greater access to the river.
In her State of the City speech in 2001, then-Mayor Vera Katz introduced an ambitious new program called River Renaissance with the goal of improving both the economy and ecology of the Willamette River. To that end, city planners have been collecting ideas and exploring strategies to restore the river’s ecosystem without infringing on the needs of business. The end result of that effort is a deeply complex River Plan for the North Reach of the Willamette, with a plethora of new maps, charts and recommended policies. The plan offers much for industry, including $586.8 million in transportation infrastructure, but harbor businesses have united to attack it bitterly, saying it would raise costs and kill development. The overwhelmingly negative response from businesses has held up passage of the River Plan.
Part of the plan calls for more than 20 new restoration sites within the harbor for businesses to mitigate for the environmental impacts of new development. Businesses unable to restore their own properties could pay to restore these “mitigation banks.”
Gardner of the Working Waterfront Coalition says new fees and complicated new rules are the last things harbor businesses need in this economy, with the uncertainty of Superfund already slowing development. The coalition presented a letter of protest to the Portland Planning Commission in June, asking, “Why would a company invest in the harbor if permitting and fees are so much more complex and costly than they would be elsewhere? The proposed plan also reduces our ability to compete globally and react quickly to changing market opportunities. The result is lost jobs for the city and the region.”
Environmentalists such as Bob Sallinger, of the Audubon Society of Portland, who joined Gardner on a committee that helped craft the plan, are not sympathetic. “These companies and their shareholders profited from the degradation of the river,” he says. “They have the responsibility to pay for that damage, and to make sure it doesn’t happen again.”
The dispute has grown increasingly contentious and resulted in a series of behind-closed doors negotiations between Mayor Adams and industry representatives. Adams says he is committed to finding a solution that works for the business community as well as the environment. “We’ve got a lot of work to do but collectively we are more than up to the task,” he says. “I refuse to accept that it’s either green or it’s good for business. We have proven in Portland that you can accomplish both.”
That may be true in parts of Portland, but it is not yet true in the Portland Harbor Superfund site. It will take decades of fighting, negotiating, encouraging and cajoling to restore the Lower Willamette River and set a course toward a more sustainable future for Portland Harbor. The transition is unlikely to be pleasant and almost certain to be expensive, time consuming and mind-numbingly complex. It is also crucial, to Oregon as well as Portland.
The harbor economy has brought prosperity to the region for 150 years, and it has the potential to do so for another 150 years into the future. But progress will remain sluggish until the river is cleaned up and the stifling weight of Superfund is lifted.