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Pope & Talbot bankruptcy leaves an expensive mess

PORT GAMBLE — According to Washington state regulations, cleanup of environmental messes is shouldered by the company that created them in the first place.

But in the case of Port Gamble Bay, Pope & Talbot Inc. can’t afford to clean up the wood debris and toxic runoff created by its 150-year-old sawmill operation.

On May 9, a ruling by the U.S. Bankruptcy Court approved a request from Pope & Talbot, which is headquartered in Oregon, to move to a Chapter 7 company, which puts assets in the hands of a court-appointed trustee for auction and liquidation.

This decision came after the company’s reorganization efforts failed to revitalize the company under its preexisting Chapter 11 title.

In November 2007, Pope & Talbot also received protection from the Canadian Companies’ Creditors Arrangement Act by filing for bankruptcy in Canada, where it owned additional timberland and mill sites.

According to the DoE, the mill’s manufacturing activities in Port Gamble Bay released petroleum, carcinogens and metal contaminants into the soil and groundwater.

The DoE is taking public comment through June 9 concerning the cleanup of two sites in the bay. The cleanup is nominated as a top priority of the Puget Sound Initiative — a funding plan created by Gov. Christine Gregoire to cleanup toxic chemicals and restore Puget Sound’s waterways.

“Part of our problem is that we are right at the beginning in trying to understand the problem in Port Gamble Bay but bankruptcy rules forces us to find out the costs of the cleanup,” said Tim Nord, manager of land and aquatic lands cleanup sections for the DoE .

“We had to give an educated estimate but it could change,” he said.

The two sites — the sawmill site and the leased area site — have mid-range estimates of $9.1 million and $53 million respectively, he said.

“We are hopeful that by the end of the year we will have sufficient information to understand the problem.”

According to the DoE , the sawmill site is located at the mouth of the bay and is where the majority of Pope & Talbot’s sawmill operations, including wood-chipping, log transferring, rafting and storing, were carried out between 1853-1995.

The other site, called the “leased area,” located at the southwest end of the bay, is aquatic land owned by Washington State Department of Natural Resources. DNR leased the 74 acres to Pope & Talbot for log storage from 1974 to 1995.

“Because Pope & Talbot claimed bankruptcy, the bankruptcy court will look at their remaining assets,” said Jim Harmony, bankruptcy lead attorney representing the Department of Ecology.

“They (Pope & Talbot) are still responsible for paying for the cleanup as well as other POPs (potentially liable parties).”

Potentially liable parties consist of Pope Resources’ two managing arms, Olympic Property Group (OPG) and Olympic Resource Management.

Pope Resources bought the sawmill site from Pope & Talbot in 1985; however they continued to lease the land until the mill closed in 1995.

The DNR is also named a potentially liable party because it also leased land to Pope & Talbot.

Harmony said each party is responsible to pay their respective part for the cleanup.

Between 2002 until Pope & Talbot filed for bankruptcy, the company completed two series of dredging in the bay to lift wood waste out of the soil with the help of OPG.

“By far, the biggest portion of work left to be accomplished is continued clean up of wood waste sediments from Port Gamble Bay,” said OPG President Jon Rose in a press release. “This was work Pope & Talbot was responsible for under an agreement between the two companies. Unfortunately for us, Pope & Talbot went into bankruptcy this year and is no longer contributing to the effort.”

Multiple phone calls last week to Pope & Talbot’s representatives and bankruptcy attorneys went unreturned.

Rose said he doesn’t believe there is anyone left to speak out of their headquarter office.

Harmony said there are previous cases of environmental polluters claiming bankruptcy to avoid having to pay for cleanup efforts including Asarco LLC Superfund sites in Everett and Tacoma in 2002.

Last January Sen. Maria Cantwell championed a bill that would make it harder for agencies to claim bankruptcy to evade pollution cleanup by passing it on to its subsidiaries or taxpayers through bankruptcy claims. According to Cantwell’s Web site, the Government Accountability Office found that Asarco LLC was using bankruptcy laws to avoid cleanup responsibility.

The Environmental Protection Agency enforced that it was the company’s financial obligation to clean up their own pollution.

“As far as environmental pollutors claiming bankruptcy, it doesn’t happen often but it does happen enough to be a concern,” Harmony said.

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