PORT OF SEATTLE
MEMORANDUM
COMMISSION AGENDA
Item No.
6b
Date of Meeting
June 7, 2011
DATE: May 27, 2011
TO: Tay Yoshitani, Chief Executive Officer
FROM: Stephanie Jones Stebbins, Director, Seaport Environmental & Planning Programs
Kathy Bahnick, Manager, Seaport Environmental Programs
Ticson Mach, Capital Project Manager, Seaport Project Management
SUBJECT: Terminal 117 Expanded Habitat Design
Amount of This Request: $3,021,000 Source of Funds: Settlement Proceeds
Est. State and Local Taxes: N/A Est. Jobs Generated: N/A
Total Project Cost: TBD
ACTION REQUESTED:
Request Commission authorization for the Chief Executive Officer to: 1) Complete permitting and
design of an expanded fish and wildlife habitat restoration project at Terminal 117 (T-117) for an
estimated cost of approximately $3,021,000; and 2) execute a contract for outside professional
services to complete the permitting and design of the habitat restoration project at T-117.
SYNOPSIS:
This Commission memo is for design and permitting work associated with habitat restoration at an
expanded Terminal 117. It should be noted that a separate Commission memo for the cleanup at
Terminal 117 (an Early Action Area for the Lower Duwamish Superfund site) was on the
Commission agenda for May 24
th
. At that meeting, the Commission approved execution of the
Settlement Agreement and Order on Consent for Removal Action Implementation at Terminal 117.
The cleanup project unlike the habitat restoration, is being performed jointly with the City of Seattle
to offset both parties’ cleanup liability. The habitat restoration, conversely, is being undertaken
exclusively by the Port for the purpose of offsetting Natural Resource Damage liability or for other
compensatory mitigation uses.
T-117 Cleanup
In 2001, the Lower Duwamish Waterway (LDW) Superfund site was named a National Priorities List
cleanup site under the Comprehensive Environmental Response, Compensation, and Liability Act
(CERCLA, the federal Superfund cleanup law). The Port, King County, the City of Seattle (City),
and the Boeing Company are participating in the investigation of LDW sediment contamination under
an administrative order issued by the U.S. Environmental Protection Agency (EPA). At this time, the
scope and extent of the final cleanup for the LDW as a whole is undetermined.
COMMISSION AGENDA
Tay Yoshitani, Chief Executive Officer
May 27, 2011
Page 2 of 6
Terminal 117 is an “Early Action Area” (EAA) of the LDW. The T-117 EAA consists of LDW
sediments adjacent to the Port’s T-117 facility, T-117 itself, and certain streets and yards in the South
Park neighborhood of Seattle where T-117 is located. The Port and the City share responsibility for
remediation of the sediment and upland facility portions of the T-117 EAA, and the City is solely
responsible for the streets and yards portion of the required work. The Port, City and EPA are
currently finalizing an agreed order to complete the remediation of the T-117 EAA.
LDW Habitat Plan
In 2009, the Commission adopted the Lower Duwamish River Habitat Restoration Plan (LDRHRP).
The purpose of the Plan was to identify objectives and opportunities for habitat restoration on Port-
owned properties along the river while supporting water dependent and water-related business uses.
The T-117 project site was identified as Site 23 in the LDRHRP.
Natural Resource Damages (NRD) Liability and T-117
In addition to regulating Superfund cleanups, CERCLA also creates liability for damages to natural
resources caused by “releases” of “hazardous substance” contamination into the environment. EPA
administers the remediation of Superfund sites, but is not responsible for the NRD liability aspects of
Superfund. That task falls to the Natural Resource Trustees (Trustees), who are designated federal,
state and tribal governmental entities that have management responsibility for the wildlife and other
resources that may have been damaged by hazardous substance releases at a cleanup site. The
National Oceanic and Atmospheric Administration (NOAA) takes the lead Trustee role in instances
when marine fish and wildlife are potentially affected, with participation from the other Trustees.
NRD settlements typically occur after EPA has issued a Record of Decision (ROD) establishing the
actions required for remediation of an entire Superfund site, and after NOAA has completed a formal
NRD “damage assessment.” If the typical Superfund process were followed, NRD settlement
discussions would not begin in earnest until sometime after 2013, when EPA expects to issue the
LDW ROD. NOAA encourages parties to settle earlier when possible.
NOAA generally allows settling parties to resolve their liability by either making a cash payment or
by carrying out habitat restoration projects. NOAA’s preferred approach is to match up one or more
habitat restoration projects with a party’s liability and settle on that basis, rather than negotiating a
cash payment.
The Port’s remediation of T-117 presents an opportunity to carry out habitat restoration in
conjunction with remediation in a way that will meet the needs of both EPA and the Trustees. In
April 2008, the Commission approved moving forward with procuring a design consultant for the
T-117 Habitat project, and also to enter into a Memorandum of Agreement (MOA) with the Trustees
to establish a “credits agreement.” This “credits agreement” would be a legally binding commitment
from the Trustees that any habitat restoration work the Port performed prior to entering into an NRD
settlement would be given credit in the settlement.
Three things have happened since 2008. The first was the delay in the cleanup at T-117 that occurred
as a result of certain dioxin-related issues. Second, NOAA informed the Port that they would prefer
to pursue the final settlement agreement rather than spend time finishing the negotiation of the credit
agreement. Third, the Gulf of Mexico oil spill in 2010 diverted much of the NOAA resources for
NRD.
COMMISSION AGENDA
Tay Yoshitani, Chief Executive Officer
May 27, 2011
Page 3 of 6
In the meantime, Port staff conducted the selection process for the design consultant, and the
consultant completed some preliminary work in preparing for the design of the T-117 Habitat project
and conducting associated public outreach. Our intent is to coordinate the timing of the habitat
project with the cleanup schedule, but that may not be feasible if settlement efforts with the Trustees
continue to progress slowly. Continuing design would enable ongoing settlement discussions,
targetting final settlement agreement in time to construct the habitat in conjunction with the T-117
cleanup.
During settlement discussions with NOAA, it has become clear that the type, size and configuration
of restored habitat influence the ultimate value of the project. In particular, larger (or longer) sites
with a diverse mix of habitat types are more valuable per unit of area. Because of this, staff is
recommending that the bankline to the south of T-117 be added to the T-117 Habitat project. This
bankline was identified as Site 25 in the LDRHRP. Including Site 25 in the T-117 project would
effectively double the size of the restoration area, substantially increasing the overall value of the
project towards resolving our NRD liability, without creating an equivalent (i.e., proportional)
increase in cost.
PROJECT DESCRIPTION AND JUSTIFICATION:
The T-117 Early Action Area cleanup project consists of 3.3 acres of upland and 1.4 acres of
submerged land and shoreline located on Dallas Avenue in South Park. This is the same area that
was approved for the design of habitat in the May 13, 2008, Commission action. The property is
currently unoccupied in anticipation of the cleanup.
The northern boundary of Site 25 is contiguous with portions of the T-117 habitat project at around
River Mile 3.8 on the west shoreline of the LDW, adjacent to the Boeing Research Facility Campus.
Adding Site 25 to the T-117 project would not only yield significantly more credit per unit of area, it
would also minimize construction related impacts by concentrating work in one location.
If the T-117 habitat site is expanded to include Site 25, the Port will need to repeat the procurement
process for the design and permitting support work. Staff is currently evaluating the option of using
in-house resources to perform design and permitting work, in conjunction with specialized consultant
support using existing IDIQ contracts, and possibly an interlocal agreement with King County. King
County could provide technical support associated with river dynamics, hydraulics, shoreline stability
and general design support. There is value in having a partnership with King County for this NRD
habitat project. The Port is committed to supporting the Watershed Resource Inventory Area 9
(WRIA 9) process which is staffed by King County. In addition the County has recently constructed a
very successful habitat similar to T-117 located immediately upriver. Involving King County in this
project will help validate our project concepts and inspire confidence with the Trustees as well as
further our WRIA 9 participation. If an interlocal agreement with King County is to be pursued,
staff will come back to Commission with a request for authorization.
The purpose of this project is to complete the design and permitting for habitat construction. Staff
will come back to Commission to request authorization to construct the designed habitat when a
mechanism is in place whereby the Port will be compensated, either financially or as an offset for our
liability, for the natural resource value of the habitat construction.
COMMISSION AGENDA
Tay Yoshitani, Chief Executive Officer
May 27, 2011
Page 4 of 6
PROJECT SCOPE OF WORK AND SCHEDULE:
This project includes 100% design and permitting for habitat construction at LDRHRP Sites 25
and 23 (T-117).
The design criteria and permits will meet state, local, and federal construction permit
requirements, and construction requirements for a site located within a federal Superfund site.
In May 2008, when Commission approved the funding for design and permitting, staff estimated
this effort would take approximately 6 months to design and approximately 16 months to permit.
Project permits, construction documents and estimates are scheduled for completion in March
2014.
Staff will return to Commission at a later date with a request for construction funding.
STRATEGIC OBJECTIVES:
This project supports the Port’s strategies to “Ensure Airport and Seaport Vitality” and “Exhibit
Environmental Stewardship through our Actions.”
Habitat restoration in the Duwamish corridor is viewed as a key component of salmon recovery
efforts. T-117 is located in the transitional zone where juvenile Chinook, chum, and other
salmonids transition from freshwater to saltwater, making this a valuable area to increase habitat.
Adding Site 25 to the existing authorization provides the opportunity to create a larger and more
diverse habitat complex.
The local community has expressed a preference for habitat creation at T-117.
BUSINESS PLAN OBJECTIVES:
Develop a habitat project design that provides more habitat value at lower cost per unit of area.
Possible cost savings if habitat can be constructed at the same time as or closely behind the
cleanup.
Refine competencies needed to capitalize on emerging restoration and ecological credit markets.
FINANCIAL IMPLICATIONS:
Budget/Authorization Summary
Funds spent through 04/30/2011
$281,828
Current request for authorization
$3,021,000
Estimated Costs, including this request
3,302,000
Cost Estimate
The actual cost for the expanded design will vary depending on the amount, timing and complexity of
the comments and input from state, federal and local regulatory agencies, resource management
agencies, the tribes, restoration experts and public input. However, based on engineering estimates,
the cost of this design work is approximately $3.021 million.
COMMISSION AGENDA
Tay Yoshitani, Chief Executive Officer
May 27, 2011
Page 5 of 6
Source of Funds
The cost to implement the expanded T-117 habitat design was included in this Commission’s 2010
Environmental Remediation Liability (ERL) spending authorization, approved on December 7, 2010,
for 2011 costs. The five-year forecast (April 2011 through June 2015) included an estimated cost of
$1.5 million. Additional funds required, an estimated $1.5 million, are for incremental design costs.
Any additional costs that might be required as the project moves forward will be recorded as a
liability and a non-operating expense in accordance with Port Policy AC-9. These amounts will be
reported annually to the Commission via routine environmental remediation liability reports and
spending authorization requests.
The primary source of funds to pay the costs for design of the habitat project will be settlement funds
the Port received in the July 30, 2008, settlement agreement with the City, King County and the
Malarkey Parties.
Financial Analysis Summary
CIP Category
Not applicable
Project Type
Environmental Habitat
Risk adjusted Discount rate
Not applicable
Key risk factors
Increased costs of habitat construction due to uncoordinated
remediation and restoration actions
Negotiation of an overall LDW settlement for NRD, without
detailed restoration plans and value assessments for the
expanded Terminal 117 site, will be less predictable, less
timely, and subject to mistaken cost/resource assumptions.
NRD settlement negotiations are pending. The value that the
expanded T-117 habitat will have as a component of that
settlement is not known at this time.
There is some risk that no mechanism will be developed to
enable compensation for the habitat, and that the Port will
decide not to construct the habitat.
Delaying construction of habitat will marginally increase
NRD liability for the Port.
Project cost for analysis
$3,302,000
Business Unit (BU)
Terminal 117
Effect on business
performance
Estimated cost and offsetting settlement money have previously
been factored into Seaport’s Environmental Remediation
Liability Expense.
The additional costs that may be required will be recorded as a
liability and a non-operating expense in accordance with Port
Policy AC-9.
IRR/NPV
Not applicable
COMMISSION AGENDA
Tay Yoshitani, Chief Executive Officer
May 27, 2011
Page 6 of 6
SUSTAINABILITY AND LIFE CYCLE COSTS:
Language incorporated in the specifications will encourage reuse of any excess soil to the extent
practical.
The design team will make every effort to design the site so that the habitat is self-sustaining to
the extent practical.
The design team will employ NRD guiding principles and triple bottom line objectives to balance
social, environmental and economic benefits and costs.
ALTERNATIVES CONSIDERED AND THEIR IMPLICATIONS:
Alternative 1 - No Action. Stop design and permitting work on a habitat site on T-117 proper until
a mechanism is in place for the Port to be compensated financially or as liability offset for the
value of the habitat. This option is the safest course, but the Port loses the present opportunity to
efficiently create and integrate habitat at T-117 in conjunction with the T-117 EAA cleanup.
Delaying the design until after the mechanism is in place will delay habitat construction for at
least a year or more (while the project is designed and permitted) which will mean that the project
likely could not be implemented immediately following remediation of the T-117 EAA.
Alternative 1 is not recommended.
Alternative 2 – Continue to design and permit a habitat site on T-117 proper but do not expand
boundaries to include Site 25. Alternative 2 is not recommended.
Alternative 3 – Perform the design and permitting for the habitat site at T-117 and expand the
boundaries to include Site 25. Adding Site 25 to the T-117 project would yield more credits per
unit of area and minimize construction related impacts. This is the recommended alternative.
OTHER DOCUMENTS ASSOCIATED WITH THIS REQUEST:
Site map of T-117 potential restoration area.
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS:
On May 13, 2008, Commission approved entering into a MOA with the Trustees for crediting
Habitat Restoration Projects in and near the LDW relating to future Settlement of Natural
Resource Damages claims; for execution of a professional services agreement for environmental
review and application of permit authorizations; and to prepare plans and specifications for design
and permitting of a fish and wildlife habitat restoration project at T-117 under the MOA, for a
total authorized expenditure of $210,000.
On October 27, 2008, Commission approved entering into a Settlement Agreement with the
Malarkey Parties, the Duwamish Parties, the City of Seattle and King County regarding T-117
Site and Lower Duwamish Site Cleanup Costs, and Natural Resource Damage Liability.
On July 7, 2009, Commission adopted the Lower Duwamish River Habitat Restoration Plan, an
inventory of Port of Seattle Properties.
On May 24, 2011, the Commission approved execution of a Settlement Agreement and Order on
Consent for Removal Action Implementation at Terminal 117.
