Template revised April 12, 2018.
COMMISSION
AGENDA MEMORANDUM
Item No.
6g
ACTION ITEM
Date of Meeting
July 24, 2018
DATE: July 6, 2018
TO: Stephen P. Metruck, Executive Director
FROM: Kathy Bahnick, Senior Manager Environmental Programs, Maritime
Brick Spangler, Senior Environmental Program Manager, Maritime
Elizabeth Black, Senior Port Counsel
SUBJECT: Amendment to 1992 Second Amended and Restated Real Estate Purchase and Sale
Agreement with Lockheed Martin regarding Yard II site (Terminal 5)
ACTION REQUESTED
Request Commission authorization for the Executive Director to sign an amendment to the
Port’s 1992 Purchase and Sale Agreement with Lockheed Martin in order to protect the Port
from long-term liability at the Lockheed West Superfund Site near Terminal 5.
EXECUTIVE SUMMARY
In 1992, in anticipation of the Southwest Harbor Redevelopment Project, the Port of Seattle
purchased aquatic and upland property on what is now the north end of Terminal 5 from
Lockheed Martin. The submerged portion of the property is a Superfund cleanup site known as
the Lockheed West Superfund Site (Site). Lockheed Martin is the sole responsible party for the
Site and is performing all of the necessary design and cleanup work.
In 1992, it was anticipated that Lockheed Martin would perform the EPA-required cleanup of
the Site and the Port would construct a large redevelopment of Terminal 5, such that Lockheed
Martin’s long-term liability for the Site would terminate upon completion of the cleanup work.
The then-anticipated redevelopment of submerged lands north of Terminal 5 did not occur, and
EPA did not issue its Record of Decision (ROD) for the Site until 2013.
Lockheed Martin has been working with EPA to design the cleanup, and the Port has actively
participated in reviewing and providing comments on the proposed cleanup design. Cleanup
construction activities are now scheduled to start in August 2018. As part of the EPA-approved
final cleanup design, there is the potential for contamination above selected cleanup levels to
remain on Port-owned submerged property, which was not anticipated in 1992. Because of this
change, and because of the changes to the Port’s 1992 redevelopment plans, the Port and
Lockheed Martin have agreed to amend the indemnity provisions of the Purchase and Sale
Agreement so that Lockheed Martin retains long-term liability for any contamination left
behind on the Site.
COMMISSION AGENDA – Action Item No. 6g Page 2 of 3
Meeting Date: July 24, 2018
Template revised September 22, 2016; format updates October 19, 2016.
Commission authorization for the Executive Director to sign this amendment is required
because the original 1992 Purchase and Sale Agreement required Commission authorization.
ALTERNATIVES AND IMPLICATIONS CONSIDERED
Alternative 1 – Do Not Sign the Amendment
Cost Implications: Potential long-term costs associated with the Site.
Pros:
(1) None.
Cons:
(1) Under the current agreement, Lockheed Martin’s indemnity for the Site is
extinguished if the Port places any “enclosed fill” (as defined in the agreement) on the
property.
(2) Under the current agreement, Lockheed Martin’s indemnity for the Site expires when
the cleanup is complete.
This is not the recommended alternative.
Alternative 2 – Sign the Amendment
Cost Implications: None
Pros:
(1) Under the proposed amendment to the agreement, Lockheed Martin would retain
liability for contamination left on the Site even if the Port places an “enclosed fill” on
the property.
(2) Under the proposed amendment to the agreement, Lockheed Martin retains long-
term liability for contamination left behind as part of the cleanup.
(3) The proposed agreement further enhances the Port’s collaborative working
relationship with Lockheed Martin.
Cons:
(1) None.
This is the recommended alternative.
FINANCIAL IMPLICATIONS
None; the proposed amendment protects the Port from potential costs associated with long-
term liability at the Site.
ATTACHMENTS TO THIS REQUEST
(1) First Amendment to Second Amended and Restated Purchase and Sale Agreement
COMMISSION AGENDA – Action Item No. 6g Page 3 of 3
Meeting Date: July 24, 2018
Template revised September 22, 2016; format updates October 19, 2016.
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS
June 13, 2017 – The Commission authorized the Port to execute a cost-sharing agreement
with Lockheed Martin for the Terminal 5 Pile Removal project, through which Lockheed
Martin agreed to reimburse the Port up to $325,000 for removal of a sheet pile wall that
would be affected by Lockheed Martin’s cleanup work.
September 22, 1992 – The Commission authorized the execution of the Second Amended
and Restated Real Estate Purchase and Sale Agreement with Lockheed Martin.
May 14, 1991 – The Commission authorized the execution of an amendment to the earnest
money agreement with Lockheed Martin and all documents required to close the
agreement.
February 12, 1991 – The Commission authorized the Port to execute an amendment to the
original earnest money agreement that would increase the amount placed in escrow
from $450,000 to $5,000,000.
July 11, 1989 – The Commission authorized the Port to execute an earnest money
agreement with Lockheed Martin for the purchase of their Yard II site; the Port agreed
to place $450,000 into escrow as earnest money.
