Backers of Failed Biofuels Project Behind Proposed Washington Refinery

– by Tony Schick & Conrad Wilson, February 2, 2016, OPB

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Photo: Columbia Riverkeeper

The state inspector thought his visit to Odessa, Washington, would be routine: a knock on the door, a chat with the operators, a look around the corrugated metal warehouse where they ran a biodiesel plant.

But when Jerry French arrived at the TransMessis Columbia Plateau facility in eastern Washington this past March, the door was locked. It seemed abandoned, but he could see chemical drums inside through the windows.

It just didn’t look right, he thought.

After getting the door unlocked, French discovered the mess.

He saw sulfuric acid leaking from crusted valves. He found chemicals stored beside each other in corroded containers that could catch fire or explode if they mixed. Storage tanks holding thousands of gallons of methanol and other dangerous chemicals were left outside unsecured.

French, a longtime inspector with the Washington Department of Ecology, knew these were red flags. The site was a threat to human health and the environment and needed to be cleaned up. He alerted the U.S. Environmental Protection Agency later that day.

He sent an email with 18 different bullet points, each detailing a potentially dangerous situation at the abandoned plant.

“Serious issues with chemical waste management were observed inside the facility,” he wrote.

TransMessis acquired the Odessa plant in late 2013 with plans to crush canola seed and produce an annual 10 million gallons of biodiesel. It operated for less than a year. After a crash in the biofuels market, TransMessis fired its employees and shut down operations, never telling state regulators. The ensuing cleanup has cost $400,000 so far, paid for through the EPA’s superfund program.2

Now, the backers of that failed biofuels project are proposing a $1.25 billion refinery and propane terminal at the Port of Longview on the Washington side of the lower Columbia River.

Waterside Energy, operated by Lou Soumas, Damon Pistulka and Chris Efird, announced the proposal in May. It calls for a refinery capable of processing 30,000 barrels of oil and 15,000 barrels of biofuel each day. Pistulka served as CEO of TransMessis, which was backed by both Soumas and Efird.3

Their initial proposal for Longview has since expanded to include a separate 75,000-barrel-per-day propane and butane terminal. Waterside says the project would generate 700 construction jobs and 180 full-time jobs while capitalizing on the West Coast demand for cleaner-burning fuels.

Details of their biofuels project in Odessa can be found in documents the Columbia Riverkeeper, an opponent of the plan, sent in January to commissioners at the Port of Longview. Along with the $400,000 environmental cleanup, the records show more than $1.6 million in unpaid bills and taxes from TransMessis.4

Environmental groups are worried about the company’s ability to handle a larger, more complex facility with more environmental risk than its last venture.

“To have the kind of track record that these proponents have of unpaid debts, major cleanup liabilities, public expenditures, certainly creates a lot of reason for doubt,” said Ross Macfarlane, a senior adviser at Climate Solutions, a Seattle-based nonprofit that promotes clean energy.

Macfarlane talked with Waterside about its refinery plans last year at the suggestion of the Washington Department of Commerce. He has since come to oppose the project.

“The overall circumstances of this project raise a lot of red flags,” Macfarlane said.

Company disputes claims about chemical waste
TransMessis leaders describe the outcome in Odessa as the consequence of a market crash, not the result of mismanagement.

Soumas, the project owner for the Longview proposal whose company co-owned TransMessis, said in a phone interview Friday he had not seen the specific documents released by Columbia Riverkeeper.

“During the very brief time the group I was involved with operated that facility, which was about five months, they cleaned up a massive amount of problems that were at the facility from the seven years prior to our being there and left that facility in much better shape than when we got there,” Soumas said.

Soumas made clear he and the other refinery proponents did not physically operate the TransMessis plant but were involved in its parent company.

“Our team was not at that facility after July of 2014, and the cleanup was a result of people who were in the plant after us, not during our time there,” Soumas said.

Damon Pistulka, the CEO of TransMessis now listed on the Waterside Energy proposal, said the chemicals left behind were owned by a creditor and could not be removed, but were stored without spills. Pistulka said TransMessis offered to help sell the chemicals. He said TransMessis deserves credit for improving the condition of the property.5

Their version of events contradicts much of what the Department of Ecology and the Odessa plant’s property owner have documented.

French, the Department of Ecology inspector, said he also observed the plant before TransMessis took it over, and that it was unlikely previous operators left a significant environmental mess.

Stacey Rasmussen, manager of the Odessa Public Development Authority, which owns the property, said the plant had no other uses between the time TransMessis vacated it and the state inspected it. She said the chemicals found in the facility were items from when TransMessis was operating. Rasmussen said TransMessis owes more than $200,000 in back rent, an amount the company disputes.

In October 2014 the Washington Department of Revenue issued a warrant to TransMessis for $6,544 in unpaid taxes, which TransMessis still has yet to pay.

In April, the Wolfkill Feed & Fertilizer Corporation, based in Monroe, Washington, filed a lawsuit over $1.6 million the company claims TransMessis owes it for canola seed. Wolfkill also alleged TransMessis submitted a false credit report. Wolfkill did not respond to requests for comment.

Pistulka did not dispute the money owed in the lawsuit. He said TransMessis has made many unsuccessful attempts to reach a settlement agreement with Wolfkill over the balance owed. He did dispute the allegation of a false credit report.

“Wolfkill managers toured the facility prior to startup and were fully aware that the credit report was based on revenue projections for the facility,” Pistulka said.

Port, state still to weigh proposal
Details of the abrupt plant closure and the ensuing lawsuit, back taxes and environmental cleanup issues did not surface until several months after state and local officials entered preliminary discussions with Waterside in 2014.

Miles Johnson, attorney for the Columbia Riverkeeper, questioned why the economic and environmental fallout from the Waterside Energy backers’ previous venture was not disclosed sooner.

“I think a good question is why the people proposing the facility in Longview didn’t bring this up and explain what happened there to the port and to the state of Washington,” he said. “And also, why the staff at the port and within the state of Washington when they were making their initial contacts, why all this information didn’t come out.”
In June, OPB and EarthFix reported Governor Jay Inslee’s administration had been in discussions with Soumas for months before the project was announced. Soumas wrote in emails to the Port of Longview that Inslee’s advisors were “anxious to tie us in with their just issued draft Clean Fuels Standard process.” He also told the port the governor’s staff members asked when the refinery could be announced and that “they hope for a positive update on concrete progress on the project.”

Inslee’s office has characterized top state officials’ dealings with Soumas as “due diligence.”

Under the state’s permitting process, overseen by the Energy Facility Site Evaluation Council, the governor has the final say in whether projects win state approval. As such, the governor and his administration say they have not taken a position on the proposal.

The project presents a mixed bag for an administration pushing clean energy: Its biofuels component aligns with Inlsee’s environmental and economic policies, yet the project also increases the state’s capacity to refine crude petroleum and calls for three more oil trains per week along the Columbia River.

A review of emails released in June from Inslee’s office, the state Department of Ecology and the state Department of Commerce concerning top officials’ dealings with Soumas and his company found no mention of the environmental cleanup or the many unpaid bills from the Odessa project. Much of the state’s documented interactions with Soumas predate the facility’s environmental inspection and the lawsuit from Wolfkill Feed & Fertilizer.6

Inslee administration spokeswoman Jaime Smith staff in the administration “were aware of the federal clean up issues but don’t recall details.”

“No proposal has yet been submitted to the state from the company. If they submit a proposal, I’m sure during the environmental review process – likely led by [the Energy Facility Site Evaluation Council] – the accompanying public discourse will ensure a thorough vetting of the company’s record,” (sic?) Smith said in an email.

Months after the Odessa plant was abandoned, Soumas described it as an active project in proposals sent to state and local officials.7

Approval for the project also depends on commissioners at the Port of Longview, who recommended in May that port staff work with Waterside to vet the refining project.

A review of emails released in June spanning the port’s dealings with Waterside found little discussion of the company backers’ previous biofuels project, but notes and research packets compiled by port staff indicate they were aware of the plant’s abrupt closure and unsettled debt.8

Port commissioner Bob Bagaason said the new documents released by Columbia Riverkeeper were very informative, and that commissioners and port staff were studying them.

“We’ve received so much information,” Bagaason said when asked if he was previously aware of problems caused by the biofuels plant. “Some of it’s repetitive, some of it’s new. That’s where I’m at.”

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