Lummi Island Quarry In Financial Collapse

Meredith Moench is president of the Lummi Island Conservancy. For updates and additional information go to www.lummiislandquarry.com

Part 12

On June 11, 2013, Lummi Rock LLC entered into receivership in Whatcom County Superior court. Three months previous, their operating partner Aggregates West, Inc. had also entered into receivership in Snohomish County Superior Court (see Whatcom Watch May 2013). Resource Transition Consultants LLC has been approved by the courts as receiver for both companies and has proceeded to take over management of their assets.

Quarry Not Locally Owned

Lummi Rock LLC owns the 113 acre quarry property on Lummi Island and is made up of KVB Holdings (Everett, WA), the Christopherson Family LLC (Bremerton, WA) and Valley View Sand and Gravel (Everson, WA). David Grainger of British Columbia owns Valley View Sand and Gravel and is also president/owner of Aggregates West, Inc. whose owners/shareholders are Canadian according to court documents. The companies are registered in Washington State. Mr. Grainger has been serving as managing partner for Lummi Rock LLC.

What Happened?

In the Fall of 2012, Lummi Rock defaulted on a $3,500,000 loan from Union Bank. Aggregates West had guaranteed the loan. As a result of the default, Bank of the Pacific refused to renew Aggregates West’s credit facilities. On November 13, 2012, Union Bank sued Aggregates West, Lummi Rock, and all of the individual company officers and their wives in Kitsap County Superior Court. Aggregates West entered into receivership in March 2013.

Second Law Suit

Lummi Rock LLC is also being sued for breach of contract in Clark County Superior Court by Ballard Diving and Salvage, Inc. Contracted in March 2012 to remove a sunken barge from the quarry’s shoreline, the salvage company had not been paid.

Oil Spills

The Washington State Department of Natural Resources notified the quarry operators in 2011 that the sunken barge must be removed from state-owned aquatic bedlands. Removal, however, proved to be more complicated than quarry managers had anticipated.

Ballard divers found not one, but two sunken barges lying next to each other. Despite Lummi Rock’s assurances that no hazardous substances were contained in the barge hulls, oil began leaking out as the contractor began preparing them for removal. The state Department of Ecology became involved when alerted by citizens that a large oil sheen was seen flowing out of Smugglers Cove into Hales Passage. Containment measures and clean-up were ordered.

Aggregates West’s general manager later explained that the two barges had been tied together to create a breakwater at the loading dock. (They can be seen in a 2006 photo included in Ecology’s June 2013 press release at ecy.wa.gov.news/2013.) The hulls were from old ships converted to barges. Hard foam patches saturated with heavy oil were found inside the sections pulled out for salvage.

Contractor Not Paid

At the end of March the first barge had been successfully cut up and removed but two large sections of the second barge remained underwater. The operation had to be suspended for the “fish window” to protect juvenile salmon in the area. Ballard Diving and Salvage invoiced Lummi Rock for $274, 928. Lummi Rock refused to pay them. In April 2013, the Clark County court awarded Ballard Diving and Salvage $322,000 (amount owed plus interest).

State Fines Lummi Rock

Locally owned Coast Construction was hired to finish removing the second barge. Over Labor Day weekend September 2012, the Department of Ecology responded to a report of oil on local residents’ beaches. Investigators found pure diesel fuel emerging from the site of the second sunken barge. Following an investigation of several months, the Department of Ecology has charged Lummi Rock a total of $17,000 in fines, damage to resources, and reimbursement for clean-up. A 300-gallon fuel tank was discovered onboard one of the sections of the second barge after it was pulled out and being prepared for scrapping.

Unpermitted Expansion

James Bride of Everett, WA purchased the Lummi Island quarry property from a local Lummi Island family in the early 1990’s. In 2005, his son Kyle and the Christopherson brothers of Bremerton partnered with Canadian David Grainger to form Lummi Rock LLC. Under Mr. Grainger’s management, facilities and production were expanded. A new mining service road was constructed, rock crushing capacity was increased, and a new pier and loading facility were constructed on the shoreline. The expanded facilities could crush up to 800 tons of rock per hour and the quarry began operating six days a week, Monday through Saturday, up to 11 hours per day.

Crushed gravel and rock were barged off island using the new more efficient pier and conveyor loading facility. According to marine traffic records, over 80 per cent of the barges headed south to Skagit, Snohomish and King county destinations. A small proportion was barged to the C-Street yard in Bellingham.

In December 2010, Lummi Rock submitted an application to Whatcom County Planning requesting approval for expansion of mining into an additional 27.5 acres. In six years, quarry operators had taken out nearly as much rock as had the previous operators in 40 years.

Things Begin to Unravel

Beginning in 2007, a series of investigations revealed that the rapid expansion of quarry production had taken place illegally:

In August 2007, The Department of Ecology and Northwest Clean Air Agency make their first inspection of the quarry site and note that operators are in violation of Ecology’s stormwater permit, that surface water is being withdrawn from local streams without a water right permit, and that the rock crushers need permitting.

In April 2010, a routine Northwest Clean Air Agency inspection reveals unpermitted expansion of the crushing plant and excessive diesel emissions, leading to a formal violation and fine.

In December 2010, Whatcom County Planning investigates a citizen complaint and finds that quarry operators have excavated beyond their permitted boundaries and have constructed a new mining service road without a permit.

In March 2011, additional violations of the state’s stormwater permit are cited by Ecology. Operators continue to withdraw water from local streams without a water right permit.

In November 2011, Whatcom County Planning determines that the new pier/loading facility and an accessory moorage were constructed without the required permits in violation of the Shoreline Management Program. Violations and fines are issued and an engineered stormwater plan to protect the marine environment is ordered.

The U.S. Army Corps of Engineers determines that the pier construction is in violation of the federal Clean Water Act.

The state Department of Natural Resources determines that unauthorized use and occupation of state aquatic lands has taken place in violation of the quarry’s lease.

Stop Work Orders Issued

• In January 2012, on the unpermitted mining service road.

• In June 2012, are issued on the pier and accessory moorage.

• In July 2012, additional fines are issued for continued use of the pier and moorage in violation of the Stop Work Orders.

• In February 2013, an after hours permit violation is issued for quarry operations taking place at night.

Hearing Examiner Upholds Orders

The three Stop Work Orders remain in effect following a February 2013 appeal before the Whatcom County Hearing Examiner. Threatening to shut them down, the exasperated hearing examiner scolded, “This is an organization totally out of control. They do whatever they want whenever they want…all without permits.”

What Next?

Spread out over four counties and given the intertwined financial dealings between the Lummi Rock and Aggregates West parties, it is difficult to say what the final outcome of this receivership will be or how long it may take. The actual quarry property has neared the end of its currently permitted 20 acres of mining resource. Without an expanded mining approval, mining operations will cease and the property will remain in forestry.

Biologically Sensitive

The entire 113 acre property is in a biologically sensitive area within a state-designated biodiversity corridor. It is adjacent to a Pacific flyway and has mapped forage fish habitat on the shoreline. Federally listed threatened salmon species are in the area as well as local priority species and habitats. The shoreline where quarry operations take place includes federally protected salmon habitat, and the Lummi Nation has stated that quarry operations interfere with treaty fishing rights. In order to proceed with review of pending permit and expansion applications, Whatcom County Planning has determined that an Environmental Impact Statement must be conducted. Further action has been suspended during the receivership process.

Conservancy Opposes Continued Mining

The Lummi Island Conservancy has actively led the opposition against expansion of mining within this biologically sensitive area. A large portion of the southern half of Lummi Island is currently in conservation status. A more appropriate use of the quarry property would be for priority habitat conservation and preservation/restoration of the shoreline forage fish habitat in support of the marine fishery resource, salmon restoration and regional Puget Sound restoration efforts.