Hopes that construction on a rail reload center could start soon evaporated recently after key permits from the federal government and the state were declined. (The Enterprise/Kezia Setyawan)

NYSSA - Malheur County’s economic development team falsely represented to state officials for months that they had all the key permits needed to launch construction of the Treasure Valley Reload Center, according to state and county records.

The permits weren’t just a matter of paperwork.

They helped lay claim to $25 million being held by the state for construction of the Nyssa rail shipping center.

Relying on assurances from Malheur County, the Oregon Transportation Commission last January gave a green light to letting those millions flow.

“The project sponsors have affirmed that they believe all federal, state and local permits and approvals are essentially complete,” Transportation Department staff wrote in a Jan. 12 briefing report to the transportation commissioners.

But an investigation by the Enterprise established that approvals were nowhere near complete from two critical agencies – the state Department of Environmental Quality and the U.S. Army Corps of Engineers.

And Greg Smith, the county’s economic development director, reported to the state that permit work was “100%” even after the two agencies rejected permits submitted by his team, the records show. The permits were the responsibility of the Malheur County Development Corp., the public company running the Treasure Valley Reload Center project.

The DEQ denied a key permit on March 29. The Corps of Engineers followed suit on April 7.

“Do not commence construction” before obtaining the federal permit, a Corps executive wrote to Smith in notifying him of the denial.

State transportation officials said last week they weren’t told of those denials.

Erik Havig, Transportation Department planning and section manager, said the state relies on information from the development corporation regarding permits.

“ODOT did not reach out to permitting entities to determine if the permits have indeed been obtained,” said Havig.

And the president of the public company building the rail center said he didn’t know of the denials until informed by the Enterprise.

“I thought it was all approved,” said Grant Kitamura, an Ontario onion broker who is president of Malheur County Development Corp. “As far as I was concerned, we are good to go. I know there was an issue with wetlands and I assumed it had been taken care of.”

Smith, a state legislator from Heppner who works for Malheur County under contract, didn’t respond to detailed written questions or telephone messages seeking comment.

The work of getting those permits was contracted out to the La Grande engineering firm of Anderson Perry & Associates.

Brad Baird, company president, insisted in an email to the Enterprise that “no permits have been denied or failed” but acknowledged that his company did resubmit the permits and that as of Friday the federal permit was “incomplete.”

“There is nothing alarming in this process as we routinely do this for dozens of projects every year,” Baird said.

He said he expected the permits would now be ready for the anticipated start of construction in August. Construction had been scheduled for March.

Records show the company charged Malheur County Development nearly $39,234 up to March for a year’s work on the state and federal permits. The work was originally budgeted for $25,000, according to state records. The company separately charged $22,955 for a wetland plan that is central to those permits.

Baird said his company would continue charging Malheur County Development for work related to submitting the permits again.

This wasn’t the first time that Smith had made exaggerated claims to the state about progress on the Nyssa project.

At the same time he was reporting completed work on permits, Smith also told the state that a key deal with Americold to run the shipping center was nearly in hand.

That was one reason the Transportation Commission in January approved letting the Nyssa project start spending construction money.

But the Americold deal said to be 95% done in January still remains a work in progress months later.

As a result, the Transportation Department in April threatened to pull the construction money, telling Smith in a letter that the failure to produce that agreement “has led the department to question MCDC’s previous assertions and assurances.”

Smith and his team now face a June 15 deadline to get Americold signed to a deal that will provide onion shipping services and a flow of money to the county.

But even with that deal in hand, construction can’t start without the two wetland permits. The acreage along Union Pacific Railroad tracks just north of Nyssa includes a network of old irrigation ditches and wetlands. And that requires careful management under state and federal environmental regulations. Wetlands are preserved by law in many circumstances because they act as a filter to clean water, provide erosion control, trap carbon and provide habitat for wildlife, including threatened or endangered species.

On construction projects, wetlands can be filled in one place – and can be mitigated or replaced elsewhere. The Treasure Valley Reload Center project will affect about 1.5 acres of wetland.

To address that, Malheur County Development needs a Section 404 permit from the Corps of Engineers to dump fill material into “the waters of the United States.”

And when anyone is getting that federal permit, they also are required to certify to the state the steps to be taken to protect water quality. The Nyssa project filed for water quality certification on Dec. 29 – just a week before state officials were told that the permit work was done.

In the coming weeks, state and federal officials repeatedly pressed the reload center team for information they need to process the permits.

Jeffery Brittain, a permit project manager for DEQ, wrote Anderson Perry on Feb. 19 asking for more details regarding a number of issues.

Dana Kurtz, senior environmental scientist for Anderson Perry, replied that same day that “we will work to address these.”

Brittain followed up in early March, saying he still didn’t have the information and set a March 15 deadline. He got the engineering details just days ahead of that deadline – but his agency still needed other documents.

DEQ asked for an approved mitigation plan and a final construction blueprint but didn’t get them and on March 29 denied the water quality certification.

Brittain explained in his denial letter to the development corporation that “the assurances we need are that those beneficial uses will be retained on site or elsewhere. And we still need to see that mitigation will cover any potential losses.”

The Oregon Department of State Lands is also reviewing the project for a removal/fill permit.

On a parallel track, the Corps was seeking similar information to finish its review of the federal permit.

In a Feb. 23 letter to Smith, the Corps outlined its needs. According to its records, the agency didn’t hear back. A month later, the Corps asked for a revised mitigation plan.

“Please see the attached memorandum outlining the elements that need to be incorporated into the revised plan. The revised plan should incorporate a watershed approach and must include a hydrology performance standard, established photo plot, a long-term management plan, and title reports for the mitigation site,” wrote Thomas Sentner of the Corps in a March 15 email.

On April 7, the Corps issued its own denial.

Six days later, Baird briefed Kitamura and the rest of the development company board about engineering work. There is no indication in the meeting minutes that he alerted the directors that the two key permits had been turned down.

“Baird said permitting is currently being addressed and will be ready when construction commences,” is how the minutes recorded his remarks.

Two weeks later, Baird again briefed the board but there is no indication he said anything about trouble with permits.

In his email to the Enterprise, Baird explained why he didn’t report the permit denials to the board.

“You are not understanding what you are calling a permit denial. That terms doesn’t mean the permit is denied. It was ‘denied without prejudice,’ which is a procedural process,” he wrote. “The permits are continuing to be processed, and are nearing completion. This process is typical, and is ongoing, and almost done. I reported to the board that the permits were progressing, which is the case and is accurate,” said Baird. But on May 5, Smith signed off on his monthly report to the Transportation Department, still listing “all public body approvals, land use approvals and permits” as 100% complete.

Five days later, Malheur County Development Corp. applied a second time to get the federal permit and its state water quality certification.

On May 13, the Corps asked for more information, setting a deadline of June 11.

News tip? Contact reporter Pat Caldwell at [email protected]

Previous coverage:

WATCHDOG: Nyssa rail project faces jeopardy as state stops funds, seeks overdue agreements

Malheur County board to farm operation: You will stay silent

WATCHDOG: Farmland picked for rail center needs $6 million in soil, gravel, rock and work to make buildable

Malheur County Court approves commitment letter for rail reload center

Nyssa rail center gets two thumbs up as construction start looms

Tracking the Treasure Valley Reload Center: Key data eludes county, stalls rail project

Malheur County needs $15 million for its industrial park. A two-year effort to get it flopped.

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