Now that U.S. Development Group’s Grays Harbor Rail Terminal company has had the chance to “kick the tires” on the Port of Grays Harbor’s Terminal 3 site near Bowerman Field in Hoquiam, it’s ready to negotiate a lease option.
It’s not a lease — not for a while, anyway. U.S. Development will pay between $7,000 and $21,000 at various periods for the right to start an actual lease on the site once it gets all the requisite permits and insurance. It’s working on a plan to store and ship crude oil through the Port.
The company has had permission from the Port to go on the property and study the feasibility of the project. Since the company “has been able go out there and kick the tires and see if it will meet their needs … the grant of the option will give Grays Harbor Rail the right to proceed with its due diligence,” Port attorney Art Blauvelt said at Tuesday’s Port of Grays Harbor meeting.
The option gives U.S. Development security as it moves through the permitting process that it will actually be able to lease the land it’s looking at once it gets to a point where the project is shovel-ready. It will have up to two years to exercise its option on the property.
Port commissioners gave staff the go-ahead Tuesday to begin negotiations, and nothing is finalized yet. The proposal suggests a 20-year lease term with two five-year options for renewal, a separate dock use and rail agreement, a specific plan for dealing with hazardous substances and a requirement the company hold pollution and accident insurance in addition to what’s required by permitting agencies such as the state Department of Ecology or the Coast Guard.
If U.S. Development leases the property, the Port can require that it remove any improvements, such as oil storage tanks, at the end of the lease.
If the company decides not to exercise its option to lease the property, the Port will keep any fees the company paid to keep the option open.
Kevin LaBorne, U.S. Development’s business development manager, said the company will carry general liability insurance with $25 million in coverage for individual incidents and $50 million total.
For pollution insurance, LaBorne said their typical policy at other sites has been $10 million.
“At the appropriate time, we well establish the requisite pollution insurance,” he told commissioners.
Port Commissioner Jack Thompson asked whether the company’s insurance would cover a spill in the estuary if the facility were built.
Blauvelt said anything that occurs on the property relating to the facility’s activities would be covered.
U.S. Development is one of three companies looking at shipping crude through the Port; the others, Westway Terminal Co. and Imperium Renewables, are existing Port tenants hoping to expand shipping operations at Terminal 2 in the heart of Port operations.
U.S. Development’s Grays Harbor Rail Terminal proposal is for Terminal 3 near the Bowerman Field airport in Hoquiam and is expected to be the largest of the operations.
Westway and Imperium are currently in the permitting and environmental review stage.