EVERETT — Over the summer, the state Department of Ecology pulled $87 million in current and future grant funds from the Port of Everett’s ongoing cleanup of a former timber site at the waterfront.

This comes as the port prepares to go to trial with Weyerhaeuser in November after the timber company pulled out of its cost-sharing agreement for the project eight years ago. Without their matching funds, port CEO Lisa Lefeber said Ecology pulled funding necessary for the cleanup’s next steps.

“I’m hoping that they will see the impact that this could have,” Lefeber said. “This is going to be the state’s largest in water cleanup.”

The Mill A site, located at 3500 Terminal Ave., was the home to Weyerhaeuser’s sawmill and pulp mill operations in the 1900s. Waste materials from decades of its industrial lumber activities contributed to pollution at the site, according to the state’s Department of Ecology website.

Samples from the site’s marine sediments and upland soil showed a large amount of wood waste and chemical contaminants, Ecology’s website said.

In 1983, the Port of Everett bought the site and, up until the mid-2000s, used the facility for log handling and storage before transitioning to container cargo handling.

At the 2026 port report, Lefeber said 50,000 truckloads of contaminated material were left at the site, leaving the port with around $250 million in cleanup costs.

A Weyerhaeuser spokesperson said in an Email Friday that the company recognizes its responsibility as the former mill owner and is committed to contributing its fair share to the cleanup.

”We have worked together with the Port and Washington Department of Ecology for several years and will continue to support this work consistent with the statewide environmental remediation program under the Model Toxics Control Act (MTCA),” The spokesperson said. “However, the Port’s lawsuit seeks to put all of that financial burden on Weyerhaeuser, with the Port avoiding any future payment obligations and obtaining six acres of new, remediated waterfront property at its South Terminal.”

The port, Weyerhaeuser and the Washington Department of Natural Resources entered an Agreed Order with Ecology in 2012 that outlines Mill A’s cleanup, according to Ecology’s timeline.

When the port entered the agreed order, it also entered a cooperation agreement with Weyerhaeuser, Lefeber said on Oct. 20. But she said Weyerhaeuser unilaterally canceled the parties’ cost-sharing agreement in 2018, leaving the port responsible for advancing through the Agreed Order with no matching funds.

The Port is set to go to trial in Nov. 9 to recoup costs incurred in recent years and request a declaratory judgment making Weyerhaeuser liable for its share of future costs, according to court documents.

A change in the review process

It was in a 15-minute call in June that Lefeber said she learned that Ecology would be rescinding previously granted funds and denying the port request for the next biennium, altogether totaling $87 million.

“Practically, what that did is it essentially killed our ability to move forward with the project,” she said.

On June 26, Ecology wrote to the port stating that high demand for cleanup funds and limited resources led the department to change its review process for the 2027-29 biennium.

The new process, which accounts for cleanup and financial progress, completed design percentage and matching funds status, means the port’s 2027-29 application requesting $55 million will be denied and current 2023-25 funds reduced, the letter said.

Lefeber said nothing had changed on the port’s side prior to this decision.

“We haven’t had matching funds since we started the extended grant agreement process because Weyerhaeuser had unilaterally canceled the cooperation agreement,” Lefeber said.

The port started the 2025-27 period with $57,697,337 from Oversight Remedial Action Grant funding, including more than $2 million remaining from an $8.6 million grant-and-loan combination.

This also includes a funding agreement from May 2023, which granted the port $35 million, that needs a match, the letter said.

To access the $35 million, Ecology wrote that the Port has to spend down or close the previous grant-and-loan agreement, since the department does not keep two active funding agreements open at once due to audit risks, the letter said.

“Given the Port’s spending to date, Ecology does not expect this will occur before the current June 30, 2027 closure date,” the letter said.

Ecology ultimately said it will rescind $32 million of the 2023 funds, leaving the port with the remaining $3 million to support the engineering design work. If the June 30, 2027 deadline is not met, the remaining funding will lapse.

“Ecology’s decision comes at a time when the demand for cleanup funding statewide far exceeds funds available,” the letter said. “In a time of limited resources, Ecology must prioritize cleanup projects that are ready to proceed.”

Withdrawing funding would put the entire cleanup at risk, the port wrote in its response. While waiting for future funding cycles, permits could expire and costs could increase.

“Without these funds, all of this work is essentially for naught,” Lefeber told The Daily Herald. “We’ve got samples that are going to expire in February, and Ecology essentially pulled the rug out from under us.”

When Weyerhaeuser learned of Ecology’s decision, the company sent a letter stating it would provide some matching funds. The company offered to immediately pay $4,734,372 for past unreimbursed remedial costs and committed up to $25 million toward future remedial costs.

It was a gesture that Ecology said was “highly relevant to our consideration of the Port’s requests,” in an Oct. 22 letter.

Despite the offered match, Lefeber said the port doesn’t see a mechanism to access it due to the impending litigation.

Without state funds, the port is running out of options.

“There’s only one funding source available for state cleanups, and that is the Model Toxics Control Act through Ecology,” Lefeber said.

Where to go from here

In response to a request for comment, Department of Ecology spokesperson Cheryl Ann Bishop referred to the October letter.

“Ecology has supported this project for many years – the Port of Everett currently has $25 million available from state cleanup funds,” she said in an email Tuesday to The Daily Herald. “Additional funding will be prioritized for this project when the Port is ready to begin construction.”

The October letter followed up on an August meeting, in particular the port’s request for $20 million of the awarded grant funds, not yet under agreement, to be approved as a loan instead of a grant for the 2027-29 biennium.

Based on the Weyerhaeuser commitment, the port has two options to access the $20 million, Ecology wrote.

Option one is a standard oversight grant, which is achievable if the Port uses Weyerhaeuser’s contributions as matching funds and the cleanup project shows substantive progress.

Option two would allow the Port access to the funds as a loan, if the Weyerhaeuser funds can lawfully be applied to repayment. The Port would need to demonstrate both financial need for the loan and an ability to repay it, with the possibility of a third-party financial review as support, the letter said.

Ecology’s letter said that the port already has access to state funds, some of which, the department said, is yet to be used.

“We believe that this funding is sufficient to sustain the planned cleanup work ahead, which includes completing the pre-remedial design investigation, preparing the Engineering Design Report, finalizing a Consent Decree with Ecology, and obtaining required permits, all necessary before in-water construction can begin,” the letter said.

Ecology wrote that its decision allowed the agency to “request funding for 31 shovel-ready projects that can begin spending funds next biennium, including 14 cleanup projects that have never before received cleanup funds.”

If the previously provided funding was used and progress made, the port would have top priority for a 2029-31 Remedial Action Grant, Ecology wrote.

“This cleanup project is gonna have huge operational impact on the port since it’s gonna last for several years,” Lefeber said. “So we need to have the financial certainty from the state and Weyerhaeuser before we move forward with the cleanup.”

The bench trial between the port and Weyerhaeuser is set to begin Nov. 9.

Jenna Millikan: 425-339-3035; jenna.millikan@heraldnet.com; X: @JennaMillikan