Defunct Cosmopolis mill fails to hand in emission allowances – again

The owner of a defunct and heavily contaminated pulp mill in Southwest Washington is digging in his heels while the bills keep piling up.

For the second year in a row, Washington’s major polluters turned in their greenhouse gas emission allowances to state regulators this month. They’re required to do so under the 2021 Climate Commitment Act. Over the coming decades, state officials will ratchet down the number of allowances sold to decrease emissions.

And for the second year in a row, each of the state’s top polluters turned in their allowances except one: Cosmo Specialty Fibers.

This business, once the largest employer for Cosmopolis just outside of Aberdeen, represents a growing thorn in the side of state and federal regulators. Its owner, Richard Bassett, already owes Washington’s Department of Ecology millions of dollars and thousands of allowances.

But that’s a fraction of his problems. He’s bleeding money and with regulators on his back to fix a series of hazardous problems, he can’t rustle up the tens of millions he needs to start the place up again.

A year ago, Bassett said he failed to turn in his allowances due to an oversight, one that he promised to correct within a matter of weeks. He didn’t.

Now, the number of allowances he owes is almost doubling while he argues he shouldn’t have to buy any at all while the mill is closed. Instead, he’s appealing his bills and saying state regulators are unfairly targeting his business.

“It’s just persecution,” Bassett said in a text message.

Allowances 101

Washington’s keystone policy to cut greenhouse gas emissions doesn’t work all at once. Rather, the Climate Commitment Act lays out a series of seven, four-year periods. For each period, state officials will reduce the number of allowances it auctions off.

Over this timeline, polluters can either compete for the shrinking number of allowances (the cost of which will likely increase thanks to their growing scarcity), reduce their emissions or both. Money raised from the auctions in which the allowances are sold (well over $3 billion by now) goes toward projects across the state meant to further reduce emissions or adapt to climate change.

Over time, polluters must hand their allowances back to Ecology in bite-sized portions. Think of this as a down payment so state officials can ensure they’re on track.

And so far, everybody’s on track but Cosmo Specialty Fibers.

By the start of this month, Washington’s top polluters handed in a total of nearly 18 million allowances. All that’s missing are 822 allowances from Cosmo, Ecology said in a recent report.

The defunct pulp mill owes a fraction of the allowances most other major polluters do. That’s because it’s not operating and its carbon footprint is relatively small at the moment. When it’s running, the site generates many more emissions and would, in turn, have to submit more allowances.

Most other major polluters owe tens or hundreds of thousands of allowances each year.

Last year, Cosmo failed to turn in 860 allowances. So, state regulators leveled a penalty of 3,440 more allowances (four times the original total). Now, they’ve fined the mill another 3,288 allowances, said Ecology spokesperson Caroline Halter, bringing the total number owed to 8,410.

At the latest auction price of $60.43 per allowances, Bassett would be able to buy all he owes for about $508,216.

Problems piling up

Allowances are only part of Bassett’s worries. State and federal regulators have been after him for years now.

When running, the pulp mill would produce products essential for everyday items like aspirin, phone and computer screens, fabrics and cosmetics. Bassett has big dreams for the place and even imagines using the mill’s byproducts to generate large quantities of electricity for the region.

But the place hasn’t been running since 2022. Its equipment is degrading and leaking acid and other toxic substances, sometimes in residential neighborhoods or into the Chehalis River, state and federal documents show. The full scope of contamination remains unknown, however.

Some hazardous substances have been left unsecured without water, electricity and security, giving rise to the risk of a “potential catastrophic release,” the Environmental Protection Agency’s acting regional administrator wrote in January.

Conditions were so dire that last year EPA officials leveled a type of regulatory order against the mill, which still hangs over the property like a black spot on its record.

Bassett has repeatedly argued against the notion that the site is contaminated. The federal order, he said, has scared away numerous investment deals that might have provided the tens of millions in seed money needed to fix the site up and turn it on again.

Should the mill reopen, Bassett argues, it could inject hundreds of millions of dollars back into the community each year.

Cosmopolis officials have been hearing that for years now, but they’ve had to move on. The mill was once the largest source of tax revenue for the city but once it closed, the money dried up, sending the municipal budget into the red. City Hall has since balanced its ledgers, though just barely.

Many residents say they’d still welcome the mill back with open arms but they can’t hold their breath for it to reopen. A growing contingent is now expressing concerns about the environmental damage left behind by the business.

An EPA spokesperson confirmed earlier this month that the agency is evaluating whether the chemicals housed at the mill threaten human health and the environment. That investigation is expected to take several weeks.

All the while state officials have ramped up their enforcement tactics, too. Over the years they’ve handed out piecemeal fines to the company for dangerous waste violations and breaches for wastewater pollution limits. But this summer they slapped $2.3 million in fines against the company.

The latest penalty breaks down to $677,325 for water quality violations, $499,350 for dangerous waste violations, $423,302 for unreported emissions and unpaid air quality permit fees and $687,992 for cap-and-invest violations.

Bassett has until May 1 to turn in the allowances he owes or he’ll face even more penalties. If these are all left unpaid, state regulators could technically fine him for each day he’s out of compliance or turn the case over to the attorney general’s office to place a type of lien on the property, Halter said.

For now, though, Bassett is going to fight the case.

Appeals

This summer Bassett appealed his $2.3 million in fines. He argues that the mill has taken “proactive steps to mitigate risks, responded in good faith, and in many cases disputes the legal basis or proportionality of the penalties.”

Plus, the penalties were issued while the mill wasn’t running, the appeal says. The state’s actions amount to regulatory overreach and a lack of accommodation for the closed business, the appeal contends.

As for the allowances, Bassett said major polluters are only required to submit allowances if they generate over 100,000 tons of greenhouse gases each year. While the mill’s closed it doesn’t pass that threshold, he said.

While running, the mill would be one of the state’s largest polluters, state officials have said, but even when it’s closed the area still generates emissions.

The state Pollution Control Hearings Board will hear Bassett’s arguments in the coming year.

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