Coos pipeline builder, county hit with fines.

Byline: Winston Ross The Register-Guard

COOS BAY - The state slapped the Coos County natural gas pipeline project with one of the largest penalties ever issued against a private contractor, regulators announced Monday.

The state ordered Florida-based MasTec Inc. to pay $205,000 for polluting streams along the pipeline corridor. It is the highest penalty issued this year by the state Department of Environmental Quality and one of the 10 highest penalties on record. The county was fined $51,000, the fifth-largest penalty issued this year.

"We had a long history of trying to get this project in compliance with the law, and we were unable to do so," said Les Carlough, a senior policy administrator with the DEQ. "There were quite a few violations - and they didn't have to happen if the county and the company had done what the permit and their lawful obligations required them to do."

Both MasTec and the county have appealed the fines. MasTec officials did not return telephone calls made late in the day for comment.

In a written statement, Coos County commissioners said the county did what it could to ensure that MasTec complied with state and federal water quality laws. The response also disputed some of the state's specific allegations.

"We didn't do anything to harm the environment," county attorney Jay Waldron said in an interview.

The $51 million pipeline, funded by state lottery dollars and property tax bonds approved by voters in 1999, runs from Roseburg to Coos Bay, the largest population center in the western United States still without natural gas.

Last year, the state issued an $11,400 fine against MasTec after its crews ruptured several streambeds while attempting to drill beneath them, spilling a thick clay-based substance called bentonite into sensitive fish-spawning habitat. The company also appealed that fine, which is still pending.

The latest penalties stem from MasTec's failure to protect streams from erosion, particularly along the East Fork of the Coquille River where crews buried pipe beneath the Coos Bay Wagon Road.

The county fired MasTec in April after the two sides failed to resolve differences about who was responsible for the project's environmental damage.

The company had worked on the project since last summer, when it was selected after underbidding competitors by $4 million on the $23 million construction portion of the job. Almost immediately, citizen complaints started coming in to state and federal regulators, who issued several verbal and written warnings to the county and MasTec to avoid damaging the area's waterways and protect struggling salmon and steelhead populations.

But that didn't happen, regulators said.

"We work with a lot of people on a daily basis," Carlough said. "In almost all cases, when we explain to people what their legal obligations are, they do what needs to be done. In this case, we didn't get compliance."

In addition to the fines, the county and the company are still battling a half-dozen lawsuits from private landowners and environmental groups - though one of the lawsuits was settled earlier this summer.

The county also expects hefty fines from the U.S. Army Corps of Engineers for federal water quality violations. Corps attorney Misty Latcu said Monday that the county has reached a settlement for those violations, including a fine and an agreement to clean up some of the damage along the pipeline route.

Latcu wouldn't disclose the amount, saying the state Department of Justice must review the settlement and could add more penalties.

Meanwhile, the corps issued a permit last week for the county to complete one of the last pieces of the project - a lateral line to Myrtle Point. Rockford Corp., an Oregon contractor hired after MasTec was fired, is doing the work.

The county has been testing the mainline recently, and "so far, everything has been generally satisfactory," Waldron said.

The state did issue a notice of noncompliance to Rockford for discharging sediment into Tenmile Creek after a hose broke, but the problem has been fixed, so the state won't seek further enforcement, DEQ natural resource specialist Ruben Kretzschmar said.

The county still hopes to meet a completion deadline of Oct. 1 on the pipeline, Waldron said.

Meanwhile, the utility that will operate the pipeline, Northwest Natural, is completing its portion of the distribution system in Coos Bay, including a section of line that will run beneath the bay to the North Spit, an area north of town that business leaders hope to be the future of the county's industrial development.