The city of Portland is being sued over its plan to use up to $12 million from a surcharge on customers’ sewer bills to help pay to plan the Portland Harbor Superfund clean up.

It’s the second lawsuit challenging the use of funds collected by the city’s sewer utility, the Bureau of Environmental Services, to pay for the city’s share of the Superfund work.

High-profile lawyer John DiLorenzo and his clients contend that despite rulings in a previous lawsuit, the city has continued to use restricted sewer money as a piggybank for projects that should be paid for by unrestricted tax dollars in the city’s general funds.

“They’re using the sewer fund as a bank,” DiLorenzo said. 

City leaders and environmentalists contend that the sewer utility’s spending on the Portland Harbor project was clearly upheld by a judge in 2017 – and they contend that the new lawsuit is the latest in a long series of tactics to delay the federally-mandated clean-up of the river.

“We’re operating squarely within the ruling that the court has already given,” said Commissioner Nick Fish, who oversees the Bureau of Environmental Services. “Since this lawsuit essentially raises the same issues, we believe it’s frivolous.”

The clean-up is expected to take up to 13 years and cost approximately $1 billion, and the city is one among many parties legally liable for the pollution.

At issue in both lawsuits is language in the city’s charter that restricts the spending of the city’s utility funds to projects that are reasonably related to water and sewer services.

The plaintiffs in the latest suit are Floy Jones, a citizen activist, and Kent Craford, a former lobbyist for industrial water users – the unlikely team behind a 2014 measure that would have removed the city’s water and utility bureaus from the city council’s control. Both were involved in the previous lawsuit over utility misspending.

The city settled that case in 2017, agreeing to transfer $7 million from its general fund back to the water and sewer bureaus and to pay $3 million for DiLorenzo’s attorney fees.

Craford said the plaintiffs are now seeking an injunction to stop the city from transferring $6 million this year, and up to $12 million total, into a trust fund that other polluters can use to reimburse the cost of designing the clean-up plans.

“We believe that this is an expenditure that does not benefit the city as a whole, much less ratepayers, but rather is for the benefit of independent third parties,” he said.

Fish said Craford is mischaracterizing the purpose of the trust fund.

He said the trust fund is an effort to pool resources to encourage polluters to meet a critical EPA deadline and complete design work by the end of the year – but it won’t change how much each party ultimately spends cleaning up the river.

According to Fish, the utilities will receive credit from the EPA for the money they’re putting into the trust fund, in effect reducing the amount they will owe toward the clean-up bill later.

“It directly relates to the utility services and their potential liability,” he said. 

The lawsuit also asks a judge to force the city to determine whether ratepayers should be reimbursed for the money the city has spent to date toward the Superfund project – including $50.2 million that was at issue in the previous lawsuit.

DiLorenzo said even if the trust fund is a good way to limit the city’s legal liability in the $1 billion overall clean-up process, the cost should be covered by the city’s general fund, not solely the sewer fund.

“Maybe it’s a good strategy for the city as a whole, but why is it that only the ratepayers are paying for it?” he said.

In the 2017 lawsuit, the city contended that most of the legal liability for pollution in the Portland Harbor Superfund site comes from wastewater pipes and drains that belong to BES and contributed to the historic pollution of the river.

DiLorenzo argued that properties owned by other city bureaus, including the Fire Bureau, also contributed to the contamination.

Judge Steven Bushong ruled in that case that it was reasonable for the city to use the sewer fund to pay for most of its upfront costs related to the Superfund litigation and clean-up.

However, he noted that the city would need to reallocate the costs and reimburse ratepayers if and when the EPA found other bureaus had also been liable for polluting the site, and he left the door open to a future legal challenge.

According to DiLorenzo, the city has made no progress allocating responsibility to other bureaus, even though the EPA has released a final plan for the clean-up, known as a Record of Decision. 

“They assured the court that there would ultimately be a reallocation,” Di Lorenzo said.

The city attorneys, meanwhile, have told DiLorenzo that the city has established a special Portland Harbor Superfund Reserve Fund. The mayor has directed other bureaus to prepare to contribute to in future budget cycles.

“The city will ensure that funding for Portland Harbor expenditures will be from the General Fund as well as ratepayer funds,” wrote city attorney Karen Moynahan.

Moynahan said the city can’t reallocate its Superfund expenses yet because the parties involved in the clean-up and the EPA have yet to decide how much the city – and each of the other responsible parties – owe for their share of the pollution.

The lawsuit comes as the city and other parties deemed responsible for the pollution, including powerful corporations such as Exxon and Greenbriar, are in private negotiations to try to settle with the EPA over how much each will pay toward the $1 billion price tag.

Environmentalists questioned the timing of the lawsuit.

Bob Sallinger, conservation director for the Portland Audubon Society and a longtime advocate of cleaning up the river, characterized the lawsuit as a tactic meant to stall progress.

“I think there are a lot of polluters who would cheer. There are a lot of polluters doing everything possible to disrupt this process,” he said

Salinger questioned who is paying for lawsuit. 

DiLorenzo said his firm, Davis Wright Tremaine, represents “one or two” of the potentially responsible parties involved the Superfund negotiations. He said he has no personal role in that work.

“I’m totally walled off from that stuff,” he said.

DiLorenzo said a nonprofit run by Craford and Jones, Citizens for Water Accountability, Trust and Reform, is providing seed funding using attorneys’ fees they won in the previous lawsuit.

Jones and Craford would not disclose their nonprofit’s donors and said they were uncertain whether they included any of the corporations that are considered potentially liable parties in the Portland Harbor Clean-Up.

Citizens for Water Accountability, Trust and Reform has been listed as inactive and administratively dissolved by the Oregon Secretary of State since December 2016. 

OPB informed DiLorenzo of the nonprofit’s lapsed status. He said it was due to the group forgetting to pay their annual registration fees to the state. By the end of the day Monday, Craford and Jones’ nonprofit was once again in good standing.