Inner BG

Hepner: A cautionary tale unfolds in Whatcom County

Puget Sound Business Journal | March 17, 2020

In Northwest Washington the Cherry Point Industrial Zone is the epicenter of Whatcom County’s economy.

Cherry Point and Whatcom County is a cautionary tale we should all be aware of as local governments engage on energy issues and the use of our industrial lands.

Companies at Cherry Point in Whatcom County support more than 3,000 direct jobs — family-wage jobs that pay an average of $110,000 a year. Around 11 percent of all Whatcom County jobs depend on the operations at Cherry Point Industrial Zone. Cherry Point companies generate around $240 million in local tax revenue every year.

Matthew Hepner is the executive director of the Certified Electrical Workers of Washington.

Families in Whatcom County look to Cherry Point to earn a good living that helps them support their families, put down roots and be part of the community. The economic strength and stability provided by Cherry Point is something to support and cultivate. And in a favorable business and investment environment, the opportunities at Cherry Point can and should continue to grow well into the future.

Unfortunately, changes under consideration by the Whatcom County Council threaten not just to undermine future growth, but to endanger the existing jobs, revenue and output that Cherry Point provides.

The proposed changes by the Whatcom County Council governing expansion, investment and operations at Cherry Point are currently being pushed through the county council. And while thoughtful, periodic review of the policies under which Cherry Point industry operates is worthwhile, both the process and the substance surrounding these proposed changes are poised to inflict harm across Whatcom County and the region.

The root of the problem is the increased use of “Conditional Use Permits” in the revised plan. In a break with the well-established and effective regulatory framework currently in place, the new plan would require Cherry Point refineries to hold off on potential facility expansion and upgrades to wait on deliberation and judicial action and approval.

This is a major break from the permitting processes that typically govern such facilities — and it represents a huge disincentive for companies looking to expand in Whatcom County. The proposed revisions pose an uncertainty in both timing and approval prospects. Consequently, the proposed new regulations will make investment in Whatcom a much harder sell and have a regional ripple effect in the development of such projects.

This concept is inherently flawed and self-defeating. No governing body truly representing its constituency should set out to eliminate good-paying jobs and hundreds of millions in tax revenue.

The technical aspects of the changes are also confusing and complex. The language of the changes uses subjective criteria to determine approval or denial that is far from clear. This is a major problem, and a strong argument in favor of taking more time to understand the full impact of these changes before taking action.

The Whatcom County Planning Commission in its review of the county council’s proposed changes has listened to industry and made a good faith effort to rework the council’s proposed changes. As a result of the Planning Commission review, it’s become apparent that the county council is attempting to re-regulate very complex issues within an industry they don’t understand.

If enacted as written, the proposed changes will significantly erode the business climate in Whatcom County and the region. In seeking to replace a well-functioning, existing framework with an ill-conceived and flawed plan, the county council is sending a bad message to both businesses and would-be investors.

If a business can’t bank on regulatory stability and certainty in a community, they are far less likely to place their bets there.


Matthew Hepner is the executive director of the Certified Electrical Workers of Washington — IBEW.

My Ferndale News: County Council’s Cherry Point Plan is Killing Growth in Whatcom County

Andrew Gamble, a Marine and Safety Operations Advisor to Petrogas as well an Energy Industry Representative on the Whatcom County Business and Commerce Advisory Committee, recently wrote an op-ed for My Ferndale News speaking out against the County Council’s proposed changes for Cherry Point and the devastating impact they’d have on the county.

The changes “would be among the most radical and sweeping regulatory revisions in decades,” Gamble wrote in the piece. “And while the Council may seek to portray their efforts as narrowly targeted and impacting only the refineries at Cherry Point, the fact of the matter is that this proposal’s impact would be felt far beyond one critical sector.”

Gamble also discusses the air of uncertainty for business investment in Whatcom created by their proposed changes and the eight times Council has passed interim moratoriums on new fossil fuel projects at Cherry Point in the last two years.

“My experience working for operators at Cherry Point who have made substantial investments in this community, has taught me that an uncertain regulatory environment causes unintended ripple effects with negative impacts. Take for example, the recent cancellation of a huge renewable diesel project at Cherry Point that, while maybe not a direct result of the proposed Cherry Point amendments, they absolutely add to the general regulatory uncertainty that has permeated Whatcom County over the last few years,” Gamble wrote.

Added Gamble, “The new plan will make it next to impossible for these companies – which employ thousands – to keep up with their competitors outside Whatcom County who don’t have to bear the burden of such radical requirements.

Cherry Point operators would have no reasonable expectation to receive permit approvals of permit applications even for improved environmental technologies that could make operations more efficient or competitively sustainable, and therefore there will be no future investments that lead to more jobs and higher tax revenues.

And against this backdrop, the notion of any new energy companies throwing their hat in Whatcom County’s ring is laughable. The new regulations would also apply to the renewable energy operations present at Cherry Point. They, too, would face rising costs, restricted investment, and non-existent growth and expansion if the revised plan moves forward. Hardly the most effective way to transition to a cleaner energy future.”

Click HERE to read the entire op-ed in My Ferndale News.

Not All Employers are Created Equal

When discussing job creation, it is clear that some jobs are far more beneficial to the general welfare than others.

That’s the hard-nosed economic conclusion of the independent 2019 Cherry Point Economic Impact Study conducted by Western Washington University’s Center for Economic and Business Research. This research updated the 2014 study previously conducted by Western Washington University and the University of Washington.

Commissioned by the Whatcom Business Alliance and released on March 19, 2019 at a WBA breakfast encouraging fact-based public dialogue on community economic policies, especially those affecting the Cherry Point heavy industrial zone in Whatcom County.

Commissioned by the Whatcom Business Alliance, the study focuses on the economic impacts of 8 companies operating within the Cherry Point zone, which includes the Phillips 66 and BP oil refineries, Alcoa’s Intalco Works aluminum smelter, and several smaller companies, and will serve as a useful reference for other communities examining the merits of heavy industry on their economy. While there are over 7,000 employers in Whatcom County, those 8 Cherry Point businesses and their at least 3,320 employees have a disproportionate affect on the County’s economy, because of the significant “multiplier effects” of business purchases and the spending of high-wage employees.

  • The median home price in Whatcom County was $345,900 in 2017 and has increased since then, while the annual household income required to afford that home is $51,575.
  • The businesses in Cherry Point paid more than $370 million in state and local taxes and $15 million in property taxes of the overall property taxes in the County, 11% of property taxes for County Road Fund, 15% of the Ferndale Schools, and 21% of the Blaine Schools.  The large tax contributions of these industries effectively reduce taxes for everyone else.
  • The businesses in the region donated more than $1 million to local charitable organizations in 2018. This, at a time when local non-profits are in need of support in order to serve the growing poverty rates.
  • Jobs within the Cherry Point zone represent 3.75% of the County’s employment, but support (directly or indirectly) 11.2% of the overall jobs in the County and 17% of all wages.
  • Cherry Point industrial area jobs pay an average of $110,690 per year, 243% more than the average County wage of $45,491.

You can download and read the full study here.