Cascadia Report

Biodiesel plans take shape

An investment group plans to build a $75 million biodiesel plant in eastern Washington, the latest such announcement since voters this month approved a mandate for new renewable energy in the state.

More than a dozen projects in Washington are in the works, including several in eastern Washington, according to recent reports. Two projects near Spokane recently adjusted plans to take advantage of tax incentives while another in Aberdeen aims to fill an economic void on the coast. The latest refinery, near Pasco, eventually would produce about 63 million gallons annually of biodiesel from soy, palm and canola oils which would be sold in Seattle, Portland and other markets.

Port consolidation may be back on the table

The seaports in the Vancouver area may combine forces, a move that could make them more formidable competitors to Seattle and Tacoma.

The Vancouver Port Authority and two ports along the Fraser River currently operate independently under a federal mandate to generate profit. Combining marketing and land development should help cut costs, though it's unclear if they can increase productivity compared to Washington's locally chartered ports.

The move could revive the issue of cooperation in Washington between Tacoma and Seattle, which have been rivals since the 1860s. Tacoma still has plenty of room to grow but Seattle, which is seeing a decline in traffic, has agitated for years for consolidation among Puget Sound ports.

At a conference earlier this month in Whistler, the director of Seattle's seaport, Mark Knudsen, said the region's ports will be forced to cooperate when each hits capacity and finds fiercer competition from other parts of the continent. Traffic has recently shifted to Los Angeles as space has become available there.

"The question is if we become local stops or the major international gateway that we aspire to," Knudsen told the Pacific Northwest Economic Region conference. "Shippers will all call in both Canada and the U.S. The question is if they will be big or small ships and how much discretionary goods will come through here."

Cascadia ports should cooperate to improve infrastructure and lower costs. West Coast ports currently move about 3,000 to 5,000 containers per acre each year, compared to a rate of 14,000 to 16,000 for ports in Asia, using virtually the same equipment and software.

Mine closure raises new energy questions

The sudden closure of a coal mine in rural southwest Washington this week struck a blow to the area's economy and raised questions about the region's power supply just as a new emphasis on renewable energy begins to take hold.

Calgary-based energy company TransAlta blamed the closure of its 30-year-old Centralia mine on rising safety costs and regulatory delays that prevented expansion. The closure means the loss of about 600 jobs that paid an average of $65,000, according to The Associated Press. The area, located midway between Seattle and Portland, has already been hard hit by the long decline in the timber industry. Now officials estimate the lost taxes will cost up to 30 percent of the area's school budget.

The closure late Monday is another sign of Cascadia's transition from an oil and hydro-fueled economy where industry and consumers counted on inexpensive energy. Earlier this month Washington voters mandated that utilities source 15 percent of their electricity from new renewable sources by 2020. While backers of the measure predict a flood of investment into new energy industry, the measure itself didn't consider siting, regulatory or cost issues.

TransAlta's mine reportedly accounts for about 8 percent of Washington's electricity, which the company said it would replace by bringing coal by train from the Powder River basin of Wyoming to an electric plant it plans to continue operating in Centralia. Apparently high supher and mercury readings in the Washington mine added to costs. Still unanswered questions include how the trains will get there, considering existing freight bottlenecks, and how costly the shift will be for regional business.

Local officials were surprised by the closure because the mine had political connections. A Republican leader of the Washington legislature helped push through a tax break for TransAlta in 2004 while he worked for the company and chaired the state House's energy committee. At the time he told the Seattle Post-Intelligencer the deal would keep the company sourcing its coal nearby.

In the wake of this week's announcement, area politicians scrambled to make plans to compensate. TransAlta said it set aside C$5 million to cover retraining expenses and the congressman who represents the area pledged to work for economic development programs. A local paper quoted an economist who noted that the air around Centralia would likely now be cleaner.

Supreme Court to decide if ruthless competition is unfair

Where's the line between ruthless competition and unfair business practices? That's the basic question before the U.S. Supreme Court today as it considers an earlier verdict against Weyerhaeuser for violating antitrust laws.

As detailed in Hal Bernton's excellent overview in The Seattle Times, Weyerhaeuser allegedly bid up the price of alder logs across the region in order to drive rivals out of business. The Fortune 100 company argues that it developed the market for alder products through innovation and marketing.

The case is another sign that the wood-products industry that largely built Cascadia is a global business. The small mills that sued Weyerhaeuser still harvest logs from nearby forests and say the ability of local firms to prosper is at stake. The wood market in question amounts to a rounding error for Weyerhaeuser, which is under pressure from Wall Street as it competes for global markets.

So this is what took so long at the border

Thousands of Americans returning from a Thanksgiving weekend in British Columbia clogged the border for hours on Sunday. It was a prelude to the costly bottleneck that may accompany the 2010 Olympics.

My snow-covered Subaru reached the crossing at 6:30 p.m. -- after nearly two hours in line -- with me still in long underwear, fleece and post-snowshoeing hat hair. I identified myself as a journalist who had spent two nights at Whistler and handed the agent my American passport. Our conversation included this:

Agent: Do you have anything to declare?

Me: No. I didn't do any shopping.

Agent: I didn't ask that. Did anyone give you anything?

Me: No

Agent (seeing the Granny Smith apple sitting on the passenger seat): What about that apple?

Me: I bought it at the store to eat on the way.

Agent: That's a $500 fine. It's illegal to bring in fruits or vegetables without filling out a customs form. It's on the sign out there, unless it's covered with snow.

Me: Oh. I didn't know that.

Agent: Is there a sticker on it?

Me: No, I peeled it off after I bought it.

Agent: Let me see the apple. (pause) I'm confiscating it. If there's no sticker it could have come from anywhere.

The interview took just a few minutes but left a bad taste. If every car was questioned like this, no wonder the border delays mounted -- to four hours by early Sunday evening, according to local radio. This kind of hair-splitting about obscure rules, not to mention new passport requirements, will make crossing the border more difficult and certainly turn off casual visitors.

In order to not waste the economic opportunity from the 2010 games, it's critical that Washington and B.C. convince their federal governments to fund better infrastructure at the border and use much clearer standards for screening travelers.

Seattle study finds that tolls work

Widespread use of toll roads could cut traffic congestion, according to an eight-month study of drivers in the Seattle area.

Tolls, especially at peak times, are key to funding new projects and making transit economically viable. But don't expect them soon. The head of the state Transportation Commission told the Seattle Times that the area has too little experience with tolls and the public won't accept them. "The politics of that is just too tough," said Richard Ford, commission chairman.

In the study, drivers' dashboards were fitted with electronic devices that tracked their travel, and they were charged virtual tolls ranging from five to 50 cents a mile, according to the paper. Charges were deducted from accounts of between $600 and $3,000 set up for each driver and participants could keep whatever money was left at the end of the experiment. About 80 percent of participants drove less or changed routes and travel times to avoid the highest tolls.

But incoming state Sen. Ed Murray of Seattle, who chairs the House Transportation Committee, said there is already widespread opposition to tolls, even to fund projects like replacing a floating bridge. "This isn't Amsterdam -- this is the West," he said. "One of the things we have to understand is whether the culture for this (tolls) exists here," he added. "It doesn't now. It don't think that's going to be easy to overcome."

B.C. wants to stop new private health clinic

British Columbia's government is looking for ways to stop a new for-profit private clinic that could help make the region a center for the medical industry.

The Vancouver center would charge a fee for "urgent care," a violation of the Canada Health Act, which governs the country's publicly funded health care system and bans private billing for medically necessary services. Though some private clinics for specialized care already exist, critics see the latest as an attempt to undermine the social safety net rather than stimulate new industry. The government may seek a court order or financial penalties to prevent the clinic from opening this week.

Victoria industry suffering from city's image

Victoria's key tourism industry is suffering from the city's image as a place for little more than English gardens and high tea. Not to mention raw sewage.

The total number of visitors to the British Columbia capital has been flat for about a decade and revenues aren't keeping up with inflation, according to BC Business magazine (registration required). The city recently launched a C$160,000 effort to rebrand itself as a destination for dining, shopping and outdoor sports. But hurdles include dowdy shops downtown, an old ferry terminal and a relatively small C$3 million marketing budget.

The city's image has also been hurt by its continued dumping of millions of gallons of raw sewage into the ocean, though the government recently announced plans to build a treatment system. Delta Air Lines is launching seasonal nonstop flights to Salt Lake City next summer, which could reverse the 8 percent drop in visitors from the U.S. earlier this year. That's important because visitors from the U.S. generally spend more than those from elsewhere in Canada. But Victoria has a way to go before it can capitalize on the exposure of the 2010 Olympics.

New Alaska pipeline to impact Cascadia business

Here's another impact of the U.S. elections: plans for a new natural gas pipeline from Alaska may stall, potentially costing Cascadia business.

At issue is a plan where Alaska's taxpayers to would buy 20 percent of a $22 billion proposed pipeline from the northern part of the state through Canada to the U.S. Midwest. The construction project -- considered one of the biggest ever -- could supply years of staging business in B.C. and Washington, as well as give a boost to Seattle's Alaska Airlines and the rest of the travel industry.

The project's fate is unclear since the Nov. 7 election, when Alaskans tossed out Gov. Frank Murkowski -- who pushed the plan -- in favor of political unknown Sarah Palin, the Republican mayor of a small town. Democratic former Gov. Tony Knowles was the favorite of big business because of his oil-friendly history. Palin has criticized many details negotiated by Murkowski and is set to reconsider the plan when she takes office on Dec. 4.

Real estate slump transforming region

As home sales across Cascadia continue to cool, there's increasing evidence of how rising prices are directing development to new areas.

In British Columbia the number of home sales slid 11 percent in October, the fourth straight decline, yet average home price rose 20 percent to C$410,728. In Washington the number of sales during the latest quarter slid 16 percent as the median sale price topped $300,000. Across the region the number of sales dropped as prices became less affordable.

What's remarkable is how the slowdown is changing development. In B.C., rural areas are being transformed as retirees and newcomers seek affordable real estate. Similarly, development of new condos is transforming Washington coast communities such as Ocean Shores, Westport and Long Beach.