Commitments and Contingencies

6 Months Ended

Jun. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

The Partnership had an accrual for estimated environmental remediation costs of $21.1 million and $21.7 million as of June 30, 2015 and December 31, 2014, respectively. The environmental remediation liability represents management’s estimate of payments to be made to monitor and remediate certain areas in and around Port Gamble Bay, and at Port Ludlow, Washington.

In December of 2013, a consent decree and Clean-up Action Plan (CAP) related to Port Gamble were finalized with the Department of Ecology (DOE) and filed with Kitsap County Superior Court. During the second quarter of 2015, there were two developments with respect to the project: additional cost information obtained from contractor bids for the construction work, and an unfavorable litigation outcome. These two developments offset one another, resulting in no change to the overall estimated project liability, other than for payments made during the quarter.

The design of the remediation project was substantially completed in the second quarter of 2015 and the Partnership received bids from contractors to complete the remediation work. Management's cost estimates for the project are based on these bids. In addition, on June 8, 2015, Kitsap County Superior Court ruled on summary judgment that Washington’s Department of Natural Resources (DNR) did not qualify as an owner or operator of the site and therefore did not have liability under Washington’s Model Toxics Control Act (MTCA). The effect of the court’s ruling is to absolve DNR of any responsibility to contribute to the cost of cleanup at Port Gamble. The Court issued its ruling without making findings of fact or conclusions of law. Management has appealed the Superior Court’s ruling, and believes it has a strong case for overturning the lower court’s decision. While management remains optimistic about the appeal process and the ultimate outcome of this litigation, management has adjusted the liability to reflect its best estimate of the cost of the project without any contribution by DNR.

The environmental remediation liability also includes estimated costs related to a separate remediation effort within the resort community of Port Ludlow. The liability for this project consists primarily of ongoing monitoring activity.

The environmental liability at June 30, 2015 is comprised of $12.5 million that management expects to expend in the next 12 months and $8.6 million thereafter.

Activity in the environmental liability is as follows:



	Balance at the Beginning		Additions to		Expenditures for		Balance at
(in thousands)	of the Period		Accrual		Remediation		Period-end
Year ended December 31, 2013	$	13,942	$	—	$	701	$	13,241
Year ended December 31, 2014	13,241		10,000		1,590		21,651
Quarter ended March 31, 2015	21,651		—		286		21,365
Quarter ended June 30, 2015	$	21,365	$	—	$	286	$	21,079