Wetlands deal criticized Lawyer says report on plan that helped attract Boeing suppliers is misleading

Vought Aircraft had to fill about 40 acres of wetlands in North Charleston to accommodate a plant that makes aft fuselage sections for the Boeing 787. Boeing bought the factory in 2009.

A new report prepared for a group of state legislators is critical of a wetlands mitigation program the state Department of Commerce used more than a decade ago to help lure Boeing Co. suppliers to North Charleston.

An environmental lawyer who worked on the project, however, said the report is misleading and based on incorrect assumptions.

John Hodge, who was hired by Commerce to lead the wetlands program, said in an affidavit that the “report is selective in its recitation of the facts in a manner that could lead the legislature to the conclusion that the project was not in the public interest.”

He said, “The people of South Carolina deserve to know that the (state) acted diligently and in the public’s interest” to recruit Boeing and its 787 assembly plant.

The report issued Wednesday by the state Legislative Audit Council says Commerce lacked oversight of a nonprofit — called the Ashley-Cooper Rivers Environmental Trust, or ACRET — it created in late 2004 to handle wetlands mitigation for a proposed Boeing 787 supplier campus at Charleston International Airport.

Specifically, the report says:

Commerce arranged to have $5 million of a $160 million incentive package transferred to the trust, but did not monitor how the money was spent.

The trust bought much more property than the Army Corps of Engineers required for the mitigation, bought property that was not classified as wetlands, bought property outside the target watershed and spent more than it was supposed to.

The nonprofit arbitrarily determined which properties it would purchase and took longer to accomplish its mission than agreed.

The trust included representatives from environmental groups and state and federal regulatory agencies. It was created to mitigate about 40 acres of wetlands that were to be filled on the Boeing supplier site. The Army Corps had agreed that a minimum of 1,000 acres of wetlands would mitigate the property, according to the report, but the trust purchased about 7,100 acres between 2007 and 2011, spending about $4.6 million more than required.

The council recommends in its report that Commerce “should not create a nonprofit entity to accomplish compensatory wetlands mitigation again.” However, if the agency does take that route, it must have stricter controls on spending and oversight, the report says.

The wetlands project was part of an incentive package the state approved to attract Boeing 787 fuselage suppliers to the North Charleston site in 2004.

Vought Aircraft Industries and the affiliated Global Aeronautica built factories on the property. Boeing bought those suppliers in 2009, and then built a full-scale 787 assembly plant nearby.

Hodge says in his affidavit that many of the audit council’s assumptions are incorrect. The council did not interview him for its report, although it knew he was in charge of the project, according to the affidavit.

“The conclusion that ACRET spent $4.6 million more than was necessary is incorrect,” Hodge said, adding that the property the trust purchased was to mitigate for future Boeing expansions.

“It was represented to us that three aircraft product lines would eventually be built at the site,” Hodge said.

Hodge said ACRET “regularly reported to (Commerce) officials the status of the mitigation program” and that its purchase of non-wetlands sites was proper because mitigation credits are “allowed for upland buffers that serve to prevent degradation of wetlands from upland sources of pollution.”

Bobby Hitt, now the state’s Commerce secretary, was an executive at BMW Manufacturing in Greer at the time of the wetlands program. He says in a letter to the council that the trust “was an innovative way to implement Commerce’s commitment to mitigate the Boeing site and obtain buy-in from environmental stakeholders to support the impacts associated with a significant economic development project.”

A similar agreement was reached earlier this year under which the State Ports Authority will give $5 million toward protection of the Cooper River corridor in exchange for environmentalists signing off on plans to deepen Charleston Harbor.

The audit council’s report was requested by 15 members of the General Assembly — eight of them from Horry and Georgetown counties — who also wanted a review of how other states handle environmental groups’ opposition to development permitting.

Those legislators have supported proposed laws that would ban private citizens and groups from filing claims under the state’s Pollution Control Act and eliminate the automatic stay when a state wetlands permit is contested. They have proposed a 30-day temporary stay and possibly requiring the contesting party to post a bond for the cost of the litigation and project delay.

Some Grand Strand legislators have said environmentalists needlessly delay the state’s big development projects with court filings. However, the council’s report found that laws in other states have “relatively minor” differences from existing South Carolina laws governing environmental permitting. Only North Carolina has eliminated the automatic stay in permit appeals, the report states.

Attempts to contact some of the lawmakers who requested the report were unsuccessful Wednesday.

Hodge, in his affidavit, says the council’s review of Boeing’s wetlands mitigation in support of weakening state environmental laws was improper because the Boeing project involved federal permits that would not be affected by any change in state laws.

Reach David Wren at 937-5550 or on Twitter at @David_Wren_