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Construction is well under way on a new wastewater treatment plant to serve the small coastal communities of Netarts and Oceanside, but a complaint that recently hit Multnomah County Circuit Court has jeopardized the plans for the pipes that will carry sewage to the facility and then move the treated water to the ocean.

The Netarts Oceanside Sanitary District for years has planned to replace its 35-year-old treatment plant. But the drilling company that was hired to build two subsurface pipelines filed a complaint in December against the project’s general contractor, Salem-based , for an alleged breach of contract. Now the route of the pipelines is up in the air, and project costs may rise.

of Cameron Park, Calif., claims that complications from the subsurface conditions led Emery & Sons to unfairly delete HDD’s work from the project, costing the horizontal drilling company an estimated $2.35 million in damages.

Instead of drilling through the hillside, the district is now considering a new plan to lay the pipes along a local road. This plan would mean doubling the length of the pipelines and building a new effluent pump station 鈥� adding about $4.2 million to the project, according to Dan Mello, district superintendent. The bid on the project was slightly more than $13 million, he said.

鈥淭here’s a difference of opinion on why (the initial plan) didn’t work,鈥� Mello said, unable to comment further on the pending litigation. 鈥淧roblems were encountered with the drilling, and we had to make a choice to finish this treatment plant on time.鈥�

If the new treatment plant is not able to begin initial operations by Sept. 30, the state Department of Environmental Quality could penalize the district $250 per day for every violation of the schedule that the DEQ and the district agreed to in 2006.

鈥淭hey tried to drill straight up the hill and hit rock twice in the late winter last year,鈥� said Mike Pinney, a DEQ senior environmental engineer for the northwest region. 鈥淣ow they have a much longer route, which adds a little expense, but it’s obviously easier to dig and it was impractical to try to keep drilling.鈥�

The alternative route would involve laying two pipelines, each approximately 6,000 feet, beneath local roads.

Rick Evans, vice president of engineering and estimating at HDD, said that the project site is 鈥渃omplicated,鈥� but he and the company’s lawyers declined to comment further.

The official complaint argues that the specifications provided with HDD’s contract documents did not accurately represent the gravel, excessive sand flows and groundwater that the drillers actually encountered, which it says led to problems and project delays.

HDD submitted claims for the additional costs, which Emery denied. Then in June, Emery and the district issued a change order that deleted the $2 million horizontal drilling component from the project.

鈥淲e deleted the remaining and uncompleted work on the directional bores; that doesn’t say there won’t be more,鈥� said Vince Makinson, vice president of Emery & Sons. 鈥淎t this point nothing is contracted for that yet. We haven’t been issued any direction.鈥�

The project was initially expected to receive a significant funding package from U.S. Department of Agriculture Rural Development. The USDA awarded the Netarts Oceanside Sanitary District a grant for approximately $9 million and a loan for approximately $12 million, but then reduced those awards to $7.4 million and $10 million, respectively, because the project came in several million dollars under its original estimates.

鈥淭he economy turned south and contractors were hungry for work, so across the board, bids were coming in well below estimates,鈥� said Sam Goldstein, community programs director for USDA Rural Development. 鈥淭hat was happening everywhere in Oregon and around the country in some places. It’s certainly not typical, but these were odd economic times.鈥�

But now, because of the horizontal drilling problems, the project may receive additional federal money after all. Additional funding amounts are being reviewed by USDA Rural Development, Goldstein said.