Commerce secretary: regulatory delays and contractor decisions drove $150 million Scout Motors shortfall
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Summary
At a Senate Finance subcommittee hearing, Secretary Leitzy said permitting delays and construction decisions by the project’s construction manager contributed to a roughly $150 million budget overrun at the Scout Motors site and outlined steps to cap future state site commitments; senators pressed for names and documentary evidence.
At a Senate Finance subcommittee hearing, Secretary Leitzy told lawmakers that permitting delays and decisions by the project’s construction manager increased costs on the Scout Motors site and produced a roughly $150 million budget shortfall.
The shortfall arose as the project encountered wetlands permitting delays and expanded mitigation requirements, the secretary said; Commerce officials informed the governor's office and legislative leadership in October 2024 once the agency had better estimates. "We became aware of the extent of the delays in the fall of 2024," Leitzy said, and added that the agency "informed the governor's office, in October, and we informed the legislative leadership about the same time." He told senators the wetlands permit was issued in January 2024 after a period of delay.
The session mattered because the Commerce Department had been the state’s funding partner on the project but did not act as construction manager. "Commerce is not a construction managing agency. We do not — we are a financial agency," Leitzy said. He told the committee that Richland County owned the property, that Thomas & Hutton served as construction manager, and that those entities made on-site start decisions. "I would say that Thomas and Hutton made the decision to initiate construction activity on the dry part of the site with an understanding of both Richland County and Commerce," he said.
Senators pressed the secretary on when Commerce first learned of cost overruns and why contingency funds could not be used to offset the gap. The secretary said the original construction budget used as the appropriation basis was about $700 million and that the agency included roughly a 10 percent contingency (about $70 million). "Unfortunately not," Leitzy said when asked whether the contingency could simply be deducted from the $150 million overrun, explaining the contingency already had been used to cover mitigation and other added construction costs.
Committee members asked whether Department of Natural Resources (DNR) comments on the mitigation package caused the delay. Leitzy acknowledged that DNR filed comments that led to a roughly five‑month pause while the Army Corps of Engineers processed the wetlands permit, saying DNR "filed comments in July 2023" and that a 30‑day extension was granted by the corps. The secretary said Commerce had worked with Richland County and environmental consultants and that the mitigation package submitted in May 2023 was prepared by Richland County with counsel from Burr & Forman; lead attorney Chad Johnston was identified as the county's counsel on the submission.
When asked what the state would do to prevent repetitions, Leitzy described policy changes: Commerce will cap its site‑development commitments so the agency is not open‑endedly responsible for unlimited site costs, and the department has instituted regular, earlier communication with regulatory agencies including DNR, the Army Corps and the Department of Transportation to surface mitigation needs before construction begins. "We will always have a defined amount of money that could be expended toward the site. But once that money is fully utilized, then it will no longer be our responsibility," Leitzy said.
On consequences, Leitzy warned that not funding the request would leave contractors owed money and could lead to legal claims against Richland County as the contracting entity, with the state likely to be added to any proceedings. He said relying solely on recurring funds to cover the shortfall would consume recurring appropriations for years and harm the state's ability to attract future projects.
Several senators asked the committee to subpoena or invite Thomas & Hutton and other contractors to explain who authorized early construction activity; the secretary agreed to provide the name of the company representative who authorized the start. The committee adjourned after asking staff to pursue additional testimony and documents.
