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HomeMy WebLinkAboutCalled Commission Meeting March 12, 2007 CALLED MEETING COMMITTEE ROOM – March 12, 2007 12:15 P. M. Augusta Richmond County Commission convened at 12:15 p.m., Monday, March 12, 2007, the Honorable Deke Copenhaver, Mayor, presiding. PRESENT: Hons. Holland, Smith, Harper, Grantham, Hatney, Beard, Williams, Bowles and Brigham, members of Augusta Richmond County Commission. ABSENT: Hon. Cheek, member of Augusta Richmond County Commission. The meeting was called to order by Mayor Copenhaver. 5. Approve settlement with LandGas of Georgia, LP. Mr. Shepard: We have been in two mediation sessions with LandGas of Georgia. LandGas was granted an exclusive franchise at the Augusta Richmond County Landfill in the mid 90s because we needed to remove the methane and control it as it was made from the decomposing substances in the Landfill. You think the burning off of methane is a very wasteful thing. Well, it can be but what if you don’t burn it. If you don’t burn it, it’s the kind of chemical that goes up into the ozone and creates ozone layer problems. So, burning it off even to waste it is a more environmentally friendly thing to do than to just let it go. We have developed an economic use for the methane and that is to burn it over at the Unimin kaolin facility in Hephzibah. You will recall that at the Wastewater Treatment Plant we were hit with a series of violations and we paid for consent orders and compliance. We had problems with polluting the river. We were cited for notices of air quality violations at the Landfill and we brought that to your attention. LandGas was basically operating their machinery, their gas collection to their own convenience, not to its primary purpose which was to control the production of methane and not allow it to escape into the air. We came back to you and asked for authority to file suit, and we engaged special counsel, Alston and Bird. Last Monday we went through the second of two mediation sessions and one of the options which was developed was to purchase the system and operate it ourselves. We purchase the system that is on the Landfill and Mark’s forces will be in total control. They have a ten year contract with which they will be selling it and the contract pays about $400,000 a year. We’re going to pay $4 million so it is a contract that will eventually pay for itself. It will immediately end the environmental threats that existed when LandGas did not want to control its emissions. So we commend to you the settlement with LandGas. We will be in control, the environmental problem will be solved and they will be off our Landfill. The contract with Unimin will produce revenue for us. Mr. Williams: What would this do for us? Mr. Shepard: This would end the suit and convert an uncertain outcome in the suit to a certain total ownership of the facility with a return each year by selling the gas. 1 Mr. Williams: Why would we want to settle now? Mr. Mark Johnson: At this point because of how our contract was drafted ten years ago we hold the lesser legal position. We cannot legally terminate the contract for failure to perform. Provisions in the contract allow them a 30-day remedy period so they can put us in a violation standpoint if we provide them notice and then they have 30 days to correct the problem. And this has become very cyclical. Our best case if we win in court is to get a judgment that forces them to comply with the law. If they violate that, then they’re in contempt of court. So that becomes an enforcement tool. Yes, we have a provision that says you must maintain all federal, state and local laws but because of the termination provision and the breach provision are so loosely drafted, we have no enforcement of the contract and that’s where we get into this problem and this cyclical issue of how the system can run. It was a poorly drafted contract ten years ago. Mr. Mayor: Based on the recommendations that have been made, I would be in support of it. Ms. Beard: Wouldn’t we eventually make money? Mr. Johnson: Yes. Right now the way this is performing, it is pre-expansion. So if you look at their cash returns, they generate about $440,000 a year in profit. Once we tap in to the other landfill we’ve given you very conservative estimates saying that we’re only going to see a 50% increase in gas. The reality will be that it will be more than that. So, yes, in the future between five and seven years, it should convert to profit. Mr. Brigham: Wouldn’t we also save potential non compliance fines in the future by operating it ourselves? Mr. Johnson: Yes. Mr. Brigham: Do you feel we have the expertise in-house to operate the system? Mr. Johnson: The expertise in-house is something we would have to develop. One of the processes that LandGas did not do that we will actually have to do fairly quickly is put in some automation. They had already purchased the automation equipment but they never installed it. Once you go automated, it’s more or less a check and a balance versus manually turning levers and pushing buttons. At that point that’s something I think we could accomplish. Mr. Grantham: I notice in the agreement that it would terminate in 2008. When does the agreement with Unimin terminate or are we entering into a new contract with them? Mr. Johnson: The contract that’s currently in place is assignable and I believe it’s an evergreen. It goes on as long as they have a demand for gas. I would want to check that for sure, but it would be our intent that we could renegotiate that to provide some 2 stability because they’ve got tiered pricing in there. We would rather go with an average price because it’s easier to calculate and you’ll have a consistent return on investment. Mr. Grantham: Do we have other contacts that we could negotiate with or would we be just depending on Unimin? Mr. Johnson: Our Landfill sits on top of two natural gas pipelines. Let’s say that there was an economic slowdown in the kaolin. We could be looking at additional alternative energy options. We could put in turbines and put power back into the grid. Right now Georgia Power is not paying a significant amount of money for that, but it will cover development costs. We can actually convert that to liquefied natural gas and put it in the gas pipeline which it sits 100 feet from. So those are additional options should there be a downturn in the kaolin industry. Mr. Williams: What will it cost? Mr. Johnson: $4 million dollars. Mr. Williams: Where will that come from? Mr. Johnson: It will come out of the Landfill account. We have monies in our closure account. Mr. Mayor: Any further discussion? Can we get a motion? Mr. Smith: I so move that we approve. Mr. Grantham: Second. Mr. Williams and Mr. Holland vote No. Mr. Hatney not voting. Motion carries 6-2. ADJOURNMENT: There being no further business, the meeting was adjourned. Nancy W. Morawski Deputy Clerk of Commission nwm 3