HomeMy WebLinkAbout2022-269AMENDMENT NO.3 TO LANDFILL GAS AGREEMENT
This Amendment No. 3 ("Amendment") to that certain Landfill Gas Agreement (the
"Agreement") by and between the Indian River County Solid Waste Disposal District, a
dependent special district of Indian River County, Florida (the "District") and Nopetro Eco
District, LLC, a Florida Limited Liability Company ("Assignee" or "NED") (herein referred to as,
the "Company") (the District and NED each a "Party" and collectively the "Parties") is made
and entered into as of December 20 , 2022 ("Effective Date").
WHEREAS, the original Agreement, dated as of July 16, 2019, was made between the
District and the Indian River Eco District, LLC, a Texas limited liability company ("IRED"); and
WHEREAS, the the District and IRED entered into the Agreement pursuant to which the
District would deliver and IRED would accept, landfill gas from the District, which Agreement
was amended twice by the Parties on July 14, 2020 ("Amendment No. 1") and May 18, 2021
("Amendment No. 2"); and
WHEREAS, the Parties entered into that certain Assignment and Assumption Agreement
(the "Assignment") dated as of November 29, 2021 pursuant to which IRED assigned all of its
rights and obligations under the Agreement to NED; and
WHEREAS, the Parties acknowledge that the overall success of this Agreement is
contingent upon the Parties working together to ensure that the goals for the quantity and quality
of landfill gas are optimized, to the financial benefit of the District and the Company; and
NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree to modify this agreement and all prior amendments as follows:
Each capitalized term used, but not defined, in this Amendment shall have the meaning
given it in the Agreement.
The Landfill Gas Agreement and prior amendments are hereby amended as follows:
ARTICLE 1- DEFINITIONS
Section 1.1 is amended to include and/or replace the following definition(s) (other clauses not
referenced below will stay as written):
Acceptable Landfill Gas or Acceptable LFG — means landfill gas meeting the quality
parameters for methane, nitrogen, oxygen and sulfur as set forth in Schedule 1 hereto.
Annual Contract Quantity - means the daily average of 1,150 standard cubic feet per minute
("SCFM") of Acceptable LFG delivered by the District to Company at the Delivery Point
over a calendar year.
Facility Capacity — means the amount of LFG that the Company is able to accept at the
Delivery Point or in the case of the RNG Facility up to 1,600 SCFM.
Force Majeure — is amended to exclude delays caused by COVID-19.
Amendment No. 3 to LFG Agreement Pagel of 9
Gross Receipts — means the gross receipts received by the Company or its subsidiaries
during the Term from the sale of RNG from the Facility, including any and all
Environmental Attributes net of any direct or indirect operating costs incurred in the
ordinary course of business including but not limited to plant utility costs, consumables,
debt service, regulatory compliance, brokerage fees, transportation costs and sales taxes by
the Company and its subsidiaries in connection with the RNG facility.
Renewable Identification Numbers (BINS) — means the credits that are used for compliance,
and are the "currency" of the Renewable Fuel Standard program.
Unacceptable LFG — means landfill gas not meeting the quality parameters for methane,
nitrogen, oxygen and sulfur as set forth in Schedule 1 hereto.
ARTICLE 2 — TERM, RENEWAL AND MILESTONES
Section 2.1 is amended to read as follows (other clauses not referenced below will stay as
written):
2.1. This Agreement shall take effect on the Effective Date and continue for a period of
twenty (20) years following the LFG Commencement Date (the "Initial Term"),
unless terminated earlier or extended as provided herein. The Parties have agreed
upon a LFG Commencement Date of June 30, 2024, unless extended as provided
herein (the "LFG Commencement Date").
If the LFG Commencement Date has not occured by June 30, 2024 (subject to
extension by Force Majeure), Section 13.1 shall apply.
Company shall meet the following milestones as a demonstration of their progress
toward LFG Commencement Date:
a) Contracts for the purchase of the following equipment: PSA System to
include the gas conditioning system and nitrogen rejection unit. Company
shall provide proof of these signed contracts to the District by June 30, 2023.
b) Air Permit, Site Plan, and Building Permit Applications submittal to
Regulatory reviewers by December 31, 2023.
c) Groundbreaking for foundations shall occur by December 31, 2023.
The above milestones shall be extended for any delays caused solely by the District
in achieving such milestone acknowledged in writing by the District or by an event
of Force Majeure, but only to the extent of and for the duration of any such delay.
ARTICLE 3 — THE PARTIES' LFG FACILITIES
Section 3.1 is amended to read as follows (other clauses not referenced below will stay as written):
3.1. District Responsibilities and Obligations.
J. The District will accept only up to a 1,000 gallons per day of Condensate
generated by the Company LFG Assets.
Amendment No. 3 to LFG Agreement Page 2 of 9
K. The District will install a High Pressure Skid System with chiller to provide
pressurized dry gas to the Company at 8 PSIG (pounds per square inch gauge).
In addition, the District will be responsible for measuring and recording the
quantity and quality of LFG that is delivered to Company at the Delivery
Point, which is on the District's property and this information will be used to
correlate Acceptable Landfill Gas with the Company. The District will, at a
minimum, factory calibrate the flow and quality metering equipment at least
semiannually and provide copies of those calibrations to the Company.
Section 3.2 is amended to read as follows (other clauses not referenced below will stay as written):
3.2. Company Responsibilities and Obligations._
I. The Company is responsible for the metering of the Condensate and
providing metering records to the District on a monthly basis. The Company
shall pay District lesser of $0.22 per gallon or actual operating cost for any
volume over 1,000 gallons per day. This rate is subject to annual
adjustments. On a quarterly basis, the Company shall sample and analyze
the condensate from its equipment to verify that it is non -hazardous and
provide a copy of the laboratory results to the District. The Company to
identify the sample port location on the facility site plan. If it is determined
to be hazardous, then the Company shall be responsible for the proper
disposal of the hazardous Condensate.
O. The Company commits, per the letter to the County dated April 28, 2022,
to issue a payment to the District for $146,285 per Biogas Engineering's
Change Order No. 1 cost related to the High Pressure Skid within 30 days
of the Effective Date otherwise there will be a 5% penalty per day until it is
paid.
Section 3.3 C is amended as follows:
C. Commercial and Environmental Improvement Projects. Without limiting
District's obligations under Section 3.3 within ninety (90) days after the
Effective Date, and every three (3) months thereafter, the Company and
District shall meet to discuss and agree upon a recommended scope of
Commercial and Environmental Improvement projects. The Parties shall
work in good faith to reach a consensus plan. When and if an agreement is
reached, and the District has approved any District related expenditure at its
highest level of government, on the scope and terms of a Commercial and
Environmental Improvement projects, the Company shall confirm the
Parties' agreement by issuing a notice to District including the terms of the
agreement of the Parties as to the Commercial and Environmental
Improvement projects, and the Parties' proposed respective responsibilities
for such improvements, which notice shall be subject to District's written
acknowledgment. As of District's confirmation of the notice provided by
Company, Company shall be obligated to pay for the cost of the
Commercial and Environmental Improvement projects as reflected in the
Notice. The District may elect to jointly fund some or all of the agreed
Commercial and Environmental Improvement projects up to the amount
agreed to be paid by the Company, but shall have no obligation to do so.
Amendment No. 3 to LFG Agreement Page 3 of 9
Unless otherwise agreed, title to, and ownership of, the Commercial and
Environmental Improvement projects shall be vested in District, and the
parties shall execute such documentation as required to evidence the
respective ownership of such Commercial and Environmental Improvement
projects.
ARTICLE 6 — LFG QUANTITY; MEASUREMENT
Section 6.7 is amended to read as follows (other clauses not referenced below will stay as
written):
6.7 During the term of this Agreement, the District shall not undertake any action that
would: (a) temporarily or permanently divert Acceptable LFG to any other user
without first offering said LFG to the Company per Section 3.2(L); or (b)
permanently reduce the production of LFG at the Landfill, unless such action is (1).
required by an applicable law or (2) otherwise deemed necessary and appropriate
by the District for the protection of the public health, safety and welfare. After
accepting 1,150 SCFM of Acceptable LFG, the Company in its sole discretion will
have the option, but not the obligation, to consume the incremental 450 SCFM of
Acceptable LFG at the RNG Facility (instead of use by the County at the Landfill
for processing of Leachate) and the County will utilize 225 SCFM of pipeline
natural gas in lieu of 450 SCFM of Acceptable LFG. In such event, the Company
will reimburse the District on a monthly basis for said 225 SCFM of pipeline natural
gas consumed but in no event will this volume exceed 118,260,000 SCFM in a
calendar year prorated over 12 month period.
Section 6.8 is amended to read as follows (other clauses not referenced below will stay as written):
A. The Company shall be responsible for measuring and recording the quantity of
LFG that is delivered at the Facility Location. The Company shall also measure and
analyze the LFG with the Metering equipment defined in Section 6.3 at the Facility
Location. The Company shall measure these parameters by using the Metering
equipment and/or such other instruments as necessary and shall be solely
responsible for the operation, maintenance and calibration of the meters and other
equipment used to measure or test the LFG. To ensure accurate correlation of the
Acceptable LFG delivered, the Company will, at a minimum, factory calibrate the
flow and quality Metering equipment at least semiannually and provide copies of
those calibrations to the District.
B. The Company will test the incoming LFG at the Facility Location from the District
on about an hourly basis over the course of each month in the following 5
categories:
1. Gas Flow in SCFM
2. Methane (CH4) % Content
3. N2 % Content
4. 02 % Content
5. Sulfur (112S) % Content
Amendment No. 3 to LFG Agreement Page 4 of 9
If 90% or more of the readings of categories 2-5 between the District and the
Company over the course of a month (ie: 30 days minimum) equal or exceed the
Acceptable Landfill Gas Quality criteria in Schedule 1 of the Agreement, this will
be deemed Acceptable LFG for the Month. If less than 90% of the readings equal
or exceed the quality criteria, Company agrees to immediately recalibrate the
specific Metering equipment of concern and then to retest the specific category that
is below the quality criteria. Only then will the LFG be deemed unacceptable LFG.
C. The Company agrees to provide all flow and chemistry data to the District so the
District may use such information that is required by regulatory agencies for air
permit reporting and District records.
Section 6.9 is amended to read as follows (other clauses not referenced below will stay as written):
6.9. If Company or the District discovers that the Metering equipment are not calibrated
to within 95% accuracy, they shall promptly report this information to the other
Party. In such case, the applicable Party shall have the right to request and receive
an equitable adjustment of the payments hereunder reflected on the first statement
or invoice after the inaccuracy is identified. It is the intent of the Parties that no
one should benefit unjustly as a result of an error in the calibration of the Metering
equipment. Unless there are specific factual reasons to believe otherwise, the
Parties shall assume that the error in the calibration of the Metering equipment
increased or decreased at a uniform rate over time.
ARTICLE 7 — LFG QUALITY; MEASUREMENT
Section 7.6 is deleted (other clauses not referenced below will stay as written):
Schedule 1 is amended as follows:
SCHEDULE 1
Acceptable Landfill Gas Quality
Constituent
Units
Minimum Methane Content
>=45%
Sulfur
<=quarterly average of 2,300 ppmv
Oxygen (02)
<=2.0%
Nitrogen (N2)
<=12.0%
ARTICLE 8 — PRICE FOR LFG AND DISTRICT CREDITS
Section 8.1 (B) and 8.1 (C) are deleted and replaced with a new 8.1 (B) to read as follows (other
clauses not referenced below will stay as written):
8.1. Price for LFG
B. The LFG Price for a Landfill Gas to RNG Facility shall be as follows:
Amendment No. 3 to LFG Agreement Page 5 of 9
On the months whereby the District provides an average gas flow greater
than or equal to 1,150 scfm per month, the LFG Price for a Landfill Gas to
RNG Facility, the Company shall pay to the District a royalty payment of
12% of the Gross Receipts generated by the RNG Facility from the
Acceptable LFG ("RNG Gross Receipts"). If the average gas flow is
greater than or equal to 1,150 scfin per month of unacceptable LFG, the
Company shall pay to the District a royalty payment of 10% of RNG Gross
Receipts.
2. On the months whereby the average gas flows are between 800 scfin and
1,150 scfin of Acceptable LFG, the LFG Price for a Landfill Gas to RNG
Facility, the Company shall pay to the District a royalty payment of 10% of
the RNG Gross Receipts. If the average gas flows are between 800 scfin
and 1,150 scfin per month of unacceptable LFG, the Company shall pay to
the District royalty payment of 8% of RNG Gross Receipts.
3. On the months whereby the average gas flows are less than 800 scfin of
Acceptable LFG, the LFG Price for a Landfill Gas to RNG Facility, the
Company shall pay to the District a royalty payment of 8% of the RNG
Gross Receipts. If the average gas flows are less than 800 scfin per month
of unacceptable LFG, the Company shall pay to the District royalty payment
of 6% of RNG Gross Receipts.
The above translated into table format is shown below where "x" is the average gas
flow rate:
Average Gas Flowrate
SCFM
Acceptable LFG
Unacceptable LFG
x > 1,150
12%
10%
800:5 x < 1,150
10%
8%
x < 800
8%
6%
Notwithstanding the above, the District and the Company agree that royalty
payments will only be subordinate to any debt service payments between Company
and its financing party for the RNG Facility if the prior months' transacted RINS
price as listed on RIN Trades and Price Information I US EPA
(httt)s://www.eDa. Sov/fuels-registration-renortina-and-compliance-help/rin-trades-
and-price-information) is less than $1.25 per RIN. If subordination occurs, the
Company is still obligated to accrue any royalty payments due and will begin
making payments within 30 days. On day 31, interest will accrue on the unpaid
balance at a 6% annualized interest rate until paid.
ARTICLE 9 — LFG STATEMENT AND INVOICE
Section 9.1 is amended to read as follows (other clauses not referenced below will stay as
written):
A. Monthly LFG Statement. On the fifth (5t') day of each month, starting with the
first full month after the LFG Commencement Date, the Company shall provide a
Monthly LFG Statement to the District. The Monthly LFG Statement will be
marked "Confidential" and shall identify:
Amendment No. 3 to LFG Agreement Page 6 of 9
(1) the total amount of Acceptable LFG provided to the Facility
(standard cubic feet);
(2) the total amount of Unacceptable LFG provided to the Facility
(standard cubic feet);
(3) the daily average methane content of the Acceptable LFG and
unacceptable LFG (accordingly, the Company will test the incoming
LFG on approximately an hourly basis over the course of each
month for methane content);
(4) the calculated MMBTUs of RNG produced from the Facility for
injection into the natural gas pipeline; and
(5) the total amount owed to the District including documentation of
RNG Gross Receipts.
B. Quarterly LFG Statement. Within thirty (30) Days after the end of each Quarter,
the Company shall provide a Quarterly LFG Statement to the District. The
Quarterly LFG Statement shall identify:
(1) the total amount of Acceptable LFG and unacceptable LFG
provided to the Facility during the applicable Quarter and the
average SCFM of Acceptable LFG delivered;
(2) the daily average methane content of the Acceptable LFG and
unacceptable LFG (accordingly, the Company will test the incoming
LFG on approximately an hourly basis over the course of each
month for methane content); and
(3) the calculated MMBTUs of RNG produced from the Facility for
injection into the natural gas pipeline; and
(4) the total amount owed to the District including documentation of
RNG Gross Receipts.
C. Payments / Statement Submittals. All payments, statements, etc. shall be made out
to and sent to the Indian River County Landfill at 1325 740, Avenue SW, Vero
Beach, FL 32968 to the attention of the SWDD Managing Director.
D. To the extent Company believes that the information provided to District is
confidential and protected per section 815.045, Florida Statutes, and is to be
redacted in response to a public records request submitted to the District or Indian
River County, Company shall indemnify and defend the District and Indian River
County in any related litigation.
ARTICLE 13 — TERMINATION AND REMEDIES
Section 13.1 is amended to read as follows (other clauses not referenced below will stay as
written):
Amendment No. 3 to LFG Agreement Page 7 of 9
13.1 Delay in Achieving LFG Commencement Date. If the Company has not met the
LFG Commencement Date as set forth in Section 2.1, the Company will pay the
District $15,000 a month as liquidated damages and not as a penalty for each month
until the LFG Commencement Date has occurred or until the Agreement has
terminated.
If the LFG Commencement Date has not occured by September 30, 2024 (subject
to extension due to Force Majeure), then this Agreement shall terminate and neither
Party shall have any further rights, obligations or liabilities hereunder.
A. Delay in Meeting Milestones. If the milestones listed in Section 2.1 are not met by
Company, then Company shall pay District as follows:
i. $15,000 per month for the first milestone not achieved (prorated for a partial
month) until milestone is achieved.
ii. $15,000 per month for the 2nd milestone not achieved (prorated for a partial
month) until milestone is achieved.
iii. $15,000 per month for the Yd milestone not achieved (prorated for a partial
month) until milestone is achieved.
Milestone Payments. The total amount of remedies are payable from Company to
District within thirty (30) days of invoice from District to Company.
All other sections and contents of the Agreement shall remain the same.
[Remainder of Page Intentionally Left Blank]
Amendment No. 3 to LFG Agreement Page 8 of 9
IN WITNESS WHEREOF, District and Company hereto have executed this Amendment No. 3
as of the date first written above
Attest:
Jeffrey R. Smith, Clerk of Court and
Comptroller
Approved By:
eputy Clerk
Date Approved by SWDD:
Jason E.lBr)fwn, County Administrator
Approved as to Form and Legal
Sufficiency By:
Dylan Reingold, County Attorney
By Owner:
Solid Waste Disposal District
Indian River County, Florida
December 20, 2022
By Company:
NOPETRO ECO DISTRICT, LLC
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Amendment No. 3 to LFG Agreement Page 9 of 9