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Western Dubuque Biodiesel AgreementTHE CITY OF DuB E MEMORANDUM ~°~-~~ May 3, 2007 TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: Western Dubuque BIODIESEL The City of Dubuque has been approached by Western Dubuque BIODIESEL requesting that the City accept their sanitary sewer waste at the Water Pollution Control Plant. Western Dubuque BIODIESEL will be producing fuel from soybean oil at their facility in Farley. The wastewater produced at the facility is a low volume high strength waste that would overload the local municipal treatment system in Farley and, therefore, cannot be discharged into that system. The cost to construct an industrial wastewater treatment plant onsite would be significant, which leads to the request that Western Dubuque BIODIESEL be allowed to discharge wastewater from its facility to the sanitary sewer system at the City of Dubuque. The increase in loading to the plant would not be significant, and sufficient capacity will remain for future residential or industrial expansion. Water Pollution Control Plant Manager Jonathan Brown recommends that the City enter into an agreement with Western Dubuque BIODIESEL. This agreement would allow the City of Dubuque to take part in an important economic development activity for Dubuque County, play a positive role in the emerging biofuels industry and receive an additional revenue stream for the operation and maintenance of the Water Pollution Control Plant. I concur with the recommendation and respectfully request Mayor and City Council approval. j~G~ , G-- ,' Michael C. Van Milligen MCVM/jh Attachment cc: Barry Lindahl, City Attorney Cindy Steinhauser, Assistant City Manager Teri Goodmann, Assistant City Manager Eric Manternach, Chair, Dubuque County Board of Supervisors Wayne Demmer, Dubuque County Board of Supervisors Donna Smith, Dubuque County Board of Supervisors William Einwalter, Mayor of Farley Kelley Deutmeyer, Executive Director, East Central Intergovernmental Assoc. Molly Grover, President and CEO, Dubuque Area Chamber of Commerce Karen Adams, Prosperity Eastern Iowa Jonathan Brown, Water Pollution Control Plant Manager Dave Heiar, Economic Development Director THE CITY OF DuB E MEMORANDUM ~~~ May 2, 2007 TO: Michael C. Van Milligen, City Manager FROM: Jonathan R. Brown, Water Pollution Control Plant Manager SUBJECT: Western Dubuque BIODIESEL INTRODUCTION The purpose of this memo is to provide information regarding the possible discharge of wastewater from the Western Dubuque Biodiesel facility into the sanitary sewer system of the City of Dubuque and to request that the City Council authorize the City Manager to enter into an agreement to provide sanitary sewer services for Western Dubuque Biodiesel. BACKGROUND Western Dubuque Biodiesel will be producing fuel from soybean oil at their facility in Farley. The wastewater produced at the facility is a low volume high strength waste that would overload the local municipal treatment system in Farley and therefore cannot be discharged into that system. The costs to construct an industrial wastewater treatment plant onsite would be significant which leads to the request that Western Dubuque Biodiesel be allowed to discharge wastewater from its' facility to the sanitary sewer system of the City of Dubuque. In addition to the biodiesel production at the plant there will also be a significant amount of glycerin produced that may be used for industrial applications. It may be possible at some point to use unrefined glycerin from this facility as an alternate fuel source for the Water Pollution Control Plant. This scenario is in the future and will require significant research into its feasibility and is not included in this agreement; however its possibility merits continued study DISCUSSION The amount of wastewater produced from the biodiesel plant would be approximately 5300 gallons per day with an organic component of 728 pounds per day of Biological Oxygen Demand (BOD) and 25 pounds per day of Total Suspended Solids (TSS). The design BOD loading of the Water Pollution Control Plant is 24,400 pounds per day with current average loading of 18,000 pounds per day. The increase in loading to the plant will not be significant and sufficient capacity will remain for future residential or industrial expansion. Charges for this wastewater will be based on our three current industrial contracts within the City, plus allowances for rate increases that have occurred, and a fifty percent surcharge for the facility being outside the corporate limits of the City of Dubuque. We currently have three industrial users within the City; Inland Protein, Inc., Rousselot and Swiss Valley Foods, Inc. The revenues generated by this agreement are expected to be approximately $88,000 per year. In addition to the proposed Sewer Use Agreement with Western Dubuque Biodiesel there will also be in place an Industrial Pretreatment Discharge Permit which provides the mechanism to protect the treatment works from potential harmful discharges from industrial facilities. The Industrial Pretreatment Program Permit supercedes the Sewer Use Agreement in those situations where an industrial discharge may present a threat to the treatment works, its employees or the environment. The Sewer Use Agreement and the Industrial Discharge Permit also requires that all of the provisions of the Sewer Use Ordinance are adhered to. The proposed Sewer Use Agreement as presented has been reviewed by the City of Dubuque legal staff. RECOMMENDATION It is my recommendation that the City of Dubuque enter into an agreement with Western Dubuque Biodiesel for sanitary sewer services. This agreement would allow the City of Dubuque to take part in an important economic development activity for Dubuque County, play a positive role in the emerging biofuels industry and receive an additional revenue stream for the operation and maintenance of the Water Pollution Control Plant and the sanitary sewer system. In addition to these positive aspects the City of Dubuque sanitary sewer system will be protected by the use of the Industrial Discharge Permit issued under Federal and State authority by the City of Dubuque. ACTION STEP I respectfully request that the City Council authorize the City Manager to enter into an agreement with Western Dubuque Biodiesel for the discharge of wastewater into the sanitary sewer system of the City of Dubuque. cc: Cindy Steinhauser, Assistant City Manager Attachment: t SEWER USE AGREEMENT BETWEEN THE CITY OF DUBUQUE, IOWA AND WESTERN DUBUQUE BIODIESEL This Agreement, dated the day of , 2007, is made and entered into by and between Western Dubuque Biodiesel ("Company"), an Iowa business corporation, and the City of Dubuque, Iowa, ("City") a municipal corporation. WHEREAS, City currently has an Iowa Department of Natural Resources permit to process municipal and industrial wastes and to discharge treated effluent into a navigable waterway in conformance with said permit; and WHEREAS, Company owns and operates a facility (the Facility) located at 301 1St Street Ne P.O. Box 82 in Farley, Iowa, and is desirous of entering into a sewer use agreement with City. NOW THEREFORE, the parties do mutually agree as follows: SECTION 1. DEFINITIONS. As used herein, the following terms shall have the following meanings: 1.1 EPA - Environmental Protection AgencLr. The U.S. Environmental Protection Agency, or, where appropriate, the Administrator or other duly authorized official of said Agency. 1.2 CBOD5 -Carbonaceous Biochemical Oxygen Demand (CBOD). The quantity of oxygen utilized in the biochemical oxidation of carbonaceous matter under standard laboratory procedure, measured at 5 days, 20 degrees Celsius, expressed in terms of concentration (milligrams per liter [mg/I]). 1.3 TSS or Suspended Solids -Suspended Solids. The total suspended matter that floats on the surface of or is suspended in water, wastewater, or other liquids, and which is removable by laboratory filtering. 1.4 Surcharges. Charges to be paid by Company based on hydraulic loading, CBOD, and Suspended Solids that exceed maximum limits and time frames as set forth herein. 1.5 POTW - Publicly Owned Treatment Works (POTW). City's treatment works as defined by Section 212 of the Water Pollution Control (33 U.S.C. 1292) including any sewers that convey wastewater to the treatment plant, but not including pipes, sewers, or other conveyances not connected to facility providing treatment. POTW" shall include any sewers that convey wastewater to the POTW from persons outside the corporate boundaries of City who are, by Agreement with City, users of City's Wastewater Treatment Facility. SECTION 2. SERVICES PROVIDED BY CITY. City shall provide the required wastewater treatment and disposal services to Company for wastewater discharged to the POTW in volumes and of the type described in this Agreement. SECTION 3. LIMITATION ON VOLUME AND LOADING. Company is hereby granted permission to discharge from the Facility into the POTW up to the volumes and loadings described in this Agreement, but is not required to discharge any minimum volume or loading. SECTION 4. EFFECT OF REQUIREMENT OF HIGHER DEGREE OF TREATMENT. If any state or federal regulatory agency requires City to install a higher degree of treatment to the domestic and industrial wastewater flow than that contemplated herein, thereby requiring the making of changes to the POTW that City determines are material, it shall give Company written notice of said requirement and the proposed additional charges to Company for said higher treatment. Within six months after date of delivery of said notice, Company may notify City in writing of its intent to terminate this Agreement and this Agreement shall be terminated 30 days from the date of Company's notice. If Company does not give said notice of termination, then this Agreement shall continue in effect and said proposed additional charges, unless otherwise agreed to by the parties, shall prevail as to said higher treatment. SECTION 5. COMPANY'S AUTHORITY. Company shall only discharge wastewater from the Facility into the POTW in accordance with the effluent limitations, monitoring requirements and other conditions set forth in this Agreement. SECTION 6. TERM OF AGREEMENT. The term of this Agreement shall commence at midnight , 2007, and terminate at midnight on 30, 2012. SECTION 7. CHARGES. The following charges shall apply to Company: 7.1 Sewer use rates in Section 44-83 of the City of Dubuque Code of Ordinances shall be the basis for the sewer use rates indicated below. Sewer use rates for Company shall be 1.5 times the rates for those within the corporate limits of the City of Dubuque. In the absence of sewer use rates for flow, CBODS and Total Suspended Solids, the following rates shall be used for all wastes discharged by Company until such time as sewer use rates are otherwise established in Section 44-83 of the City of Dubuque Code of Ordinances: (1) Flow $.484/100CF 2 i (2) CBOD5 $311.55/10001bs. (3) Total Suspended Solids $416.21/1000 lbs. Sewer use rates shall be adjusted as required by City to reflect costs associated with the operation of the POTW. The percentage increase or decrease of sewer use rates shall be the same as the rate adjustments to the municipal users of the City of Dubuque POTW. 7.2 All charges associated with the implementation of the City of Dubuque's Industrial Pretreatment Program shall be additional charges in accordance with Section 44-103 of the City of Dubuque Code of Ordinances. 7.3 Invoices shall be issued by City to Company by the 15t" day of each month for the prior month's service. 7.4 Invoices shall be payable by Company not later than 15 days after the date of issuance. SECTION 8. APPLICABLE EFFLUENT LIMITATIONS. Wastewater discharged by Company to the POTW shall not exceed the following amounts as found in Company's Industrial Pretreatment Permit with City: Parameter Monthly Maximum Maximum Daily Flow .217 Million Gallons 7,000 Gallons CBODS 46,500 Pounds 1,500 Pounds TSS 930 Pounds 30 Pounds SECTION 9. EXCESS DISCHARGES & CHARGES. The rates set forth herein shall be effective upon the commencement of the term of this Agreement. If City determines in its sole discretion that waste treatment problems occur as a result of Company's discharge exceeding the daily maximum of 7,000 gallons, 1,500 pounds of CBODS or 30 pounds of TSS, or as a result of a change in either state or federal regulations, then City and Company agree to jointly work to resolve such problems as quickly as practical. 9.1 When the analyses and volume data show that any limit specified herein has been exceeded, City shall so notify Company in writing. Company shall have ten working days after receipt of such notice to reduce the limits. If the limits are met during the ten day period, no further action shall be taken by City. 9.2 A surcharge shall be imposed for discharges which fall outside the pH range of 5.5 to 12.0 as set forth in Section 44-102(3) of the City of Dubuque Code of Ordinances. Surcharge rates shall be $100.00 per day in which one or more grab(s) or composite sample(s) is (are) found to be outside the range. 3 SECTION 10. METERING, MONITORING AND REPORTING REQUIREMENTS. 10.1 Company shall provide to City in order for City to operate at Company's expense, monitoring capabilities to allow inspection, sampling and flow measurement of Company's wastewater discharge. 10.2 Company shall allow City continuous access to any monitoring facilities located at the Facility. 10.3 Monitoring results obtained on a daily/weekly basis and/or on a monthly basis shall be reported by City to Company no later than the 15th of the following month. Monitoring reports prepared by Company shall be signed by a Company principal executive officer or the officer's designee. 10.4 Testing to determine compliance with the limits set forth herein may be done by City's representatives at any time. Company shall cooperate in making any necessary arrangements for such testing. Sampling and analytical frequencies shall be determined by City and accomplished by City's representatives. All samples taken by City shall be divided with Company, if requested by Company. 10.5 City's Water Pollution Control Plant Manager shall make an initial determination of any questions relative to the results of the sampling and testing. If Company does not agree with any such determination, it shall notify City's Water Pollution Control Plant in writing not less than fifteen (15) days following receipt of notification. 10.6 When noncompliance is determined by City's Water Pollution Control Plant Manager, and there is no written request by Company under (e), Company agrees that the results of sampling and testing by City shall be final for the determination of sewer use charges. 10.7 If Company does not accept City's testing results, upon written request by Company, City shall submit samples to the University of Iowa Hygienic Laboratory for testing. Company shall not be entitled to submit more than twelve requests for sampling and testing week periods in any calendar year. 10.8 All charges associated with independent testing shall be at Company's expense and Company shall reimburse City for any charges incurred by City upon receipt of a statement therefore from City. 10.9 The methods and procedures for determining the extent of noncompliance shall, insofar as they are consistent with the purpose of this paragraph, be those set forth above. The results of any current sampling and testing period by City shall govern the extent of charges until the results of the 4 next sampling and testing, subject to appropriate refunds after final resolution of any dispute. SECTION 11. GENERAL DISCHARGE PROHIBITIONS. Company agrees to comply with the provisions set forth in City's Industrial Pretreatment Program in Ch. 44, Division 6 of the City of Dubuque Code of Ordinances, as amended during the term of this Agreement. SECTION 12. LIABILITY LIMITATIONS. It is not contemplated that there will be any interruption to sanitary sewer service as herein contracted for, but if for any reason, including but not limited to court order, or physical conditions beyond the control of City, City is unable to furnish the services herein required, City shall not be liable for any damages or loss of any kind by Company, including but not limited to breakdown or failure of the Facility. If City notifies Company that it cannot for any reason accept the volume contemplated herein, City shall reduce the monthly charges in the same proportion that the reduced volume bears to volumes contemplated by this Agreement. Such interruption of service is limited to interruption caused by anon-permanent condition or situation and does not contemplate the right of City to voluntarily abandon or curtail the service required herein. SECTION 13. FAILURE TO PAY -TERMINATION OF SERVICE. In the event of the failure of Company to pay any amount due under this Agreement within 30 days after the due date, or in the event of any other breach of any of the terms of this Agreement by Company which is not corrected within 90 days from the date of written notice of such breach by City, City may, at its option, terminate service to Company and/or enforce the provisions hereof by any legal means. SECTION 14. COMPLIANCE WITH GOVERNMENTAL LAWS. Company shall in the performance of this Agreement comply with all applicable federal, state and local laws. SECTION 15. EXCLUSIVENESS. This Agreement contains the entire agreement between the parties and supersedes any prior understandings or agreement between them respecting the subject matter. There are no representations, arrangements, understandings or agreements, oral or written between the parties hereto relating to the subject matter of this Agreement except those expressed in this Agreement. SECTION 16. ASSIGNMENT OF AGREEMENT. Company shall not assign this Agreement without the prior written consent of City. Company acknowledges and agrees that City, in its sole discretion and for any reason, may refuse to grant consent to such assignment. Merger of Company with another corporation, sale of the majority of the stock of Company to any other corporation, or consolidation, shall be deemed an assignment for the purposes of this section. 5 SECTION 17. PARAGRAPH HEADINGS. Paragraph headings in this Agreement are for convenience only and such headings do not add to or detract from the content of the paragraphs themselves. CITY OF DUBUQUE, IOWA WESTERN DUBUQUE BIODIESEL By: By: Roy D. Buol, Mayor Attest: Jeanne Schneider, City Clerk Attest: