Guam – GEDA Administrator Henry Taitano Friday released a draft agreement between the Guam Economic Development Authority [GEDA] and Guam Resource Recovery Partners [GRRP] for the construction of a waste to energy plant in Santa Rita.
This “draft” revises the prior 1996 agreement over the controversial plant, and Taitano says in an email to the media that this is the draft that “the Legislature will be considering” [read Taitano’s email below].
In a March 18 letter to Speaker Judi Won Pat announcing the draft agreement, Taitano says this new agreement offers terms “more favorable” to GovGuam. However in an email to the media Friday he states that “neither GEDA nor the Governor agree with many of the proposed provisions of the agreement, especially those in conflict with current law.” A waste to energy plant of the type proposed by GRRP is prohibited under current Guam law.
This revised agreement is the result of court ordered mediation following GRRP’s decision to file a $20-million dollar lawsuit against GovGuam in 2011. That lawsuit alleged breach of contract claiming that GovGuam failed to negotiate a waste-to-energy agreement with GRRP in good faith.
Taitano says GEDA agreed to enter into the mediation “to avoid the $20M liability” and this revised agreement is the result. A status hearing on the case is schedule for Monday at 2pm in Judge Alberto Lamorena’s court.
The revised agreement was announced in a letter from Taitano to Speaker Judi Won Pat last Tuesday, March 18th. In that letter, Taitano highlights significant components including:
* Chevron will partner with GRRP to finance and operate the Waste-to-Energy plant
* the project proposed by Chevron and GRRP will “significantly” extend the life of the Layon landfill
* this new “draft” agreement does not require GovGuam to deliver a minimum guaranteed tonnage of waste
* the new agreement does not contain a liquidated damages provision (the liquidated damages provision in the first contract led the Guam Supreme Court to invalidate the original contract)
In his Friday email to the media, Taitano writes “The Governor leaves it to the wisdom of the Legislature to ensure whatever they do with this draft agreement is in the best interests of the people of Guam,” states Taitano, concluding that “it’s now up to them to adopt it, reject it, or amend this agreement”.
Extent of Legislative Approval Questioned:
However, Santa Rita resident, and long-time critic of the proposel, Ken Leon Guerrero, questions the degree of approval this draft agreement would require from the Legislature. He points to Section 3.02 which says that “neither the execution … of this Agreement or the Related Agreements … nor the performance of their respective terms, requires Legislative Approval.”
Page 50, letter (e) states the following:
Section 3.02 Government Representations. The Government represents and warrants to the Company as of the Contract Date as follows:
(e) Neither the execution and delivery by the Government of this Agreement or the Related Agreements to which the Government is a party, nor the performance of their respective terms, requires Legislative Approval (other than (i) rezoning of the Facility Site, if any, required to comply with the Zoning Law, as provided in Section 4.02(e) and (ii) in connection with the issuance of Bonds, as provided in Section 4.02(f) or the consent or approval of, the giving of notice to, or the registration with, any Governmental Authority or any referendum of voters.
When we contact GEDA Administrator Taitano for comment he referred us to attorney Tom Fisher who told us he is bound by a confidentiality agreement, but he hopes to provide as much detail about the revised agreement, soon.
GRRP representative David Sablan did not return our call.
If the revised agreement does win Legislative approval, it will still need approval from the Guam Environmental Protection Agency [GEPA].
Guam EPA initially rejected the permit application for GRRP’s first “Waste to Energy” plant application. However last year Guam EPA Administrator Eric Palacios rescinded his previous denial, putting GRRP’s original application back to square one. And a final decision on that first permit application by GRRP has still not been issued, said Palacios.
He has not received a new permit application from GRRP for this revised plan, but Palacios said it will still require EPA approval.
Option to Buy:
The draft agreement also includes an option that would allow GRRP to purchase and privatize the Layon Landfill site, which is now owned by GovGuam, and operated under the Solid Waste Authority, which remains under receivership.
Page 73 letter (a) states the following:
“In recognition of the rights and obligations of the Company[GRRP] under the Amended License, the Company [GRRP] hereby grants to the Government an option … to offer the Company [GRRP] to purchase the Layon Landfill for the Purchase Price. The Purchase Price shall equal the Layon Landfill Construction Cost plus the Layon Landfill Land Acquisition Cost. The Government must provide the Company ninety days written notice of its intent to exercise this option. In no event shall the Option Exercise Date be deemed to have occurred prior to the ninety-first date after such notice.”
Location of Waste to Energy Plant, Still Planned for Santa Rita:
The original agreement called for building this waste to energy plant in the Atentano area of Santa Rita, which GRRP has always refered to as Gutali.
Leon Guerrero, says “it appears the government is responsible for finding and providing a site if for any reason the current [Santa Rita] site is not viable. And the government is responsible for issuing bonds to pay for the construction.”
READ GEDA Administrator Henry Tiatano’s email to the media below:
Some of you have asked me for the draft agreement on GRRP that the Legislature will be considering. While this is a draft and is not part of public domain, in the spirit of transparency (and because this matter is of significant public importance) I have attached this draft. Please let me know what else you may need to present the public with all information you wish to report. Here are seven points on this matter from me:
1. GRRP sued GovGuam for $20M, claiming GovGuam failed to negotiate a waste-to-energy agreement with them in good faith.
2. So, we went into court-ordered mediation with GRRP to avoid the $20M liability. In the mediation we agreed we would negotiate with them, and then turn the matter over to the Legislature to see if the senators want to come up with any contract. We required conditions that GRRP would have to address legal conflicts in the law directly with the Legislature, as that is the policy-making body.
3. GEDA did its ministerial duty and negotiated with GRRP until December. We attached the draft agreement in the spirit of transparency.
4. While GEDA understands its ministerial duty to transmit this agreement, neither GEDA nor the Governor agree with many of the proposed provisions of the agreement, especially those in conflict with current law. Part of our ministerial duty is to pass this to the Legislature so that they can set policy.
5. One of the reasons the Governor would not sign a contract like this is it conflicts with local law.
6. The Governor leaves it to the wisdom of the Legislature to ensure whatever they do with this draft agreement is in the best interests of the people of Guam. It’s now up to them to adopt it, reject it, or amend this agreement.
7. We wish them well in their deliberations.