REPORT TO THE CITY COUNCIL
FROM: BROCK D. BUCHE, PE, PLS, Director
Department of Public Utilities
BY: AHMAD ALKHAYYAT, PE, MBA, Assistant Director
Department of Public Utilities - Solid Waste Management Division
LORENZO NADORA, Solid Waste Manager
Department of Public Utilities - Solid Waste Management Division
SUBJECT
Title
Actions pertaining to the First Amendment to the Service Agreement with Kochergen Farms Composting, Inc., to comply with Senate Bill 1383 Short-Lived Climate Pollutants (citywide):
1. RESOLUTION - Adopt findings pursuant to California Environmental Quality Act (CEQA) Guidelines Sections 15091 and 15093 as required for Responsible Agencies by California Environmental Quality Act (CEQA) Guidelines Section 15096 for Senate Bill 1383 Regulations Short-Lived Climate Pollutants: Organic Waste Methane Emission Reduction
2. Approve the First Amendment to the Service Agreement related to receiving and processing of organic waste with Kochergen Farms Composting, Incorporated
Body
RECOMMENDATIONS
Staff recommends that City Council adopt a Resolution making findings pursuant to California Environmental Quality Act (CEQA) Guidelines Sections 15091 and 15093 as required for Responsible Agencies by CEQA Guidelines Section 15096 for Senate Bill 1383 (SB 1383) Regulations Short-Lived Climate Pollutants (SLCP): Organic Waste Methane Emission Reduction; Approve the First Amendment to the Service Agreement (First Amendment) with Kochergen Farms Composting, Inc. (Kochergen); and authorize the Director of Public Utilities, or designee, to execute the First Amendment on behalf of the City of Fresno (City).
EXECUTIVE SUMMARY
The Department of Public Utilities - Solid Waste Management Division proposes that the Council approve the First Amendment with Kochergen, for the inclusion of language to ensure the City of Fresno’s (City) compliance with SB 1383 requirements. In addition, the First Amendment will extend the term of the agreement by five years to June 30, 2031, and revise Kochergen’s service fee based on per ton amount of organic materials delivered. Council approval of this First Amendment cannot be delayed, as the due date required by CalRecycle to complete this task is on November 16, 2023.
BACKGROUND
On May 1, 2016, the City entered into a service agreement with Kochergen for the processing of green waste materials collected by the City. The passing of SB 1383 placed new regulatory requirements on the City that necessitated changes to the service agreement to meet the latest State mandates.
In September 2016, Governor Brown signed into law SB 1383 establishing methane emissions reduction targets in a state-wide effort to reduce emissions of SLCP in various sectors of California’s economy. SB 1383 directs the Department of Resources Recycling & Recovery (CalRecycle) to adopt regulations and requirements to achieve statewide goals. SB 1383 is California’s most significant waste reduction mandate in the last 30 years.
Under SB 1383, the City will be subject to noncompliance fines by CalRecycle for up to $10,000 per day per violation. To achieve SB 1383 compliance status and to meet the Corrective Action Plan requirements, the City must expand commercial organic waste collection programs, develop edible food recovery programs, and instill procurement mechanisms for SB 1383. Those programs included ordinances, policies, and other enforceable mechanisms, including the City’s Service Agreement with the Service Providers.
Recognizing that the requirements of SB 1383 compliance were extensive, the City and Kochergen began discussions and negotiations for SB 1383 services in April 2022. The proposed amendment to the City’s service agreement will require Kochergen to receive and process organic materials to comply with SB 1383 requirements for final disposition of the City’s collected organic materials. In addition, Kochergen shall act as a direct service provider to assist the City in attempting to meet its SB 1383 required procurement target.
In order for Kochergen to perform these required actions, a service fee adjustment must be adopted to account for the additional expenses incurred and capital resources needed. The special adjustment would increase the service fee sufficiently to cover all costs of the organics processing and diversion program mandated under SB 1383. The current service fee is $16.75. The service fee amounts beginning December 1, 2023, through June 30, 2028, shall be as follows:
Date Service Fee per ton
December 1, 2023 - June 20, 2024 $22.50
July 1, 2024 - June 20, 2025 $27.00
July 1, 2025 - June 30, 2026 $30.00
July 1, 2026 - June 30, 2027 $31.50
July 1, 2027 - June 30, 2028 $32.50
The First Amendment has also been reviewed for legal sufficiency and approved to form by the City Attorney.
Considering the foregoing, staff recommends that City Council approve the First Amendment with Kochergen and authorize the Director of Public Utilities to sign the amendment on behalf of the City.
ENVIRONMENTAL FINDINGS
The Department of Resources Recycling and Recovery (CalRecycle), as Lead Agency prepared an Environmental Impact Report for SB 1383 Regulations Short-Lived Climate Pollutants: Organic Waste Methane Emission Reduction Regulations, identified by State Clearinghouse No. 2018122023 (SLCP EIR). CalRecycle certified the EIR in a Notice of Determination dated December 30, 2019. The SB 1383 Regulations EIR provided an analysis of the potential environmental impacts associated with the SB 1383 Regulations (Regulations). Approval of the proposed First Amendment to Service Agreement with Kochergen is to require the provider to receive and process organic wastes from customers, contamination monitoring, noticing, education and outreach, and reporting services, all as required by the Regulations.
An analysis has been performed pursuant to CEQA Guidelines Section 15162 to determine potential environmental impacts associated with the Regulations. Based upon the analysis, the following findings are made to support the determination that no subsequent environmental review is required:
1. No substantial changes are proposed in the project, which will require major revisions to the EIR due to the involvement of new significant environmental effects because the project is being implemented as planned.
2. No substantial changes occurred with respect to the circumstances under which the project was undertaken which will require major revisions to the EIR due to the involvement of new significant environmental effects or a substantial increase in severity of previously identified significant effects.
3. There is no new information, which was not known and could not have been known at the time of the previous EIR showing that:
a. The project will have one or more significant effects not discussed in the previous EIR.
b. Significant effects previously examined will be substantially more severe than shown in the previous EIR.
c. Mitigation measures or alternatives previously found to be not feasible are now feasible and would substantially reduce one or more significant effects of the project.
Based upon these findings, it has been determined that a subsequent EIR is not required.
Pursuant to the requirements of CEQA Guidelines Section 15096(h), the City adopts the findings attached as Exhibit A to the Resolution, as required by CEQA Guidelines 15091 and 15093.
LOCAL PREFERENCE
Local preference is not implemented because this amendment is not an award of a construction or services contract.
FISCAL IMPACT
There is no impact on the General Fund. This project is located citywide. Funding for services is included in the approved Fiscal Year 2024 Solid Waste Enterprise Fund budget.
Attachments:
Resolution Adopting findings pursuant to CEQA
First Amendment to Service Agreement with Kochergen Farms Composting, Inc.
Service Agreement with Kochergen Farms Composting, Inc.