HomeMy WebLinkAbout2021 05 10 Letter from Veolia to City Manager Shawn Boyle May 10, 2021
VIA HAND DELIVERY
Shawn Boyle, City Manager
City of Winter Springs, Florida
1126 East State Road 434
Winter Springs, Florida 32708-2799
RE: Agreement for Utilities Operations, Maintenance and Management Services dated
October 21, 2019 ("Agreement"), by and between the City of Winter Springs ("City")
and Veolia North America—South LLC ("Veolia")
Dear Mr. Boyle:
We are in receipt of two breach letters from the City dated January 11, 2021, and April 20, 2021,
which followed the City's receipt of two DEP Warning letters to the City dated January 5, 2021
(for the West Plant) and April 13, 2021 (for the East Plant), respectively. Both letters allege
performance breaches by Veolia under the above-referenced Agreement based on the DEP
Warning letters and request that Veolia take whatever steps are necessary to cure and remedy
the performance breaches as required by Paragraph 12.3 of the Agreement.
As explained below,Veolia has met with the DEP and City and remedied any issues(irrespective
of whether they were alleged violations or not), and otherwise cooperated and serviced the City's
needs throughout this challenging time. While this response seeks to address the points raised
by the City in its two letters, it is not meant to be a comprehensive response to the City's breach
letters. Veolia expressly reserves all of its rights, remedies and defenses under the Agreement
and Florida law, whether or not stated herein.
To that end, Veolia respectfully disagrees that certain matters constitute breaches by Veolia
since the matters were beyond the reasonable control of Veolia as explained below. With
respect to matters within Veolia's reasonable control, Veolia has cured and remedied such
matters as documented by the City in its responses to the DEP Warning letters. As you are
aware, Veolia's management and project staff have worked, and continue to work, closely with
the City's staff, and Veolia's attorneys have worked closely with the City Attorney, to respond to
the allegations of non-compliance raised by the DEP in its Warning letters. Veolia incorporates
by reference the City's responses to the DEP Warning letters, together with the City's other
filings with the DEP since January, as evidence that Veolia has worked diligently to cure or
remedy the alleged breaches which could be the responsibility of Veolia. As Veolia previously
stated to the City and promised in the Agreement,Veolia will be responsible for any civil penalties
imposed by the DEP that are a result of Veolia's negligence or willful misconduct.
West Plant
The City's first breach letter dated January 11, 2021, was sent in response to the DEP Warning
letter dated January 5,2021, which asserted (i) late reporting of several unauthorized discharges
of less than 1,000 gallons that occurred at the West Plant during construction activities in
November and December 2020, and (ii) unauthorized discharges of approximately 10,000 -
15,000 gallons of partially treated effluent from the West Plant to irrigation ponds on the adjacent
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golf course that has been inactive for the past 15 years. The DEP letter followed closely after
reports of several dead fish in the same golf course ponds, including a body of water locally
known as"Lake Audubon".'
As you recall, the dead fish and DEP Warning letter were the first indication to either party that
something was amiss and prompted the City and Veolia to immediately investigate to determine
if there were discharges to the golf course ponds. The investigation revealed that a series of
unknown or poorly documented connections between subsurface lines, valves and weirs at the
West Plant diverted water sent to the North Pond at the West Plant to the golf course ponds.
The line to the golf course connects to irrigation ponds that were used to draw irrigation water
for the golf course when it operated 15 years ago. The DEP permit indicates the line to the golf
course ponds is still a permitted outfall for the West Plant, but the line is not metered.
The existence of these subsurface structures and lines apparently caused water to flow to the
golf course ponds and is just one example of pre-existing issues which long precede any
involvement by Veolia with operations at the West Plant. The West Plant is more than 50 years
old and consists of two treatment trains that were constructed, patched, and repaired at various
times over the decades with no as-built drawings or flow diagrams available to describe the
interconnections and flows at the West Plant. Construction activities at the West Plant over the
past 6 months, which have been coordinated and discussed with the City, have uncovered
numerous unknown lines and valves which create uncertainty regarding operations at the West
Plant and the purpose and location of these various subsurface structures. The construction
activities and stresses of running all flow to the West Plant through one treatment train caused
a long series of unforeseeable equipment and component failures that made it impossible at
points for the plant to operate as designed. The above pre-existing conditions and failures are
in many cases the primary cause of the non-compliance events alleged in the various DEP
Warning letters, if they did, in fact, occur.
The City recently acknowledged the existence of pre-existing conditions at the West Plant that
are beyond the reasonable control of the City and Veolia in its letter to the DEP dated April 29,
2021:
... the release to the golf course ponds was unintentional and the result of unknown
subsurface lines, valves and weirs that diverted water being sent to the North Pond to
the golf course ponds. The existence of these subsurface structures in a 50 ear old
facilitywere clearl a force ma'eure event that was be and the knowled a and
reasonable control of the Cit 's current staff and contractors."
See also the Amended Wastewater Malfunction/Abnormal Event Report filed by the City with the
DEP on March 22, 2021, which reported to the DEP that the absence of a meter on the line to
the golf course made it impossible to determine the exact amount of water that reached the golf
course ponds. The City reported to the DEP that the best that could be done was to calculate
an "Unaccounted for Flow" number in the November and December 2020 DMRs with a warning
that the Unaccounted for Flow number contained in the November and December DMRs is more
than just water making it to the golf course ponds.2
As both the City and Veolia have come to realize as part of our investigation, this"lake" is not naturally
occurring but rather a man-made retention pond created to serve the now inactive golf course.
2 Unaccounted for Flow includes, without limitation, the calibration issues of the various meters into and
out of the Plant and their respective margins of error (as much as 5%), meter volume, timing of meter
readings, flow lost in the reject/recycle pond (both seepage and evapotranspiration losses), unmetered
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Among other things, the latent and patent defects, chronic equipment and component failures,
poor condition and age of the facilities, and uncertainty regarding plant flows and treatment
capability at the West Plant existed before Veolia started operating the West Plant under the
Agreement. As the Agreement makes clear, these events or conditions at the West Plant and
their direct or indirect impacts constitute Force Majeure Events under the Agreement. The
construction activities themselves, which are performed by the City using other contractors, also
constitute Force Majeure events under the Agreement to the extent they negatively impact
Veolia's operation of the West Plant. In this regard, Veolia operated the West Plant without
incident for the most part until Train#2 at the West Plant was taken off line at the end of October
2020 at which point Train#1 began taking all of the flow and the seemingly unceasing series of
equipment and component failures started almost immediately.
It is clear from the length and substance of the Force Majeure provisions in the Agreement that
the parties anticipated the age and condition of the plants could lead to significant Force Majeure
Events during the term of the Agreement. Section 13.2 of the Agreement includes standard
language that "neither Party shall be liable for any default or delay in the performance of its
obligations under this Agreement if and to the extent such default or delay is caused, directly or
indirectly, by a Force Majeure Event". The Agreement opts for an expansive definition of Force
Majeure, recognizing that "any event or condition ... which is be and the reasonable control of
the Party relyina thereon" is a Force Majeure Event. The definition includes a non-exclusive
listing (i.e., "including but not limited to") of specific Force Majeure events (e.g., Acts of God,
change of law, actions by third parties), which means any event or condition that is beyond the
reasonable control of Veolia is a Force Majeure event regardless of whether it is specifically
listed in the Agreement. Force Majeure Events, and anything directly or indirectly caused by the
Force Majeure Events, cannot be asserted to be defaults by Veolia under the Agreement.
Section 13.2 emphasizes that both parties "commit to each other to use their respective
commercially reasonable-efforts as owner and operator, to repair, restore, operate and/or
manage the[East and West Plants] ... even during and after a Force Majeure Event such as to
mitigate the effects of such Force Majeure Event." Both the City and Veolia have to date worked
very well together to address any issues, service the City's residents, and have both clearly met
and exceeded their respective obligations to mitigate the Force Majeure Events at the West
Plant as required by the Agreement.
The obligation to continue performing in the face of Force Majeure Events was so important to
the parties when the Agreement was negotiated that Section 13.2 of the Agreement provides
that "fthe]Agreement shall not be terminated in whole or in part, as a result of a Force Majeure
Event unless by mutual written agreement or VWNA's abandonment of its obligations under this
Agreement." As Veolia continues to work with the City through the Force Majeure Events and
clearly has not abandoned its obligations under the Agreement, Veolia submits that any
termination of the Agreement at this point must occur, if at all, by mutual agreement of the parties.
As more evidence of the hard work both Veolia and the City have undertaken to ensure the
Force Majeure Events have minimal impact on Winter Springs residents and the environment,
the City recently acknowledged in the mitigation letter sent to the DEP on April 27 that both the
City and Veolia have expended considerable additional monies,time and effort to respond to the
Force Majeure Events at the West Plant. Veolia, for its part, has provided more than $500,000
in additional value at the West Plant the form of services, labor and expenses, which includes,
among other things, emergency services, extended hours and days for Veolia staff, and Veolia
onsite excursions, percolation into the golf course area, differential percolation pond storage levels, other
volume reductions and losses, and finally some overland flow to the lake.
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pulling in many of Veolia's wastewater treatment experts and operators to the West Plant from
other Veolia locations in North America.
To summarize the above, the allegations by the DEP in its January 5 Warning letter regarding
flows to the golf course ponds constitute Force Majeure Events under the Agreement, which are
beyond the reasonable control of Veolia and do not constitute a breach or default by Veolia
under the Agreement. As to the other allegations in the January 5 Warning letter regarding the
alleged late reporting of the minor on-site plant overtopping during construction, Veolia has
implemented new and more stringent reporting protocols for all onsite personnel which will
remedy this happening again, as outlined in the City's response to the DEP Warning letters.
East Plant
With respect to the breach allegations raised by the City in its breach letter dated April 20, 2021,
which concerns the non-compliance events described in the DEP Warning letter to the City dated
April 13, 2021 (for the East Plant), Veolia once again asserts that many of the allegations
constitute or arise from Force Majeure Events that are beyond the reasonable control of Veolia
(e.g. non-compliance caused by the equipment and component failures). Similar to the West
Plant, with respect to matters within Veolia's reasonable control, Veolia again points to the City's
written and verbal responses to the DEP's April 13 letter which outline how any alleged breaches
that are the responsibility of Veolia have been or will be cured or remedied. Once again, Veolia
will be responsible for any civil penalties imposed by the DEP that are a result of Veolia's
negligence or willful misconduct.
In summary, the City and Veolia have worked well with one another above and beyond their
respective contractual and legal requirement to respond to the Force Majeure Events and other
problems encountered at the East and West Plants and the City's other facilities. Despite these
challenges, the West Plant is now functioning properly and, in fact, demonstrating substantial
improved performance over pre-construction operations. The East Plant may yet experience
similar problems as construction activities there are performed, delayed or minimized in light of
expedited plans to build replacement treatment plant(s). As always, Veolia remains prepared to
work with the City to overcome any problems that may arise as the City's partner in providing
excellent utility services to the City's residents.
Please call me if you have any questions regarding the above.
Sincerely,
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Steven J Kruger
Senior Vice President