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HomeMy WebLinkAboutOCWD - Orange County Water District - Poseidon Resources - 2013-08-05 (2)0flCITE( OF HUNTINGTON BEACH INTER -DEPARTMENT COMMUNICATION ECONOMIC DEVELOPMENT DEPARTMENT HUNTINGTON BEACH To: Honorable Mayor and City Council Members From: Joe Shaw, City Council Membe n Date: August 5, 2013 Subject: CONFIDENTIALITY AGREEMENT BETWEEN THE ORANGE COUNTY WATER DISTRICT AND POSEIDON RESOURCES STATEMENT OF ISSUE: At the July 24, 2013, meeting of the Orange County Water District (OCWD), the Board of Directors considered and approved entering into a Confidentiality Agreement with Poseidon Resources to study the economic feasibility of a seawater desalination facility in Huntington Beach that may lead to a water purchase agreement for the entire productive capacity of the plant. This agreement essentially leaves the general public out of discussions regarding their future water supply. OCWD is a public agency. A lack of transparency on such an important issue is unacceptable. RECOMMENDED ACTION: Transmit to OCWD a letter from the City Council expressing the City's opposition to OCWD entering into the Confidentiality Agreement. Fred A. Wilson, City Manager Jennifer McGrath, City Attorney (s e4,e�6 J zo��e 8/5/2013 x Cost: $1.8 billion Fully operational but expected to be mothballed at a cost of $30 million a year Water rates for Adelaide ratepayers tripled This plant is expected to be the third source of water but as of now is not needed (after two other natural sources) Rates stay the same whether water is used or not SUPPLEMENTAL COMMUNICATION Meeting Date: A7 0 l Agenda Item N0. 0a 8/5/2013 * Double or nothing: water prices create thirsty poor • Desal plants inflate household power bill • Water charges are set to spiral in desalination squeeze * Water bills set to rise under proposed changes • Australia has overinvested in desalination says government report: The report, titled Australia's Urban Water Sector, concludes that "much of the recent investment in supply augmentation using desalination could have been smaller in scale and from a source other than desalination, while maintaining security of supply." Lower -cost sources were available in many areas, says the commission, but large investments in desalination were preferred. Like Adelaide would also be our third source of water - after groundwater and imported water OCSD expects we will be able to get 75 percent of our water from groundwater by 2015 Orange County ratepayers will pay for Poseidon's water whether it's needed or not and it's way more expensive than our first two sources of water 8/5/2013 Orange County water agencies are starting to balk at the idea of paying for water they don't need No long-term policies or standards for using desalinated water in Orange County were produced or were not studied — no one is sure what our future water needs are and how desalination fits in Conservation is increasing and water usage is declining W What we do know: Water rates will go up precipitously if Poseidon is built 3 DIREC70R5 PHILIP L ANTHONY KATHRYN L BARR DENIS R. BILODEAU, P.E. SHAWN DEWANE CATHY GREEN VINCENT F. SARMIENTO, ESQ. STEPHEN R.SHELDON HARRY S. SIDHU, P.E_ BRUCE WHITAKER ROGER C. YOH, P.E. August 2, 2013 S;NCE 1933 Celebrating 80 Years ORANGE COUNTY WATER DISTRICT ORANGE COUNTY S GRUuNowz,mg JJrtaClRtTY City of Huntington Beach Mayor Connie Boardman and Councilman Joe Shaw 2000 Main Street Huntington Beach, CA 92648 Dear Mayor Boardman and Councilman Shaw: OFIKERS President SHAWN DEWANE First Vice President CATHY GREEN Second Vice President ROGER C. YOH. P.E. General Manager MICHAEL R. MARKUS, P.E., O.WRE SUPPLEMENTAL COMMUNICATION Moo" Date: � ! L-o J3 tWn No. This letter is in response to the Inter -Department Communication from Council Member Shaw contained in item 28 of the posted agenda for the City Council meeting to be held on August 5, 2013, regarding the confidentiality agreement between the Orange County Water District (the District) and Poseidon Resources (Poseidon). I respectfully disagree with the accusation that the District is in any way lacking transparency regarding this matter. To the contrary, the District has posted the original confidentiality agreement and the recent amendment on its website for public viewing. I also believe it is noteworthy that there were 13 other agencies that executed the original confidentiality agreement with Poseidon Resources. Our Board of Directors has a policy to look at all potential sources of water to ensure water supply reliability for Orange County and ocean desalination is one of those potential sources. You may not be aware but in 2003 and 2004, the District considered developing an ocean desalination plant. At that time, we requested contractors to give us pricing information to determine what such a project might cost. Additionally in the mid 1970's the District actually constructed a pipeline from the ocean to our Fountain Valley campus along with a small ocean desalination plant to consider the cost and feasibility of constructing a large-scale plant. The study that District staff is now embarking on is going to be coordinated very closely with the current ocean desalination working group, which the City of Huntington Beach has been a participating member. In order to do a thorough evaluation, it is necessary to validate Poseidon's cost data and that is why the confidentiality agreement is necessary. It is really no different than what the City might initially do in dealing with any developer. If the District decides to consider entering into any formal arrangement with Poseidon, all of the information and data that Poseidon provides will be made available to the public. Mayor Connie Boardman Councilman Joe Shaw August 2, 2013 Page 2 of 2 Our Board also suggested that a Citizens' Advisory Committee be formed to have input during the evaluation. The District is currently taking applications for this group and details on how anyone can become involved are posted on our website. The District's Board has always been committed to openness and transparency in all its dealings and I would urge the Council not to support the recommended action regarding this matter. Respectfully, , r Michael R. Markus, P.E., D.WRE, BCEE, F.ASCE General Manager c/c: Councilman Joe Carchio Councilwoman Jill Hardy Councilman Matthew Harper Councilman Jim Katapodis Councilman Dave Sullivan City Manager Fred Wilson City Attorney Jennifer McGrath OCWD Director Phil Anthony OCWD Cathy Green CONFIDENTIALITY AGREEMENT THIS C NFIDENTIALITY AGREEMENT ("Agreement"), entered into and made effective as of the day of 2010, is by and between Orange County Water District ("OCWD") and Poseidon Resources (Surfside) LLC ("Poseidon") (collectively the "Parties"). F,Nfcffg�� WHEREAS, the Parties, along with other agencies providing water service (collectively, OCWD and such other agencies are referred to as the "Water Agencies"), have entered into discussions and negotiations concerning the possibility of a public - private partnership regarding Poseidon's Huntington Beach desalination project (the "Project"); and WHEREAS, in order to proceed with the next stage of the discussions and negotiations, OCWD has requested, and Poseidon is willing to provide, certain information that Poseidon considers proprietary and confidential; and WHEREAS, Poseidon wishes to protect its proprietary and confidential information against unauthorized use and disclosure by OCWD; NOW, THEREFORE, in consideration of the mutual promises and covenants made herein, and with the intent to be legally bound hereby, the Parties agree as follows: Confidential Information. The term "Confidential Information," as used in this Agreement, shall mean information, other than information described in one or more of clauses (a) through (d) below in this Section, that is provided by Poseidon to OCWD. When Poseidon provides Confidential Information in documentary form, whether hardcopy or electronic, it shall clearly mark it "Confidential." When Poseidon provides Confidential Information to OCWD verbally, it shall notify OCWD of the confidential nature of the information in writing prior to or immediately after verbally conveying the information. In addition to the foregoing requirements, each item of Confidential Information provided either in documentary form or verbally shall be accompanied by a writing stating the grounds for Poseidon's assertion that the information is of the nature described in Section 6 below and is not within any of the exclusions listed in clauses (a) through (d) in this Section. Poseidon shall have the right to determine, in its sole judgment, what information it will provide to OCWD, Confidential Information shall not include the following: (a) Information that, at the time of disclosure by Poseidon, is publicly available or generally known or available to third parties, or information that later becomes publicly available or generally known or available to third parties through no act or omission by OCWD; (b) Information that OCWD can demonstrate was in its possession prior to disclosure by Poseidon; (c) Information received by OCWD from a third party who, to OCWD's knowledge and reasonable belief, did not acquire such information on a confidential basis either directly or indirectly from Poseidon; and (d) Information OCWD can demonstrate was independently developed by it or a third party or for it or a third party and that was not obtained, in whole or in part, from Poseidon. 2. Disclosure and Use of Confidential Information. OCWD shall not, without Poseidon's prior written consent, disclose to any third party, firm, corporation or entity such Confidential Information, provided, however, OCWD may discuss Confidential Information with other Water Agenc(ies) that have entered into a confidentiality agreement with Poseidon. Internally, OCWD shall limit the disclosure of the Confidential Information to only those officers, employees and agents (including its governing board or committees, attorneys, accountants, bankers and consultants) of OCWD reasonably necessary to evaluate the Confidential Information and/or the Project. If OCWD internally evaluates Confidential Information and/or the Project with its governing board or committees, OCWD shall do so without disclosing the Confidential Information in a public meeting, to the extent permitted by Section 54950 et seq. of the California Government Code. Should OCWD staff determine that a need exists to disclose Confidential Information in a public meeting, OCWD will notify Poseidon of this need and identify the information to be disclosed prior to posting the agenda for the meeting. OCWD shall use the Confidential Information received from Poseidon under this Agreement only for the purpose of its internal evaluation of the Project. In complying with its obligations under this Agreement, OCWD shall use reasonable means to prevent unauthorized disclosure and to protect the confidentiality of the Confidential Information. Notwithstanding OCWD's exercise of its right to discuss Confidential Information with another Water Agenc(ies) that have entered into a confidentiality agreement with Poseidon, OCWD shall not have any obligation with regard to limiting or preventing disclosure of Confidential Information by such other Water Agenc(ies) or with regard to such other Water Agenc(ies)' performance of their confidentiality agreements, and OCWD's and such other Water Agenc(ies)' obligations under their respective confidentiality agreements shall not be construed as joint and several. Required Disclosure. In the event OCWD is requested or required by oral questions, interrogatories, requests for information or documents, subpoena, civil investigation, demand or similar process to disclose any Confidential Information received pursuant to this Agreement, OCWD will notify Poseidon immediately of such request(s) and will use reasonable efforts to lawfully delay disclosure until an appropriate protective order may be sought by Poseidon and/or a waiver of compliance with the provisions of this Agreement granted by Poseidon; provided, however, such measures shall not include initiating or defending litigation or otherwise contesting the validity of a demand for disclosure pursuant to law or order of a court or regulatory body, unless OCWD and Poseidon first reach agreement regarding the engagement of legal counsel for OCWD and the payment of OCWD's legal and related expenses in such litigation or contest. If by the earlier of seven (7) days after being notified by OCWD of such request(s) or two (2) days prior to the disclosure date, Poseidon does not either grant a waiver or seek a protective order, then OCWD may comply with the request(s) and such disclosure of Confidential Information will not constitute a breach of this Agreement. 4, Return of Documents. Either Party may elect at any time to terminate this Agreement. OCWD will return any and all Confidential Information upon written request from Poseidon, including all originals, copies, translations, transcriptions or any other form of said material, without retaining any copy or duplicate thereof. To the extent permitted by law and if Poseidon has not requested the return thereof pursuant to the preceding sentence, OCWD shall promptly destroy any and all electronic and hardcopy versions of Confidential Information, as well as any documents consisting of excerpts or portions of materials previously identified by Poseidon as Confidential Information. OCWD will not retain any Confidential Materials in its agency files. Survival of Obligations. Regardless of any termination of any business relationship between the Parties, the obligations and commitments established by this Agreement shall remain in full force and effect for four (4) years from the day and year first hereinabove written or until such time as the Parties have entered into an agreement providing otherwise. Nature of Information. OCWD hereby accepts the representations of Poseidon that the Confidential Information is of a special, unique, unusual, extraordinary, and intellectual character, that money damages would not be a sufficient remedy for any breach of this Agreement by OCWD, and that specific performance and injunctive or other equitable remedies for any such breach shall be available to it. The Parties also acknowledge that the interests of Poseidon in such Confidential Information may be irreparably injured by disclosure of such Confidential Information. The remedy stated above may be pursued in addition to any other remedies applicable at law or equity for breach of this Agreement. Should litigation be instituted to enforce any provision hereof, the Party that prevails will be entitled to recover all costs, including reasonable legal fees. expert costs and costs of investigation. 7. Governing Law. The laws of the State of California shall govern this Agreement. No Other Agreement. It is expressly understood that this Confidentiality Agreement is not and shall not be construed as any form of a letter of intent or agreement to enter into any type of transaction. No License or Rights. Neither this Agreement, nor the transfer of Confidential Information hereunder, shall be construed as granting to OCWD any license or rights to any information or data now or hereafter owned or controlled by Poseidon. 10. Except as may be required by law, without the prior consent of Poseidon, OCWD will not (a) confirm or deny any statement made by a third party regarding the Confidential Information. (b) disclose to any person the fact that Confidential Information has been made available to it by Poseidon, or (c) disclose any of the terms or conditions of this Agreement. IN WITNESS WHEREOF, the Parties hereto have entered into this Agreement on the day and year first herein above written. ORANGE;COUNTY WATER POSEIDON RESOURCES (SURFSIDE) IS IC(` LLC � 11 BY / 1 BY�~-- Kathryn Bar [NAME] S i- �lAa1O.3 [NAME] President [TITLE] «,1P--o i [TITLE] DATE DATE 26 , 1 0 r BY Mi ael R. Markus General Manager DATE ,Wiy�'r By G n rai io ds fort Oran ounty Water District THIS AMENDMENT NO. 1 (the "Amendment") entered into and made effective as of the 24 day of July, 2013, is by and between Orange County Water District ("OCWD") and Poseidon Resources (Surfside) LLC ("Poseidon") (collectively the "Parties") and amends that certain CONFIDENTIALITY AGREEMENT (as amended, the "Agreement") dated as of April 7, 2010 by and between the Parties. Capitalized terms used in this Amendment without definition shall have the meanings set forth in the Agreement. NOW, THEREFORE, in consideration of the mutual promises and covenants made herein, and with the intent to be legally bound hereby, the Parties agree as follows: Term of Agreement_ and Survival of Obligations. Section 5 of the Agreement is amended as follows: The Parties agree that the obligations and commitments established by the Agreement shall remain in full force and effect until April 7, 2016 or such time as the Parties have entered into an agreement providing otherwise. Confidential Information. The fourth sentence of Section 1 of the Agreement is amended to read as follows: "In addition to the foregoing requirements, each item of Confidential Information provided either in documentary form or verbally shall be accompanied by a writing from Poseidon, specifying the specific legal authority that would authorize OCWD to withhold each individual item of Confidential Information from public disclosure under applicable law, and stating the grounds and factual basis for Poseidon's assertion that the information is of the nature described in Section 6 below and is not within any of the exclusions listed in clauses (a) through (d) in this Section." Disclosure and Use of Confidential information. Section 2 of the Agreement is amended to read as follows: "OCWD shall not, without Poseidon's prior written consent (which may include consent obtained from Poseidon through e-mail or text message), disclose to any third party, firm, corporation or entity such Confidential Information, provided, however, following Poseidon's written consent with respect to each specific Water Agency, which shall not be unreasonably withheld, OCWD may discuss Confidential Information with such other Water Agenc(ies) that have entered into a confidentiality agreement with Poseidon, or which otherwise have expressed potential interest in entering into a future agreement with Poseidon and OCWD. Internally, OCWD shall limit the disclosure of the Confidential Information to only those officers, employees and agents (including its governing board or committees, attorneys, accountants, bankers and consultants) of OCWD reasonably necessary to evaluate the Confidential Information and/or the Project. If OCWD internally evaluates Confidential Information and/or the Project with its governing board or committees, OCWD shall do so without disclosing the Confidential Information in a public meeting, to the extent permitted by Section 54950 et seq. of the California Government Code. Notwithstanding the above, following consultation with Poseidon, OCWD may prepare and disclose summaries of any Confidential Information in a public meeting, the purpose of which is to evaluate, consider, deliberate, or act to approve any Project agreement(s) or necessary OCWD Board actions that precede the potential approval of any Project agreement. Should OCWD staff, in preparing for a public meeting, determine that a need exists to disclose Confidential Information that cannot be adequately summarized, OCWD will notify Poseidon of this need and identify the information to be disclosed prior to posting the agenda for the meeting. Poseidon expressly acknowledges and agrees that OCWD shall not be responsible or liable in any way to Poseidon for any losses that Poseidon may suffer from disclosure of any Confidential Information during the course of a public meeting in compliance with this Agreement. OCWD shall use the Confidential Information received from Poseidon under this Agreement only for the purpose of its internal evaluation of the Project. In complying with its obligations under this Agreement, OCWD shall use reasonable means to prevent unauthorized disclosure and to protect the confidentiality of the Confidential Information. Notwithstanding OCWD's exercise of its right, following Poseidon's written consent, to discuss Confidential Information with other Water Agenc(ies) in accordance with this paragraph, OCWD shall not have any obligation with regard to limiting or preventing disclosure of Confidential Information by such other Water Agenc(ies) or with regard to such other Water Agenc(ies)' performance of their confidentiality agreements, and OCWD's and such other Water Agenc(ies)' obligations under their respective confidentiality agreements shall not be construed as joint and several." Required Disclosure. Section 3 of the Agreement is amended to read as follows: "in the event OCWD is requested or required by oral questions, interrogatories, requests for information or documents, subpoena, civil investigation, demand or similar process to disclose any Confidential Information received pursuant to the Agreement, OCWD will notify Poseidon immediately of such request(s) and will use reasonable efforts to lawfully delay disclosure until an appropriate protective order may be sought by Poseidon and/or a waiver of compliance with the provisions of this Agreement granted by Poseidon; provided, however, such measures shall not include initiating or defending litigation or otherwise contesting the validity of a demand for disclosure pursuant to law or order of a court or regulatory body. It is Poseidon's responsibility, as the real party in interest, to defend at its sole cost any court action, or any other proceeding, related to requests for Confidential Information received by OCWD, and further, Poseidon shall hold OCWD harmless and pay any reasonable costs or attorneys' fees incurred by OCWD, and/or awarded against OCWD, in the event an action is brought to obtain Confidential Information from OCWD and OCWD withholds Confidential Information from public disclosure in accordance with this Agreement. If by the earlier of seven (7) days after being notified by OCWD of such request(s) or two (2) days prior to the disclosure date, Poseidon does not either grant a waiver or seek a protective order, then OCWD may comply with the request(s) and such disclosure of Confidential Information will not constitute a breach of this Agreement. If OCWD is in compliance with this Agreement, OCWD shall not be responsible or liable in any way for any losses that Poseidon may suffer from disclosure of any documents which are released pursuant to a court order, or other legal authority, in any lawsuit related to requests for Confidential Information." Nature of Information. Section 6 of the Agreement is amended to read as follows: "if OCWD disagrees with Poseidon that information disclosed is confidential under the law cited by Poseidon, OCWD shall return the information to Poseidon within fifteen (15) days, and shall not retain it. If the information is not returned within fifteen (15) days, OCWD will be considered to have accepted the representations of Poseidon that the information disclosed is confidential under the law. OCWD agrees that the Confidential Information is of a special, unique, unusual, extraordinary, and intellectual character, that money damages would not be a sufficient remedy for any breach of this Agreement by OCWD, and that specific performance and injunctive or other equitable remedies for any such breach shall be available to it. The Parties also acknowledge that the interests of Poseidon in such Confidential Information may be irreparably injured by disclosure of such Confidential Information. The remedy stated above may be pursued in addition to any other remedies applicable at law or equity for breach of this Agreement." Section 10 of the Agreement is amended to read as follows: "OCWD shall use its professional discretion, with the intention of carrying out the intent and spirit of this Agreement, in responding to requests to: (a) confirm or deny any statement made by a third party regarding the Confidential Information, (b) disclose the fact that Confidential Information has been made available to it by Poseidon, or (c) disclose the existence of this Agreement and discussions with Poseidon; provided that OCWD shall not disclose the terms or conditions of this Agreement or the content of any Confidential Information except as may be required by law or otherwise in accordance with this Agreement. OCWD shall promptly notify Poseidon of such requests, and of any response provided. OCWD shall not be responsible or liable in any way for any losses that Poseidon may suffer from any disclosure made in response to such requests, except as otherwise provided for in this Agreement." 7. Each Party represents that it is duly authorized to execute this Amendment and perform its obligations hereunder. 8. All other terms, covenants, and conditions in the Agreement as amended shall remain in full force and effect and shall be applicable to this Amendment. IN WITNESS WHEREOF, the Parties hereto have entered into this Amendment on the day and year fir erein a itten. ORA COUNTY WAT DISTRICT POSEIDON RESOURC (SURFSIDE) LLC By, Bv: Name: Shawn Dewane Name: 5a,57jir M,N100 Title: President Title: i/ieC. PrC5Je,st Date:__ - _ Dater 2 H ZOt3 By: Name: Michael R. Markus Title: General Manager Date: 2- „zq- 13