title
An ordinance authorizing the granting of easements and approving a Gas Rights Agreement and Lease Agreement between the Metropolitan Government of Nashville and Davidson County, through the Department of Water and Sewerage Services, and Burnham Nashville LLC, for the Renewable Natural Gas Project. (Proposal No. 2026M-025AG-001)
body
WHEREAS, the Metro Water and Sewerage Services (“MWS”) Biosolids Facility at the Central Water Reclamation Facility, located at 1810 Cement Plant Road, produces an average of 1,500,000 Cubic Feet of biogas everyday as a byproduct of the biological processes occurring in its anaerobic digesters; and,
WHEREAS, although the Biosolids Facility uses a portion of this biogas for internal processes, a significant amount of the biogas is burned off using waste gas burners; and,
WHEREAS, pursuant the Gas Rights Agreement, attached hereto as Exhibit 1, Burnham Nashville LLC (“Burnham”) will construct a facility on MWS property (“RNG Facility”), which will receive biogas from the Biosolids Facility, convert the biogas into Renewable Natural Gas (“RNG”) and inject it into a nearby gas pipeline; and,
WHEREAS, this process will allow for the beneficial reuse of 100% of the biogas produced at the Biosolids Facility and the RNG that is injected into the pipeline will generate energy credits that can be marketed; and,
WHEREAS, Burnham will finance, design, construct, own, and operate the RNG Facility and in exchange for the biogas provided by MWS, Burnham will provide MWS with a minimum of 70% of the net revenue generated from the marketing of the RNG and the energy credits; and,
WHEREAS, pursuant to the Lease Agreement, attached hereto as Exhibit 2, Burnham will lease approximately 1.2 acres, located at 1815 Cement Plant Road, to construct and operate the RNG Facility; and,
WHEREAS, MWS will convey two (2) permanent easements to Burnham and one (1) temporary construction easement to Burnham for Burnham to access, construct and operate the RNG Facility, as described and shown in the Permanent and Temporary Easement Agreement, attached hereto as Exhibit 3; and,
WHEREAS, contracts beyond 60 months must be approved by ordinance; and,
WHEREAS, it is in the best interest of the Metropolitan Government of Nashville and Davidson County to grant the easements to Burnham and to approve the Gas Rights Agreement and the Lease Agreement.
NOW, THEREFORE, BE IT ENACTED BY THE COUNCIL OF THE METROPOLITAN GOVERNMENT OF NASHVILLE AND DAVIDSON COUNTY:
Section 1. That the Gas Rights Agreement between the Metropolitan Government of Nashville and Davidson County, through the Department of Water and Sewerage Services, and Burnham Nashville LLC, attached hereto as Exhibit 1 and incorporated herein, is hereby approved.
Section 2. That the Lease Agreement between the Metropolitan Government of Nashville and Davidson County, through the Department of Water and Sewerage Services, and Burnham Nashville LLC, attached hereto as Exhibit 2 and incorporated herein, is hereby approved.
Section 3. That the Permanent and Temporary Easement Agreement granting to Burnham Nashville LLC permanent and temporary easements to access, construct and operate the RNG Facility, attached hereto as Exhibit 3 and incorporated herein, is hereby approved.
Section 4. That the Director of the Department of Water and Sewerage Services or his designee is authorized to execute such other documents as are necessary to carry out the objectives of this ordinance.
Section 5. Amendments to this legislation shall be approved by resolution.
Section 6. This ordinance shall take effect from and after its final passage, the welfare of The Metropolitan Government of Nashville and Davidson County requiring it.
Agenda Analysis
Analysis
This ordinance approves a gas rights agreement and lease agreement between the Metropolitan Department of Water and Sewerage Services (“MWS”) and Burnham Nashville LLC (“Burnham”) for a renewable natural gas project. The ordinance also authorizes the granting of easements related to the project.
Both agreements have twenty-year terms. Burnham has two five-year options to extend length of the agreement, subject to a letter of acceptance from both parties. Both agreements would take effect upon their approval and filing with the Metropolitan Clerk. Section 4.12.160 of the Metropolitan Code of Laws limits the term of contracts for supplies or services to sixty months, unless otherwise authorized by the Metropolitan Council. Future amendments to the agreement may be approved by a resolution of the Metropolitan Council receiving 21 affirmative votes.
Gas Rights Agreement
The MWS Biosolids Facility at 1810 Cement Plant Road produces an average of 1.5 million Cubic Feet of biogas everyday as a byproduct of the anaerobic digesters used for water reclamation. A significant amount of the biogas is currently burned off through waste gas burners. The gas rights agreement under consideration through this ordinance would allow Burnham to construct a facility on MWS property that would receive biogas from the Biosolids Facility, convert the biogas into Renewable Natural Gas and inject it into a nearby gas pipeline. This conversion allows for the beneficial reuse of 100 percent of the biogas produced at the Biosolids Facility.
Per the gas rights agreement, Burnham will finance, design, construct, own, and operate a renewable natural gas facility in exchange for the biogas provided by MWS. Burnham would agree to start construction 18 months after the effective date of the agreement and achieve commercial operation 24 months after the effective date. Burnham would own the facilities it constructs, and MWS would continue to own the existing biosolids facility.
Burnham would agree to purchase all biogas delivered by MWS and use all commercially reasonable efforts to process and deliver that biogas. Burnham would provide MWS with at least 70 percent of the net revenue generated from renewable natural gas.
Both parties would have the right to terminate the agreement upon the default of the other party. Burnham may terminate the agreement at any time prior to the start of construction or 18 months after the effective date, whichever is earlier. Upon termination or expiration of the agreement, Burnham would be required to dispose of most of its equipment within 12 months.
Both parties would agree to indemnify and hold each other harmless for losses from third-party claims. Burnham’s indemnification of MWS expressly includes injuries, property loss, willful acts or negligence, violation of laws, the spill of hazardous substances, or any breach of a covenant or agreement from Burnham as part of the gas rights agreement.
Relative to insurance, Burnham would maintain general liability insurance with a respective limit of at least $2,000,000 for each occurrence. Burnham will also maintain worker’s compensation and employer’s liability, automobile insurance with a limit of $1,000,000, bodily injury and property damage insurance with a $2,000,000 general aggregate limit, property insurance for equipment’s full replacement value, and pollution legal liability with a $1,000,000 limit for each occurrence and in general aggregate.
Lease Agreement and Easements
In a separate lease agreement, Burnham would lease approximately 1.2 acres at 1815 Cement Plant Road to construct and operate the renewable natural gas facility. MWS would also convey two permanent easements to Burnham and one temporary construction easement to Burnham for Burnham to access, construct and operate the renewable natural gas facility.
During the term of the contract, Burnham shall pay $1 a year to MWS in annual rent. MWS would agree to allow Burnham to develop, construct, and manage the renewable natural gas project. Burnham would continue to own the components of the renewable natural gas project and the products produced through the gas rights agreement. Burnham would maintain the insurance described in the gas rights agreement. Both parties would agree to indemnify and hold each other harmless for losses from third-party claims. Burnham’s indemnification of MWS expressly includes injuries, property loss, willful acts or negligence, violation of laws, the spill of hazardous substances, or any breach of a covenant or agreement from Burnham as part of the lease.
Separately, MWS and Burnham would agree to two permanent easements to allow Burnham to access the property at 1815 Cement Plant Road and one temporary construction easement on the same property.
Fiscal Note: Burnham Nashville LLC (“Burnham”) will pay quarterly a royalty amount with a minimum amount of $1,000,000 per calendar year for biogas provided by Metro. The royalty amount is calculated at 70% of the offtake revenues. Offtake revenues is the net revenue received from the sale of Renewable Natural Gas (“RNG”) and Environmental Attributes less cost of recovery allowance and any additional RNG management costs. RNG management cost is capped at 30% of the gross revenues from the sale of RNG and Environmental Attributes. Burnham will pay a late fee of $500 each day for failure to achieve actual start of construction by the guaranteed start of construction date and $1,000 each day for failure to achieve commercial operation by the guaranteed commercial operation date.
Burnham will lease the Central Biosolids Facility from Metro in the amount of one dollar and will be responsible for the construction of the facility, any applicable personal property tax, permits, utilities, build, maintain, and install any road, improvements, equipment, fences, gates, signs, communication lines or facilities, pipelines, or anything reasonably necessary for RNG project activities.