Document bay3LQVQX93z1qvmno4km7VM0

To: From: Sent: Subject: Gunasekara, Mandy[Gunasekara.Mandy@epa.gov] Doyle, Colleen Wed 11/29/2017 7:06:50 PM Hanson Aggregates' Request for Guidance Re Common Control - (Part 2 of 2) 17cv1906 Sierra Club v. EPA ED_O01523A_00000101-00001 HRsi ami-xiai.^ I hi, hi',1 Vtieiulmci:! to I andIIII Ikwhipmcnt .Vjieenicnl ilhc "Aniei'd.inenfi is hereby entered into and dk-cthe as of! Jecenibcr ?. 2016. by and between I l.mson Aperee.iics I'addc Southwest, hie., a Delaware cot penal ion <"l lamon" l arid Seeuiiiorc I aitdlill. hie., a Caldbnmi cetpordion i SI Id cdlecmdy. the parries") ........ ... . RM JI AIS . \ Smith ( oast Mukuials ('oaipaiiy. a '.ilnomia (.oipiiralion. as ptcikecssni to Hanson, and SM entered into that certain I iuuh'ill Dmdopirumt Agreement dated usof Dce.mbci H. 2W(> rlkndopriiciit AyiceiikO." toecthci with tins Amendment. the Auieeincnt i H. \\ hen the panic-enteic.I irilo the Deselopmcnt Amivuu-nt. thee coiilcmplin.-d thill Hanson's pay metil ol the I iced Royally >li Section <?, .it the IKnelopinetit Avimiu-iit wiiukl equally balance with SI.I s paymcii! ot the I Mractior. I cc in Section -I of the Dmdopmcnl Amsvmcnl hi ami mound Dcccmbei H '00X. tin parties <kkmiir-cd lh.it li e fixed Rowhics and the 1 xtraction l ee- were nut equally balan,iny as contemplated 1 iwd Ifp.dncs paid by I lam.on were substantially mote than ik i Mr iclion I ccs pmd by SI 1. ( On or about December '1. 20<>S. SI I contend-- that the panic, ayroxl m tcrip.imrij suspend I l.nison's obhpalion m pay the I iwd Rosahic-. to s| I and apreed that the pm Des would rcas-.c.- the I iced Royalty pros i-,ion in the Dodopnienl \eicemott in the future I laiisea contend, that cm run'.h SI I owe, I Itutson 22.453,477 Cl Mi action I ecs Keech able:; Bal.imv") which represents Um liitleremc between ilu- total I iced Riwaln.w paid by II i SSJRi L'/?i n and the total I Mi action I co paid In s| I ($5.82 7.442) under the I k\c:opmci:t V.-recmeiit M I dispute, these ,<mtvntahi, I) < )m or about Xo'cmbcr 20. .A>14. SI I piinidcd notice to 1 kmsoii Ilia! SI I required I l.msuii to tckiunc it, equipment to anmhci location on the I'topeity I l.imoli mm.med s A1111 i. if u-st- Io relocate it, equipment > "Ik:.vuliot) < osts'h Pursuant to Section 6 1 oi the I)mclopnn-iif Xeicemcnt, SI I is ..hhpqiud to pin Hamon XI.MH .<>44 <14 ("Si I I'docalimi oMicau.in") which represents 7 I ?th, ol'tite Relocatiott < 6sts. .. I On ui ub.Hii Nosciiibci 21 .''114. SI I dcieimi led th.it i' needed llmison to Mih-mmtialh tn, i ease 1, i.ite o: excmulitm of the Material I'mm the PiopcHy Si I contends that ii anticipated mat. as af December 2"15 Hanson vmuki hate cscawdo.l a ImI.iI of hr million cubic yatd. ot M.iteiials. mid SI I contends that I ImiM'n has escm.i'c-J shehth mei i.l million cubic yards of Mulcnals as el December 2I>15. Hanson dispute, these contentions. I SI I hired .mJ paid a eontraclor. Rumen, in 21'1 I to cxiamte the Malctial horn the I'mpcrty Ot onli.iom 1 \c,nation ( ost"i SI I has heap and will be |imiid-nit mdi cxc.it .iso MuU'Hai to Ilan-on am! will pay SI I tne I'laduclmii Roy dty Rate f,h the saleable \p:.-cuatc-> conlmticd m Midi csvmutcJ M.il.iial, (i On or about Mmch !8. 2dl<'. SI 1 rcquesicJ that ll.ms.m relocated certail utility : I 17cv1906 Sierra Club v. EPA ED_O01523A_00000102-00001 hues io another location on the Propcrl.v Hanson cmikmls that pursuant to Section fU of the Dewlopmenl Agiwmcnt. Si ( will he obligated to pat 1 hmsiw = Htha of the total cost to relocate the ublm lines fl ulih Rdocalioii (.Wt. he total <o:>t (>i which is estimated to be about ..... II S| ] wishes to mdwe I know to tKwk-iw its exem alien rale, and the putties wish to rcsohe the?currem JApmes and to that end. Hanson and SI.I ilesite to amend the IXwdopmcnl Auiccincnl on the tenns set forth Imidii.... M AS I III RI It iRI . t<>i and in von .delation of the Imapoiii/ Recitals, and the mutual cowtwtih contadted tk-rcin. and for such oilier pood and valuable consideration, the receipt. adei|ii,a) and '.ecu! sutfu icmv id whuh ,uc licidp csjncwl;, ad.miwkdwd In each o! Hanson and SU. and intending to be legulh bound herebj. Hanson and SI I hctebs specilkails covciiam and aeree as follows- a .. 1. Amendments to Development Agreement . i.i) Rwikil H of the Dcxciopmvui \mecnieol sh.d! be mncti.k-d m its ciHhci) to lead U he parties estimate that there arc thirls four million two huiuhcsl thousand cubis '.aids of m-m-ml to be esdraelc.l Irma the Ibopem ithe Almenar? (il this M ikiiul. h>>iv pert ent l-Rl"<o is vslimated to he saleable agt>ree.ik-s |ihe " AuervL-.ik-s I w ith the icinuiiidci bi me mateiial iiol is imi cukubk aggicgatc' (the "I :ik .MatcfhrC All iclcuiices to "line materi.d" m the I k'.elopmcnt Vtvcimi! shall mean "1 inc Malci :i I ib! Seemm Ot the I kwlopmcnt Amement whutl he amended in its entirely to read as follows. 'I hikes wti Iki tcimmated as j'toi ided heieiii. Ike tcini al tin-. Aguvineir shall begin on the i flectiw dale ohhk Ameemcm and terminate on December '<1 .?il > I ("Imlml I eim"l kola ifllskimlini- the Im citme. Il.mson shall lime foe < 5 one () vear options to extend the I erm ini the pciiod of lime between .hitman i, AOM am! Dwcmbci A |. AuSX " k-im" shall mean the Initial I erm and ant c wicked opium l<> cxieml the I emu lo cwickc cad: such option, Hanson must give SI I a m nimum of one bundled .md iwemj 11 Ah d:iV wt ita-H notice beMic the end <>i each teim. kibjwt lo an vxiemioii er.micd to Hanson puisuant to Sveiou l> n, 11,1100;-. apices, <i 1 lo immplcK- iliis mimn.i pinkel within the fnitial I cim ami 111 awordancc wiifi the v-xc.i'.mion sdk-d.ik- and Mmm? Pl.m .ilkida-d hcivto .i-. l-xhil-u I .md ni) il I lanson vxcwtscv one or mow . <ptioii'. u> extend the lei 111. I lan-.oii ami SU shall meet ai d i oulei u, good f.nih n> dcteimmc il .1 >irefi>viu e.m hi ic.he.I on -m cscmatioii -.dkiluk- .11 id Mmiiip Plan lo' -.ikP option penod-, Il tp alie, anno' icadi ai"wiueiil on .1 tev -.wd ex m :itl<1 sdiedulo and Miwup I'lm. lien cithci 2 17cv1906 Sierra Club v. EPA ED_001523A_00000102-00002 party may terminate this .igiccmctil oh one hundred twenty I OH day< no:ice t<- the iIki p.n!j ... . A* prmJed in Section b'. ihc Icrm may be extended il'the panie- mutually avive Im additional phne.es on the Property " lei she lot owiae sentences -hah be added >o Section ! : ol the IO dupmciit Amccmcii'.. "Production Royalty". A ' "Yntaitlistandiiia the forvi:. >ing. -am-tir.g <>n January I, ?h I 7. regard los >( the an.o.ml el \yyic.i: oe icmowl Inna the Properix .i-.kI sold by llan.vm each Year. Il.iason <hall pax SI I a minimum Prodiutimi Royalty <>t liu- 1 hmdud Hani'and I Miai--('Ohi.iihAO per Year < "Minimum \nnual 'wdiictiim Rin alt y " i. provided hmwwi that ll.mmit child be ullmud n> 'bunk" anx Production Royalty paid in .un h ca I hoi exceeds the Minimum Annual Production Remit} to be appiimi towards Mii:J;iUH>n of the Mmimiur, Mutual Pi.iJiictmn Roy.iiiy toi a maximum ot'linee .ml'sequcut YAsii'., I or example, if in scar I. I lamini pays a Production Royalty ot $7sn.H0(): in tear 7. 1 lamen pave a Piodiution Royalty i>! SxiM.liHii; m }cai a, I Limon pave PiodiKlion Rm alt} ofS'fHMiW; and in year I Hanson pays a Piodu. linn Ripul} Paymciu id SfO>>MHf<L then 11 main smil noi be obligated l pm aim additional Rrmludmn Rowdlu.-:, in year I (ivi mise h?s>Mhl(l Pioductmn Royally exceeded the Minimum \nmud Pioduclimi <}ah} t: or in wat ? (because So<MitM) H the Minimum Annual Piodinlion Royalty. or in jeat 5 (because I laimon banked S25<M>00 from war 1 and applied SJOO.obii o| sudi banked umoimt m xitici;, the Minimum Amm.ii Piodmnoti Rosalie forbear .m: <<r in year 4 bcciu-.e the MdHUWi Prod^ Royalty paymcn.l exceeded the Minimum Minna! PnKliicOmi Royally But in Year 5. ' I hm-or. oill haw no 1 urtimr ' bmiwif ew.iits dipiblc Irvin 4 e ir I m-d ili .mb Luxe the MiiiMW banked eredi- tma'luhk from ih scar I payment m excess of the Minimum PoMiii-tum Rio.illy I to olisci .rumisi the Minimum Pio.lm-tii c, Royall m year 5. because there i-. a three year limit on the carry tornai J m ' b.iiikiny o payments in exccm ol the Minimum Annual l'iodudion Roytthy -\ny dim Hail in the iinmial Piodm-limi Royally paid and the Minimum Amnia! I'loductioii Royalty dial! be (aid hy limiseli lo SI I wiflim thnly t 'onlays oflhc end ol the Year. I he Mimmum Annual i'toductmn Royalty MH escalate emh deal by the sime pciccntayc adiusmicm as applied to the pcr-ton PruJuctioii Roiahy. "Year'' shall mean a J? month i.ik-ndm ycm I m .my partial Yc.ii titillili' the I mu, the Minimum Animal Ih odimi ion Royally shall in pro-rated bused on n "'b'-dux y eiir ' id,- Sections V. '|-iwd Roy.illy.' 4 I Mmetiou I ee. and I xhibil I- oi the IksAipiiH-in kgrcimiciii shall be deleted in their cmiictx ivi Section Y. -.hall A amended in it-- enlAt; !.. lead lolhm ; 3 17cv1906 Sierra Club v. EPA ED_001523A_00000102-00003 "(a) Subject lo the adjiistincnt pun ided in Section V3ibk I hmson shall pav a twain ol liiditv-Six Cents |S S6i pct Ion of Aggregates as a production rosali) during the lenti ol this Agreement tax adjusted, the "PioduK-tiint Rovidh Rate"). Sitili losahio ate due thirti-fnc i 351 dtps alter the end of the month in whu h the Awrej'ates <tiv sold In I (ancon (hl Beeinnhw on .himi.in 1. ''IH 7, and each .fammiv I ' tbcrcatlei during : the 'I erm. the l`t eduction Ros alls Rate shall he an amount equal to the amount in clkct in the immcdialch pi reeding Year increased In a percentage equal to the greater ol: (a) the percent increase, ifanv. in the 1*1'1 dm me the musi ievent twehc month period lor which such data is available or ibi the scar oi er emir pen enlace ineiimsc in the memge -.elitiip pi ice to ill thiid putties t excluding I lansoids A Hi I Kites > of Aggregates produced or sold tn or from the Property. I he incielisi' in the aicnigc -ales price pet ton shall he cakidaK'd a-, tolh>Ms: ( ! ) the prior YcaiA awrage sellini' price shall be calculated as the perlon price received by 1 Limon during the iwdw month penod emline one full >cm belote the Jaituarv 1 rosali) rccalcid.ition date, by maraging the per ton price received by Hanson dm ini' ilmt idw month pet tod ,md uii inn equal ciuht to the price ol each tun sold, compared with < Ilie au-itiec selline pi tee. situihit lx calculated, received by llmisim during the twelve month period immediate!) preceding the .tmm.iry I nnahv ici.':ik'tilaiiii date. "Affiliate" means tin) business emits that directly or indii cell) is in contini of. is connolled by .in is umici common control ol meh business emit) f: j (ci I he temi "1'1'!" mc.iiis the I ;n:tcd Stales I tep.n Imeni ol I ,ibor Butxoii: ol 1 abiq Sunistiis. Produce! Pikt hwvx lot < otr-t; in lion -ami. piaid. and emshsd stone iconnnedit) code I V? I ) on the basis ol'1`iS.' Hilf Ifthc humat m components <.t the ITI me mmeiialh Hi.m.wd ittici the execution oi tins Vgreement. the parties shall substitute an index which is published by Ila Bmcan of I ubai Statistics m a sinnlm apenm. and ubici' in the parties' iidgmcnt is equivalent to the I'PI in efteU on the dale et ibi-Aiiiccmi-iit hi i 1 he ('art ics will lev ww arai monitm nun Let coidilmn- lo dcleimine i! the Production Ro\.ill) Rak-fail h repieseul' and compensates SI I dmii.i-ihe dm cion of the letm Iha review isdc-gtK'd lo addrem unique price impiov cmvr.i renditions (tei cs.unpk. itm" iinpim .-mciu m rime selling price of Aggicgakw from (he I'ropcny I. and lestriicture the Production Riwidh Rafe to icikcl those ciicmnsiamvs Any chmmcs will be dAuiswd and modified onh ifapprmcd by both Panics " j : I fi Woim (ju.unit) ,aid (.hi,db) of Materials.' ol ihc Dmciopmcni Xercement ts amended in its cntiicK to lead as follow.-.: 1,11 It Is a II Mici ini icim .Hid conditimi <d this. Vervi pie m that I l.niMm cm. avute sul He tent name 11 e . not stockpiled) Material (saleable or nut 1 t"XaimMate!ial"t m meet the exemation schedule mid adhere to the Minins' I'Lm set 4 17cv1906 Sierra Club v. EPA ED_001523A_00000102-00004 forth iti f Ahibh 1; ti' this Amendment, 1 his is necessary i<> enabk- St 1 to prepare additional ail space mr diqmsid al the kindtill. I herefore. I kmson agrees to CKc.nate. at a minimum. the quantity t A X latei lai den'i ik'd lei each nmmh m animal period I slated in 1 ixhibii 1'1 and at the designaled areas al the Properly, .is sei h>nh in 1 xhibit I belato. I m e ib) I ide to the suk-abk- Aggiegalcs shall pass to Hanson upon cwivumn of such k-.iblc Appiccate. flout the PlcpcHj- pimidrd. limici.i that up*ot the expiration <>f I vnn of the bctelopmem Amenu-nt as amended herein. Jvyal utfc ami ov.neiship to all sdetiHe Aepiepatcs and all othci cxcnalcd malvtiulo rem,lining on the Piopcrty, if any, shall icwn to and be divined solely i esk'd in SI I. SI 1 tuny then-alUT sell such wkabk Aggregates and shall retain all proceeds thereof. ................. u I kotwil si indimi (he hiicgomg SI I n oblmalkd io e waiac I m. Aiate, als thill Hanson pici io,My conveyed io Si I pm iutinl to Section 6 5 of die Ikidopment Agreement ami SI ! placed m an area ih.it I lamen must c win ate pin siami to the Mining Plan i "Pi ci ieusly Rcmmal I trie MaLTiaf'l. Such inaici i.ils excmaleJ by SI I shall not iimnl unmade 11.imoiik cxi-maiioti obligations in Ixiiibil I orlile Mining Plan. "1 ne Materials' shall mean the portmu ol die Mulctiul that is not composed of sukvhk' Auprcetdc." {|j ScdMti md. 'Alinmg Plan." is .micndcd in its cittiivu to read as folimis: "1 Luisn shall udhoc lo the Mining Plan allachcd hereto as I xhtbit I unless tbc panics aguv mheniisc. in a wntmy signed by both pailas In addition, on or ' about Spumix., |M ufi.wh ycm ol the Agmemoii s| | ,hull gonidi- I Illusoti with copies ol I audlill dcwlopmcm phim deluding ihc specific location of I andini development Heeded Illi the Upiominc cak-tid II xeni along hfh the I .indilli deidopmeni progression anticipated ow ilk- next fnc-yc.it pelimi SI 1\ plum shall indikk etigincering estmales of'qu.mities of Material tn be removed along with details regarding am and all permit limitation and or rcsirk-lion that would impuci 1 kitison's ability to perform under this Agreement. H.imoii shall use the Mining Plan to dciclop Ihc anticipated Cost oflAtiaciior. r'Cosf'Hoi remming olid piocc-.sing Malarial. I ..wept as expressly prm idol in Section diet, .ill 'aid < Psi -hull lv the ok icpomibdity oil Limon and shall includi' the not o| cscmalioii and liampmlathm and dopes,d at lines mio the Designated l ines Materials Command- Arv.'s (ewept the Ptcimmly |{ciiio'cd I me Mak-tuih. \othmp m this Agicviucm shall prohibit si I horn tin- telimi mt .ictii itic o i i i excmal'mn. lAlraukn. itnihnc. and bl.isting of Malcti.il. (u 1 pkiciny liner-, in all <>t a portion ut the Propem. (iiiBtmkpihttg Muicri.il. <>r(n l doiintany otherluriiim icasonably ncccs-aiy lor SI I io timely and efkciiiciy opemte its laiidlili accotding C its perniile, prmkkd. lievi ivi. that Cx) M.l will cxtrncl Mali-nal m ie isomil'ly pi.ichctil io piasene lhe Mmrcgaks tot cMruclkn In Hamon" ......... ... 5 17cv1906 Sierra Club v. EPA ED_001523A_00000102-00005 ih) In Section h.l. 'I abvrar.d Equipment", the second sentence shall be leplacsil m its eiltheh with the following: . `h; the cwtii SI 1 ivquiiv- I hii-au; t>> ivuwjk-atp or all of the equiptnent or ui-lilies sooner than .'4 months hchirc the end u! the Initial I cm;, then S] I shall jw to I kinsor. the pro-rata share ol the relocation expenses based or, a straight hue dcpivci.-ium ox ci the total reais in the Initial I cim. i at example. il Sid requite-; I lanson to relcealc equipment in tuK -'Odd. -.hen SI I would be nM-gim-o topas llansohd I"ih ol the teloc.ilion cost itt lien of siuli paxment. I l.mscr imp then elect to tai initiate the ayivcnicm on I 20 daxs' sm men notice to SU." I he billow lilt- seutcixv. sha!l be added to Sc. 'ion O.?. Rcmoxal ot | iiK-": Hanson shall also, at its sole expense, eonxex l ine Materials to the pit designated xm I xl.ihit < i (the *'Additional I tm- Mati-nak Mea culi: the Additional bine Mat.-iuds Aiea is filled U> its capacit). "I died to ns c.qwitC shall mean non eneinccrvil placement of material tip h> the approximate ekxatmn of Kl() II. IImwon shall be n-sponsiblc lot ibe costs (ocoincx and place the I me Materials into the Add! lit mal I inv Materials Area. A hen the . Aikhl nm.-it line Malcnal' Area" A lilLxl to its capadle. the parlies -hull meet and confer on an .iltcrnote location lo- the hm- Muk-rials ("Ahema'-ixe I ine M.itcnals Vea"> ILtuson shall comes I ine Material- lo the Allernatrie bine Material. Aiea H.iimon shall oiilx be nwponsible lot the eosl loconxcs tines to the Mteinullsc I ine Materials Vea up to the axci.iyc miunal apit.il and opvi.itin!- u>\t- iiuiitu-d Ip Hanson to coaxes I ine Materials to the Addilional i ine Material Aiea fl lansuii s Coinevmiv (Ihhpatnitft I kmemfs Conuw.inec < >b! >n shall he determined be adding up the K'ilow ine marginal costs inclined hx Hanson to conscx iincs to the \ddilioual I me Mabnals Men lab->i. pwwet. hied uiuipiiicni ic t'.. dozer, loader, haul rrtivkat. and capital easts such as enfAesor cxicnsier.s I hew- costs will tilesi he calculated on .i pci cubic xarj basis using the t ohmic ol malarial-, umxcxed lo In- Addiihmai I me XHavikJ Ak-.i I Ik ; e-mhing m ci .rev pci cubic caul cost shall be the I Ltnsun Conx ex atice (>bli cation. 1 ollo-Mri-e the A'c.ir in which the I l.iii.im ( mu-j.itxc < blie,akm i- lit ..i cak-ulmcd the f l.nismi Comcvinsc (bliuation shall t>e escalated uiinualh thereafter be the percent incrcm-e. fane, in the PPI during (lie most recent luche month period hit xxlmh sueii dal.i . mcMlabie. Hanson shall redexv its line Material coin ex anee costs per cubic card with SI I in Svptemhci ot each sear dining the 1 eiin and sh.il! allow Sf I to :md>! Hanson's bi>oks and recot ds to x cri A all st.ch costs, SI I hal! be i>bheiited to p.iv Iio- the costs inclined hx I Iiiiimh: in emnex llu- 1 ine Material, to the Ahcrnatix e I in-.- Mm.cri.il \rc.i m excess of the Him'.oi, ( omo.nu-e I Jl'h.'.ui SI I shill pax 11.mom such amount within thiitx t.bli Muxs following n-Miancc of an imoue b;. i lim-mn to si 1. .. 17cv1906 Sierra Club v. EPA ED_001523A_00000102-00006 Il 11,him >11 teqmtvs the placement of Mmciura: III I in connect ion with (hen opd'atioii- during the I erm of thik Ayreenivni. d i- HP will he constructed in a.vordamv with cngim-iing spcctlkav.ms hit structural till placement promded hi SI J and attached heteto .is 1 xlidnt 11, mid shall be paid t<>: !p lluiiMm 11 follow st Section 6 4. Tropics Mi'etmgs .mJ Kcpmls." is amended in its cntiivH to itmd .is .. ; "Hanson shall provide SI.I with a mtmihh report stating the total quantile id Mutcual excavated bj Hanson during the prior nt.nth. ! his report shall he dIhxicdIn K.-ptrldu no lafet than 'he icnlh 'm'ltxda)ul Ux toll.mme mouth I'unhc. unless the pmlic- amec otheiwise, II.mean nud SI I sit,>11 meet mmiliih Io rcMcw Hanson's pu.; res, nmmds meeting the noutnn! ,. bed.de lumiicmcnts in I xhibtt I ,mJ. il agreed in H both parties in a writing signed hi both panics, ma) intend or update the schedule arid'or the Mining Plan ... I olhm tuij Phase 1 am! J of the Mining Plan. H-urs-on di.dl vxemate at the iiiuiimum rate ol 7s(l.(Mitt cubic cards per Year ol Same Xluts-Ha! I his requiivincnt mas be waived anmwlh b) SI 1. in SI IA -.olc discretion Suoi wanei i! impicskd m IlwiMm shall he discussml at th.- .iiitmal inccting described in Section t\2 ofihe Aereemcni. h given be SM SI I shall pirn ide I Imison ;np Midi vvaivet in wilting..... . 11 it is delei mined that Hamon i, not making 'Adequate Ptogre--" ba,cd on tin Mining Plan tn I xhihi! I and the mnn;d memalmn mquiicimmls after the cmnpkti'm o! Ph.i'Cs I and 2 JmeriixM herein, and as these requirements max Ie amended ni wi ning In the Pinites from time to time. SI I imi. at is option, pun ide wrnten noit.c to I hmmi ol the shortfall tn mem.mot shall .ihmx Hanson to cure the .slrnrllal! itt till within dm a of I lanson s receipt vl sueli notice. " kdcqmite Piogtcm'' shall mean ( A) 'ihi.O(H) cubic x.mH pct month during Phm.e I of the Minim.' Pl.tr. m I xhibit I. or iB> L'MHHKuhiv v.ird. pct iimmh dm mg Phase ' .>1 Ibc Mmmg Plan in ! s hibil I . m (Ct follow ing Phase I and J ol the Mining Plan. '<>.<Hi ctiba raids pci mouth II the shotltall i, iml cured b} the end of such n<> Jax period. SI I max. at t-. sole option and dismtiou. lute a tliitd pans contimtoi al the expense o! I tanson to reach the lexd of \dcqiiak' Ptoeicss. pins ided liowmci ihat I Innami max eonimne Io csox.ito the Property in coiiiunctmn with such thiixl parix coniracU'r. During the period that SI I s tlnul pans coiUi.h.lm is cu;r..mm- on the Pmpcilx. Ilan-mi shat! lot ur.re.isonabh intettere with Ilie excmutloh plan-, and actiuties 1 Si ! , third p.nIf eontraclor. Hmison -hall reimburse SI.1. within thirls, (di! daxs ol'invoice receipt, lor SI !' leaser,.ihm o'.il-ol-pmkct costs <it Ititine stkh thiid pail) (-ontia.tm to icachtiiv kwchd Adequate PtvorcM,."............................................... !.... 4.) SccUuti`I n ,q the Ifeulopmcnt M'ecmcm s >,.ll be untended to i.-pl uc m I o-at d v,'ll -uic 1 mn . ... 7 17cv1906 Sierra Club v. EPA ED_001523A_00000102-00007 KJJ.Mionlec; und I pul Uulky <1 ll.'mstm umws anil M I shall m>1 be uWigatd u> pm 1 knw>n the I xtiaoiou I s Rccvh.ibk's Balance St I waives. and llar.son shall n<>! Ivubhemed t>> nay SI L the (.ottlmckr I xciwUmn ('o-.l. ' > > a- a : : th) I Luisen waives any and al! right Ue and SI I shall no lower he <mln>.itch to pus Ikmsim. an> Ixltactnni l-'ees tot the iemtniuL! lernt SI I waives am and ail right to. and Hanson sh:iil not be obligated to pay SI I. any I ixed Royaltie-muiei the Iksdupmem tawnier. la) SU shal! pay i lansoo the S!,5`H ,044.m SI I Relocation ( blii'nin-n on m bcUic December l. . ibl SI I sha'I pay I taw lie I itlily Relocation I o-l within 60 days of ikitison'-, issuance of an invi>:i.'e lor such cost to SIL 4. ( oniUK \<i mho Amendment hohe went m a wnlhd ivlv.cm the pr* >x Ku m- ol thr. Amendmentand the pruv tsiuits ol the Dcvclupmcni Amvcmciu, the punisimu ol tills Amcndmeni shall . cnrml ( .iptlahml let no not dclined Ik tchi shall idct m the dclmitions of smh temv- in the Development Agivcmeni. Except .o expressly set forth in thi \mendnicm. the pmv isionsof the I.tccaw rem.im tn full imcc and effect (ai Xullomly I m L sitm.iloiy ol this V-iwmem icpie-em, mi.l w, tmills that h. v he has lull authority to imlcr into the. Awmitewnt or, nch.iH <>l the respective parties. tin I mire \grccmcm I hi > Amendment, together with, the I levempmcm V`i>wor icmcsenls |Ik- entire tiHikTdaii'.him and agreeincni between ll.mson and SI I with leaped U> the sithiiM mallei hereol. and no aiumdnww m nuuti fixation ol line Agreement shall he effect As unless it is set lorth in a writing specifically skiing that it is intended to be tin amendment hereol. specify Hie what pnnt'ion hereof is being .intended theicbx and smiled In each >>t the parties I his Arwihlinetil rewise-. all lectpioeal p.p,incut obhe Hums ol the Paili.-s noun prior Io 'Its' date U exes iitian ol this Amendment arman? under sections L 4 and <> I of the Dmelopnum .. Xgivcmcnl .m<i c-.uhb'hcs tin ici tpi.v.tl pas mem oblieutiotis <d the P.iilte-rskitinp to tt'.c matters covered by these sections hem tins altet the dale of eeeuttioti of tins Amciidiiicnl. mikss this Amendment expressly pros ices otherwise ... (st \o I bird ILuty Bendki.irics. Xothmg tr. this \meiid,nent. espicss m implied, t:. mh ii.k'd oi shall be e>msUi<i-.ho umfet upon oi cite to am pemmi. othet than the mured p lines to 'his \mendmcit n y h'hl' wmedics ol.lipmions m Inbil tie- 17cv1906 Sierra Club v. EPA ED_001523A_00000102-00008 id; Cjjuitopdlls. TMs/unwid.nuillti.n-v-ewrt^ cadi . >1 vhk h diali he an original, Kl .di o! whid ohe:: h-gvt'uT sMI ..neiilute irne un J tlu- mi. \n.0i *iov b>k- unies .enumpUk W. ihc, may Ix rx;-c(i?!.y, .m.-tf tilt- V ths ' Aux ult I. ni xrsaiird 1-y U., un.ik-c t ci'unlrn H >i tormat .md agre an HnU'td tint < ature K Lusindk rischine n oLjl ,n PDI nimat sha:I Hnd th party su ugnir.y sdh (bc .anu vite.? v; th.iufh the sioiahm v...- an or .-mai s^Miurc Hd -.or- ar<i h. 1 A d" ew. and deiner s-n 1. -iddirm u! huxuurt i and UU sud) .uhktmna tu-.itut, as ali! et rue. K-.iu-rr.Nv mpust te cim <>w The ptirp.-!: ir.'thi'- ArxiidmeM lu hever-ihin 11 tiuy !..<< o- piox: non ni thu. .ArtKndxr.: >,, ne. ahd. ilkgji. a: a i ipahk 'ha-.e .ni.w<rd H uiu.c .niy kd.-u:l .. state lau ni publie P'ocj. ail othei ici">. <Vj eu < ns <c ibn Amen un. n, -hall iM',id<".`, r..-n;uirt ai i<4 '.me nud etmt - Lita as ii.<. k-r.i! s ,(!- r.ni. cul lin- v ce x'i.-a p'ak'.! hmhj b eut *i h.. i.J >n u-'y - .u t r r. o'e'ie 11 > muets ' ,:ir> d tiu ; u- ` tu s > > thb Aniimilinou 1 r.:n du o.-r > rnuultr-n iLal rh 'rnii ar prc. i .mn h i;n i J b'.rgtt), .u uatMbk ! b nm- ,b ae.I, dre part m k m.i sh i-, n< e .> I l,.i ' ir u:t-. Ame `du1, ni te, > :i. ! the ciip. .<1...'.utt < i il c .ei.a Je.eh < p> ebk- m . k > q'dde auri.ei m enk-r tha (dur insani'.-. i.uil>'npl.rcd lu-ie'm < < u'ii- KU.i.ik'd . i-rii Aly ./. -tip: <h-d ta tee meaU-.t eVA-r p<iv.ibk \ AI l M SS Hl-S'ht )!. i Luand SI ! h.-.-.e esmiiad this Aerwti.-rl iutw.<lin ,! t> i e et-.K'l A Us .i li-e <Li"t l'to u cti-, al,< te ......... .... ... ....... Il V-S-P. AUI.K) IiAH M`AGH<. sY< AMORI- -VSDl B 1 l\H . a t aliioinu s< il PIA ksi 1'-!< .dM.iu.t.'t: u<rp.'.-/,Ui>n u .Igei.e\.a 1k tm I ie VP<<V Hiae k 1:0 Vt'l^ Bafei S 17cv1906 Sierra Club v. EPA ED_O01523A_00000102-00009 LX11U1LLL Xlinin" Plan ami LuavHion Sdicduk l.sctnaic MIU'-! Phaw* I. approxitnau-h 2.2 million ushic sank of Same Mak-ri.il during the eight iM month period otartiny on Pha^c 1 < .'mmcnceincm Date nk "Pham I I xcnation" See drawing number I. I'll.1-.C I ( ommememcnl Date shall be September I MIIs imlev- SI I pnoidm I l.iiv..m a.k.iwe n< the ofa dclas tn the I'h.o.- I < omniemi hki.s Dale. Vi-mmim. thai the Pnase 1 ( omiwnivm.mt Date hi-pins im SepiemK i I. .2116 the Pha-e I Kunatioti -liali he uniipk-lcd M no Diet than \ptil M. MH" Minimum maltim i.m- will in- kjD 11,|)U pus pci month e'mlmg on I'hmc I ( ommimccnkmi Date; 2 . I umvad maMitil to be smekpikd in area damn on drawing number 1. t omplctc esemntion of letimiiimg aica ol MP< -i appno.iniateh ' 4 million c'mic studv oi\alh. Mitel al dnimp t k kr.iti I 'It) iiK.nth p-. tied Hmtiiw <-n the I'll im 2 ( oni'iicikcewiH Dak- HI 1 prwndea I lanson .ids uuenolici nt u >lela\ Mich <>! 11 ill H uelK r 11 tel it See di.ic.ina ilninK'i 2 2 m .. . I'haw ' thimmeiKwiciit Dale dial' he the dtp inhnwina the cmiclm.iim of Ik Pbaw I I'xcmtilion Mmmn.in cxemmmn laic will be I ttllii cml'ic % mJ-, per nmntb I xi.ix.iicd material to K rted-.pkd in area shown >n dmuiiva number 2. 1 t.Himmg Ph.iei I and * <d the Mining I'lan. I lanw hi ehall cwm.ilc ,il the nmmumii ink nt '-M.lHhUuhu-jm.b pct Ve.i: <>f Mime Mnti-iial. See d.mwmi'iitunhci Hoi rcr.ammg Imi.ltil! lootprml im m.ilmr, Stockpile location fo- Inline esemmed ma!ci i.d .mil additional lii.es nialciial to be detcimined Hie fanUfill dmclupmcnt piogrcs*e^ 17cv1906 Sierra Club v. EPA ED_001523A_00000102-00010 THOMS E. MONTGOMERY comvcote. (Eount of Jian ego OFFICE OF COUNTY COUNSEL l-C l'A< , PH m V MX M P SmNjIE-' r-V' 4m rj. mil za PAULA FORBS SaJKMIWfY teaKaL MW5-27' Saufe^ May 2,2017 ' Stephen .1. D'Neil Sheppard MtiEin Richter & 1 lampion 333 South Hope Street,-Hour I os Angeles. CA W(;71 -1422 VIA EMAIL AND U.S. MAIL Re: Hanson Aggregates Pacific Southwest,- Inc.- Santee Title V Issues Dear Stephens I hank you Lor your teller of March 15. 2017. I have reviewed your letter as well as the Landfill Development Agreement ("Agreement") and the first Amendment ("Amendment'') to that Agreement which you provided. As a preliminary matter, the District will agree to protect the information in Exhibit B. C, and I), as trade secret information. If a public records act request is submitted asking for these materials, the ])strict will follow' trie procedures prescribed in District Rule 177(g) prior to releasing those materials. Additionally, for the reasons disclosed below, we do not require the pricing and billing information that you offered to submit as Exhibits C and D. You may choose to submit that information at a later lime, but we do not 11ml it necessary to detei mining whether the I lanson Aggregates Pacific Southwest Inc. operation of the Hanson Santee Aggregate Plant ("Hanson Santee'') at Sycamore Landfill should be aggregated with the operations of the landfill itself. from the review of the Agreement and Amendment, and in wn/idci at ion of your letter, the I )is1rict finds that I lanson Santee and Sycamore 1 and Ei II should he considered a single .stationary source for purposes oi' l ills V permitting. I he follow ing arc the reasons for thsfilusidn. I. Him.swi Santee and Sycamore I andn 11 meet the definition of a single stationary source under District Rule 1401. For purposes of permitting under Title V. a stationary source is defined as "an emission unit, or aggregation of emission units w hich arc located on the same or 17cv1906 Sierra Club v. EPA ED_001523A_00000103-00001 Mr. Stephen O' Neil -2- Maj 2,2017 contiguous properties and which units are under common ownership or entitlement to use." District Rule 1401(cH46). As we discussed in our phone call ol September 15. 2016. the District interprets the phrase "cnlillemcnl to use" to be the same as "common control" which is 'extensively discussed in federal Environmental Protection Agency ("LPA") letters related to stationary source determinations1. Thus, there are two prongs to identifying a stationary source under the District Tille V Rules: location on a contigitus parcel, and entitlement to use (common control). A. The I (anson Santee and Sycamore I and 111 1 operations are located on a contiguous parcel. 1 here is no dispute that the Hanson Santee operations are located on the same parcel ns the Sycamore Landfill operations. In fact, what is apparent from the aptly named Landfill Development Agreement submitted as Exhibit B is that Hanson Santee is located upon and was contracted to excavate- the: landfill itself, as well as provide the daily cover for the landfill. B, There is dearly common control between the parties as relieved in the Agreement and Amendment. As the Id'A has long noted, "'I y pica'.ly. companies don't just locate on another's property and do whatever they want. Such relationships are usually governed by contractual. lease, or other agreements that establish how the facilities interact with one another. 1 herddre. w e presume that one company locating on another's land establishes a "control'' relationship." Letter from William A. Spratiin. Director. Air, RCRA. and 'I oxic.s Division to Paler R. Hamlin, dated September 18, 1995. This presumption is rebuttable, so it is important to look al the contractual rekilionship between Hanson Santee amt the Sycamore Landfill to determine whether common control exists. As repeatedly stated in LI'A determination letters. LPA has no adopted regulatory ddinitiur. of common control". Instead. "... the Agency has relied on the common definition. Webster's Dictionary defines iwitiv/ as 'to exercise restraining or directing inllucnce over.' 'to has c power over,' 'power of authority to guide or manage,' or fit [regulates] economic activity." I elter from Matt I labcr. Chief. Permits Office, to Jennifer B. Sditosstein. dated November 27. 19%. Hie Spratiin letter referenced above includes a list of screening questions often employed in analyzing the operations of 1 Ihw.eve-. to clear -ip tiny cwiliiv.-n from cm rail. I did not irdicatu- 'hm the Dutiiet irtcipietcd "entitlenenl to use as also encompawing the concept ofcotnmor Sil' code, contrary to I he usnertion in yi'Ui letter V will be diraowd tohw. hi-wcwi. under cither the federal i.r local definid.m >M\tatioiwy source, the Hanson Santee operations must be aggregated with theAycamore Landfill. 17cv1906 Sierra Club v. EPA ED_001523A_00000103-00002 Mr. Stephen O'Neil -3- May 2,2017 sources to determine whether common control exists between the entities, liven in the absence of shared corporate structures or administrative functions, "the new facility may still be considered to be under (he control of the existing source i t a significant number of the indicators point to comm control." Spratlm letter, -all. After review of the Agreement and Amendment, the District finds that several ot th< screening questions in the I PA guidance can be answered in the affirmative. and thus are indicative of common control. These include the following: Docs one operation support the operation of the other'.' Yes- I knson Santee is essentially operating as the excavation operation for the Sycamore f anilfill. This is reflected in the terms of the Agreement and Amendment. The I amltill Development Agreement provides. "The parlies desire to enter into an arrangement whereby [I lanson Santee's predecessorl will cause the Material to be removed from the Property... in a manner consistent with [Sycamore'sj needs to develop the Property as a landfill, and the Aggregates to be marketed...." Agreement at page 1. Recitals- section L). 1 he Amendment provides. "It is a material term and condition of this Agreement that Hanson excavate sufficient... Material... to meet the excavation schedule and adhere to the Mining Plan set forth in 1 xhibit f to this Amendment. 1 his is necessary to enable [Sycamore] to prepare additional air space for disposal al the landfill " Amendment al section I( f)(a). (emphasis added). What are the financial gements between the two entities'.' The financial arrangements arc mutually beneficial. As you note in your letter, it is not unlawful to engage in a mutually beneficial contract; however it can indicate common control, as it does here. I Inder the Agreement. I lanson Santee has an exclusive license to extract the aggregates on the site. /Xgreement at section l.t 1.1 Kai. Under the Amendment. Hanson Santee provides a minimum production royalty to Sycamore Landfill, and pays royalties bused upon the aggregate it is able to sell. Amendment section 1(c). Under the Agreement. Sycamore I ar.dHll was required to pay an Extraction l ee pci cubic yard of material removed. I his fee is no longer required under the terms of the Amendment. Agreement section 1(4i; Amendment section Udi. ces? 1 he Amendment provides that Hanson will extract nmtenals as specified in the Mining Plan and Excavation Schedule in order Io create the space for the landfill. Amendment section l( 0(a), I.xhibit K If Hanson Santee tails to 17cv1906 Sierra Club v. EPA ED_001523A_00000103-00003 Mr. Stephen O'Neil -4- Maj 2. 2017 comply with the established schedule. Sycamore I andfill may hire another contractor at Hanlon Santee's expense. Amendment al Itj). IWc tycilificy share intermediaries, products. byproducts, m other manulacturim! equipment'? Hanson Santee is also required to deposit rhe "line materials" byproduct to an urea specified by Sycamore Landfill. Agreement section 1(6.3); Amendment section Ki). Fine Materials arc defined in the Amendment as the portion of excavated material that is not composed of saleable aggregate. According to the Joint Technical Document for Sycamore I andfill. approx imaidy 60% by volume ot the excavated material (i.e. the fine materials) is being supplied to Sycamore I andfill for daily cover, and this is projected to supply 100% of the landfill's daily and final cover needs. 2015 Joint technical Document for Sycamore Landfill al 6-1 and 6-2. There is no fee for this material in the Agreement or Amendment. Based upon the abocc answers to these screening questions. Hanson Santee and Sycamore Landfill are under common control. Hanson Santee provides all of the execration for the Sycamore Landfill, tsi addition to all of the soil for the daily and final corer. Sycamore Landfill can control the location and the amount of materials tv be removed from the site, in order to develop the I andfill. While Hanson Santee benefits from being able to sell the aggregates it produces, this does not detract from the considerable control over its operation under the terms of the Agreement and Amendment. Additionally. LPA screening also looks for a conlract-for-scrvice relationship as evidence of common control. An 1PA policy guidance letter on 1 he treatment of temporary and contracted operations al stationary sources instructs that, "temporary and contractor-operated units be included as part of the source with which they operate or support." I ettcr from John Siet/. Chief of the Office of Air Quality Planning and Standards to the Minnesota Pollution Control Agency. November 16, 1994). /Additional LPA guidance provides, "a determination of common control may be made or. the basis of... indirect control, such as when the goods or services provided by a co-located. conf ract-for-sen ice eniily are integral to or contribute to the output provided by a separately owned or operated' activity w ith w hkh it operates or supports." 1 labor letter, at 3. hi this case. 1 lansoit Santee's excaudioii operation is integral to the operation of the landfill While a contracw was brought on to supplement the excavation m 2D 14. this dues not detract from the fact that Hanson Santee is the primary provider of excavation services to Sycamore Landfill. In feet, under the initial Agreement, Hanson's 17cv1906 Sierra Club v. EPA ED_001523A_00000103-00004 Mr. Siephcr. O'Neil -5- May2y2017 predecessor was paid an "Lxlraciion Lee" per cubic yard of materia' removed to perform this service. Agreement at section It 4). And as noted above. Hanson Santee must comply with the Mining and Excavation Schedule established by the Amendment. If J lanson Santee docs not comply with the excavation schedule. Sycamore found till 'may. at its sole option and discretion, hire a third puny contractor at the exj .e of Hanson to reach the level of Adequate Progress." Amendment at section I(j I (emphasis added). This is clear evidence of contract-for-service arrangement, and its such, common control. H. I hmspn Santee must be aggregated with the Sycamore Landfill because they source under federal Title V regulations. As you correctly noted nt your letter, the federal definition of stationary source has a three-prong test/' tor purposes of Title V permitting, federal regulations define major source as one or more stationary sources that: I) are located oil contiguous or adjacent properties; 2) arc under common control of the same person or persons under common control; and 3) have the same two-digit Standard Industrial Classification ("SK."T code. 40 Code of Federal Regulations 70.2. As discussed above. Hanson Santee and Sycamore Landfill operate on the same parcel, and arc under common control by virtue of the contractual relationship between them. They also can be considered to be under the same SIC code, since Hanson Santee is operating as-a support facility to Sycamore Landfill. A. Hanson Santee is operating as a support facility io Sycamore Landfill, and as such can be considered to be operating tinder the same SIC code. As discussed above. Hanson Santee supports the operation of the Svcamore I andfill by providing excavation services to develop the landfill as well as the fine materials needed for the daily anti final cover for the landfill per the terms of the Agreement and Amendment. tl'A guidance provides that "a support facility is considered to be part of the same industrial grouping of that as the primary facility it supports even if the support facility has a different two-digit SIC code." Letter from Robert B. Miller. Chief. Permits ;:r.d Grans Section. Io William Baumann, dated August 25. BW. A support facility relationship is presumed to exist when more than 50 percent of the output or services that arc provided by one facility is dedicated to another facility I he Distikt's I itle V Rules inclinimi: ibis dcrmition wcrc approvai by t-.l'A initinil> un Fcbo-fns 5. 'Wp .jtcrail.it Mhe I rama defiiuik.n ni a.rJuii.tiy siMirce llitil vv.miI.I gerani thi, c.etermin..U.ri Reaiidkra ,w lui thei i! ira urani 'iuk-hi, th Barami carnee and Sycanra'e I andfil! i.pciatjniw un Al bc aeprepalcd urtici* ciliw iklli'.ltion. 17cv1906 Sierra Club v. EPA ED_001523A_00000103-00005 Mr. Stephen O'Keil 6- May 2,2017 that it supports. Letter from Kathleen Anderson, Chief. Air Permits and Technical Review Branch, to Sharon (i. foley. dated October 22. 2009. In this case, 11)()% of I lanson Santee's excavation operation is dedicated to excavation of the Sycamore I andlill, and this operation provides 1of the daily cover needed for the landtill. furthermore. additional factors may be considered in determining whether a support facility relationship exists. Support facility determinations can also depend upon the following: The degree to which the supporting activity receives materials er services from the primary act's ity (which indicates a mutually beneficial arrangement between the primary and secondary activities Ilie degree to which the primary activity exerts controls over the support activity's operations; TIfonature of any wnttactuaLarrangeinsnts between the facilities; and' The reasons forth presence ofthe support activity on the samesite as the primary activity (e.g. whether the support activity would exist at that site but for the primary activity). Miller letter, at 2. As discussed above, it is clear from the review of the Agreement and Amendment that Hanson Santee receives the ability to mine aggregate lor sale. Sycamore 1 andfill exerts complete control over the location and amount of materials to be removed, and I lanson Santee would not he located upon this property were it not for its role in excavating foe spacefor the Sycamore Landfill. As such, it is a support facility to'the Sycamore I and till and can he considered '0 he operating under the same two-digit SIC code as Sycamore Landfill. B. The support facility concept is rot limited to permitting decisions under the Prevention of Significant Daarmination ("PSD") program. Contrary to the assertion in your letter, the support facility concept is not limited to permitting under the PSD program. The LPA letter to John D. Lowe referenced in your letter simply docs not specify as such. While the concept was initially described in the preamble to rhe PSI) reeulationv, it has suhccquently beer, referenced in many I PA determinations related i<> Titk V permits. See I fiber Idler. November 27. 1996 al I: Anderson letter, October22. 20W at L and (most recently) Letter from Keir.tclh Moraff. Director, < M't'ce of I'cosvstcm Protection to Doudas I . VkVav. dated March 25, 20In at 3,4. ' 17cv1906 Sierra Club v. EPA ED_001523A_00000103-00006 Mr. Stephen O'Neil -7- May 2. 2017 Conclusion Based upon its analysis of the factors discussed above. the District finds that the Hanson Santee operations at the Sycamore landfill must be aggregated with the emissions of the landfill itself, because I lanson Santee is essentially operating as the excavation operation for the Sycamore Landfill, and provides the daily an er materials for the landfill, As such, Hanson Santee should have submitted a Title V permit application within 12 months oreominenuing operation at that location. District Rule 1414(c). The District sunt notice of the Title V permit requirement to your client on March 11, 2016, Under even the most generous raiding ol'District Rule 1414. an application for I lamon's Title V permit was due to the District by March 11.2017. further delay in submittal of the application will put your client at added risk for District,.'federal or citizen enforcement. Please contact me with any questions yon may have. Very truly yours. UlDMASt. MON1OMIRV. Count} Counsel By ula l-'orbis. Senior Deputy 17cv1906 Sierra Club v. EPA ED_001523A_00000103-00007