Agenda 06/27/2017 Item #16C 206/27/2017
EXECUTIVE SUMMARY
Recommendation to approve a Certification of Financial Responsibility, as required by the Florida
Department of Environmental Protection, for the renewal of an operating permit for the deep
injection well system at the Collier County North Regional Water Treatment Plant.
OBJECTIVE: To certify unconditionally to the Florida Department of Environmental Protection
(FDEP) the county’s obligation to perform plugging and abandonment of the deep injection well system
at the Collier County North Regional Water Treatment Plant (NRWTP) pursuant to Chapter 62-528
Florida Administrative Code.
CONSIDERATIONS: The NRWTP provides drinking water to customers throughout the Collier
County Water-Sewer District area. The purpose of the deep injection well at the water treatment plant is
to dispose of the concentrate and odor control blowdown flows produced by various membrane water
treatment processes. The permit, which expires August 9, 2017, is for Injection Well 1 (IW-1) located at
the NRWTP.
Location Date of permit
issuance
Date of permit
expiration
Permit No.
NRWTP - 8005 Vanderbilt Beach Road Ext, Naples, FL 34120 August 10,
2012
August 9, 2017 50581-569-UO/1I
The permit renewal application requires the county to complete and execute a Certification of Financial
Responsibility form (copy attached). This form certifies that the county will be unconditionally obligated
to have the financial resources necessary to close, plug, and abandon the Class I injection well and related
monitoring wells. The current plugging and abandonment cost estimate is $292,790. In the event that
the injection well system fails to meet permit conditions, or the well is no longer required for its intended
use, then plugging and abandonment become necessary.
This action is consistent with previous Board of County Commissioners decisions to approve similar
requests for the water treatment plant’s deep injection well system, most recently on April 26, 2016, as
Agenda Item 16C2.
FISCAL IMPACT: The actual expenditure of funds is not anticipated and would only be required if an
injection well was to be abandoned. Funds to cover these costs, if needed, are maintained in the Reserves
for Contingency line item in the Water/Sewer Operating Fund (408), which is funded through user fees.
LEGAL CONSIDERATIONS: This item has been reviewed by the County Attorney, is approved as to
form and legality, and requires majority vote for approval. -JAK
GROWTH MANAGEMENT IMPACT: There is no growth management impact associated with
executing this document.
RECOMMENDATIONS: To approve and authorize the Chair to execute the Certification of Financial
Responsibility form.
Prepared by: Steve Messner, Director, Public Utilities Water Division
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06/27/2017
ATTACHMENT(S)
1. NRWTP IW 1 Attachment 1 Certification of Financial Responsibility form and Cost Estimate
(PDF)
2. NRWTP IW 1 Attachment 2 Local Government Guarantee (PDF)
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06/27/2017
COLLIER COUNTY
Board of County Commissioners
Item Number: 16.C.2
Doc ID: 3261
Item Summary: Recommendation to approve a Certification of Financial Responsibility, as
required by the Florida Department of Environmental Protection, for the renewal of an operating permit
for the deep injection well system at the Collier County North Regional Water Treatment Plant.
Meeting Date: 06/27/2017
Prepared by:
Title: Plant Manager – Water
Name: Howard Brogdon
05/24/2017 10:21 AM
Submitted by:
Title: Division Director - Water – Water
Name: Steve Messner
05/24/2017 10:21 AM
Approved By:
Review:
Public Utilities Department Margie Hapke Level 1 Division Reviewer Completed 05/24/2017 11:47 AM
Public Utilities Operations Support Joseph Bellone Additional Reviewer Completed 06/05/2017 3:52 PM
Public Utilities Department Heather Bustos Additional Reviewer Completed 06/06/2017 9:33 AM
Public Utilities Department George Yilmaz Level 2 Division Administrator Review Completed 06/06/2017 10:05 AM
County Attorney's Office Jeffrey A. Klatzkow Level 3 County Attorney's Office Review Completed 06/07/2017 9:26 AM
Office of Management and Budget Valerie Fleming Level 3 OMB Gatekeeper Review Completed 06/09/2017 12:22 PM
Budget and Management Office Ed Finn Additional Reviewer Completed 06/13/2017 9:55 AM
County Manager's Office Leo E. Ochs Level 4 County Manager Review Completed 06/16/2017 10:23 AM
Board of County Commissioners MaryJo Brock Meeting Pending 06/27/2017 9:00 AM
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Appendix C
Updated Injection Well System Plug and
Abandonment Plan
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_________________________________
_________________________________
_________________________________
CERTIFICATION OF FINANCIAL RESPONSIBILITY FOR LOCAL GOVERNMENT
______________________________________________________, a unit of local government of
the State of Florida, hereby certifies that it has unconditionally obligated itself to have the
financial resources necessary to close, plug, and abandon its underground injection well(s)
and related monitoring wells, as required by Chapter 62-528, Florida Administrative Code. It
is further understood that the cost estimate to conduct plugging and abandonment,
established on _____________________, shall be updated thirty (30) months after the date
of permit issuance and this obligation shall incorporate accumulated inflation costs. An
increase exceeding 10 percent compared with the amount stated below shall require submission
of an updated certification form.
Injection Wells and Monitoring Wells Covered By This Agreement:
(attach additional sheet if necessary)
Facility Name: _______________________________________________
Facility Address: ____________________________________________________________
Facility Contact: ____________________________________________________________
Phone Number: _____________________________________________________________
Latitude/Longitude of Injection Well(s): _________________________________________
Current Permit Number: _______________________________________________________
Current Plugging and Abandonment Cost Estimate: _________________________________
(total for all injection and monitoring wells)
It is hereby understood that the cancellation of this certification may not take place without
the prior written consent of the Secretary of the Florida Department of Environmental
Protection.
_________________________________ NOTARY: See Next Page
(Signature)
(Print Name)
(Title)
(Date)
1
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Packet Pg. 874 Attachment: NRWTP IW 1 Attachment 1 Certification of Financial Responsibility form and Cost Estimate (3261 : NRWTP Injection Well 1
_______________________________________________
_______________________________________________
Notary Form
State of Florida
County of: _________________________
Sworn to (or affirmed) and subscribed before me this ____ day of ______________, ______
by ______________________________________________________________,
(Name of person making statement)
[__] Personally known to me
OR
[__] Produced the following identification ________________________________________
Notary Signature
Print, Type, or Stamp Commissioned Name of Notary Public
Apply Seal of Notary Public below -State of Florida
2
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PROCEDURES AND COSTS FOR THE PLUGGING AND ABANDONMENT OF
INJECTION WELL IW-1 AND DUAL-ZONE MONITOR WELL
COLLIER COUNTY NORTH COUNTY REGIONAL WATER TREATMENT PLANT
Plans for the plugging and abandonment of injection well IW-1 and the dual zone monitor well are
provided in Appendix C Figure 1. Injection well IW-1 would be abandoned by first removing the
wellhead, 16-inch diameter injection tubing, and packer. The open hole will then be filled with
gravel to 10 feet below the base of the 20-inch diameter injection casing, which is located at 2,497
feet below land surface. The 20-inch diameter injection casing will then be filled with cement to land
surface. The dual-zone monitor well will be abandoned by filling both the 6 5/8-inch and 16-inch
diameter casings with Portland Cement to land surface. Neat Portland cement would be used unless
permission is granted by the Florida Department of Environmental Protection (FDEP) to use
extenders. The costs associated with implementing the plugging and abandonment plan (plus 15%
contingency) for the wells would be approximately $292,790 under current market conditions. A
current Certification of Financial Responsibility is being prepared and will be submitted separately.
The abandonment plans for the well includes the following 4 major bid items:
IW-1
Bid Item #1 includes all work associated with mobilization and demobilization of the drilling rig
and supporting equipment suitable for the task. This bid item also includes the work required to
retrofit the drilling pad with new pad walls to ensure that injected or formation fluids are not
accidentally spilled on the ground.
Remove Wellhead .......................................................................................................... $10,000
Mobilization-demobilization ..................................................................................... $60,000
Bid Item #2 consists of a mechanical integrity test.
Contractor costs .............................................................................................................. $35,000
Bid Item #3 Complete below ground/add monument.
Drilling mud ....................................................................................................................... $5,000
Bid Item #4 includes all materials and work required to fill the open hole interval with gravel to 10
feet below the bottom of the 20-inch diameter casing, and filling the remaining 10 feet of open hole
and the entire 20-inch diameter casing with neat cement.
Note Section 62-28.270 (7) FAC indicates that "neat cement grout or approved equivalent" shall be
used for well abandonment. For the purposes of this document we therefore assume that the FDEP
would not approve the use of extending cement in implementing this plan.
File open hole with gravel est. 2,350 ft3 @ $$10.00/ft3 .................................. $23,500
Emplace 2,900 cubic feet of cement @ $20/ft3 .................................................. $58,000
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Packet Pg. 876 Attachment: NRWTP IW 1 Attachment 1 Certification of Financial Responsibility form and Cost Estimate (3261 : NRWTP Injection Well 1
Procedures/Costs for Plugging/Abandonment
IW-1 and DZMW
NCRWTP
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Subtotal for Injection Well ...................................................................................... $191,500
15% Contingency ........................................................................................................... $28,725
Total Estimated Cost for IW Abandonment ...................................................... $220,225
DZMW Monitor Well
Bid Item #1 includes all work associated with mobilization and demobilization of the drilling rig
and supporting equipment suitable for the task. This bid item also includes the work required to
retrofit the drilling pad with new pad walls to ensure that injected or formation fluids are not
accidentally spilled on the ground.
Remove Wellhead ............................................................................................................ $4,000
Mobilization-demobilization ..................................................................................... $15,000
Bid Item #2 consists of a mechanical integrity test.
Contractor costs .............................................................................................................. $10,000
Bid Item #3 Complete below ground/add monument.
Drilling mud ....................................................................................................................... $2,500
Bid Item #4 includes all materials and work required to fill the open hole interval with gravel to 10
feet below the bottom of the 20-inch diameter casing, and filling the remaining 10 feet of open hole
and the entire 20-inch diameter casing with neat cement.
Note Section 62-28.270 (7) FAC indicates that "neat cement grout or approved equivalent" shall be
used for well abandonment. For the purposes of this document we therefore assume that the FDEP
would not approve the use of extending cement in implementing this plan.
Emplace Cement LZ 580 ft3 – Neat @ $$20/ft3 .................................................. $11,600
Emplace Cement UZ 1,000 ft3 – Neat @ $20/ft3 ................................................. $20,000
Subtotal for Monitor Well ........................................................................................... $63,100
15% Contingency ............................................................................................................. $9,465
Total Estimated Cost for MW Abandonment ...................................................... $72,565
TOTAL CONTINGENCY (15%) IW-1 & DZMW-1 ................................................... $38,190
TOTAL IW-1 & DZMW-1 P&A & 15% CONTINGENCY ....................................... $292,790
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Local Government Guarantee
A unit of local government of the State of Florida may demonstrate financial responsibility as required in Rule
62-528.435(9), F.A.C., by submitting all of the following information:
1. The local government must submit a letter from its attorney attesting to the permittee meeting the definition
of a local government as defined in Chapter 218, Florida Statutes (F.S.). The attorney must also attest to
the local government's coverage under Chapter 218, Part V, F.S., Financial Emergencies. A copy of
Chapter 218, Part V, F.S., is provided with this attachment.
If the permittee is unable to obtain a letter from its attorney regarding its status as a local government, an
alternate demonstration of financial responsibility must be submitted to the FDEP. The alternatives
suggested by the FDEP are:
a. Surety Bond
b. Letter of Credit
c. Trust Fund
d. Financial Test
2. The local government must submit a Certification of Financial Responsibility which certifies
unconditionally the obligation of the local government to perform plugging and abandonment of its
injection system(s) pursuant to Chapter 62-528, F.A.C. The certification form provides information on the
location of the injection system(s) guaranteed by the local government with the related cost estimates for
plugging and abandonment.
The certification allows for an annual cost increase of 10 percent without submission of an updated
certification form. Cancellation of the agreement may not take place without the written consent of the
FDEP Secretary (10% increase applies only within a permit cycle – financial responsibility must
address full amount when renewing or reissuing a permit).
The person signing the Certification on behalf of the local government must be an individual authorized to
bind the local government (the entity that is qualifying as a local government - not just the utility) to
such an agreement. The signing of this agreement must be notarized to complete the processing of the
"Certification of Financial Responsibility" form. The wording of the certification form is provided in the
attachment Form for Certification of Financial Responsibility for Local Government.
3. A copy of the financial statements (for the entity qualifying as a local government – not the utility) for
the latest completed fiscal year must accompany items 1 and 2 above to complete the financial package for
review by the FDEP. If the Department finds through its review of the financial statements that the
financial strength of the unit of local government is questionable, the Department may notify the permittee
of its intentions to deny the financial package as submitted. The permittee would then be required to submit
an alternate financial demonstration to meet the requirements of Rule 62-528.435(9), F.A.C.
16.C.2.b
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Plugging and Abandonment Plan/Cost Determination - In order to demonstrate financial responsibility a permittee
or applicant must submit a detailed plugging and abandonment (P&A) plan to the Department for approval (injection
and monitor well). The P&A plan should contain the following information:
1. A step-by-step plugging plan indicating where cement and other fillers (if any) will be placed.
2. A drawing showing the well construction and proposed placement of plugging materials. Appropriate
depths should be indicated on this drawing.
3. Calculations showing the derivation of the volume of cement and other fillers (if any) needed to plug the
well according to the plan prepared in Items 1 and 2 above. Separate calculations should be made for each
well.
4. Calculations showing the derivation of the total cost for plugging each well (injection and monitor well(s)).
Costs should be itemized for each well (i.e. cement cost, mobilization cost, etc.). Financial responsibility
must be demonstrated for the sum of the total costs for all injection and associated monitor wells at a
facility.
Timing of Demonstrations - Department rules require that financial responsibility be demonstrated at the time of
permitting and maintained. A demonstration of financial responsibility will be required for each construction and
operation permit application. Also, at any time during a permit cycle, if updated plugging and abandonment costs
exceed the initial financial certification amount by ten percent or more, then a redemonstration shall be submitted to
the Department. Updated plugging and abandonment cost estimates should be provided to the Department at the
midpoint of the permit cycle. Permittees which utilize a UIC Financial Test shall redemonstrate annually, and
forward the latest annual report or financial statement.
Financial responsibility is required for Class I injection wells, and any monitor well which penetrates to a depth
below the underground source of drinking water.
Summary - Department UIC rules require that a permittee for a Class I injection well demonstrate and maintain
financial responsibility. To do this, the applicant or permittee must first develop a plugging and abandonment plan
and determine the cost associated with implementing this plan should it become necessary. These costs should be
updated during the midpoint of the permit cycle and if the cost is ten percent or more above the amount of the
previous financial responsibility demonstration is based, then a redemonstration must be made to the Department.
Once the costs have been determined, several methods are available to demonstrate financial responsibility. Each
method is described in the Department's guidelines for demonstrating financial responsibility.
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CHAPTER 218
FINANCIAL MATTERS PERTAINING TO POLITICAL SUBDIVISIONS
PART V
FINANCIAL EMERGENCIES
218.50 Short title.--Sections 218.50-218.504 shall be known as the "Local Government Financial
Emergencies Act."
History.--s. 8, ch. 79-183.
218.501 Purposes.--The purposes of ss. 218.50-218.504 are:
(1) To preserve and protect the fiscal solvency of local governmental entities.
(2) To assist local governmental entities in providing essential services without interruption and in meeting
their financial obligations.
(3) To assist local governmental entities through the improvement of local financial management
procedures.
History.--s. 8, ch. 79-183; s. 25, ch. 96-324.
218.502 Definition.--As used in ss. 218.50-218.504, the term "local governmental entity" means a county,
municipality, or special district.
History.--s. 8, ch. 79-183; s. 26, ch. 96-324.
218.503 Determination of financial emergency.--
(1) A local governmental entity is in a state of financial emergency when any of the following conditions
occurs:
(a) Failure within the same fiscal year in which due to pay short-term loans from banks or failure to make
bond debt service payments when due.
(b) Failure to transfer at the appropriate time, due to lack of funds:
1. Taxes withheld on the income of employees; or
2. Employer and employee contributions for:
a. Federal social security; or
b. Any pension, retirement, or benefit plan of an employee.
(c) Failure for one pay period to pay, due to lack of funds:
1. Wages and salaries owed to employees; or
2. Retirement benefits owed to former employees.
(d) An unreserved or total fund balance or retained earnings deficit for which sufficient resources of the
local governmental entity are not available to cover the deficit for 2 successive years.
(e) Noncompliance of the local government retirement system with actuarial conditions provided by law.
(2) A local governmental entity shall notify the Governor and the Legislative Auditing Committee when one
or more of the conditions specified in subsection (1) have occurred or will occur if action is not taken to assist the
local governmental entity. In addition, any state agency must, within 30 days after the identification of the financial
emergency, notify the Governor and the Legislative Auditing Committee when one or more of the conditions
specified in subsection (1) have occurred or will occur if action is not taken to assist a local governmental entity.
(3) Upon notification that one or more of the conditions in subsection (1) exist, the Governor or his or her
designee shall contact the local governmental entity to determine what actions have been taken by the local
governmental entity to resolve the financial emergency. The Governor has the authority to implement measures as set
forth in ss. 218.50-218.504 to resolve the financial emergency. Such measures may include, but are not limited to:
(a) Requiring approval of the local governmental entity's budget by the Governor.
(b) Authorizing a state loan to the local governmental entity and providing for repayment of same.
(c) Prohibiting a local governmental entity from issuing bonds, notes, certificates of indebtedness, or any
other form of debt until such time as it is no longer subject to this section.
(d) Making such inspections and reviews of records, information, reports, and assets of the local
governmental entity, in which inspections and reviews the appropriate local officials shall cooperate.
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(e) Consulting with the officials of the local governmental entity and the appropriate state agency regarding
any steps necessary to bring the books of account, accounting systems, financial procedures, and reports into
compliance with state requirements.
(f) Providing technical assistance to the local governmental entity.
(g)
1. Establishing a financial emergencies board to oversee the activities of the local governmental entity. The
board, if established, shall be appointed by the Governor. The Governor shall select a chair and such other officers as
are necessary. The board shall adopt such rules as are necessary for conducting board business. The board may:
a. Make such reviews of records, reports, and assets of the local governmental entity as are needed.
b. Consult with the officials of the local governmental entity and appropriate state officials regarding any
steps necessary to bring the books of account, accounting systems, financial procedures, and reports of the local
governmental entity into compliance with state requirements.
c. Review the operations, management, efficiency, productivity, and financing of functions and operations
of the local governmental entity.
2. The recommendations and reports made by the board must be submitted to the Governor for appropriate
action.
(h) Requiring and approving a plan, to be prepared by the appropriate state agency in conjunction with the
local governmental entity, prescribing actions that will cause the local governmental entity to no longer be subject to
this section. The plan must include, but need not be limited to:
1. Provision for payment in full of all payments due or to come due on debt obligations, pension payments,
and all payments and charges imposed or mandated by federal or state law and for all judgments and past due
accounts, as priority items of expenditures.
2. Establishment of a basis of priority budgeting or zero-based budgeting, so as to eliminate low-priority
items that are not affordable.
3. The prohibition of a level of operations which can be sustained only with nonrecurring revenues.
(4) During the financial emergency period, the local governmental entity may not seek application of laws
under the bankruptcy provisions of the United States Constitution except with the prior approval of the Governor.
History.--s. 8, ch. 79-183; s. 54, ch. 89-169; s. 1180, ch. 95-147; s. 27, ch. 96-324; s. 29, ch. 97-96.
218.504 Cessation of state action.--The Governor has the authority to terminate all state actions pursuant
to ss. 218.50-218.504. Cessation of state action must not occur until the Governor has determined that:
(1) The local governmental entity:
(a) Has established and is operating an effective financial accounting and reporting system.
(b) Has corrected or eliminated the fiscal emergency conditions outlined in s. 218.503.
(2) No new fiscal emergency conditions exist.
History.--s. 8, ch. 79-183; s. 28, ch. 96-324.
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