This Council memorandum is a follow-up to the December 5, 2016 work session for the approval of the Pretreatment Service Agreement with the ExxonMobil Corporation.  Approval of this agreement is required before the Public Works Department is able to issue an Industrial Pretreatment Permit to their refinery.  A public hearing is required prior to the City providing sewer service to an area outside of the City limits as per City Code (BMCC) Section 26-206.  City Council will conduct a public hearing, consider granting a waiver to service and annexation requirements of Sections 22-203 and 22-204 (as amended) and consider approving the Pretreatment Service agreement with the ExxonMobil Corporation.  The agreement identifies the terms and conditions to permit the ExxonMobil Corporation’s refinery industrial wastewater discharge into the City's wastewater system for treatment.  In general, this includes insuring compliance with City, State and Federal requirements, fee and rate methodology, limits on industrial loadings, and indemnification conditions.  The agreement states that the ExxonMobil Corporation acknowledges and accepts a maximum daily discharge of 2.0 million gallons per day (2 MGD).  They may request a variance to the 2 MGD if they anticipate the flow limit might be exceeded.  Staff has determined that the City’s wastewater treatment plant has the capacity to treat this industrial wastewater.  The ExxonMobil Corporation is expected to utilize the Lockwood sewer system to convey this discharge to the City for treatment.  The point of compliance for this agreement will be upstream of the Lockwood sewer system.  In the event that the Lockwood sewer system is not used, the ExxonMobil Corporation is required to find an alternate conveyance system to the City.

Public Works originally presented this recommendation to Council at the January 5, 2015 work session.  In addition, the Public Works Board discussed the City serving the ExxonMobil Corporation at their April 16, 2015 meeting. The consensus of the Board was to pursue serving this property outside of the City limits without requiring annexation.  This agreement is similar to the Pretreatment Service Agreement with the Phillips 66 Billings refinery that was approved by City Council on July 22, 2013.  Following the approval of the agreement, Public Works will issue a Significant Industrial User Discharge permit to the ExxonMobil Corporation which specifically sets pollutant and flow limits, monitoring and reporting requirements.

Council may:

• Grant a waiver to BMCC Sections 26-203 and 204 and approve this agreement without annexation; or
• Not approve the waiver or this agreement.  Not approving the Agreement will require the ExxonMobil Corporation to pursue an alternate industrial wastewater discharge that would likely include direct discharge to the Yellowstone River.

 If the Agreement is approved, the City would assess fees and rates based on an outside service contract similar to the Lockwood Water and Sewer District Agreement and to the Pretreatment Service Agreement for the Phillips 66 Company’s Billings refinery.  The ExxonMobil Corporation would be assessed a one-time System Development Fee, three-year Industrial Permit Fees, and a monthly wastewater rate based on metered flow. 

Staff recommends that the City Council conduct the public hearing, grant a waiver to BMCC 26-203 and 204 and approve this Pretreatment Service agreement between the City of Billings and the ExxonMobil Corporation without annexation.