Common use of Introduction and Summary Clause in Contracts

Introduction and Summary. The intent of this Introduction and Summary is solely to summarize the terms of this Mitigation Agreement. In the event of a conflict between the language set forth in this Introduction and Summary and the terms and conditions set forth in the numbered sections of this Mitigation Agreement, the latter shall control. Capitalized terms are defined below. SoCalGas has entered into a Consent Decree with the City of Los Angeles, the County of Los Angeles, the Attorney General, and CARB (together, “Government Plaintiffs”) to resolve legal claims against SoCalGas in connection with the natural gas leak from SoCalGas’s Aliso Canyon Natural Gas Storage Facility in October 2015 (“Consent Decree”). This Mitigation Agreement, which is Appendix A to that Consent Decree, includes the terms governing the discharge of SoCalGas’s “Mitigation Obligation” under the Consent Decree, that is, the obligation to mitigate 109,000 metric tons of methane emissions. This Mitigation Agreement fulfills the requirements from Governor ▇▇▇▇▇’▇ January 6, 2016, Emergency Proclamation for SoCalGas to pay for a mitigation program developed by CARB that causes full mitigation, that is limited to projects in California, and that prioritizes projects that reduce short-lived climate pollutants. The Mitigation Projects developed pursuant to this Mitigation Agreement will be dairy-digester biomethane projects, which were proposed in CARB’s March 31, 2016, Aliso Canyon Climate Impacts Mitigation Program and will conform to the Program’s objectives and mandatory project criteria. Pursuant to the terms set forth below, SoCalGas will establish a Mitigation Fund as a trust. SoCalGas will transfer the Mitigation Contribution required under the Consent Decree to a Mitigation Account opened by the Mitigation Fund and serve as initial Administrator of the Mitigation Fund. The function of SoCalGas’s payment of the Mitigation Contribution is to cause full mitigation of the Aliso Canyon leak; it is not a payment in lieu of penalties to CARB (nor is mitigation a Supplemental Environmental Project). The Mitigation Fund will be managed by a Trustee, who will enter into an administrative services agreement with the Administrator. The Mitigation Fund will disburse the Mitigation Contribution to support Mitigation Projects. For the First (Mitigation) Project, the Mitigation Fund will provide partial financing, in the form of loans, to the Dairy Projects, organized into three Clusters, which will capture, upgrade, and inject biomethane into a common carrier pipeline. Taken together, all Clusters included in the First Project are expected to achieve the Mitigation Obligation by mid-2020 and achieve a reduction of at least 109,000 metric tons of methane emissions reductions within ten years of initial operation. In the event it is reasonably determined that the First Project as implemented will not achieve 109,000 metric tons of methane emissions reductions, the Administrator will work with CARB to pursue investment from the Mitigation Fund into one or more Additional Mitigation Projects. The methane emissions reductions associated with each Mitigation Project supported by the Mitigation Fund will be projected over a ten-year time period starting on the day when such Mitigation Project achieves Commercial Operation and in accordance with the CARB Quantification Protocol. When CARB certifies the Mitigation Projects are collectively projected to achieve at least 109,000 metric tons of methane emissions reductions, CARB will issue and file with the Court a Mitigation Certification, certifying that SoCalGas’s Mitigation Obligation under the Consent Decree has been discharged. SoCalGas shall then appoint a successor Administrator to replace SoCalGas. The successor Administrator will administer the Mitigation Fund until 109,000 metric tons of methane emissions reductions are achieved. At the time of the appointment of the successor Administrator, SoCalGas shall automatically cease to be the Administrator or to have any access to or authority over the Mitigation Fund. At specific milestones set forth in this Mitigation Agreement, the Trustee will transfer funds from the Mitigation Fund, including sums received as repayments of principal and interest from Borrowers, to the Aliso Canyon Recovery Account or to the Aliso Fund. The Administrator may modify the amounts transferred to serve the purposes of this Mitigation Agreement and the Governor’s Proclamation to achieve 109,000 metric tons of methane emissions reductions. The successor Administrator will make a final transfer of all monies in the Mitigation Fund to either the Aliso Canyon Recovery Account or the Aliso Fund after 109,000 metric tons of methane emissions reductions are achieved and after all anticipated repayments of principal and interest from Borrowers are received.