Here are some calculations that show that the NBB royalty charge will soon
pay the NBB back their entire "investment" they made for the Health Effects
data. Their charge structure requires a bond for nonmembers to use this data,
plus
royalty fees. The bond of $100,000 is to be held until the year 2015 to
assure they will recoup their "investment" or they will take the balance out of
the
bond. The number below show they will have no basis for holding this bond.
This means that the nonmember option may be more attractive with only a royalty
payment, if the bond requirement is eliminated through an arbitration process.
Note that the nonmember royalty fee is 125% of the royalty fee for members.
2003 National Production 60,000,000 to 80,000,000
(from NBB website, lets use the smaller number)
Producers, estimated 12
(actual number known, anyone?)
Avg. Volume per producer 5000000
Royalty per Producer $65,000
(from chart, below)
Total Royalties Collected $780,000
NBB Health Effects cost $2,200,000
(their stated outlay)
years to payback 2.82
Add to this 7% interest on the outlay since May, 2001, and you can see that
the royalties collected through the end of 2004 or possibly mid-2005 will have
satisfied their "investment" in the Health Effects Data. Therefore, they do
not have a financial stake in protecting their data at this point, other than
mere profit and operating income. This is important for a proposed mediation to
get them to lower their charges for the use of this data. This also
demonstrates to me that the nonmember option may be far more attractive
financially than
the membership with its higher fees.
Production Levels Royalty Payments
Min Max Min Max
0 1000000 $5,000 $10,000
1000000 5000000 $7,500 $30,000
5000000 10000000 $25,000 $25,000
10000000 15000000 $12,500 $12,500
15000000 over $15,000
BIODIESEL BOARD
NONMEMBER PAYMENT AGREEMENT
FOR ACCESS TO HEALTH EFFECTS DATA
Definitions:
1. �gBiodiesel�h means the Mono alkyl esters of long-chain fatty acids that
are derived from
animal fats or vegetable oils and that meet the specifications of D-6751 or
any legal
successor.
2. �gNBB�h means the National Biodiesel Board.
3. �gEPA�h means the U.S. Environmental Protection Agency.
4. �gManufacturer�h means the ___________________________ Co., which is
required to
register its Biodiesel with the EPA under the Clean Air Act.
5. �gMember�h means an entity represented on NBB by a voting Director.
6. �gNonmember�h means an entity not represented on the National Biodiesel
Board.
7. �gHealth Effects Data�h means information submitted by NBB to support the
registration of
Biodiesel with the EPA, demonstrating Biodiesel�fs satisfaction of EPA
requirements for both Tier 1 and Tier 2 Health Effects testing pursuant to 40
CFR
Part 79.
8. �gAccess�h means NBB�fs letter to EPA stating that, pursuant to 40 CFR
79.56(c), NBB
grants permission for Manufacturer to make use of all Tier I and Tier 2
testing data which NBB has previously submitted to EPA, and affirming that
appropriate arrangements for reimbursement of testing costs have been made.
Recitals:
1. Manufacturer is required to register its Biodiesel with the EPA pursuant
to Clean Air Act
regulations found at 40 CFR Part 79.
2. Such registration of Biodiesel requires the submission of Biodiesel Health
Effects Data to
the EPA.
3. To satisfy this requirement, Manufacturer may rely upon data submitted by
another party,
if that party is reimbursed for an appropriate portion of the costs it
incurred to obtain and
report such data. 40 CFR 79.56(c).
4. NBB has obtained and submitted to EPA all Health Effects Data required for
Biodiesel
satisfaction of both Tier 1 and Tier 2 testing requirements, at a cost of
approximately $2,200,000.
5. Manufacturer desires access to the Health Effects Data submitted to EPA by
NBB.
6. Manufacturer is aware that it is NBB policy to provide access to Members
at no charge as
a benefit of membership.
7. Manufacturer is not a Member of or an Applicant for membership in the
National
Biodiesel Board.
Agreement: NBB and Manufacturer therefore agree as follows:
1. In consideration for access to Health Effects Data, Manufacturer will pay
to NBB the
following:
a. Lump-sum: $100,000, receipt of which is hereby acknowledged.
b. Also quarterly payments: From the date access is granted until May 25,
2015, a per-gallon amount on each gallon of biodiesel sold by Manufacturer
equal
to 125% of the amount of per-gallon dues paid to NBB by Marketer/Processor
Members. For these purposes, all terms shall be construed as they are for
payment
of per-gallon dues to NBB.
Within thirty days following the end of each calendar quarter, the
Manufacturer shall remit to NBB both a copy of the quarterly report required by
EPA
pursuant to 40 CFR Part 79 and any report to IRS reflecting amounts of
Biodiesel
sold. If neither is required, Manufacturer shall remit to NBB an equivalent
quarterly report on the form required by NBB. With the report, Manufacturer
shall
remit the per-gallon fee stated above.
Production Cessation. If at any time Manufacturer permanently ceases to
produce Biodiesel, Manufacturer shall notify NBB in writing within ten days.
The
per-gallon amount of subparagraph (b) above shall then be paid on all Biodiesel
produced in that calendar quarter during which production ceased. Upon
presentation of proof of permanent cessation of production, the per-gallon
amount
shall be thereafter discontinued.
c. Escrow. The $100,000 lump-sum payment stated above shall, upon receipt, be
deposited by NBB in an escrow account with a qualified escrow agent.
This amount shall be held in a separate escrow account specifically
identified to the Manufacturer making the deposit. Interest earned on the
escrow
account shall be paid annually to the National Biodiesel Board, which may spend
said
funds for its general purposes. The principal amount shall be released from
escrow only according to the following provisions:
1) If at any time prior to May 25, 2015 Manufacturer is tardy or noncompliant
with the quarterly payments required at subparagraph (b) above, the entire
principal amount of that Manufacturer's escrow account shall be paid over to
the
National Biodiesel Board.
2) If at any time prior to May 25, 2015 Manufacturer permanently ceases to
produce Biodiesel registered with the EPA, Manufacturer's escrow account shall
continue to May 25, 2015, at which time it will be disposed of pursuant to the
provisions herein.
3) If at any time prior to May 25, 2015, Manufacturer is acquired by, merged
into, consolidated with or in any other legal manner succeeded by a lawful
corporate successor, that lawful corporate successor shall step into the shoes
of
the predecessor Manufacturer with respect to this escrow account.
4) Disposition on May 25, 2015: If on May 25, 2015, NBB has been reimbursed
by Non-Members in the form of both escrowed lump-sum amounts and per-gallon
amounts totaling more than the $2.2 million of its testing costs plus 7% APR
from
May 25, 2001 accruing annually, NBB shall direct the escrow agent to refund
to all Non-Members who fully complied with the terms of their payment
agreements for such access. Such excess shall be refunded prorata to such
Non-Members
according to the amount of total per-gallon fees paid to NBB under their
respective Health Effects Data access agreements.
If on May 25, 2015 NBB has not been reimbursed by Non-Members the $2.2
million of its testing costs plus 7% APR from May 25, 2001 accruing annually,
in the
form of both escrowed lump-sum amounts and per-gallon amounts, NBB shall
direct the escrow agent to distribute all amounts in all escrow accounts to
itself, to be spent for the regular program of the National Biodiesel Board.
2. Production during Noncompliance. Manufacturer shall not while in violation
of this Agreement continue to produce biodiesel that was registered by EPA by
virtue of Access granted pursuant to this Agreement.
3. Confidentiality. Production of sales volumes as revealed by reports
received and amounts paid shall be kept confidential pursuant to NBB policy
adopted
June 10, 1999.
4. Right to Audit Books. NBB shall have, until the payment of all sums
hereunder, access to Manufacturer's books and records relevant to the
enforcement of
this Agreement. If at any time Manufacturer has underpaid NBB by more than
ten percent (10%) of the amount due, Manufacturer shall be assessed and shall
be
liable for, the costs of this audit.
5. Costs. Should legal action be required to enforce payment by Manufacturer,
Manufacturer shall indemnify the Board or reimburse the Board for any and all
court costs, expenses, attorneys' fees and other necessary costs that may be
incurred and expended in such proceedings, including collection efforts.
6. Notices. All written notices sent under this Agreement will be sent by
certified mail, return receipt requested, or by facsimile. All such notices
will
be effective upon receipt.
Subject to change upon ten (10) days written notice to the other party, all
notices to NBB
provided for in this Agreement will be addressed as follows:
Director of Operations
National Biodiesel Board
3337A Emerald Lane
P.O. Box l04898
Jefferson City, MO 65110-4898
Facsimile No.: 1-573-635-7913
and notices to Manufacturer will be addressed as follows:
_______________________________
_______________________________
_______________________________
_______________________________
_______________________________
7. No warranty. Manufacturer understands and accepts that the Health Effects
Data submitted by the National Biodiesel Board was data submitted on biodiesel
that met the specifications of D-6751 or any legal successor. NBB disclaims
all liability for, and Manufacturer shall hold NBB harmless, for any
consequences of EPA action or inaction on Manufacturer's application for
registration.
8. Waiver Affecting Performance. The failure to take action with respect to
any breach of any term or condition of this Agreement shall not be deemed to be
a waiver of such term or condition. The acceptance of payments under the
contract subsequent to a breach shall not be deemed to be a waiver of any
breach
of the contract.
9. Injunctive Relief. Manufacturer acknowledges that any violation or
threatened violation of the terms of this Agreement will cause irreparable
injury to
NBB and that, in addition to any other remedies that may be available, NBB
shall be entitled to obtain injunctive relief against the threatened breach or
continuation of any such brief, without the necessity of providing actual
damages or posting bond.
10. Remedies Cumulative. All remedies granted to either party by this
Agreement shall be deemed cumulative of any remedy otherwise allowed by law.
11. Entire Agreement. This Agreement sets forth the entire Agreement between
the parties regarding access to NBB Health Effects Data. The parties agree
that there are no other oral or written understandings or agreements between
them
regarding these matters, and that this Agreement supersedes any previous or
contemporaneous oral or written understandings or agreements.
12. Amendment, Modification or Waiver. No amendment, modification or waiver
of any
provision of this Agreement will be effective unless made in writing, and
signed by the parties.
13. Severability. If any provision of this Agreement is held invalid or
unenforceable, that
holding will not affect the validity or enforceability of the balance of the
Agreement. Any provision of this Agreement held invalid or unenforceable will
not be completely invalidated, but will instead be considered amended to the
extent necessary to remove the clause of invalidity or unenforceability.
14. Governing Law. This Agreement and any other documents related to it will
be interpreted and enforced in accordance with the laws of the State of Iowa.
15. Consent to Jurisdiction and Venue. The parties agree that any legal or
equitable action
for claims, debts, or obligations arising out of, or to enforce the terms of,
this Agreement may be brought by NBB in the United States District Court for
the Southern District of Iowa or in the District Court of Iowa for Polk
County, Iowa, and that either court shall have personam jurisdiction over the
parties and venue of the action shall be appropriate in either court.
16. Agreement Not Assignable. Neither party may assign its rights or its
obligations under this Agreement to any other person or organization without
the
written consent of the other party.
17. Term. This Agreement terminates upon the earlier of:
a. May 25, 2015; or,
b. If earlier, when Manufacturer has ceased production of all Biodiesel
registered with
These data; when Manufacturer has requested in writing to EPA, with a
notarized copy to NBB, that its Biodiesel product registration be permanently
rescinded, NBB has been provided all applicable notices, Manufacturer has
ceased NBB
membership, and all sums due NBB in connection with this Agreement have been
paid in full.
-----------------------------
Homestead Inc.
www.yellowbiodiesel.com
[Non-text portions of this message have been removed]
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