8F
Date: January 27, 2026
To: Honorable Mayor and Members of the City Council
From: Craig Bilezerian, Public Works Director
By: Chuck Schaich, Policy & Resources Specialist | [email protected] Subject: Public Works – Approve Fourth Amendment for Usage of Recycled Water at the Torrance Refinery. Expenditure: None.
RECOMMENDATION
Recommendation of the Public Works Director that the City Council approve a fourth amendment to the tri-party agreement (C2021-027) between the City of Torrance (City), Torrance Refining Company, LLC (TORC), and the West Basin Municipal Water District (WBMWD) to extend the continued use of recycled water at the TORC Refinery for an additional five-month period, beginning February 1, 2026, and ending June 30, 2026.
FUNDING
None required.
DISCUSSION
The tri-party agreement between the City, TORC, and WBMWD functions as a pass-through arrangement, with all recycled water–related costs fully reimbursed by TORC. Following City Council adoption of a new recycled water rate structure on January 13, 2026 (Resolution No. 2026-09) applicable to all recycled water customers within the Torrance Municipal Service Area, the City will apply a five percent (5%) administrative charge to the recycled water commodity (volumetric) charges assessed by WBMWD, effective February 1, 2026. These charges will be adjusted accordingly when WBMWD updates its rates.
A monthly fixed meter service charge (readiness-to-serve) will be assessed only for meters that are owned and serviced by the City, in accordance with the City’s Proposition 218–approved rate structure. The total charges billed by the City to the TORC Refinery will consist of the applicable WBMWD volumetric water charges plus the City’s administrative charge.
While significant progress has been made in resolving outstanding financial and technical issues, several matters remain to be finalized between TORC and WBMWD before entering into a new long-term five-year recycled water service agreement with an extension option. To allow additional time for resolution of these outstanding issues, all parties have agreed to extend the current agreement for an additional five-month period, from February 1, 2026, through June 30, 2026.
1 City Council
January 27, 2026
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9 With the implementation of the City’s new recycled water rate structure, all issues pertaining to the City have been resolved at this time. All parties remain actively engaged and committed to finalizing a new long-term recycled water service agreement by the end of Fiscal Year 2025–26.
ATTACHMENT
1. Fourth Amendment for Usage of Recycled Water at the Torrance Refinery 2 65506.00001\44562280.1
1 FOURTH AMENDMENT TO AGREEMENT FOR USAGE OF WEST BASIN MUNICIPAL
WATER DISTRICT NITRIFIED RECYCLED WATER AT TORRANCE REFINERY (No. C2021-027)
This Fourth Amendment to the Agreement for Usage of West Basin Municipal Water District Nitrified Recycled Water at Torrance Refinery No. C2021-027 (“Fourth Amendment”) is made effective as of February 1, 2026 (the “Effective Date”), by and between the City of Torrance, a municipal corporation and charter law city (“City”), the Torrance Refining Company LLC, a Delaware limited liability company (“TORC”), and the West Basin Municipal Water District, a California special district (“District”). City, TORC, and District may sometimes be referred to herewith individually as a “Party” and collectively as “Parties.”
RECITALS
WHEREAS, on March 1, 2021, City, TORC, and District entered into an Agreement for Usage of West Basin Municipal Water District Nitrified Recycled Water at Torrance Refinery C2021-027 (the “Agreement”), which established the terms and conditions pursuant to which City and District provide nitrified recycled water for cooling tower use and landscape irrigation by TORC at the Torrance Refinery (“Refinery”) located in Torrance, California; and WHEREAS, the Parties entered into the First Amendment to the Agreement for Usage of West Basin Municipal Water District Nitrified Recycled Water at Torrance Refinery No.
C2021-027 (“First Amendment”), dated and effective on September 1, 2023; and WHEREAS , the First Amendment extended the term of the Agreement by twelve (12) months, through August 31, 2024; and
WHEREAS , the Second Amendment extended the term of the Agreement by twelve (12) months, through August 31, 2025; and
WHEREAS , the Third Amendment extended the term of the Agreement by five (5) months, which now is set to expire on January 31, 2026; and WHEREAS , by way of this Fourth Amendment, the Parties now wish to extend the term of the Agreement by another five (5) months through June 30, 2026, in order to continue good-faith negotiations between the Parties for a new long-term agreement for recycled water service to the Refinery; and
WHEREAS , the Parties intend that any new agreement for the supply of recycled water to TORC reached pursuant to this extension will be deemed effective July 1, 2026.
AGREEMENT
NOW, THEREFORE , for valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties do hereby agree to amend the Agreement as follows:
1. Definitions. The capitalized terms defined in this Fourth Amendment have the meanings assigned to them, including terms defined by inclusion in quotation marks and parentheses. All other capitalized terms used, but not defined, herein shall have 3 65506.00001\44562280.1
2 the same meanings assigned to such terms in the Agreement, the First Amendment, the Second Amendment, or the Third Amendment.
2. Agreement Term – Section 1. The Term is amended to read in its entirety as follows:
"1 Agreement Term. This Agreement shall commence on March 1, 2021 and terminate on June 30, 2026 (‘Term’).”
3. Ownership of the Ammonia Removal Facility and Piping . Pursuant to Section 8, the District and TORC negotiated in good faith and reached an agreement as to the ownership of the Ammonia Removal Facility and Piping. The District and TORC will cooperate in good faith to achieve a transfer of ownership to TORC with minimum impact to the Parties.
4. Reconciliation . For the period of February 1, 2026 to June 30, 2026, the District and TORC agree that a reconciliation shall be performed by the Parties based on the reasonable actual costs incurred by the District under the Agreement and methodology referenced in the January 13, 2026 letter from TORC to the District.
T h e l e t t e r i s a t t a c h e d a s E x h i b i t A a n d i s i n c o r p o r a t e d i n t o t h i s A m e n d m e n t b y t h i s r e f e r e n c e . The Parties agree to continue cooperating in good faith in determining reasonable costs pursuant to this methodology. The District and TORC agree that Onsite Capital Projects will require written approval by TORC in order for such costs to be recovered by the District during the reconciliation process. All reasonable actual costs incurred by the District under the Agreement, other than costs associated with Onsite Capital Projects, will not require written approval by TORC in order for such costs to be considered eligible costs for reconciliation. Such eligible costs include, but are not limited to, the cost of replacement, repair, or refurbishment of capital assets associated with the delivery of recycled water for cooling tower use and landscape irrigation. Parties shall attempt to resolve any disputes over reconciliation through good faith discussions and negotiations before invoking the Alternative Dispute Resolution provisions of Section 16 of the Agreement. Notwithstanding the forgoing, and for the sake of clarity, this Section 4, does not supersede the reconciliation periods of Section 5 and 6 of the Agreement, the reconciliation period of Section 4 of the First Amendment, the reconciliation period of Section 4 of the Second Amendment, or the reconciliation period of Section 4 of the Third Amendment.
5. City Administrative Charge . The City will apply, and TORC agrees to pay, an administrative charge in accordance with the City’s Recycled Water Rate Resolution No. 2026-09, as may be amended or superseded by the City with 60-day advance notice.
6. Effect of the Amendment . Except as expressly amended, supplemented, and modified herein, nothing in this Fourth Amendment in any way alters or amends the restrictions, rights or obligations under Agreement, the First Amendment, the Second Amendment, or Third Amendment that are not expressly amended herein, and all other provisions in the Agreement are hereby ratified, confirmed and remain in full force and effect. This Fourth Amendment shall prevail and control with respect to any inconsistency between the interpretation of the Agreement, the First Amendment, the 4 65506.00001\44562280.1
3 Second Amendment, the Third Amendment, and this Fourth Amendment and any other addendum or prior amendment.
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IN WITNESS WHEREOF , the Parties have executed this Fourth Amendment through their authorized representatives as evidenced by their signatures below.
City of Torrance Torrance Refining Company LLC
By: _______________________
George K. Chen, Mayor
By: _______________________
ATTEST:
By: _______________________
Rebecca Poirier, MMC
City Clerk
West Basin Municipal Water District
By: _______________________
APPROVED AS TO FORM
PATRICK Q. SULLIVAN, City Attorney
By: _______________________
Patrick Q. Sullivan
Attachment: Exhibit A Letter from TORC to District dated January 13, 2026 6 7
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