Since 2006, the private company has been converting methane gas produced from decomposing trash at the Ada County landfill into energy, generating more than $250,000 annually in royalties for the county.

Now the project could generate a lot of work for attorneys.

Hidden Hollow Energy, which operates the gas-to-energy equipment, has filed a $30 million tort claim against the county and formal complaints with Idaho Department of Environmental Quality and Idaho Public Utilities Commission.

Hidden Hollow launched its full-court press after Idaho Power canceled its power purchase agreement and assessed $144,000 in fines.

Hidden Hollow claims the county’s diversion of waste to the proposed Dynamis project “would have generated the landfill gas already promised” to HHE.

The company also claims that Idaho DEQ erred in setting permit requirements and that Idaho Power did not acknowledge circumstances beyond its control.

THE TORT CLAIM

In order to reduce harmful methane gas created by decomposing trash, Ada County has created an extensive system of wells and pipes for collection.

The county burns off some of the captured gas in a flare, and since 2006, has diverted some of it to Hidden Hollow, which uses two engines to convert the gas to electricity that is sold to Idaho Power.

In February 2011, the county entered a new contract with Hidden Hollow to add two engines, creating an additional 3.2 megawatts of power and more revenue. The second pair of engines is on site but not operating, pending outcome of the complaints.

Under the deal, the county is obligated to deliver gas produced and collected at the landfill to Hidden Hollow’s four-engine system through September 2031.

“The landfill is drawing between 2,600 and 2,800 cubic feet per minute of gas from the existing wells,” said county spokesperson Jessica Donald.

Each Hidden Hollow engine consumes 600 cubic feet of gas per minute, Donald said, so if all four engines are operating, Hidden Hollow would need almost the total amount currently collected by the county.

NEW DEAL

In November 2011, Ada County signed a contract with Dynamis Energy guaranteeing the company 408 to 572 tons of trash daily — about a third of the landfill’s daily stream. Dynamis would super-heat the trash to generate up to 20 megawatts of energy, which Idaho Power has agreed to purchase. Dynamis has not started construction on its plant, which will take about 15 months to build.

The Dynamis contract undercuts the county’s deal with Hidden Hollow by “putting their present investment at risk, impairing their ability to go forward and undercutting and harming their financial and credit arrangement with lenders and investors,” according to the tort claim filed July 24.

The claim is the first step to suing the county. The county has 90 days to respond; if there’s no response or resolution, Hidden Hollow may sue the county.

The county says it is in the process of connecting more wells to collect landfill gas.

“Ada County has had no difficulty in supplying the contractor with all the volume of landfill gas it has a right to receive, therefore there is absolutely no merit to the claim,” Donald said July 25 on behalf of county commissioners.

But on June 7, Commissioners Sharon Ullman and Rick Yzaguirre sent a letter to Hidden Hollow proposing that the company and the county “mutually agree” to cancel the landfill gas agreement for the two new engines, leaving the 2006 agreement in place.

New Ada County Commissioner David Case was appointed May 29. He said he was not asked to sign the letter and does not support his fellow commissioners’ push to cancel the contract. Case said he wants “to work with Fortistar to resolve whatever issues are present rather than terminate the contract,” saying it has been “very beneficial to the citizens of Ada County.”

Hidden Hollow is a subsidiary of New York-based Fortistar Methane Group.

Hidden Hollow senior vice president David Wentworth could not be reached for comment.

IDAHO PUC COMPLAINT

On June 14, Idaho Power terminated its agreement with Hidden Hollow to purchase electricity generated by the two new engines. The power purchase agreement from 2006 remains in effect.

Hidden Hollow was to have the two new engines generating power by Feb. 28. Because the company missed that date and a subsequent 90-day deadline, Idaho Power terminated the contract and assessed the company $144,000 for failing to perform.

In a complaint filed July 13 with the Idaho Public Utilities Commission, Hidden Hollow claimed that two factors beyond its control caused it to miss the Idaho Power deadline: uncertainty about future landfill gas supplies because of the Dynamis deal and an unresolved issue over bringing the landfill gas hydrogen sulfide levels into compliance.

Hydrogen sulfide, produced by the bacterial breakdown of organic matter, is toxic and flammable.

Idaho Power had until mid-August to repond to Hidden Hollow’s PUC complaint.

IDAHO DEQ

The Department of Environmental Quality issued Hidden Hollow Energy a permit in March 2010 to add the two engines, and it has had a permit since 2006 to operate the first engines.

Ada County has a permit to use flares to burn off excess captured gas.

Last summer, the county notified DEQ that certain contaminant levels from landfill gas had increased so that the county was longer in compliance with its permit.

DEQ responded by reviewing the county’s and Hidden Hollow’s permits.

On June 19, the state issued Hidden Hollow a new permit, which supercedes the existing permits and applies to all four engines. Under it, Hidden Hollow has 180 days to install a hydrogen sulfide-removal system to treat the landfill gas before burning it in its engines. The treated gas cannot exceed 180 parts per million of hydrogen sulfide.

Under the county’s proposed revised permit, issued in February, the hydrogen sulfide level in its flares can’t exceed 600 ppm.

“The fact that (Hidden Hollow Energy’s system) and Ada County’s flares combust the same landfill gas calls the disparate (limits) … into serious question,” the company said in a complaint filed with DEQ.

Even though the flares and gas-to-energy engines both operate within the landfill and draw from the same pool of gas, the state said that it considers the two projects separate and distinct facilities.

Hidden Hollow’s permit has a more stringent hydrogen sulfide limit because the state analyzes a facility by its boundaries.

The Ada County landfill covers 2,700 acres; DEQ’s review was based on ambient air outside the landfill’s boundaries. Hidden Hollow operates on less than half an acre within the landfill, so DEQ’s review was based on ambient air just outside its boundaries.

In its complaint, Hidden Hollow claims that its facility should be considered part of the overall landfill facility for air-modeling purposes, and not a separate facility.

The state is reviewing the complaint and will issue its initial response this month. After that, a hearing officer will be assigned to determine whether the issue can be resolved or must be sent to the DEQ board.

Cynthia Sewell: 377-6428, Twitter: @CynthiaSewell