STATE OF MINNESOTA MINNESOTA POLLUTION CONTROL AGENCY FINDINGS OF FACT

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2 STATE OF MINNESOTA MINNESOTA POLLUTION CONTROL AGENCY IN THE MATTER OF THE DECISION ON THE NEED FOR AN ENVIRONMENTAL IMPACT STATEMENT FOR THE PROPOSED FLINT HILLS RESOURCES, LP MARSHALL TANK FARM EXPANSION LYON COUNTY MARSHALL, MINNESOTA FINDINGS OF FACT CONCLUSIONS OF LAW AND ORDER FINDINGS OF FACT Pursuant to Minn. R (2006), the Minnesota Pollution Control Agency (MPCA) staff has prepared an Environmental Assessment Worksheet (EAW) for the proposed Flint Hills Resources, LP Marshall Tank Farm Expansion project (Project). Based on the MPCA staff environmental review, comments, and information received during the comment period, and other information in the record of the MPCA, the MPCA hereby makes the following Findings of Fact, Conclusions of Law, and Order. FACILITY HISTORY Overview The Flint Hills Resources, LP (FHR) Marshall Tank Farm is an existing 10.4-acre tank farm in the city of Marshall, Lyon County. The facility currently has 46 tanks and several heating units. After construction, the facility will contain 48 above-ground storage tanks. Materials stored at the facility include asphalt cement and asphalt emulsions, along with fuel used for facility operations. FHR proposes to construct two new storage tanks at its facility in Marshall, Minnesota. Tank #73 would have a capacity of 3,700,000 gallons and Tank #74 would have a capacity of 9,100,000 gallons. Both would be used to store asphalt cement. The tanks to be constructed are located within the footprint of the existing facility. Permitting History The MPCA has issued or reissued the following permits to the facility: Option D Air Emission Registration Permit, April 13, 1998; Above-Ground Storage Tank (AST) Permit, July 29, 2003; and National Pollutant Discharge Elimination System/State Disposal System General Stormwater Permit for Industrial Activity, May 1, Previous Environmental Review A previous EAW was conducted for the Project in The Project received a negative declaration on the need for an environmental assessment worksheet on October 22, TTY (for hearing and speech impaired only): (651) Printed on recycled paper containing at least 30% fibers from paper recycled by consumers

3 Flint Hills Resources, LP - Marshall Tank Farm On the Need for an Environmental Impact Statement Marshall, Minnesota Findings of Fact Conclusions of Law And Order PROPOSED PROJECT DESCRIPTION Proposed New Construction/Proposed Modification The Project proposer plans to construct two new asphalt cement storage tanks, install a new 24 million British thermal unit heater, and associated piping and loading racks at its existing facility in Marshall, Minnesota. Tank #73 would have a capacity of 3,700,000 gallons and would be used to store asphalt cement. Tank #74 would have a capacity of 9,100,000 gallons and would be used to store asphalt cement. The existing FHR Marshall facility encompasses 10.4 acres. The new tanks will be built within the existing FHR Marshall property. The construction area will be approximately 1.0 acres, 0.25 of which will end up being the tank footprint for Tank #73 and 0.6 acres will end up being the tank footprint for Tank #74. These tanks are being constructed to provide asphalt cement storage capacity over the winter months. No additional process capacity or capabilities are being added to the facility. The tanks will be constructed in the area shown in Attachment 3. No significant demolition of existing structures is planned. One emulsion unloading dock will be demolished. The ten-day notification will be sent to the MPCA prior to the project. The dock is constructed of concrete with a metal railing; there is no insulation on the unload dock; therefore, there is no asbestos containing materials (ACM) or presumed ACM on or near the unloading dock. Construction will involve excavation for the placement of the tank foundations, construction of the tanks, and installation of ancillary piping and pumps for the transfer of the asphalt cement to and from tanks. Construction activities will be contained within the boundaries of the existing facility and will generate minimal if any waste. No hazardous waste will be generated. Environmental Concerns An EAW is required for the proposed Project under Minn. R subp. 10.B., storage facilities capable of storing one million gallons or more of hazardous material. Potential environmental concerns from above-ground tanks include surface-water impacts and fugitive air emissions. Additional Concerns Described in Comment Letters One comment letter (Comment Letter #3 found in Attachment B) expressed concern regarding the potential impacts to the Redwood River from a spill at the Project location. The concern noted such issues as Project proximity and spill remediation. Community Involvement in Process The MPCA placed the EAW on a 30-day public notice in order to provide the public an opportunity to review and comment on the Project. PROCEDURAL HISTORY 1. Pursuant to Minn. R subp. (10)(b), an EAW was prepared by MPCA staff on the proposed Project. Pursuant to Minn. R (2006), the EAW was distributed to the Environmental Quality Board (EQB) mailing list and other interested parties on April 6, The MPCA notified the public of the availability of the EAW for public comment. A news release was provided to Lyon, Redwood, Cottonwood, Murray, Pipestone, Lincoln, and Yellow Medicine counties, as well as other interested parties, on April 6, In addition, the EAW was published in the EQB Monitor on April 9, 2007, and available for review on the MPCA Web site at on April 7,

4 Flint Hills Resources, LP - Marshall Tank Farm On the Need for an Environmental Impact Statement Marshall, Minnesota Findings of Fact Conclusions of Law And Order 3. The public comment period for the EAW began on April 9, 2007, and ended on May 9, During the 30-day comment period, the MPCA received three comment letters from government agencies and received no comment letters from citizens. 4. The MPCA prepared responses to all comments received during the 30-day public comment period. Comment letters received have been hereby incorporated by reference as Appendix A to these findings. The MPCA responses to comments received are hereby incorporated by reference as Appendix B to these findings. CRITERIA FOR DETERMINING THE POTENTIAL FOR SIGNIFICANT ENVIRONMENTAL EFFECTS 5. Under Minn. R (2006), the MPCA must order an Environmental Impact Statement (EIS) for projects that have the potential for significant environmental effects that are reasonably expected to occur. In deciding whether a project has the potential for significant environmental effects, the MPCA must compare the impacts that may be reasonably expected to occur from the project with the criteria set forth in Minn. R , subp. 7 (2006). These criteria are: A. the type, extent, and reversibility of environmental effects; B. potential cumulative effects of related or anticipated future projects; C. the extent to which the environmental effects are subject to mitigation by ongoing public regulatory authority; and D. the extent to which environmental effects can be anticipated and controlled as a result of other available environmental studies undertaken by public agencies or the project proposer, including other EISs. THE MPCA FINDINGS WITH RESPECT TO EACH OF THESE CRITERIA ARE SET FORTH BELOW Type, Extent, and Reversibility of Environmental Effects 6. The first criterion that the MPCA must consider when determining if a project has the potential for significant environmental effects that are reasonably expected to occur, is the "type, extent, and reversibility of environmental effects" Minn. R , subp. 7.A (2006). The MPCA findings with respect to each of these factors are set forth below. 7. Reasonably expected environmental effects of this project to air quality: Vehicle emissions Air emissions Odors 3

5 Flint Hills Resources, LP - Marshall Tank Farm On the Need for an Environmental Impact Statement Marshall, Minnesota Findings of Fact Conclusions of Law And Order 8. The extent of any potential air quality effects that are reasonably expected to occur: Vehicle Source Emissions The net effect of the Project will be no increase in vehicle-related air emissions. The new tank(s) will be filled once per year. The truck traffic from this one-time fill (usually in winter) will be the same as the previous operations, which consisted of regular receipts of asphalt throughout the summer. The market demand and resulting throughput of the facility are independent of the amount of storage available. Air Emissions The Option D Registration Permit is a state permit for companies that have low actual emissions (both fugitive and stationary source emissions) in relation to their potential emissions. Once a facility holds an Option D Registration Permit, changes within the facility are allowed without a permit amendment so long as the facility remains eligible for the registration permit. The facility has several existing stationary sources consistent with the operation of an asphalt terminal. These consist of above-ground storage tanks, combustion units (2 heaters and 1 boiler), 9 loading racks and 14 unloading spots. The facility has an Option D Registration Air Permit for its existing air sources. The pollutants regulated by the Option D Registration Permit include carbon monoxide, nitrogen oxide, particulate matter, sulfur dioxide, volatile organic compounds, lead, and hazardous air pollutants. The Project will involve the addition of two large above-ground storage tanks and a hot oil heater. The addition of this equipment will not change the status of the Option D Registration Permit. The Project will continue to manage the emissions at their facility through air quality control technologies and management practices. There will be minor amounts of fugitive asphalt fume emissions from the new tanks during winter filling operation and during the normal operation season (approximately April November). Asphalt cement tanks are maintained at atmospheric pressure and fugitive emissions typically result as the vapor space in the tank is exchanged due to the addition or removal of product. Fugitive emissions typically consist of small amounts of semi-volatile organic compounds (<100 pounds per year of volatile organic compounds). Odors There would be minor amounts of fugitive asphalt fume emissions from the new tanks during winter filling operation and during the normal operating season (approximately April November). There are odors associated with asphalt fumes. The addition of the two new tanks is not expected to significantly increase the concentration or duration of asphalt odors associated with the facility. 9. The reversibility of any potential air quality effects that are reasonably expected to occur: The MPCA finds that any potential effect that is reasonably likely to occur from this Project would be reversible. The Project is capable or integrating additional air quality control technologies or management practices in the unlikely event that they are needed. As discussed above, the expected effects on air quality are minimal. There is no reason to believe that this Project is reasonably expected to cause a significant negative effect on air quality. 10. No comments were received that expressed concerns regarding potential effects to air quality. As discussed above in Findings 8 and 9, the analysis indicates that the effects on air quality that are reasonably expected to occur are not significant. 4

6 Flint Hills Resources, LP - Marshall Tank Farm On the Need for an Environmental Impact Statement Marshall, Minnesota Findings of Fact Conclusions of Law And Order 11. The MPCA finds that the environmental review is adequate to address the concerns because: All potential impacts to air quality that are reasonably expected to occur from the proposed Project have been considered during the review process and methods to prevent these impacts have been developed. 12. The MPCA finds that the Project, as it is proposed, does not have the potential for significant environmental effects based on the type, extent, and reversibility of environmental effects reasonably expected to occur as a result of its air emissions. 13. Reasonably expected environmental effects of this Project to water quality: ground-water quality surface-water quality 14. The extent of any potential water quality effects that are reasonably expected to occur: Ground-water Quality The proposed Project would add two asphalt cement storage tanks. Asphalt cement is very viscous and would remain on the ground surface and not infiltrate into the soil. No significant impacts to ground water are, therefore, expected from the proposed Project. Surface-water Quality Construction of the asphalt cement storage tanks on the east side of the site would not significantly increase the impermeable area of the site, and should cause little if any increase in runoff from the site. Best management practices such as ditches, dikes, and siltation fences would be used to reduce the potential for pollutants to reach water bodies during construction of the tanks. The Flint Hills facility already includes berms to prevent or minimize spills from reaching the river. The proposed new tanks would also be included within the berms. The site currently drains via a gate valve to several stormwater conveyance channels to a culvert located in the southeast corner of Flint Hills property. The culvert discharges into the Redwood River at the junction of the conveyance ditch and the river. No significant change is anticipated in either the quantity or quality of surface-water runoff from the site into the Redwood River from the Flint Hills site due to the addition of the proposed tanks. The facility has a Stormwater Pollution Prevention Plan that identifies best management practices that have been implemented at the plant to ensure that stormwater does not come into contact with materials associated with industrial activities. A Spill Prevention, Control and Countermeasures (SPCC) Plan for the existing facility was completed (September 2006). The SPCC Plan would be amended when the new tanks are built. 5

7 Flint Hills Resources, LP - Marshall Tank Farm On the Need for an Environmental Impact Statement Marshall, Minnesota Findings of Fact Conclusions of Law And Order 15. The reversibility of any potential water-quality effects that are reasonably expected to occur: The MPCA finds that any potential effect that is reasonably likely to occur from this Project would be reversible. As discussed above, the expected effects on water quality are minimal in light of the construction, design, and operation of the tanks. Any spills would be addressed under the legally enforceable SPCC Plan or Facility Response Plan. There is no reason to believe that this project is reasonably expected to cause a significant negative effect on water quality. 16. Comments received that give a specific basis for concerns regarding potential effects to water quality: One comment letter expressed concern with the proximity of the Project to a diversion channel of the Redwood River and the potential for adverse impact to surface waters from a spill event. As discussed above in Findings 14 and 15, the analysis indicates that the effects on water quality that are reasonably expected to occur are not significant. 17. The MPCA finds that the environmental review is adequate to address the concerns because: All potential impacts to water quality that are reasonably expected to occur from the proposed expansion of this facility have been considered during the review process and a method to prevent these impacts has been developed. 18. The MPCA finds that the Project, as it is proposed, does not have the potential for significant environmental effects on water quality based on the type, extent, and reversibility of environmental effects reasonably expected to occur. Potential Cumulative Effects of Related or Anticipated Future Projects 19. The second criterion that the MPCA must consider, when determining if a project has the potential for significant environmental effects that are reasonably expected to occur, is the "potential cumulative effects of related or anticipated future projects," Minn. R , subp. 7.B (2006). The MPCA findings with respect to this criterion are set forth below. 20. The EAW, public comments, and MPCA follow-up evaluation did not disclose any related or anticipated future projects that may interact with this Project in such a way as to identify any potential cumulative environmental effects that are reasonably expected to occur. 21. The MPCA did not receive any public comments concerning potential cumulative effects. Based on MPCA staff experience, available information on the Project, including the EAW, the tank permit application, the SPCC Plan, the Facility Response Plan, and information presented by the commenters, the MPCA does not reasonably expect significant cumulative effects from this Project. 22. In considering the potential cumulative effects of related or anticipated future projects, the MPCA finds that the reasonably expected effects from this Project will not be significant. 6

8 Flint Hills Resources, LP - Marshall Tank Farm On the Need for an Environmental Impact Statement Marshall, Minnesota Findings of Fact Conclusions of Law And Order The Extent to Which the Environmental Effects are Subject to Mitigation by Ongoing Public Regulatory Authority 23. The third criterion that the MPCA must consider, when determining if a project has the potential for significant environmental effects that are reasonably expected to occur, is "the extent to which the environmental effects are subject to mitigation by ongoing public regulatory authority," Minn. R , subp. 7.C (2006). The MPCA findings with respect to this criterion are set forth below. 24. The following permits or approvals will be required for the project: Unit of Government Permit or Approval Required Status Marshall Fire Fire Plan Pending environmental review Department MPCA Option D Air Permit Existing MPCA AST Permit modification Application to be submitted MPCA Construction Stormwater Permit Application to be submitted Marshall Municipal Utilities Water Discharge from Hydrostatic Testing Application to be submitted 25. The MPCA finds that ongoing public regulatory authority will address any significant potential environmental effects that were identified as reasonably expected to occur. The Extent to Which Environmental Effects can be Anticipated and Controlled as a Result of Other Available Environmental Studies Undertaken by Public Agencies or the Project Proposer, Including Other EISs 26. The fourth criterion that the MPCA must consider is "the extent to which environmental effects can be anticipated and controlled as a result of other available environmental studies undertaken by public agencies or the project proposer, including other EISs, Minn. R , subp. 7.D (2006). The MPCA findings with respect to this criterion are set forth below. 27. The following documents were reviewed by the MPCA staff as part of the potential environmental impact analysis for the proposed expansion of the FHR - Marshall Tank Farm facility: aboveground storage tank permit application; spill response and contingency plans; and the air quality emission inventory analysis. This list is not intended to be exhaustive. The MPCA also relies on information provided by the Project proposer, commenters, staff experience, and other available information. 28. There are no elements of the Project that pose the potential for significant environmental effects that cannot be addressed in the Project design and permit development processes, or by regional and local plans. 7

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10 APPENDIX A Minnesota Pollution Control Agency Flint Hills Resources, LP - Marshall Tank Farm Expansion Environmental Assessment Worksheet LIST OF COMMENT LETTERS RECEIVED 1. Glenn J. Olson, P.E., City Engineer, City of Marshall. Letter received April 26, Ronald Wieland, Senior Planner, Minnesota Department of Natural Resources. Letter received May 8, Annette Blair, Physical Development Director, Southwest Regional Development Commission. Facsimile received May 9, 2007.

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16 APPENDIX B Minnesota Pollution Control Agency (MPCA) Flint Hills Resources, LP - Marshall Tank Farm Expansion Project (Project) Environmental Assessment Worksheet (EAW) RESPONSES TO COMMENTS ON THE EAW 1. Comments by Glenn J. Olson, P.E., City Engineer, City of Marshall. Letter received April 20, Comment: The only concern the City of Marshall would have is they be required to obtain written permission from the US Army Corps of Engineers for the potential of oil against the flood protection facility on the south portion of this site and the BNSF Railroad on the west. Response: The comment is noted. Flint Hills Resources, LP (FHR) is working with the U.S. Army Corps of Engineers to address this issue. 2. Comments by Ron Wieland, Senior Planner, Minnesota Department of Natural Resources. Letter received May 7, Comment: The Natural Heritage and Nongame Research Program letter used for this EAW is six years old. The letter was completed for an earlier EAW for tank construction at this facility in 2001 and reused for this EAW. The information that the letter was based on is considered outdated. During the comment period we reevaluated the project area to determine if changes or updates have occurred since the last review. We found that there has been an update in the vicinity of the project since 2001 (see attached database printouts). However, provided that the standard construction procedures (e.g., runoff protection) are implemented, we do not believe that the project will negatively affect any known occurrences or rare features. Response: The comment is noted. Thank you for providing the additional information. The new information will become part of the administrative record for the Project. 3. Comments by Annette Blair, Physical Development Director, Southwest Regional Development Commission. Facsimile received May 9, Comment 3-1: Under the land use question, the EAW identified many of the businesses in the vicinity of the proposed project site, but failed to identify the park and ball field to the south. Response 3-1: The comment is noted. The ball field was not included in the EAW; however, all of the surrounding receptors were considered as part of the environmental review process. The ball field was not expected to be a potential receptor in light of a spill; however, the Project proposers have incorporated notification processes within their required spill response plans that would address any ongoing activities at the ball field in the event of a spill. As air emissions are not expected to be an ongoing issue at the Project, additional air impact assessment was considered unnecessary.

17 Flint Hills Resources, LP Marshall Tank Farm Expansion Project Chippewa County, Minnesota Responses to Comments on the Environmental Assessment Worksheet Comment 3-2: Under the Fish, Wildlife, and Ecologically Sensitive Resources the EAW speaks of a windbreak of trees on the south property boundary between the tank farm and the conveyance channel. At no time is the Diversion Channel identified as a watercourse that has direct connection to the Redwood River. Response 3-2: The comment is noted. The EAW did not explicitly describe the relationship between the Diversion Channel and the Redwood River; however, it is thoroughly discussed as a resource of concern in the FHR Facility Response Plan (FRP) and in the Spill Prevention Control and Countermeasure (SPCC) Plan. The MPCA has reviewed these required documents as part of the environmental review for this Project. Comment 3-3: Asphalt cement is a hazardous material primarily because it needs to be kept hot. When cooled it becomes a flexible solid. If a leak were to occur there would be some toxic chemicals released. The proposed tanks are significant in size, holding jointly 12.8 million gallons of asphalt cement and will reduce impervious surface runoff by nearly one acre. Response 3-3: The comment is noted. In the event of a spill, the Project proposer will implement the SPCC Plan and FRP provisions to contain and recover the spilled product. Such an event would be a short-term condition that would not result a permanent impervious surface condition. Comment 3-4: Asphalt cement is a petroleum product and the proposed project calls for a significant storage of this material in close proximity to waters of the state. Staff questions whether potential pollution and proximity to waters of the state have been adequately addressed. Response 3-4: As noted in Response 3-3, FHR has developed a detailed FRP and SPCC Plan to prevent and in the unlikely event, control and remediate a spill at the facility. The FRP and SPCC Plan are required under both state and federal law (see generally Minn. Stat. 115E and 40 CFR 112). 1 As noted above, the proximity of the Project to surface waters, along with the stormwater shut-off values and related safeguards for tank operation (e.g., secondary containment), have been carefully reviewed as part of this EAW and related permitting of the Project. As a result, the MPCA believes that the design, operation and continued regulatory authority adequately address the development and operation of the Project in its current location and will not present a potential for significant environmental impact. 1 See generally the federal regulations regarding spill response at (May 23, 2007). FHR is required to comply with these regulations. 2