STATE OF MINNESOTA MINNESOTA POLLUTION CONTROL AGENCY

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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 SOUTHERN MINNESOTA MUNICIPAL POWER AGENCY OWATONNA ENERGY STATION STEELE COUNTY OWATONNA, MINNESOTA FINDINGS OF FACT CONCLUSIONS OF LAW AND ORDER Pursuant to Minn. ch. 4410, the Minnesota Pollution Control Agency (MPCA) staff prepared and distributed an Environmental Assessment Worksheet (EAW) for the proposed Southern Minnesota Municipal Power Agency (SMMPA or Proposer) Owatonna Energy Station (Project). Based on the MPCA staff environmental review, the EAW, comments and information received during the comment period, and other information in the record of the MPCA, the MPCA hereby makes the following,, and Order. FINDINGS OF FACT Owatonna Energy Station Project Description 1. SMMPA is a non-profit Joint Action Agency that provides electrical generation and transmission service on a wholesale basis to 18 non-profit, municipally-owned member utilities. SMMPA will own the Project, a proposed new electric generation power plant located in. 2. The Project will involve the installation of four new 9,770 kilowatt (kw) Caterpillar natural gas fired electrical generating units within a new building. The Project would make the facility s electric generating capacity 39.1 (nameplate) megawatts. An 800 kw diesel-fired generating unit is also proposed to provide emergency power to the facility in the event of a power outage. 3. The Project will generate electric energy during peak demand periods and back up intermittent resources such as wind and solar power generation. Environmental Review of the Project 4. The Project will be capable of operating at a capacity of between 25 megawatts (MW) and 50 MW. Therefore, Minn. R , subp. 3 requires the preparation of an EAW. 5. Minn. R , subp. 3 identifies the Environmental Quality Board (EQB) as the responsible governmental unit (RGU) for the EAW preparation. However, the MPCA was re-designated as the RGU for the EAW preparation at the May 20, 2015 EQB Board meeting based on Minn. R , subp. 6. At the meeting, the EQB concluded that the MPCA had the greater TDD (for hearing and speech impaired only): Printed on recycled paper containing at least 30% fibers from paper recycled by consumers

3 responsibility for supervising or approving the Project and that the MPCA was better suited for the environmental review and analysis of the potential for significant environmental impacts. 6. An EAW is a brief document designed to set out the basic facts necessary to determine whether an Environmental Impact Statement (EIS) is required for a proposed project or to initiate the scoping process for an EIS. (Minn. R , subp. 24.) 7. The MPCA provided public notice of the Project as follows: a) Notice of the availability of the EAW for public comment was published in the EQB Monitor on July 6, 2015, as required by Minn. R b) The EAW was available for review on the MPCA website at c) The MPCA provided a news release to media, Steele County and neighboring counties, and other interested parties on July 7, During the 30-day comment period, the MPCA received one comment letter from the Department of Natural Resources and one from the Minnesota State Historic Preservation Office. The comment letters are included in Appendix A to these Findings. 9. The MPCA prepared a written response to the comment letters which is also included in Appendix A to these findings. Standard for Decision on the Need for an EIS 10. The MPCA shall base its decision on the need for an EIS on the information gathered during the EAW process and the comments received on the EAW (Minn. R , subp. 3). The agency must order an EIS for projects that have the potential for significant environmental effects (Minn. R , subp. 1). 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. These criteria are: A. Type, extent, and reversibility of environmental effects; B. Cumulative potential effects. The responsible governmental unit (RGU) shall consider the following factors: whether the cumulative potential effect is significant; whether the contribution from the project is significant when viewed in connection with other contributions to the cumulative potential effect; the degree to which the project complies with approved mitigation measures specifically designed to address the cumulative potential effect; and the efforts of the proposer to minimize the contributions from the project; C. The extent to which the environmental effects are subject to mitigation by ongoing public regulatory authority. The RGU may rely only on mitigation measures that are specific and that can be reasonably expected to effectively mitigate the identified environmental impacts of the project; and 2

4 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. Type, Extent, and Reversibility of Environmental Effects 11. The MPCA finds that the types of impacts that may reasonably be expected to occur from the Project include impacts from air emissions and noise generation. 12. The MPCA makes the following findings on the extent and reversibility of impacts that are reasonably expected to occur from the Project: Findings on Air Emission Impacts 13. The operation of four natural gas fired engine generators and a diesel fired emergency generator will generate air emissions. 14. The Project will require a major source permit under Title V (Part 70) of the federal Clean Air Act because the facility-wide potential to emit (PTE) is above major source thresholds (i.e., 100 TPY) for several criteria pollutants. 15. The Project will be a major source of hazardous air pollutants (HAPs) under the National Emission Standards for Hazardous Air Pollutants (NESHAP) Program (40 CFR Part 63) because the facility-wide PTE is greater than the NESHAP thresholds (i.e., 10 TPY of any single HAP and 25 TPY of all HAPs combined). 16. The engines will be subject to the NESHAP for Stationary Reciprocating Internal Combustion Engines (RICE). The RICE NESHAP will require the installation of a catalytic oxidizer on the engines, performance testing, and installation of monitors on the oxidizers. 17. The four natural gas-fired engines will be subject to the New Source Performance Standard (NSPS) for Stationary Spark Ignition Internal Combustion Engines. This NSPS sets emission limits for nitrogen oxides (NO x ) and volatile organic compounds (VOCs) and requires performance testing. 18. The diesel-fired emergency generator is subject to the NSPS for stationary compression ignition internal combustion engines, which will set emission limits for carbon monoxide (CO), non-methane hydrocarbons, and NO x emissions. 19. The air permit for the Project will include air emissions limits and a requirement to operate air pollution control equipment. Add-on control equipment for the four natural gas-fired engine generators includes an oxidation catalyst which will reduce CO, VOCs, and HAPs. 20. The air permit will contain enforceable requirement to ensure that the facility will be in full compliance with state and federal air programs. Requirements will include limits on fuel usage and emission rates, monitoring and recordkeeping requirements, and performance testing requirements. 3

5 21. The Proposer conducted air dispersion modeling following an MPCA-approved protocol. The Proposer used the U. S. Environmental Protection Agency s (EPA) preferred model, the American Meteorological Society/Environmental Protection Agency Regulatory Model Improvement Committee s Dispersion Model (AERMOD), to conduct the analysis. 22. The Proposer conducted a Significant Impact Level (SIL) analysis using air dispersion modeling following an MPCA-approved modeling protocol. The EPA established the SILs for criteria pollutants with a National Ambient Air Quality Standard (NAAQS). EPA typically sets SIL thresholds at 4-6% of NAAQS depending on the pollutant. SILs are a non-regulatory threshold only used for evaluating the significance of an emission source or sources. 23. The Proposer used AERMOD modeling software for the air dispersion modeling exercise. The EPA developed, validated, and approved AERMOD for air dispersion modeling. Applying worst-case hourly emissions allowed by the MPCA air permit to predict potential pollution levels in the air, pollutants with predicted levels below the EPA s SIL are screened out from further refined modeling as insignificant contributions. 24. Because the SIL threshold was exceeded for PM hr, PM hr, and NO 2 1-hr the Proposer conducted refined air dispersion modeling for those criteria pollutants. Refined air dispersion modeling includes emissions from the Project, the facility, nearby sources, and a background concentration. 25. The Proposer s refined modeling results predicted maximum modeled concentration would not exceed the EPA NAAQS standards for PM 10 and NO 2. For PM 2.5 the results exceeded the EPA standard, thus prompting the MPCA to require the Proposer to do a culpability analysis. A culpability analysis breaks out the contributions to a modeled exceedance by each individual emissions source. If the sum of the contributions from a project s emissions sources is below the SIL, then the project is determined to not be a culpable source to the modeled exceedance. 26. The culpability analysis demonstrated that the Project contributed 0.22 μg/m 3 to the predicted exceedances, below the SIL of 1.2 μg/m 3 ; therefore, the facility is not a culpable source. These findings support the conclusion that the Project s cumulative air emissions do not have the potential for significant environmental effects on ambient air. 27. With respect to the reversibility of air quality impacts that are reasonably expected to occur from the Project, air emissions from the Project will continue while the Project remains in operation, and would cease only if the Project were to be temporarily or permanently closed. While in operation, the Project is expected to meet applicable air quality standards and criteria. If excessive air emissions or violations of the ambient air standards were to occur, air quality impacts are likely to be temporary in nature and corrective measures could be implemented. Such measures could include the initiation of a complaint investigation by the MPCA and requiring the Proposer to make operation and maintenance changes. 28. The MPCA finds that information presented in the EAW and other information in the environmental review record are adequate to address the concerns related to air emissions. The impacts on air emissions that are reasonably expected to occur from the Project have been considered during the 4

6 review process and appropriate mitigation measures are available and will be required to prevent significant adverse impacts. 29. 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 impacts related to air emissions that are reasonably expected to occur from the Project. Findings on Noise Generation 30. Vehicle deliveries, vehicles working on site preparation and building, and equipment erection will generate noise during the construction of the Project. 31. The operation of the natural gas-fired engine generators will generate noise. 32. The engine generators will operate on an intermittent basis during any time of the day or night. 33. Operation of the diesel fired emergency generator will also create noise; however, it will only operate for testing purposes or in an emergency situation. 34. The Project is expected to increase future daytime noise levels anywhere from 0 dba to 6.7 dba depending on the distance of the receptor from the Project location. 35. The Project is expected to increase future nighttime noise levels anywhere from 0.4 dba to 8.6 dba depending on the distance of the receptor from the Project location. 36. The Proposer will mitigate noise from the Project by installing the engines and auxiliary equipment inside a concrete block building. Also, engine exhaust noise will be reduced through the use of exhaust mufflers. With respect to the reversibility of noise impacts that are reasonably expected to occur from the Project, noise from the Project will continue while the Project remains in operation and would cease only if the Project were to temporarily or permanently close. While in operation, the Project is expected to meet the Minnesota Noise Standard (See Table 1). If violations of the Minnesota Noise Standard occur, impacts are likely to be temporary in nature and the Proposer could implement corrective measures. Such measures could include the initiation of a complaint investigation by the MPCA and requiring the Project Proposer to make operation and maintenance changes. 5

7 Table 1. Minnesota Noise Standard Daytime (dba) (7AM 10PM) Nighttime (dba) (10PM 7AM) Land use L50 L10 L50 L10 1. Residential, Churches, Hospitals Commercial Establishments, Terminals, Parks 3. Industrial Establishments, Manufacturing Plants, Agriculture The MPCA finds that information presented in the EAW and other information in the environmental review record are adequate to address the concerns related to noise generation. The MPCA has considered the impacts on noise generation that are reasonably expected to occur from the Project during the review process and appropriate mitigation measures are available and will be required to prevent significant adverse impacts. 38. 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 impacts related to noise impacts that are reasonably expected to occur from the Project. Cumulative Potential Effects 39. The second criterion that the MPCA must consider when determining if a project has the potential for significant environmental effects is the cumulative potential effects. In making this determination, the MPCA must consider whether the cumulative potential effect is significant; whether the contribution from the project is significant when viewed in connection with other contributions to the cumulative potential effect; the degree to which the project complies with approved mitigation measures specifically designed to address the cumulative potential effects; and the efforts of the proposer to minimize the contributions from the project. Minn. R subp.7.b. The MPCA findings with respect to this criterion are set forth below. 40. The MPCA considered the cumulative potential effects for the Project on air quality. This analysis included consideration of background concentrations for the area and the impacts from the Project. The MPCA makes the following findings on the cumulative potential effects for the Project on air quality. 41. Operation of the facility will generate air emissions. The Proposer conducted air dispersion modeling to evaluate cumulative effects specifically for this EAW. This evaluation considered background conditions and the Project impacts. For each pollutant, the SIL plus monitored ambient background is less than 90% of the NAAQS. The MPCA expects that the anticipated increase in air emissions will not result in significant cumulative potential effects. 42. Air dispersion modeling demonstrated Project impacts below the SIL for all pollutants except PM hr, PM10 24-hr, and NO2 1-hr. The Proposer performed refined air dispersion modeling which included nearby sources and background levels for these pollutants. In the case of NO2 1-hr and PM10 24-hr standards, the model predicted concentrations below the standard. The PM2.5 refined 6

8 modeling demonstration showed values exceeding the standard. Therefore, the Proposer completed a culpability analysis using the cumulative effect criteria in Minn. R subp. 7.B. to determine culpability. 43. The culpability analysis concluded the Project is not culpable because its contribution to the PM hr concentration is below the Significant Impact Level (SIL). 44. Based on information on the Project obtained from air modeling, permit application processes, information presented in the EAW, and in consideration of potential effects due to related or anticipated future projects, the MPCA finds no potential for significant cumulative effects from the Project. The Extent to Which the Environmental Effects Are Subject to Mitigation by Ongoing Public Regulatory Authority 45. The third criterion that the MPCA must consider when determining if a project has the potential for significant environmental effects is "the extent to which the environmental effects are subject to mitigation by ongoing public regulatory authority. The RGU may rely only on mitigation measures that are specific and that can be reasonably expected to effectively mitigate the identified environmental impacts of the project." Minn. R , subp. 7.C. The MPCA findings with respect to this criterion are set forth below. 46. The following permits or approvals will be required for the Project: Unit of Government MPCA MPCA City of Owatonna Permit or Approval Required Air Emission Permit National Pollutant Discharge Elimination System (NPDES)/State Disposal System (SDS) Construction Stormwater General Permit Building Permit 47. MPCA Air Emissions Permit Amendment. The Proposer must receive an Air Emissions Permit from the MPCA before construction can begin. The Air Emission Permit will contain operational and emission limits, including requirements for use of control equipment, that will help prevent or minimize the potential for significant environmental effects. 48. MPCA NPDES/SDS Construction Stormwater General Permit. The Proposer must obtain a National Pollutant Discharge Elimination System/State Disposal System (NPDES/SDS) Construction Stormwater General Permit for the Project. A General NPDES Construction Stormwater Permit is required when a project disturbs one or more acres. It provides for the use of best management practices (BMPs) such as silt fences, bale checks, and prompt revegetation to prevent eroded sediment from leaving the construction site. The Project must have a Stormwater Pollution Prevention Plan (SWPPP) detailing the BMPs to be implemented and that will also address: phased construction; vehicle tracking of sediment; inspection of erosion control measures implemented; and timeframes in which erosion control measures will be implemented. The general permit also requires the Proposer to provide adequate stormwater treatment capacity to assure that water quality will not be impacted by runoff once the Project is constructed. 7

9 49. City of Owatonna. The Proposer must obtain a Building Permit from the City of Owatonna. This permit will ensure compliance with local ordinances, zoning, environmental, regulatory, and other requirements that are needed to avoid adverse effects on adjacent land uses. 50. The above-listed permits include general and specific requirements for mitigation of environmental effects of the Project. The MPCA finds that the environmental effects of the Project are subject to mitigation by ongoing public regulatory authority. 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 51. 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. The MPCA findings with respect to this criterion are set forth below. 52. The following documents were reviewed by MPCA staff as part of the environmental impact analysis for the Project: data presented in the EAW air permit application air dispersion modeling report 53. The list above is not intended to be exhaustive. The MPCA also relies on information provided by the Proposer, persons commenting on the EAW, staff experience, and other available information obtained by staff. 54. The MPCA finds that the environmental effects of the Project have been addressed by the design and permit development processes, and by ensuring conformance with regional and local plans. There are no elements of the Project that pose the potential for significant environmental effects. 55. Based on the environmental review, previous environmental studies by public agencies or the Project proposer, and staff expertise and experience on similar projects, the MPCA finds that the environmental effects of the Project that are reasonably expected to occur can be anticipated and controlled. CONCLUSIONS OF LAW 56. The MPCA has jurisdiction and is the RGU for determining the need for an EIS for the Project. 57. The EAW, the permit development process, and the evidence in the record are adequate to support a reasoned decision regarding the potential significant environmental effects that are reasonably expected to occur from the Project. 58. Areas where the potential for significant environmental effects may have existed have been identified and appropriate mitigation measures have been incorporated into the Project design and permits. The Project is expected to comply with all MPCA standards. 8

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11 APPENDIX A Minnesota Pollution Control Agency Southern Minnesota Municipal Power Agency Owatonna Energy Station (Project) Environmental Assessment Worksheet LIST OF COMMENT LETTERS RECEIVED 1. Kevin Mixon, Minnesota Department of Natural Resources, letter received August 3, Sarah J. Beimers, Minnesota Historical Society, letter received August 4, 2015 RESPONSES TO COMMENTS ON THE EAW 1. Comments by Kevin Mixon, Minnesota Department of Natural Resources (MDNR). Letter received August 3, Comment 1-1: The commenter stated that the MDNR has reviewed the document and has no comments at this time. Response: No response necessary. 2. Comments by Sarah J. Beimers, Minnesota Historical Society (MHS). Letter received August 4, 2015 Comment 2-1: Based on our review of the project information, we conclude that there are no properties listed on the National or State Registers of Historic Places, and no known of suspected archaeological properties in the area that will be affected by this project. Response: Comment noted. Comment 2-2: The Minnesota Historical Society (MHS) comment letter does not address the requirements of Section 106 of the National Historic Preservation Act of 1966 and 36CFR800, Procedures of the Advisory Council on Historic Preservation for the protection of historic properties. If this project is considered for federal assistance, or requires a federal permit or license, it should be submitted to our office by the responsible federal agency. Response: Comment noted.

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