STATE OF MINNESOTA MINNESOTA POLLUTION CONTROL AGENCY FINDINGS OF FACT

Transcription

1 g-45-01a

2 ATTACHMENT 1 STATE OF MINNESOTA MINNESOTA POLLUTION CONTROL AGENCY IN THE MATTER OF THE REQUEST FOR DENIAL OF CONTESTED CASE HEARING REQUESTS AND DENIAL OF REISSUANCE OF NPDES/SDS PERMIT NO. MN FOR THE DAIRY DOZEN THIEF RIVER FALLS, LLP (DOING BUSINESS AS: EXCEL DAIRY) CONCENTRATED ANIMAL FEEDLOT FACILITY EXCEL TOWNSHIP MARSHALL COUNTY, MINNESOTA FINDINGS OF FACT, CONCLUSIONS OF LAW, AND ORDER FINDINGS OF FACT The above-entitled matter came before the Minnesota Pollution Control Agency (MPCA) Citizens Board at a regular meeting held in St. Paul, Minnesota on December 14, Based on the MPCA staff review, 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: INTRODUCTION 1. The matter before the MPCA Citizens Board is the denial of reissuance of an individual National Pollutant Discharge Elimination System (NPDES) / State Disposal System (SDS) Permit for a dairy feedlot known as Excel Dairy located in Excel Township, Marshall County (Facility). As discussed more fully below, the MPCA has decided to deny reissuance of Excel Dairy s Permit due to repeated and continued non-compliance, the permittee s unwillingness to comply with a schedule to bring the Facility into compliance, and the history of non-compliance at other dairy facilities operated by Rick Millner, the managing partner of Excel Dairy. 2. The MPCA received two timely requests for contested case hearings on the proposed denial of reissuance of Excel Dairy s NPDES/SDS Permit. The first request was filed by the law firm of Briggs and Morgan on behalf of Excel Dairy. The second request was filed by the law firm of Gray, Plant, Mooty, Mooty, & Bennet on behalf of AgStar Financial Services, ACA, the managing agent for a group of lenders who have extended credit to Excel Dairy. JURISDICTION 3. The MPCA is authorized and required to administer and enforce all laws relating to the pollution of the air and water of the state. Minn. Stat. chs. 115 and The MPCA has authority to deny reissuance of this NPDES/SDS Permit and to rule on the contested case hearing requests on the denial of the NPDES/SDS Permit. Minn. Stat. chs. 115 and 116 and Minn. R. chs. 7000, 7001, 7009, and Under the federal Clean Water Act, the MPCA is delegated the authority from U.S. Environmental Protection Agency (EPA) to issue NPDES permits. 33 U.S.C. 1342; Minn. Stat , subd. 5. TDD (for hearing and speech impaired only): (651) Printed on recycled paper containing at least 30% fibers from paper recycled by consumers

3 DESCRIPTION Existing Facility Overview 6. The Dairy Dozen Thief River Falls, LLP (Doing Business As: Excel Dairy) (Excel Dairy or the Dairy) Concentrated Animal Feedlot Facility is a total confinement dairy operation located in Section 31,. The Facility consists of three total confinement dairy barns permitted to house 1,544 animal units (AU), three clay-lined liquid manure storage areas, two clay-lined feed storage area runoff control basins, one building to house sand separation equipment, and one concrete feed storage area. The Facility utilizes sand as a bedding material for the animals, which is scraped to a central gutter system (flume), along with manure produced by the animals, where it is flushed with recycled, diluted liquid manure to the sand separation room. The sand is mechanically removed, cleaned, and stored to be reused as bedding for the animals while the manure is then transferred to the clay-lined liquid manure storage system. The liquid manure enters the first liquid manure storage area where solids settling is intended to occur before being allowed to enter the second liquid manure storage area where the manure is further processed, and finally, the liquid manure enters the third and final liquid manure storage area where it is ultimately stored or drawn back into the barns to flush more sand-laden manure to the sand separation room. Permitting History 7. Excel Dairy was originally constructed in 1996 and operated by Larry and Rhonda Amundson. The Dairy was a 1,544 AU operation that used typical organic bedding with one clay-lined manure basin. With organic bedding, manure basins typically form crusts that contain odors. The Amundsons stopped operating the Dairy in approximately The current ownership, led by Rick Millner, purchased the Dairy in late The Facility was re-permitted in the current ownership s name in June 2006 for 1,544 AU. At that time, the Facility consisted of one total confinement barn and one clay-liquid manure storage area (now referred to as Basin #1). 9. In September 2006, the current owners submitted a permit application to add a new barn and two new clay-lined manure basins (now referred to as Basins #2 and #3) to the Facility. 10. In November 2006 (after the current ownership had purchased the Facility), MPCA staff Jim Courneya and Gary Lackey inspected the Facility. During the November 2006 inspection, there were no cows at the Facility, and there was approximately three feet of manure/sludge in the bottom of Basin #1 (then the only basin at the Facility). In addition, the MPCA staff observed deep wheel ruts in multiple locations on the sidewalls of the basin. As a result, the sidewall of the original basin needed to be repaired. 11. The MPCA staff also performed soil probes that revealed layers of sand in close proximity to the basin s liner. The damage to the sidewall indicated that agitation during clean out may have compromised the liner. If the liner was compromised, this would present a threat to groundwater; especially with the presence of sand layers near the basin liner. The MPCA staff, therefore, determined that the integrity of the basin liner needed to be verified. 2

4 12. The MPCA reissued the Facility s permit in March The reissued permit required Excel Dairy to take specific steps to ensure the integrity of the liner in Basin #1. To evaluate the condition of the basin s liner at the bottom of the basin and repair the sidewalls of the basin, the Facility was required to remove and land apply the approximately three feet of sludge in the basin and to have a registered professional engineer evaluate the integrity of the liner. 13. The March 2007 permit required Excel Dairy to complete the repair and evaluation of Basin #1 by November Excel Dairy, however, failed to complete the repair/evaluation of Basin #1 until June 30, Despite the fact that it had not timely completed the repair/evaluation of Basin #1, Excel Dairy chose to stock the barns and to load additional manure into Basin #1. This made it necessary for Excel Dairy to transfer manure from Basin #1 into Basins #2 and #3 so that the repair/evaluation of Basin #1 could be completed. 14. The March 2007 permit also authorized Excel Dairy to construct two new manure basins (referred to as Basins #2 and #3) and an additional barn. The March 2007 permit did not, however, authorize Excel Dairy to increase the number of AU stocked at the Facility. 15. As part of the March 2007 permit, Excel Dairy submitted a narrative Air Emission Plan that stated that the Dairy would apply straw to the manure basins to establish and maintain a crust on the basins to control air emissions from the basins. On June 11, 2008, the Deputy Commissioner of the MPCA directed the Facility in writing to apply straw to the basins in order to establish crusts on the basins. The Dairy refused and had instead indicated that it never intended to cover Basins #2 and #3 with straw as required by the narrative Air Emission Plan that the Dairy submitted with its permit application. 16. In May 2008, Excel Dairy installed aerators (which were never approved or permitted by the MPCA as required) in Basins #2 and #3 and also began using an unapproved biological treatment agent. Continuous air monitor (CAM) data collected at the Facility s property line have shown hundreds of exceedances of Minnesota s hydrogen sulfide standards from May 2008 through October On September 19, 2008, the federal U.S. Agency for Toxic Substances and Disease Registry (ATSDR) and the Minnesota Department of Health (MDH) took the unprecedented step of officially declaring this Facility a public health threat as a result of the emissions from the uncovered manure basins. 18. A September 26, 2008, report submitted on behalf of Excel Dairy by its consultants Paul D. Kuhlmeier and David Parker, utilized numerous tables, references, and estimations for dairy cows weighing 1,400 pounds. In addition, the daily Facility waste generation data presented in the report suggests that 1,925 1,400-pound cows (2,695 AU) were housed at the Facility. Presuming that Excel Dairy s reports to the Court are accurate, this would mean that Excel Dairy stocked its Facility with more AU than the March 2007 NPDES/SDS Permit allowed. 19. In early 2009, Excel Dairy removed the cows from the Facility; however, the basins at the Facility remained full of accumulated manure. 3

5 20. On February 27, 2009, the MPCA notified Excel Dairy of the MPCA s intent to revoke and reissue the Facility s permit to provide for the installation of synthetic covers on Basins #2 and #3 and the correction of various other areas of environmental noncompliance. The MPCA formally placed Excel Dairy s new permit on public notice from March 4, 2009, to April 3, On March 26, 2009, the MDH and ATSDR provided a health consultation to the neighbors near Excel Dairy. In summary, the consultation found that unhealthy levels of hydrogen sulfide are present in the area surrounding the Dairy. Repeated exposures to hydrogen sulfide at the measured levels may cause persistent eye and throat irritation, headaches, and nausea, to name a few of the health effects identified in the consultation. The consultation also continues to discuss the effect of stress as a result of having to live with the emissions and its detriment to the neighbor s health as well. Finally, the conclusion drawn in the consultation was that the Dairy is a public health hazard. 22. On April 28, 2009, the MPCA revoked and reissued Excel Dairy s NPDES/SDS Permit in order to address unauthorized changes to the Facility and to remove danger to human health and the environment, as summarized by the events above. 23. The April 28, 2009, the Permit contained a very detailed schedule in order to bring the Facility back into compliance, which included, among other items, no cows could return to the Facility until all corrective actions were completed, installation of synthetic covers on Basins #2 and #3, and removal of all manure in Basins #1, #2, and # Throughout 2009, the MPCA issued various enforcement documents in order to compel compliance with the terms and conditions of the Permit, including two Administrative Orders requiring manure removal from the Facility (greater detail is provided below). Additionally, continuous air monitor (CAM) data collected at the Facility s property line have shown numerous exceedances of Minnesota s hydrogen sulfide standards from April 2009 through November Among other items, Excel Dairy has not installed the required covers on Basins #2 and #3. Additionally, eight feet of manure still remains in Basin #1, while Basins #2 and #3 have had all manure satisfactorily removed. 26. Excel Dairy s current NPDES/SDS Permit (which was issued on April 28, 2009) expired on April 28, 2010, and it is under this Permit which Excel Dairy has requested continued coverage. Compliance/Enforcement History 27. In the fall of 2007, the Facility roughly doubled the size of an existing concrete feedpad. The Facility did this without first obtaining the necessary permission from the MPCA. As part of a stipulated enforcement action for this violation, the Facility was required to install a clay liner on an existing borrow pit at the Facility so that the borrow pit could serve as a runoff pond for any runoff from the feedpad. The Facility was also required to construct a second runoff pond to capture additional runoff from the feedpad. The Dairy has failed to manage that second runoff pond properly, and in September 2008, the Facility discharged manure-contaminated runoff from the pond into waters of the state in violation of the Facility s Permit. Specifically, the Facility discharged manure-contaminated runoff into a ditch which drains into the Thief River. 4

6 28. In May 2008, the MPCA began monitoring the hydrogen sulfide levels at the Excel Dairy property line because there had been numerous complaints about odors and air emissions from the basins. The MPCA s monitoring showed that the Facility was in significant non-compliance with Minnesota s hydrogen sulfide standards. 29. As part of its application for the March 2007 permit, Excel Dairy had submitted a narrative Air Emissions Plan which stated that the Facility would apply chopped straw to establish crusts on its basins in order to control air emissions. 30. On June 11, 2008, the Deputy Commissioner of the MPCA directed the Facility in writing to apply straw to the basins in order to establish crusts on the basins. Excel Dairy refused and instead stated that it could not and would not cover Basins #2 and #3 with straw as required by the narrative Air Emission Plan that the Dairy submitted with its permit application. 31. Beginning in May 2008, Excel Dairy began experimenting with aeration and the addition of microbes to its manure basins. Excel Dairy did not receive the MPCA s prior approval to implement these measures as required by rule, statute, and the Facility s permit. 32. After learning that the Facility had failed to implement the measures set forth in the narrative Air Emissions Plan that the Facility had submitted with its permit application, the MPCA and the Attorney General s office initiated a legal action to compel the Facility to stop exceeding Minnesota s hydrogen sulfide standards. The purpose of the state s civil action against Excel Dairy was to obtain immediate, temporary abatement of Excel Dairy s ongoing hydrogen sulfide exceedances. 33. In response to the state s request for a temporary injunction asking the court to order Excel Dairy to install either straw or synthetic covers on its basins, Excel Dairy informed both the MPCA and the court that upon the MPCA s approval of Basin #1 for use, Excel Dairy would establish a straw crust on Basin #1. Excel Dairy also asked the court to allow Excel Dairy to continue experimenting with aeration of Basins #2 and #3. Excel Dairy further informed both the court and the state that if aeration of its basins failed to resolve the hydrogen sulfide exceedances, Excel Dairy would install synthetic covers on Basins #2 and # On July 30, 2008, the Marshall County District Court issued its first Interim Order in the state s civil action against Excel Dairy. The first Interim Order directed Excel Dairy to establish a crust on Basin #1 upon the MPCA s certification of that basin for use. The first Interim Order also directed Excel Dairy to continue aerating its basins. The first Interim Order reserved the right to require the Dairy to cover Basins #2 and #3 if aeration failed to resolve the hydrogen sulfide exceedances and called for a review hearing in August or September 2008 to further evaluate the situation. 35. During the summer of 2008, the federal government also initiated enforcement action against Excel Dairy for its hydrogen sulfide exceedances. On July 18, 2008, the EPA issued a Notice of Violation to Excel Dairy for violating the federal Clean Air Act. During the summer of 2008, the federal ATSDR deployed its own air quality monitors in the homes of several of Excel Dairy s neighbors. ATSDR s monitors, which record hydrogen sulfide levels higher than the MPCA s monitors are capable of recording, recorded alarming levels of hydrogen sulfide in Excel Dairy s neighbors homes. On September 19, 2008, the ATSDR and the MDH took the unprecedented step of officially declaring Excel Dairy a public health threat as a result of the emissions from the uncovered manure basins. 5

7 36. In October 2008, the court conducted a review hearing pursuant to the court s first Interim Order. The MPCA s air quality monitoring data showed that Excel Dairy s system of crusting Basin #1, along with aeration of Basins #2 and #3, had failed to resolve the hydrogen sulfide exceedances. Excel Dairy continued to exceed Minnesota s hydrogen sulfide standards even after it established a crust on Basin #1 and aerated Basins #2 and #3. The state, therefore, asked the court to order Excel Dairy to install covers on Basins #2 and #3 as Excel Dairy had said it would if its experiment with aeration failed to resolve the hydrogen sulfide issues. 37. At the October 2008 hearing, Excel Dairy again refused to install covers on Basins #2 and #3. Excel Dairy instead asked the court for additional time to experiment with aeration. 38. In Marshall County s civil and criminal cases against Excel Dairy, Excel Dairy argued that the MPCA s 40-year old hydrogen sulfide standards were invalid and that Excel Dairy, therefore, could not be required to install covers on its basins. 39. On January 2, 2009, the court issued its second Interim Order in the state s civil case against Excel Dairy. In the court s second Interim Order, the court decided to wait until Excel Dairy s challenge to Minnesota s hydrogen sulfide standards in the county litigation had been resolved before ruling on the state s renewed request to require Excel Dairy to cover Basins #2 and #3. The state s request for an order requiring Excel Dairy to install covers on Basins #2 and #3 is, therefore, still pending before the Marshall County District Court. 40. On January 9, 2009, Excel Dairy notified both the Marshall County District Court and the MPCA that Excel Dairy would be removing the cows from the site and that the Facility would install synthetic covers on Basins #2 and # On April 28, 2009, the MPCA revoked and reissued Excel Dairy s NPDES/SDS Permit. The reissued Permit contained a very detailed schedule to bring the Facility into compliance. 42. On June 8, 2009, the MPCA issued a Notice of Violation (NOV) that documented Excel Dairy had missed a number of requirements within the April 28, 2009, NPDES/SDS Permit. Including, among other items, the failure to remove feedstocks, failure to submit plans for cover installation by the required deadline, and failure to install a new manure transfer pipeline into Basin # On June 16, 2009, the MPCA issued an NOV that documented Excel Dairy had not removed manure from Basins #1, #2, and #3 by June 12, 2009, as required by the April 28, 2009, Permit. 44. Excel Dairy s refusal to empty the manure from the basins as required by the Permit resulted in a violation of freeboard requirements on Basins #2 and #3 which created a threat of overflow and impact to local water supplies. On July 2, 2009, in response to the continued hydrogen sulfide exceedances and the threat of overflow, the MPCA issued Excel Dairy an Administrative Order requiring Excel Dairy to completely empty Basins #2 and #3 by July 16, Excel Dairy only partially complied with the July 2, 2009, Administrative Order. 6

8 45. On July 17, 2009, the MPCA issued an NOV that documented, among other items, that although Excel Dairy had removed a substantial amount of manure form Basins #2 and #3, approximately one foot of manure remained within Basins #2 and #3 which did not comply with the Administrative Order issued on July 2, On October 1, 2009, the MPCA issued a second Administrative Order to Excel Dairy. The second Administrative Order required Excel Dairy to empty the manure from Basin #1 to a depth not to exceed two feet and to maintain a straw crust on any remaining manure. The Administrative Order also required Excel Dairy to complete the removal of the remaining one-foot of manure from Basins #2 and #3. Both of these items were ordered to be accomplished by October 31, Excel Dairy temporarily reduced the level of manure in Basin #1 to less than two feet; however, in order to complete the manure removal from Basins #2 and #3, Excel Dairy placed the manure from Basins #2 and #3 into Basin #1 causing the manure level to rise to approximately seven feet. Excel Dairy still has not removed all manure from Basin #1 and did not completely empty the manure from Basins #2 and #3 until late November 2009 (verified December 3, 2009); approximately five months after the Permit deadline. 47. In January 2010, the Marshall County District Court granted the MPCA a temporary injunction and issued a January 20, 2010, Order that required Excel Dairy to remove manure from Basin #1 during the spring of 2010, as dictated by the MPCA. 48. Pursuant to the January 20, 2010, court Order, on April 20, 2010, the MPCA notified Excel Dairy that conditions were adequate for land application of manure to commence and that Excel Dairy now had seven days to complete manure removal from Basin # At the MPCA Citizens Board meeting on April 27, 2010, Excel Dairy informed the MPCA that Basin #1 had been emptied in accordance with the January 20, 2010, court Order. However, a May 4, 2010, site inspection revealed that the manure had not been removed from Basin #1 in accordance with the court Order. The site inspection revealed that some manure had been removed to lower the basin level to approximately five feet, well short of the requirements of the court Order no more than two feet. PROCEDURAL HISTORY 50. Under the authority of Minn. Stats and and pursuant to Minn. R to , the Fact Sheet and Public Notice of Intent that identifies the MPCA s preliminary decision to deny reissuance of Excel Dairy s NPDES/SDS Permit, incorporated herein as Appendix E to the Findings, was placed on public notice on January 20, 2010, with the last day of the public notice period officially ending at 4:30 p.m. on February 19, The MPCA notified the public of the public comment period. A Notice of Intent to Deny Reissuance of NPDES/SDS Permit No. MN was provided to the Thief River Falls Times and published on January 20, The public notice was provided to Excel Dairy on January 19, The public notice was provided to governmental agencies and individuals listed on the MPCA s Marshall County interested parties mailing list, governmental agencies, and individuals, as well as other interested parties, by mail on January 19, In addition, the public notice and draft NPDES/SDS Permit were made available for review on the MPCA Web site at on January 20,

9 52. The public comment period for the denial of the NPDES/SDS Permit began on January 20, 2010, and ended on February 19, During the 30-day comment period, the MPCA received eight comment letters from government agencies and entities, and received 21 comment letters from citizens. The MPCA also received two comment letters after the public comment period had ended. 53. 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 s response to comments received is hereby incorporated by reference as Appendix B to these Findings. 54. The MPCA received two timely requests for contested case hearings on the proposed denial of reissuance of Excel Dairy s NPDES/SDS Permit. The first request was filed by the law firm of Briggs and Morgan on behalf of Excel Dairy. The second request was filed by the law firm of Gray, Plant, Mooty, Mooty, & Bennet on behalf of AgStar Financial Services, ACA, the managing agent for a group of lenders who have extended credit to Excel Dairy. The requests for contested case hearings are hereby incorporated by reference as Appendix C to these Findings. CONTESTED CASE HEARING REQUESTS 55. Minn. Stat , subd. 5, states, in relevant part: [i]f the agency proposes to deny a permit under this section, the permit applicant may request a hearing under chapter 14. The permit applicant may request that the hearing be held under Minnesota Rules, parts to As Minn. Stat requires a contested case hearing upon request, on March 12, 2010, the MPCA Commissioner issued an order granting Excel Dairy s contested case hearing request. 56. On May 7, 2010, the MPCA issued a Notice and Order for Prehearing Conference in regard to the contested case hearing. On May 24, 2010, the law firm of Briggs and Morgan filed a Notice of Appearance on behalf of Excel Dairy. On May 28, 2010, the law firm of Gray, Plant, Mooty, Mooty, and Bennett filed a Notice of Appearance on behalf of AgStar Financial, et al. 57. On June , Excel Dairy filed a Chapter 7 bankruptcy petition, and Mr. Gene W. Doeling was appointed trustee in the case. Mr. Doeling subsequently indicated that he did intend to prosecute the case on behalf of Excel Dairy. 58. On June 15, 2010, the law firm of Briggs and Morgan filed a Notice of Withdrawal as counsel for Excel Dairy, and no one has filed a Notice of Appearance on behalf of Excel Dairy. Subsequently, on August 26, 2010, the MPCA filed a Motion for an Order of Default as no effort had been made by Excel Dairy to prosecute the contested case hearing request. 59. On November 10, 2010, Administrative Law Judge Richard C. Luis issued Conclusions and Recommendation that the MPCA deny Excel Dairy s request for reissuance of its Permit. The Conclusions and Recommendation is hereby incorporated by reference as Appendix D to these Findings. 8

10 REGULATORY STATUS OF PERMIT 60. On March 12, 2010, the Commissioner of the MPCA issued an Order denying Excel Dairy authorization to operate under an expired permit pursuant to Minn. R (A). 61. On March 22, 2010, Excel Dairy submitted a request for reconsideration or alternatively for a contested case hearing or a stay of the Commissioner s March 12, 2010, Order. Although reconsideration by the full MPCA Board was not required, the Commissioner elected to allow Excel Dairy to present its request to the full MPCA Citizens Board at the regularly-scheduled April 27, 2010, Citizens Board meeting. 62. At the April 27, 2010, MPCA Citizens Board meeting, the Citizens Board issued Finding of Fact, Conclusions, and Order prohibiting Excel Dairy from operating under its expired permit. 63. The MPCA Citizens Board decision was appealed by Excel Dairy and the law firm of Gray, Plant, Mooty, et. al, representing AgStar Financial Services. 64. On June 18, 2010, Excel Dairy s counsel filed a Notice of Withdrawal, and on June 25, 2010, Excel Dairy s appeal was dismissed. On July 6, 2010, the Minnesota Court of Appeals dismissed AgStar Financial Services appeal request citing that it did not establish standing to appeal the MPCA s decision. Therefore, Excel Dairy is prohibited from operating under the expired Permit. DENIAL OF PERMIT REISSUANCE AUTHORITY AND JUSTIFICATION 65. Minn. Stat , subd. 1(a)(2), provides that the MPCA may refuse to issue a feedlot permit if the agency determines that the permit applicant may not operate the facility in conformance with applicable requirements. Minn. Stat , subd. 1(b), provides that in making a determination under this statute, the agency may consider the past record of the applicant in operating animal feedlot facilities in Minnesota and other states. 66. The applicant has a history of non-compliance with Minnesota rules, statues, and permit conditions. The applicant has a history of routinely modifying feedlot facilities without authorization from the MPCA, allowing discharges to waters of the state, violating the state ambient air quality standards, and continued noncompliance with the NPDES/SDS Permit and Administrative Order requirements. The MPCA is aware of the applicant s involvement in seven dairy facilities, past and present, all of which have had various non-compliance issues. Each facility s compliance issues are addressed separately below. Excel Dairy Marshall County, Minnesota 67. Excel Dairy s March 8, 2007, Individual NPDES/SDS Permit required Excel Dairy to repair/ evaluate Basin #1 by November 1, At the time of Permit issuance, there was approximately three feet of manure remaining in Basin #1. Excel Dairy failed to meet the deadline for repairing and evaluating Basin #1. At Excel Dairy s request, the MPCA extended the deadline for the repair/evaluation to June 30, Excel Dairy then chose to stock the Facility with animals and subsequently place more manure into Basin #1, meaning that more manure would have to be removed before the repair/evaluation process could be completed. As a result of Excel Dairy s choices, the repair/evaluation did not happen when initially required by the MPCA, and the amount of time needed to complete the repair/evaluation was lengthened. 9

11 68. In the fall of 2007, Excel Dairy roughly doubled the size of an existing concrete feedpad without first obtaining the necessary permission from the MPCA. As part of the enforcement action for that violation, Excel Dairy was required to install a clay liner on an existing borrow pit at the Facility so that the borrow pit could serve as a runoff pond for any runoff from the feedpad. Excel Dairy was also required to construct a second runoff pond to capture runoff from the feedpad. Excel Dairy failed to manage that second runoff pond properly, and in September 2008 discharged manurecontaminated runoff from the pond into waters of the state in violation of applicable rules, statue, and permits. 69. As part of the application for its March 2007 permit, Excel Dairy submitted a narrative Air Emission Plan in which Excel Dairy stated that it would apply straw to the manure basins to establish and maintain a crust on the basins to control air emissions. Excel Dairy subsequently refused to apply straw to the basins claiming that it had submitted the narrative Air Emissions Plan accidentally and that it had never truly intended to crust its basins despite what the written plan stated. 70. In May 2008, Excel Dairy elected to implement an experimental program involving aeration and biological treatment of its manure basins despite the fact that these measures had never been approved or permitted by the MPCA. 71. In July 2008, Excel Dairy represented to the MPCA that if its experiment with aeration of its basins (which the MPCA never approved) failed to resolve the Facility s hydrogen sulfide violations, then Excel Dairy would install covers on Basins #2 and #3. When Excel Dairy s experiment with aeration of its basins failed to resolve the hydrogen sulfide violations, Excel Dairy refused to install covers as it had previously claimed it would. Instead, Excel Dairy claimed that the MPCA s longstanding hydrogen sulfide standards should be discarded. 72. In both 2008 and 2009, Excel Dairy violated Minnesota s air quality standards for hydrogen sulfide hundreds of times. During the monitoring season of 2008, after accounting for the allowed air quality exemption days, Excel Dairy exceeded the 30 parts per billion (ppb) hydrogen sulfide standard 384 times and the 50 ppb hydrogen sulfide standard 191 times. During the monitoring season of 2009, after accounting for the allowed air quality exemption days, Excel Dairy exceeded the 30 ppb hydrogen sulfide standard 152 times and the 50 ppb hydrogen sulfide standard 51 times. Overall during the two monitoring seasons combined, Excel Dairy exceeded the 30 ppb hydrogen sulfide standard 535 times and the 50 ppb hydrogen sulfide standard 242 times. 73. The hydrogen sulfide standards that Excel Dairy has violated are primary standards, meaning that they are set at a level necessary to protect public health. Excel Dairy s violations have been so severe that the families that live near Excel Dairy have been rendered physically ill by the emissions and have been forced to flee their homes on numerous occasions because of the sickening emissions. The federal ATSDR and the MDH have jointly declared Excel Dairy a public health threat. 74. Excel Dairy also violated provisions regarding exemptions from Minnesota s hydrogen sulfide standards. Minnesota statute establishes a maximum 21-day exemption from the hydrogen standards for a feedlot of this size when manure is being emptied and land applied. This exemption 10

12 only applies if the feedlot follows proper procedures in notifying the MPCA of its activities. In this case, the Facility failed to follow proper notification procedures and tried to claim a cumulative 58 days of exemptions instead of the maximum 21 days that the law allows. 75. In April 2009, the MPCA Citizens Board revoked and reissued Excel Dairy s feedlot permit. Excel Dairy has failed to comply with a number of provisions of its current Permit. 76. Excel Dairy s current Permit required Excel Dairy to completely empty the manure from its three manure basins by June 12, Excel Dairy failed to meet that deadline. 77. Excel Dairy s refusal to empty the manure from the basins as required by the Permit resulted in a violation of freeboard requirements on Basins #2 and #3 which created a threat of overflow and impact to local water supplies. On July 2, 2009, in response to the continued hydrogen sulfide exceedances and the threat of overflow, the MPCA issued Excel Dairy an Administrative Order requiring Excel Dairy to completely empty Basins #2 and #3 by July 16, Excel Dairy only partially complied with the July 2, 2009, Administrative Order. Excel Dairy left approximately one foot of manure in Basins #2 and # On October 1, 2009, the MPCA issued a second Administrative Order to Excel Dairy. The second Administrative Order required Excel Dairy to empty the manure from Basin #1 to a depth not to exceed two feet and to maintain a straw crust on any remaining manure. The Administrative Order also required Excel Dairy to complete the removal of the remaining one foot of manure from Basins #2 and #3. Both of these items were ordered to be accomplished by October 31, Excel Dairy temporarily reduced the level of manure in Basin #1 to less than two feet; however, in order to complete the manure removal from Basins #2 and #3, Excel Dairy placed the manure from Basins #2 and #3 into Basin #1 causing the manure level to rise to approximately seven feet. Excel Dairy still has not removed all manure from Basin #1 and did not completely empty the manure from Basins #2 and #3 until late November 2009 (verified December 3, 2009); approximately five months after the permit deadline. 79. Excel Dairy s current Permit required Excel Dairy to submit approvable plans and specifications for synthetic covers for Basins #2 and #3 by May 28, On August 7, 2009, the MPCA staff notified the design engineer that the plans Excel Dairy submitted were insufficient. Covers that the Permit required for Basins #2 and #3 have not been installed. 80. The current Permit also required that a perimeter tile be installed around the feed storage runoff basins by July 1, Excel Dairy did not start installation of a perimeter tile around one of the feed storage runoff basins until November 3, Excel Dairy has yet to finish that installation. 81. The Permit required that a new manure transfer pipeline into Basin #1 be installed by August 26, Excel Dairy has yet to install this manure transfer pipe and cannot install this pipe until manure is removed from Basin # In January 2010, the Marshall County District Court granted the MPCA a temporary injunction and issued a January 20, 2010, Order that requires Excel Dairy to remove manure from Basin #1 during the spring of 2010, as dictated by the MPCA. 11

13 83. Pursuant to the January 20, 2010, court Order, on April 20, 2010, the MPCA notified Excel Dairy that conditions were adequate for land application of manure to commence and that Excel Dairy now had seven days to complete manure removal from Basin # At the MPCA Citizens Board meeting on April 27, 2010, Excel Dairy informed the MPCA that Basin #1 had been emptied in accordance with the January 20, 2010, court Order. However, a May 4, 2010, site inspection revealed that the manure had not been removed from Basin #1 in accordance with the court Order. The site inspection revealed that some manure had been removed to lower the basin level to approximately five feet, well short of the requirements of the court Order of no more than two feet. 85. Based on statements that Excel Dairy has made, Excel Dairy also appears to have misled the MPCA regarding the number of animal units (AU) housed at the Facility. Under the Facility s previous permit, the Facility was authorized to stock 1,545 AU. Under Minnesota law, a mature dairy cow weighing over 1,000 pounds is 1.4 AU and a mature dairy cow weighing less than 1,000 pounds is 1.0 AU. 86. In this case, Excel Dairy represented to the MPCA that it would either house 1,104 mature dairy cattle over 1,000 pounds or house a hybrid cow that weighed less than 1,000 pounds so that the Facility could stock a total of 1,545 cattle. 87. Information obtained from Excel Dairy shows it has instead chosen to stock 1,545 cattle over 1,000 pounds at the Facility. This would equate to 2,163 AU, significantly more than the Permit allows. Moreover, overstocking of the Facility would result in, or have the potential to result in, a significant alteration in the nature or quantity of manure stored and processed by the Facility. Overstocking of the Facility would also result in, or have the potential to result in, a significant alteration in the nature or quantity of emissions from the Facility s manure basins. Unnamed Dairy Roseau County, Minnesota 88. The feedlot was located in Section 8, Mickinock Township, Roseau County, Minnesota. The managing partner of Excel Dairy, Rick Millner, operated this facility before abandoning it in In September 1997, the MPCA staff inspected the abandoned facility and observed manure stockpiles still remaining on site as well as two earthen manure storage structures that still contained manure and were not properly closed. Lone Tree Dairy Yellow Medicine County, Minnesota 89. Lone Tree Dairy is located in Section 32, Sandnes Township, Yellow Medicine County, Minnesota. Rick Millner was the managing partner for the entity that owned this dairy and had operated the dairy before it was sold in The facility was permitted for 1,400 cows (1,960 AU) and consisted of freestall barns and an earthen liquid manure storage structure. 90. In August 2006, the MPCA staff inspected the facility and documented the basin manure level above the basin freeboard limit level and determined that unless immediate basin manure removal and land application occurred, the basin manure level was in danger of breaching the basin s constructed berm. The MPCA staff also observed that loose soil had been dumped and spread on top of the southeast corner of the basin s constructed berm in an apparent attempt to prevent basin manure from spilling out the basin s southeast corner. The MPCA did not approve or issue a permit 12

14 for this modification of the basin. The level of manure within the basin was above the freeboard of the basin and only six inches below the top of the loose fill material added to the southeast corner of the basin. 91. In response, the MPCA executed a stipulation agreement with the applicant, which included a monetary penalty as well as corrective actions and design reports to ensure that freeboard would be maintained in the future. New Horizon Dairy Grant County, Minnesota 92. This dairy facility is located in Section 28, Land Township, Grant County, Minnesota. Rick Millner is the managing partner for the entity that owns this dairy and has operated this dairy since From 2003 to May 2007, it was operated as a 700 head dairy facility with two manure storage basins. In May 2007, it was expanded to a 1,357 head dairy facility with three earthen basins, as it still exists today. 93. On July 27, 2005, the MPCA contacted Mr. Millner in regards to a Minnesota Duty Officer report concerning land application of manure and runoff impacting a nearby coulee. Mr. Millner confirmed that the manure storage basins at the facility were full and that land application was occurring every two weeks to prevent basin overflow. 94. A subsequent July 28, 2005, site inspection revealed a discharge to a coulee was occurring during the land application of manure. The manure application rate was 20,000 gallons per acre, and the same field had received 18,000 gallons per acre three weeks prior, resulting in over-application of manure nutrients. During the July 28, 2005, inspection, the MPCA staff also observed the manure levels in the basins encroaching into the freeboard and was approximately six inches from the top of the basin berms. Also during the inspection, it was observed that manure had been placed in an unpermitted manure storage structure at the facility as a means of storing excess manure. 95. In response to the above, the MPCA executed a stipulation agreement with the applicant, which included a monetary penalty as well as corrective actions and design reports to ensure that freeboard would be maintained in the future. 96. Additionally, in the fall of 2007, the facility expanded the feed storage area at the facility without first obtaining approval and permit modification from the MPCA. During a November 2007 site inspection, manure was observed leaving the facility s sand separation room and flowing to a stormwater pond. Also during the November 2007 site inspection, numerous areas of damage to the liner in the newest basin were observed, which appeared to be the result of agitation of the basin. During a November 2008 site visit, process wastewater was observed leaving the facility from the feed storage area, which was a violation of the facility s permit. The MPCA has not yet taken official action(s) regarding these compliance issues. Five Star Dairy - Sargent County, North Dakota 97. This dairy facility was purchased in 2005 by The Dairy Dozen, LLP, and received approval to operate as a 1,400 head dairy in April In November 2006, the North Dakota Department of Health issued a notice of violation (NOV) to the facility and its managing partner Rick Millner. The NOV stated that Five Star Dairy failed to receive approval from the North Dakota Department of 13

15 Health prior to constructing a new manure storage pond. Also, Five Star Dairy submitted records that indicated that the facility was stocked with more animals than its permitted capacity of 1,400 head prior to gaining the appropriate approvals. 98. The NOV goes on to state that during an August 8, 2006, site inspection of the facility, it was observed that the required freeboard was not maintained in the manure storage basins and that additional material had been added to the top of the basin berms, without prior approval, in an attempt to prevent overflow of the basins. Furthermore, during a September 12, 2006, site inspection of the facility, evidence of a discharge from the manure storage basins was observed. 99. An Administrative Consent Agreement was reached between Five Star Dairy and the North Dakota Department of Health that included monetary penalties as well as a series of corrective actions On October 28, 2008, Five Star Dairy was again inspected by the North Dakota Department of Health and, during that inspection, it was observed that the manure storage ponds were full, with no freeboard remaining. Additionally, it was noted that wave action of the surface of the pond had caused erosion of the top of the basin berms. A second NOV was issued for these violations, and a second Administrative Consent Agreement was reached between Five Star Dairy and the North Dakota Department of Health that included monetary penalties as well as a series of corrective actions Five Star Dairy was once more inspected by the North Dakota Department of Health on October 27, 2009, and, during that inspection, it was observed that the manure storage basins did not have adequate freeboard remaining. Follow-up inspections on November 2, and November 10, 2009, found that the manure storage basins were still above the allowable operating level, and no manure had been removed. A November 19, 2009, site inspection did reveal that some manure had been removed, but the level of manure in the basins remained above the allowable operating level. A third NOV was issued to Five Star Dairy and its managing partner Rick Millner on January 6, 2010, for these violations. Veblen East Dairy & Veblen West Dairy - Marshall County, South Dakota 102. Veblen East Dairy is an 8,176 head dairy facility that consists of six total confinement barns and eight manure storage basins. Veblen West Dairy, previously known as MCC Dairy, is a 5,500 head dairy facility that consists of five total confinement barns and five manure storage basins. Rick Millner is the managing partner for the entity that owns both facilities. On October 23, 2009, the South Dakota Department of Environment and Natural Resources (South Dakota DENR) issued a Notice of Violation, Order, and Settlement Agreement On July 10, 2008, the South Dakota DENR inspected both Veblen East and Veblen West Dairies. During the inspection, it was noted that the basins at Veblen West were at their maximum operating level, and the basins at Veblen East were below the maximum operating level. On July 18, 2008, the South Dakota DENR approved the transfer of ten million gallons of manure from Veblen West to Veblen East. This manure was to be land applied in the fall of 2008 prior to soil freeze, and the South Dakota DENR was to be notified when this was complete. A notification was not received. 14

16 104. In April 2009, the South Dakota DENR received notification from the facilities that the basins at both Veblen East and Veblen West Dairies were above the maximum operating level and into the freeboard of the basins. This was confirmed during a May 6, 2009, site inspection by the South Dakota DENR. On May 20, 2009, Rick Millner contacted the South Dakota DENR to inform them that high winds were causing manure spray to blow over the berms of the north basins and that a line of straw bales was erected to keep the spray from leaving the basins. Various correspondence and inspections in the months of June, July, and August indicated that the basins at both Veblen East and Veblen West were above the maximum operating levels and into the freeboard The Order, issued October 23, 2009, and amended in March 2010, required both dairies to complete a number of requirements, summarized below, to bring the facilities back into compliance: a. As soon as possible, remove a sufficient amount of manure to return them to compliance with the freeboard requirements. The Order went on to require the removal of manure from all basins to have no more than one foot of residual material remaining by November 1, The lowering of the liquid levels in the basins at Veblen West did not happen until December 7, This lowering of the levels was not sufficient to comply with the October 23, 2009, Order (no more than one foot of manure) but was sufficient to bring the basins back into compliance with the freeboard requirements. Similarly, the lowering of the liquid levels in the basins at Veblen East did not happen until November 23, This lowering of the levels was not sufficient to comply with the October 23, 2009, Order (no more than one foot of manure) but was sufficient to bring the basins back into compliance with the freeboard requirements. b. Submit calculations and schedules that demonstrated that the remaining storage capacity within the basins at each facility, after the fall of 2009 pump-down, was sufficient to provide 270 days worth of storage. Sufficient calculations and schedules were never received by the South Dakota DENR. Consequently, the South Dakota DENR concluded that the volume remaining after the fall of 2009 pump-down was not sufficient to provide 270 days of storage. c. By November 1, 2009, submit an emergency response plan for each of the facilities to identify procedures to be followed in the event of a spill or release. The South Dakota DENR did receive a plan, but it was not sufficient to comply with the specific requirements of the Order. The South Dakota DENR has not yet received sufficient plans. d. Submit a design report that uses actual water usage and system operation for each facility to assess if the manure management system capacity meets the requirements of the South Dakota General NPDES Permit (270 days of storage). The South Dakota DENR has not received an adequate report to address this issue On November 17, 2009, the South Dakota DENR performed inspections of Veblen East and Veblen West and also conducted water sampling within the Little Minnesota River (headwaters of the Minnesota River) at areas were there was evidence that discharges had occurred from both dairies. The discharge from Veblen East appeared to reach an unnamed wetland; water sampling confirmed that manure did indeed reach this wetland. Neither of the dairies reported the discharges to the South Dakota DENR as required Inspections on November 17, 2009, and January 8, 2010, at both facilities revealed that depth markers (designed to clearly identify the maximum operating levels of the ponds) were missing or were broken off. 15

17 108. Inspections on July 10, 2008, and January 12, 2010, at Veblen West and December 7, 2009, and January 8, 2010, at Veblen East noted stockpiles of used sand and manure solids in areas not authorized by the permits for the facilities Inspections on January 8, 2010, and January 12, 2010, at Veblen West and January 8, 2010, at Veblen East indicated that manure application had taken place to fields not identified within the approved manure management plans for the dairies. Also, both dairies had insufficient records of land application dating back to 2008 and including all of The MPCA has also received complaints about and photos of these facilities, specifically regarding the lack of freeboard, potential for overflow, and pollution resulting from improper land application of manure. The MPCA has received these complaints as the facilities sit at the head of the watershed of Big Stone Lake, located at the border of Minnesota (Big Stone County) and South Dakota The MPCA has considered the above compliance issues at all seven dairies in the determination to deny reissuance of NPDES/SDS Permit MN to Excel Dairy. COMMENT LETTERS RECEIVED DURING THE PUBLIC NOTICE PERIOD 112. The MPCA received a total of 29 comment letters from the public and governmental agencies and entities and two requests for a contested case hearing, in response to the decision to deny reissuance of the NPDES/SDS Permit. Members of the public expressed their agreements with the MPCA s decision to deny reissuance of the Permit and also shared their personal stories of what life has been like living near this Facility. The personal stories in the comments included a variety of health effects and compromised quality of life due to past compliance and air emissions issues of Excel Dairy. The commenters also expressed their displeasure with the ownership and management of the Facility and their concerns over future air emissions from the continued operation of the Facility. These comments are addressed in the Response to Comments, and the MPCA adopts and incorporates by reference the rationale in the Response to Comments as its Findings. CONCLUSIONS OF LAW 1. As set forth above, the MPCA finds that the past record of the applicant in operating animal feedlot facilities in Minnesota and other states justifies denial of reissuance of the Facility s Permit pursuant to Minn. Stat Because the Permit is subject to denial under Minn. Stat , the contested case hearing request of AgStar Financial, et al., regarding reissuance of the Permit is rendered moot. 3. Because the Permit is subject to denial under Minn. Stat , to the extent that Excel Dairy has a contested case hearing request still pending, that contested case request is rendered moot. 4. Any findings that might properly be termed conclusions and any conclusions that might properly be termed findings are hereby adopted as such. 16