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 BUFFALO LAKE ETHANOL, LLC FAIRMONT, MINNESOTA FINDINGS OF FACT CONCLUSIONS OF LAW AND ORDER FINDINGS OF FACT Pursuant to Minn. R (2005), the Minnesota Pollution Control Agency (MPCA) staff has prepared an Environmental Assessment Worksheet (EAW) for the proposed 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. Proposed New Construction PROPOSED PROJECT DESCRIPTION 1. Buffalo Lake Energy, LLC (BLE) proposes to construct a dry mill ethanol production facility co-located with an existing Cargill Ag Horizons grain handling facility in Martin County, with a maximum capacity of 118 million gallons per year (MMGY) of 200-proof ethanol (Project). The facility will produce 360,000 tons per year of distiller s dried grains with solubles (DDGS) as a co-product that would be used as animal feed. The Project will consume approximately MMGY of ground water at full production. 2. Ethanol is an alcohol that is used as a fuel additive or extender. In the E85 fuel blend, it constitutes 85 percent of the fuel mixture. Ethanol would be produced by fermenting corn. The basic steps in ethanol production are preparing the feedstock, fermentation, distillation, recovery of the alcohol, and recovery of residual materials. The proposed Project would process approximately 43.7 million bushels (approximately 1,223,704 tons) of corn per year. 3. The facility will use two 145 million British Thermal Unit per hour thermal oxidizers/heat recovery boilers to control air emissions, including odorous volatile organic compounds (VOCs), routed from the distillation and DDGS drying processes, and to provide steam for cooking, distilling, evaporating, and other plant uses. These two units would be routed to one common stack. PROCEDURAL HISTORY 4. Pursuant to Minn. R , subp. 5B, an EAW was prepared by the MPCA staff on the proposed Project. Pursuant to Minn. R (2005), the EAW was distributed to the Environmental Quality Board (EQB) mailing list and other interested parties on March 27, TDD (for hearing and speech impaired only): (651) Printed on recycled paper containing at least 30% fibers from paper recycled by consumers

3 Buffalo Lake, LLC On the Need for an Environmental Impact Statement Findings of Fact Conclusions of Law And Order 5. The MPCA notified the public of the availability of the EAW for public comment. A news release was provided to Martin, Jackson, Cottonwood, Watonwan, Blue Earth and Faribault counties and other interested parties on March 27, In addition, the EAW was published in the EQB Monitor on March 27, 2006, and available for review on the MPCA Web site at on March 28, The public comment period for the EAW began on March 26, 2006, and ended on April 26, During the 30-day comment period, the MPCA received two comment letters from government agencies, one comment letter from an environmental not-for-profit organization, and two comment letters from citizens. There were two requests for an Environmental Impact Statement (EIS). 7. The MPCA prepared responses to all comments received during the 30-day public comment period. The MPCA responses to comments received are hereby incorporated by reference into these findings and are attached as Appendix A. 8. The EAW came before the MPCA Citizens Board (Board) at a Special Meeting held on May 23, 2006, for a determination of whether the Project has the potential for significant environmental impact. 9. After considering the record before it and taking testimony from BLE and interested persons who commented on the adequacy of the draft EAW, the MPCA Board concluded that it lacked information necessary to making a reasoned decision. The MPCA Board invoked Minn. R , subp. 2a, Item B and held the matter over to a future meeting to allow the BLE additional time to collect reasonably obtainable information that the MPCA Board concluded was lacking. 10. On May 25, 2006, the MPCA staff notified interested persons of the MPCA Board decision to delay action on the draft EAW. The MPCA Board requested supplemental information on several items. 11. On approximately June 14, 2006, the MPCA received additional information from BLE addressing the MPCA Board s information requests. On June 21, 2006, the MPCA received comments on the supplemental information from the Minnesota Center for Environmental Advocacy (MCEA), an environmental organization that provided comments on the original draft EAW. 12. On June 21, 2006, at the BLE s request, the MPCA staff removed consideration of the draft EAW from the June MPCA Board agenda. The MPCA staff continued to develop the EAW with input from BLE. 13. On June 26, 2006, MCEA submitted a letter to the MPCA objecting to further delay of the MPCA Board s consideration of the BLE draft EAW. 14. On July 14, 2006, the MPCA staff notified the MPCA Board and interested persons that consideration of BLE s draft EAW would be on the agenda for the July 25, 2006, regularlyscheduled MPCA Board Meeting. The MPCA staff included copies of several additional comment letters from MCEA and from interested citizens with the notification. 2

4 Buffalo Lake, LLC On the Need for an Environmental Impact Statement Findings of Fact Conclusions of Law And Order 15. The MPCA Board considered the need for an EIS at its regularly scheduled meeting on July 25, The Project proposer, MCEA, interested persons, and MPCA staff provided testimony at the meeting. 16. The MPCA Board resolved to continue its decision on the need for an EIS to its regularlyscheduled August 22, 2006, meeting. The record was held open until August 8, 2006, to take public comment on the EAW information gathered since the original public comment period closed. After August 8, 2006, the MPCA did not receive additional written submittals. The MPCA Board agreed to take brief oral testimony on the matter at the August 22, 2006, meeting. 17. The MPCA staff posted information on the MPCA Web site that they received or developed concerning the BLE EAW until August 8, The Project proposer continued to submit information to the MPCA in response to MPCA staff questions until August 8, The MPCA staff received comments on the EAW information from interested members of the public and from MCEA until August 8, Environmental Concerns The following environmental issues associated with the proposed construction were identified and discussed in the EAW or in subsequent writings or in testimony to the MPCA Board: 20. Cumulative Impacts: The MPCA staff gathered information regarding potential effects from the Project in conjunction with effects from other existing and actually planned facilities. For air quality purposes, existing facilities considered were the Cenex Harvest States (CHS) facility, Weigh-Tronics, Cargill, and the Fairmont Racetrack. The proposed VeraSun ethanol project in Welcome, Minnesota was also considered. The potential cumulative effects information addressed the Air Emissions Risk Assessment (AERA), as well as air quality modeling for criteria and hazardous air pollutants. For water quality purposes, the potential water impacts from the proposed Project and other dischargers to Judicial Ditch #18 and Center Creek and other users of ground water from the aquifer proposed for use by BLE, including the proposed Vera Sun ethanol project in Welcome, Minnesota, were considered. 21. Water Discharges from the BLE Project: Cooling tower blowdown, softener/polisher, and reverse osmosis reject water will be treated and discharged, via piping, to Center Creek via Judicial Ditch #18. This non-process discharge will be regulated by the National Pollutant Discharge Elimination System (NPDES)/State Disposal System (SDS) Permit Program. The toxicity of the discharge for expected constituents such as sulfates, arsenic, and the complex ionic makeup was assessed and the possibility of using whole effluent testing on a synthetic discharge or equivalent method was addressed. The Project proposer recalculated the ionic composition of the discharge water to correct a prior calculation that showed an ionic imbalance in the discharge. 22. Process wastewater that comes into contact with the production process will be recycled to the cook tanks and fermentation basins. There will be no discharge process wastewaters to surface water. Information gathered included biological assessment of and biological integrity in the receiving waters, including identification of aquatic species in the receiving waters and the potential impact 3

5 Buffalo Lake, LLC On the Need for an Environmental Impact Statement Findings of Fact Conclusions of Law And Order on them from the proposal to discharge at levels proposed for the variance from water quality standards for the Project. The Project proposer also identified the point in the receiving waters where discharge from the Project does not dominate the receiving waters during low flow conditions. 23. Water Appropriation: The Project will require approximately 1,388 gallons of water per minute for normal operations, which it will appropriate from ground-water wells. The Project proposer has submitted a Minnesota Department of Natural Resources (DNR) Water Appropriation Permit for that purpose. The Project proposer conducted a seven-day pump test for the Project at 1,560 gallons per minute (gpm). 24. Erosion and Sedimentation: Based on a site survey, the majority of the Project area is relatively flat, with slopes not exceeding four percent. Construction of the Project will disturb approximately 48.3 acres of soil. A disturbance of more than one acre of soil requires an NPDES/SDS General Stormwater Permit for Construction. BLE will use best management practices (BMPs), including silt fences and straw bales, to reduce surface-water runoff during construction. The Project proposer also submitted information concerning the potential for erosion or changes in channel dimensions in Judicial Ditch 18 and erosion or increased turbidity in Center Creek from the proposed Project s wastewater discharge. 25. Surface-water Runoff: The predicted acreage to be graded is approximately 48.3 acres, with approximately 78,000 cubic yards of soil to be excavated. The mitigation measures contained in the General Permit for Discharge of Stormwater from Construction Activities and the NPDES/SDS Permit for stormwater associated with an industrial activity will assure the quality of surface water leaving the site will be sufficient to protect the water quality of the receiving waters [25 milligrams per liter (mg/l) 5-Day Biochemical Oxygen Demand and 30 mg/l Total Suspended Solids]. The Project proposer provided information on issues related to stormwater management, detention ponds and discharge. 26. Wastewater: The Project proposer will recycle all process water in an effort to reduce the wastewater generated as part of the proposed Project. 27. Tanks: There will be 18 large tanks (including fermentation tanks and the beer well) on the site that will be subject to the conditions of an Above-ground Storage Tank Permit issued by the MPCA. These conditions include the construction of secondary containment with sufficient capacity to hold the contents of the largest tank. 28. Stationary Source Air Emissions: The Cargill facility is a support facility to BLE, therefore emissions from the two facilities are considered together. A variety of air pollutants would be emitted from the facility in the following areas: grain receiving and offloading, grain milling and handling, batch fermentation, distillation and drying, distiller s grains drying and handling, ethanol storage tanks, thermal oxidizer and heat recovery boiler, and fugitive and miscellaneous emissions. Emissions from the grain receiving and offloading and the grain milling and handling would consist mainly of particulates, which would be removed by a bag house filter and returned to the process. Emissions from the batch fermentation area would be routed to a direct contact water scrubber. Scrubber water would be returned to the process and non-condensing gases (carbon dioxide) would be released to the atmosphere. The gases from the distillation and dehydration process would be 4

6 Buffalo Lake, LLC On the Need for an Environmental Impact Statement Findings of Fact Conclusions of Law And Order exhausted to a thermal oxidizer with a destruction efficiency of at least 95 percent prior to venting to the atmosphere. Fugitive emissions from a variety of sources, as described in the EAW, would also be emitted from the Project. 29. An analysis of the potential emissions of air pollutants has been performed in conjunction with the Project application for an air permit. Estimates of air emissions indicate that the plant will be a synthetic minor source with respect to both the prevention of significant deterioration and the Title V air permitting process. The Project is considered a synthetic minor source of air pollution because the facility will not emit 100 or more tons per year (TPY) of any regulated air pollutant with the use of pollution control equipment. Total facility emissions for criteria air pollutants are predicted to be as follows: Pollutant Proposed Emissions (in TPY) Particulate Matter (PM) PM less than 10 Microns (PM 10 ) Carbon Monoxide (CO) Nitrogen Oxides (NO x ) VOCs Sulfur Dioxide(SO 2 ) Total HAPs Individual HAP (Acetaldehyde) The air emission permit for the Project will contain specific operational and performance standards for each emissions unit. The Project proposer accepted certain modifications to its proposed operation to address modeled exceedences of the ambient air standards for PM 10 when the Project was considered in conjunction with other emission sources. 31. In addition to the above, a modeling exercise was completed to determine potential health risks associated with the Project. The modeling was completed with the use of the MPCA AERA. The Project conducted refined modeling, which increased the accuracy of the modeling results. Based on the predictions of the model, health risks from air emissions from the proposed Project will be within an approvable range. Modeled health risks from all air emission facilities in the area, including the proposed Project, were elevated. The contribution from the Project, however, was nominal. The MPCA staff, in collaboration with staff from the Minnesota Department of Health, will follow up on this information to insure that the public is not exposed to unacceptable health risks. 32. Odors and Noise: Fermentation tanks and DDGS dryers are typically the main generators of odor problems at ethanol facilities. A number of VOCs can be odorous. The Project is proposing to use a thermal oxidizer to control VOCs from the facility. The proposed thermal oxidizer will destroy a minimum of 95 percent of the organic compounds believed to cause odors from the facility. With this level of control, it is expected that potential odor impacts will be limited to areas immediately surrounding the facility. Please refer to Finding 39 of this document for further discussion. 5

7 Buffalo Lake, LLC On the Need for an Environmental Impact Statement Findings of Fact Conclusions of Law And Order 33. Noise levels at existing ethanol facilities in Minnesota have been reviewed in order to assess the potential noise impacts from the Project. Drawing on that information, the Project proposer has determined that the facility is expected to comply with the state noise standard. Additionally, the distance between the facility property line and neighboring homes will also provide supplemental buffer to further dissipate noise levels. The MPCA has also reviewed the applicable city of Fairmont and Martin County noise ordinances and has concluded that there is ongoing regulatory authority to address any potential noise issues. No significant impacts to the areas immediately surrounding the Project are anticipated. 34. Nearby Resources: The Project will be located on a 203-acre plot of land in an area zoned for industrial use. Several other commercial/industrial facilities are located within the area, along with several residents. 35. Additional Concerns Described in Comment Letters: The public comment process identified several issues: Procedural Issues Objection to the dual notice process of EAW, permits and variance (Comment Letter #2) Unsatisfied with the public notice process (Comment Letters #1 and #3) Air Quality Various concerns related to odor and human health related to air quality (Comment Letters #1 and #3) Water Resources Concerns related to the water appropriation analysis and the variance process (Comment Letter #2) Concern over potential impacts to residential wells (Comment Letters #1 and #3) Erosion and turbidity issues (Comment Letters #2 and #4) Aquatic wildlife (Comment Letters #2, #4 and #5) Effluent chemistry and impacts on water quality (Comment Letters #2, #4 and #5) Habitat Loss General concern on loss of habitat (Comment Letter #3) Wildlife and water consumption (Comment Letter #2) Light, Noise and Odor General concerns related to odor from trucks, noise and light issues (Comment Letters #1 and #3) 6

8 Buffalo Lake, LLC On the Need for an Environmental Impact Statement Findings of Fact Conclusions of Law And Order CRITERIA FOR DETERMINING THE POTENTIAL FOR SIGNIFICANT ENVIRONMENTAL EFFECTS 36. Under Minn. R (2005), the MPCA must order an 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 (2005). These criteria are: A. the type, extent, and reversibility of environmental effects; B. cumulative potential 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 37. 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 (2005). The MPCA findings with respect to each of these factors are set forth below. 38. The type of reasonably expected environmental effects of this project to air quality: A. Criteria Pollutants B. Hazardous Air Pollutants C. Potential for Significant Deterioration D. Truck Traffic and Idling D. PM E. Odor F. Air Toxics 7

9 Buffalo Lake, LLC On the Need for an Environmental Impact Statement Findings of Fact Conclusions of Law And Order 39. The extent of any potential air quality effects that are reasonably expected to occur: A. Criteria Pollutants: An analysis of the emission of criteria air pollutants has been performed in conjunction with BLE s application for an air quality permit. Estimates of air emissions that were submitted to the MPCA by the Project proposer indicate that the plant would remain a minor source for Title V air permitting purposes. The proposed Project will employ a regenerative thermal oxidizer, bag house, scrubber, and flares to control air emissions. B. Hazardous Air Pollutants (HAPs): The Project will be a non-major source for HAPs under the federal Part 70 permit program. HAP emission sources at the Project will be controlled using a variety of control technologies, including a regenerative thermal oxidizer, bag house, scrubber and flares. C. Potential for Significant Deterioration: Due to the close proximity of the facility to a major source for air emissions (Cenex Harvest States), the proposed facility completed an ambient air quality and Potential for Significant Deterioration (PSD) increment analysis to ensure that the proposal meets ambient air quality standards and federal PSD regulations regarding new air pollution sources. The modeling used site and project-specific factors, such as topography, meteorological data, emission projections, and stack information, to predict ambient air concentrations at and beyond the facility boundary. Based on the PSD analysis conducted, the Project as proposed would not violate ambient air quality standards. Modeling for potential PM 10 effects disclosed modeled non-compliance with the National Ambient Air Quality Standards (NAAQS) for PM 10. The primary PM 10 emission source identified during the cumulative air quality effects analysis was the Cargill grain dryer located off site. The Cargill grain dryer does not contain any type of air emission control technology. The Project proposers along with Cargill have accepted an operating permit condition that would require the grain dryer to cease operation when the Project begins operation. With the discontinued operation of the Cargill grain dryer during Project operation, the stationary source is not expected to cause or contribute to a violation of the NAAQS for PM 10 D. Truck Traffic and Idling: Two commenters expressed concern over truck traffic and idling (see Comment Letters #1 and #3). The MPCA staff reviewed the projected truck traffic for the Project, along with vehicle related emissions and concerns over truck idling. The analysis of traffic and vehicle-related emissions indicates that the Project does not present a significant environmental impact. The Air Quality Permit contains provisions that address truck trafficrelated idling and dust and, as such, is sufficient to address any potential environmental impact. E. PM: Two commenters expressed concern over particulate matter (see Comment Letters #1 and #3). Dust will be generated during the construction process. However, impacts are expected to be minimal since the Project area is relatively small (compared to nearby agricultural areas). In addition, construction activities will be temporary. Construction related dust will be managed, as necessary, through the use of water trucks. Once the Project is constructed, dust is expected to return to pre-construction levels. 8

10 Buffalo Lake, LLC On the Need for an Environmental Impact Statement Findings of Fact Conclusions of Law And Order F. Odor: Fermentation tanks and DDGS dryers are typically the main generators of odor problems at ethanol facilities. Several VOCs can be odorous. The Project is proposing to use a scrubber system, a thermal oxidizer, and flares to control VOC emissions from the Project. The proposed thermal oxidizer will destroy a minimum of 95 percent of the organic compounds believed to cause odors from the Project. With this level of control, it is expected that potential impacts will be limited to the areas immediately surrounding the Project. The Project has also developed an Odor Management Plan to immediately implement corrective action in the event an odor complaint is received and validated by a governmental unit (Martin County or the MPCA). Additionally, Martin County has specific ordinances pertaining to the control of odor. G. Air Toxics: Two commenters expressed concern for the presence of air pollutants from the Project that could impact human health (Comment Letters #1 and #3). The AERA process has been developed by the MPCA to screen air emissions from facilities that emit more than 100 TPY of a criteria pollutant for the potential to pose unacceptable risks to the public. The Project will not exceed 100 tons per year of any criteria pollutant. However, as per MPCA instruction, the Project proposer prepared a quantitative risk analysis to examine the potential of the proposed Project to pose unacceptable health risks to the public. The Project analysis was supplemented with additional information by the MPCA. Air quality modeling was used to develop site specific factors to complete the Risk Analysis Screening Spreadsheet. The evaluation included chemicals with known toxicity and also compared criteria pollutants (CO, NOx, SO 2, VOCs, PM/PM 10 ) to their respective ambient standards. The AERA process indicated all hazard indices and carcinogenic risks for the chemicals evaluated are at or below the generally accepted federal and state risk thresholds; therefore, the Project is not expected to pose an unacceptable risk to the public. 40. 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. 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. 41. Comments received that expressed concerns regarding potential effects to air quality: Some comment letters expressed a general concern for human health impacts from diesel truck emissions and potential adverse health impacts from the Project. 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. 42. 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. 9

11 Buffalo Lake, LLC On the Need for an Environmental Impact Statement Findings of Fact Conclusions of Law And Order 43. 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. 44. The type of reasonably expected environmental effects of this project to water resources: A. Surface Waters (Judicial Ditch #18 and Center Creek) 1. Erosion and Turbidity 2. Water Quality Discharge Standard Compliance Issue 3. Effluent Chemistry and Toxicity B. Water Supply and the Availability of Ground Water 45. The extent of any potential water resource effects that are reasonably expected to occur: A. Surface Waters (Judicial #18 and Center Creek): The MPCA received two comments pertaining to surface water impacts from the Project. The surface water impacts of concern include erosion and turbidity from the outfall structure and its potential impact on drainage, the water quality discharge variance, and effluent chemistry and toxicity. 1. Erosion and Turbidity: Two commenters indicated that the Project may contribute to erosion and turbidity of Judicial #18, which outlets to Center Creek (Comment Letters #2 and #4). The Project, as designed, will discharge wastewater through the city storm sewer that serves the industrial park, rather than a direct outfall to Judicial Ditch #18. Additionally, the Project proposers have indicated that they will use a stormwater retention basin as temporary storage of stormwater. This design will provide for a controlled release of stormwater through a control flow design, thereby reducing the peak flow during storm events. The Project proposers have also conducted an erosion analysis that included effluent discharge from the Project, along with the addition of effluent from the industrial park. The results of this analysis indicate that the velocity of the discharge in Judicial Ditch #18 would not create a situation in which sediment would be eroded and, thereby, contribute to the turbidity impairment in Center Creek. Currently, Judicial Ditch #18 contains stone riprap as a means to address erosion issues at the outfall structure. The Project proposers recognize the need to review and address the implementation of additional riprap as needed in order to maintain a discharge velocity in Judicial Ditch #18 that does not create sediment erosion. The MPCA Water Quality Discharge Permit will reflect this commitment and will become an enforceable condition of the Permit. The Project proposers will also procure any necessary local approvals. Based on the erosion analysis for this Project, along with the supplemental BMPs at the outfall structure in Judicial Ditch #18, there is no potential for significant environmental effect. 2. Water Quality Discharge Standard Compliance Issue: One commenter has expressed concern with the procedure and analysis of the proposed water quality variance for the Project (Comment Letter #2). The source of water for the Project is ground water. The concentration levels of the salinity and other related pollutants in the ground water are very high, such that treatment of the water supply prior to discharge to surface waters would violate existing Class 3 and 4 water quality discharge standards. These standards are intended for commercial/industrial uses, livestock watering and irrigation uses and wildlife 10

12 Buffalo Lake, LLC On the Need for an Environmental Impact Statement Findings of Fact Conclusions of Law And Order uses. As a result, the Project proposers sought a variance from water quality standards pursuant to Minn. R , subp. 1). Under Minn. R , subp. 1, a project proposer may receive a variance from water quality standards in a situation where the MPCA finds by reason of exceptional circumstances the strict enforcement of any provisions with the standards: would cause the discharger undue hardship; that the disposal of the sewage, industrial or other wastes is necessary for the public health safety or welfare; and that strict conformity with the standards would be unreasonable, impractical or not feasible under the circumstances. The request for a variance along with the supporting analysis was placed on public notice on June 9, 2006, for a 30-day review and comment period. The decision to grant a variance will be determined by the MPCA Board. The MPCA staff developed the EAW on the basis that the MPCA would issue the proposed variance from surface water quality standards. This approach assumed that the uncontrolled discharge from the Project presented the greatest potential for environmental impact and that the controls within the variance would be adequate to mitigate the impacts identified. The MPCA staff s review of the variance request submittals and the Project s potential impact on the environment if a variance were granted were reviewed as the Project EAW developed. The Project proposers initially applied for a variance from the surface water standards on the basis that compliance with the limits is unreasonable and impractical. The revised application materials included an analysis of the economic burden of compliance with the standards. Upon consideration of all environmental aspects of the proposed variance, MPCA finds that discharge at the interim effluent limitations set in the proposed variance from water surface quality standards would not have the potential for significant environmental impact on the existing uses of Judicial Ditch #18 and ultimately, of Center Creek. 3. Effluent Chemistry and Toxicity: Three commentors expressed concern for the potential impact of Project effluent on Judicial Ditch #18 and Center Creek. Comment Letters #2 and #5 address concerns related to sulfate toxicity, while Comment Letters #2 and #4 discuss the issues related to the concentrations of pollutants that are the subject of the proposed water quality discharge variance. The Project proposers are aware of these concerns and proposed operational changes in response to the comments to treat the water to address the sulfate toxicity issue. Based on the information submitted to the MPCA regarding the operational changes for the Project the MPCA finds that there is not a potential for significant environmental impact due to effluent chemistry and toxicity. 11

13 Buffalo Lake, LLC On the Need for an Environmental Impact Statement Findings of Fact Conclusions of Law And Order B. Water Supply and the Availability of Ground Water: The MPCA received a comment pertaining to water appropriation issues and pump tests (Comment Letter #2) along with two concerns regarding the potential impact to nearby wells (Comment Letters #1 and #3). Comment Letter #2 also expressed a concern with the lack of consideration of climatic factors to long-term or service life issues related to the Project and water supply. The DNR has evaluated the projected Project water use information (e.g., initial partial pump test, second full capacity pump test and pump test data for the VeraSun ethanol project) in light of their role as a responsible governmental unit with respect to water appropriation permitting. The DNR process is designed to determine if adequate ground water supply will be available and sustainable in light of existing and proposed uses and the priority of uses as mandated by law. The DNR review of potential impacts to the wells of nearby residents indicates that there was a measurable influence to nearby residents; however, the measured influence was not considered significant and is not anticipated to interrupt or modify supply to existing users. 46 The reversibility of any potential water resource 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, data from the two Project pump tests conducted along with the proposed VeraSun ethanol project in Welcome, Minnesota, show that there is adequate water for the Project. The MPCA finds that there is no potential for significant environmental impact due to the water the Project will appropriate. 47. Comments received that expressed concerns regarding potential effects to water resources: Some comment letters expressed concern that the Project will affect the water resources of Center Creek (toxicity, erosion and turbidity) and whether an adequate supply of ground water exists to meet the needs of the facility over the 20-year service life. As discussed above in Findings 43 through 46, the MPCA finds that the analysis indicates that the effects on water resources that are reasonably expected to occur are not significant. 48. The MPCA finds that the environmental review is adequate to address the concerns because: All potential impacts to water resources that are reasonably expected to occur from the proposed Project have been considered during the review process and a method to prevent these impacts has been developed. 49. The MPCA finds that the project as it is proposed does not have the potential for significant environmental effects on water resources based on the type, extent, and reversibility of environmental effects reasonably expected to occur. 12

14 Buffalo Lake, LLC On the Need for an Environmental Impact Statement Findings of Fact Conclusions of Law And Order 50. The type of reasonably expected environmental effects of this Project to light, noise, and odor: A. Light from the proposed Project B. Noise from both existing and the proposed Project C. Odor from truck idling 51. The extent of any potential effects of light, noise, and odor that are reasonably expected to occur: A. Light from the Proposed Project: One commenter has indicated concern that the Project lighting will adversely impact the quality of life in the area. The Project will have to comply with the performance standard ordinances for lighting in Martin County. As a result, the MPCA finds that lighting at the Project will not create a potential for significant environmental impact if it comports with the applicable Martin County performance standard ordinance. B. Noise from Both Existing and the Proposed Project: Two commenters expressed concern regarding noise from existing and proposed truck traffic and the existing industrial and commercial operations along with the proposed Project. A noise evaluation was conducted for the Project that did not specifically include other off-site sources in the area, but did include a background value to account for any off-site noise-emitting sources or activities. The Project evaluation included the applicable state of Minnesota noise standard and determined that the Project, as proposed, would comply with the applicable state of Minnesota noise standards. Additionally, the Project will have to comply with the city of Fairmont and Martin County noise regulations. Based on the noise modeling and the applicable local and state noise regulations, the MPCA finds that the Project, as proposed, does not have the potential for significant environmental impact as a result of noise. C. Odor from Truck Idling: The MPCA received comments regarding the impact of odor from truck traffic on human health. The MPCA did not directly address odor in the EAW. However, the MPCA did account for potential human health impacts from the Project, which included truck traffic. The MPCA does not have any specific administrative rule to address odor in the ambient air; however, Martin County has a performance standard that addresses odor. The Project proposer will have to comply with the applicable local Martin County odor performance standard. Based on compliance with the Martin County odor performance standard, the MPCA finds that the Project does not have the potential for significant environmental impact as a result of odor. 52. The reversibility of any potential light, noise and odor issues 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 upon cessation of the Project. As discussed above, the expected effects of light, noise, and odor are minimal. While the Project is in operation, there is no reason to believe that this Project is reasonably expected to cause a significant negative effect based upon light, noise, and odor impacts. 13

15 Buffalo Lake, LLC On the Need for an Environmental Impact Statement Findings of Fact Conclusions of Law And Order 53. Comments received that expressed concerns regarding potential effects from light, noise and odor: Some comment letters expressed concern that light, noise, and odor from existing operations and the Project will adversely affect the nearby residents. As discussed above in Findings 49 through 51, the analysis indicates that the effects on nearby residents from light, noise, and odor impacts that that are reasonably expected to occur are not significant. The MPCA finds that the environmental review is adequate to address the concerns because all potential impacts of light, noise, and odor that are reasonably expected to occur from the proposed Project have been considered during the review process. 54. The MPCA finds that the project, as it is proposed, does not have the potential for significant environmental effects based on light, noise, and odor impacts based on the type, extent, and reversibility of environmental effects reasonably expected to occur. Cumulative Potential Effects of Related or Anticipated Future Projects 55. 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 "cumulative potential effects of related or anticipated future projects," Minn. R , subp. 7.B (2005). The MPCA findings with respect to this criterion are set forth below. 56. 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 impacts that are reasonably expected to occur. 57. Public comments concerning cumulative impacts: Several comments were received which expressed concern for the quantity and quality of cumulative impact assessment conducted for the Project (Comment Letters #1, #2 and #3). Additionally, during the course of the EAW for the Project, the Minnesota Court of Appeals handed down a decision in Citizens Advocating Responsible Development v. Kandiyohi County (CARD), which provided Responsible Governmental Units with guidance on how to apply the cumulative effects criterion of Minn. Stat. 116D. In response to public comment on potential cumulative effects and on the CARD decision, the Project proposer identified existing facilities that were reasonably likely to affect the same natural resources and planned future projects that were reasonably likely to affect the same natural resources. The Project proposer then submitted analyses of the potential cumulative effects of the proposed BLE Project in conjunction with the effects of both the existing and planned future projects. Cumulative Ground Water Appropriation Analysis: The analyses for cumulative potential effects of ground water appropriation between existing and planned future projects showed a potential for crossover effects between the appropriations for the BLE and VeraSun ethanol projects. The DNR water appropriation permitting program is able to address the effects through permit conditions. The BLE and VeraSun ethanol projects will each have permit conditions to address water appropriation management issues. Based on the mitigation and management measures that will be 14

16 Buffalo Lake, LLC On the Need for an Environmental Impact Statement Findings of Fact Conclusions of Law And Order included in the DNR water appropriations permits, the MPCA finds that there is no potential for significant environmental impact from the cumulative effects of the VeraSun ethanol and BLE Projects ground water usage. Cumulative Wastewater Discharge Analysis: The MPCA also considered the potential cumulative effects of the proposed Project in conjunction with existing and potential future wastewater dischargers to Judicial Ditch #18 and Center Creek, the surface waters to which BLE proposes to discharge its wastewater. The evaluation indicated that the Project effluent discharge to Judicial Ditch #18, in conjunction with the discharge from the industrial park, does not have the potential to erode sediment from Judicial Ditch #18. The Project proposers will continue to observe the outfall and implement additional BMPs in order to mitigate any potential erosion issues that may occur. The BMPs will become enforceable conditions of the MPCA Water Quality Discharge Permit. Based on the analysis provided by the Project proposer, along with the BMPs to control the velocity of the discharge, the Project does not have the potential to contribute to a significant environmental impact within the Center Creek drainage. Cumulative Air Emissions Analysis: The MPCA reviewed a cumulative air quality and risk effects analysis to determine if the Project would contribute to a significant air quality or human health condition. The analysis included CHS facility, Weigh-Tronics, Cargill and the Fairmont Racetrack. The proposed VeraSun ethanol facility in Welcome, Minnesota was also considered. The analysis included criteria pollutants and related pollutants of concern consistent with the AERA evaluation. The results of the analysis indicated that the operation of the Cargill grain dryer created a modeled noncompliance condition for PM 10. The Project proposers, in conjunction with Cargill, have agreed to cease operation of the grain dryer when the Project begins operation. This action will become an enforceable condition in the Project and Cargill air quality permits. 58. In considering the cumulative potential effects of related or anticipated future projects, the MPCA finds that the cumulative effect of the Project and other existing or planned future projects does not pose the potential for significant environmental impact. The Extent to Which the Environmental Effects Are Subject To Mitigation by Ongoing Public Regulatory Authority 59. 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 (2005). The MPCA findings with respect to this criterion are set forth below. 15

17 Buffalo Lake, LLC On the Need for an Environmental Impact Statement Findings of Fact Conclusions of Law And Order 60. The following permits or approvals will be required for the project: Unit of Government Permit or Approval Required Status A. MPCA Air Emission Permit Drafted - Public Notice ended April 26, 2006 B. MPCA NPDES/SDS General Industrial Stormwater Permit Drafted - Public Notice ended April 26, 2006 C. MPCA NPDES/SDS Discharge Permit Drafted - Public Notice ended D. MPCA Water Quality Discharge Variances E. MPCA NPDES/SDS General Permit for discharge of stormwater during construction activities (Notice of Intent) F. MPCA Above Ground Storage Tank (AST) Permit G. MPCA Very Small Quantity Hazardous April 26, 2006 BLE is requesting variances from water quality standards for seven pollutants in the discharge: total hardness, boron, total dissolved salts (solids), total salinity, sodium, sulfates, and specific conductance. The variance will be heard by the MPCA Board on August 22, To be submitted Drafted - Public Notice ended April 26, 2006 To be submitted Waste Generator Permit H. State Fire Marshall AST Permit To be submitted I. Martin County Conditional Use Permit To be submitted J. Martin County Building Permit To be submitted K. Martin County Utility Permit To be submitted L. City of Fairmont Industrial Stormwater Agreement To be submitted M. City of Fairmont Phosphorus Trading Agreement Draft To be approved upon completion of environmental review. N. DNR Public Waters Permit To be approved upon completion of capacity pump test and environmental review. O. DNR Water Appropriation Permit To be submitted P. Minnesota Department of Transportation (MNDOT) Utility Permit To be submitted 16

18 Buffalo Lake, LLC On the Need for an Environmental Impact Statement Findings of Fact Conclusions of Law And Order 61. A. MPCA Air Emissions Permit. The Air Emission Permit for the Project will contain operational and emission limits, including requirements for use of control equipment that would prevent or minimize the potential for significant environmental effects. B. MPCA NPDES/SDS General Industrial Stormwater Permit. The NPDES General Industrial Stormwater Permit requires the implementation of BMPs to control pollutant levels in stormwater runoff. It is the MPCA s policy to merge the general requirements into an individual water permit if the Project proposer has made an application for an individual permit. C. MPCA NPDES/SDS Discharge Permit. The NPDES/SDS Permit authorizes the discharge of pollutants to a surface water. Effluent limitations established within the NPDES/SDS Permit ensure that water quality in the receiving water is protected for its designated use. D. Water Quality Discharge Variances. BLE is requesting variances from water quality standards for seven pollutants in the effluent discharge: total hardness; boron; total dissolved salts (solids); total salinity; sodium; sulfates; and specific conductance. The variance process is provided in Minn. R , subp. 1. The NPDES/SDS Permit will contain narrative criteria requiring BLE to make reasonable progress towards attaining compliance with applicable water quality standards. E. MPCA NPDES/SDS General Permit for Discharge of Stormwater During Construction Activities. A general NPDES/SDS Stormwater Construction Permit is required when a project disturbs one or more acres. It provides for the use of BMPs, such as silt fences, rock check dams, and prompt re-vegetation, to prevent eroded sediment from leaving the construction site. The proposer must have a sediment and erosion control plan that will provide more detail as to the specific measures to be implemented and will also address: phased construction; vehicle tracking of sediment; inspection of erosion control measures implemented; and time frames in which erosion control measures will be implemented. The general permit also requires adequate stormwater treatment capacity be provided to assure that water quality will not be impacted by runoff once the Project is constructed. The permit application serves as the Notice of Intent. F. MPCA AST Permit. The AST Permit includes operational limits and construction requirements that would help prevent or minimize the potential for significant environmental effects. Requirements include a secondary containment area, routine monitoring for leaks, corrosion protection for the floor of the various tanks associated with ethanol production, overfill prevention equipment, and areas where substances are transferred must be equipped with spill containment. G. MPCA Very Small Quantity Hazardous Waste Generator Permit. Any business that generates more than ten gallons of hazardous waste in a calendar year must be licensed. The Project will generate hazardous waste from maintenance activities (e.g., waste oil) and will remain under the 220 pounds per month threshold for a Very Small Quantity Hazardous Waste Generator Permit. The hazardous waste generator license program requires evaluation of wastes, emergency planning, and personnel training. Additional requirements include the proper storage, transport, manifesting, shipping and disposal of wastes, and related record keeping. 17