STATE OF MINNESOTA MINNESOTA POLLUTION CONTROL AGENCY

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STATE OF MINNESOTA MINNESOTA POLLUTION CONTROL AGENCY IN THE MATTER OF THE DECISION ON THE NEED FOR AN ENVIRONMENTAL IMPACT STATEMENT FOR THE PROPOSED REG ALBERT LEA, LLC PROJECT FREEBORN COUNTY GLENVILLE, MINNESOTA FINDINGS OF FACT CONCLUSIONS OF LAW AND ORDER Pursuant to Minn. ch. 4410, the Minnesota Pollution Control Agency ( MPCA ) staff prepared and distributed an Environmental Assessment Worksheet ( EAW ) for the proposed REG Albert Lea, LLC ( Proposer ) increase in the maximum biodiesel production rate. Based on the MPCA staff environmental review, the EAW, comments and information received during the comment period, and other information in the record of the MPCA, the MPCA hereby makes the following Findings of Fact, Conclusions of Law, and Order. FINDINGS OF FACT Project Description 1. Proposer operates a biodiesel production facility ( Facility ) in Glenville, Minnesota and is proposing to increase the maximum biodiesel production rate from 31.5 million gallons per year ( MGY ) to 38 MGY ( Project ). Biodiesel is an alternative fuel for use in diesel engines and produced from soybeans, used corn oil, and animal fats. Environmental Review of the Project Facility History 2. In 2004, the MPCA completed an EAW for the Facility, which was then known as the SoyMor Cooperative Biodiesel Facility with a maximum allowable production capacity of 25 MGY. 3. On July 7, 2011, the Proposer acquired the Facility from SoyMor Cooperative. 4. On March 4, 2013, the MPCA issued an amended air emission permit (Permit No. 04700061-002) in response to the Proposer s request to modify the production Facility equipment to process a lower quality feedstock. Low quality feedstocks such as inedible corn oil, animal fats, and used cooking oil are high in free fatty acids. In addition, the permit established a maximum production capacity of 31.5 MGY of biodiesel which resulted in an increase of 6.5 MGY from the maximum production capacity reviewed by the MPCA in 2004. 5. No environmental review was done on the March 2013 expansion at the Facility. TDD (for hearing and speech impaired only): 651-282-5332 Printed on recycled paper containing at least 30% fibers from paper recycled by consumers

On the Need for an Environmental Impact Statement Glenville, Minnesota Findings of Fact Conclusions of Law And Order 6. On February 13, 2014, the Proposer submitted an application to the MPCA to increase the production capacity at the Facility to 38 MGY. This is an increase of 6.5 MGY to the maximum production capacity of 31.5 MGY that the MPCA approved in March 2013 when the agency issued an amended air emissions permit. Environmental Review of the Project Determination of Phased Action 7. Because the Project involves an expansion of production within three years of the MPCA s approval of a previous (2013) permit authorizing expansion, the MPCA must determine whether a mandatory EAW is required and whether the earlier expansion must be included as a phased action in the EAW under the environmental review rules. 8. In making the determination whether a mandatory EAW is required and if the 2013 expansion must be included as a phased actions, the MPCA considers the language in Minn. R. 4410.4300 subp. 1, which states in part: If the project is an expansion or additional stage of an existing project, the cumulative total of the proposed project and any existing stages or components of the existing project must be included with determining if a threshold is met or exceeded if construction was begun within three years before the date of application for a permit or approval from a governmental unit for the expansion of additional stage but after April 21, 1997, except that any existing stage or component that was reviewed under a previously completed EAW or EIS need not be included. 9. The Facility is a fuel conversion facility under the EAW rules which state that a mandatory EAW is required for construction of a facility for conversion of biomass to gaseous, liquid, or solid fuels if that facility has the capacity to utilize 25,000 dry tons or more per year of input (Minn. R. 4410.4300, subp. 5(A)). 10. The MPCA is the Responsible Governmental Unit ( RGU ) for a mandatory EAW for a fuel conversion facility under Minn. R. 4410.4300, subp. 5(A). 11. The initial 25 MGY biodiesel production approved in 2004 was covered under a previous EAW and occurred more than three years ago. The MPCA did not consider the 2004 production in making its determination on phased actions, since it is beyond the three-year look-back time frame in Minn. R. 4410.4300 subp. 1. 12. The increase in production in 2013 of 6.5 MGY was not covered under a previous EAW and occurred less than three years ago. Therefore, for determining if the threshold for an EAW has been met, the MPCA must consider both the 6.5 MGY increase in 2013 and the 2014 6.5 MGY proposed increase in making its phased action determination. 13. To determine whether the Facility expansion requires a mandatory EAW, the MPCA must first convert the Facility s production capacity, which is a liquid measure (MGD), to dry tons. The density of biodiesel is 7.35 lbs. per gallon. 2

On the Need for an Environmental Impact Statement Glenville, Minnesota Findings of Fact Conclusions of Law And Order 14. The MPCA converted the Facility s proposed production increases from liquid to dry weight: 6.5 MGY x 7.35 lb/gal = 23,887.5 tons of feedstock per year for 2013. Adding a second 6.5 MGY increase proposed in 2014 results in a cumulative (2013 and 2014) liquid total of 13 MGY and a dry tons conversion equal to 47,775 tons of feedstock per year. 15. The MPCA determined that since the Facility s proposed and phased production increases (2013 and 2014 increases of 6.5 MGY) are greater than 25,000 dry tons per year of input, Minn. R. 4410.4300, subp. 5(A) requires the preparation of an EAW for the Project. Environmental Review of the Project Public Notice 16. An EAW is a brief document designed to set out the basic facts necessary to determine whether an Environmental Impact Statement ( EIS ) is required for a proposed project or to initiate the scoping process for an EIS. (Minn. R. 4410.0200, subp. 24). 17. The MPCA provided public notice of the Project as follows: a) Notice of the availability of the EAW for public comment was published in the EQB Monitor on August 17, 2015, as required by Minn. R. 4410.1500. b) The EAW was available for review on the MPCA website at http://www.pca.state.mn.us/news/eaw/index.html. c) The MPCA provided a news release to media, Freeborn County and neighboring counties, and other interested parties on August 20, 2015. 18. During the 30-day comment period, the MPCA received comments from the Minnesota Historical Society, the Minnesota Department of Natural Resources, and the Minnesota Department of Transportation. The comments are included in Appendix A to these Findings. 19. The MPCA prepared a written response to the comments which is also included in Appendix A to these findings. Standard for Decision on the Need for an EIS 20. The MPCA shall base its decision on the need for an EIS on the information gathered during the EAW process and the comments received on the EAW (Minn. R. 4410.1700, subp. 3). The agency must order an EIS for projects that have the potential for significant environmental effects (Minn. R. 4410.1700, subp. 1). In deciding whether a project has the potential for significant environmental effects, the MPCA must compare the impacts that may be reasonably expected to occur from the project with the criteria set forth in Minn. R. 4410.1700, subp. 7. These criteria are: A. Type, extent, and reversibility of environmental effects; B. Cumulative potential effects. The responsible governmental unit (RGU) shall consider the following factors: whether the cumulative potential effect is significant; whether the contribution from the project is significant when viewed in connection with other contributions to the cumulative potential effect; the degree to which the project complies with approved 3

On the Need for an Environmental Impact Statement Glenville, Minnesota Findings of Fact Conclusions of Law And Order mitigation measures specifically designed to address the cumulative potential effect; and the efforts of the proposer to minimize the contributions from the project; C. The extent to which the environmental effects are subject to mitigation by ongoing public regulatory authority. The RGU may rely only on mitigation measures that are specific and that can be reasonably expected to effectively mitigate the identified environmental impacts of the project; and D. The extent to which environmental effects can be anticipated and controlled as a result of other available environmental studies undertaken by public agencies or the project proposer, including other EISs. Type, Extent, and Reversibility of Environmental Effects 21. The MPCA finds that the types of impacts that may reasonably be expected to occur from the Project include impacts from air emissions. The MPCA makes the following findings on the extent and reversibility of impacts that are reasonably expected to occur from the Project: Findings on Air Emission Impacts 22. The Facility is a minor source under the federal Prevention of Significant Deterioration ( PSD ) and Title V (Part 70) of the federal Clean Air Act programs because the facility-wide potential to emit (PTE) is below major source thresholds (i.e., 100 TPY) for several criteria pollutants: particulate matter ( PM ), particulate matter less than 10 microns ( PM 10 ), particulate matter less than 2.5 microns ( PM 2.5 ), nitrogen oxides ( NO x ), sulfur dioxide ( SO 2 ), volatile organic compounds ( VOCs ), and carbon monoxide. 23. The Facility includes stationary sources that emit VOCs associated with the combustion of natural gas and related processes. The Facility also has air emissions from storage tanks and a cooling tower. 24. The Facility emissions also include hazardous air pollutants ( HAPs ). Consequently, the MPCA must evaluate whether the Facility requires a permit under the National Emission Standards for Hazardous Air Pollutants ( NESHAP ) program. If a facility has the potential to emit HAPs in a quantity greater than the NESHAP thresholds, the Facility must obtain a permit as a major source under the NESHAP program. There are federal thresholds for allowable emissions of HAPs, (See 40 CFR pt. 63), and these NESHAP thresholds apply to the facility-wide Potential to Emit ( PTE ) HAPs. 25. Although the facility-wide PTE is greater than the NESHAP thresholds (i.e., 10 TPY of any single HAP and 25 TPY of all HAPs combined), the Facility has accepted limits to be a non-major source for HAPs, specifically methanol, under the NESHAP program. 26. The Project will require an MPCA air emission permit ( air permit ) but not a NESHAPs major source permit. 4

On the Need for an Environmental Impact Statement Glenville, Minnesota Findings of Fact Conclusions of Law And Order 27. The air permit for the Project will include air emission limits and a requirement to operate air pollution control equipment. 28. VOC emissions from the production process and above ground storage tanks are collected by air pollution control equipment and sent to the on-site flare for destruction. VOC emissions from the load out process and vacuum pump are also collected and sent to the flare for VOC destruction. The flare captures 100% of the emissions for these sources, and has a destruction capacity of 98%. 29. The MPCA air permit will contain enforceable requirements to ensure that the Facility will be in full compliance with state and federal air programs. Requirements will include limits on fuel usage and emission rates, monitoring and recordkeeping requirements, and performance testing requirements. 30. The Proposer conducted air dispersion modeling following an MPCA-approved protocol. The Proposer used the U. S. Environmental Protection Agency s ( EPA ) preferred model - the American Meteorological Society/Environmental Protection Agency Regulatory Model Improvement Committee s Dispersion Model ( AERMOD ), to conduct the analysis. The Proposer used AERMOD modeling software for the air dispersion modeling exercise. The EPA developed, validated, and approved AERMOD for air dispersion modeling. 31. The Proposer conducted a Significant Impact Level ( SIL ) analysis using AERMOD with an MPCAapproved modeling protocol. A SIL analysis involves determining whether certain kinds of air emissions from a Project are significant enough to require a more detailed evaluation. The EPA has established SILs for all criteria pollutants that have a National Ambient Air Quality Standard ( NAAQS ). Typically, EPA establishes a SIL at an emission level of 4-6% of the NAAQS, depending on the pollutant. SILs are a non-regulatory threshold, and the MPCA uses a SIL analysis in environmental review only for evaluating the significance of an emission source or sources. 32. In the SIL analysis, the Proposer applied worst-case hourly emissions allowed by the MPCA air permit to predict potential pollution levels in the air. Pollutants with predicted levels below the EPA s SIL are screened out from further refined modeling as insignificant contributions. 33. The SIL analysis indicated that the SIL threshold was exceeded for PM 2.5 24-hr and annual, PM 10 24- hr and annual, and NO 2 1-hr and annual. Therefore, the Proposer conducted refined air dispersion modeling for those criteria pollutants. Refined air dispersion modeling includes emissions from the Project, the Facility, nearby sources, and a background concentration. 34. The Proposer s refined modeling results predicted maximum modeled concentration would not exceed the EPA NAAQS standards for NO 2. The results exceeded the EPA standard for PM 10 and PM 2.5, thus prompting the MPCA to require the Proposer to do a culpability analysis. A culpability analysis breaks out the contributions to a modeled exceedance by each individual emissions source. If the sum of the contributions from a project s emissions sources is below the SIL, then the project is determined to not be a culpable source to the modeled exceedance. 35. The culpability analysis demonstrated that the Project contributed 3.7 μg/m 3 to the predicted exceedances, below the SIL of 5 μg/m 3 for the 24-hour averaging time. The culpability analysis for 5

On the Need for an Environmental Impact Statement Glenville, Minnesota Findings of Fact Conclusions of Law And Order PM10 also showed the Project contributed 0.28 μg/m 3 to the predicted exceedances for the annual averaging time, below the SIL of 1 μg/m 3. Therefore, the Facility is not a culpable source for PM 10 emissions. These findings support the conclusion that the Project s cumulative air emissions for PM 10 do not have the potential for significant environmental effects on ambient air. 36. The culpability analysis for PM 2.5 demonstrated that the Project contributed 0.58 μg/m 3 to the predicted exceedances, below the SIL of 1.2 μg/m 3 for the 24-hour averaging time; and contributed 0.18 μg/m 3 to the predicted exceedances, below the SIL of 0.3 μg/m 3 for the annual averaging time. Therefore, the Facility is not a culpable source for PM 2.5 emissions. These findings support the conclusion that the Project s cumulative air emissions for PM 2.5 do not have the potential for significant environmental effects on ambient air. 37. With respect to the reversibility of air quality impacts that are reasonably expected to occur from the Project, the MPCA has determined that air emissions from the Project would continue while the Project remains in operation, and would cease only if the Project were to be temporarily or permanently closed. While in operation, the MPCA expects the Project to meet applicable air quality standards and criteria. If excessive air emissions or violations of the ambient air standards were to occur, air quality impacts are likely to be temporary in nature and corrective measures could be implemented. Such measures could include the initiation of a complaint investigation by the MPCA and requiring the Project Proposer to make operation and maintenance changes. 38. The MPCA finds that information presented in the EAW and other information in the environmental review record are adequate to address the concerns related to air emissions. The impacts on air emissions that are reasonably expected to occur from the Project have been considered during the review process and appropriate mitigation measures are available and will be required to prevent significant adverse impacts. 39. The MPCA finds that the Project, as it is proposed, does not have the potential for significant environmental effects based on the type, extent, and reversibility of impacts related to air emissions that are reasonably expected to occur from the Project. Cumulative Potential Effects 40. The second criterion that the MPCA must consider when determining if a project has the potential for significant environmental effects is the cumulative potential effects. In making this determination, the MPCA must consider whether the cumulative potential effect is significant; whether the contribution from the project is significant when viewed in connection with other contributions to the cumulative potential effect; the degree to which the project complies with approved mitigation measures specifically designed to address the cumulative potential effects; and the efforts of the proposer to minimize the contributions from the project. Minn. R. 4410.1700 subp.7.b. The MPCA findings with respect to this criterion are set forth below. 41. The MPCA considered the cumulative potential effects of the Project on air quality. This analysis included consideration of background concentrations for the area and the impacts from the Project. The MPCA makes the following findings on the cumulative potential effects for the Project on air quality. 6

On the Need for an Environmental Impact Statement Glenville, Minnesota Findings of Fact Conclusions of Law And Order 42. Operation of the Facility will generate air emissions. The Proposer conducted air dispersion modeling specifically for this EAW to evaluate cumulative effects. This evaluation considered background conditions and the Project impacts. For each pollutant, the SIL, when added to the monitored ambient background, is less than 90% of the NAAQS. The MPCA expects that the anticipated increase in air emissions will not result in significant cumulative potential effects. 43. Air dispersion modeling demonstrated Project impacts below the SIL for all pollutants except PM 2.5 24-hr and annual, PM 10 24-hr and annual, and NO2 1-hr and annual. The Proposer performed refined air dispersion modeling which included nearby sources and background levels for these pollutants. In the case of NO2 1-hr and annual standards, the model predicted concentrations below the standard. The PM 2.5 and PM 10 refined modeling demonstration showed values exceeding the standard. Therefore, the Proposer completed a culpability analysis using the cumulative effect criteria in Minn. R. 4410.1700 subp. 7.B. to determine culpability. 44. The culpability analysis concluded the Project is not culpable because its contribution to the PM2.5 24-hr and annual and PM 10 24-hr and annual concentrations does not have the potential for significant effects. 45. Based on information on the Project obtained from air modeling, permit application processes, information presented in the EAW, and in consideration of potential effects due to related or anticipated future projects, the MPCA finds no potential for significant cumulative effects from the Project. The Extent to Which the Environmental Effects Are Subject to Mitigation by Ongoing Public Regulatory Authority 46. The third criterion that the MPCA must consider when determining if a project has the potential for significant environmental effects is "the extent to which the environmental effects are subject to mitigation by ongoing public regulatory authority. The RGU may rely only on mitigation measures that are specific and that can be reasonably expected to effectively mitigate the identified environmental impacts of the project." Minn. R. 4410.1700, subp. 7.C. The MPCA findings with respect to this criterion are set forth below. 47. The following permits or approvals will be required for the Project: Unit of Government Permit or Approval Required MPCA Modification of Existing Air Emission Permit (No. 04700061-002) MPCA Above ground storage tank ( AST ) Major Facility Permit (No AST #123782) MPCA No exposure industrial stormwater ( ISW ) exclusion (No. MNRNE37C7) MDNR Water Appropriation Permit (Permit No. 2013-1350) City of Albert Lea Industrial Wastewater Discharge Permit to city of Albert Lea WWTF (No. 06-012R) 7

On the Need for an Environmental Impact Statement Glenville, Minnesota Findings of Fact Conclusions of Law And Order 48. MPCA Air Emissions Permit Amendment. This issued permit was in response to the Proposer s request in 2015 to modify the Facility to handle lower quality feedstock. In addition, the permit established a maximum capacity of 31,500,000 gallons of biodiesel per year. The Facility is a nonmajor source for HAPs, specifically methanol. The Facility qualifies as a non-major source for HAPs through the operation of a flare to control VOC and methanol emissions. The Proposer operates this flare in accordance with the requirements of Minn. R. 7011.0070. This modification also incorporated an administrative name change to REG Albert Lea, LLC, reflecting REG s purchase of the Facility from SoyMor, LLC on July 7, 2011. 49. MPCA AST Major Facility Permit. This permit applies to all above ground storage tank systems located at the Facility that are used to store any substance as defined in Minn. R. 7001.4205, and that are not excluded under Minn. R. 7151.1300 subp. 2. The permit establishes both a routine and a formal inspection program. 50. MPCA No Exposure ISW exclusion. This certification indicates that stormwater discharges from the Facility do not contain industrial discharges or wastes. There is an on-site stormwater retention pond, the size and volume of which allows for particulate settlement prior to discharge. 51. MDNR Water Appropriation Permit. This permit allows the Facility to withdraw water from an onsite well. The permit allows for the withdrawal of up to 50.0 MGY for use in industrial processing. The Facility has a flowmeter and records well water usage per the permit requirements. 52. City of Albert Lea Industrial Wastewater Discharge Permit. This permit applies to the discharge of industrial and sewage wastes from the Facility. The permit addresses the discharge of, and establishes limits for, biochemical oxygen demand, flow, suspended solids, oil and grease, ph, and total kjeldahl nitrogen. In addition, the permit establishes monitoring requirements for the pollutants identified in the permit. 53. The above-listed permits include general and specific requirements for mitigation of environmental effects of the Project. The MPCA finds that the environmental effects of the Project are subject to mitigation by ongoing public regulatory authority. The Extent to Which Environmental Effects Can Be Anticipated and Controlled as a Result of Other Available Environmental Studies Undertaken by Public Agencies or the Project Proposer, Including Other EISs 54. The fourth criterion that the MPCA must consider is the extent to which environmental effects can be anticipated and controlled as a result of other available environmental studies undertaken by public agencies or the project proposer, including other EISs, Minn. R. 4410.1700, subp. 7. D. The MPCA findings with respect to this criterion are set forth below. 55. The following documents were reviewed by MPCA staff as part of the environmental impact analysis for the Project: data presented in the EAW air permit application air dispersion modeling report 8

APPENDIX A Minnesota Pollution Control Agency Environmental Assessment Worksheet LIST OF COMMENT LETTERS RECEIVED 1. Sarah J. Beimers, Minnesota Historical Society. Letter received August 21, 2015 2. Kevin Mixon, Minnesota Department of Natural Resources. Letter received September 16, 2015. 3. Gregory Pates, Minnesota Department of Transportation. Letter received September 21, 2015. RESPONSES TO COMMENTS ON THE EAW 1. Comments by Sarah J. Beimers, Minnesota Historical Society (MHS). Letter received August 21, 2015 Comment 1-1: Based on our review of the project information, we conclude that there are no properties listed on the National or State Registers of Historic Places, and no known of suspected archaeological properties in the area that will be affected by this project. Response: Comment noted. Comment 1-2: The Minnesota Historical Society (MHS) comment letter does not address the requirements of Section 106 of the National Historic Preservation Act of 1966 and 36CFR800, Procedures of the Advisory Council on Historic Preservation for the protection of historic properties. If this project is considered for federal assistance, or requires a federal permit or license, it should be submitted to our office by the responsible federal agency. Response: Comment noted. 2. Comments by Kevin Mixon, Minnesota Department of Natural Resources (MDNR). Letter received August 3, 2015. Comment 2-1: The commenter stated that the MDNR has reviewed the project and has no comments at this point in time. Response: No response necessary.

3. Comments by Gregory Pates, Minnesota Department of Transportation (MnDOT). Letter received September 21, 2015. Comment 3-1: Commenter stated that the EAW is accurate and complete, and that there are no potential state transportation system impacts that may warrant further investigation before the project is commenced. Response: No response necessary. Comment 3-2: Commenter stated that there is no need for an Environmental Impact Statement. Response: No response necessary.

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