Agassiz Energy Ethanol Production Facility

Home , Agassiz Wilderness, Crookston Daily Times

Minnesota Pollution Cont,rolAgency 520 Lafayette Road North I St. Paul, MN 55155-4194 I 651-296-6300 I 800-657-3864 I 651-282-5332 TTY I www.pca.state.mn.us

.March 14,2008

TO: INTERESTEDPARTIES

RE: Agassiz Energy Ethanol Production Facility

Enclosed for your information is a copy of the Minnesota Pollution Control Agency (MPCA) Citizens' Board (Board) Item for the proposed Agassiz Energy Ethanol Production Facility, Polk County, and a copy of the Board Agenda. The Board Item includes:

. Proposed Findings of Fact, Conclusions of Law, and Order for the Environmental Assessment Worksheet; . Responses to written comments received for this project submitted; and . Request for a positive declaration on the need for an Environmental hnpact ~tatemen1.

There were 82 comment letters received during the public comment period, and 10 comment letters' received after the close of the public comment period. In an effort to save postage and resources, these comment letters (along with the above documents) can be reviewed at the MPCA offices in S1.Paul and Detroit Lakes, and at the following libraries:

. Minneapolis Public Library at 300NicolletMall, Minneapolis . LegislativeReference Library at 645 State OfficeBuilding, S1.Paul . CrookstonPublic Library at 110North Ash Street,Crookston . ClimaxPublic Library at 104WestBroadwayAvenue, Climax .. East Grand Forks Public Library at 422 4thStreetNW, East Grand Forks . Fertile Public Library at 101 SouthMill Street,Fertile . Fosston Public Library at 403 FossAvenueNorth . McIntosh Public Library at 115BroadwayNW

The Board Packet and commentletters can alsobe viewedon our MPCA Web site at . http://www.pca.state.mn.us/aboutlboard/bdagenda.html. Requests for copies of these comment letters and Board documents may be made by contacting the S1.Paul office at 651-297-8510.

The Board Item will be presented at the MPCA Committee and Board Meetings. Please refer to the enclosed Board Agenda for specific location, dates, and times. We encourage your attendance at the Committee and Board Meetings. If you have any questions regarding the enclosed Board Item or the specifics of the meeting, feel free to contact Mike Rafferty of my staffa~ 651-297-7173.

Sincerely, Q~ ~. ~a-c-.

~.mes L. Warner, P.E. Division Director Industrial Division

JLW:mbo Enclosures 150 YEARS St.Paul I Brainerd I Detroit Lakes I Duluth I Mankato I Marshall I Rochester I Willmar af'STATEHOODI8U.2008

---- MINNESOTA POLLUTION CONTROL AGENCY Industrial Division Biofuels Sector Board Item Cover Sheet

MEETING DATE: March 25,2008 DATE MAILED: March 14, 2008

Presenter(s): Phone Number: 651-297-7173 Supv/Mgr: Phone Number: 651-296-8399 Division Director: Phone Number: 651-296-7333 Deputy Commissioner: Leo Raud s Phone Number: 651-296-7305 Attorney: Kathleen Winters Phone Number: 651-297-8756

TITLE OF BOARD ITEM: Agassiz Energy Ethanol Production Facility - Request for Approval of Findings of Fact, Conclusions of Law, and Order and Authorization to Issue a Positive Declaration on the Need for an Environmental Impact Statement

LOCATION: ErskineIKnute Polk City/Township County

TYPE OF ACTION: Environmental Review

RECOMMENDED ACTION: Approval of Findings of Fact and Authorization to issue a Positive Declaration

ISSUE STATEMENT: An Environmental Assessment Worksheet (EAW) was prepared by the Minnesota Pollution Control Agency (MPCA) staff on the Agassiz Energy, LLC (Agassiz Energy or Proposer) proposal to construct a dry mill, 200- proof fuel ethanol production facility in Polk County, called the Agassiz Energy Ethanol Production Facility (Project or Facility). The proposed production capacity is 70 million gallons per year of undenatured ethanol (74 million gallons per year of denatured ethanol). Agassiz Energy plans to use a solid fuel (primarily coal)- fired boiler for steam generation. Agassiz Energy would process approximately 26.1 million bushels of corn per year. Agassiz Energy proposes to pump ground water at an average daily rate of 522 gallons per minute (gpm) (not to exceed a peak pumping rate of 783 gpm) from the aquifer for this Project. The total annual water appropriation would be approximately 274 million gallons per year. The Project will be a zero liquid discharge facility; no process water or non-process utility wastewater will be discharged.

This Project was reviewed in an EA W as a mandatory category for ethanol production. Pursuant to Minn. R. 4410.4300, subp. 5.B, the MPCA is the governmental unit responsible for preparing a mandatory EA W to assess the potential for significant environmental effects, and to determine the need for an Environmental Impact Statement (EIS). During the EA W comment period, the' preparation of an EIS was requested.

Printed on recycled paper containing at least 30% fibers from paper recycled by consumers. Telephone Devicefor Deaf(TDD): 1-800-657-3864; Local 651-282-5332 This material can be made available in other formats. including Braille, large type or audio tape, upon request.

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MPCA staff recommends that the Project Proposer complete an EIS scoped to supply additional data to characterize the degree to which the surface and ground-water systems are connected in the area of the proposed Project for determining the potential for significant environmental effects on surface waters, including wetlands, from the Project’s ground-water pumping.

The MPCA staff also recommends additional data be collected during the EIS regarding the performance of active carbon technology at fluidized-bed combustors using coal with dry-sorbent injection/fabric filters to adequately determine the feasibility that this technology can be applied in reducing mercury emissions to 4.0 pounds per year to meet conditions expected by the MPCA’s Mercury Total Maximum Daily Load (TMDL) Implementation Plan. Because MPCA staff is recommending a positive declaration on the need for an EIS on other grounds, the feasibility study that would be required by permit should be included in the scope of the EIS.

Finally, the draft EAW does not contain carbon dioxide emissions data to understand the potential contribution to greenhouse gases (GHGs) from the proposed coal-fired Project. The MPCA has recently made a decision to include GHGs in future environmental review; however, this EAW was drafted and placed on public notice prior to that decision. Because MPCA staff is recommending a positive declaration on the need for an EIS on other grounds, it is consistent with MPCA’s recent decision on GHGs to develop GHG emissions data as part of the recommended EIS.

ATTACHMENTS: 1. Findings of Fact, Conclusions of Law, and Order – Attachment 1 2. List of Comment Letters Received on the EAW – Appendix A 3. Responses to Comments on the EAW – Appendix B

2 MINNESOTA POLLUTION CONTROL AGENCY Industrial Division Biofuels Sector

Agassiz Energy Ethanol Production Facility Request for Approval of Findings of Fact, Conclusions of Law, and Order and Authorization to Issue a Positive Declaration On the Need for an Environmental Impact Statement

March 25, 2008

ISSUE STATEMENT

An Environmental Assessment Worksheet (EAW) was prepared by the Minnesota Pollution Control Agency (MPCA) staff on the Agassiz Energy, LLC (Agassiz Energy or Proposer) proposal to construct a dry mill, 200-proof fuel ethanol production facility in Polk County, called the Agassiz Energy Ethanol Production Facility (Project or Facility). The proposed production capacity is 70 million gallons per year of undenatured ethanol (74 million gallons per year of denatured ethanol). Agassiz Energy plans to use a solid fuel (primarily coal)-fired boiler for steam generation. Agassiz Energy would process approximately 26.1 million bushels of corn per year. Agassiz Energy proposes to pump ground water at an average daily rate of 522 gallons per minute (gpm) (not to exceed a peak pumping rate of 783 gpm) from the aquifer for this Project. The total annual water appropriation would be approximately 274 million gallons per year. The Project will be a zero liquid discharge facility; no process water or non-process utility wastewater will be discharged.

This Project was reviewed in an EAW as a mandatory category for ethanol production. Pursuant to Minn. R. 4410.4300, subp. 5.B, the MPCA is the governmental unit responsible for preparing a mandatory EAW to assess the potential for significant environmental effects, and to determine the need for an Environmental Impact Statement (EIS). During the EAW comment period, the preparation of an EIS was requested.

The proposed Findings of Fact, Conclusions of Law, and Order, including a summary of significant issues and the response to comments received on the EAW, are attached. 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 proposed Findings of Fact, Conclusions of Law, and Order conclude that insufficient information exists to make a reasoned decision about the potential for, or significance of, environmental impacts, and that the lacking information can be reasonably obtained. Pursuant to Minn. R. 4410.1700, subp. 2a, item A, the MPCA staff recommends that the Project Proposer complete an EIS scoped to supply additional data to characterize the degree to which the surface and ground-water systems are connected in the area of the proposed Project for determining the potential for significant environmental effects on surface waters, including wetlands, from the Project’s ground-water pumping.

I. BACKGROUND AND ENVIRONMENTAL REVIEW PROCESS:

MPCA staff prepared an EAW on the proposed Project. The public comment period for the EAW began on December 3, 2007, and ended on January 17, 2008. During the 45-day comment period, the

MPCA received a total of 82 comment letters, including three letters from government agencies, one letter from a non-profit environmental group, and 78 letters from citizens. Ten additional letters were received after the end of the comment period. The comment letters received by the MPCA during the comment period are reproduced in Appendix A to the Findings of Fact, Conclusions of Law, and Order, and are incorporated herein by reference. The MPCA prepared responses to comments after the close of the 45- day comment period. The responses to comments are reproduced in Appendix B to the Findings of Fact,

Conclusions of Law, and Order, and are incorporated herein by reference. During the comment period, the preparation of an EIS was requested by 59 commenters, including a government agency, a non-profit environmental group, and 57 citizens, the majority of which reside or own property in the area of the proposed Project. There were ten letters received during the comment period expressing various concerns about the proposed Project, but did not specifically request an EIS. Also, 13 comment letters were received during the comment period expressing support for the proposed Project. Based on the EAW, the comments and information received during the public comment period, and other information in the record of the MPCA, the MPCA staff recommends that the MPCA Citizens’ Board issue a positive declaration on the need for an EIS.

II. DISCUSSION:

Minn. R. 4410.1700, subp. 7 provides that four criteria must be considered when a responsible government unit (RGU) makes a determination of the potential for significant environmental effects from a project. 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

2 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. These criteria are applied to the proposed Project and are discussed in the proposed Findings of Fact, Conclusions of Law, and Order.

Additionally, Minn. R. 4410.1700, subp. 2a. provides that if the RGU determines that information necessary to reach a reasoned decision about the potential for, or significance of, one or more possible environmental impacts is lacking, the RGU may act to obtain the necessary information, either by delaying a decision or by making a positive declaration and requesting the appropriate studies to obtain the lacking information.

Following is a brief discussion of those issues that are the basis for the MPCA staff’s recommendation regarding the need for an EIS.

1. Wetland impacts

The U.S. Fish and Wildlife Service (USFWS) expressed concern that the analysis of the effects of ground-water pumping on the area wetlands was incomplete in that the EAW characterized all the area wetlands as the same general hydrologic type in their connection to the aquifer, although the documentation supporting the EAW did not support that conclusion. The USFWS further requested that an EIS be prepared to characterize each potentially affected wetland’s connection to ground water in a manner consistent with supporting documentation.

In subsequent communication to the Project Proposer to clarify its comments on the EAW, USFWS noted that the proposed Project’s water appropriation is projected to surpass 50 percent of the available head of the aquifer, but that the Minnesota Department of Natural Resources (DNR) water appropriation permit has no mechanism to prevent surface water dewatering caused by a ground-water appropriation unless the dewatering is directly linked to a ground-water measure. In this case, the USFWS identified that the aquifer is patchy in its connection to surface waters. This means the potential exists that a surface water could be dewatered, but the ground-water threshold as measured in another part of the aquifer is not exceeded. MPCA staff believes that the EAW did not adequately identify and characterize the ground-

3 water-to-surface-water connections such that appropriate permit conditions to prevent dewatering could be included in the water appropriation permit or some other enforceable approval. MPCA staff believes that an EIS is necessary to analyze the degree to which area surface-water and ground-water systems are interconnected and the potential for significant environmental effects on surface waters, including wetlands, from the Project’s ground-water pumping.

The USFWS owns and operates the Erskine Complex Waterfowl Production Area (WPA) directly to the north and west of the Agassiz Energy property. Additionally, there are numerous wetlands and state and federal wildlife management areas in the area. According to DNR Wildlife staff, habitat in the vicinity of Erskine Complex WPA appears to be a high value habitat and the north part of Polk County is generally a high value waterfowl corridor. WPAs and federal wetland easements represent sites of high public value, where substantial investments have been made in acquisition and management to optimize wildlife production and habitat conservation.

The wetland impacts are discussed in Findings 24–39 in the proposed Findings of Fact,

Conclusions of Law, and Order (Attachment 1).

2. Air Emissions

Several commenters expressed concerns about air emissions and the human health effects and impacts of such emissions including smaller particulate matter, volatile organic compounds (VOCs), and hazardous air pollutants from the proposed Project. Some commenters expressed concern about air quality impacts including mercury from the proposed Project on fish and wildlife resources in the area. An analysis of the potential emissions of air pollutants has been conducted by MPCA staff in conjunction with the Agassiz Energy application for an air permit. Additionally, an Air Emissions Risk Analysis

(AERA) was completed to evaluate potential human health risks from the Project’s air emissions. MPCA

4 staff performed air dispersion modeling to predict ambient air concentrations at and beyond the Project boundary. MPCA staff finds the EAW was adequate in regard to the analysis regarding air emissions and human health risk.

Two commenters expressed concern that there was not a discussion of the proposed Project’s potential contribution to regional haze in Voyageurs Park (Voyageurs) and the Boundary Waters Canoe

Area Wilderness (BWCA) (Class 1 areas under the Clean Air Act) from nitrogen oxide and sulfur dioxide emissions. MPCA staff analysis generally shows that individual facilities of Agassiz Energy’s proposed size and distance from Class 1 areas (approximately 150 miles from Voyageurs and approximately 175 miles from BWCA) do not have a measurable impact on Class 1 area visibility. MPCA staff does not believe that there is a potential for significant environmental effects from regional haze for this proposed

Project.

Some commenters expressed concern about the Project’s proposed mercury emissions and how these emissions are incorporated into Minnesota’s plan to implement the mercury TMDL limit. When the

Mercury TMDL Implementation Plan (Plan) is complete, this Project will be required to meet the conditions set forth in the Plan.

Activated carbon injection has been demonstrated to achieve significant removal of mercury from coal combustion units with dry-sorbent injection and fabric filters, but is a recently-developed control technology for coal-fired boilers. A feasibility study on the application of the technology to coal-fired boilers would determine whether the technology can be applied to this Project and whether mercury emissions can be reduced to 4.0 pounds per year for the purpose of meeting conditions expected by the

MPCA’s Mercury TMDL Implementation Plan. Because MPCA staff is recommending a positive declaration on the need for an EIS on other grounds, the feasibility study that would be required by permit should be included in the scope of the EIS.

Commenters expressed concern that the EAW did not fully discuss global warming, climate change, and this Project’s cumulative contribution to GHG (methane, nitrous oxides, and carbon dioxide) emissions. The MPCA recently decided to include GHGs in future environmental review. This EAW was drafted and placed on public notice prior to that decision. Because additional data will be collected in

5 other areas as part of the staff-recommended EIS, it is consistent with MPCA’s recent decision on GHGs to develop GHG emissions data for this proposed Project.

The air quality issues are discussed in Findings 40–48, 55–62, and 65–66 in the proposed Findings of Fact, Conclusions of Law, and Order (Attachment 1).

3. Ground-water appropriations

Several commenters are concerned about the addition of a large appropriator of ground water in the area and the potential effect on their wells, the potential effect on the area’s aquifers, and the aquifer interaction with nearby surface water bodies including Maple Lake, Union Lake,

Lake Sarah, and Cable Lake.

Agassiz Energy conducted an aquifer test of its proposed production well to determine how the aquifer would respond to the proposed appropriation and the potential impact on local wells.

The DNR reviewed the aquifer test and agreed with Agassiz Energy’s consultant that an adequate source of ground water exists to supply the Project as proposed. The aquifer test data and subsequent data and evaluation indicate that Agassiz Energy’s well will not have the potential to cause environmental impacts on the aquifer or neighboring wells.

Regarding aquifer interaction with nearby surface water, surface water levels were only collected at

Bubak Lake. The EAW does not contain adequate information to describe the interconnectedness between surface water features, particularly those involved in the Erskine WPA, to determine the significance of any potential environmental impacts. Therefore, MPCA staff recommends that additional data be collected as part of the recommended EIS to evaluate potential impacts on ground-water-to-surface water interaction with area wetlands. The water appropriation and other water resource issues are discussed in Findings

24-39, 50-51, and 67-68 in the proposed Findings of Fact, Conclusions of Law, and Order (Attachment 1).

4. Cumulative effects of air emissions and ground-water appropriation

One commenter stated that the EAW was inadequate and an EIS is warranted because it failed to discuss the cumulative effects from nitrogen oxides on regional haze, GHGs, and mercury (in consideration of the TMDL) from the proposed Project. MPCA staff evaluated the potential cumulative effects of the proposed Project and other nearby sources of air emissions. Given the distance of the

6 Project, MPCA staff believes the Project would not be a significant contributor to regional haze in the

Class I areas in northern Minnesota. Because MPCA staff is recommending a positive declaration on the need for an EIS in other areas, it is consistent with MPCA’s recent decision on GHGs to develop GHG emissions data for this proposed Project. Also, with MPCA staff recommending an EIS in other areas,

MPCA staff believes it is appropriate to gain additional information about the technical feasibility of the

Project with regard to reducing mercury emissions in accordance with the expected goals being developed in the MPCA Mercury TMDL Implementation Plan. However, the cumulative impact analysis for mercury was completed in the EAW.

As part of the EAW process, MPCA staff and DNR staff evaluated the potential cumulative effects of the ground-water appropriation on nearby water supply wells and the aquifers. MPCA staff believes that the DNR analysis of the Project considers the cumulative effects of known future use. MPCA staff does not expect the Project to have an adverse effect on the aquifers as a result of long-term pumping from the proposed Agassiz Energy production well.

In the evaluation completed for the review on air emissions and ground-water appropriation, all of the existing and known future projects were considered. The cumulative effects discussion is found in

Findings 63-70 in the proposed Findings of Fact, Conclusions of Law, and Order (Attachment 1).

III. CONCLUSIONS:

The EAW, and the responses by the MPCA staff to comments on the EAW, did not generate information that adequately addresses all issues raised about the proposed Project. MPCA staff believes that additional information is needed to adequately describe the potential impact from potential ground- water-to-surface-water withdrawal effects. Because the MPCA is recommending an EIS on other grounds,

MPCA staff also finds that additional data should be collected during the EIS regarding the performance of active-carbon technology at fluidized-bed combustors with dry-sorbent injection/fabric filters. Because the MPCA is recommending an EIS on other grounds, it is also consistent with the

7 MPCA’s recent decision on GHGs to develop GHG emissions data for the proposed Project. Therefore,

MPCA staff concludes, based on the analysis presented above and in the Findings of Fact, Conclusions of

Law, and Order (Attachment 1), that the preparation of an EIS is warranted for the proposed Project.

IV. RECOMMENDATION:

MPCA staff recommends that, in accordance with the standard set forth in Minn. R. 4410.1700, subp. 2a., item A, the MPCA approve the Findings of Fact, Conclusions of Law, and Order, which concludes that the information necessary to make a reasoned decision about the potential for, or significance of, the potential for significant environmental effects is lacking, and recommends that the

MPCA Citizens’ Board authorize the Commissioner to publish a positive declaration, concluding that the proposed project does require an EIS.

SUGGESTED STAFF RESOLUTION

BE IT RESOLVED, that, in accordance with the standard and criteria set forth in Minn. R.

4410.1700, subp. 2a, item A, the Minnesota Pollution Control Agency (MPCA) approves and adopts the attached Findings of Fact, Conclusions of Law, and Order, which concludes that the information necessary to make a reasoned decision about the potential for, or significance of, one or more possible environmental impacts is lacking, but could be reasonably obtained for the Agassiz Energy Ethanol

Production Facility. The Commissioner is authorized to execute the Findings of Fact, Conclusions of

Law, and Order on behalf of the MPCA.

BE IT FURTHER RESOLVED, that the MPCA authorizes the Commissioner to publish a positive declaration on the need for an Environmental Impact Statement on behalf of the MPCA.

8 ATTACHMENT 1

STATE OF MINNESOTA MINNESOTA POLLUTION CONTROL AGENCY

IN THE MATTER OF THE DECISION ON THE NEED FOR AN ENVIRONMENTAL IMPACT STATEMENT FOR THE PROPOSED AGASSIZ ENERGY ETHANOL PRODUCTION FACILITY FINDINGS OF FACT KNUTE TOWNSHIP, POLK COUNTY CONCLUSIONS OF LAW ERSKINE, MINNESOTA AND ORDER

FINDINGS OF FACT

1. The above-entitled matter came before the Minnesota Pollution Control Agency (MPCA) Citizens’ Board at a regular meeting held in St. Paul, Minnesota, on March 25, 2008. Pursuant to Minn. R. 4410.1000 – 4410.1600 (2007), the MPCA staff prepared an Environmental Assessment Worksheet (EAW) for the proposed Agassiz Energy Ethanol Production Facility project (Project or Facility). 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 PROJECT DESCRIPTION

Proposed New Construction

2. Agassiz Energy, LLC (Agassiz Energy or Proposer) proposes to produce ethanol, an alcohol used as a gasoline fuel additive or extender. Ethanol is produced by fermenting corn. The basic steps in ethanol production include receiving feedstock, fermentation, distillation, recovering the alcohol, and recovering residual materials.

3. The proposed Project would be located in Knute Township in Polk County, near the city of Erskine, Minnesota. The ethanol production process would typically operate 24 hours per day, 7 days per week, with periodic maintenance shutdowns scheduled throughout the year. The proposed production capacity is 70 million gallons per year of undenatured ethanol (74 million gallons per year of denatured ethanol) using a solid fuel (primarily coal)-fired boiler for steam generation. The proposed Project would process approximately 26.1 million bushels of corn per year. The proposed Project would also produce up to 228,545 tons per year (tpy) of distillers dried grains with solubles, or, alternatively, up to 714,202 tpy of wet distillers’ grains with solubles (wetcake) instead of drying all the stillage. The dried distillers grains and wetcake can be sold as animal feed.

4. The Proposer proposes to pump ground water at an estimated average rate of 522 gallons per minute (gpm) and a maximum rate of 783 gpm from ground water, with an annual total appropriation expected at 274 million gallons per year. Agassiz Energy will recycle all process wastewater back into the fermentation process or stillage. Agassiz Energy has also proposed to use a cold lime softening system and an evaporator/crystallizer system to concentrate the non-process utility wastewater and remove and recycle as much utility water as possible. As a result, the amount of water needed to supply the Project is reduced and there will be no discharge of process or non- process utility wastewater to surface waters. The evaporatization and crystallization system may increase the proposed Project’s energy use. All the known permitting and approval requirements are listed in Finding 72. These permits will mandate that the proposed Project operate in compliance with all applicable regulatory requirements.

TDD (for hearing and speech impaired only): 651-282-5332 Printed on recycled paper containing at least 30% fibers from paper recycled by consumers Agassiz Energy Ethanol Production Facility Findings of Fact On the Need for an Environmental Impact Statement Conclusions of Law Knute Township, Minnesota And Order

PROCEDURAL HISTORY

5. Minn. R. 4410.4300, subp. 5.B, requires that the construction or expansion of a facility for the production of alcohol fuels of more then 5,000,000 gallons per year must be preceded by the preparation of an EAW. The same section identifies the MPCA as the Responsible Governmental Unit (RGU) for such projects. The mandatory EAW for the proposed Agassiz Project was compiled by MPCA staff from information provided by Agassiz Energy pursuant to Minn. R. 4410.1400 (2007). The EAW was distributed to the EQB mailing list and other interested parties on November 30, 2007.

6. The MPCA notified the public of the public comment period. A news release was provided to media in Polk County and other interested parties, including all persons who had requested to be placed on the mailing list, on December 3, 2007. In addition, the EAW was published in the Environmental Quality Board’s (EQB) EQB Monitor on December 3, 2007, and was made available for review on the MPCA Web site at http://www.pca.state.mn.us/news/eaw/index.html on December 3, 2007.

7. The public comment period for the EAW began on December 3, 2007, and ended on January 17, 2008. During the 45-day comment period, the MPCA received a total of 82 timely comment letters including three timely comment letters from government agencies, one timely comment letter from a non-profit environmental group, and 78 timely comment letters from citizens.

8. The MPCA received a total of ten additional comment letters including two additional comment letters from government agencies, one additional comment letter from a non-profit environmental group, and seven additional comment letters from citizens after the close of the public comment period. In general, the concerns expressed in the late comments reiterated concerns that were submitted in timely comments. Therefore, their concerns have largely been addressed in the Response to Comments prepared for this proceeding.

9. The MPCA held a public informational meeting at the Win-E-Mac school in the city of Erskine, Minnesota on December 19, 2007. Notice for this meeting was published in the EQB Monitor, the MPCA Web site, and the Crookston Daily Times. Additional notification for this public meeting was also provided in the cover letter for the Agassiz Energy EAW, which was distributed to the standard mailing list and to any interested parties that requested to be on the mailing list by November 30, 2007.

10. The MPCA and Minnesota Department of Natural Resources (DNR) staff attended a citizen- sponsored meeting at the Win-E-Mac School on October 1, 2007, to listen to citizen concerns about the proposed Project and answer questions about the EAW process. Approximately 100 persons attended the meeting.

11. The MPCA prepared responses to all comments received before the close of the 45-day public comment period. All the comment letters that were received before the close of the comment period are hereby incorporated by reference as Appendix A to these findings.

2 Agassiz Energy Ethanol Production Facility Findings of Fact On the Need for an Environmental Impact Statement Conclusions of Law Knute Township, Minnesota And Order

Concerns Described in Comment Letters

12. Several commenters expressed concern about ground-water availability in the area and the potential for drawdown in private wells and in nearby lakes and surface water bodies. Two commenters expressed concern about potential arsenic cross-contamination in the aquifer affecting the water quality in existing private wells. Several commenters expressed concern about health impacts to area residents from air emissions including particulate matter, volatile organic compounds, and hazardous air pollutants. Additional comments included concerns about impacts from traffic, noise and odors.

13. The MPCA received 57 comment letters from individual citizens that included a request for an EIS.

14. The MPCA received a comment letter from a non-profit environmental group, the Minnesota Center for Environmental Advocacy (MCEA), which included a request for the preparation of an EIS. The MCEA’s request asserted that the draft EAW failed to assess the proposed Facility’s potential regional haze impacts on Class I areas, failed to assess the energy needs of the Project and its contribution to greenhouse gas emissions, and failed to analyze the proposed Project’s actual mercury emissions of 8.9 pounds per year and how the emissions will affect the environment relative to the mercury reductions that are needed pursuant to the Mercury Total Maximum Daily Load (TMDL) Plan.

15. The MPCA received a comment letter from the U.S. Fish and Wildlife Service (USFWS) that included a request for the preparation of an EIS. The USFWS noted that the draft EAW failed to identify all potentially affected wetlands, failed to adequately characterize the ground-water-to- surface-water interaction from the proposed Facility including the effect of the interaction on wetlands, and failed to provide an analysis of the long-term effects of mercury or other emissions on wildlife. The USFWS indicated that they did not believe the information in the EAW supported a conclusion that the Project will not have a significant impact on fish and wildlife resources.

16. DNR Wildlife staff reviewed USFWS comments and provided additional perspective. Various wildlife species are affected by disturbance in different ways and at different times of the year. They may show behavioral responses of short duration (temporary displacement) or long-term responses (such as abandonment of preferred foraging areas). Disturbance that alters behaviors within a local population, which then results in distribution and habitat use changes, may ultimately affect the health and status of that population. Possible effects include disturbance of ground nesting upland birds and waterfowl, interference with bird communication during incubation and fledgling phases, disruption of waterfowl (e.g., mallard, blue-winged teal) courtship and breeding behavior, disturbance of waterfowl resting and feeding during September-October migration, and interference with drumming behavior and breeding of ruffed grouse in mid-May. Disturbances of this nature have the potential to reduce breeding pairs numbers, reduce breeding success, and reduce nesting success. Young of the year deer and bear and ruffed grouse, and waterfowl broods in June through August could be particularly sensitive to disruption. Activities near wetland and riparian habitat have the potential to disturb beaver, mink and otter. If disturbance were severe enough such that wildlife species are unable to adjust and instead abandon preferred habitat, the end result would be lower wild bird and animal populations adjacent to the Project area.

17. The MPCA must make a decision on whether to order an EIS based on the EQB rules found in Minn. R. ch. 4410. The MPCA’s findings on the rules are given in the Findings below.

3 Agassiz Energy Ethanol Production Facility Findings of Fact On the Need for an Environmental Impact Statement Conclusions of Law Knute Township, Minnesota And Order

CRITERIA FOR DETERMINING THE POTENTIAL FOR SIGNIFICANT ENVIRONMENTAL EFFECTS

18. Under Minn. R. 4410.1700 (2007), 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. 4410.1700, subp. 7 (2007). These criteria are:

A. the type, extent, and reversibility of environmental effects;

B. potential cumulative effects of related or anticipated future projects;

C. the extent to which the environmental effects are subject to mitigation by ongoing public regulatory authority; and

D. the extent to which environmental effects can be anticipated and controlled as a result of other available environmental studies undertaken by public agencies or the project proposer, including other EISs.

SUFFICIENCY OF THE INFORMATION TO MAKE A DECISION ABOUT THE POTENTIAL FOR SIGNIFICANT ENVIRONMENTAL IMPACTS

19. Minn. R. 4410.1700, subp. 2a. provides that if the RGU determines that information necessary to make a reasoned decision about the potential for or significance of potential environmental impacts is lacking, but could be reasonably obtained, the RGU may make a positive declaration on the need for an EIS and include the appropriate studies to obtain the information in the scope of the EIS. The rule also allows the RGU to postpone making its decision for not more than 30 days if the information can be gathered within that time.

MPCA FINDINGS WITH RESPECT TO THE CRITERIA TO ASSESS THE POTENTIAL FOR SIGNIFICANT ENVIRONMENTAL EFFECTS

20. Wildlife in the vicinity of the proposed site primarily consists of species native to northern Minnesota. Species include deer, squirrels, rabbits, small mammals, snakes, turkeys, songbirds, amphibians, raptors, fish, and waterfowl. There are six known occurrences of rare species or native plant communities in the area.

21. The USFWS owns and operates the Erskine Complex Waterfowl Production Area (WPA) directly to the north and west of the Project; and there are numerous wetlands and state and federal wildlife management areas in the area.

22. According to DNR Wildlife staff, habitat in the vicinity of Erskine Complex WPA appears to be high value habitat and the north part of Polk County is generally a high value waterfowl corridor. It appears that some federal wetland easements are also within the Project area, some are immediately adjacent, and others exist within one mile of the Project site. WPAs and federal wetland easements represent sites of high public value, where substantial investments have been made in acquisition and management to optimize wildlife production and habitat conservation.

4 Agassiz Energy Ethanol Production Facility Findings of Fact On the Need for an Environmental Impact Statement Conclusions of Law Knute Township, Minnesota And Order

23. 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. 4410.1700, subp. 7.A (2007). The MPCA findings with respect to these factors as they relate to fish and wildlife resources are set forth below.

Type, Extent, and Reversibility of Environmental Effects

Water Resources

Surface Water and Wetland Effects from Ground-water Appropriations

The type and extent of any potential effects that are reasonably expected to occur:

24. In order to determine the potential for environmental effects on surface water and wetlands from ground-water appropriations, two types of analyses are commonly done: a wetland delineation and an aquifer test.

25. On August 29, 2005, USFWS staff from the Twin Cities’ Ecological Services Field Office and the Detroit Lakes Wetland Management District met with Agassiz Energy representatives to discuss the proposed Project. At that meeting, USFWS staff made recommendations regarding future planning to ensure that construction and operation of the proposed Project avoid impacting protected on-site wetland basins. On May 15, 2006, MPCA and USFWS staff and Agassiz Energy representatives met again and reviewed the recommendations. Small modifications were required to ensure that Project development would not result in direct impacts to the on-site wetland basins.

26. Agassiz completed an on-site wetland delineation on July 5-6, 2006. Based on that delineation, four wetlands were identified using the criteria outlined in the U.S. Army Corps of Engineers (USACE) 1987 Wetlands Delineation Manual. One of these wetlands is listed on the DNR’s Public Waters Inventory (PWI) (#60-188W). During the field delineation, the watershed boundaries were identified for the three on-site areas designated as protected basins by the USFWS. These three basins did not meet the USACE wetland criteria and are in addition to the four field-delineated wetlands.

27. The EAW noted that the proposed Project would not disturb any of the seven wetland features on the site. These basins cannot be drained, filled, leveled or burned, though they can be (and are) in agricultural production. It was determined that no actual construction could occur within those protected wetlands nor could they be used for stormwater management.

28. Agassiz concluded that the on-site basins are ephemeral in nature and primarily provide waterfowl returning from migration with habitat early in the season, but the on-site basins were not used for nesting. The Project Proposer indicated that operation of the Facility could have an indirect impact on the protected wetland basins by displacing waterfowl and wildlife, but the waterfowl might move to other of the numerous wetlands in the area.

29. The Project Proposer also completed an aquifer test as required by the DNR of large users of ground water prior to issuing a groundwater appropriation permit. The aquifer test is done to determine how the aquifer will respond to the proposed appropriation and the potential impact on local wells. The primary source of water for the Project will be ground water in an aquifer that includes both confined and unconfined areas. The water will be obtained by installing two production wells on-site.

5 Agassiz Energy Ethanol Production Facility Findings of Fact On the Need for an Environmental Impact Statement Conclusions of Law Knute Township, Minnesota And Order

30. The Project Proposer completed a production well to conduct the aquifer test. The production well was completed in a confined portion of the aquifer that locally is artesian in nature and is separated from the surficial aquifer system by more than fifty feet of a thick clay/till layer that does not permit water to flow through it and is expected to prevent upward and downward movement of ground water. Data supporting the EAW indicates that the source aquifer becomes unconfined southwest and east of the plant site, however.

31. Agassiz Energy conducted the aquifer test using its production well from June 15 to June 26, 2006. Water levels in the production well, two on-site observation wells, and seven domestic wells were monitored to observe drawdown and recovery effects of the pumping test on the local ground-water system. Ground-water levels were monitored for an additional ten days to assess aquifer recovery rates.

32. Measurements taken in the production and observations wells showed steady-state conditions would be reached in the aquifer. Steady-state is an equilibrium state where ground-water recharge equals ground-water withdrawal.

33. Because the Facility production wells will be located in an aquifer system that includes unconfined areas, the pumping could potentially affect surface water features in the area, including the WPAs wetlands, or lakes. Surface water features were monitored during the aquifer test to evaluate potential impacts to surface water features. Data was gathered from one surface water monitoring station at Bubak Lake. Regarding aquifer interaction with nearby surface water, observations during the test showed a similarity in water elevations between the production well and nearby observation wells and Bubak Lake. The similarity is an indication that the aquifer system and the surface water system may be hydraulically connected. The extent to which the aquifer and surface water systems are connected was not explored any further, however.

34. The Bubak Lake monitoring station showed drawdown during the test, but also showed that the lake did not recover during and after the recovery period of the test. Drawdown and failure to recover was also observed at other area lakes. The Project Proposer attributed these surface water drawdowns and lack of recovery to natural, seasonal fluctuations in lake levels and not to pumping.

35. In its letter submitted during the public comment period, the USFWS noted that the EAW was its first opportunity to review the complete Project proposal. The USFWS review of the EAW identified that the Project footprint will be immediately adjacent to the Erskine Complex WPA and that of 540 acres of USFWS wetland easement that protect 43 acres of wetland within a one-mile radius of the proposed Project mentioned in the EAW, only three of the wetland basins are mentioned in the EAW. USFWS requested an EIS that included the full extent of the potentially- impacted wetlands in the area on site and surrounding the proposed site.

36. USFWS also raised a concern that the analysis of the effects of ground-water pumping on the area wetlands was incomplete in that the EAW characterized all the area wetlands as the same general hydrologic type in their connection to the aquifer, although the documentation supporting the EAW did not support that conclusion. The USFWS further requested that an EIS be prepared to characterize each potentially affected wetland’s connection to ground water in a manner consistent with supporting documentation.

37. In a subsequent communication to the Project Proposer to clarify its comments on the EAW, the USFWS noted that the Project’s water appropriation is projected to surpass 50 percent of the available head of the aquifer, but that the DNR water appropriation permit has no mechanism to prevent surface-water dewatering caused by a ground-water appropriation unless the dewatering is

6 Agassiz Energy Ethanol Production Facility Findings of Fact On the Need for an Environmental Impact Statement Conclusions of Law Knute Township, Minnesota And Order

directly linked to a ground-water measure. In this case, the USFWS identified that the aquifer is patchy in its connection to surface waters. This means the potential exists that a surface water could be dewatered, but the ground-water threshold as measured in another part of the aquifer is not exceeded. The EAW did not adequately identify and characterize the ground-water-to-surface-water connections such that appropriate permit conditions to prevent dewatering could be included in the water appropriations permit or some other enforceable approval.

38. The MPCA finds that the EAW did not identify the full inventory of potentially impacted wetlands in the area of the proposed Project, but that the information could reasonably be obtained. The USFWS has extensive information on wetlands in the area. The MPCA finds that evidence exists that the surface and ground-water systems are interconnected; yet, the degree to which they are interconnected and the degree to which the interconnectedness has the potential for significant environmental effect is currently unknown, but could reasonably be obtained. The MPCA finds that there is not enough information to make a reasoned decision on the potential for significant environmental effect on surface waters, including wetlands, from the proposed Project’s pumping from ground water and that an EIS to supply the lacking information and analysis is needed.

The reversibility of any potential effects to wetlands that are reasonably expected to occur:

39. The MPCA finds that it is not possible to determine the reversibility of potential effects that are reasonably likely to occur from the proposed Project to surface waters, including wetlands, from ground-water pumping due to the information and analysis that is lacking at this time.

Air Quality

40. The EAW identified mercury emissions as a reasonably expected type of environmental effect of this Project related to air quality:

The EAW also identified and analyzed other air emissions from the Facility, but the MPCA is not recommending that those other air emissions be included in the scope of an EIS on this Project. MPCA Findings 55-66 address the other air emissions.

Mercury

41. The MCEA requested an EIS to assess the effect of the Facility’s mercury emissions on the reduction in mercury emissions sought under the mercury TMDL. Several commenters also expressed concern about the Facility’s ability to meet the Facility’s mercury limit of 8.9 pounds per year.

42. The MPCA finds that the EAW identified the Facility’s 8.9 pounds per year mercury permit limit, but did not discuss the 4.0 pounds per year mercury goal. The proposed air emissions permit includes a requirement that the Proposer complete a feasibility study within 12 months of permit issuance and before Facility operation to determine the feasibility of reducing mercury emissions to 4.0 pounds per year, which is the stated goal for Mercury TMDL Implementation Plan.

43. MPCA staff is aware that activated carbon injection to control mercury emissions has been demonstrated in other applications to achieve significant removal of mercury from coal-combustion units equipped with dry-sorbent injection and fabric filters. The technology has only recently been developed for application for coal-fired boilers, however. A feasibility study on the application of the technology to coal-fired boilers would determine whether technology can be applied to this Facility and whether mercury emissions can be reduced to 4.0 pounds per year.

7 Agassiz Energy Ethanol Production Facility Findings of Fact On the Need for an Environmental Impact Statement Conclusions of Law Knute Township, Minnesota And Order

44. Because the MPCA is ordering an EIS on other grounds, it is appropriate to include the feasibility study that would have been required by the permit in the scope of the EIS.

Greenhouse Gas Emissions

45. The MCEA also requested an EIS on failure of the EAW to quantify and assess the potential effect of greenhouse gas emissions from the Facility.

46. There is no argument that the EAW does not discuss greenhouse gas emissions from the Facility. At the time the EAW was prepared and put on public notice, the MPCA had not yet developed an approach for the inclusion of greenhouse gas emissions in environmental review. Since publication of the EAW, the MPCA has implemented a policy by which greenhouse gas emissions will be included in environmental review.

47. Because the MPCA is ordering the preparation of an EIS on a number of other grounds, it is appropriate to include a greenhouse gas emissions analysis within the recommended scope of the EIS pursuant to the MPCA’s new policy.

The reversibility of any potential effects from air emissions that are reasonably expected to occur:

48. The MPCA finds that it is not possible to determine the reversibility of potential effects from mercury or greenhouse gas emissions that are reasonably likely to occur from this Project due to the information and analysis that is lacking at this time.

MPCA FINDINGS WITH RESPECT TO ISSUES THAT ARE NOT RECOMMENDED FOR INCLUSION IN AN EIS

49. The EAW included adequate information to assess the potential for significant environmental effects concerning a number of issues.

Water Resources

Ground-water supplies

50. The type and extent of potential ground-water supply effects that are reasonably expected to occur as a result of the Project were described in Findings 29-32 above. In addition, according to the DNR, the drawdowns measured in the production and observation wells during the aquifer test were insignificant. The greatest drawdown was observed in the production well itself (5.5 feet). Drawdowns observed in the remaining nine monitored wells ranged from 0.23 to 1.08 feet. Although the aquifer test showed that the aquifer is not as risk from the proposed appropriation, the DNR proposes to include aquifer safe yield requirements and ground-water monitoring in the water appropriation permit it will issue for the Project.

51. The DNR water use database shows appropriation permits in the vicinity of the proposed Facility for the city of Erskine and the city of McIntosh, along with numerous domestic and agricultural wells. The aquifer test indicated that well interference is not expected. If a well owner experiences well interference; however, Minn. R. 6115.0730 provides a procedure to resolve the problem. The rule provides that the Project Proposer will be responsible for mitigating any well interference caused by the Facility’s operation.

8 Agassiz Energy Ethanol Production Facility Findings of Fact On the Need for an Environmental Impact Statement Conclusions of Law Knute Township, Minnesota And Order

Stormwater

52. The type and extent of any potential effects that are reasonably expected to occur from stormwater discharges:

The proposed Project will discharge treated stormwater to surface waters. The stormwater discharges will be covered under the National Pollutant Discharge Elimination System (NPDES)/State Disposal System (SDS) General Permit for Discharge of Stormwater during Construction Activities (General Stormwater Permit) and an individual Industrial Stormwater Permit. The NPDES General Stormwater Permit for Construction Activities will be required prior to beginning any construction at the site of the proposed Facility. Mitigation for stormwater discharge as a result of the construction activities includes the implementation of best management practices, such as the installation of erosion control devices to eliminate or reduce erosion and keep sediments from leaving the site. The individual Industrial Stormwater Permit will address the operation of the Facility to minimize contact with stored materials that might contaminate stormwater and require treatment prior to discharge of stormwater with the use of two stormwater detention ponds. The stormwater ponds’ discharge will be directed to natural on-site drainage features that flow to an unnamed wetland (PWI #60-188W) in the northwest corner of the property. The manually controlled outlets will be used to control flows from the ponds. Agassiz Energy will maintain vegetation on major drainage paths to prevent excessive erosion from these areas.

The reversibility of any potential effects on water resources that are reasonably expected to occur:

53. The potential effect on water resources that is reasonably likely to occur from this Project would be reversible. DNR has established safe yield thresholds for source aquifers. In the event that the safe yield threshold is breached, well pumping would be stopped, allowing recharge of the impacted aquifer.

Surface-water discharge

54. As described in Finding 4 above, Agassiz Energy proposes to use a cold lime softening system and an evaporator/crystallizer system to recycle as much water as possible and to eliminate the discharge of process or non-process utility wastewater to surface waters. As a result, the type, extent and reversibility of effects of surface water discharge is not an issue with this Project.

Air Quality

Air Emissions

The type and extent of any potential air quality effects that are reasonably expected to occur from air emissions:

55. The Proposer’s application for an Air Quality Permit included an analysis of the potential emissions of air pollutants. The Proposer will take air emission limits to be a “minor” facility for purposes of the Clean Air Act’s Prevention of Significant Deterioration (PSD) and Hazardous Air Pollutants (HAPs) programs. The Facility will be considered a major source under the Part 70 permit program. The major source threshold for the PSD program is 250 tons per year (tpy) or more of any single PSD regulated pollutant. The major source threshold for the Part 70 program is 100 tpy of any

9 Agassiz Energy Ethanol Production Facility Findings of Fact On the Need for an Environmental Impact Statement Conclusions of Law Knute Township, Minnesota And Order

regulated pollutant (including particulate matter less than 10 um in size [PM10], Sulfur Dioxide [SO2], Nitrogen Oxides [NOx], and Carbon Monoxide [CO]). The major source threshold for the HAPs program is 10 tpy of any single HAP and 25 tpy of all HAPs combined. The Facility’s limited potential to emit is as follows:

Total Potential Facility Emissions Pollutant Proposed Emissions (tpy) PM 199.5 PM10 183.9 CO 207.1 NOx 182.2 VOCs 97.0 SO2 138.4 Mercury 0.00445 (equals 8.9 pounds) Individual HAP (max) 9.5 (Acetaldehyde) Total HAPs 16.9

56. An Air Emissions Risk Analysis (AERA) was also completed for the Project. The AERA process was developed by the MPCA to evaluate potential human health risks from a given facility’s air emissions. Fully refined air dispersion modeling, using the AERMOD program, was used to determine ambient air pollution concentrations. The AERA process indicated that the maximum modeled risks from the proposed Project are within acceptable levels for human health risks. Criteria pollutants, including PM10, were also evaluated as part of the AERA analysis and the results have demonstrated that the proposed Facility will comply with the National Ambient Air Quality Standards (NAAQS).

Noise

The extent of any potential effects that are reasonably expected to occur from noise:

57. Noise monitoring completed at various ethanol facilities has indicated that cooling towers, hammermills, and conveyor systems/motors are generally the greatest noise sources. The Proposer conducted an analysis to estimate the future noise levels from the Facility on the nearest residences. The analysis showed that the proposed Project will not exceed the applicable noise standards provided in Minn. R. ch. 7030 for residences.

Odors

58. The extent of any potential air quality effects that are reasonably expected to occur from odors are from fermentation tanks and the distillers’ grain dryer, which have historically been identified as the main contributors to odor at ethanol facilities. The Proposer will use a regenerative thermal oxidizer that will destroy at least 95 percent of the VOCs that are responsible for the odor emitted from ethanol facilities. The Facility will also be equipped with a scrubber for control of VOC emissions from the fermentation tank. Odors may also be generated at the wetcake storage area. However, wetcake has a short shelf life and, therefore, a rapid turnaround is necessary for the sale of the byproduct. Also, the Air Emissions Permit will require that wetcake stored onsite be removed within 48 hours. With these controls, it is expected that the Project will not result in a significant impact from odor emissions.

10 Agassiz Energy Ethanol Production Facility Findings of Fact On the Need for an Environmental Impact Statement Conclusions of Law Knute Township, Minnesota And Order

59. While the Facility is in operation, the expected effects on air quality are expected to meet applicable regulatory standards and the impacts on human health are not expected to be significant.

Traffic

The extent of any potential effects that are reasonably expected to occur from increased traffic:

60. The proposed Project is expected to result in 266 average daily vehicle trips, mostly between 8:00 a.m. and 5:00 p.m. U.S. Highway 2 and U.S. Highway 59 will be the primary transportation routes to and from the Facility. The increase in truck traffic from the Project results in an increase of approximately 14 percent of the total average daily traffic using only U.S. Highway 59, which would serve as the main entry point to the Facility.

61. The Proposer worked with the Minnesota Department of Transportation (MNDOT) staff and Polk County staff regarding the improvements to U.S. Highway 59 to accommodate the increase in traffic. MNDOT staff recommended lengthening the right-turn lane for southbound traffic and constructing a northbound bypass lane to improve safety and operation of the intersection at 350th Street SE and U.S. Highway 59. MNDOT staff is also recommending, for U.S. Highway 59, the addition or relocation of warning signs, additional pavement striping, and performing a speed study to determine appropriate posted speeds.

The reversibility of any potential effects from air emissions, noise, odors and traffic that are reasonably expected to occur:

62. The effects that are reasonably likely to occur from air emissions, noise, odors and traffic associated with this Project would be reversible.

Potential Cumulative Effects of Related or Anticipated Future Projects

63. The second criterion that the MPCA must consider, when determining if a project has the potential for significant environmental effects that are reasonably expected to occur, is the “potential cumulative effects of related or anticipated future projects,” Minn. R. 4410.1700, subp. 7.B (2007). The MPCA findings with respect to this criterion as it relates to human health are set forth below.

64. As discussed in the EAW, Response to Comments, and information provided in this finding, all existing sources that might interact with this Project were evaluated.

Cumulative Effects of Air Emissions and Noise

65. There are no other industries located in the vicinity of the proposed Facility, nor are there known plans to construct other industrial facilities. A review of the MPCA’s Environmental Access system indicated no other air emission or noise sources in or around the city of Erskine. The nearest source is a school boiler in McIntosh approximately five miles southeast of the site. Given the amount of emissions, the distance between sources, and the nature of the emissions, modeling did not show that cumulative effects would be expected.

66. The MPCA received comment letters that expressed concerns about cumulative impacts from increased emissions of nitrogen oxides on Class I areas in northern Minnesota from the Project. The MPCA has identified the major contributors to nitrogen oxide levels in Minnesota’s Class I areas through its regional haze and Best Available Retrofit Technology (BART) rule implementation

11 Agassiz Energy Ethanol Production Facility Findings of Fact On the Need for an Environmental Impact Statement Conclusions of Law Knute Township, Minnesota And Order

process. The process took this proposed Project into account during the process of identifying BART-eligible emission units. Through that process, MPCA staff determined that emissions from the Project’s boiler would not be measurable in Class I areas.

Cumulative Effects of Ground-water Appropriation

67. The aquifer test protocol required by DNR included an evaluation of all existing water appropriations from the same or connected aquifers. No future projects are planned at this time. The DNR has a regulatory process to protect existing users of the aquifer which applies here. The process includes the use of an interference management process, yield restrictions in the DNR Water Appropriation Permit, and curtailed ethanol production, if necessary.

68. The MPCA received several comment letters expressing concerns about competing needs for ground-water resources in the area of the Project, now and in the future. The DNR’s aquifer test protocol includes all existing water appropriations from the same or connected aquifer. In addition to including all existing sources in the evaluation, the DNR’s assessment for the EAW includes future known uses. The MPCA believes that the DNR’s analysis of the Project considers the cumulative effects of known future use.

Cumulative Effects of Surface-water Discharges

69. This item is not applicable since the Facility will not have any surface-water discharge.

Cumulative Effects of Traffic

70. An increase in truck and rail traffic will occur as a result of the Project. The increase in truck traffic is expected to be approximately 14 percent above the current traffic levels if utilizing primarily U.S. Highway 59. There are no known future projects in the vicinity that would result in a significant cumulative traffic impact.

The Extent to Which the Environmental Effects Are Subject to Mitigation by Ongoing Public Regulatory Authority

71. 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. 4410.1700, subp. 7.C (2007).

12 Agassiz Energy Ethanol Production Facility Findings of Fact On the Need for an Environmental Impact Statement Conclusions of Law Knute Township, Minnesota And Order

72. The following permits or approvals are required for the Project:

Unit of Government Type of Application Status

MPCA Air Emission Permit Submitted, under review NPDES/SDS Individual Industrial MPCA Submitted, under review Stormwater Discharge Permit NPDES Authorization to Discharge MPCA To be submitted Hydrostatic Test Water SDS Permit (Utility Water Holding MPCA Submitted, under review Pond) Aboveground Storage Tank (AST) MPCA Submitted, under review Permit NPDES General Stormwater Permit for MPCA To be submitted Construction Activities Very Small Hazardous Waste Generator MPCA To be submitted License DNR Natural Heritage Inventory Review Completed DNR Water Appropriations Permit To be submitted General Permit 97-0005 for Temporary To be submitted, if DNR Water Appropriation necessary Minnesota Department of Non-transient, Non-Community Water To be completed Health Supply Inspection and Evaluation Minnesota State Historic Concurrence on Findings of Cultural Completed Preservation Office Resource Impacts MNDOT Entrance/Access Permit To be submitted Polk County On-Site Septic System Permit To be submitted Polk County Conditional Use Permit To be submitted Polk County Building Permit To be submitted Polk County Farm Service CRP Land Removal Process To be submitted Agency Committee Red Lake Watershed District Watershed District Permit To be submitted Alcohol Tobacco Tax and Distiller’s Permit To be submitted Trade Bureau

73. The above-listed permits include general and specific requirements for mitigation of environmental effects of the Project.

74. These Findings also include numerous specific findings regarding mitigative measures that will be implemented regarding water appropriations and water discharge.

75. The MPCA finds that the EIS it is ordering may influence the degree to which ongoing public regulatory authority will mitigate any potentially significant environmental effects that may reasonably occur as a result of this Project.

13 Agassiz Energy Ethanol Production Facility Findings of Fact On the Need for an Environmental Impact Statement Conclusions of Law Knute Township, Minnesota And Order

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

76. 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 (2007). The MPCA findings with respect to this criterion are set forth below.

77. MPCA staff reviewed the following documents as part of the potential environmental impact analysis for the proposed Project. This list is not intended to be exhaustive. The MPCA also relies on information provided by the Proposer, commenters, staff experience, and other available information.

A. EAW; B. Air Emission Permit Application and Draft Permit, Technical Support Document for the Air Emission Permit; C. AERA and air modeling information; D. NPDES/SDS Permit Application and Draft Permit; and E. Ground-water aquifer test.

MPCA’S Preliminary Determination on the Potential for Significant Environmental Effects From Issues that are not Recommended for Inclusion in an EIS

78. The MPCA preliminarily concludes that there is no potential for significant environmental effects from the issues not recommended for inclusion in the EIS in recognition of the fact that new information may be developed in the EIS that could affect the MPCA’s assessment of the potential for significant environmental effects.

PUBLIC COMMENTS

79. The public commented extensively on the proposed Project. MPCA staff prepared a Response to Comments that has been made available to all commenters. Some of the comments have been directly addressed in these Findings. Others may be addressed through the EIS that the MPCA is ordering today. The process of scoping the EIS includes a meeting that is open to the public and commenters may participate in that process

CONCLUSIONS OF LAW

80. The MPCA has jurisdiction to determine the need for an EIS for this Project.

81. The EAW, the permit development process, the Facility planning process, response to comments prepared by MPCA staff on the Project EAW, and the evidence in the record is not adequate to support a reasoned decision regarding the potential significant environmental effects that are reasonably expected to occur from this Project as they relate to the following issues:

A. wetland inventory; B. ground-water and surface-water interaction; C. a feasibility study to determine whether a 4.0-pound per year mercury goal is achievable; and D. an analysis of how the Project’s mercury emissions will affect reductions required by the Mercury TMDL Implementation Plan.

14 Agassiz Energy Ethanol Production Facility Findings of Fact On the Need for an Environmental Impact Statement Conclusions of Law Knute Township, Minnesota And Order

Based on the criteria established in Minn. R. 4410.1700 (2007), there is insufficient information to make a reasoned decision about the potential for, or significance of, environmental impact regarding these issues and the lacking information can be reasonably obtained.

82. An EIS is required to supply the necessary information.

83. Because it is now the MPCA’s policy to include an analysis of greenhouse gas emissions in environmental review and the EAW was prepared prior to implementing this policy, the MPCA concludes that it is appropriate to include greenhouse gas emissions in the scope of the EIS ordered herein.

84. Any findings that might properly be termed conclusions and any conclusions that might properly be termed findings are hereby adopted as such.

ORDER

The Minnesota Pollution Control Agency (MPCA) determines that there is insufficient information to make a reasoned decision about the potential for, or significance of, environmental effects reasonably expected to occur from the Agassiz Energy Ethanol Production Facility project and that there is a need for an Environmental Impact Statement (EIS). The MPCA orders that the MPCA staff shall begin the process of scoping the EIS pursuant to Minn. R. 4410.2100.

IT IS SO ORDERED

______Commissioner Brad Moore Chair, Citizens’ Board Minnesota Pollution Control Agency

______Date

15 APPENDIX A

Minnesota Pollution Control Agency

Agassiz Energy Ethanol Production Facility Environmental Assessment Worksheet

LIST OF COMMENT LETTERS RECEIVED

1. Laurie Fairchild for Tony Sullins, U.S. Fish & Wildlife Service. Facsimile received January 16, 2008. 2. Janette K. Brimmer, Minnesota Center for Environmental Advocacy. Letter received January 17, 2008. 3. Sherry Hoaas, Erskine, Minnesota. Letter received January 16, 2008. 4. James Hoel, Erskine, Minnesota. Letter received January 3, 2008. 5. G.H. Ellegard, Mentor, Minnesota. Letter received January 11, 2008. 6. Roger and Rita Amiot, Mentor, Minnesota. Letter received January 10, 2008. 7. Ron and Renee Howe, Erskine, Minnesota. Letter received via e-mail January 10, 2008. 8. Rose Bakken, Fosston, Minnesota. Letter received January 7, 2008. 9. Ron Bergh, Grand Forks, North Dakota. Letter received January 10, 2008. 10. Carl and Kathryn Lill, Grand Forks, North Dakota. Letter received January 10, 2008. 11. Emil and Lois Bagley, Crookston, Minnesota. Letter received January 10, 2008. 12. Gary Walter, Erskine, Minnesota. Letter received January 10, 2008. 13. Keith and Donna Christianson, Mentor, Minnesota. Letter received January 10, 2008. 14. Dick and Carole Hebert, Mentor, Minnesota. Letter received January 10, 2008. 15. Julie Oppegaard, Erskine, Minnesota. Letter received January 9, 2008. 16. Boyd Oppegaard, Erskine, Minnesota. Letter received January 9, 2008. 17. Gary Bridgeford, Mentor, Minnesota. E-mail received December 26, 2007. 18. Roger Clifton, Branford, Florida. Letter received December 10, 2007. 19. Jason Pangiarella, Mentor, Minnesota. Letter received January 7, 2008. 20. Glenn J. Kangas, Erskine, Minnesota. Letter received December 21, 2007; e-mail received December 24, 2007. 21. Greg Parenteau, Erskine, Minnesota. Letter received January 4, 2008. 22. Gordon Hoel, Cedar, Minnesota. Letter received January 4, 2008. 23. Barb DiMaggio, Erskine, Minnesota. Letter received January 4, 2008. 24. Stephen Green, Fosston, Minnesota. Letter received January 3, 2008. 25. Armin and Kathleen Ross, Mcintosh, Minnesota. Letter also signed by J.A. Ross-Hanson. Letter received December 12, 2007. 26. Cecily Erickson, Plummer, Minnesota. Letter received January 3, 2008. 27. Evelyn Johnson, Erskine, Minnesota. Letter received December 24, 2007. 28. Julie Krueger, Fosston, Minnesota. Letter received January 3, 2008. 29. Marcus and Marilyn Erickson, Erskine, Minnesota. Letter received December 19, 2007. 30. Roger Dziengel, Kennedy, Minnesota. Letter received January 10, 2008. 31. Cliff Moen, Mentor, Minnesota. Letter received January 11, 2008. 32. David Dangerfield, East Grand Forks, Minnesota. Letter received January 11, 2008. 33. Jason Wardner, Fisher, Minnesota. Letter received January 11, 2008. 34. Chad Pavlish, East Grand Forks, Minnesota. Letter received January 11, 2008. 35. Kip Langei, East Grand Forks, Minnesota. Letter received January 11, 2008. 36. The Honorable Paul Noyes, Mayor of Erskine. Letter received January 14, 2008. 37. Laurel Nabben, Thief River Falls, Minnesota. Letter received January 14, 2008. 38. Clinton L. Castle, Newfolden, Minnesota. Letter received January 14, 2008. 39. Larry and Mary Lou Plante, Mentor, Minnesota. Letter received January 14, 2008.

Agassiz Energy Ethanol Production Facility List of Comment Letters Received on the Knute Township, Minnesota Environmental Assessment Worksheet

40. Allen R. Jenson, Erskine, Minnesota. Letter received January 14, 2008. 41. James P. Arnold, Mentor, Minnesota. Letter received January 14, 2008. 42. Earl Proulx, Crookston, Minnesota. Letter received January 14, 2008. 43. Allan Seydel, East Grand Forks, Minnesota. Letter received January 14, 2008. 44. Dennis W. Lindberg, Fertile, Minnesota. Letter received January 14, 2008. 45. Blanchard Krogstad, Winger, Minnesota. Letter received January 14, 2008. 46. Dennis V. Hoel, Duluth, Minnesota. Letter received January 14, 2008. 47. Bill Crane, Climax, Minnesota. Letter received January 14, 2008. 48. Bill and Bev Schoen, Grand Forks, North Dakota. Letter received January 14, 2008. 49. John Killian, Red Lake Falls, Minnesota. Letter received January 14, 2008. 50. Mark A. Kihne, Erskine, Minnesota. Letter received January 14, 2008. 51. Bob Ramberg, Mentor, Minnesota. Letter received January 14, 2008. 52. Milo Oppegaard, Erskine, Minnesota. Letter received January 14, 2008. 53. Dallas and Beth Kopp, Grand Forks, North Dakota. Letter received January 14, 2008. 54. Skyler Johnson, Rochester, Minnesota. Letter received January 15, 2008. 55. John S. Peterson, Edina, Minnesota. Letter received January 15, 2008. 56. K. David Hulteng, Crownsville, Maryland. Letter received January 15, 2008. 57. Mark Johnson, Rochester, Minnesota. Letter received January 15, 2008. 58. Bruce and Jeanne Bergquist, Lakewood, Colorado. E-mail received January 14, 2008. 59. Lawrence Brokke, Grand Forks, North Dakota. Letter received January 16, 2008. 60. Vivian Hanson, Erskine, Minnesota. Letter received January 16, 2008. 61. Mary L. Carlson, Hastings, Minnesota. Letter received January 16, 2008. 62. Lee Hoaas, Erskine, Minnesota. Letter received January 16, 2008. 63. Ron and Nancy Tradewell, Erskine, Minnesota. Letter received January 16, 2008. 64. Deb Espeseth and Family, Bagley, Minnesota. Letter received January 16, 2008. 65. William L. Larsen, Ames, Iowa. Letter received January 16, 2008. 66. Randal Schreiner, Mahtomedi, Minnesota. Letter received via e-mail January 16, 2008. 67. Greg and Kathy Schneider, Grand Forks, North Dakota. Letter received January 17, 2008. 68. Douglas Flom, Fargo, North Dakota. Letter received January 17, 2008. 69. Alf J. Hulteng, Billings, Montana. Letter received January 17, 2008. 70. Robert and Lori Hole, Erskine, Minnesota. Letter received January 17, 2008. 71. Curt Jenson, Pioneer Memorial Care Center, Erskine, Minnesota. Letter received January 17, 2008. 72. Douglas Planten, Erskine, Minnesota. Letter received January 17, 2008. 73. Steve Bernard, McIntosh, Minnesota. Letter received January 17, 2008. 74. Dean Bernard, Erskine, Minnesota. Letter received January 17, 2008. 75. Concerned in Erskine, no name or address provided. Letter received January 14, 2008. 76. James H. Norfleet, Mentor, Minnesota. Letter received January 17, 2008. 77. Hazel Bernard, Erskine, Minnesota. Letter received January 17, 2008. 78. Shirlee Maertens, Bemidji, Minnesota. E-mail received January 17, 2003. 79. Corinne Dargus, PA-C, Erskine, Minnesota. Letter received January 16, 2008. 80. H.B. Bergand, no address provided. Letter received January 17, 2008. 81. William Baer for Robert J. Whiting, Corps of Engineers. Letter received via facsimile January 17, 2008. 82. James F. Walsh, Minnesota Department of Health. Letter received January 16, 2008.

2 Agassiz Energy Ethanol Production Facility List of Comment Letters Received on the Knute Township, Minnesota Environmental Assessment Worksheet

LIST OF COMMENT LETTERS RECEIVED AFTER THE CLOSE OF COMMENT PERIOD

1. Jean & Irene Bernard, Mentor, Minnesota. Letter received January 18, 2008. 2. David Rognlie and Fern Letnes, Mentor, Minnesota. Letter received January 18, 2008. 3. Merle Anderson, Climax, Minnesota. Letter received January 18, 2008. 4. John P. Schmalenberg, Polk County. Letter received January 22, 2008. 5. Con Dietz, Mentor, Minnesota. Letter received January 23, 2008. 6. Brian and Pam Floan, Mentor, Minnesota. Letter received January 22, 2008. 7. Brandy Toft, Leech Lake Band of Ojibwe. Letter received January 24, 2008. 8. Leroy Reitmeier, Crookston, Minnesota. Letter received January 28, 2008. 9. Alf J. Hulteng, Billings, Montana. Second letter received January 29, 2008. 10. Janette K. Brimmer, Minnesota Center for Environmental Advocacy. E-mail received February 14, 2008.

3 APPENDIX B

Minnesota Pollution Control Agency (MPCA)

Agassiz Energy Ethanol Production Facility (Project or Facility) Environmental Assessment Worksheet (EAW)

RESPONSES TO COMMENTS ON THE EAW

A number of common issues and concerns were stated in most of the comment letters received. These issues have been summarized and listed below. The numbers appearing in parenthesis identify those letters that raised that particular issue or concern.

The following responses to comments address the various issues and concerns.

1. Comment: Several commenters asked that the MPCA complete an environmental impact statement for the proposed Project (1, 2, 3, 4, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 19, 20, 21, 22, 23, 24, 26, 27, 28, 29, 37, 38, 39, 40, 41, 42, 44, 45, 46, 48, 51, 52, 53, 54, 55, 56, 57, 58, 59, 61, 62, 63, 66, 67, 68, 69, 70, 71, 73, 74, 75, 76, 77, 79).

Response: The MPCA staff will recommend to the MPCA Citizens’ Board that a positive declaration be issued to proceed with an Environmental Impact Statement (EIS).

2. Comment: The U.S. Fish and Wildlife Service (USFWS) (1) states that the EAW is focused almost entirely on impacts to humans. Commenters believe the MPCA should thoroughly analyze associated effects on fish and wildlife resources from the proposed Project, including impacts from noise, lighting, ground-water effects, and air quality issues (1, 26, 63). Analysis is needed to determine if the proposed Project’s impacts could cause nest or habitat avoidance or abandonment during breeding season or long-term abandonment (1).

Response: MPCA staff consulted with the USFWS and the DNR Wildlife staff regarding the EAW’s content regarding impacts to fish and wildlife.

According to DNR Wildlife staff, habitat in the vicinity of the Erskine Complex WPA is high value habitat and the north part of Polk County is generally a high value waterfowl corridor. The Erskine Complex WPA is immediately west of the proposed Project site. The DNR indicates that some federal wetland easements are also within the proposed Project area; some are immediately adjacent, and others exist within one mile of the proposed Project site. WPAs and federal wetland easements represent sites of high public value, where substantial investments have been made in acquisition and management to optimize wildlife production and habitat conservation.

DNR Wildlife staff believes that it is reasonable to conclude that wildlife in the Erskine Complex WPA, and perhaps in similarly nearby wetland easement areas, would be impacted by noise, lighting, and other disturbances caused by Facility operations. The extent to which they may be impacted has not been adequately analyzed in the EAW. Per DNR Wildlife staff, various wildlife species are affected by disturbance in different ways and at different times of the year. They may show behavioral responses of short duration (temporary displacement), or long-term responses (such as abandonment of preferred foraging areas). Disturbance that alters behaviors within a local population, which then results in distribution and habitat use changes, may ultimately affect the health and status of that population. Possible effects include disturbance of ground nesting upland birds and waterfowl, interference with bird communication during incubation and fledgling phases, disruption of waterfowl (e.g., mallard, blue-winged teal) courtship and breeding behavior, disturbance of waterfowl resting and Agassiz Energy Ethanol Production Facility Responses to Comments on the On the Need for an Environmental Impact Statement Environmental Assessment Worksheet Knute Township, Minnesota

feeding during September–October migration, and interference with drumming behavior and breeding of ruffed grouse in mid-May. Disturbances of this nature have the potential to reduce breeding pairs numbers, reduce breeding success, and reduce nesting success. Young of the year deer and bear and ruffed grouse, and waterfowl broods in June through August could be particularly sensitive to disruption. Activities near wetland and riparian habitat have the potential to disturb beaver, mink, and otter. If disturbance were severe enough such that wildlife species are unable to adjust and instead abandon preferred habitat, the end result would be lower wild bird and animal populations adjacent to the proposed Project area.

MPCA staff is recommending that the MPCA Citizens’ Board declare a positive declaration to proceed with an EIS in part because the area wetland inventory is incomplete and the degree of interconnectedness between ground water and surface water is incomplete. Additional data and analysis to address these two issues will substantially answer many of the questions regarding impacts of the proposed project on wildlife.

3. Comment: The USFWS notes that the Erskine Complex WPA is immediately adjacent to the proposed Project footprint and that only a fraction of the wetland basins in the area are mentioned in the EAW. The USFWS says that the EAW should include all of the potentially affected wetlands and the wetland easement acreage in order to adequately analyze the proposed Project’s impacts to fish and wildlife (1).

Response: The MPCA concurs with the USFWS that information on all potentially affected wetlands and wetland easement acreage need more detail to adequately analyze the proposed Project’s potential impacts.

4. Comment: The USFWS requests analyses of long-term effects of mercury or other emissions on wildlife (1).

Response: MPCA staff believes that the long-term effects of mercury are known and that inhalation would not be expected to impact nearby wildlife at the limits proposed in the Facility permit. Additionally, the other air emission standards are appropriate to protect wildlife, in addition to human health. However, MPCA staff is recommending development of additional data on the effectiveness of activated-carbon injection technology at the proposed Facility to control mercury emissions. MPCA staff is recommending that the additional information on mercury controls be included in the scope of an EIS.

5. Comment: The USFWS and another commenter (1, 26) note that the documentation in the EAW does not support the conclusion that all area wetlands can be characterized as the same general hydrologic type in their connection to the aquifer from which the proposed Project proposes to draw its water. The commenters request more analysis of ground-water and surface-water interaction on wetlands from proposed Facility operation.

Response: MPCA staff concurs with the commenters that the EAW does not characterize the wetland areas regarding their connection to the aquifer and that more analysis of the ground-water and surface-water interaction is needed. MPCA staff is recommending an EIS, in part, based on this issue.

6. Comment: A commenter believes the estimate of water usage needed for the proposed Facility is low (55).

2 Agassiz Energy Ethanol Production Facility Responses to Comments on the On the Need for an Environmental Impact Statement Environmental Assessment Worksheet Knute Township, Minnesota

Response: The proposed Project sponsor estimates annual production at the plant will be 70 million gallons of undenatured ethanol per year, or 74 million gallons of denatured ethanol per year. It is estimated that the proposed Project will use 274 million gallons of water per year. The proposed Project sponsor has estimated an average pumping rate of 522 gallons per minute (gpm), which represents the total estimated annual water usage for the Facility averaged over the course of the year. The ratio of gallons of ground water pumped to the number of gallons of ethanol produced is 3.9 to 1, or 274,000,000 gallons/70,000,000 gallons. Each ethanol plant in Minnesota is required to submit the volume of water used at the plant on an annual basis. The DNR tracks water usage for all ground-water and surface-water users in Minnesota that require a water appropriation permit through the DNR. Based on 2006 water use reports and ethanol production volumes, the ratio of gallons of water used to gallons of ethanol produced at each facility ranged from 2.8 to 5.9.

Due to water discharge permitting constraints, Agassiz Energy, LLC (Agassiz Energy or Proposer) has proposed an operating scenario that allows for the recycling of the majority of the non-process utility wastewater that would normally be discharged. The recycling of non-process utility wastewater decreases the amount of water needed. This is supported by the level at which pump test was completed and the requested appropriation permit number.

7. Comment: Commenters are concerned about water levels dropping and aquifer drawdown in private wells near the proposed Agassiz Energy site and interaction with nearby surface water bodies like the Erskine swimming pond, Maple Lake, Union Lake, Lake Sarah, and Cable Lake (3, 4, 6, 8, 9, 10, 11, 13, 14, 15, 16, 18, 19, 24, 25, 27, 28, 29, 37, 39, 40, 41, 44, 45, 46, 48, 51, 52, 54, 55, 56, 57, 58, 60, 61, 62, 63, 68, 69, 70, 71, 73, 76, 77, 78, 80).

Response: The production well is completed in the confined portion of the aquifer, which locally is artesian in nature and is separated from the surficial aquifer system by about 50 feet of thick clay/till aquitard. Aquitards, or confining layers, are underground formations like clay that do not permit water to flow readily through them and minimize upward and downward movement of ground water. However, the aquifer reportedly becomes unconfined southwest and east of the production well. As such, unconfined (i.e., water table) conditions were used to model impacts of the proposed pumping rate on the aquifer system. Overall observations from the aquifer test in the wells surrounding the production well were consistent with typical yield values for unconfined sand.

Static water elevations recorded in the production well and nearby observation wells (1,201.92-1,202.64) are very similar to the elevations reported for Bubak Lake (1,204.01) and surface waters adjacent to observation well #2 (1,202.29). The similar water elevations indicate the two systems may be hydraulically connected. Surface water levels collected at Bubak Lake declined before, during, and after the pumping phase of the aquifer test. Since similar trends were observed in surface water bodies outside the area of influence of the pumping, it was concluded the decline observed at Bubak Lake was due to natural effects rather than the pumping. Because the source aquifer may interconnect with surface water resources, the DNR will require monitoring of nearby surface-water bodies. Additionally, the DNR will require the installation of several shallow observation wells that will also be monitored.

Many of the lakes mentioned by the commenters are some distance from the production well and as the distance increased, less impact from the production well was documented. Thus, for production and well interference, the DNR believes there is sufficient water supply to

3 Agassiz Energy Ethanol Production Facility Responses to Comments on the On the Need for an Environmental Impact Statement Environmental Assessment Worksheet Knute Township, Minnesota

meet the needs of the plant production. MPCA staff concurs that analysis of the impact to all the lakes mentioned is not required. However, based on comments 2-5, further analysis is needed to determine impacts on the nearby Erskine Complex WPA and other wetlands.

8. Comment: Commenters believe some wells were greatly affected during the aquifer test (3, 16, 24, 37, 40).

Response: The MPCA staff cannot directly respond to these comments. The DNR oversees the aquifer test and responds to issues raised during the test. The DNR is also responsible for any well interference that may be encountered after a project is operating. However, the DNR has indicated that drawdowns measured during the test were very insignificant. The greatest drawdown was observed in the production well itself (5.5 feet). Drawdowns observed in the remaining nine monitored wells ranged from 0.23 to 1.08 feet.

9. Comment: Commenters say that Agassiz Energy stated that it would not be responsible for replacing or fixing wells. Commenters ask who will be responsible for replacing or fixing wells if there is a problem (3, 4, 37, 78).

Response: If a homeowner believes their domestic well has been negatively impacted from the proposed Project’s water use, they may file a well interference complaint with the DNR. The DNR well interference investigation process is outlined in Minn. R. 6115.0730. If the Project begins production and at some time in the future the DNR determines that the Project has caused interference with a domestic well, the procedure outlined in Minn. R. 6115.0730 is followed. The options available to the project sponsor include, lowering the pump in an existing well, drilling a deeper well, or to providing a service hook-up to a nearby municipal water system. The cost of modifying these wells or providing an alternative supply of water to the affected homeowners is the responsibility of the project sponsor.

10. Comment: Commenters are concerned that the aquifers are not mapped (3, 14, 15, 16, 27, 28, 38, 39, 40, 44, 45, 55, 62, 77).

Response: The United States Geological Survey (USGS) published an extensive report on aquifers in Polk County in 1996. The USGS report, titled Availability and Quality of Water from Drift Aquifers in Marshall, Pennington, Polk and Red Lake Counties in Northwestern Minnesota (Report #95-4201), is available on the USGS Web site.

11. Comment: Commenters are concerned that duration of the aquifer test was too short (3, 19, 27, 28, 55, 62, 73, 77, 78).

Response: The Agassiz Energy aquifer test was conducted with DNR oversight and it was the DNR project hydrogeologist that determined when to terminate the test. In this case, the test was terminated after water levels had stabilized in the source aquifer. Further pumping would not have added data to the study regarding the ability of the aquifer to support the appropriation request. The aquifer test provides a snapshot that can be modeled into a prediction of how the aquifer will respond to pumping. Ultimately, the true test of an aquifer’s ability to sustain pumping is to construct a well field, pump the wells, monitor water level changes in and around the well field, and modify the pumping rates, as needed. If the Facility is permitted, the DNR will require the installation of additional observation wells,

4 Agassiz Energy Ethanol Production Facility Responses to Comments on the On the Need for an Environmental Impact Statement Environmental Assessment Worksheet Knute Township, Minnesota

ground-water monitoring, and the establishment of a 25 percent and 50 percent threshold to protect the long-term viability of the source aquifer. However, in order to conduct the evaluation of impacts to the Erskine Complex WPA and other wetland complexes that may be hydraulically connected, additional pumping may be required if the recommended EIS is ordered.

12. Comment: Commenters believe mapping aquifers and conducting well tests for all four seasons is the only way to map accurate aquifers (3, 8, 14, 15, 16, 19, 24, 27, 28, 38, 39, 40, 44, 45, 55, 62, 73, 77).

Response: Conducting aquifer tests at various times of the year will not yield significantly different findings about the aquifer characteristics themselves. For example, the aquifer transmissivity and storage coefficient will not change due to climate; they are functions of the aquifer materials themselves. The data collected during the Project’s aquifer test did not suggest that there would be problems associated to nearby wells with the long-term pumping of the source aquifer.

13. Comment: Commenters are concerned that the aquifer only recharges in the summer if there is enough rain (24, 27, 28, 62),

Response: According to the DNR, generally, Minnesota’s glacial aquifers are recharged in the spring by melting snow; in fall, after the vegetation has died but before freeze-up; and following significant precipitation events in summer.

14. Comment: A commenter notes that the National Oceanic and Atmospheric Administration predicts a movement into a 70-year dry cycle (45).

Response: The DNR state climatologist, Greg Spoden, is unfamiliar with the referenced model and provided the following reference* on climate prediction. This reference notes that models predict that all of North America is likely to warm during this century. In reference to precipitation, models predict that precipitation is likely to increase in Canada and the northeast United States, and likely to decrease in the southwest United States. In southern Canada (and likely northern Minnesota), precipitation is likely to increase in winter and spring, but decrease in summer. However, as noted in this reference, modeling climate can have many uncertainties in it. Most of these uncertainties factor into the precipitation predictions. The models agree more readily on the size and magnitude of temperature changes than of precipitation changes. Therefore, since the general circulation models are inconclusive in their projections of future precipitation patterns in central North America, it is difficult to confirm or refute this comment. If the primary concern with this comment is the recharge of the aquifer, then this comment response is addressed in the responses to previous comments on aquifer recharge and mapping.

*Reference: Christensen, J.H., B. Hewitson, A. Busuioc, A. Chen, X. Gao, I. Held, R. Jones, R.K. Kolli, W.T. Kwon, R. Laprise, V. Magaña Rueda, L. Mearns, C.G. Menéndez, J. Räisänen, A. Rinke, A. Sarr, and P. Whetton, 2007: Regional Climate Projections. In: Climate Change 2007: The Physical Science Basis. Contribution of Working Group I to the Fourth Assessment Report of the intergovernmental Panel on Climate Change [Solomon, S., D. Qin, M. Manning, Z. Chen, M. Marquis, K.B. Averyt, M. Tignor, and H.L. Miller (eds.)]. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA.m viability of the source aquifer.

5 Agassiz Energy Ethanol Production Facility Responses to Comments on the On the Need for an Environmental Impact Statement Environmental Assessment Worksheet Knute Township, Minnesota

15. Comment: Commenters are concerned about water quality effects from the proposed Project (5, 8, 15, 26, 40, 44, 53, 54, 59, 63, 65, 68, 69, 80).

Response: There will be no discharge of process or non-process utility wastewater to a surface water, land, or subsurface, nor the potential of seepage to any. The type of wastewater treatment (lime softening) takes the constituents that can cause scaling of equipment out of the wastewater. This is similar to methods used for softening of water for human use. The treatment allows the reuse of treated wastewater within the system, and decreases the amount of source water needed for the Facility.

There will also be a waste stream of salty water from the lime-softening treatment. This will be mixed into the thin stillage and wetcake, which can then be dried into distiller’s grains, and used as animal feed. As dryer exhaust is routed to the regenerative thermal oxidizer for treatment, there is not a release of constituents into the air. The salt content of the distiller’s grains after the inclusion of this water into the wetcake, then dried, has been calculated, and preliminary determinations indicate that the salt content would not be at levels shown to be detrimental to livestock.

There will also be a waste stream of residual lime sludge from the lime softening treatment. However, this lime sludge may be reused in the boiler to remove sulfur dioxide. It would be sent to an appropriate landfill approved to manage this waste. This lime sludge would offset some of the need to purchase lime that is required in the boiler process, and can be of better quality. Alternatively, this lime sludge may be of a quality, through required testing, that can be land applied as a soil amendment. It is applied in accordance with both University of Minnesota soil application recommendations, and MPCA setback recommendations.

Industrial stormwater at the proposed Project site must be routed into stormwater ponds at the site. These stormwater ponds have controlled outlets and may only be discharged to a surface water if they can meet discharge limits. In addition, the stormwater ponds must be constructed such that they cannot seep excessively, or negatively affect the ground water.

16. Comment: Commenters note that birds are often on retention ponds and commenters question if stormwater ponds could contain contaminants with potential effects on wildlife (1).

Response: In addition to the response in Comment 15, above, included within the draft National Pollutant Discharge Elimination System/State Disposal System Permit are the stormwater chapter requirements, which are comprehensive and enforceable. In addition, one of the stormwater requirements is for the Proposer to develop, submit to the MPCA, and require Facility staff to follow, a Stormwater Pollution Prevention Plan (SWPP). As the permittee is required to inventory and track all materials at the Facility site, the SWPP is to ensure that materials on site (including but not limited to feedstock, corn dust, gasoline, chemicals, etc.) do not get into the stormwater ponds and be discharged into a surface water.

17. Comment: Several commenters stated the draft EAW is inadequate because there is no discussion of the global warming and climate change implications of the proposed Project. Further, they state that there is no mention of greenhouse gas (GHG) emissions (methane, nitrous oxides, carbon dioxide) from the project or of the project’s cumulative contribution of greenhouse gas emissions. Commenters believe there is a net energy loss in producing ethanol. One commenter indicates that the

6 Agassiz Energy Ethanol Production Facility Responses to Comments on the On the Need for an Environmental Impact Statement Environmental Assessment Worksheet Knute Township, Minnesota

EAW does not address carbon-related regulatory changes. One commenter states that the MPCA must consider the environmental effects of carbon dioxide as an air pollutant with adverse consequences for the state (2, 3, 18, 38, 45, 66, 75, 70, 78, 79).

Response: In addition to the recommendation to proceed with an EIS, based on insufficient data in other areas of the EAW, MPCA staff is recommending that an EIS include analyses of GHG for this proposed Project. The MPCA has recently decided on an approach to discussing GHG emissions and energy efficiency. This decision was made after the draft EAW for this proposed Project was placed on public notice. Because MPCA staff is recommending a positive declaration on the need for an EIS on other grounds, it is consistent with the MPCA’s recent decision on GHGs to develop a GHG analysis as part of the recommended EIS.

The issue of GHG emissions and ethanol production is currently being studied by a number of institutions. Most of the research uses a lifecycle analysis approach in which energy inputs to feedstock production and the associated emissions are also considered with the Facility and vehicle emissions. The results of such analyses are compared with similar analyses of other biofuels and conventional gasoline and presented in equivalents of carbon dioxide per unit of energy to standardize the results. There are no standards for carbon dioxide as an air pollutant.

One such study by the Argonne Laboratory published on May 22, 2007, is entitled, Life-cycle Energy and Greenhouse Gas Emission Impacts on Different Corn Ethanol Plant Types, and can be found online at: stacks.iop.org/ERL/2/024001. This study suggests that if wet distillers grain (WDG) is produced in coal-fuelled ethanol plants, corn ethanol still offers GHG reductions of 18 percent. Based on the Agassiz Energy EAW, WDG will be produced only when the market would support direct sale of the product. The study also suggests that coal used with distillers dried grain with solubles (DDGS) may eliminate GHG emission benefits. MPCA staff believes, in light of the recent decision by the MPCA, it would be appropriate to gather additional information

18. Comment: One commenter states that there has not been consideration of environmental effects of climate change to which the proposed Agassiz Energy will contribute, nor has there been evaluation of alternatives or strategies that could mitigate emissions or subsequent effects (2).

Response: The draft EAW does not address carbon dioxide emissions data to understand the proposed Project’s potential contribution to greenhouse gases. While the MPCA has recently made a decision to include GHG emissions in future environmental review, this EAW was drafted and placed on public notice prior to that decision. Again, because the MPCA staff is recommending a positive declaration on the need for an EIS on other grounds, it is consistent with the MPCA’s recent decision on GHGs to develop GHG emissions data as part of the recommended EIS. It is also appropriate to point out that an EAW is not designed to evaluate alternatives, which is the role of an EIS.

19. Comment: Several commenters state there is inadequate discussion of the proposed Project’s proposed mercury emissions and how the emissions figure into the state’s plan to implement the mercury total maximum daily load (TMDL). Commenters ask who enforces the mercury limit and what happens if the Facility ultimately cannot meet the limit. Commenters are concerned about mercury emissions to the air (2, 3, 25, 44, 78).

7 Agassiz Energy Ethanol Production Facility Responses to Comments on the On the Need for an Environmental Impact Statement Environmental Assessment Worksheet Knute Township, Minnesota

Response: The MPCA concurs with commenters that there is insufficient data in the EAW demonstrating that fluidized-bed boilers using coal equipped with dry-sorbent injection and fabric filters alone, as proposed at Agassiz Energy, are capable of meeting more stringent mercury emission limits and recommends that the MPCA Citizens’ Board include the feasibility study included in the draft permit in the scoping document of the EIS being recommended for other reasons.

Mercury was evaluated as part of the Air Emissions Risk Analysis and its potential effects are accounted for in the human health risks presented in the EAW. It was not a human health risk driver for inhalation risk and did not evaluate non-inhalation risks that were calculated (e.g., potential risk from consuming fish) above a level of human health concern.

MPCA staff will enforce the mercury limit imposed by the permit as any other limit. The MPCA crafts emission limits that are achievable reflecting the technology and emission measurement methods. Activated-carbon injection has been demonstrated to achieve significant removal of mercury from coal combustion units with dry-sorbent injection and fabric filters, but is a recently- developed control technology for coal-fired boilers. Additional data about the performance of this technology at fluidized-bed combustors with dry sorbent injection/fabric filters is needed to adequately develop appropriate permit conditions.

The Mercury TMDL Implementation Plan (Plan) is under development by a stakeholder group to address fish consumption advisories for Minnesota’s lakes and streams. The MPCA will undertake activities to implement the Plan, including how existing and newly-proposed industrial boilers like the proposed Project are addressed in the Plan.

20. Comment: Commenters state that the EAW fails to discuss the proposed Project’s contribution to regional haze in Minnesota’s Class I areas (under the Clean Air Act that include Voyageurs (Voyageurs) National Park and the Boundary Waters Canoe Area Wilderness [BWCA]) due to its emissions of nitrogen oxides (2, 66).

Response: The MPCA has prepared a Draft Regional Haze State Implementation Plan (SIP) to satisfy the Clean Air Act’s visibility requirements, as specified in the Regional Haze Rule. The draft plan is currently on public notice and comments are being accepted until April 16, 2008. The Minnesota Center for Environmental Adequacy (MCEA) notes that “the plan calls for certain percentage reductions in Minnesota emissions by 2018 in order to stay on the path to required reductions by 2064. Currently, the MPCA’s estimates show that even with expected reductions in existing sources, the 2018 targets for Voyageurs and Boundary Waters will not be met.”

The draft Regional Haze SIP does call for a percent reduction in Minnesota emissions of sulfur dioxide and nitrogen oxides by 2018, but only for a six-county area in the northeast corner of Minnesota. Polk County, the site of the proposed Project, is not included in this six-county area.

It should also be noted that the Regional Haze Rule does not mandate that a specific visibility target for 2018 be met. Rather, individual states are given the discretion to set a reasonable progress goal based on the visibility conditions resulting from implementation of all reasonable control measures. Reasonableness is determined based on a test of several factors: cost of compliance, time necessary for compliance, energy and non-air environmental impacts, remaining useful life of the source, and resulting visibility improvement.

8 Agassiz Energy Ethanol Production Facility Responses to Comments on the On the Need for an Environmental Impact Statement Environmental Assessment Worksheet Knute Township, Minnesota

As described in the draft Regional Haze SIP, there are predicted reductions of sulfur dioxide and nitrogen oxides emissions from point sources across Minnesota between 2002 and 2018, taking into account both emissions growth and planned controls. The level of nitrogen oxides emissions (an estimated 182.2 tons per year) and sulfur dioxide emissions (an estimated 138.4 tons per year) from this proposed Project will not affect this overall reduction. The estimated point source emissions totals for nitrogen oxides in 2018, according the Minnesota Draft Haze SIP, is estimated at 117,492 tons per year, and the estimated point source emissions total for sulfur dioxide in 2018 is 83,506 tons per year. In addition, analyses generally show that individual facilities of this size and distance (Agassiz Energy is approximately 150 miles from Voyageurs and approximately 175 miles from the BWCA) from the Class I areas do not have a measurable impact on Class I area visibility. Emission reductions from sources of Agassiz Energy’s size and distance from Class 1 areas are not likely to be considered reasonable when looking at cost-effectiveness or resulting visibility improvement.

It should also be noted that the Regional Haze program is a long-term one; the SIP requires an adequacy determination every five years and a full update every ten years. In future revisions, additional control strategies for Regional Haze could be considered for this and other facilities, with controls being implemented if they are necessary to meet the reasonable progress goals for visibility and are shown to be reasonable.

21. Comment: The MCEA says that the proposed Project proposes to burn “biomass” but the EAW fails to identify the materials or to analyze the potential environmental effects of other fuel feedstocks. Alternatives to coal should be considered, but analysis of their potential effects should be provided (2).

Response: The EAW identifies materials (defined in Section 6b of the EAW on page 5) that may potentially be used as feedstocks in addition to coal and they include sugar beet pulp, sunflower hulls, corn stover, clean wood chips, or wheat straw. Emissions from agricultural material silos were included in the total Facility potential-to-emit calculations. Before Agassiz Energy burns alternative materials routinely in the boiler (see Section 23 on Page 28 of EAW), Agassiz Energy would be required to determine the type and amount of emissions from each proposed material. Agassiz Energy would also be required to obtain a permit to authorize regular use of agricultural materials as fuel.

22. Comment: Commenters say that scrubbers and baghouses are not capable of controlling particulate matter, volatile organic compounds (VOCs), and hazardous air pollutants (HAPs). Commenters are concerned about health impacts from air pollutants to children in a nearby school, elderly in a nearby care facility, and Erskine residents. Commenters are concerned about microscopic pollutants entering their lungs by living in close proximity to the proposed Project. Commenters are concerned the particulate inhaled from coal burning from the proposed Project could aggravate asthma and lung disease, based on information from the American Lung Association. Commenters are concerned about sulfur dioxide emissions and mortality risk. Commenters are concerned about acetaldehyde emissions to the air that becomes part of the watershed. Commenters are concerned generally about impacts including cancer from coal-burning facilities. Commenters are concerned about carbon monoxide emissions (3, 28, 27, 29, 26, 25, 24, 21, 20, 8, 16, 15, 11, 10, 6, 5, 7, 37, 38, 39, 40, 41, 44, 45, 51, 52, 54, 57, 60, 61, 62, 63, 64, 69, 70, 71, 73, 76, 80, 77, 79, 75, 74).

9 Agassiz Energy Ethanol Production Facility Responses to Comments on the On the Need for an Environmental Impact Statement Environmental Assessment Worksheet Knute Township, Minnesota

Response: Scrubbers Stack testing at ethanol plants throughout Minnesota has shown that scrubbers can capture more than 95 percent of total VOCs. It is correct, however, that there is uncertainty surrounding the nature of the remaining specific VOC emissions not controlled by scrubbers. That uncertainty concerns the make- up of those emissions and the amount that individual chemicals may contribute. The Air Emission Risk Analysis (AERA) described potential risks from the majority of VOCs likely to be emitted from the proposed Project. The AERA estimated risk from acute inhalation (short-term breathing risks) to be below health guidelines at the point of maximum concentration. These estimates evaluate potential risks from VOCs and HAPs and the analysis was done in the same manner as previous analyses for ethanol plants. VOC concentrations and related inhalation risks are expected to dissipate rapidly with distance from the source. There is not currently a more comprehensive data set available for estimating VOC emissions from ethanol plants than that used by the MPCA. The VOC data for Agassiz Energy was consistent with data from stack testing done at other ethanol facilities.

Baghouses Baghouses are the most effective way to capture particulate matter in the form of dry solid particles (U.S. Environmental Protection Agency [EPA] APTI Course 413, Control of Particulate Emissions). All Minnesota ethanol plants use baghouses for dust-generating operations such as the grain receiving, hammer milling, and DDGS loadout. Emission tests have proven the very high efficiencies baghouses can achieve.

Human Health Impacts MPCA staff has analyzed the potential effects of the proposed Project against three sets of health based criteria, discussed under A, B, and C, following.

A. Pollutants with a National Ambient Air Quality Standard (NAAQS, including sulfur dioxide)

The EPA sets National Ambient Air Quality Standards (NAAQS) based on the known human health effects of six pollutants known as criteria pollutants. The Clean Air Act requires the NAAQS to be set with a margin of safety to protect human health. Minnesota also has ambient air quality standards (MAAQS). The criteria pollutants reviewed for the proposed Project are listed in the table below.

For a proposed new source such as Agassiz Energy, computer models are used to predict the dispersion of air pollutants from the plant. Based on such a model, the impact of Agassiz Energy’s emissions by themselves is shown in the column labeled “Agassiz Energy” below. The MPCA also monitors the ambient air at several locations in Minnesota for these same pollutants. The range of background levels established by this monitoring is shown below and added to the Agassiz Energy impact. The total must be below the NAAQS before a permit can be issued. All pollutant concentrations listed below are in micrograms per cubic meter (µg/m3). (See also pages 30–31 of the EAW.)

10 Agassiz Energy Ethanol Production Facility Responses to Comments on the On the Need for an Environmental Impact Statement Environmental Assessment Worksheet Knute Township, Minnesota

As the table shows, all of the criteria pollutants from the proposed project added to the existing background levels show levels well below the NAAQS and MAAQS.

Agassiz Energy Background Total NAAQS MAAQS PM10 - 24 hr 24.9 14 - 37 39 – 62 150 150 PM10 - annual 5.0 7 – 23 12 – 28 (50)* 50 SO2 - 1 hr 13.1 32 – 181 45 – 194 1,300 SO2 - 3 hr 10.7 25 – 128 36 – 139 1300 915 SO2 - 24 hr 7.2 11 – 60 18 – 67 365 365 SO2 - annual 1.0 3 – 5 4 – 6 60 60 NOx - annual 0.8 8 - 17 9 – 18 100 100 CO - 1 hr 40,000 35,000 CO - 8 hr 10,000 10,000 *The federal annual standard for PM10 has been repealed. Minnesota maintains an annual standard of 50 in Minnesota rules.

PM10 = Particulate Matter less than 10 um in size SO2 = Sulfur Dioxide NOx = Nitrogen Oxides CO = Carbon Monoxide

Human health effects of PM have been mentioned in a number of comments. Since the projected maximum concentration of PM10 in the air, including background levels after the proposed Project is estimated at 62 µg/m3, it will be well below the standard of 150 µg/m3, and human health effects are not expected. In addition, it is important to note that the Agassiz Energy impact of 24.9 µg/m3 for PM is modeled to occur only in a small area southeast of the proposed Project near the fence line around the site. The estimated ambient air impact from the proposed Project at the school is 1.5 µg/m3 and at the senior center is 2.6 µg/m3. A similar conclusion can be made for the other pollutants listed in the table above.

PM10 and smaller, what the commenters refer to as microscopic, were evaluated in an air dispersion analyses performed for the proposed permit. The air dispersion analysis found concentrations to be well below the NAAQS threshold (approximately five percent of the ambient standard at the Agassiz Energy property boundary). This analysis does not predict health effects; however, it is a rough measure of how the emitted criteria pollutant concentrations may be elevated by the proposed Project. Concentrations of fine particulate will increase above current levels with the addition of this proposed Project.

The commenters are correct that some evidence suggests that fine PM may aggravate chronic breathing problems such as asthma. Dispersion modeling predicts relatively low concentrations in the area of the school and elder care facility. For healthy populations, potential effects from particulate exposure are not expected to rise to a level of health concern.

The AERA was conducted assuming controls for VOCs and HAPs. The health risks presented in the AERA do not account for diesel emissions from additional truck traffic. It is important to note that some human health effects may be highly subjective and the AERA does not predict effects on sensitive human receptors. Instead, the AERA attempts to characterize potential risk for the general population. Air dispersion modeling conducted for the AERA predicted the point of acute

11 Agassiz Energy Ethanol Production Facility Responses to Comments on the On the Need for an Environmental Impact Statement Environmental Assessment Worksheet Knute Township, Minnesota

non-cancer maximum impact to occur directly north of the proposed Project along the fence line. Air dispersion modeling indicates that concentrations of VOCs will dissipate rapidly with distance from the stack. Therefore, MPCA staff expects the potential human health risk to be lower in populated areas than the maximum values predicted to occur at the northern property boundary.

B. PSD Increment

Because the Agassiz Energy project is subject to the federal Prevention of Significant Deterioration (PSD) regulation, Agassiz Energy must also show that the proposed Project impact does not exceed PSD increments as shown below. PSD increments are required by the federal Clean Air Act to protect public health and welfare from unknown potential adverse effects, while allowing for economic growth. Increments have been established for PM10, sulfur dioxide, and nitrogen oxides. All pollutant concentrations listed below are in µg/m3.

Agassiz Energy Increment PM10 - 24 hr 24.9 30 PM10 - annual 4.9 17 SO2 - 3 hr 10.7 512 SO2 - 24 hr 7.2 91 SO2 annual 1.0 20 NOx annual 0.8 25

C. Air Toxics (including acetaldehyde and coal emissions)

The term “air toxics” sometimes refers to all air pollutants other than the “criteria pollutants” (PM10, sulfur dioxide, nitrogen oxides, carbon monoxide, lead, and VOCs). In Minnesota, “air toxics” usually refers to pollutants for which a recommended inhalation health-based limit has been established. Nitrogen oxides is included as an air toxic in Minnesota because we have established a 1-hour health-based recommended limit, as compared to the federal limit which is an annual average. VOCs and PM are not air toxics by themselves, but the chemicals that make up VOCs and PM are considered in an air toxics analysis.

The combined effect of air toxics emitted from the proposed Project is summarized in the table following. Acute risk is based on one-hour exposure and usually involves health effects, such as eye or nose irritation. For each chemical with an acute toxicity value, a hazard quotient is calculated by dividing the predicted concentration in the air (due to the emissions from Agassiz Energy) by a health-based recommended limit. The MPCA prefers to see a hazard quotient less than 1.0, although there are situations in which a proposed project with a hazard quotient greater than 1.0 does not present an unacceptable level of risk to human health. The “hazard index” in the table below is the sum of the hazard quotients for all the chemicals with a toxicity value. The MPCA goal is that the hazard index also be less than 1.0 to proceed with permitting.

Subchronic and chronic noncancer risks are calculated similarly. Subchronic risk is based on exposure over three months and chronic on annual exposure. The preferred 1.0 threshold is shown in the bottom row. The cancer numbers give the increased probability. For the inhalation case, for example, the risk increase is two in one million.

12 Agassiz Energy Ethanol Production Facility Responses to Comments on the On the Need for an Environmental Impact Statement Environmental Assessment Worksheet Knute Township, Minnesota

Total Inhalation Screening Hazard Total Multipathway Screening Hazard Index Index and Cancer Risks and Cancer Risks Subchronic Subchronic Acute Cancer Noncancer Acute Cancer Noncancer Chronic Chronic 0.7 0.01 0.6 0.000002 0.6 0.000009 0.6 0.000008

1.0 1.0 1.0 0.00001 1.0 1.0 1.0 0.00001

23. Comment: Commenters say that there is not a clear plan for ash disposal with the Polk County landfill projected to run out of capacity in 12 years. Commenter says that there are no guarantees that the ash would remain below hazardous waste regulatory levels and consider it toxic mud (3, 25, 38, 57, 70, 74, 75).

Response: The Aggassiz Energy EAW states, in Section 20a on Page 21, that Agassiz Energy plans to dispose of ash in the Polk County Landfill. Agassiz Energy did evaluate other disposal options and Clay County is a viable option. Polk County has indicated a willingness to accept Aggasiz Energy’s coal ash as stated in Attachment D of this EAW.

With respect to the comment about whether or not this proposed project’s coal ash would remain below hazardous waste regulatory levels, it is important to note that fossil fuel combustion wastes (FFC) wastes are the wastes produced from the burning of fossil fuels including coal. This includes all ash slag, and particulates removed from flue gas. FFC wastes are categorized by EPA as a “special waste” and have been exempted from federal hazardous waste regulations under Subtitle C of the Resource Conservation and Recovery Act, or RCRA. In addressing FFC wastes, Agassiz Energy’s coal ash would be exempted from hazardous waste regulations as a remaining FFC waste category that includes coal combustion wastes generated at non-utilities.

In two separate regulatory determinations, the EPA determined that neither large-volume wastes, nor the remaining FFC wastes, warrant regulation as a hazardous waste under Subtitle C of RCRA and, therefore, remain excluded under 40 CFR §261.4(b)(4). The EPA did determine, however, that coal combustion wastes that are disposed in landfills and surface impoundments should be regulated under Subtitle D of RCRA (i.e., the solid waste regulations). The coal combustion wastes from Agassiz Energy will be required to be disposed of in accordance with the rules.

24. Comment: Commenters site data indicating that cattle fed with WDG (an ethanol byproduct) are twice as likely to carry a deadly strain of E Coli (0157) bacteria as cattle not fed this distillers grain. Commenters are concerned that there could be health impacts on the cattle or people eating these cattle fed with the ethanol byproduct (3, 8, 38, 75).

Response: While MPCA staff acknowledges a concern with ongoing studies about the potential presence of E Coli 0157 bacteria in ethanol byproducts identifying a concern about feeding the byproducts to cattle, environmental review of proposed projects is required by rule to identify the potential effects of the proposed project to the environment, which is defined as the “physical conditions existing in the area that may be affected by a proposed project. It includes land, air, water, minerals, flora, fauna, ambient noise, energy resources, and artifacts or natural features of historic,

13 Agassiz Energy Ethanol Production Facility Responses to Comments on the On the Need for an Environmental Impact Statement Environmental Assessment Worksheet Knute Township, Minnesota

geologic, or aesthetic significance.” The potential effect on livestock from the products of the proposed Project are not within the scope of an EAW, which examines the potential for effects to the environment from a proposed project.

25. Comment: Commenters would like more information about lime-softening system that is planned for use in the bubbling fluidized bed/circulating fluidized bed (BFB/CFB) proposed for the Facility (3).

Response: The lime-softening system proposed for the Facility will be a wastewater treatment unit and will not be used to provide direct feed water for the BFB/CFB boiler.

In the lime softening process, hardness is removed by precipitating calcium and magnesium compounds out of water, which generate a lime softening sludge. Lime softening as a treatment process is commonly used to remove hardness, and Minnesota solid waste beneficial use categories allow for land application of this material as a soil additive if certain conditions are met.

Agassiz Energy has proposed to use the lime softening sludge to off-set a portion of the lime feed to the BFB/CFB boiler. The BFB/CFB boiler will require lime addition for emission control purposes. Because the lime softening system will be capturing lime from the Facility make-up water, the reuse of this material may reduce or eliminate the need to landfill this material. Agassiz’s air permit allows for a test burn of this material to ensure its utility in this manner. A beneficial use determination from the MPCA under Minn. R. 7035.2860 would be required to fully implement this option.

As shown on Figure 8 of the EAW, the majority of the noncontact utility water coming into the lime softening unit would be recovered as lime softening product water and returned to the front end of the water treatment system. A small amount of water (approximately 2 gpm) would be removed along with the lime softening sludge. Approximately 20 gpm would be combined with the thin stillage (water recovered from the centrifugation of the corn solids remaining after the fermentation and distillation process). This stream would contain monovalent salts and is referred to as a salt stream. The thin stillage is evaporated to create a syrup, which is added to the DDGS prior to off-site shipping. The water vapor created in the evaporators is condensed and returned to the ethanol production process. The non-condensable gases from the evaporators will be routed through the wet scrubber and to the Regenerative Thermal Oxidizer.

26. Comment: Commenters state that evaporation of wastewater (100,000 gallons per day) into air is toxic and will settle on the area watershed and get into lakes, rivers, and aquifers (3, 28, 27, 38, 40, 62, 75).

Response: The origin of the “100,000” gallons per day is unclear to staff. Drying the wet cake (the corn meal leftover from fermentation) results in an evaporation of roughly 300,000 gallons of water per day. The other evaporative loss is from the cooling tower and is estimated to be up to roughly 400,000 gallons per day, for a total of 700,000 gallons per day. The evaporative loss from the cooling tower will be pure water. When wet cake is drying, water evaporates and VOCs are driven off. The VOCs are routed to the regenerative thermal oxidizer for destruction at a 95 percent rate. There will also be a waste stream of salty water from the lime softening treatment. This can be mixed with thin stillage and wet cake. This is dried into distiller’s grain and used as animal feed. As dryer exhaust gets routed for treatment, there is not a release of constituents to the air. See Response to Comment 22 for additional information regarding VOC capture.

14 Agassiz Energy Ethanol Production Facility Responses to Comments on the On the Need for an Environmental Impact Statement Environmental Assessment Worksheet Knute Township, Minnesota

27. Comment: Commenters have concern about odors from sugar beets if used at the proposed Project (3).

Response: Odors could result if sugar beet waste is managed improperly. Agassiz has requested permission in the air emission permit to test burn the pulp from processing sugar beets as a possible renewable biomass fuel. MPCA staff experience is that there is little or no odor from the pulp itself in the sugar beet plant. Drying the pulp produces a mild odor similar to barley malting. At Agassiz Energy, the pulp would be stored in an enclosed silo.

28. Comment: Commenters are concerned about integrity of testing when test burns for agricultural materials are conducted and ask who is monitoring this testing. Commenters question the integrity of the testing by the consultant and Proposer. Commenters ask who is responsible for ethanol facility compliance. Commenters do not believe well testing should be done by the Proposer (3, 24, 27, 28, 40, 52, 62, 74, 77).

Response: Stack emission testing is performed by third-party contractors that are independent of either the MPCA or the facility being tested. If testing shows noncompliance with a permit limit, the results are referred to MPCA enforcement staff for further action. DNR staff provides oversight for well appropriation for facility production conducted by the Proposer (and its consultant).

29. Comment: Commenters are concerned about arsenic in ground water being disturbed from a drawdown and causing a serious problem for drinking water based on information from a retired Extension agent (3, 60).

Response: According to the Minnesota Department of Health (MDH), the commenters rightly point out that arsenic over 10 parts per billion (ppb) is observed in the Fosston-Mcintosh area, and possibly in the Mentor area. Arsenic data from the MDH and the MPCA public water supply and ground-water databases suggest that concentrations are likely below 10 ppb in the Erskine area. Although the Erskine area likely has relatively low arsenic concentrations, arsenic is highly spatially variable in aquifers and it is almost certain that some wells in the area have arsenic over 10 ppb now.

30. Comment: Commenters ask who is responsible for problems at the Facility if it is owned by a limited liability corporation. Commenters are concerned about management of the plant if it is abandoned due to obsolescence. Commenters are concerned about management of Facility if there is a downturn in the ethanol industry and profitability (3, 45, 66).

Response: Comment noted. This comment is beyond the scope of the EAW.

31. Comment: Commenters are concerned about fire and safety plans and response for the proposed Facility and believe drills are needed (3, 52, 77).

Response: The MPCA’s Aboveground Storage Tank program provides overfill protection depending on the flammability of the substance in the tank and the process by which the tank is filled. A flammable substance that is transferred to a tank without visual oversight would have alarms and shutoffs to prevent overfills, which are potential fire concerns.

Minn. Stat. ch. 115E requires facilities storing more than 10,000 gallons of oil or hazardous substances to have a prevention and response plan. The plan is more formal for facilities with a million or more gallons storage capacity. The plan requires facility planning for its response to public

15 Agassiz Energy Ethanol Production Facility Responses to Comments on the On the Need for an Environmental Impact Statement Environmental Assessment Worksheet Knute Township, Minnesota

safety, health, and environmental threats; to air, land, and water. Upon completion of the prevention and response plan, notice is given to the Minnesota Department of Public Safety (DPS). The DPS State Fire Marshal’s Office does not conduct plan reviews for ethanol facilities, other than for a required Fire Protection (Sprinkler) System.

It is optional for the DPS or the MPCA to review the prevention and response plan. If the MPCA reviews the plan, the MPCA examines the facility's preparedness for containing, recovering, and cleaning up spilled material. The DPS review, if any, is of the facility's preparedness for protecting the public's safety and property; primarily from fire, explosion, and smoke hazards. Facilities are encouraged to coordinate their preparedness with the preparedness of local fire and emergency management agencies. Fire and explosion responses are both a local public safety agency issue and a facility issue.

32. Comment: Commenters are concerned about traffic safety from increased truck traffic with the proposed Facility so close to the intersection if U.S. Highway 2 and U.S. Highway 59, a school, nursing home, clinic, apartment, and golf course. Commenters are wondering if the Minnesota Department of Transportation (MNDOT) has looked at traffic issues (3, 26, 45, 52, 63, 80, 77, 75).

Response: According to MNDOT, traffic impacts from the proposed Facility were studied and mitigation as stated in the EAW addresses those issues (see Section 21 on Pages 25 and 26 of the Agassiz Energy EAW). The interchange at U.S. Highway 2 and U.S. Highway 59 is designed to handle additional traffic above what currently exists. The increase in truck traffic can be accommodated by the reserve capacity available on U.S. Highway 2, which is a four–lane, divided highway and U.S. Highway 59, which is a two-lane, two-way highway. Average daily traffic counts on U.S. Highway 2 and U.S. Highway 59 of 3,000 (2006) and 1,850 (2006) respectively, indicate that the additional traffic volume of 266 trucks per day will not significantly impact the safety and operation of the highways. Lengthening of the right turn lane for southbound traffic and the construction of a northbound bypass lane will improve the safety and operation of the intersection at 350th Street and U.S. Highway 59.

U.S. Highway 2 and U.S. Highway 59 are heavy commercial truck routes built to provide for the safe movement of goods and services. The intersection of the two major highways is built as an interchange, is lighted and has adequate intersection sight distance. The intersection at 350th Street and U.S. Highway 59 also has adequate intersection sight distance. The majority of the trucks (90 percent) will be arriving and departing the plant site between the hours of 8:00 a.m. and 5:00 p.m. These hours will avoid the peak travel times.

Crash data was reviewed along U.S. Highway 59 from the intersection of 350th Street north past the Win-E-Mac school. Additional traffic volumes using the traffic distribution as outlined in the EAW will not present significant impacts to driver safety.

MNDOT is specifically recommending the addition or relocation of warning signs, additional pavement striping, performing a speed study (to determine appropriate posted speeds), extending a right turn lane, and constructing a bypass lane to address the identified traffic impacts. MNDOT will continue to monitor the safety and operational aspects of the highways and intersections in this area before and after the Facility is constructed, if constructed, and will work with those involved to take the necessary steps to address concerns or issues.

16 Agassiz Energy Ethanol Production Facility Responses to Comments on the On the Need for an Environmental Impact Statement Environmental Assessment Worksheet Knute Township, Minnesota

33. Comment: Commenters are concerned about noise impacts from proposed Facility (26, 21, 52, 63, 80).

Response: The future operational noise levels including traffic noise are estimated to be below the state noise rule thresholds. Noise analysis is provided in Section 24 of the Agassiz Energy EAW on Pages 33–35. The results of the noise analysis, as measured in decibels with an “A-weighting scale” dBA applied to sound measurements to adjust for the sensitivity of the human ear are contained in Table 24-1 and Table 24-2 on Page 34 of the EAW. To be in compliance with Noise Area Classifications that are established by the state noise rules, the proposed Project cannot contribute greater than a daytime noise level of 60 dBA and a nighttime noise level of 50 dBA. As shown in these tables, the estimated noise levels will be in compliance with Minnesota noise standards.

34. Comment: Commenters are concerned about odor impacts from the proposed Facility (26, 21, 63, 75, 80).

Response: The startup of an ethanol plant in St. Paul in 2000 made the odor potential of these plants an obvious issue. At that time, the large VOC emissions from drying the wetcake (leftover corn meal from fermentation) were not known. The emission of the large amounts of VOC that result from the drying process caused very noticeable odors in St. Paul. Testing at the St. Paul plant confirmed the VOC from drying as the main odor source, and the first thermal oxidizer was installed to reduce the VOC emissions, and thus the odor. Thermal oxidizers are now standard on all ethanol facilities.

35. Comment: Commenters are concerned about light pollution from the proposed Facility (21, 52).

Response: As indicated in the Agassiz Energy EAW in Section 26 on Page 36, exterior lights will be used for nighttime operations to ensure worker safety and security. Agassiz Energy will use lights to illuminate Project roads and pathways and wall-mounted lights on building entrances. Downward- pointing lights and glare reduction filters will be used on outdoor lighting fixtures to minimize off- site impacts.

36. Comment: Commenters are concerned about damage to endangered species (25).

Response: Section 11b of the Agassiz Energy EAW on Page 12 discusses endangered or threatened species. The DNR’s Minnesota Natural Heritage and Nongame database was reviewed to determine if any rare plant or animal species or other significant natural features are known to occur within a one- mile radius of the proposed area to be disturbed. The DNR concluded, based on the nature and location of the proposed Project as it is currently proposed and described in this EAW, that the proposed construction will not affect known occurrences of rare features.

37. Comment: Some commenters favor this Project and see it as a reduction in foreign oil dependence and a way to meet government goals for increased ethanol production. Commenters believe the Facility is designed to comply with latest environmental standards and there are many factors that make this a good location for the proposed project, including water availability, transportation access, and job creation. Commenters believe coal is reasonable to use for this Project to keep it economically profitable. Commenters believe the water levels in the area and wildlife will not be impacted. Commenters also believe pollution, wetlands, traffic, and noise issues will not be significant. Commenters believe jobs created by the Project will benefit the area and the Project is needed to keep area going (17, 30, 31, 32, 33, 34, 35, 36, 43, 47, 49, 50, 72).

Response: Comments noted.

17 Agassiz Energy Ethanol Production Facility Responses to Comments on the On the Need for an Environmental Impact Statement Environmental Assessment Worksheet Knute Township, Minnesota

38. Comment: Commenters note that a cemetery is located very near the proposed Project. Commenters are concerned about smoke from the proposed Project hanging overhead during funerals and when visiting the cemetery. Commenters do not believe the proposed Facility should be so close to cemeteries. Commenters believe it should be quiet during funerals (16, 15, 37, 52, 63).

Response: With the control equipment proposed for Agassiz, no visible emissions of smoke or other pollutants are expected. During colder weather, condensed water vapor resembling clouds will be visible from some of the stacks. The compatibility of a proposed Project with surrounding activities is a local land-use decision (see Comment 33 and Comment 33 Response regarding noise standards).

39. Comment: Commenters believe taxpayers are contributing $1.34 per gallon in subsidies to support ethanol and believe it is outrageous (38, 70).

Response: Comment noted. This comment is outside the scope of the EAW analyses.

40. Comment: Commenters are concerned that Agassiz Energy does not have property rights for entire proposed site (40).

Response: When asked about the property rights for the proposed Agassiz Energy site, Agassiz Energy stated that it has secured purchase options on the site presented in the EAW, but do not intend to exercise the purchase options until the permitting process is complete.

41. Comment: Commenters are concerned about the MPCA’s objectivity with regard to the public informational meeting with Proposer and consultant being allowed to respond to questions on EAW project. Commenters are concerned about Proposer and consultant interaction with MPCA during the review process (62, 74).

Response: During public meetings, it is common practice for MPCA staff to ask a proposer or consultant to speak about technical aspects of a project. Additionally, it is necessary for MPCA to gather data and information throughout the environmental review process by requesting information from and speaking to the proposer or their consultant regarding technical aspects of a project.

42. Comment: Commenters are concerned that increased production of corn for ethanol and ethanol production has resulted in increased atrazine use and contaminated wells in southwest Minnesota (78).

Response: Comment noted. This comment is outside the scope of this EAW that must examine the potential for environmental effects for the proposed Project.

43. Comment: Commenters are concerned that the proposed project will result in economic harm to the community (76).

Response: The comment is noted. The analysis and evaluation of economic impacts including harm is outside the scope of this EAW.

18 Agassiz Energy Ethanol Production Facility Responses to Comments on the On the Need for an Environmental Impact Statement Environmental Assessment Worksheet Knute Township, Minnesota

44. Comment: Commenters are concerned increased corn production for ethanol and ethanol production has contributed to the dead zone in the Gulf of Mexico (78).

Response: The comment is noted. This comment is beyond the scope of the EAW that must examine the potential environmental impacts from this specific Project.

45. Comment: Commenters outlines 404 Clean Water Act requirements if any deposition or dredging of fill materials to waters of United States (81).

Response: Comment noted and forwarded to Project Proposer.

46. Comment: Commenters outlines the MDH requirements for noncommunity nontransient public water supply system and indicates that the MDH requires notification, a fee, a well inspection, and evaluation (82).

Response: Comment noted and forwarded to Project Proposer. The MPCA has informed the Proposer and the Proposer’s consultant of the specific requirements regarding fees, notification, inspection, and evaluation of noncommunity nontransient public water supply system wells.