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1

1 STATE OF ) )SS 2 COUNTY OF JO DAVIESS)

3

4

5 In the Matter of the Petition

6 of

7 Rentech Energy Midwest Corporation,

8 Jo Daviess County, Illinois

9

10 Testimony of Witnesses 11 Produced, Sworn and Examined on this 14th day 12 of February A.D. 2007 before the Jo Daviess County 13 Zoning Board of Appeals

14

15

16 Present: 17 William Tonne 18 Tom Heidenreich Nick Tranel 19 Susan Davis David Jansen 20 Melvin Gratton, Chairman

21 Linda Delvaux, Zoning Administrator

22

23

24

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1 INDEX

2

3 WITNESS: JOHN DIESCH

4 Examination Page

5 Attorney Heaton (Direct)...... 16

6

7 WITNESS: MARK IBSEN

8 Examination Page

9 Attorney Heaton (Direct)...... 46

10

11 WITNESS: JOHN IWANSKI

12 Examination Page

13 Attorney Sanders (Direct) ...... 108

14

15 WITNESS: KEVIN BOYER

16 Examination Page

17 Attorney Sanders (Direct) ...... 154

18

19 EXHIBITS Exhibit Page 20 Petitioner's Exhibit No. 1...... 16 Petitioner's Exhibit No. 2...... 16 21 Petitioner's Exhibit No. 4...... 110 Petitioner's Exhibit No. 5...... 153 22

23 End ...... 170

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1 MR. GRATTON: Good evening everybody and

2 welcome to this evening's proceedings. This is

3 the special meeting of the Jo Daviess County

4 Zoning Board of Appeals. I'm going to start by

5 calling roll so we can establish a quorum.

6 MS. SOPPE: Tom Heidenreich?

7 MR. HEIDENREICH: Present.

8 MS. SOPPE: Nick Tranel?

9 MR. TRANEL: Here.

10 MS. SOPPE: Bill Tonne?

11 MR. TONNE: Here.

12 MS. SOPPE: Susie Davis?

13 MS. DAVIS: Here.

14 MS. SOPPE: Mel Gratton?

15 MR. GRATTON: Here.

16 MS. SOPPE: Alternative Dave Jansen?

17 MR. JANSEN: Here.

18 MR. GRATTON: Okay. We have a quorum so

19 we can proceed. I'm going to dispense with the

20 approval of the minutes from our last regularly

21 scheduled meeting, and we'll take that up at our

22 February 28th regular meeting. We'll get right

23 into the business at hand this evening. We have

24 a request before us this evening, an application

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1 by Rentech Energy Midwest Corporation, and they

2 are requesting a special use permit in an ag

3 district to allow for basic industry. They plan

4 to convert the existing plant into an integrated

5 fertilizer and Fischer-Tropsch fuels production

6 facility which will use coal gasification

7 technology to produce nitrogen fertilizer and

8 other products such as transportation fuels and

9 electricity. The address for this particular

10 request is 16675 U.S. Route 20 West in East

11 Dubuque.

12 I have a few items I'd like to just take

13 care of as far as housekeeping before we begin.

14 I would like to introduce some people. On the

15 staff, we have most of the people representing

16 staff over here in the jury box. And Linda

17 Delvaux, our zoning administrator. Linda, just

18 raise your hand so people know who I'm talking

19 about. And then normally we would have Terry

20 Kurt who is the legal counsel for the County,

21 and he has deferred to two people who have been

22 hired for this process who have expertise in not

23 only legal but environmental law. And the two

24 people representing Foley & Lardner, LLP are

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1 Chris Zibart and Katie Licup, and -- sitting

2 over here, and they will be representing the

3 counsel from a legal standpoint. The County has

4 also retained a environmental engineer

5 corporation consulting group of URS. And we

6 have with us next to Linda over here Patty

7 Bryan, Michael Musial, and Bruce Dumdei. So

8 they are acting as consultants to County Staff

9 in this evening's proceedings. They will be

10 helping in the preparation of finding of fact

11 and things like that as we move forward, and

12 help us answer any environmental or other

13 engineering questions we might have.

14 The process -- or let me get the time line

15 out of the way, first of all. I'm not sure how

16 long this will take. I'm not sure how lengthy

17 the presentation might be on behalf of

18 petitioner, but we have set aside this evening

19 and again tomorrow night, and there are some

20 open dates in the courtroom next week if it

21 turns out that we have to, you know, take that

22 long. I hope it won't. I hope we can wrap this

23 up in a relatively timely manner. But tonight

24 and tomorrow night is open on the docket just in

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1 case and this may be continued, so I'll just

2 tell you that up front just in case we don't

3 finish this evening. I would anticipate that we

4 will go no later than 9 o'clock this evening.

5 If it looks like we can see light at the end of

6 the tunnel and we can finish up tonight, then we

7 might go longer, but otherwise we will continue

8 until tomorrow evening.

9 We also will look at -- this might be --

10 there might be some lengthy requirements and

11 contingencies in here as far as permitting,

12 things like that, and I think what we'd like to

13 do, to make sure we get this as correct as

14 possible, make up -- put together the finding of

15 fact and have staff and counsel and everyone put

16 this together as far as the finding of fact, and

17 then make the final decision on this request on

18 our regular meeting date of February 28th, so

19 that's the plan as of now.

20 I would like to explain a little bit about

21 the request and how it will be viewed this

22 evening. Like I said, this is a special use

23 request. The purpose of the Zoning Board of

24 Appeals is to look at this special use in light

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1 of special use standards which are delineated in

2 the Jo Daviess County Zoning Ordinance, and

3 there are six standards in there that we will be

4 considering as far as whether or not this is an

5 acceptable special use in Jo Daviess County as

6 far as basic industry in an ag district. And

7 just real briefly I'll touch on those, and maybe

8 as you do your presentations, gentlemen, and as

9 anyone here wants to be heard, if you would

10 direct yourself to those questions, or those

11 areas, those will be the areas we will be

12 considering as we make a determination on this

13 particular request.

14 The first one, and like I said, there are

15 six of those standards, the first one is whether

16 or not the project will -- how it will affect

17 the health, safety, and welfare of the people of

18 Jo Daviess County. Secondly, whether the

19 project will be injurious to the use and

20 enjoyment of the other property in the immediate

21 vicinity and whether it will impair property

22 values. Third, whether the project will impede

23 the normal and orderly development of

24 surrounding property. Fourth, whether the

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1 applicant is proposing adequate utilities,

2 access roads, drainage, etcetera. Fifth, the

3 effect on traffic congestion on public streets

4 and highways. And six, whether the special use

5 otherwise conforms to the applicable County

6 regulations. So if everyone would address

7 those.

8 I'm going to swear everyone in in a few

9 minutes, and I want everyone to remember that

10 you will be under oath when you testify, so the

11 truth in your testimony is very important. I

12 would ask that everyone be as brief and concise

13 as possible so that we don't tire or wear anyone

14 out before the evening is totally over. If you

15 have a cell phone I would ask you to either turn

16 it off or put it on vibrate, if you would.

17 Otherwise we'll stop and listen while you talk.

18 Does anyone have any questions as far as

19 proceedings this evening? Okay. Hearing none,

20 we will begin then.

21 Normally at this time what we would do is

22 hear the staff report regarding this case. The

23 staff report today is about 11-plus pages long,

24 and I would probably dispense with having Linda

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1 read that at this time. I think the petitioner

2 has received a copy of that report.

3 MR. HEATON: I don't think so.

4 MR. GRATTON: Linda, have they or not?

5 MS. DELVAUX: No, I guess they haven't.

6 It was lack of communication, I think,

7 between --

8 MR. GRATTON: I think probably you'll be

9 addressing most of the concerns that are in

10 there, but we will make a copy of that available

11 to you. And as you testify, anything that you

12 can get along with the standards and any

13 concerns that are addressed in there, why if you

14 would present those it would be helpful. So

15 we'll get you a copy. And I'm sorry that you

16 don't have one. Are there -- does anyone have

17 procedural questions before we begin? Okay. We

18 don't have too many thousands of people here

19 tonight, so what I think I'll do is instead of

20 swearing everybody in individually, I'm going to

21 ask that we all raise our right hand and get

22 sworn in together so that all of us when we

23 testify we will be under oath, and please

24 remember that in the future.

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1 (Whereupon everyone was sworn.)

2 MR. GRATTON: Okay. At this point then I

3 think we're ready. And I would ask the

4 representatives from Rentech Midwest maybe to

5 make some introductions and begin the

6 presentation for us. We're here to learn. All

7 right.

8 MR. HEATON: Thank you, Mr. Chairman and

9 members of the Zoning Board of Appeals. We

10 first of all want to thank you for coming out on

11 Valentines night and giving us a special

12 hearing. We should be able, we think, to

13 present our case pretty much this evening and

14 then end within maybe the first hour tomorrow

15 evening. We have a witness coming from Chicago

16 tomorrow. My name is Jock Heaton. I'm a lawyer

17 in Sterling, Illinois. My partner Tom Sanders

18 is to my right, and my other partner Jim Reese

19 is in the first row here. They will be helping

20 Rentech this evening in presenting its case.

21 As you know, we represent Rentech Energy

22 Midwest Corporation. It's filed its application

23 requesting that it be granted a special use for

24 a basic industry within the County's Ag-1 zoning

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1 classification. Its present plant is situated

2 on approximately 187 acres.

3 MR. GRATTON: Whenever you'd like to use

4 the wall, tell us and we'll dim the lights.

5 MR. HEATON: I think when Mr. Diesch

6 testifies we'll have -- he's got this thing, but

7 I would like to kind of explain what land is

8 involved here just from the start. Maybe Tom,

9 if you can hold it. As I indicated, the Rentech

10 plant was actually built in 1965. Rentech has

11 owned it since 2006. In its present facility --

12 this is a copy of the concept plan that was

13 submitted to your County Zoning Office. This is

14 the existing facility, and it's situated on

15 approximately 187 acres. What we are adding to

16 the site would be a 19-acre tract that Rentech

17 owns here, and then we are taking seven or eight

18 various tracts that are owned by the adjoining

19 owner, and that's Gary Newt. Mr. Newt owns this

20 parcel here, he owns miscellaneous other parcels

21 that surround this. And so when you add the

22 original 187 acres to the land that Mr. Newt

23 will also -- that we have an option to purchase

24 on -- or my client does, and the 19 acres that

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1 Rentech will be adding to the project, it's

2 going to bring the total project to about 279

3 acres. It's also mentioned in the application

4 that a trust by the name of Wilma Hilby trust

5 which owns about 1.7 acres, Rentech has an

6 option to purchase this narrow strip which will

7 allow a second entrance to the plant. This will

8 lead to the existing Sandridge Township road

9 that will eventually lead to Route 20. So the

10 project is actually going to be 279 acres plus

11 or minus. We have given you the list

12 of witnesses that we intend to rely on. I think

13 there were ten, and I think we're actually going

14 to pear (sic) that down to about seven. John

15 Diesch will be our first witness. I'll have him

16 come up in a minute. John is the president of

17 Rentech Energy Midwest Corporation. John has

18 actually been on-site since 1998. He will give

19 you a Power Point presentation about the history

20 of the plant, the existing plant, and what the

21 new plant will entail, and also the benefits not

22 only to Jo Daviess County but to Northwest

23 Illinois.

24 Then we're going to have Mark Ibsen. Mark

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1 is with Rentech, the parent company, which is

2 based in Denver, Colorado. Mark is the manager

3 of project engineering. He's been on this

4 project for a number of years and will stay to

5 the end. So he will talk about some of the

6 engineering issues, traffic issues, the railroad

7 issues, if any, and some other issues that I

8 think you will need to know about.

9 Then John Iwanski who is in the white

10 shirt off to my far left, John is with Trinity

11 Consultants which is an environmental management

12 consulting firm based out of Oakbrook, Illinois,

13 and he will talk about some of the air permit

14 issues that Rentech will have to go through

15 before it can build the plant.

16 Tomorrow evening we're going to have a

17 land use planner, Kon Savoy who is with an

18 outfit called Teska Associates from Evanston,

19 Illinois. Kon has done a lot of land use

20 planning around the northern part of the state,

21 and he will testify that in his opinion the

22 project will indeed meet the standards that your

23 chairman enunciated a few minutes ago.

24 Later this evening we will have Kevin

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1 Boyer. Kevin is a -- there he is back to the

2 left. Kevin is a certified real estate

3 appraiser who has reviewed the property and the

4 surrounding properties, and he will testify that

5 the special use that's been requested will not

6 substantially diminish and impair property

7 values within the neighborhood.

8 We also have some letters of support from

9 Senator Todd Sieben and Representative Jim Sacia

10 which we will introduce into evidence. And then

11 we have three other individuals who would like

12 to speak. Mr. Ron Lawfer, if you could raise

13 your hand. Ron is a -- from Stockton, Illinois

14 and a farmer here. Many of you may know him.

15 He's going to talk about the benefits of keeping

16 this plant in this area and the benefits of cost

17 effective fertilizer to farmers. We have Kurt

18 Brunner way in the back. Kurt is with the

19 Brotherhood of Carpenters and

20 Joiners of America, the carpenter's union. He's

21 from Mount Carroll, Illinois, and he will talk

22 about the significant benefits that will come by

23 way of the construction jobs that will be needed

24 to build the new plant. And I think that's

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1 everyone for the evening then. Is there anybody

2 here that I forgot? Okay.

3 Let me say at the outset that as is

4 mentioned in the special use application, it is

5 important that if you are willing to grant the

6 special use that the special -- that the

7 language that your board recommends to the

8 County -- to the County Board be that this

9 special use must be transferable to a third

10 party. We don't know how long Rentech will own

11 this facility. It's going to invest a

12 substantial amount of money in building this new

13 plant, and if the plant should be sold in the

14 future to a third party, obviously we don't want

15 to have to come back to the County and get

16 permission to be able to transfer that to a

17 third party.

18 So with that I would like to call our

19 first witness, John Diesch. John, you can stand

20 up. And John is going to, first of all, take

21 you through his Power Point presentation, and

22 then he's going to answer any questions that you

23 or anybody in the audience may have. And I

24 would like to hand out at the outset two

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1 exhibits. The first is Petitioner's Exhibit 1,

2 which is a one-page summary of the overview and

3 of the plant and what the conversion process

4 will be, and also the benefits of shifting to

5 what he's going to refer to as coal

6 gasification. If you'd pass that out to your

7 committee. And then we have these available for

8 anybody in the audience that would like to

9 follow this to go along.

10 We'd also like to offer into evidence

11 Petitioner's Exhibit No. 2, which is a copy of

12 the Power Point presentation. I think it will

13 be a lot easier if you have the benefit of

14 following your own copy as John works through

15 this.

16 JOHN DIESCH,

17 being previously duly sworn, was examined and

18 testified as follows:

19 DIRECT EXAMINATION

20 BY MR. HEATON:

21 Q. First of all, would you again state your name.

22 A. My name is John Diesch.

23 Q. And John, tell us -- I mentioned you've been

24 with Rentech Energy Midwest Corporation since

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1 1998. What is your position there?

2 A. I'm currently president of Rentech Energy

3 Midwest Corporation.

4 Q. Have you been in that position since 1998?

5 A. Well, the previous owners -- I've been

6 responsible for the plant site since 1998, but

7 under different actual titles with the different

8 owners.

9 Q. Okay, and what is your profession?

10 A. My background is I grew up on a farm in

11 Southeastern Minnesota. My hometown is a little

12 town called -- community called Blooming

13 Prairie, Minnesota so I've got quite a bit of an

14 agricultural background. Went to school at

15 Community State University. I have a degree in

16 environmental studies, and then from the

17 University of Minnesota a degree in chemical

18 engineering. I spent the last 25 years in this

19 industry working for companies like Monsanto. I

20 started my career with Monsanto down in

21 Louisiana, worked for a company called Columbian

22 Nitrogen Corporation, which is now PCSIS

23 Corporation, Saskatewan, IMC Global, and then

24 Royster Clark, and then now Rentech Energy.

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1 MR. HEATON: If you then would start with

2 your Power Point and --

3 MR. DIESCH: The agenda for this, first of

4 all, I want to go over some of the history of

5 the facility, talk a little bit about the

6 current operations, how we produce the products

7 we make, our expansion plans and some of the

8 benefits that we'll see from this project

9 expansion. The plant itself was built in 1965

10 by Northern Illinois Natural Gas Company, today

11 known as Nicor. We currently have 123 employees

12 of which 87 are union, part of the UAW 1391 out

13 of Dubuque. Over the last -- as this project

14 has moved forward actually we've began the

15 process of hiring additional people. We've

16 added about 10 percent to the work force here in

17 the last year, both hourly as well as

18 engineering and technical and other types of

19 professions for the facility. We're probably

20 one of the highest paying for our hourly people

21 in the area. The average wage is about $60,000

22 per year plus full benefits. Major products we

23 produce are ammonia, urea, UAN solution. On an

24 annualized basis we produce roughly 670,000 tons

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1 of fertilizer products which we sell to Midwest

2 farmers. The majority of it stays within a 200

3 mile radius of the facility. Companies like FS

4 -- some of our major customers are companies

5 like FS here locally, Swiss Valley are two or

6 three of the larger companies that we sell our

7 products to. Last year we had 125 million in

8 sales. And our current feedstock is natural

9 gas.

10 A little bit about the tax base. We are

11 the largest single payer of taxes in the County.

12 Last year 416 -- roughly $1,417,000 of taxes, of

13 which about 253,000 go to East Dubuque School

14 District. Again, we're the largest taxpayer in

15 the school district. Annual payroll, our

16 estimate for 2007 is just a hair under

17 $9 million for payroll for our facility.

18 Plant history, again, I mentioned it was

19 built in 1965. At that time it was just an

20 ammonia plant producing anhydrous ammonia.

21 Production rate of about 600 tons per day using

22 natural gas as feedstock. Over the years as

23 markets changed and agricultures changed we

24 began adding different newer product to our

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1 product line. We had a number of expansions.

2 Ammonia expansions in '68, '75, '81, '88, and

3 when I say expansion, we added additional

4 capacity to the plant. In 1975 we added urea

5 production. We had that large prill tower.

6 That large tower that you see out there, that's

7 a prill tower which we're no longer using, but

8 that was producing a solid form of urea. And in

9 '78 we had UAN solution production, which a lot

10 of the farmers in the area use. And then

11 upgraded in 1992. We got away from the prill

12 tower and went to a granular product, which gets

13 us a very high quality product. And one of our

14 major customers is Scotts, so if you buy Scotts

15 Fertilizer there's a good chance you have our

16 urea in it. And the first carbon capture for

17 the plant, our CO2 plant was actually built in

18 '72, and we had a major expansion in 1980.

19 We've had a very safe operating history.

20 Been very active in the community, taking part

21 in sports teams, we've -- civic groups. We work

22 very closely with the local fire department. We

23 support them financially. We also train with

24 them. We have a hazardous materials team that

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1 on occasion we'll go out and assist the County.

2 Actually we assisted all three states, the local

3 counties in all three states that surround us

4 with specific incidents. Paramedics emergency

5 responders, we have some folks on the local fire

6 department, members of the local emergency

7 planning commission, and then other business

8 organizations. We have excellent labor

9 management relations. In fact, we just

10 completed negotiating a collective bargaining

11 agreement, a six-year agreement which we

12 finalized this past fall.

13 Why did Rentech pick East Dubuque? Well,

14 first of all, we're located in the middle of the

15 corn belt on the western end of the Northwest

16 Illinois alternative energy corridor. This is a

17 key. We've got good railroad access, very good

18 barge access. We have the River to

19 the heartland of the United States, excellent

20 road access to local farmers. We have a well

21 educated and trained work force. And 90 percent

22 of our products are sold within 200 miles, so it

23 significantly cuts down on our shipping costs.

24 Again, our major product's anhydrous

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1 ammonia. About half of the ammonia produced is

2 used for direct application to agriculture. The

3 other half is upgraded in our other products,

4 the urea and the UAN solution. The urea

5 product, we both make the liquid and the solid

6 form. The solid form, again, I mentioned goes

7 to the lawn and garden industry such as Scotts.

8 One of our bigger customers that has begun to

9 grow over time has been the use of ammonia and

10 -- both ammonia and urea for nitric oxide

11 reduction systems in power plants. We sell

12 quite a bit to the power and pulp and paper

13 industry.

14 UAN solution is probably the largest

15 volume product we produce that goes for direct

16 ag application. And also liquid carbon dioxide

17 which we sell to the beverage industry.

18 That's an areal photograph of the plant.

19 You can see that's the Mississippi River. We

20 have a barge facility kind of off to the side

21 there where we can load some of our products by

22 barge. And that's Dubuque back up in the

23 background.

24 A little bit about our parent company,

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1 Rentech Energy is a wholly owned subsidiary to

2 Rentech, Incorporated. Rentech was formed in

3 1981. It's our publicly traded company on the

4 American stock exchange. For the past 25 years

5 they've been working research and development

6 into the Fischer-Tropsch technology. We

7 currently own 23 patents in that technology.

8 And then in April they purchased the plant for

9 the purpose of utilizing their technology to

10 expand and actually to make the first world

11 scale Fischer-Tropsch fuels production facility

12 in the United States.

13 The reality of the plant. Since 2000 we

14 all feel it when we pay our utility bills,

15 natural gas prices are extremely high and

16 volatile. To produce ammonia using natural gas

17 as a feedstock it's roughly 90 percent of our

18 operating costs. So when natural gas prices go

19 up the farmer is going to pay more for his

20 fertilizer because of that. Prices have hit

21 historic highs. Last year at this time natural

22 gas was trading for nearly $15 per unit. Since

23 2000 because of these high and volatile natural

24 gas prices this industry has been shutting down.

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1 22 percent of the U.S. fertilizer industry has

2 shut down since 2000 because of the high and

3 volatile natural gas prices. And because of

4 that we now import over 50 percent of our

5 nation's fertilizer to grow our corn crop.

6 The East Dubuque plant will not survive

7 without a feedstock change. This plant would

8 have been shut down three years ago if it wasn't

9 for this project going forward. We have been --

10 we've had one year in the black in the last six

11 years. That was in 2004 was the first year in

12 six years that we made money at this facility.

13 Why is it -- this is a comparison of natural gas

14 prices. The market today is trading between 7

15 and $8 in MMBtus if you look it up in the

16 futures market. The front month we traded in

17 the 7.50 range, and you compare that to other

18 parts of the world, Trinidad $1.25, Middle East

19 75¢, and so they can produce products that you

20 use as a farmer and ship it up into the

21 Mississippi -- up the Mississippi River right in

22 the middle of the corn belt cheaper than we can

23 make it, and that's been our problem having to

24 compete with offshore. We're paying ten times

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1 the amount for natural gas than offshore

2 producers, so consequently as it shrinks -- the

3 industry shrinks in this country it's expanding

4 in the Middle East. All the new production

5 coming on line is taking place in the Middle

6 East or South America.

7 I'm going to go just briefly over to

8 process of the existing plant, how it's

9 producing anhydrous ammonia. It starts with

10 natural gas. About two-thirds of the gas that

11 we use, we use 31,800 MMBtus a day of natural

12 gas. We're one of the largest consumers in the

13 State of Illinois. That's enough gas to heat

14 150 thousand homes per day. So you can imagine

15 the amount of gas we use. Imagine our natural

16 gas bill. It's extensive. Natural gas, we

17 bring it into the plant, we have a large --

18 basically a furnace called a primary reformer

19 where we break the carbon and hydrogen bond. We

20 need the hydrogen to make ammonia. The nitrogen

21 from the ammonia comes from the air. We also

22 add water and steam, and the steam and the water

23 combine with the carbon and produce carbon

24 dioxide. The carbon dioxide, part of it goes to

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1 producing urea, one of our products, and the

2 other part is liquified and we sell it in the

3 beverage industry.

4 About half the ammonia, like I said

5 before, goes for direct sales, half of it is

6 upgraded to produce products like urea, hydric

7 acid, ammonium nitrate fertilizer, so these are

8 the products that we produce in the plant. We

9 import -- we use 15 megawatts of power currently

10 off the grid to operate this facility.

11 Our plant location, this is the concept

12 plan. As you can see we're roughly just a

13 little over a mile off of U.S. 20. Kind of off

14 the beaten path. Unless you know we're there

15 you really don't see us except during cold

16 weather. During cold weather you can see the

17 steam or the water vapor coming off the

18 facility. Right along the Mississippi River we

19 have good barge access, rail access. It's a

20 good place to build a facility.

21 A little bit about the conversion project.

22 We're going to be using Illinois coal to gasify

23 or produce ammonia, anhydrous ammonia, all of

24 the existing products we currently use -- have.

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1 Fischer-Tropsch fuels and electric power for

2 internal use. This ensures a continued

3 viability of the plant, will add about 120

4 additional jobs to the facility. During the

5 height of construction we'll have roughly a

6 thousand construction workers at the site. One

7 of the big positive things of this project is

8 reduced regulated emissions lower than the

9 existing facility is today, significantly lower

10 -- will be lower. Another positive thing will

11 be the low cost to produce nitrogen fertilizer

12 in the area which allows us to be more

13 competitive in the market, and that will have a

14 stabilizing effect on fertilizer prices for the

15 local farmer.

16 The project time line, the project is kind

17 of broken in a number of stages. The first

18 phase, Phase 1, is install the gasification

19 process and get the ammonia plant converted off

20 natural gas as quick as possible. Economically

21 that's the first thing we have to do. Phase

22 1-A, which will lag about six months behind, is

23 the first Fischer-Tropsch process. So about

24 two-thirds of the synthesis gas that comes off

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1 the gasifier will go to ammonia production, and

2 about one-third will go to Fischer-Tropsch fuel

3 production. We're going to be using

4 ConoccoPhillips E-Gas gasification technology.

5 It's probably one of the most mature

6 technologies. It will be a duplicate of the

7 Wabash facility located just south side of -- at

8 Terre Haute, Indiana. That facility has been

9 operating -- that gasifier has been operating

10 for almost 10 years. Like I mentioned before,

11 the FT unit will be producing roughly 18 barrels

12 per day of Fischer-Tropsch fuels.

13 A second phase, which is going to be down

14 the road roughly, and we don't know exactly what

15 that time line is yet, but it will be sometime

16 after the start-up of the Phase 1 and Phase 1-A.

17 Currently our plan of construction will begin

18 this summer when we start moving dirt, roughly

19 two to two and a half years of construction. We

20 expect to begin the start-up process the fall of

21 2009 with commercial operations in early 2010.

22 The Fischer-Tropsch process, like I

23 mentioned before, construction is going to be

24 starting the latter part of 2008, would start

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1 about six months behind the gasification. Phase

2 1 time line, first of all, of course, the

3 purchase of the plant, which took place last

4 April. Front end engineering design, which

5 we're into that process currently, that began in

6 June of last year. We made our air permit

7 submittal in June of last year. Of course we're

8 going through zoning now. We expect to have our

9 air permit issued in May of 2007. Front end

10 engineering design completion September of 2007.

11 We'll actually begin construction, moving dirt

12 before we finish the front end engineering

13 design. Close of construction financing, so

14 financing the major portion of the construction

15 project will take place as soon as the detail

16 cost estimates come out of front engineering,

17 which is in September, so that will be excepted

18 to be completed in October. Again, fall

19 start-up '09, and commercial operations in 2010.

20 A little bit about gasification

21 technology. The question is how can you make

22 coal clean. You know, everybody thinks of coal

23 as this black smokestack coming up. The

24 gasification technology is significant. It's

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1 not combustion. You're not burning the coal.

2 You're using pure oxygen, so we'll have an air

3 separation unit. We'll take air, liquify the

4 air and separate the oxygen from the nitrogen.

5 The oxygen goes to the gasifier, the nitrogen

6 goes to the ammonia plant to produce ammonia.

7 The oxygen -- the coal comes in and it's ground

8 up into a fine powder and mixed with water to

9 produce a slurry which goes to the bottom of the

10 gasifier. This gasifier runs at very high

11 temperatures, close to 3000 degrees. You hear

12 about town gas, the old type of gasifiers and

13 the slubs and the tars and stuff. The reason

14 why you had that was because it operated at such

15 low temperatures. You operate at a high

16 temperature you create -- all those materials

17 aren't created, so you produce two products.

18 You get the right ratio of oxygen and coal and

19 you produce products of carbon monoxide and

20 hydrogen, and those are the two products, which

21 is called synthesis gas, synthetic gas. Again,

22 like I mentioned before, we need hydrogen to

23 make ammonia. That's a component we need, and

24 the carbon monoxide is what is used to make the

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1 fuel. It comes off the top of the gasifier, and

2 that gas coming off there goes through a heat

3 exchanger to produce steam, and that steam will

4 drive a generator to produce power. The solids

5 are removed through what's called a candle

6 filter which are recycled back to the bottom of

7 the gasifier. So all the solids will come off

8 of the bottom of the gasifier, and because it's

9 such high temperatures it goes through a process

10 called rigification and basically creates a

11 glass. It will come out as a black glass. It

12 meets all the environmental requirements, so

13 there will be no leaching problems or anything.

14 So it's used as a building material to asphalt

15 and cover for landfills and things like that.

16 So that byproduct will be a product that we'll

17 sell in the marketplace. Gas comes off from

18 there and goes through an area called acid gas

19 removal. That's where we remove the carbon

20 dioxide, the sulfur, and the mercury. The

21 mercury is moved in carbon beds and the sulfur

22 can either be removed as a liquid or a solid,

23 pure sulfur product which will be sold in the

24 marketplace to make other products. For

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1 instance, sulfur is a main component in a Tide

2 soap that you use to make laundry detergents.

3 It's one of the major products to make dimonium

4 phosphate, which is a phosphate a farmer puts on

5 his soil. So it has multi-product uses.

6 This on this particular diagram shows

7 what's called IGCC, which is a power plant. So

8 what it shows here is that this clean synthesis

9 gas is actually combusted in a combustion

10 turbine, and we won't be doing that. This will

11 then split apart, and part of it is going to go

12 to the Fischer-Tropsch plant to make the fuels

13 and part of it is going to go to the ammonia

14 plant to make ammonia.

15 This is an integrated design. The front

16 end of the ammonia plant, which we use so much

17 energy now for heat source, we'll no longer use.

18 All we need is the back end of the ammonia

19 plant, which is the conversion of the hydrogen

20 and nitrogen brought together to make ammonia.

21 Fischer-Tropsch, the gasification will go to the

22 Fischer-Tropsch process, upgraded to the fuels.

23 The steam is used to produce power. It will

24 produce roughly 80 megawatts of power at this

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1 plant. But for the first phase, 1 and 1-A, all

2 that power will be used internally. And then

3 we'll continue to make the products we currently

4 do on the nitrogen side, plus we'll make

5 Fischer-Tropsch diesel, another fuel product

6 called Naphtha, and then the sulfur compound

7 products.

8 Again, this is a photograph of the project

9 location. I wanted to kind of point out, the

10 green area here is the existing facility. The

11 expansion is going to be somewhat to the south.

12 This area here is where the gasification

13 facility is going to be. Power generation,

14 utilities, that's water treatment, and then the

15 Fischer-Tropsch process is right in here. The

16 coal handling, this is a rail line coming -- the

17 coal cars will come in, drop into a coal pile,

18 plus coal handling, and the slurry plant will be

19 back in this area here. The whole surrounding

20 area, this is the property -- the way it will

21 look will be -- this bluff area here is all

22 planted with the trees and the whole surrounding

23 area will be planted with trees where we do the

24 construction. It's important for us to put

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1 barriers around there, you know, to make it look

2 nice.

3 The project itself, $810 million is the

4 estimated -- is the cost estimate, which is

5 Phase 1, Phase 1-A. Phase 2 we don't have

6 enough information yet to do an estimate on the

7 cost of Phase 2. Ammonia production will go

8 from 830 tons per day to a thousand tons per

9 day. We'll produce 1800 barrels per day in

10 Fischer-Tropsch fuels by 80 megawatts of power

11 using 2600 tons per day of coal.

12 Phase 2 we'll be at additional

13 gasification trained, all of that will go to

14 produce Fischer-Tropsch fuels, which is an

15 additional 4000 barrels a day for a Phase 2

16 total of 1500 barrels. Ammonia production won't

17 change in the Phase 2. Double the power

18 production using 5200 tons per day of coal. We

19 think we will have a slight amount of export

20 power once Phase 2 is complete, somewhere around

21 10 or 20 megawatts of power. After conversion

22 production the plant will -- I mentioned -- this

23 is what I just said -- will go from 830 to a

24 thousand tons per day. We'll continue to

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1 produce our urea, UAN solution, and all those

2 products, while we're constructing that plant,

3 we'll continue to operate while we do the

4 construction. Produce our own electric power

5 instead of importing power. We'll produce

6 ultra-clean Fischer-Tropsch fuels.

7 I have a sample of the fuel, which is the

8 fuel -- you can pull the top off it. What

9 you're going -- it doesn't smell like a standard

10 petroleum fuel. It will have a -- it smells

11 like candle wax because that's what it is. It's

12 paraffin. It's a carbon -- straight carbon

13 chain paraffin. Because it's a paraffin you can

14 use it on the standard diesel engine and you see

15 significant reduction in emissions from that

16 fuel.

17 The positive thing about the fuel, first

18 of all, it's biodegradable. You spill it on the

19 ground, the microbes on the ground will

20 decompose it, break it down. There's virtually

21 no sulfur because the gasification process moves

22 the sulfur out of the coal. It's got a very

23 high Cetane level, which is similar to octane in

24 gasoline. Very stable in long storage

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1 capabilities. The standard , as you

2 know, you use diesel as a farmer, it's going to

3 gel over a period of time, and you also have

4 some cold weather concerns with fuel, when this

5 fuel has a very long storage life. We've had

6 samples that sat on a shelf for eight years with

7 no degradation in the properties of the fuel

8 itself, so which is -- that's extremely

9 important for both long-term storage of the fuel

10 as well as the other interesting party is the

11 Department of Defense, because in addition to

12 diesel fuel you can produce using this

13 process. The combustion products are

14 significantly -- there's a significant reduction

15 in hydrocarbons emissions off the tailpipe,

16 42 percent, 33 percent less carbon monoxide

17 emissions from it. This is on a standard diesel

18 engine. These were government tests that were

19 done on a standard diesel. 9 percent less

20 carbon dioxide, 28 percent less particulate

21 matter, the black stuff that comes off of these,

22 and 3 percent less carbon dioxide emissions off

23 using the Fischer-Tropsch fuels.

24 I mentioned earlier about the emissions

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1 reductions from the plant itself. We'll see

2 roughly a two-thirds reduction of total criteria

3 fluid emissions from the existing plant site

4 after the expansion. Those emission reductions

5 -- our particulate matter will stay roughly the

6 same, we'll see a reduction in volatile organic

7 compounds, we'll see a slight increase in carbon

8 monoxide. The largest reduction is nitric

9 oxides because we'll no longer be burning the

10 natural gas for a heat source in the new plant.

11 We'll also see a slight increase in sulfur

12 compounds. But overall a net reduction of about

13 two-thirds.

14 A lot of times you hear about the mercury,

15 concerned about mercury in coal. Illinois coal

16 contains roughly 70 parts per billion of

17 mercury, so with 2600 tons per day of coal that

18 corresponds to about 5 ounces of mercury that

19 will be in the coal that will feed into the

20 plant a day. Because of the gasification

21 process you get concentrated streams, you can

22 easily remove that mercury. We'll remove over

23 95 percent. Actually it's going to be

24 nondetectable based on the studies that have

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1 come off the Wabash plant. The synthesis coming

2 in after mercury removal is basically

3 nondetectable, below detectable limits. The

4 other thing is we have to remove it because it's

5 a contaminant to the catalyst we use, both the

6 sulfur and mercury are contaminants, so we have

7 to remove it all. And so what we're -- what our

8 vendors for the mercury removal system say is

9 they can guarantee 95 percent, but we think it's

10 actually going to be better than that. This

11 will be utilizing a state-of-the-art dual bed

12 carbon filter removal system.

13 We hear a lot about greenhouse gases, what

14 are you doing with carbon. About one-third of

15 the carbon in the coal will be converted in the

16 products we produce, both the liquid CO2, the

17 urea, as well as the fuels. With this

18 technology, because you can get concentrated

19 streams, the technology is there to remove more.

20 Potentially up to 85 percent of the carbon can

21 be removed using this process. You got -- but

22 the technology as a nation is not there of how

23 -- what do you do with that carbon, you got to

24 have places to go with it. Currently it is

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1 used, sequestered for enhanced oil recovery.

2 And enhanced oil recovery is where you inject

3 carbon dioxide into the ground, it displaces oil

4 that is caught in the cores of the rock, and

5 then it's easier to bring oil out of the ground.

6 So that's one of the possible uses that will be

7 coming off gasification facilities like this.

8 Rentech's strategy is to design and build

9 plants that will permit maximum carbon capture

10 and aggressively seek sequestration

11 opportunities. Sequester means taking the

12 carbon -- carbon dioxide and putting it in a

13 place where it won't go into the atmosphere. We

14 are also working to develop biomass utilization

15 in FT fuels. To make FT fuels it doesn't make

16 any difference what the carbon source is. It

17 can be coal, it can be natural gas, it can be

18 biomass. We believe the future is really going

19 to be biomass or a combination of coal and

20 biomass, because in order to reduce carbon into

21 the atmosphere biomass allows you to create a

22 carbon cycle. So it's a much better way to

23 handle the carbon issue with regards to

24 gasification. But the technology has not been

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1 fully developed to sequester all the CO2 at this

2 point in time. But in order to get to that

3 point these plants have to be constructed in

4 order to continue to move the research and

5 development technology forward.

6 What are the benefits. First of all, it

7 ensures continued viability of the plant. As I

8 mentioned before, this project keeps this plant

9 operating. Maintain the tax base, and actually

10 add tax dollars into the Jo Daviess County and

11 East Dubuque School District as this plant

12 expands. Maintain a current 123 plant jobs,

13 create 120 new union salaried positions for the

14 facility, nearly a thousand union construction

15 jobs. This project will be done on a project

16 labor agreement. 150 coal mining jobs for the

17 amount of coal that we'll be utilizing at this

18 facility, and this is going to be Illinois coal.

19 Our reduced emissions of criteria pollutants,

20 we'll be capturing a portion of the carbon, and

21 providing competitive priced fertilizer to

22 Midwest farmers. Any questions?

23 AUDIENCE MEMBER: Is your pilot plant in

24 Colorado -- is your pilot plant in Colorado up

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1 and running yet?

2 MR. DIESCH: No, it's under construction.

3 Our expectation right now is the Fischer-Tropsch

4 unit has been delivered. They are building

5 that. The gasifier is complete -- pretty close

6 to complete. We expect that to be delivered

7 within the next month or month and a half. And

8 so we'll have the construction complete and be

9 ready to begin start-up process probably

10 September or October of this year. Let me

11 explain what he's talking about. Rentech has

12 what we call a project -- product demonstration

13 unit to allow us to further do research like on

14 utilizing biomass, doing research on different

15 types of catalysts, reactor designs, so it's a

16 research facility, but it also allows us to

17 produce both diesel fuel and jet fuel, to be --

18 to utilize that and do more research. Because

19 the Department of Defense wants a fuel source to

20 do more research to utilize Fischer-Tropsch

21 fuels for jet fuel.

22 AUDIENCE MEMBER: You mentioned about the

23 increase in the use of coal. And is the

24 majority of the coal going to come in via barge

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1 or via rail, the rail spur that goes to the

2 plant off the main track?

3 MR. DIESCH: All the coal is going to be

4 delivered by rail.

5 AUDIENCE MEMBER: All, 100 percent?

6 MR. DIESCH: 100 percent of the coal.

7 AUDIENCE MEMBER: Another question would

8 be, you talked about how clean everything is

9 going to be, and that sounds great, but I just

10 got a question about the current process. With

11 the manufacturer of the urea and its use in NOX

12 reduction, why hasn't the plant used its own

13 urea to lower the NOX of the existing facility?

14 MR. DIESCH: Economics for utilizing the

15 urea source. The way the plant is designed,

16 it's not economical to do that, to the -- to

17 further reduce those NOX emissions at the

18 present time. There are -- there is some

19 additional things that are being -- taking place

20 right now with regards to some of our

21 compressors to do -- to do exactly that. There

22 are different technologies. Some was using

23 urea, some was using a different type of

24 catalyst using ammonia as a source. For

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1 instance, during our nitric acid process we do

2 use ammonia for NOX reduction emissions. It's

3 called selective catalytic reduction. So it

4 depends on the process unit and the capability

5 of the design of the unit itself and what we can

6 and can't do.

7 MR. HEATON: I have a question. Has this

8 been endorsed or supported by the State of

9 Illinois or --

10 MR. DIESCH: Yeah, the State of Illinois

11 through the Office of Coal Development, which is

12 part of the Department of Economic Opportunity,

13 we received a half a million in grant for the

14 initial phase of engineering study, and then

15 they've contributed two and a half million

16 dollars towards the front end engineering

17 design. So they've been extremely supportive of

18 the process and the project and to help us

19 develop the technology to be the first one in

20 this country to produce the fuel using this

21 gasification technology.

22 MR. HEATON: In your slide show you said

23 that the Phase 1 and Phase 1-A investment would

24 be 850 million.

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1 MR. DIESCH: 810 million.

2 MR. HEATON: 810 million. Excuse me. Do

3 you have any estimate what Phase 2 would be as

4 far as an investment beyond that?

5 MR. DIESCH: Mark?

6 MR. IBSEN: It would be, I mean, very

7 rough numbers. It's going to be in a similar

8 magnitude of costs, because we won't have all

9 the same infrastructure, we'll be able to save

10 some costs on it, but it's still going to be in

11 the hundreds of millions of dollars for the

12 Phase 2 modification.

13 MR. HEATON: But it's safe to say that the

14 investment over the two -- Phase 2 would be well

15 over a million dollars?

16 MR. IBSEN: Easily.

17 MR. GRATTON: Excuse me just a minute. I

18 just want to interject something here. We want

19 to fully answer the public's questions on all

20 these things, but I understand in order to

21 follow the proper legal proceedings, that those

22 people who have an immediate interest in and

23 around this area are the people who get to do

24 the cross-examining of witnesses. And so if you

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1 will, I would like you to state your name and

2 your address and your particular interest in

3 this case. If you just have a general knowledge

4 question and you live in Belvidere or something

5 like that, it doesn't have the standing in this

6 case. But we do want to clarify that. And I

7 think as Petitioners go forward with their

8 presentation a lot of these questions will -- I

9 hope will be answered so we don't have to, you

10 know, slow this down at this point. So yes,

11 sir, do you want to state your name?

12 MR. SHIBANK: My name is Tom Shibank. I

13 live at 3822 Lonergan in the Galena Estates

14 subdivision. The railroad spur goes right

15 through my property, so obviously if there's one

16 train a day now it's going to increase to what?

17 I have no concept of knowing -- you know, you

18 say how many millions of tons of coal, I don't

19 know what that equates to. I don't know how

20 many trains a day that is and what's it going to

21 do to myself and my neighbors who all are

22 adjacent to the spur. You look out all of our

23 windows, it's not even the point of it running

24 through out property, that's what we look at.

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1 MR. DIESCH: We currently have one switch

2 -- on average one switch a day where the switch

3 engine will come in and pull cars out. With

4 regards to the coal there will be a unit train

5 of coal roughly every three days, which is about

6 -- there will be a 70 car unit train. And Mark

7 is going to talk a little bit more about

8 transportation issues and things like that as we

9 get into it. But for the increase in regards to

10 coal it's going to be one train every three days

11 for Phase 1 and 1-A, and it would be every day

12 and a half for Phase 2.

13 MR. GRATTON: Any other questions for

14 John? Thank you.

15 MR. HEATON: Thank you, John. I'd like to

16 call Mark Ibsen. I'd like you to address your

17 remarks to the board.

18 MARK IBSEN,

19 being previously duly sworn, was examined and

20 testified as follows:

21 DIRECT EXAMINATION

22 BY MR. HEATON:

23 Q. Would you please tell the board who you are and

24 who you work for and what is your profession?

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1 A. My name is Mark Ibsen. I work for Rentech,

2 Inc., the parent company of Rentech Energy

3 Midwest. I've been with the company about seven

4 years. I have been a project engineer and now

5 manager of project engineering. In that period

6 of time worked on numerous projects for the

7 company in trying to commercialize and develop

8 Fischer-Tropsch technology for Rentech.

9 Q. And are you an engineer?

10 A. I am a degreed engineer, chemical engineer and

11 also a licensed professional engineer in the

12 State of Colorado.

13 Q. And as it now stands you will continue to be

14 the manager of this project through its

15 completion?

16 A. Well, excuse me, but I am not the project

17 manager. There is a project manager. I'm the

18 project engineer.

19 Q. Okay. I'm sorry. Not the manager, but you

20 will be --

21 A. I am scheduled to be on the project through its

22 completion, that's correct.

23 Q. Mark, I want to take you through a number of

24 issues and have you explain to the board some of

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1 the things that I think are normal concerns of

2 any board such as this. John Diesch gave a

3 great explanation about all of the chemical

4 processes and whatnot, but I want to bring it

5 down to maybe some issues that maybe are a

6 little closer to all of us. And the first is,

7 tell the board how traffic is going to be

8 impacted by this new plant both during the

9 construction phase and thereafter. And how does

10 that compare -- and make your comparisons as to

11 traffic today with the plant.

12 A. Okay. Right now, and as John had presented in

13 his presentation, we're expecting that the

14 construction work force is going to peak at

15 around a thousand people. And I say peak

16 because there's going to be a ramp-up period of

17 time. You just don't drop a thousand workers

18 into an area and start building a facility.

19 There's a period of time where you start working

20 with the ground work. As John talked about, you

21 have some people doing -- moving dirt work,

22 getting the ground prepared. And then you start

23 ultimately building foundation, start laying

24 underground piping. And as that work progresses

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1 the labor force is going to start building and

2 ultimately peak at around a thousand, 750 to a

3 thousand people. And with that work force we're

4 expecting that that's going to mean there's

5 about 450 cars per day going down the plant road

6 to a dedicated parking lot that will be used for

7 the construction traffic where there would be

8 security and things of that maintained during

9 that peak. And then that would start tapering

10 off as we got closer to start-up. And then we

11 would start adding some of those 120 jobs that

12 would be full-time jobs at the facility, some of

13 the full-time union jobs and then the salaried

14 positions as we brought additional operators

15 onto the facility to do that. That's what we

16 currently see for the construction traffic.

17 We have met and spoke with Illinois

18 Department of Transportation as well as the

19 sheriff and they are -- they very much want us

20 to do a more formal traffic study related to how

21 not only the construction traffic will move, but

22 as John said, the long-term movement of products

23 in and out of the facility. And so that is in

24 the process of getting started. It has not been

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1 completed at this point in time. But we have

2 met with them and we do know that we'll be

3 utilizing the main road that currently exists

4 into the facility to move this traffic in and

5 out easy enough. It's a two-lane road with

6 ability to make expansions on either side for

7 turning lanes as they might be needed, making

8 the road over to the construction parking area

9 to hold that construction traffic. So that's

10 kind of getting us through construction. And

11 then you asked about normal operations of the

12 facility. So at this point in time now we're

13 talking about primarily the movement in terms of

14 vehicle traffic of the products out of the

15 facility that will be going by truck. And

16 currently the facility is moving about 40 to 50

17 trucks a day. There's about 40 to 50 trucks a

18 day that are moving in and out of the facility,

19 with the additional products going in and out,

20 so we're talking the slide that would be going

21 out, the sulfuric acid which will be used to

22 move -- get rid of the sulfur will be sold as a

23 product. We'll be expecting that those and then

24 the FT products will increase at Phase 1-A to

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1 between 60 and 70 trucks a day going down the

2 plant road. And then as we move to Phase 2 in

3 the future, that would then increase in the 80

4 to 90 range for the number of trucks that would

5 go in and out of that facility a day. So

6 ultimately it would essentially double the

7 amount of trucks. But to date the plant has had

8 no issues with any of the truck traffic that has

9 been occurring at the facility. And that sounds

10 like well, how would I know if it's going to

11 double. But currently in the peak farming

12 season and in the peak planting season the

13 facility actually handles about 350 trucks a day

14 of ammonia that are loaded in and out to get the

15 fertilizer out to the market, because there's a

16 big peak season to do that, and there's also a

17 peak season for when the urea and the ammonium

18 nitrate gets loaded and is shipped off to the

19 farmer. So we are not aware of any problems

20 that any of this has caused. It's handled very

21 well. It's a very smooth transition in and out

22 of the area onto U.S. 20 where the products will

23 ship.

24 Q. So those 350 trucks a day, when you say the

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1 peak season, that's in the spring when farmers

2 are spreading fertilizer on their fields?

3 A. That's correct, because it's -- ammonia is

4 applied prior to -- I believe prior to planting

5 -- right prior to planting so it does it's best

6 for the corn crop. And so it's a fairly short

7 window and the farmers watch very closely as to

8 when they want to put that nitrogen down. And

9 so the plant builds inventories, and then it's a

10 pretty hectic season for probably three or four

11 weeks while they are making those shipments.

12 Q. And you already started negotiations with the

13 Illinois Department of Transportation and the

14 County -- through the County Sheriff's

15 Department?

16 A. That's correct, we started the discussions with

17 them to get the traffic study going and

18 negotiating how best to handle this and cause

19 minimal impact to U.S. 20 and the rest of the

20 surrounding area.

21 Q. Let me use the easel for some of the rest of

22 your testimony. It would be helpful if we could

23 point to some things.

24 A. Okay.

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1 Q. I don't want to block anybody out. Maybe I'll

2 set it right over here. And now I mentioned in

3 my opening remarks that -- that you're also

4 going to purchase some property from Wilma

5 Hilby, and I believe that's this short -- or

6 this rectangular piece here that's about

7 1.7 acres. It's my understanding that that is

8 going to be used for a second entrance to and

9 from the plant; is that right?

10 A. It would a secondary entrance to the plant, but

11 not a secondary entrance that's intended to be

12 used on a regular --

13 Q. On a regular basis.

14 A. It's really just a secondary entrance, be it

15 when we have some of the construction traffic.

16 If we had some other access -- you know, one of

17 the parts that I did want to talk about is that

18 when this facility is constructed there's a fair

19 amount of large equipment that's going to have

20 to be moved in and out of the facility. And

21 when I speak of large equipment I'm speaking of

22 columns that could be as long as 200 feet and

23 some reactors that are, you know, 100, 120 feet

24 high. Those are going to take special type of

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1 permits that we will have to work with the

2 Illinois Department of Transportation, the

3 sheriff's office to get moved to make sure that

4 they don't impact the traffic flow on U.S. 20.

5 But they will have an impact on the traffic

6 getting into the plant because you don't move

7 those kind of -- pieces of equipment in a

8 hurried manner. You take your time to make sure

9 that there's no problems. So some of the other

10 traffic during construction will get moved, and

11 that's also an incentive to be able to have a

12 secondary entrance in those cases.

13 Q. Now, the main entrance, it comes off 20 and it

14 proceeds south to the existing plant, and that's

15 about a mile; is that right?

16 A. Correct.

17 MR. HEATON: Okay. If you have any

18 questions as we go along on any of these topics

19 feel free to jump in.

20 MR. TONNE: This is close to one subject

21 here. So if it were built and after it's

22 finished, the Fischer-Tropsch, FT fuels would

23 increase significantly, and would be leaving the

24 plant by truck?

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1 MR. IBSEN: With the initial phase we

2 expect that the bulk of the Fischer-Tropsch

3 fuels will be going out in the form of truck.

4 And as we develop that market, because it is --

5 it's a new domestic market, we're going to have

6 to develop that market, we'll have a better

7 handle on it, and it would be our goal in Phase

8 2 more of the products would be moved by rail,

9 not by truck per se. Because we have a larger

10 capacity per rail car than you do per truck car.

11 MR. TONNE: So now ammonia goes out -- I

12 think it's ammonia, at these peak spring periods

13 of 30 trucks maybe?

14 MR. IBSEN: Correct.

15 MR. TONNE: How long is that peak period

16 roughly?

17 MR. IBSEN: I believe it's in order of

18 three to four weeks typically.

19 MR. DIESCH: Yeah, usually you'll see

20 ammonia applications begin in the latter part of

21 March, depending on weather conditions, March

22 through April.

23 MR. TONNE: Where I'm really going is,

24 will the trucks carrying the Fischer FT fuels

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1 before you go to trains, if, in fact, you do

2 approach the 350 a day, or what would that be?

3 MR. IBSEN: No, I would expect the

4 Fischer-Tropsch fuels would be shipped more on a

5 consistent regular basis. The product, I mean,

6 diesel, like gasoline, is something that's

7 consumed on a fairly consistent basis throughout

8 the year. We would be expecting that this

9 product would be sold into a market where the

10 diesel could be blended for its high Cetane

11 value and some of its other properties. It can

12 also be used neat. Excuse the word neat, but

13 meaning that you don't do any blending with it.

14 It's an excellent fuel all by itself. But you

15 know, it would dictate the market and what was

16 most active at that time.

17 MR. TONNE: So not a lot of trucks in any

18 peak period so to speak?

19 MR. IBSEN: No, it would be fairly uniform

20 over a year as to how the product would be

21 shipped.

22 MR. TONNE: And that was in your 80 to 90

23 trucks a day estimate?

24 MR. IBSEN: Yes, in the Phase 2 estimate

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1 that was in the 80 to 90. Phase 1-A is 60 to

2 70, that's correct.

3 Q. And right now you're 40 to 50 on the average a

4 day?

5 A. That's correct.

6 Q. Okay.

7 A. That's correct. Now, I haven't gone into the

8 rail shipments --

9 Q. I understand, but I think he has a question.

10 MR. IBSEN: I'm sorry.

11 MR. JANSEN: Along the same line as Bill's

12 questions there, if you're -- just so I

13 understand this clearly. If you peak three to

14 four week period now when farmers are using the

15 ammonia, it's 350 trucks a day, and you're

16 doubling the size of the plant, is it safe to

17 assume that you're going to peak trucks 700?

18 MR. DIESCH: No, that's our capacity for

19 loading. We actually see two peaks. We'll see

20 ammonia peak early in the season before

21 planting, and then you'll see a peak of roughly

22 the same 350 trucks a day in the May and June

23 time frame when they start putting down the UAN

24 solution, which is typically done as a side rest

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1 after the corn is up. So -- but that's our

2 loading -- our capacity to load trucks. So it

3 will peak at that capacity. And so there are no

4 plans to expand the fertilizer capacity of the

5 plant at the present time, so that won't change.

6 MR. HEATON: So your peak of 350, which

7 you experience in those months you mentioned,

8 should remain about the same?

9 MR. DIESCH: Yes.

10 MR. HEATON: And because of the other

11 products you're now having 40 to 50 on the

12 average per day, again, outside the peak season,

13 and in Phase 1 and 1-A that would go up from 40

14 to 50 to 60 to 70 trucks a day.

15 MR. DIESCH: That's correct.

16 MR. HEATON: And then if you ultimately go

17 forward with Phase 2 it would go up to 80 to 90

18 a day?

19 MR. DIESCH: Correct.

20 MR. TONNE: Follow up here. Would -- and

21 you might want to think about this, but would

22 the Petitioner agree to a -- under the special

23 use for it to be granted that truck traffic

24 would be not to exceed certain levels? And we

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1 might arrive at that at a later hour here. But

2 you know, such as these peak periods, pick a

3 number, you know.

4 MR. HEATON: Well, I think John said their

5 capability now is at 350. That's what you can

6 load out in a day.

7 MR. DIESCH: Right, I -- you know, I think

8 that would -- you know, my opinion is that would

9 need to be -- we're going to be doing a traffic

10 study and IDOT would be involved with that. And

11 so right now I've not heard of any concerns

12 about the traffic during a peak season affecting

13 U.S. 20. And I'd hate to limit what our

14 capabilities are without -- unless there was

15 some real reason why we had some concerns from

16 either the Department of Transportation or the

17 sheriff's department or stuff like that.

18 MR. TONNE: We can do this later, but you

19 know, you don't anticipate that ammonia

20 production would increase particularly?

21 MR. DIESCH: There will be --

22 MR. TONNE: But if you did decide to go

23 that way --

24 MR. DIESCH: I see what you're saying. If

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1 we did a major expansion --

2 MR. TONNE: Yeah, as part of the special

3 use you'd be back, then would you stipulate

4 that?

5 MR. DIESCH: Stipulate --

6 MR. TONNE: Think about it. We can talk

7 later, yeah. Not too much later maybe.

8 MR. GRATTON: Any other questions?

9 MR. HEATON: Let's jump to the rail issue.

10 I didn't get Tom's last name, but it was a

11 legitimate question on his part.

12 Q. Right now, the way I understand it, the --

13 there are two railroad lines that -- they come

14 up along the Mississippi River, and you have an

15 existing rail spur -- you have an existing rail

16 spur that the location of that will remain the

17 same; is that correct?

18 A. That's correct.

19 Q. How many -- first of all, do you ship anything

20 out by rail right now? And if so, how many cars

21 a day are you shipping out through that spur?

22 A. On average there's four to five cars per day

23 that are shipped out as products right now.

24 Q. And when you complete Phase 1 and 1-A, how many

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1 railroad cars will be shipped out per day?

2 A. As products going out we're anticipating it

3 will increase between five and ten. Some days

4 there will be fewer cars and some days there

5 will be ten to get the product out.

6 Q. But we're talking ten railroad cars per day?

7 A. That's correct.

8 Q. Okay, and then Phase 2, how many cars would be

9 shipped out on the average per day?

10 A. Well, as I said, our goal then is probably

11 going to be to increase the ability to ship the

12 FT products by rail, we're probably going to see

13 an increase to 15 to 20 rail cars per day, the

14 bulk of that being related to the FT products

15 going out and the fuels going out.

16 Q. So that shipment out. Okay. Now, you

17 mentioned that your coal is going to come in by

18 rail rather than barge?

19 A. That's correct.

20 Q. Okay. In Phase 1 -- or after Phase 1 and 1-A

21 is completed, how many cars would you expect to

22 come in? And you've mentioned -- somebody

23 mentioned unit train. Why don't you explain

24 that?

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1 A. Well, a unit train is just a common term for a

2 train that's -- it's actually a unit train was

3 defined as a train that's a mile long. It's

4 roughly a hundred cars in a train, but there's

5 different sizes of unit trains. One size being

6 70, 90, all the way up to about a maximum length

7 of a unit train is 120 cars. So in this initial

8 phase we would anticipate using 70 car unit

9 trains, that is what we've been talking to our

10 railroad with about working with and their

11 ability to handle it. And which in that

12 scenario those unit trains would come in down

13 the main line and come up the existing rail spur

14 about once every three days, and then we

15 anticipate that they'll be brought up in two

16 different cuts; one 35 cars, engines will go

17 back down, grab the other set of 35 cars, and

18 then they would remain inside the plant

19 boundaries until they were unloaded and taken

20 back onto the main line. The transportation

21 time to and from the main line we don't

22 anticipate to be extensive, because the travel

23 time up the line is about -- they'll be moving

24 about 10 miles an hour up into the plant, and

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1 then back down into the plant about the same

2 amount of time. And the length of that track is

3 about 4500 feet, so it shouldn't take very long

4 for the trains to get up and into the facility

5 where they are sited on specific siting for the

6 coal to handle the coal so we can then take it

7 and off load it in the facility itself.

8 Q. So when you said a 70-car unit train you're

9 talking one -- in my terms that's one train that

10 would have 70 cars.

11 A. That's correct, 70 full cars of coal, and then

12 the engines associated with that.

13 Q. And that will be broken up, 35 cars, it will be

14 pulled up to the plant, unloaded, and then the

15 locomotive will go down and get the other 35

16 cars?

17 A. Actually we'll bring both full sets up before

18 we start unloading it so that we can get

19 everything off of the main line and get it out

20 of the way. And then once it's unloaded we

21 would take the entire 70 car unit train down.

22 And the reason for that is that there is a fair

23 amount of grade going up into the plant. It's

24 about 2.2 percent grade in most areas. For a

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1 railroad that's like climbing a huge mountain.

2 That's a difficult task for a train.

3 Q. We are talking from down in here up to the

4 plant?

5 A. We're talking from the main line where the

6 curve comes up, that's correct, and up into the

7 plant. Once it's in the plant the grade is very

8 flat and very uniform and we will maintain it

9 that way so --

10 Q. So to summarize then, Phase 1 and 1-A you will

11 have every three days, once every three days

12 those 70 cars passing up the plant and then

13 leaving?

14 A. That's correct.

15 Q. And then with Phase 2 what would you expect the

16 rail traffic to be on the spur?

17 A. Phase 2 of the coal consumption will double, as

18 John showed in his presentation, to 5200 tons a

19 day. We would anticipate moving to 90-car unit

20 trains. Again, because we can split that train

21 into smaller sections, about 45 cars and still

22 get them up into the plant through the grade,

23 and then unload them. The frequency would

24 increase to one unit train every other day.

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1 Q. So in a 30-day period you would expect in Phase

2 1 this train would come every third day or 10

3 days during that 30-day period, and Phase 2 it

4 would be every other day?

5 A. Correct.

6 Q. Okay. Now, you're going to have to make some

7 improvements to the spur as it now exists,

8 right?

9 A. We're going to have to upgrade some of -- the

10 rail has been designed to handle -- in the past

11 there was different standards for the railroad.

12 The railroad has changed their standards. And

13 so for us to do this they are going to ask that

14 we upgrade the rail lines and some of the ties

15 to a little bit heavier grade of rail so that

16 the engines have a good grip getting up the

17 hill, and just to replace it. The rails are 40

18 years old, the bulk of it. So yes, we will be

19 upgrading some of that rail. But it will still

20 lay in the same bed that it currently lays.

21 Q. Now let's shift to barge traffic. That came up

22 earlier. How many barges now do you have?

23 A. Right now the plant ships about 25 barges a

24 year of products between ammonia and UAN

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1 products.

2 Q. And with the new project, the new plant, how

3 many would you expect?

4 A. In Phase 1 and 1-A because of the slight

5 increase in ammonia production we're

6 anticipating that will go to 30 barges per year.

7 Q. So it's an increase from 20 to 30?

8 A. Right, 25 to 30.

9 Q. 25 to 30.

10 A. Uh-huh.

11 Q. Some other issues, what about the water source?

12 I mean, do you need water to operate this plant,

13 and if so, where are you going to get it from

14 and explain that?

15 A. We do. The water is needed for as a feedstock.

16 It's used in the slurry process for the

17 gasifier. It's also used as a water source for

18 cooling in enclosed cooling systems where it has

19 to be make-up and where there's water that's

20 rejected in that system. Currently the plant

21 uses well water that's sitting buried up to --

22 Q. The wells are up in this area; is that correct?

23 A. Correct, we have three operating wells up in

24 that area, but currently hold permits for an

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1 additional three wells. So our current

2 preferred method of accessing the water for the

3 facility would be to increase the number of

4 wells up there and get the water from the well

5 permits that are currently in place but have not

6 been used. But to do that we also need to

7 verify that the geology of the -- providing the

8 water to the wells can sustain that. And so we

9 are in the process of kicking off a

10 hydrogeological study with a geologist and a

11 hydrogeologist to verify and to start working on

12 whether the formation can supply the water we

13 need and take a look at that, do that study.

14 And if it can provide it without affecting any

15 of the wells in the area detrimentally then we

16 would be able to get our water from that source

17 and that would be our preferred location.

18 Secondary choice would be to put an intake

19 structure on the river and you could take water

20 from the river. We have talked in past years to

21 Illinois EPA about that possibility. They were

22 not opposed to it. It does require some proper

23 engineering design of the intake structure,

24 because the EPA has some fairly strict

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1 guidelines that were recently implemented on how

2 you build that structure to make sure you

3 protect the aquatic life so that the water

4 coming in is not too fast, you're not trapping

5 things, there's no problems, and you don't

6 affect the natural balance of what's going on in

7 the river. But right now that's our second

8 choice as far as a water source. To minimize

9 that water source within the plant we will do

10 everything we can to recycle the water. The

11 water that goes to the gasifier is not -- it has

12 to be of certain quality and it has to be of

13 limited mineral content. But much of the water

14 that we would take as reject water in other

15 sources in the plant can be used in that slurry

16 water, and we're going to maximize the use of

17 those recycled water sources within the plant.

18 Then there's other sources in the plant that we

19 won't be able to do that with, and so that's the

20 need for the make-up water.

21 MS. DAVIS: Is that being done now,

22 recycling?

23 MR. IBSEN: There is some recycling done

24 in the plant right now. The amount of recycling

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1 that will be done with the conversion will be

2 extensively more. There will be a lot more

3 closed discharge systems for the steam

4 blowdowns, cooling tower blowdowns, so that we

5 can maximize the use of that water. And some of

6 the new processes that are added, the acid gas

7 removal to take the sulfur and CO2 compounds out

8 also has a discharge water stream that we'll be

9 able to recycle, and that's currently in the

10 plans. When you make Fischer-Tropsch products

11 you also as by-product make some water, and that

12 water will also be recycled back and won't be a

13 wastewater stream. So we're going to do

14 everything we can to maximize the water in the

15 facility.

16 MR. GRATTON: What did you say the amount

17 of water used today would be?

18 MR. IBSEN: Right now the Phase 1-A -- the

19 total make-up for the existing facility and

20 Phase 1-A will be about 4500 gallons a minute.

21 The bulk of that water consumption will go to

22 the cooling system, a lot of which is associated

23 with the power cycle to make the power, because

24 you need to condense the steam that you use to

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1 make the power and --

2 MR. GRATTON: What happens -- this is a

3 tremendous amount of water. What happens to

4 that water? Is it all a vapor or waste or what

5 happens?

6 MR. IBSEN: A fair amount of it, what is

7 used in the cooling towers, so a cooling tower

8 is a closed system where the water is sent

9 through the pieces of equipment, comes back

10 warm, and then it's passed over what's called a

11 cooling tower. And just as John said, in the

12 winter you can see the plant because you see the

13 vapor of water coming off. When you pass water

14 through an airstream you evaporate the water and

15 it cools the water, so the source of cooling is

16 the evaporation of the water. So a large

17 portion of that water will go out as water in

18 that cycle.

19 MR. GRATTON: And then is there a

20 wastewater treatment that's --

21 MR. IBSEN: There's also a wastewater

22 component to that. You also have to -- you also

23 have to send a slip stream to wastewater from

24 the cooling tower cycle. You have to keep the

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1 mineral content and the PH and some of those in

2 check in that circulating water system. And so

3 to do that you have to do what's called blowing

4 down or discharging some of that water, and that

5 water would then go to the wastewater treatment

6 system settling ponds, and then it would be

7 discharged. And then an NPDS permit, which is a

8 permit that's issued by the state of -- the

9 IEPA, and allows you to discharge water meeting

10 certain qualities to the rivers of the United

11 States.

12 MR. GRATTON: So you treat your water

13 on-site?

14 MR. IBSEN: Yes, that's correct.

15 Q. Since your feedstock is now going to be coal,

16 and John mentioned you're going to store your

17 coal on-site, which I think he described as

18 somewhere in this area here; is that right,

19 John, somewhere --

20 MR. IBSEN: Little bit further south of

21 that.

22 Q. Would you describe what plans you have in place

23 for coal dust?

24 A. When the trains come in, when they go to be

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1 unloaded there'll be what's called bottom dump

2 trains, meaning that the bottoms open up and the

3 coal will drop through into an underground pit

4 that's going to be probably 50 percent longer

5 than the rail car and a little bit wider. It

6 will direct the coal onto conveyor belts which

7 will take it into another conveyer belt and

8 start bringing it over to the coal pile. On top

9 of that will be what's called a grizzly

10 structure or a steel structure to maintain the

11 integrity for safety, personnel protection,

12 something the people can't fall through. And

13 then there will also be baffles on them, and so

14 as the coal falls through any coal dust or coal

15 particles can't come back out and up into the

16 environment. So that would be the first one.

17 Then there will also be atomizing or water

18 sprays that would be able to be sprayed as

19 necessary to knock down any coal dust that might

20 be coming off of that area. It will be just

21 enough mist to knock the coal down, not enough

22 to make the coal wet where it's sticking to

23 anything. It's just enough to contemporate that

24 coal dust that's coming off. So now we've got

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1 the coal in this big pile in the ground that's

2 going to go into some of the conveyers that then

3 will take it underground at first, and then it

4 will take it over to what's called a radial

5 stacker, which is a device that will come out of

6 the ground. It will go up to about 45 feet in

7 the air. It has the ability to pivot so we can

8 store the coal in kind of a semicircular area,

9 and then it will drop down to where we can build

10 a height of coal 40 to 45 feet of coal height

11 that will be established at that point in time

12 to store the coal. That pile creates something

13 that's called a direct pile. It's a pile that

14 we would have direct access to feed the

15 facility. And the nice thing is that we are

16 going to be putting the coal on top, but we're

17 going to have another structure underneath at

18 the bottom of the coal pile to then collect that

19 coal and send it to the plant where it would

20 actually be crushed into the fine coal and to be

21 mixed with the slurry and fed to the gasifier.

22 So we would be able -- we'll be doing the best

23 we can to minimize the amount of any kind of

24 coal moving equipment, front end loaders, those

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1 kinds of things to move the coal around. Those

2 grates in the radial stacker will give us the

3 ability to place it where we can most

4 efficiently use it as quick as possible, sending

5 it up into the facility. So that will help with

6 the dust emission. We're going to minimize

7 driving as much as we can. And then at every

8 transfer point we will keep the atomizers on

9 that, so we maintain that just like we did in

10 the grizzly where we were unloading the coal.

11 When we get to the coal pile itself we'll have

12 probably something similar to a sprinkler

13 system, for lack of a better word, that can be

14 able to spray water on the coal itself to knock

15 the coal dust down to keep it moist so it

16 doesn't blow away. That's just enough water to

17 keep it moist. It's not going to make the coal

18 wet. But if we do find that we're having

19 problems with the coal dust there will also be

20 facilities in that sprinkler system to put a

21 crusting agent in there so that when it hits the

22 top of the coal will physically put a slight

23 crust on the coal so that the coal gets a

24 slightly hard surface to it. And it will then

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1 be more resistant to any wind or any

2 transportation by wind and things blowing around

3 in the area. Another plus to the fact, we're

4 using Illinois coal. I mean, this -- as John

5 said, Illinois is supporting the project, is

6 very much for the project, the coal development

7 wants to see the project. But the Illinois coal

8 is not a real brittle coal, it's a strong coal,

9 so it doesn't want to break up like many of the

10 western coals, specifically coal which

11 is a low sulfur coal because of its chemical

12 composition and characteristics, it more easily

13 breaks down, it's more dusty. And so it's one

14 of the pluses of Illinois coal, we have a little

15 bit less to do deal with in that situation.

16 MR. TONNE: Is this process, the misting

17 and the underground and the pile to 45 feet, is

18 that done at other plants now?

19 MR. IBSEN: It's done fairly common around

20 the United States. That's how they --

21 MR. TONNE: Using Illinois coal? Is it

22 done in other plants using Illinois coal?

23 MR. IBSEN: It is. In fact, the facility

24 that the gasifier will be patterned after, the

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1 Wabash facility, initially started up on

2 Illinois No. 6 coal. It ran on Illinois No. 6

3 coal for a period of three to four years, and

4 now they have recently switched to petrol for

5 other reasons, but at the time it's a very

6 similar setup that they were using for the coal.

7 MR. TONNE: Is that the one near Terre

8 Haute?

9 MR. IBSEN: Yes, sir.

10 MR. GRATTON: How much coal will be stored

11 on-site at any given time?

12 MR. IBSEN: The active pile will be as

13 large as 34,000 tons, which is -- the active

14 pile is that direct pile that we have easy

15 access to. There will also be room put aside

16 for another about 80,000 tons of storage where

17 it could be pushed off with a dozer to maintain

18 it for long-term storage. And there's -- some

19 incentive to do that is if we're having trouble

20 with weather, snow and things and getting trains

21 in. Those can all have some impact. So the

22 goal would be to build up some form of long-term

23 storage there.

24 MR. GRATTON: Basically on the short term

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1 that's about what, a seven-day supply?

2 MR. IBSEN: No, that would be more like a

3 15-day supply. 2600 so --

4 MR. GRATTON: And how big is a pile of

5 35,000 tons of coal?

6 MR. IBSEN: Boy, now you've got me,

7 because I'd have to go back and look at

8 something, so excuse me, because I can't

9 remember the size off the top of my head. It's

10 on the order of if you took a center radius, so

11 it's -- if you took 100 feet and came back about

12 50 percent, so about 75 feet wide and, you know,

13 around the circumference of half a circle,

14 40 feet high, that's how the radial stack would

15 operate. It's about 150 feet long and going

16 45 feet high, so it would make that kind of a

17 pivot. So it would be -- the circle, about

18 150 feet in the center of the radius and

19 300 feet across, probably about 75 to 80 feet

20 wide and 40 feet high.

21 MR. GRATTON: And that feeds into the

22 system underground then?

23 MR. IBSEN: That's correct, there would be

24 the grizzlies underground. Now, the grizzly

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1 wouldn't cover that entire area, but it would

2 cover a part of the area where you were trying

3 to maintain the radial stacker or the bulk of

4 the time. So you might still have to push some

5 in with dozers for periods of time, but the goal

6 would be to minimize the amount of dozer work

7 required to get the coal over to the loading

8 facility.

9 MR. HEIDENREICH: Can you build a facility

10 to store the coal on so that it doesn't drain

11 off someplace else?

12 MR. IBSEN: The ground would be initially

13 dug out and then compacted and put a hard layer

14 of about 14 inches of material or other coal,

15 and then built up with some four level coal

16 that's then compacted. There would also be

17 stormwater drainage put around the system. It

18 will be peaked slightly in the center so the

19 stormwater runs off into collection trenches.

20 Those collection trenches then would go to two

21 settling ponds. The first one would be to get

22 any of the coal fines out of the water, take

23 those off. That water again could be

24 reprocessed by going back up to the gasification

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1 system as feed water. And then the bulk of the

2 water would then go out into the rest of the

3 wastewater system and be treated as necessary to

4 make sure it met the requirements of our

5 discharge permit.

6 MR. JANSEN: Question back on the

7 transportation of coal. Could you give us a

8 brief explanation why you wouldn't bring the

9 coal in on a barge?

10 MR. IBSEN: I think the main -- there were

11 two factors. One of the main ones is the fact

12 that the Mississippi freezes up three months out

13 of the year.

14 MR. JANSEN: I understand that.

15 MR. IBSEN: We would have to develop

16 substantial coal reserves to make sure that we

17 could meet the three months of the freeze-up

18 period of time. The facilities -- and given

19 that it would freeze up over the time, you'd

20 never know that you would have a reliable

21 source, you would probably be forced to put both

22 rail and barge in at the same point in time. So

23 to be quite honest, it came down to an economic

24 decision of what was going to be most economical

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1 at this point in time. It doesn't mean that

2 we've eliminated for any future projects that

3 that can't happen, you know, but at this point

4 in time for economic reasons that was the

5 selection.

6 MR. JANSEN: Another question unrelated.

7 With all the Southern Illinois coal fields so

8 many miles away, why wasn't this plant built

9 near your source of coal?

10 MR. IBSEN: The plant wasn't built near

11 the source of coal because the benefit that

12 Rentech saw to this facility is to come into and

13 establish an operating plant. Rentech as a

14 company has been a relatively small company.

15 It's grown a lot over the last two years. We've

16 added some excellent people in many areas of the

17 company. And part of the challenges in

18 operating the plant is how many people know how

19 to operate plants, you know. Designing a plant

20 and operating a plant you'd say well, they are

21 very similar, but they are not. They are very

22 different, very different functions. And so

23 being able to acquire a facility like the former

24 -- the REMC facility when it was Royster Clark

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1 gives us A) a leg up on a stable base of

2 operating people, a stable base of experience to

3 do that. That would be number one. Number two,

4 RFT technology is still emerging. You know,

5 this is a project that's going to have to be

6 financed through Rentech, it's going to require

7 financing through banks, and to build a green

8 field facility that would just be -- half the

9 entire thing would be financed and be green

10 field would make that financing more difficult

11 because of the fact that we could obtain a

12 facility that's already existing, all of the

13 infrastructure is existing, it will help make

14 some of that financing easier. Likewise, by

15 producing ammonia we have a product that's

16 demonstrated and a plant that's demonstrated.

17 MR. GRATTON: Was there a staff question?

18 STAFF MEMBER: Mark, you talked about the

19 trains -- the unit trains coming into the plant,

20 and you also talked about doing a traffic study

21 as far as the roads. Have you looked or will

22 your traffic studies include the -- I mean, like

23 how many rail intersections does the main line

24 cross in the County, and will the traffic study

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1 be evaluating that too?

2 MR. IBSEN: I think the answer to the

3 question -- and John can address this, because I

4 personally wasn't at the IDOT meeting, so I'll

5 chime in that we haven't finalized the coal

6 contract, so we can't tell you exactly where the

7 coal is coming from. So to tell you how many

8 it's going to cross in any county, tell you

9 exactly where it's going to come from would be a

10 best guess at this point in time. Okay, so with

11 that said that would be one reason. I don't

12 know whether the IDOT asked for that study to

13 include that or not.

14 MR. DIESCH: They have not mentioned any

15 concern about the rail or the number of trains

16 that we have. It's small. And they weren't

17 concerned about that; however, they did request

18 a traffic study with regards to the traffic in

19 and out of the facility. So that's what they

20 are concerned about.

21 MR. HEIDENREICH: How is coal transported?

22 I know on a train, but are the cars covered or

23 are they opened?

24 MR. IBSEN: No, they are open top cars.

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1 Illinois coal, it can be open top cars.

2 STAFF MEMBER: Can I go back and ask you

3 about water again? You said that for Phase 1

4 and 1-A the water usage was calculated at 4500

5 gallons. What about Phase 2?

6 MR. IBSEN: We don't -- as a lot -- as the

7 costs are still developed and not well

8 developed, these numbers aren't well developed,

9 but you know, we would be in the 6 to 7,000

10 gallon a minute range for Phase 2. That's a

11 rough estimate. I would ask that you don't hold

12 me to that, because the engineering work hasn't

13 been done.

14 Q. (BY MR. HEATON) Another subject that you're

15 going to have to deal with is whether or not

16 there are any wetlands on the subject site. Are

17 you familiar with that?

18 A. Yes, and there was some initial work done by

19 the USDA Soil and Water District that their

20 initial evaluation is that there are no

21 certified wetlands in the project area or on the

22 existing facility. Now, having said that, we

23 realized that any future work as far as going

24 forward with some of the construction activities

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1 and those things we'll be hiring a consultant to

2 do a more thorough evaluation to verify that the

3 initial evaluation that there are no wetlands in

4 the area that's going to be touched by this

5 construction would be impacted.

6 Q. And regardless, you're going to have to deal

7 with the Army Corps on that as well as the

8 Department of Natural Resources?

9 A. Right, we would expect --

10 Q. Need permitting on that?

11 A. -- that depending on where it is, the Corps of

12 Engineering or the Illinois Department of

13 Natural Resources would have to be consulted on

14 that, and it would be working with them to

15 identify any of those situations.

16 Q. Okay. You mentioned earlier cooling towers,

17 and I'm familiar with cooling towers at the

18 Byron Nuclear Plant which are really tall

19 structures. Tell the board, what will the new

20 phase -- what the new plant height structure

21 will be built on a new plant as compared to the

22 existing plant?

23 A. The new cooling towers will be very similar to

24 the cooling towers that exist in the existing

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1 facility. They are all induced strapped cooling

2 towers. There's fans on top to draw out the

3 air. That's one of the big differences when you

4 talk about the nuclear industry and the large

5 cooling tower, those cooling towers don't have

6 fans. They are natural convection and that's

7 why they are so large. These towers will be

8 substantially lower, probably on the order of 20

9 to 30 feet up in the air to the peak. And

10 dimensionally they are probably 50 to 60 feet

11 wide, and then depending upon how many cells are

12 required, you know, they are 50 feet -- probably

13 50 feet square per cell, we're probably looking

14 at 10 to 12 cells to do this work, so probably

15 100, 150 by about 50 feet wide so --

16 Q. So go a minute to that tallest structure you

17 now have on the existing plant, and what would

18 the tallest structure be on the new plant? Are

19 they comparable?

20 A. Currently the existing plant has a prill tower

21 that's about 200 feet high. Original estimates

22 when we were doing some of the work with the

23 sulfur removal equipment we were anticipating

24 that the column was going to be -- that was

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1 associated with what's called a Rectasol

2 (phonetic) unit was going to be 250 feet high.

3 As we said, the engineering continues to

4 develop. And I received word from some people

5 that are working with that group that we're

6 probably now looking at a column that's more in

7 the order of 200 to 220 feet tall. So that's

8 probably going to be the tallest column in the

9 process, about 200 to 220 feet tall. The flare,

10 for safety reasons and other reasons, will

11 probably be very similar in height. We would

12 expect it to be close to the height of the other

13 column and we would still expect it to be

14 maintained similar to the height of this column

15 as well.

16 Q. So the heights are comparable?

17 A. They are very comparable to what you would have

18 right now. And one of the pluses is the

19 existing prill tower is substantially larger in

20 width than the columns would be for the Rectasol

21 unit. The prill tower is probably 10 to 12 feet

22 wide, and we don't expect these columns to be

23 that wide, larger than that, probably 10 feet

24 wide, so not looking at anything of that size in

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1 width.

2 MR. HEATON: I want to touch on one other

3 area, and that is noise. And maybe John can

4 join in with you here. Now, the Galena Estates

5 subdivision is down here, if I'm correct. John,

6 how far away is that from the new plant, and

7 what type of train are we talking about between

8 the new plant that you're proposing and the

9 subdivision?

10 MR. DIESCH: It's roughly 3,000 to

11 3500 feet, is the estimates. It's very rough

12 terrain. The Menominee River, I think that's --

13 it drops in grade about 60 to 70 feet, so it's

14 very rough terrain, very wooded, very hilly area

15 so --

16 MR. HEATON: Okay, so that -- and you

17 mentioned trees are going to be planted. And

18 isn't it true that Gary Newt now has -- I don't

19 know how many thousands of trees he already has

20 planted, but I've gone through the area once and

21 I was amazed at how many trees there are

22 existing, plus the trees that he has planted.

23 And then you also have plans to --

24 MR. DIESCH: We'll have multiple rows of

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1 trees around the fence line, again, related to

2 minimize sound.

3 MR. GRATTON: Any other questions of

4 Mr. Ibsen?

5 AUDIENCE MEMBER: When there's a burn

6 going on now or whether the plant is running, we

7 can all pretty much hear it from our facility.

8 I don't think you answered the question about

9 noise. You said something about planting more

10 trees and doing a lot of different things, but

11 what is the noise going to be versus the

12 existing plant? And also, the prill tower, if

13 it's now defunct, is that going to be torn down,

14 or is that going to be left up?

15 MR. DIESCH: The future plan is to take

16 that tower down. It's not being utilized at the

17 present time.

18 MR. IBSEN: And then with regards to the

19 noise, I mean, the equipment that will be

20 utilized in this facility is of the similar

21 substance to what's used in the existing

22 facility. We're not anticipating any additional

23 -- we're not anticipating noise levels will be

24 any higher than what they are in the existing

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1 facility. I mean, our first goal with the noise

2 is to protect the workers. We have an

3 obligation. They are the ones closest to the

4 equipment. We have to make sure that they are

5 not exposed to high noise, and OSHA makes sure

6 that we take care of that. So that's going to

7 be one of the first things.

8 The second thing then would be to make

9 sure that that noise level is not extensive at

10 the fence boundary, and we just don't expect

11 that's going to be an issue. And then with the

12 terrain in many cases, as John said, being very

13 rough, it helps -- it's to our advantage to keep

14 that from being a problem. Right now the -- all

15 the equipment hasn't been laid out to the extent

16 that we know where all the high voltage power

17 motors and some other things are, but when that

18 gets done then there will be an evaluation of

19 the noise levels, and that can be done on an

20 engineering study. You can take a look and

21 determine exactly what the noise levels will be

22 or anticipate at the plant boundary limits. And

23 I believe we've said that our -- the industry

24 standard we would apply is that that's not above

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1 70 decibels at the property line. Does that

2 answer all of your questions?

3 AUDIENCE MEMBER: I believe so.

4 STAFF MEMBER: I've got a question. You

5 said 70 decibels is the, you know, industry

6 standard. Are you familiar with the Illinois

7 ambient noise regulations?

8 MR. IBSEN: I am not personally familiar

9 with it, no.

10 STAFF MEMBER: That divides the acceptable

11 noise from one kind of classification of

12 property to another classification, so industry

13 to industry, industry to agriculture, industry

14 to domestic and the -- or residential areas, for

15 example, and that can be as low as 30 decibels

16 for certain frequencies. It's actually

17 different decibels for different frequency

18 levels. Those regulations have been on the

19 books for a long time and were recently updated

20 in March of this last year. I guess the

21 expectation would be that you'd have design

22 values for your noise at the property line would

23 need to meet those Illinois regulations as well

24 as the OSHA levels on-site. Is that a plan, to

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1 use those ambient levels as design criteria?

2 MR. IBSEN: At the present time the only

3 thing that we've shown is that the design

4 criteria is the 70 decibels at the fence

5 pattern. We will have to work with some other

6 people and take a look at what all these other

7 regulations are and how they would actually

8 affect us. And if they are absolutely

9 applicable, then we would comply with any rules

10 and regulations that would be applied against us

11 -- or applied to the facility, not against us.

12 So our goal is to be in compliance with those

13 areas.

14 STAFF MEMBER: And that's a commitment

15 that you can make as part of the zoning request?

16 MR. IBSEN: I think that we would have no

17 choice but to make the commitment to comply with

18 any regulations that we fell underneath as part

19 of the construction process of the project.

20 MR. GRATTON: Is it your understanding

21 that 70 decibels does not meet the current

22 requirement?

23 STAFF MEMBER: For certain frequencies it

24 does, very, very high pitch frequencies, for

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1 example, but there's like 10 different frequency

2 levels. It's a very kind of complicated

3 regulation. And it depends on what -- the size

4 of the industrial to industrial, residential to

5 residential. For example, if you were a

6 resident you can't produce as much noise to a

7 nearby residential as industry would be allowed

8 to produce to a nearby industrial area. But

9 it's at the level -- since decibel scales, like

10 rhythmic scales, it goes up a lot faster than

11 just one to one. 30 decibels is a lot softer

12 than 70 decibels would be.

13 MR. IBSEN: Correct.

14 MR. GRATTON: Will the type of noise

15 change in any way?

16 MR. IBSEN: From the existing facility?

17 MR. GRATTON: With the new process

18 compared to existing?

19 MR. IBSEN: I would not expect that it

20 would be substantially different. There's

21 currently a compressor on the facility that

22 compresses air for the manufacturing of nitrogen

23 -- or for the ammonia. There will be a larger

24 air compressor in the facility to make -- for

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1 the air separation unit to produce the oxygen

2 and nitrogen, but it's a very similar service.

3 We're talking compressors, similar compressors

4 to what they have now except they won't be

5 driven by gas fired engines, they will be driven

6 by electric motors, so that would be a plus.

7 But there's still a high pressure synthesis gas

8 compressor that will be used. There will be

9 numerous high pressure pumps which have the same

10 type of frequency given that they are running at

11 3,000, 3800 RPMs, they are going to have a very

12 similar frequency that's going to be generated.

13 So I would not expect it would be substantially

14 different, either higher pitched or lower

15 pitched, than what's currently there today.

16 MR. TONNE: Does EPA -- am I correct --

17 administer and police the noise issues?

18 STAFF MEMBER: Right now there's no

19 specific agency that either preapproves or that

20 actively enforces the noise regulations around

21 the state. They had an enforcement group a few

22 years ago but budget cuts kind of eliminated

23 that group. It was previously enforced by the

24 air group on the air enforcement division, but

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1 they kind of gave it up. The way their

2 regulations work is that any enforcement agency

3 can enforce those rules.

4 MR. TONNE: Any enforcement agency, but

5 the regulation stipulates the levels that might

6 be enforced?

7 STAFF MEMBER: Yes.

8 STAFF MEMBER: Mike, you talked about the

9 cooling towers. We had talked a little bit

10 about fog and icing. Could you talk about that

11 a little bit?

12 MR. IBSEN: We talked about that

13 internally. And as I said, the cooling towers

14 that we'd be putting in in the new facility are

15 not substantially different than what is already

16 existing in the facility. A significant amount

17 of material in the top of them to avoid any

18 water from getting entrained and coming out,

19 which is called drift from the cooling tower,

20 we'll be avoiding that. But you can't avoid the

21 fact that you're evaporating water and you're

22 creating a saturated air space. And as a

23 temperature drops naturally that water starts to

24 condense when it gets out of the tower, and

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1 that's why you see the white plumes coming off

2 of the cooling tower. The facility has been

3 operating over 40 years, and with the exception

4 of the road which is immediately adjacent to the

5 cooling towers in the facility there is enough

6 dispersion from the general air movement of the

7 facility that there's no problems with the fog

8 and/or icing moving off of the plot boundary to

9 date. It's only right immediately adjacent to

10 the cooling tower is where you'll get a little

11 bit of icing on the roads. Given that U.S. 20

12 is a mile to the north of the facility and

13 there's the roads -- there's no roads, you know,

14 immediately adjacent to around the facility, we

15 don't see that there's going to be any kind of a

16 problem with the fogging or any icing related to

17 the cooling tower operations whatsoever.

18 STAFF MEMBER: Mark, you talked about the

19 -- having a fence or a fenced area and then

20 trees around that fenced area. Can you explain

21 to the board approximately where that fence

22 would be? Is that out by the property line or

23 somewhere inside that?

24 MR. IBSEN: The fence will -- typically,

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1 you know, in getting the additional land for the

2 facility, I mean, we've pretty much acquired the

3 land that's required, so yes, the fence line

4 within -- around the process areas will pretty

5 much surround the property as near the property

6 limits of it, and that's where the trees will be

7 placed. Now, when we get down further to the

8 south that fence might come in some from the

9 property line just because the property -- we

10 don't need as much property down in that area

11 that's down where the flare would be in that

12 area. So is that enough of an answer, or do you

13 need more?

14 STAFF MEMBER: That's not shown on the

15 concept plan? I'm just --

16 MR. IBSEN: No.

17 STAFF MEMBER: What's shown on the concept

18 plan is the property line, and I'm just trying

19 to get a thought for where --

20 MR. IBSEN: That's correct. And as far as

21 engineering goes, we haven't laid out the fence

22 line per se in the project itself. We're just

23 now finishing up some of the cut and fill

24 operations and getting a better handle on where

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1 the plot is going to be, because there will be

2 some elevation shift steps in the plan itself to

3 minimize how much earth work and dirt work has

4 to be done on the project itself.

5 Q. (BY MR. HEATON) The plant line to the east is

6 right here, and you don't own this down here,

7 nor do you have an option to purchase it, so any

8 fence you have would have to be up in this area?

9 A. That's correct.

10 Q. Because all this is owned by Mr. Newt?

11 A. Correct.

12 STAFF MEMBER: Mike, I should have

13 followed up. I'm sorry. With the icing and the

14 fogging, do you plan on performing any studies

15 to look at that besides just the historical -- I

16 mean, the plant is changing. Are you planning

17 on --

18 MR. IBSEN: I guess if we can -- if we

19 would find reason that there's reason to believe

20 that it's going to move the distance that we're

21 talking about we would do a study. I don't want

22 to sound, you know, overconfident, but we just

23 don't see it as a problem -- in judgment we

24 don't see that's going to be a problem. Where

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1 icing and fogging is a problem is where the

2 cooling towers get located 1500 feet away from

3 -- you know, 50 to 100 feet away from a road.

4 And then you will have the problem without

5 question. You know, being from Denver, in fact,

6 we had a plant that the cooling towers got shut

7 down because it iced up one of the major roads

8 over one of the major interstates, so at certain

9 periods of time of the year they had to switch

10 to using air cooling for that application. But

11 that was very close. And if you're out in the

12 facility, the water vapor it just -- it doesn't

13 travel off the plot area. It's all pretty much

14 disbursed by the time it gets to the plot area.

15 I just don't see it as an issue.

16 AUDIENCE MEMBER: When you refer to a

17 fence are you talking 6-foot chain link, barbed

18 wire fence, and where will it be located? Will

19 it be located, for example, between the Rentech

20 property and Mr. Newt's property?

21 MR. IBSEN: Yes.

22 AUDIENCE MEMBER: And what is the height

23 of the fence? And also, if there's anything as

24 far as what impact it may have on wildlife in

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1 the area, the deer, fox, you know, whatever in

2 that area.

3 MR. IBSEN: Yeah, I would, you know --

4 AUDIENCE MEMBER: Because right now you'd

5 be fencing quite a large natural area.

6 MR. DIESCH: We will only fence really the

7 operating area. You know, even though our

8 expectations -- and again, we haven't done the

9 engineering work, but here's the property line,

10 and there will be construction and lay down area

11 for equipment, and so we'll need a fence

12 probably right along the property line up to

13 here. And then again, this is just my

14 expectation is it will come across here and then

15 up. And then that's the way it works -- it's

16 the way it's set up now. We just fenced along

17 the property. We're the operating area. We're

18 not fencing in the middle of a wildlife area or

19 trees. There will be no fences along the rail

20 spur. There will be a gate, you know, that the

21 railroad has a key to bring things in. So it's

22 just going to be in the improved area that we'll

23 fence off. And we have to do that under

24 homeland security because we're a highly

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1 regulated access facility.

2 AUDIENCE MEMBER: So it will be a security

3 fence, barbed wire on top?

4 MR. DIESCH: It will be probably strands

5 of barbed wire. That's what the existing fence

6 is to meet the coast guard regulations, homeland

7 security.

8 Q. (BY MR. HEATON) Mark, I don't know if I asked

9 this, but this rail spur has been there since

10 the plant started 40 years ago; isn't that

11 right?

12 A. Correct.

13 Q. Okay, and with regard to water use, whether

14 it's Phase 1 or Phase 2, it's our understanding

15 that your permits that you receive, whether well

16 or some other source, require that there's no

17 impact on surrounding property owners; isn't

18 that right?

19 A. That's correct. I mean, we would not even --

20 to activate the permits of wells that we have to

21 use them and get them approved we would have to

22 show that we're not going to negatively impact

23 any surrounding property owner or any

24 surrounding well that might currently have

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1 access to that aquifer or that water structure

2 in the ground. So that's part of why we're

3 doing the hydrogeological study, so we

4 understand what's called the radius of influence

5 of the wells, so we know when we pump that much

6 water we know how far out it's going to affect

7 that surrounding structure underground and where

8 it's going to affect any other wells in that

9 area.

10 MR. GRATTON: Mark, were you going to

11 address the storm detention areas and wastewater

12 runoff and things like that? Is that part of

13 your presentation or whether that come in

14 someplace else?

15 MR. IBSEN: I mean, I can, you know,

16 address some of it. I mean, we will have to

17 have a stormwater permit that, you know, John

18 can talk a little more about, but all those

19 waters will have to be collected and directed

20 into either the settling ponds so that all that

21 water can be sampled and tested before it goes

22 out through the MPDS permit. With regards to

23 the wastewater itself, any wastewater that was

24 contaminated above those limits would have to go

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1 through a treatment system, which this it not

2 probably popular, but to be determined. We

3 haven't determined exactly what we're going to

4 use, be it settling, be it, you know, what kind

5 of active treatment will have to be required on

6 that wastewater. But that wastewater would be

7 treated before it goes out to the settling

8 ponds. Currently the facility has, you know,

9 two settling ponds that provide certain

10 resonance time before that water goes out to the

11 river. It does a couple of things. It

12 temperates it to closer to ambient conditions

13 and it also makes sure any particulates settle

14 out and allows them to sample it first. And we

15 would expect similar limitations would be

16 applied on the new revised facility.

17 MR. GRATTON: During the erosion control

18 process, during construction would you be using

19 those settling ponds for that purpose, or would

20 you be controlling in other ways?

21 MR. IBSEN: John, can you help out at all

22 on the construction process ponds that we have

23 now would be used similar to that to avoid

24 erosion control while we're doing construction

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1 versus a separate type of pond, or do you think

2 it would be one of those cases where --

3 MR. DIESCH: For the construction?

4 MR. IBSEN: For stormwater, yes, during

5 the construction phase.

6 MR. DIESCH: We'll follow standard

7 procedures for construction purposes, follow

8 what's typical industry procedure during the

9 construction facility process, and file the

10 necessary application with the IEPA for the

11 stormwater construction process.

12 MR. IBSEN: We would expect that that

13 would be built into the construction permit, you

14 know, for the stormwater and we would follow

15 that, but I don't have the exact set.

16 MR. HEIDENREICH: Let's talk about

17 sanitary waste rather than stormwater. What

18 provisions do you now have for handling that?

19 Are you connected to the city? Do you have your

20 own facility?

21 MR. IBSEN: No, there's currently a septic

22 tank and a leach field that's in the existing

23 facility, but we are currently working on

24 looking at an active system that would then

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1 replace that and be able to handle the

2 additional loads. And that would be installed

3 about as part of the project probably prior to

4 the start of the project to handle the sanitary

5 loads and take care of the sanitary sewer

6 demands.

7 MR. HEIDENREICH: And that will all be

8 on-site?

9 MR. IBSEN: Correct.

10 MR. HEIDENREICH: And during the

11 construction phase you're going to have houses

12 for workers or --

13 MR. IBSEN: That would be like the

14 portolets and the kind of stuff that you're

15 going to have to have somebody come out to pump

16 that stuff out and take care of those kind of

17 things. We would not be building a sanitary

18 system to handle that kind of a load.

19 MR. JANSEN: Question about flooding. Can

20 you give us a couple of sentences on the current

21 status of a floodplain. You're in the

22 Mississippi River basin. Is there any impact of

23 flooding? You made some reference to it in the

24 record at -- what is it, a small area that's in

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1 the hundred-year floodplain. Could you talk a

2 little bit about that?

3 MR. IBSEN: Correct, and it's where the

4 rail spur comes off of the main line, right down

5 there, up to -- there's a trestle up probably, I

6 don't know, 250, 300 feet around the corner.

7 It's probably further than that because that's a

8 500-foot radius, so let's say 500 to a thousand

9 feet up, part of that is in hundred-year

10 floodplain, and there's a trestle there that

11 allows that water to drain back to the

12 Mississippi. That's the only portion of the

13 project that's in the floodplain. That's a

14 portion of it that's existed for 40 years in the

15 facility. There won't be any other

16 construction.

17 MR. JANSEN: What FEMA classification

18 would that be?

19 MR. IBSEN: I do not know the answer to

20 that question. Do you know?

21 MR. HEATON: Do you know, Larry? Larry

22 Boyer, he's the surveyor for this project.

23 MR. BOYER: Right here it says FEMA flood

24 zone A-9. Area of 100 year flood. FEMA flood

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1 insurance rate map, and it gives a community

2 panel number. And it's this blue area, this

3 blue hatched area that goes up the Menominee

4 River. And the only part that's in the property

5 is down here where the rail spur turns and comes

6 around.

7 MR. JANSEN: So if we had an event like

8 1993, by example, everything with the exception

9 of that area would be safe?

10 MR. BOYER: Yes, uh-huh.

11 MR. SHAFT: My name is Martin Shaft. I

12 was just wondering, is it only H20 that comes

13 out of the cooling tower?

14 MR. IBSEN: Predominantly what you see is

15 water vapor. And it's true that any droplets of

16 water will have the same minerals and other

17 species in the water. So whatever is in the

18 cooling tower and is taken out as drifts, which

19 is the small droplets of particles that do come

20 out of the cooling tower, that would include

21 some mineral deposits. And so cooling towers do

22 have an emission of what's called a particulate

23 matter, PM 10 or just PM because of the solid

24 content of the water droplets that come off of

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1 the cooling tower.

2 MR. SHAFT: Because that's straight well

3 water then basically.

4 MR. IBSEN: No, it's not. It's treated

5 water, the water will be softened and much of

6 the hardness taken out of it before it's put in

7 the cooling tower. If it were used to straight

8 well water they would foul up quite quickly. So

9 no, it is treated water that goes in there.

10 MR. GRATTON: Any other questions for

11 Mark?

12 AUDIENCE MEMBER: Just a quick question.

13 With the proximity to the little Menominee River

14 which runs through a bunch of our property and

15 the Mississippi, is there anything in place for

16 containment in case of a catastrophic failure

17 either with the rail or with the plant itself?

18 If there ever is a spill or something goes on in

19 the water, whatever comes out is going to go

20 somewhere and might eventually end up in the

21 river, and I'm wondering if there's anything in

22 the works.

23 MR. DIESCH: All the storage tanks are

24 diked to handle regulatory 110 percent of their

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1 volume, so there's diking systems around there.

2 The new tanks that will be installed also have

3 containment systems on them.

4 MR. GRATTON: Thank you, Mark.

5 MR. HEATON: Mark, before you sit down, I

6 want to offer Mr. Chairman and the other members

7 any questions, but I should have given you this

8 when John was up here. This is the permit

9 letter from the Illinois Historic Preservation

10 Agency that we just got last week, and we'd

11 offer that into evidence. I think it's straight

12 forward. It's just the state agency's

13 permitting on that. I'd like to call John

14 Iwanski.

15 JOHN IWANSKI,

16 being previously duly sworn, was examined and

17 testified as follows:

18 DIRECT EXAMINATION

19 BY MR. SANDERS:

20 Q. State your name, sir.

21 A. John Iwanski.

22 Q. John, you are the regional director of Trinity

23 Consultants; is that right?

24 A. That's correct.

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1 Q. What is -- what type of business is Trinity?

2 A. Trinity is an environmental consulting firm.

3 Trinity has been around since 1974. We're a

4 nationwide environmental consulting firm. I am

5 housed in our office in Oakbrook, Illinois.

6 Q. How many offices does Trinity have?

7 A. 22 offices around the country.

8 Q. What kind of work do you do for Trinity, John?

9 A. My title is regional director, but most of my

10 time is still spent managing projects, primarily

11 industrial customers. These projects range from

12 procuring the necessary permits to strategizing

13 with companies on ways to meet environmental

14 compliance given the complexity of regulations.

15 Q. John, will you briefly describe for us your

16 educational background and your training in this

17 environmental work that you do?

18 A. I graduated in 1985 from Penn State University.

19 I'm a meteorologist with a bachelor degree in

20 meteorology. I spent four years in the United

21 States Air Force and then joined Trinity in

22 1990. Trinity historically in the first 10

23 years of our existence in the 1970s and '80s

24 built its practice largely on air dispersion

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1 modeling. When emissions are into the -- going

2 into the air, how do they disperse into the

3 atmosphere. Therefore we've always had the

4 practice of looking and hiring meteorologists.

5 They form about -- 15 percent of our -- of our

6 employees have a meteorology background. The

7 far majority of our consultants are engineers,

8 chemical, environmental, mechanical engineers.

9 Q. Thank you, John. Has Trinity been hired by

10 Rentech to assist Rentech in obtaining the

11 necessary environmental permits for this

12 expansion project?

13 A. That's our role on the project, is we are

14 working very closely with Mark, with John to

15 procure the plethora of environmental permits

16 and approvals that a project of this size

17 entails.

18 MR. HEATON: Mr. Chairman, we'd like to

19 offer Petitioner's Exhibit 4, which is Mark's

20 two-page report. That also includes his -- a

21 lot of the jobs that he has worked on prior to

22 this one, and also includes a matrix at the end

23 of the group exhibit regarding the permits and

24 approvals that will be needed.

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1 Q. John, you have before you a copy of Exhibit 4.

2 The first two pages of that are your summary

3 report, right, of your involvement in this

4 project -- Trinity's involvement in this

5 project?

6 A. Right.

7 Q. That was prepared at our request as an aid for

8 the board to understand your role and the

9 processes involved in this; is that right?

10 A. That's correct.

11 Q. Okay. Your credentials and your work

12 experience are also attached in the several

13 following pages; is that right, John?

14 A. That's correct.

15 Q. And the final page is what I would call a

16 matrix of necessary permitting -- environmental

17 permitting for this expansion project?

18 A. Yes, it is.

19 Q. Can you provide us with a summary of what

20 permitting you perceive to be necessary and what

21 the processes are for those particular permits,

22 please?

23 A. You've got the listing in front of you there,

24 but I will briefly describe each one of them,

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1 not necessarily in the order of the list, but in

2 the order that we're completing them. The first

3 piece that has been completed and been submitted

4 to the Illinois EPA is the application for an

5 air construction permit. The reason why we did

6 that one first is we know -- Rentech came to

7 Trinity, we know how long it takes to get a

8 construction permit of approval from the agency.

9 It's typically up to -- for a project of this

10 size we require the agency told us they are

11 going to need upwards of 270 days to a year's

12 time. It's a very complicated, it's a very

13 regulation-intense process. That process has

14 been, as I said, submitted to the agency.

15 There's a copy of it right here to the

16 application that was submitted of 2006. We are

17 working with the Illinois EPA in drafting some

18 of the conditions of the construction permit as

19 of this period right now. It's going to be a

20 very detailed permit. It's not something that

21 someone can sit down and write in one day.

22 There are various sections for the various

23 pieces of equipment that John Diesch described.

24 That process is underway and we're working very

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1 closely with the Illinois EPA.

2 Q. John, excuse me. For the record, can you --

3 just so that the reporter can have an indication

4 here, how many -- approximately how many pages

5 is the application for the --

6 A. This is a standard format that Trinity will

7 follow to do an air construction permit. It

8 will lay out in executive summary to describe

9 what the project is, what the project entails,

10 what's the overall conclusion in the emissions

11 based on the project as proposed. It includes

12 some information about the plot as we know it,

13 the process flow diagrams simplified, much more

14 simple than what Mark's engineers are using.

15 These are simplified to understand major air

16 emitting processes. We then quantify the

17 emissions from all of the new equipment, all of

18 the modified equipment, all of the equipment at

19 the site that will not be modified but may

20 experience an increase in emissions due to the

21 project. That will be done in this section.

22 We then have to detail the regulatory

23 applicability. All federal, state and air

24 regulations that are required to be addressed

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1 have to be laid out in the application, and the

2 appendices are actually the emission

3 calculations, and then a large girth of this is

4 going to be the IEPA's application forms, since

5 everything has to be done on the forms that they

6 have provided for industry to file applications

7 for. So that's the air construction permit

8 application.

9 Q. Okay, John. Thanks.

10 A. Probably the next one in chronological order

11 which will be touched on in a bit is the

12 stormwater construction permit application,

13 which will be the process where we have -- we

14 will have to develop a stormwater pollution

15 prevention plan during the process of the

16 construction process. We also have the

17 requirement to amend the existing water

18 discharge permit we have that was talked about

19 the water earlier as well. The facility largely

20 has one outflow to the Mississippi River right

21 now. They have an existing permit that will

22 have to be amended because the quantity of

23 discharge will change as well as the

24 constituency. Trinity is still working with

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1 Mark very closely to arrive at some of those

2 numbers, so we have not yet submitted any

3 application to modify our water discharge permit

4 and we are working to begin the process of

5 applying for the stormwater construction permit

6 application process as well. Those are the two

7 main permitting programs.

8 There was some talk earlier as well with

9 regard to tanks and tank containment structures.

10 We will have to meet the requirements for the --

11 it's actually called the Oil Prevention Act.

12 We're not producing any oil, but the tankage

13 that we will store our FT products in will fall

14 under that regulation, so we will have to

15 develop a spill prevention control and counter

16 measure plan which will address the catastrophic

17 value of the vessel. We also will have to

18 address that storage of those -- that quantity

19 of FT products with the state fire marshall.

20 That's a concurrent process. The same plan will

21 be used to satisfy both the elements there. The

22 whole question of where we're getting the water

23 from is indeterminate yet as well, so we really

24 haven't been able to go to formally talk to the

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1 U.S. Army Corps of Engineers with regard to

2 withdrawal out of the Mississippi River, if

3 we're going to do that or not. But that is a

4 process, that's an approval process. It's a

5 coordinated approval process with the Army Corps

6 of Engineers down in Rock Island and the

7 Illinois Department of Natural Resources. And

8 we will obtain the necessary approvals if we --

9 if we're going to pull more water out of the

10 wells -- the existing wells or additional wells.

11 Finally the other -- not really

12 environmental approval process, but which we've

13 been tasked and will be tasked to do is to

14 address any federal aviation administration

15 height requirements with regard to the tall

16 structures that Mark had mentioned. That's

17 pretty much a synopsis of what you see here on

18 this listing.

19 Q. John, Rentech is presently operating under

20 permits as well; is that right?

21 A. Yes, they are.

22 Q. And what would those be just in a nutshell?

23 A. In a nutshell they are currently operating

24 under their Clean Air Act permit -- program

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1 permit. It's called -- in my language these

2 acronyms just flow off of our tongues easily.

3 It's called a CAP permit. It's the ability for

4 that plant to operate. This is the entire

5 permit. It's not one or two pages, this

6 document is over a hundred pages long. This is

7 their ability to operate the plant in

8 conformance with all Clean Air Act requirements.

9 Trinity actually had some history with the

10 facility even prior to the Rentech days. We

11 assisted the facility in procuring this original

12 CAP permit back in 2003, is when this was

13 issued. Just to give you a little bit of an

14 idea of that process, this original CAP permit

15 was applied for in 1996. It took the agency, by

16 my math that's seven years to issue this permit

17 -- this operation permit. Granted that was a

18 new operating permit program that every industry

19 in the state had to go through, but that --

20 these are very complex permits. But we have

21 history with this facility. We know what the

22 emission points are, we know where the emissions

23 are coming from. And that logically led into a

24 very understanding relationship of how we're

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1 going to permit this new plant through the air

2 permit.

3 The other permit that the facility does

4 have and has to comply with is the water

5 discharge permit. It's not as thick of a permit

6 obviously, as you can clearly see. This governs

7 the outflows, as I said, that one outflow into

8 the Mississippi River. It governs the outflows

9 of what are the allowances for discharges into

10 that outflow both on a contaminant or

11 constituent basis as well as how does that

12 impact the water temperature of the river, the

13 mixing zones, so there is very specific

14 limitations here of what the temperature of the

15 discharge is allowed to be in the river over the

16 course of various months. These are the two

17 main permits the facility is governed by right

18 now in the environmental arena.

19 Q. John, are there any monitoring requirements for

20 operation under those permits?

21 A. Absolutely, that's -- that's what keeps folks

22 like me in business, the consultants, is because

23 there is a plethora of monitoring requirements

24 in this permit, the air, and in the water. The

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1 water has monthly, quarterly, and annual

2 monitoring requirements that have to be

3 submitted. The air permit has quarterly,

4 semiannual, and annual requirements, including a

5 requirement on an annual basis to self-certify

6 that they are in compliance with this permit.

7 So that's one thing that's quite unique about

8 the air permit. It is a self-certifying permit.

9 John has to sign a certification every year that

10 the plant is in compliance with this permit.

11 Q. Thanks, John. You mentioned earlier that you

12 had already applied on behalf of Rentech for an

13 air construction permit. Is there a distinction

14 between a construction permit and, say, an

15 operating permit?

16 A. The construction permit and the operation

17 permit in the State of Illinois, the IEPA

18 maintains a dual permitting system. Before

19 Rentech can construct or modify an air emission

20 unit they have to go get the approval from the

21 IEPA for that construction process. That's

22 called the construction permit. That's what

23 this was the application for. Once the IEPA

24 issues that construction permit Rentech will

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1 have -- in the case of this construction permit

2 that will be issued here, given the fact that

3 this is a facility expansion and modification,

4 they will have to roll the requirements of that

5 construction permit into the operating permit.

6 So Rentech will have to file another application

7 with the State of Illinois once the facility

8 starts operating to update the construction

9 permit elements into their operating permit. So

10 yeah, there's a lot of paperwork involved here,

11 but that's just the way Illinois system is set

12 up. You got to get the construction permit

13 first, then you have an obligation to modify

14 your operation permit afterward.

15 Q. Thanks, John. In the process that you went

16 through to prepare this air construction permit,

17 this encyclopedic air construction permit, did

18 you arrive at any overall conclusion as to the

19 operation of the proposed expansion as to air

20 emissions?

21 A. The statement that I have put in there, and you

22 saw a preview of that on John Diesch's slide

23 earlier where he had the bar graph about the

24 various pollutants, on a regulated pollutant

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1 basis this project is reducing emissions of

2 upwards of 2,000 tons per year on an aggregate

3 basis of all pollutants. The reason being is we

4 can -- part of this project, like Mark said,

5 we're going to remove some of that front end of

6 the existing ammonia plant. The high emitting

7 ammonia, the high emitting front end. These

8 emissions have all been documented with the

9 Illinois EPA. It's not as if the Illinois EPA

10 does not know of these emissions. They were

11 permitted in the operating, and annually John

12 Diesch certifies the annual emissions report

13 that certifies this higher level of emissions

14 that will be removed as a result of the

15 construction permit. It is going to be a

16 technically complex construction permit. They

17 are in a very highly regulated industry. There

18 will be some new regulations that will apply to

19 them that have not applied before. Organic

20 liquids distribution, leak detection and repair

21 requirements, some additional steam generation

22 capacity will be more regulated that they are

23 going to construct so that there will be new

24 requirements to this permit that the facility

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1 does not have, so it will be a complex permit.

2 Q. Thanks, John. John, can you tell us, what is a

3 fugitive dust plan?

4 A. A fugitive dust plan is just what it sounds

5 like. It's -- fugitive dust is that dust that

6 is caused by either the effect of a mechanical

7 action or wind. Fugitive dust is caused when a

8 truck drives down a road and releases a cloud of

9 dust. I saw it this morning driving in on U.S.

10 20. The salt that we all appreciate to melt the

11 roads then becomes fugitive dust when it dries

12 on a nice dry day like today. That's a fugitive

13 dust. The coal pile that we're going to be

14 using in this process will be a source of

15 fugitive dust. The Illinois EPA in their

16 regulations has specific regulations in Part 212

17 that identify when a facility has to have a

18 fugitive dust plan. In the Illinois regulations

19 most of the areas that need a fugitive dust plan

20 are located in the metropolitan Chicago area,

21 East St. Louis, and then some select

22 metropolitan areas throughout the state.

23 Jo Daviess County is not on the list where a

24 fugitive dust control plan is required. As part

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1 of this effort though we're going to develop,

2 implement, and maintain a fugitive dust control

3 plan as part of our construction permitting

4 process. And then the permit that the Illinois

5 EPA issues us will make that plan enforceable

6 and it will be part of the certification that

7 John will have to sign that we are doing these

8 measures that we lay out. Typical measures in a

9 fugitive dust plan, roadways, you're going to

10 wet them to prevent the dust from becoming

11 airborne, or you're going to occasionally sweep

12 them. As Mark mentioned we're going to put up a

13 sprinkler system around the pole pot (phonetic).

14 If necessary we'll add a surfactant to that to

15 make the crusting material. And each one of

16 those plans will be spelled out, as well as how

17 will we know we're doing this. We're going to

18 have some sort of monitoring frequency that

19 we're going to go out and verify this is being

20 done.

21 Q. If I understand this correctly then, John, even

22 though Rentech in your view is not obliged by

23 law to have a fugitive dust plan because it is

24 in Jo Daviess County, once it agrees to submit

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1 one as part of its application, then it becomes

2 enforceable as to Rentech and must maintain

3 it --

4 A. It will become enforceable upon the issuance of

5 the construction permit which allows us to start

6 the construction process. We're going to have

7 to begin maintaining that fugitive dust plan;

8 otherwise, we would not be subject to it here in

9 Jo Daviess County, because the way that's

10 developed by the regulation is that it -- has

11 there been a history of particulate attainment

12 problems in that county, and historically

13 Jo Daviess County has not had that problem.

14 Q. Is there any recordkeeping requirement with

15 respect to a fugitive dust plan?

16 A. Yes, there will be. That's the element of the

17 plan. It has to spell out how are your going to

18 say you're doing these things. It's one thing

19 to have the plan, but you also have the proof

20 that you're implementing the plan. So we will

21 have to work very closely with Rentech to say

22 how are we going to prove that we are minimizing

23 fugitive dust through our water spraying or road

24 sweeping or our water applications to the pile

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1 as well as some of our coal handling, the water

2 fog application that Mark talked about. There

3 will be a recordkeeping component and that will

4 have to be certified that we're following that.

5 Q. John, I want to finish with a couple of just

6 very general questions. Is there any

7 requirement that Rentech have communications

8 with or apply for anything with respect to the

9 United States Environmental Protection Agency?

10 A. The Illinois EPA has authority and has the

11 delegated authority and has the state

12 implementation approval authority to implement

13 all of the requirements of the Clean Air Act as

14 well as the national pollutant discharge

15 elimination system, which is NPDS, or the water

16 discharge. We're going to be interfacing

17 directly with Illinois EPA on all environmental

18 matters. As these permits come up for public

19 notice, USEPA has the ability to comment on

20 these permits as anyone else has the ability to

21 comment on them.

22 Q. Thank you. And finally, John, this may be

23 self-evident, but say for example if Rentech

24 were to fail to secure a valid air construction

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1 permit or a valid air operating permit, what

2 would be the consequence to the company?

3 A. I'm obviously not a lawyer, but I counsel my

4 clients it says you can't do that. You will not

5 be able to construct or start construction

6 without the construction permit issued. You

7 will not be able to operate your facility

8 without your operation permit properly modified

9 and updated.

10 MR. SANDERS: Thank you very much.

11 Mr. Chairman, that's all questions I have for

12 John. I certainly invite questions from the

13 board or from the public.

14 MR. GRATTON: Okay. Maybe this question

15 could be for both Johns, since the other John

16 has a little more history here. What has been

17 your experience with obtaining and maintaining

18 proper compliance with all the regulations that

19 you operate under now? Will you tell us a

20 little bit about your history with that?

21 MR. DIESCH: Well, the plant has always

22 been -- we operate in compliance. It's

23 extremely important for us we have a very good

24 close relationship with the regulators. We work

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1 with them very closely. We've worked with them

2 on design issues relating to how do we meet

3 these compliance requirements when we see

4 different regulatory changes coming forward.

5 With new laws, as you know, typically what

6 you're going to see is reductions in emissions

7 as time goes on, so when we hear about a permit

8 change or a regulatory change, many times we'll

9 sit down with the regulators and kind of

10 brainstorm how can we make this fit. Because

11 they know our facility extremely well. I mean,

12 they are in there on a routine basis to do

13 walk-throughs and to talk to our environmental

14 people, environmental health and safety people,

15 so we have a very close relationship. We work

16 with them very closely. And this plant has had

17 consistent record over the 40 years it's been

18 there of being in compliance, otherwise we

19 couldn't operate if we didn't operate in

20 compliance.

21 MR. JANSEN: Is it safe to say you've

22 never been fined or cited?

23 MR. DIESCH: If you go -- there was a

24 citation back in the early '80s, I believe,

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1 before my time. It was related to a nitric gas

2 plant. There was a problem with a piece of

3 equipment, and we had a higher level than the

4 regulation at that time emitted on the nitric

5 oxide emissions. And the fact that they were

6 above that and they didn't notify the agency

7 quick enough, they got a fine for that. And

8 that was in the early '80s, I believe.

9 STAFF MEMBER: Along those lines, you say

10 before the CAP permit, the Title 5 permit

11 required you to self-certify against all the

12 regulations that are in your permit, a long list

13 of them. Could you provide to the board the

14 last few years of compliance certification

15 reports just to show the compliance over the

16 last few years?

17 MR. DIESCH: We can. They are public

18 documents, so absolutely.

19 MR. IWANSKI: I've got one here. The copy

20 that I brought just because I wanted to be sure

21 of what was done and make sure it's filed. But

22 here's the most recent one for year 2005.

23 MR. DIESCH: How far back?

24 STAFF MEMBER: I think the board would

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1 just like to see, you know, since Rentech has

2 owned it, and maybe the past three years or so

3 would just be a good indication of all the

4 little details that go into that. It's pretty

5 reassuring when that thing comes up nice and

6 clean, wouldn't you say?

7 MR. GRATTON: Any other questions for

8 John?

9 STAFF MEMBER: Yeah, I've got a couple.

10 During the previous presentations we were

11 talking about Phase 1 and Phase 1-A and Phase 2.

12 I guess it's our understanding that the permit

13 right now is only being submitted for Phase 1

14 and Phase 1-A. The zoning request is being

15 questioned for Phase 2 as well. Could you

16 describe for the board any additional emissions

17 or any additional procedures that will be

18 required for Phase 2 of this project when it

19 occurs, and explain how that circumvention is

20 not going to -- kind of comes into play.

21 Circumvention is kind of defined as it's illegal

22 to split a project into smaller projects to

23 avoid a major source modification project. So

24 you can't arbitrarily divide it up and permit

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1 little pieces to avoid getting a big permit

2 that's required. So if you could explain to the

3 board why that's not an issue here, the Phase 2

4 part of this project.

5 MR. IWANSKI: Right, you're correct. The

6 application as submitted is for Phase 1 and 1-A.

7 This air construction permit application is

8 Phase 1 and 1-A. That's all the engineering

9 data that the environmental consultant has been

10 provided with at this point in time, so we

11 couldn't provide an application for Phase 2 at

12 this time. We do not have anywhere near the

13 engineering to determine what the calculations

14 are. So we couldn't address that now. With

15 regard to is the project being split into two

16 separate pieces, I've had numerous conversations

17 with John Diesch as well as Rentech ENC or the

18 project development folks, and I made sure to

19 understand that Phase 1 and 1-A is technically

20 economically viable on its own as a project.

21 And if that can be said affirmatively, that is

22 what USEPA and the Illinois EPA has used as the

23 determination of whether or not this project can

24 be permitted in a construction permit, and then

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1 we can apply for a Phase 2 construction permit.

2 If Phase 2 requires additional control based on

3 levels of emission, then Rentech will apply the

4 necessary additional control in Phase 2. But my

5 understanding is that Phase 1 and 1-A is

6 technically economically viable as a project on

7 its own and therefore can be permitted

8 independently of Phase 2.

9 STAFF MEMBER: I guess the follow-up on

10 that is is Phase 2 then going to also be

11 submitted as a minor modification to the

12 existing project or as possibly a major

13 modification that won't have these thresholds to

14 keep it negative or from increasing to a certain

15 amount?

16 MR. IWANSKI: Yeah, Bruce, we don't have

17 -- we don't know. I don't know if it's a minor

18 or a major yet because we haven't done the

19 emission calculations to be able to say that,

20 but we're not going -- if, in fact, it's a major

21 modification we will look to see are there

22 existing processes at the plant that we can

23 control better or in addition to make additional

24 emission reductions to process that in a more,

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1 as Bruce was saying, a minor modification. But

2 if there are not then we will permit Phase 2

3 accordingly. This is getting into some very

4 technical air lingo, and when we're saying minor

5 and major, this construction permit application

6 and that terminology would be called minor.

7 This is not a major federal prevention of

8 significant deterioration application. And the

9 reason why it is not is because the existing

10 project has so many emission reductions

11 associated with it that the emission levels

12 don't trigger that level. Again, we don't have

13 any data on Phase 2, so we can't permit -- I

14 can't answer the question at this time.

15 STAFF MEMBER: Maybe something you can

16 explain to the board is the offsets. You know,

17 the reduction in emissions from the facility

18 come from what sources, and those reductions --

19 the reason this is a net decrease in emissions,

20 even though you're increasing the amount of net

21 energy that comes into the plant, because not

22 only are you making more product and more

23 feedstock, but you're also generating

24 electricity now at the plant from the coal as

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1 well.

2 MR. IWANSKI: Right.

3 STAFF MEMBER: Maybe explain how you can

4 use more energy and have more combustion but

5 still have fewer emissions starting with natural

6 gas, which is thought to be a nice clean fuel to

7 begin with.

8 MR. IWANSKI: Okay. I'll do my best.

9 I'll probably get some help from our team here.

10 The primary pieces of equipment are on the front

11 end of the existing ammonia plant, and I did

12 hear the term mentioned tonight primary reformer

13 where we take the natural gas and put it into --

14 and in my terms a big box where you can open up

15 a window and you see a bunch of flames going on

16 in this huge box. That's going to all go away.

17 That is a fairly large source of nitrogen oxides

18 emission. The other large -- actually three

19 large pieces of equipment that will be removed

20 are some old 1965 vintage natural gas fired very

21 large compressor engines that the company has

22 chosen not to continue to invest in, but remove.

23 And actually this is where I'm going to turn it

24 over to probably Mark here. Instead of using

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1 those compressor engines we're going to use a

2 different technology that will have no emissions

3 associated with it.

4 MR. IBSEN: We're going to convert those

5 to electrically driven compressors, so we're

6 going to take some of the energy that we've used

7 to create electricity and provide those

8 compressors with electricity. So rather than

9 having natural gas fired engines, which have a

10 large stacking emission of nitrogen oxides and

11 other combustion products from the combustion

12 process, we're going to use electricity to drive

13 those engines. The bulk of the energy to make

14 the electricity is coming from steam which is

15 generated from waste heat in the process. So as

16 John was talking about, the gasifier runs very

17 hot, but we're going to get the benefit of that

18 heat by generating high pressure steam, turn

19 high pressure steam into electricity, and then

20 the electricity is going to drive these engines.

21 So that's where the bulk of this is coming from.

22 MR. DIESCH: And those emissions from

23 those removed pieces of equipment have been

24 documented in this application through site

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1 specific tests that have been done, so those are

2 -- we're not using some emission factor out of a

3 book. We're using actual test data that's been

4 performed at the facility to determine what are

5 the actual emissions exhausted into the

6 atmosphere. And the Illinois EPA has that as

7 part of our application, that test result data.

8 I guess the larger part Mark addressed

9 with regard to how can we use coal to generate

10 additional ammonia and additional FT product and

11 make power and have emission reductions.

12 Largely efficiency improvements and fundamental

13 changes in design of how you make that synthetic

14 gas that's necessary for the ammonia plant and

15 is necessary for the FT fuels plant. In 1965 it

16 probably was not a viable technology to even

17 consider, but gas fired compressors work as --

18 was primary former structures that were fairly

19 typical in the industry. There's nothing -- in

20 my understanding of the ammonia plant there's

21 nothing at this plant that's unusual with regard

22 to how ammonia plants were built and operated.

23 They have the same equipment, it's just the

24 useful life of that equipment has -- has or is

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1 nearing its useful life and we're going to

2 replace it with a different technology.

3 STAFF MEMBER: With regard to the question

4 came up from the audience before about

5 nonroutine releases and how they are going to be

6 dealt with, start-up, shutdown, malfunctions.

7 Trinity specializes in modeling. Have you done

8 any modeling of those nonroutine releases as far

9 as impacts downwind, or how do you characterize

10 those emissions?

11 MR. DIESCH: We have characterized the

12 emissions as start-up, shutdown, and malfunction

13 events in terms of a qualitative nature in the

14 application. We've quantified them based on

15 what we expect our normal start-up procedures,

16 normal shutdown procedures, and a reasonable

17 amount of time when there is an unanticipated

18 malfunction. A malfunction is just that, it's

19 an unanticipated event. So they have been

20 quantified. We have not done any air dispersion

21 modeling as part of this application. There's

22 not a requirement to do that with the Illinois

23 EPA based on the level of emissions we have. So

24 there have been no air dispersion studies done

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1 either for the start-up, shutdown malfunction

2 events or the operation as proposed. It's not a

3 requirement as part of the application.

4 MR. GRATTON: Does anybody else have a

5 question?

6 MR. TONNE: I've got a question for our

7 people there. If the petitioner for purposes of

8 this special use application stipulates that

9 they would comply with all permitting

10 requirements and IEPA regulations, does that

11 satisfy Jo Daviess County on that subject?

12 STAFF MEMBER: I guess it's -- it should

13 be said that the complexity of their air

14 permits, for example, that have hundreds of

15 underlying requirements, and to get a permit you

16 need to show that you can comply with all of

17 those, the one caveat, I guess, to answer your

18 question, is that the way the permit is proposed

19 to be submitted right now, it's a minor

20 modification. It has certain safeguards as far

21 as the maximum emissions they can emit to stay a

22 minor modification. If for whatever reason this

23 permit gets turned down as a minor modification

24 because the EPA does not like the netting

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1 analysis for some reason, doesn't like the

2 mapping, there's all kinds of arbitrary reasons

3 sometimes from my experience too that they turn

4 these things down. And they have to go and

5 perform this as a prevention of significant

6 deterioration permit or a major modification

7 permit, there is no then limit to how much

8 emissions are allowed under an NPSD permit. You

9 just have to meet other kinds of technology

10 controls, modeling impact requirements and

11 secondary emission impact studies. But there's

12 no safeguard on how much total emissions they

13 can release from any kind of project in the

14 future. For example, Phase 2, if that went

15 through a PSD permit instead there wouldn't be a

16 limit on the type -- the total amount of

17 emissions increases compared to a minor

18 modification. So I guess I would conclude that

19 if it gets submitted as a minor modification and

20 it passes all the requirements and there's a

21 limit to those emissions as expressed and that

22 decrease in emissions is good, it should meet

23 all of the concerns someone should have about

24 the air quality impacts from this kind of site.

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1 If it was a PSD permit it might meet all the

2 technical requirements of getting a permit, but

3 it might have a huge impact on the emissions

4 from the site, and the board might want to look

5 at the qualitative analysis such as modeling

6 result and everything else before making a

7 determination of whether it is acceptable for

8 this local population and the surrounding areas.

9 MR. TONNE: So at this point in our

10 hearing process here, and they are anticipating,

11 you know, it could be a year or longer before we

12 get an answer on the second part of that

13 scenario, from a legal zoning point of view this

14 is a question for the lawyers that have zoning

15 experience, would we want to stipulate that so

16 as to trigger a review of this special use

17 should that second scenario happen? Is that

18 typically --

19 MR. ZIBART: Yeah, typically, I think

20 that's certainly a possibility for the board to

21 consider. You know, the board is -- the County

22 is -- can grant, deny, or grant with conditions

23 a special use, as you know. And so certainly a

24 condition on what kind of -- you know, the kind

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1 of permitting that the applicant would get from

2 another agency could be part -- could be one of

3 the conditions. And that's traditionally done.

4 MR. TONNE: And then through the Chair to

5 the petitioner, would you so stipulate and would

6 you want to think about that, we can talk about

7 it later, but you know, like I say, unless you

8 like it too.

9 MR. HEATON: I'm not sure I understood --

10 MR. TONNE: Well, I'm not sure I can

11 explain it.

12 MR. HEATON: -- what the question was?

13 MR. TONNE: We're worried that your

14 process of application yet for which you're

15 going to self-regulate to IEPA over that, as I

16 see it, until 2010, perhaps 2009, anyway for

17 Phase 2, but that whole process could trigger

18 something you called major. So does that, as he

19 seems to say, change the threat to the air

20 quality in Jo Daviess County, and would that

21 then correctly bring you back before us? Or is

22 that not a concern of the County?

23 MR. IWANSKI: Even in a major permit, if

24 Phase 2 were to be a major permit, the IEPA can

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1 only grant that permit if it is demonstrated

2 that there will be no threat to the air quality

3 standards in Jo Daviess County. And some

4 additional requirements as a result of a major

5 permit are has the technology and some of the

6 additional impacts been addressed accordingly by

7 the applicant. So there is full protection if a

8 Phase 2 permit is a PSD permit, that air quality

9 will not be degradated to the point where air

10 quality standards are compromised; the IEPA

11 can't issue us that permit.

12 MR. TONNE: Do you agree with him?

13 STAFF MEMBER: Just one caveat. There's a

14 different criteria for requiring a minor source

15 permit and a major source permit. The limits on

16 a minor source permit for the amount of

17 emissions you can emit are much lower than the

18 amount of emissions you can reach. So it's a

19 different qualitative test on what types of

20 emissions are allowed under a major source, a

21 minor source. There's modeling requirements to

22 limit the ambient impact, but those are based on

23 criteria pollutant standards or national

24 standards that may or may not be acceptable to

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1 the County itself, even though it passes the

2 national standard. And you can't say what those

3 are until you actually perform the modeling and

4 see how close they are to the limits or how

5 insignificant they are going to be. That's my

6 only point on that.

7 MR. TONNE: So don't worry about it now.

8 We'll litigate it later. Is that --

9 STAFF MEMBER: Well, I mean, if you grant

10 them permission for the Phase 2 right now you

11 aren't going to have a say later on in

12 determining that factor. You have to trust

13 basically the modeling and stuff that's done and

14 IEPA to do that for you.

15 MR. HEATON: Wouldn't they do that job --

16 I mean, that's what we rely on them to do

17 though.

18 MR. TONNE: So what's everyone's -- all

19 the experts' experience with this?

20 MR. DIESCH: The PSD permit, just as this

21 permit is going to go to public notice, so the

22 County will certainly have an opportunity at

23 that time to comment on that permit if they felt

24 that the air quality was not adequately

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1 protected. That's one instance where there will

2 be County input availability at that time. Just

3 as this permit is going to be public notice and

4 you're going to have an additional opportunity

5 to comment if you so feel it necessary as a

6 County entity.

7 STAFF MEMBER: That's true. You have --

8 there will be public hearings if requested,

9 there's public comment. There's more public

10 comment generally for a major modification than

11 for a minor modification. But it will be the

12 IEPA making the final decision on it rather than

13 the board making a final decision on it.

14 MR. GRATTON: Let me just clarify

15 something. We're being asked to probably

16 approve here both Phase 1 and Phase 2. I think

17 that's part of your request; is that correct?

18 MR. DIESCH: Right.

19 MR. GRATTON: And we don't know air

20 quality standards and what model will be used

21 for Phase 2 yet, is what you're telling us. How

22 can we best ensure that the County will be

23 protected going forward once the best avenue to

24 proceed with approval with the major

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1 modification, or the minor -- it sounds like the

2 minor process here allows less emissions; is

3 that correct?

4 STAFF MEMBER: That's correct, less

5 emissions.

6 MR. GRATTON: Less particulate matter.

7 STAFF MEMBER: Yes, less total emissions.

8 The major source would allow more emissions but

9 would still have limitations on impacts and

10 other kinds of things to mitigate those

11 increases. But it's a kind of apples and

12 oranges kind of thing as far as what you think

13 is important to the air shed and to the general

14 public. Even when it comes to air toxics and

15 other things there aren't necessarily air toxic

16 ambient limits, for example, for modeling.

17 That's a result that could be a major source of

18 toxics and not necessarily have the amount to

19 show minor impacts. But you have to have

20 certain control technologies that reduce it to a

21 certain effect that are nationally based and may

22 or may not be more important to you locally.

23 Generally the air pollution control things

24 protect the public, and the levels of protection

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1 have been developed for thousands of man years

2 of research and everything else, and in my

3 opinion shouldn't be second guessed on whether

4 they are good enough or not. But it's a

5 different kind of permit that you're saying that

6 you're going to get and that is going to be good

7 for Jo Daviess County between a minor and a

8 major permit.

9 MR. TONNE: So if we just stipulate this

10 special use, if they will apply and achieve all

11 the necessary permits and observe regulations,

12 we're covered?

13 STAFF MEMBER: You're covered, and you're

14 kind of trusting them that the Phase 2 is going

15 to be -- the character of those emissions is

16 going to be similar to or --

17 MR. TONNE: Well, as monitored by EPA

18 then. And we're going to accept that.

19 STAFF MEMBER: You're going to defer it to

20 the IEPA to protect you in that sense, right?

21 MR. TONNE: And it's your advice to us

22 that that's okay?

23 STAFF MEMBER: The ambient standards do a

24 good job for that on a national basis and a

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1 general public kind of condition.

2 MS. DAVIS: I mean, if we did not go with

3 their recommendations where would you go for

4 input? What do we know?

5 STAFF MEMBER: Well, that's the thing.

6 Without any data to look at we can't even advise

7 you on whether that's a good increase, big

8 increase, rational, nonrational, whether the

9 offsets are of like and kind emissions, any of

10 those kind of issues, you know, we can't do, you

11 know, if the project isn't laid out or far

12 enough developed to kind of give you those

13 answers, and I'm sure John would love to give

14 you those answers if he had the data for it, but

15 it's not available at this time.

16 MR. DIESCH: The only thing we looked at

17 was what would be the particulate emissions if

18 we did 5,000 tons per day of coal. That's a

19 very small number, because it's well controlled.

20 We did not look at what are the emissions from

21 additional FT production, additional steam

22 production, additional flaring opportunities.

23 We just don't have enough engineering data to

24 even take a shot at that. One of the criteria

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1 -- one of the requests we have is to get a

2 special use from the County to allow us to do

3 both phases, and the reason for that is to

4 finance this project we're looking at borrowing

5 $600 million. And if there's any potential that

6 the County could pull away our opportunity to

7 operate, we'll never get the financing and this

8 project -- nothing will take place. This plant

9 won't survive. So it really rests in your hands

10 for this project to move toward.

11 Now EPA, I have all the faith that EPA is

12 going to protect the environment around us, and

13 we have no -- we're going to operate in

14 compliance and protect the environment around

15 us. We all have the same goal, is to protect

16 our lives and the people that live around us.

17 So we are going to operate that plant -- and

18 we're spending probably hundreds of millions of

19 dollars in additional money into this plant to

20 have -- to meet state-of-the-art, significantly

21 below what the standards are today.

22 Significantly below what current operating

23 plants are operating with emissions of sulfur --

24 MR. IBSEN: The sulfuric acid plant

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1 specifically, it's state-of-the-art, and we are

2 -- we have got guaranteed limits from our

3 licensures that are substantially below those

4 that are required by the EPA.

5 MR. DIESCH: So you know, it's our intent,

6 we're going to operate in compliance.

7 MR. TONNE: Well, I'm sure you appreciate

8 our need to ask the questions.

9 MR. DIESCH: I understand.

10 MR. GRATTON: Before we let you off the

11 hook here, I think John indicated earlier that

12 carbon dioxide sequestration is -- control of it

13 is not mandated. In other words, you don't have

14 to sequester at this time. And you talked

15 about, you know, some of it being infused into

16 the oil wells, places like that. You're going

17 to produce a tremendous amount of CO2, and you

18 have a market for some of it, but if a

19 tremendously larger amount is being produced, do

20 you envision continuing to have a market for

21 that larger amount, if you do fine? If not,

22 what would your plan be to try to control some

23 of the release of CO2?

24 MR. DIESCH: Well, there's some -- there's

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1 some things going on in the State of Illinois at

2 the present time. The governor came out with an

3 energy policy or proposal. The State of

4 Illinois wants to continue to develop its coal

5 technology, and they have realized to develop

6 that coal technology there's additional research

7 that needs to be done on how to handle the CO2.

8 So the technology is not there yet. But to get

9 there we're going to have to begin building

10 these plants in order to confer the development.

11 This will be the first one. Now, part of his

12 goal or part of his recommendations is run a CO2

13 pipeline. There's some old oil wells in

14 Southern Illinois that aren't producing very

15 well. They are virtually nonproducing.

16 Enhanced oil recovery using CO2 is a good way to

17 further produce oil out of those old wells plus

18 a place to go with the carbon dioxide. So one

19 of his proposals was a CO2 pipeline. And it

20 would be a regional CO2 pipeline. In fact,

21 there's discussions going on right now between

22 the State of Illinois and the State of

23 Wisconsin. The State of Wisconsin right now is

24 looking at building a power plant up near

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1 Casper. If that's a gasification plant, if that

2 ends up being gasification you can collect that

3 carbon dioxide. You could collect it and inject

4 it in a pipeline and you could send it to

5 Southern Illinois. Now, where that's going to

6 go, it's very early on, but it's going to take

7 some governmental help on both the federal level

8 and at the state level in order to continue to

9 move forward with those technologies. Rentech

10 is going to move forward with its own research

11 and development, mainly looking at gasification

12 of biomass. Because then if you can gasificate

13 biomass or a combination of biomass plus coal

14 you can reduce the overall impact on the

15 environment if you can sequester it. So the

16 technologies aren't there yet, but Rentech has

17 made it their direction, and I put that up

18 there, that's part of their goals is to continue

19 to develop CO2 sequestration in working with the

20 State of Illinois in doing that, and the federal

21 government as well. So our plan, I can't tell

22 you what exactly is going to happen in the

23 future, but there's going -- my expectation is

24 there's going to be regulations on carbon

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1 emissions over time. And so we're -- as a

2 carbon producer, we all produce carbon dioxide

3 every time -- all these power plants, every time

4 you combust fuel in your gasoline engine you

5 produce carbon dioxide. So I can't tell you

6 exactly where it's going to go, but we're going

7 to be part of it. I can tell you that.

8 MR. GRATTON: Any other questions? Okay.

9 This looks like our point in time has arrived.

10 Jock, how many more people do you have to

11 present?

12 MR. HEATON: We have one expert tomorrow

13 night. We have Kevin Boyer, our real estate

14 appraiser. We have Mr. Brunner and Mr. Lawfer.

15 And I'm sorry, John Schultz who came. I didn't

16 see him here earlier. So those three

17 individuals, Mr. Brunner, Mr. Schultz, and

18 Mr. Lawfer are going to be relatively short. I

19 see Kevin. Can you be here tomorrow night,

20 Kevin?

21 MR. BOYER: Yeah.

22 MR. HEATON: Then we probably would --

23 unless you want to get these three short

24 witnesses out of the way, they wouldn't have to

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1 come back.

2 MR. SANDERS: In all honesty, I don't

3 think Kevin is going to be all that lengthy.

4 You've got a written report from him. It's a

5 question of the values of the surrounding

6 property. I think that would be relatively

7 brief.

8 MR. GRATTON: What I'm trying to ascertain

9 is how much time we have to allow or should

10 allow this evening, and then we need to allow

11 some additional time for public testimony.

12 Could I see a hand of the number of people who

13 would like to present testimony? Is that going

14 -- other than the ones who have been mentioned.

15 So it does not appear like it's a lengthy list.

16 So I would say if we could wrap up and if you

17 could shorten your presentations to say five

18 minutes each -- and I don't want to cut you off.

19 If you feel you need more time then let's do it

20 tomorrow night.

21 MR. HEATON: Certainly Mr. Schultz,

22 Mr. Brunner, and Mr. Lawfer will be under five

23 minutes each.

24 MR. GRATTON: I'm not limiting the time.

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1 What I'm trying to do is use our time wisely.

2 MR. HEATON: I think they each have some

3 short comments about their feelings.

4 MR. GRATTON: Is there anybody who won't

5 be able to be here tomorrow night that -- who we

6 may want to hear from this evening? Maybe

7 that's a good way to --

8 MR. BOYER: If I can't be heard tonight I

9 have no choice but to come back tomorrow.

10 MR. GRATTON: How long is your

11 presentation?

12 MR. BOYER: I don't expect it to be long.

13 MR. SANDERS: I would guess five to 10

14 minutes, Mr. Chairman.

15 MR. GRATTON: Why don't we proceed with

16 his testimony and, you know, if it gets too late

17 we're just going to have to continue until

18 tomorrow night. But let's hear one more real

19 quick.

20 MR. SANDERS: Mr. Chairman, I would like

21 to call Kevin.

22 MR. HEATON: This is Exhibit 5, which is

23 Mr. Boyer's report.

24 MR. TONNE: We received that.

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1 KEVIN BOYER,

2 being previously duly sworn, was examined and

3 testified as follows:

4 DIRECT EXAMINATION

5 BY MR. SANDERS:

6 Q. State your name, sir.

7 A. Kevin Boyer.

8 Q. What's your occupation?

9 A. I'm a certified general real estate appraiser

10 licensed in the State of Illinois and the State

11 of Wisconsin.

12 Q. How long have you been an appraiser, sir?

13 A. Nine years this month.

14 Q. Are you -- and you're licensed with Illinois

15 and Wisconsin, correct?

16 A. Yes.

17 Q. Generally speaking, Kevin, where is your

18 practice concentrated?

19 A. I work in 10 counties in the State of Illinois

20 and I work in four counties in the State of

21 Wisconsin predominantly.

22 Q. What did you do before becoming a real estate

23 appraiser?

24 A. I was actually a dairy farmer.

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1 Q. Where?

2 A. Where I live now, in Stephenson County on a

3 farm in Winslow.

4 Q. Thank you, Kevin. At our request did you

5 review the Rentech property and the surrounding

6 properties with an eye toward forming an opinion

7 as to any impact on surrounding properties?

8 A. Yes.

9 Q. Can you tell us what you did to formulate your

10 opinion that's set forth in your report?

11 A. Sure. Often I'm asked questions from different

12 individuals regarding impact of land values on

13 specific different properties or projects that

14 are coming into the area. I've worked with

15 individuals that have been concerned about their

16 property values and that wind towers are going

17 to be constructed or have been constructed, high

18 voltage power transmission lines, ethenol

19 plants, some other miscellaneous things

20 throughout the years that I've been an

21 appraiser. I approached this project with the

22 same philosophy that I did with any other

23 project. Typically the first question that's

24 asked of me is how much will the value of my

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1 property be diminished if, whatever that

2 scenario would be. So I would go to the market

3 and research the data -- available sales data in

4 the area trying to discern if there is a

5 difference, any kind of an impact, either

6 positive or negative. One of the first cases

7 that I dealt with was on a wind tower farm. I

8 had opportunity to do some appraisal work in Lee

9 County adjacent to the wind tower farm that's on

10 Interstate 39 south of Rockford. The property

11 that I was appraising was adjacent, actually

12 contiguous to the end of wind farm. I was very

13 curious to know if there was a difference in

14 value, if I needed to make an adjustment in the

15 value because of its location to the wind

16 towers. Searched the entire perimeter of the

17 wind farm, determined that there was no data --

18 sales data that could confirm to me through

19 match sales analysis that there was a difference

20 in value. Same type of scenario on high voltage

21 power transmission lines throughout various

22 counties that I've worked on. A property on one

23 side of the road has a high voltage power

24 transmissions line, the other side doesn't, is

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1 there a difference in value, should there be a

2 reason for me to make an adjustment on that. No

3 conclusive data that would lead me to that

4 conclusion.

5 Ethenol plants are one of the more recent

6 projects that come in, and my office is in Lena

7 so if anyone is familiar with Athens Energy,

8 it's right on the edge of Lena, so I'm very

9 familiar with that plant and some of the

10 problems that they had when they first sited the

11 plant. And of course, many individuals

12 contacted me, wanted to know how much, again,

13 the value of their property would be diminished

14 if the ethenol plant was sited and operational

15 there. So I go to places that are -- first of

16 all, there's a network of appraisers. I talk to

17 people throughout the state and nation, see if

18 they have come up with documented sales that

19 would indicate something. I look at the

20 14-county area I work in to see if there's any

21 reason for me to make an adjustment on land

22 values, and determine that there wasn't. There

23 are -- a lot of people make statements that

24 property will be diminished by a certain

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1 percentage. The problem is there's never any

2 data that I have seen to support that.

3 Q. How about in this case, Kevin, as to the

4 Rentech proposed expansion?

5 A. As a litmus test I would assume that the

6 residential properties would be impacted first.

7 If there was any impact on value in the larger

8 area it would probably likely first be

9 predominantly available for me to discover in a

10 densely populated residential area. So

11 obviously Galena Estates was the closest most

12 densely populated area. I started to research

13 the area to find out what's going on. As my

14 report states there are at least 30 lots in that

15 subdivision. I looked at the history of the --

16 the most recent history, within the last 15

17 years of -- or so of sales transferred. My

18 first obvious observation was that there were

19 sales of properties in Galena Estates. Vacant

20 lots have been sold. There is a new

21 construction house that's just recently been

22 finished completion. And my report states also

23 that there's another vacant lot presumably that

24 will be constructed within the next 12 or 18

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1 months. So one of the first tests that I would

2 look at in a subdivision like that if something

3 were going on in the neighborhood I very likely

4 would not see any transfers of property. Those

5 people would shy away from that area and

6 potentially go somewhere else if there was a

7 reason for the value of those properties to be

8 diminished by whatever else outside influence

9 that might be. So I did not assume that that

10 was going on in the area because I saw actually

11 more sales than what I was expecting to find

12 compared to similar subdivisions in rural parts

13 of the counties that I work in. So I looked at

14 the transfer sale prices. The sale prices

15 tended to -- limited sales documentation,

16 there's not enough for me to do an in-depth

17 analysis of a percentage increase a year or any

18 of that type of thing, but generally the values

19 have remained stable to slightly increasing,

20 which is also what I would have expected to

21 find.

22 Q. Kevin, do you have an opinion based on what

23 you've just explained as to whether or not the

24 special use requested by Rentech would

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1 substantially diminish or impair values of

2 property within that general area?

3 A. I do have an opinion.

4 Q. What is it?

5 A. Based on my research for me to say that the

6 property values would be diminished or actually

7 increase in value, I'd have to have some

8 documentation in the market to justify that. I

9 don't see any documentation in any concrete

10 sales data that that would lend me to that

11 conclusion, so therefore I don't have any reason

12 to suspect that the property values would be

13 impacted at all by this construction.

14 Q. Kevin, do you also -- did you form an opinion

15 as to whether or not the special use requested

16 by Rentech would be injurious to the use and

17 enjoyment of other property in the immediate

18 vicinity for the purposes already permitted?

19 A. I noticed that discussions have gone on this

20 evening. I rely heavily too on regulations,

21 whether it's EPA or whatever governing body is

22 in control of any of the impact in the area.

23 And if there's -- if the facility is in

24 compliance with all regulations that are in

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1 place, the local, state, federal, however you

2 want to determine it, there would be no reason

3 for me to assume that there would be any impact

4 on the use or enjoyment of the property.

5 MR. SANDERS: Okay. Thank you, Kevin.

6 Mr. Chairman, that's all the questions I have of

7 Mr. Boyer.

8 MR. GRATTON: Thank you. Are there others

9 who would like to question Mr. Boyer?

10 AUDIENCE MEMBER: I've got a couple

11 questions. What about pieces of property that

12 are located near railroad tracks? Are they less

13 in value than similar properties that are

14 located away --

15 MR. BOYER: For me to say that I would

16 have to find match pair sales that would

17 indicate that to me. Again, I mentioned -- I'll

18 talk about the ethenol plant in Lena. It

19 increased significantly the semi truck traffic

20 and the rail traffic through the Village of

21 Lena.

22 AUDIENCE MEMBER: But to talk about Lena

23 versus this, the people that buy in Lena have

24 that type of area -- and it's a very nice area,

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1 but there's a little bit of difference than the

2 recreational use and the properties and use of

3 Jo Daviess County. We all bought in Galena

4 Estates to have a nice rural setting, to have

5 nice views, to be able to possibly hunt and fish

6 in our own backyards. I just had my house

7 appraised just a few months ago, and it always

8 has gone up in value. And one of the things is

9 just wow, what a fantastic view you have. And

10 that's pretty much the same as everybody in our

11 area. Also to say you haven't found anything,

12 there's been -- let's say the last 10 years

13 there's probably been at least two new homes

14 built every year. So when you said you can't

15 find a history of something going on in there, I

16 really question that.

17 MR. BOYER: What's the question then? I

18 guess I'm not following.

19 AUDIENCE MEMBER: I guess the question is

20 you're saying -- you saying you can't determine

21 one way or the other if the -- this plant is

22 going to effect the property value.

23 MR. BOYER: I don't see any data that the

24 expansion of Rentech would alter the pattern

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1 that's already happening.

2 AUDIENCE MEMBER: If something would alter

3 -- no matter what the area is, if something will

4 alter the view of and area will it affect the

5 property value? If something will affect the

6 noise will it affect the property value?

7 MR. BOYER: In the areas that I've

8 researched that the increased rail traffic or

9 semi truck traffic through the Village of Lena,

10 for example, I'll come back to that --

11 AUDIENCE MEMBER: You can't compare Lena

12 to an area like Galena. You look at the taxes,

13 you look at the property value, you -- Galena --

14 what did you look at in Lena? Was it a

15 subdivision? Was it rural farmhouses? What was

16 it?

17 MR. BOYER: All, all sales of properties

18 to see if there was any difference.

19 AUDIENCE MEMBER: And did you average

20 those?

21 MR. BOYER: I don't have average --

22 AUDIENCE MEMBER: I guess the average is

23 did you lump together, let's say agricultural

24 properties with residential properties or

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1 subdivisions?

2 MR. BOYER: No, they are all independent

3 properties. When I'm appraising agricultural

4 property I'm looking at agricultural sales.

5 AUDIENCE MEMBER: What is the property

6 value in the Lena area versus in the Galena area

7 or in Jo Daviess County where we're located;

8 higher or lower?

9 MR. BOYER: I suppose it would depend on

10 the quality of the individual homes. I've not

11 been asked to do an analysis of that.

12 AUDIENCE MEMBER: If I -- okay. I guess

13 what I'm saying is, you said you haven't found

14 anything one way or the other, but then you're

15 saying you don't think it will impact it. It

16 doesn't seem to be based on anything. I don't

17 know if I'm making myself clear.

18 MR. BOYER: I'm not following you.

19 AUDIENCE MEMBER: You say you can't find

20 anything in the Galena area that either showed

21 that it affected the property value positive or

22 negative; is that a correct statement?

23 MR. BOYER: Let me cite for you another

24 example of a property. The Byron Nuclear Plant

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1 was mentioned earlier. Up in Ogle County there

2 was a 40-acre parcel that was adjacent to the

3 edge of the property near Exelon. I would have

4 expected my own human (sic), I would not want to

5 live there. I would not pay -- if it was given

6 to me I'm not sure I would take the property.

7 But if I put my own emotion and my own feelings

8 out of that, that property sold for above market

9 value. Somebody bulldozed a driveway and built

10 a house in the center of the property because

11 they wanted to be in that location. Those are

12 the types of examples that I'm talking about

13 when I'm looking at this facility. That Lena

14 continues to grow. In fact, their assessed

15 value continuing to climb. There's a new

16 subdivision that lots are continuing to build.

17 There's development around the Byron Nuclear

18 Plant. That has not halted that development.

19 In fact, there's more population in that area

20 than --

21 AUDIENCE MEMBER: But nobody goes to Byron

22 for the view. It's pretty flat land. What

23 would happen to Galena territory if they were

24 going to put a plant next to Galena territory?

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1 MR. BOYER: What type of plant are you

2 talking about?

3 AUDIENCE MEMBER: A Rentech type of plant.

4 MR. GRATTON: Mr. Boyer, maybe if we

5 could, you know, keep the relevance issue intact

6 here and maybe -- I heard you, I think, say that

7 you researched property values in the Galena

8 Estates Subdivisions; is that correct?

9 MR. BOYER: Yes.

10 MR. GRATTON: And I think what you said,

11 and I'm paraphrasing you here, is that property

12 values did not decline, and in some instances

13 increased in value; is that a fair statement?

14 MR. BOYER: A general trend increased in

15 value, yes.

16 MR. GRATTON: During the, you know, period

17 of time that --

18 MR. BOYER: At least the past 15 years.

19 MR. GRATTON: Okay, but the chemical plant

20 has been in existence.

21 MR. BOYER: Yes.

22 MR. GRATTON: And is it your opinion that

23 any addition or expansion of this plant would be

24 in any way detrimental to property values?

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1 MR. BOYER: That is my opinion, that the

2 expansion of Rentech would not be detrimental to

3 the impact of the values of the surrounding

4 area.

5 STAFF MEMBER: One more question back

6 here. It's hard to predict the future because

7 plants change, so you can't really look at

8 anything in the area because it's all history

9 not looking forward. This isn't the first

10 gasifier though that's been built. Have you

11 looked at property values around gasifiers to

12 see what property values did after the gasifier

13 went in?

14 MR. BOYER: No, I have not.

15 MR. TONNE: And that -- I have the same

16 question actually to the petitioner. Do you

17 offer -- or isn't the Wabash process similar and

18 has been there 10 years, or did I -- have I

19 misstated that?

20 MR. DIESCH: Yeah, it will be a duplicate.

21 We're basically duplicating that technology.

22 MR. TONNE: Does the petitioner offer any

23 testimony about property values?

24 MR. DIESCH: That's another thing --

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1 there's a standard coal fire power plant there

2 as well. What they did was took one of the coal

3 fire units and installed the gasifier next to

4 it.

5 MR. TONNE: So it's apples and oranges. I

6 understand what you're saying but -- has any

7 peer review data been published with regard to

8 residential property values?

9 MR. DIESCH: What I can say on the

10 environmental side, that the total environmental

11 emissions for that site were dropped

12 dramatically. It's the cleanest power plant

13 operating today. I can't say unequivocally.

14 There's data and information on the USEPA's

15 website. You can look that up. I can tell you

16 that. I don't think that it would have effect

17 on property values.

18 MR. GRATTON: Do we have other questions

19 for Mr. Boyer? Thank you very much. I think at

20 this point our time has come and gone, and I

21 think it's time that we look toward tomorrow

22 night, if we can. If you don't have a copy of

23 the staff report, I would like you to review

24 that part for tomorrow night. I know that some

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1 of the questions that were in that report have

2 been answered this evening, there may be some

3 that have not been answered. If you could

4 review that and try to address those. And we'll

5 hear the rest of the testimony that you've

6 prepared plus any public input that we may

7 receive tomorrow night.

8 MR. HEATON: We want to start at 6 again,

9 Mr. Chairman?

10 MR. GRATTON: And we'll hope to wrap up at

11 9 or shortly after tomorrow night. So do I have

12 anything from staff before we -- do I have a

13 motion to continue tonight's meeting until

14 tomorrow evening?

15 MR. HEIDENREICH: Moved.

16 MR. GRATTON: We have a motion by Tom,

17 second by Nick to continue this proceeding until

18 tomorrow evening, February 15th at 6 o'clock

19 p.m. in this building in this room. All those

20 in favor signify by aye.

21 (By voice vote six ayes.)

22

23

24

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1 Now on this 14th day of February, A.D.

2 2007, I do signify that the foregoing testimony was

3 given before the Jo Daviess County Zoning Board of

4 Appeals.

5

6

7

8

Melvin Gratton, Chairman 9

10

11

12

13 Linda Delvaux, 14 Zoning Administrator

15

16

17

18 Kara M. Sullivan 19 Certified Shorthand Reporter Registered Professional Reporter 20 IL License No. 084-004482 8991 South Prairie Road 21 Ashton, Illinois 61006

22

23

24

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