STATE OF MINNESOTA MINNESOTA POLLUTION CONTROL AGENCY IN THE MATTER OF THE DECISION ON THE NEED FOR AN ENVIRONMENTAL IMPACT STATEMENT FOR THE PROPOSED DIVERSIFIED ENERGY COMPANY ETHANOL PLANT EXPANSION STEVENS COUNTY MORRIS, MINNESOTA

FINDINGS OF FACT CONCLUSIONS OF LAW AND ORDER

Pursuant to Minn. R. 4410.1000 - 4410.1600 (2003), the Minnesota Pollution Control Agency (MPCA) prepared an Environmental Assessment Worksheet (EAW) for the proposed Diversified Energy Company (DENCO) Ethanol Plant Expansion proposal. Based on the MPCA environmental review, comments, and information received during the comment period and public informational meeting, and other information in the record of the MPCA, the MPCA hereby makes the following Findings of Fact, Conclusions of Law, and Order: FACILITY HISTORY Overview DENCO proposes to expand its existing ethanol production facility (Project) in Morris, Minnesota. DENCO will increase undenatured ethanol production to 30 million gallons per year (MMGY) from 21.5 MMGY. The DENCO facility typically operates 24 hours per day, seven days per week, with periodic maintenance shutdowns scheduled throughout the year. Previous Environmental Review An EAW was prepared for a previous expansion to 17 MMGY. The Project proposer at that time was Morris Ag Energy, which operated the facility before DENCO. The Findings of Fact were signed June 30, 1998. Permitting and Compliance/Enforcement History The original air emission permit for Morris Ag Energy was issued in 1990 and amended several times. DENCO became the permittee in 1999, and received an air permit modification in 2001. DENCO received initial National Pollutant Discharge Elimination System (NPDES) State Disposal System (SDS) discharge authorization under the noncontact cooling water general permit in 1993. In July 2000, general permit coverage was replaced by an individual permit which included a second outfall and additional sources such as reverse osmosis reject water. The individual permit was later modified to include, among other changes, a schedule towards decreasing the once-through noncontact cooling water volume. The facility is expected to receive an individual above ground storage tank permit in 2005. DENCO installed a thermal oxidizer to control air emissions and comply with the 2002 Consent Decree entered into with the U.S. Environmental Protection Agency and the MPCA to resolve non-compliance with air quality rules. The air quality permit for the proposed expansion includes the requirements of the Consent Decree. The proposed NPDES/SDS Permit will address past exceedances of permitted flow volumes. Other previous noncompliance has been resolved and is not anticipated to affect the proposed Project.

TDD (for hearing and speech impaired only): (651) 282-5332 Printed on recycled paper containing at least 30% fibers from paper recycled by consumers

Diversified Energy Company Ethanol Plant Expansion Morris, Minnesota

Findings of Fact Conclusions of Law And Order

Citizen Participation The extended public notice period for this EAW ran from October 25, 2004, through December 17, 2004. The MPCA received six comment letter in that time. In addition to the public comment period, a public information meeting was held in Morris on January 25, 2005. Approximately 70 - 80 people attended the meeting. Eighteen people provided written comments at the meeting. The MPCA received 4 requests for an Environmental Impact Statement (EIS) on the Project. PROPOSED PROJECT DESCRIPTION Proposed Project DENCO produces ethanol, an alcohol that is used as a fuel additive or extender. It is produced by fermenting corn. The basic steps in ethanol production are preparing the feedstock, fermentation, distillation, recovering the alcohol, and recovering residual materials. The proposed expansion would increase production from 21.5 MMGY to 30 MMGY. Current production of 49,200 tons per year (TPY) of distillers dried grain with solubles, which is used as animal feed, will increase to 73,500 TPY. Wastewater discharges would increase to 250,000 gallons per day (GPD) from a current maximum of 193,000 GPD. Environmental Concerns Environmental concerns include the potential for increased air emissions, odors, noise, and water quality impacts to surface water. Permitting Requirements Required permits are listed in Finding 24, below. These permits will mandate that the proposed Project operates in compliance with all applicable regulatory requirements. PROCEDURAL HISTORY 1.

Pursuant to Minn. R. 4410.4300, subp. 5.B., an EAW was prepared by MPCA staff on the proposed Project. Pursuant to Minn. R. 4410.1500 (2003), the EAW was distributed to the Environmental Quality Board (EQB) mailing list and other interested parties on October 22, 2004, and is hereby incorporated by reference.

2.

The MPCA notified the public of the availability of the EAW for public comment. The EAW was published in the EQB Monitor on October 25, 2004. The EAW was available for review on the MPCA Web site at http://www.pca.state.mn.us/news/eaw/index.html on October 25, 2004. A news release was provided to interested parties on December 2, 2004.

3.

The original public comment period for the EAW began on October 25, 2004, and ended on November 24, 2004. The EAW comment period was extended to December 17, 2004. The MPCA received three comment letters from citizens and government agencies during the EAW’s public comment period. In addition, three letters concerning the EAW were submitted to the NPDES/SDS Permit writer during the permit comment period and are included here.

4.

A public information meeting was held in Morris, Minnesota on January 25, 2005, in response to two requests received during the comment period. Eighteen written comments were received at the public meeting.

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Diversified Energy Company Ethanol Plant Expansion Morris, Minnesota

5.

Findings of Fact Conclusions of Law And Order

The MPCA prepared responses to all comments pertaining to the EAW that were received during the public comment period for the EAW and NPDES/SDS Permit. The list of comment letters received has been hereby incorporated by reference as Appendix A to these Findings. The MPCA responses to comments are hereby incorporated by reference as Appendix B to these Findings.

CRITERIA FOR DETERMINING THE POTENTIAL FOR SIGNIFICANT ENVIRONMENTAL EFFECTS 6.

Under Minn. R. 4410.1700, subp. 1 (2003), the MPCA must order an EIS for projects that have the potential for significant environmental effects that are reasonably expected to occur. In deciding whether a project has the potential for significant environmental effects, the MPCA must compare the impacts that may be reasonably expected to occur from the Project with the criteria set forth in Minn. R. 4410.1700, subp. 7 (2003). These criteria are: A.

the type, extent, and reversibility of environmental effects;

B.

cumulative potential effects of related or anticipated future projects;

C.

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

D.

the extent to which environmental effects can be anticipated and controlled as a result of other available environmental studies undertaken by public agencies or the Project proposer, including other EISs. THE MPCA FINDINGS WITH RESPECT TO EACH OF THESE CRITERIA ARE SET FORTH BELOW

Type, Extent, and Reversibility of Environmental Effects 7.

The first criterion that the MPCA must consider, when determining if a project has the potential for significant environmental effects that are reasonably expected to occur, is the "type, extent, and reversibility of environmental effects" Minn. R. 4410.1700, subp. 7.A (2003). The MPCA Findings with respect to each of these factors are set forth below.

8.

Reasonably expected environmental effects of this Project to air quality: A. B. C.

Air Emissions Odors Noise

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Diversified Energy Company Ethanol Plant Expansion Morris, Minnesota

9.

Findings of Fact Conclusions of Law And Order

The extent of any potential air quality effects that are reasonably expected to occur are: A.

Air Emissions Air emission sources at the Facility include: grain receiving and handling, hammermills, batch fermentation, distillation/dehydration, dried distillers grain and handling, ethanol storage tanks, ethanol loading/unloading. DENCO would be a minor source with respect to both the prevention of significant deterioration and the Title V Permitting processes. The emissions associated with the total Facility after the expansion are shown in the table below. Hazardous Air Pollutant (HAP) emission sources at DENCO include the boilers, generators, dryers, tanks and the regenerative thermo oxidizer. Pollutant

Proposed Permit Limits (TPY)

Carbon Monoxide (CO) Nitrogen Oxide (NOx) Sulfur Dioxide (SO2) Volatile Organic Compounds (VOCs) Total Particulate Matter (PM) Particulate Matter less than ten microns (PM10) Total HAPs

88 30 0.5 74 40 35 13

Concentrations of criteria pollutants (CO, NOx, SO2, VOCs, PM/PM10) were compared to their respective ambient air standards to determine if the surrounding area would remain in attainment with the standards. Predicted concentrations were within the standards. Toxic air emissions were quantified using the Air Emissions Risk Assessment (AERA) Risk Assessment Screening Spreadsheet. The AERA process has been developed by the MPCA to screen toxic air emissions from facilities for the potential to pose unacceptable risks to the public. The AERA process indicated that for the chemicals that were evaluated, hazard indices and carcinogenic risks from emissions from the DENCO facility are below the recommended state and federal thresholds under routine operating conditions at the plant. B.

Odors DENCO uses a regenerative thermal oxidizer, which would destroy at least 95 percent of the VOCs believed to cause odors from the dryer. Leak Detection and Repair required by federal New Source Performance Standards Subp. VV will help identify any leaking components, thereby minimizing emissions and odors from leaks.

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Diversified Energy Company Ethanol Plant Expansion Morris, Minnesota

Findings of Fact Conclusions of Law And Order

An enclosed flare was recently added to collect and control VOC emissions from the ethanol truck loading rack, which will reduce any odors associated with the ethanol truck loading process. Because of these controls, significant additional odor impacts from the proposed increase in ethanol production from 21.5 MMGY to 30 MMGY are not expected. C.

Noise Significant additional noise impacts to the surrounding neighbors are not anticipated. During construction, noise from heavy equipment would be generated during daylight hours. Once the expansion is operational, additional noise would be generated by increased truck traffic to and from the facility. Adding a second hammermill, which will operate during the same hours as the existing unit, is not expected to significantly increase noise. According to the MPCA’s A Guide to Noise Control in Minnesota (March 1999), a doubling of the sound energy (such as by adding a second process unit like the hammermill) increases the environmental noise by three decibels, a level of change the human ear is just able to perceive. In other words, the noise level is expected to remain very similar to the current situation and a survey by MPCA staff indicated that the noise standards were being met. The MPCA finds that the expected impacts to the air from the proposed DENCO expansion Project are not significant in that emissions of criteria and hazardous air pollutants are within applicable standards and generally accepted health benchmarks; odors are controlled with a regenerative thermal oxidizer, a flare, and through application of the leak detection rules; and increased noise is expected to increase by an amount just perceptible to the human ear.

10.

The reversibility of any potential air quality effects that are reasonably expected to occur are: The MPCA finds that any potential air quality effects that are reasonably expected to occur from the proposed Project, like all other air emissions, would not be reversible. Any air emissions or noise that are released to the atmosphere would not be recovered, but, as discussed above, there is no reason to believe that this Project is reasonably expected to cause a significant negative effect on air quality.

11.

The MPCA finds that the environmental review is adequate to address the concerns because: All potential impacts to air quality that are reasonably expected to occur from the proposed Project have been considered during the review process. The permits that will authorize construction and operation of the proposed Project will limit air emissions to levels that have been determined will not cause a significant negative impact on air quality.

12.

The MPCA finds that the Project, as it is proposed, does not have the potential for significant environmental effects based on the type, extent, and reversibility of environmental effects reasonably expected to occur as a result of its air emissions.

13.

Reasonably expected environmental effects of this Project to water quality are: A. B. C.

Surface-water Runoff Wastewater Ground Water 5

Diversified Energy Company Ethanol Plant Expansion Morris, Minnesota

14.

Findings of Fact Conclusions of Law And Order

The extent of any potential water quality effects that are reasonably expected to occur are: A. Surface-water Runoff Construction: The entire site is relatively flat, with slopes averaging between zero and two percent. Best Management Practices for stormwater run-off pollution prevention will be implemented during construction, such as silt fencing and hay bales. Operation: Proposed new construction will increase the amount of impervious surfaces at the Facility by approximately 0.1 acre. Surface-water flows to an adjacent wetland northeast of the active portion of the site and eventually is released by way of a ditch to the Pomme de Terre River. Since much of the site will remain unchanged and the addition to impervious surfaces is minimal, the runoff from the site is expected to have minimal impacts on the quality of the receiving waters. Because material handling and manufacturing process equipment are enclosed, the potential for stormwater contamination by contact with significant materials is limited. Any spill or leak of fuel or finished material in the tank farm area would be captured within the containment dikes. Finished material spills at the loadout area or from liquid transfer will be minimized by the Facility’s spill prevention procedures and bulk transfer policy. B. Wastewater Ethanol process wastewaters are recycled back into the ethanol production process. Wastewater from sources other than ethanol production processes, which would include cooling tower blowdown, reverse osmosis reject wastewater, iron filter backwash, birm filter backwash and softener regenerate wastewater, would be discharged. The discharge will increase from a maximum of 193,000 GPD to 250,000 GPD. The wastewater initially discharges into an 8.1-acre wetland complex (shallow marsh) prior to flowing through a series of culverts and ditches associated with the railroad and U.S. Highway 59/State Highway 9. The discharge ultimately flows through drainage ditches into the Pomme de Terre River. The following proposed NPDES Permit limits and monitoring requirements are intended to protect the quality of the receiving waters. Parameter

Proposed Concentration Limitation or Range

5-Day Carbonaceous Biochemical Oxygen Demand (mg/L) Total Suspended Solids (mg/L) pH Range (standard units) Temperature (degrees F) Total Residual Chlorine (mg/L)* Total Phosphorus (mg/L) Sulfate (mg/L) Chloride (mg/L) 6

25 mg/L 30 mg/L 6.0 – 9.0 86 0.2 mg/L Monitor Monitor Monitor

Diversified Energy Company Ethanol Plant Expansion Morris, Minnesota

Findings of Fact Conclusions of Law And Order

Parameter

Proposed Concentration Limitation or Range Monitor Monitor Monitor

Specific Conductance (umhos/cm) Total dissolved solids (mg/L) Sodium (mg/L) * milligrams per liter (mg/L) * applied at internal wastestream (cooling tower blowdown) prior to co-mingling with other waste streams. The MPCA reviewed the proposed discharge under Minn. R. 7050.0185, “Nondegradation to All Waters.” The receiving wetland community is not considered highly susceptible to general pollution impacts, including hydrologic alterations. However, the discharge volume is proposed to exceed 200,000 GPD which necessitates wetland monitoring since even moderate changes in hydrology in this type of wetland could affect the integrity of the system. A second concern is the long-term influence of nutrients and other pollutants being loaded into this wetland, altering the natural community and integrity within this wetland complex. The scientific literature suggests that excess nutrients and hydrologic changes in wetlands can result in changes in the diversity of the plant community. The discharge permit will require a program of chemical and biological monitoring within the wetland using prescribed protocols to address these concerns by providing data for management decisions that insure protection of these receiving waters for their designated beneficial uses. In addition, the permittee will be required to locate and monitor a reference wetland of similar type as the subject wetland and located in the same watershed or ecoregion, but least impacted by point or nonpoint sources of pollution. The reference wetland will be used as a base for comparing the quality of the wetland impacted by SD002. The MPCA finds that the combination of water discharge permit limits and monitoring are sufficient to mitigate the potential negative impact on the receiving wetland. As a result, the MPCA finds that the reasonably expected effects of the wastewater discharge from the proposed Project do not have the potential for significant environmental impact. C. Ground Water DENCO currently has a lined (secondary containment) tank farm which is where the existing aboveground storage tanks (ASTs) are located. A new 250,000-gallon denatured ethanol storage tank and a new 39,000-gallon denaturant storage tank will be added to the lined containment area as part of the proposed expansion. All new exterior ASTs will be provided with secondary containment to contain the contents of the largest AST, as well as, runoff from a significant (25 year storm) rainfall event. Transmission pipes are, and will be, designed to prevent leaks and will include provision for a suitable leak detection system. While the ethanol loadout port is located outside the impermeable dike, it has a catch basin connected to the dike for control.

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Diversified Energy Company Ethanol Plant Expansion Morris, Minnesota

15.

Findings of Fact Conclusions of Law And Order

The reversibility of any potential water quality effects that are reasonably expected to occur are: The MPCA finds that any potential effect on surface and ground water that is reasonably likely to occur from this Project would be reversible. Impacts from a short-term release would be of finite duration and the environment would ultimately be expected to return to current conditions once the cause of the impact is corrected. The MPCA finds that there is no reason to believe that this Project is reasonably expected to cause a significant negative effect on water quality as indicated in Findings 14.A, B, and C.

16.

The MPCA finds that the environmental review is adequate to address the concerns because: All potential impacts to water quality that are reasonably expected to occur from the proposed Project have been considered during the review process and a method to prevent these impacts has been developed.

17.

The MPCA finds that the Project as it is proposed does not have the potential for significant environmental effects on water quality based on the type, extent, and reversibility of environmental effects reasonably expected to occur.

Cumulative Potential Effects of Related or Anticipated Future Projects 18.

The second criterion that the MPCA must consider, when determining if a project has the potential for significant environmental effects that are reasonably expected to occur, is the "cumulative potential effects of related or anticipated future projects." Minn. R. 4410.1700, subp. 7.B. (2003). The MPCA Findings with respect to this criterion are set forth below.

19.

The EAW, public comments, and MPCA evaluation did not disclose any related or anticipated future projects that may interact with this Project in such a way as to identify any potential cumulative environmental impacts that are reasonably expected to occur.

20.

The most recent past project at the DENCO facility was in 2001 when the facility expanded from 17 MMGY to 21.5 MMGY. Because the expansion occurred more than three years ago, it is not considered a related project to the current expansion proposal. Therefore, the MPCA finds that there are not related or anticipated future projects that may interact with this Project.

21.

Based on MPCA staff experience, available information on the Project, including the EAW, the permit application, and information presented by the commenters, the MPCA does not reasonably expect significant cumulative effects from this Project.

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Diversified Energy Company Ethanol Plant Expansion Morris, Minnesota

22.

Findings of Fact Conclusions of Law And Order

In considering the cumulative potential effects of related or anticipated future projects, the MPCA finds that the reasonably expected effects from this Project will not be significant.

The Extent to Which the Environmental Effects Are Subject To Mitigation by Ongoing Public Regulatory Authority 23.

The third criterion that the MPCA must consider, when determining if a project has the potential for significant environmental effects that are reasonably expected to occur, is "the extent to which the environmental effects are subject to mitigation by ongoing public regulatory authority," Minn. R. 4410.1700, subp. 7.C (2003). The MPCA Findings with respect to this criterion are set forth below.

24.

The following permits or approvals will be required for the Project: Unit of Government

Type of Application

Status

MPCA MPCA

Air Emissions Permit Modification NPDES/SDS Permit to Receiving Waters Above-ground Liquid Storage Tank (AST) Permit Water Appropriation Permit modification

Submitted Submitted To be submitted

MPCA Minnesota Department of Natural Resources (DNR)

To be submitted

A. MPCA Air Emission Permit The Air Emission Permit modification for the DENCO facility would contain operational and emission limits, including requirements for use of control equipment, that would help prevent or minimize the potential for significant environmental effects to the air. NPDES/SDS Discharge Permit to Receiving Waters An NPDES Permit has been prepared and has had a 30-day public comment period. The NPDES Permit authorizes a maximum discharge flow and pollutant loading allowed from the Facility. Effluent limitations established within the permit ensure that water quality in the receiving water is protected. AST Permit The AST Permit includes operational limits and construction requirements that would help prevent or minimize the potential for significant environmental effects. Requirements include a secondary containment area, routine monitoring for leaks, corrosion protection for the floor of the tank, overfill prevention equipment, and areas where substances are transferred must be equipped with spill containment.

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Diversified Energy Company Ethanol Plant Expansion Morris, Minnesota

Findings of Fact Conclusions of Law And Order

B. DNR Water Appropriation Permit A Water Appropriation Permit is required for all users withdrawing more than 10,000 gallons of water per day or one million gallons per year. The purpose of the permit program is to ensure water resources are managed so that adequate supply is provided to long-range seasonal requirements for domestic, agricultural, fish and wildlife, recreational, power, navigational, and quality control. The program exists to balance competing management objectives including both the development and protection of the water resources. Information on permitted water users and reported water use is used to evaluate impacts from pumping on surface and groundwater resources. Water use data are also used for water supply planning and resolving water use conflicts and well interferences. The DNR administers this permit and requires monthly usage monitoring and annual reporting to ensure that surrounding communities’ and industries’ water supplies will not be affected by draw-down of the aquifer. Minn. Stat. § 103G.261 establishes domestic water use as the highest priority of the state’s water when supplies are limited. 25.

The MPCA finds that ongoing public regulatory authority addresses any significant potential environmental effects that were identified as reasonably expected to occur and will continue to do so into the future.

The Extent to Which Environmental Effects can be Anticipated and Controlled as a Result of Other Available Environmental Studies Undertaken by Public Agencies or the Project Proposer, Including Other EISs. 26.

The fourth criterion that the MPCA must consider is "the extent to which environmental effects can be anticipated and controlled as a result of other available environmental studies undertaken by public agencies or the project proposer, including other EISs." Minn. R. 4410.1700, subp. 7.D (2003). The MPCA Findings with respect to this criterion are set forth below.

27.

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

EAW dated October 21, 2004; Air emission, NPDES/SDS, and AST permit applications, related application submittals including AERA, and the draft permits; and Public input in comment letters and at the informational meeting held January 25, 2005.

28.

There are no elements of the Project that pose the potential for significant environmental effects that cannot be addressed in the Project design and permit development processes or by regional and local plans.

29.

Based on the environmental review, previous environmental studies, and the MPCA staff expertise on similar projects, the MPCA finds that the environmental effects of the Project that can reasonably be expected to occur can be anticipated and controlled.

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Diversified Energy Company Ethanol Plant Expansion Morris, Minnesota

Findings of Fact Conclusions of Law And Order

CONCLUSIONS OF LAW 30.

The MPCA has jurisdiction in determining the need for an EIS for this Project. The EAW, the permit development process, responses prepared by MPCA staff in response to comments on the EAW, and the evidence in the record are adequate to support a reasoned decision regarding the potential significant environmental effects that are reasonably expected to occur from this Project.

31.

Areas where the potential for significant environmental effects may have existed have been identified and appropriate mitigation measures have been incorporated into the Project design and permits. The Project is expected to comply with all MPCA standards.

32.

Based on the criteria established in Minn. R. 4410.1700 (2003), there are no potential significant environmental effects reasonably expected to occur from the Project.

33.

An EIS is not required.

34.

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

The Minnesota Pollution Control Agency determines that there are no potential significant environmental effects reasonably expected to occur from the Diversified Energy Company Ethanol Plant Expansion Project and that there is no need for an Environmental Impact Statement.

IT IS SO ORDERED

__________________________________________ Commissioner Sheryl A. Corrigan Chair, Citizens’ Board Minnesota Pollution Control Agency __________________________________________ Date

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APPENDIX A Minnesota Pollution Control Agency Diversified Energy Company Ethanol Plant Expansion Environmental Assessment Worksheet LIST OF COMMENT LETTERS RECEIVED 1. Richard Heyman, Morris, Minnesota. Letter received November 22, 2004. 2. Patricia C. Wright, U.S. Army Corps of Engineers, St. Paul, Minnesota. Letter received by e-mail November 23, 2004. 3. Jody Martinson, Minnesota Department of Transportation, Detroit Lakes, Minnesota. Letter received December 6, 2004. LIST OF COMMENT LETTERS RECEIVED BY DEBORAH SCHUMANN DURING THE NPDES/SDS PERMIT COMMENT PERIOD 4. Kevin Flicker, Morris, Minnesota. Letter received November 19, 2004. 5. Tom Hoffman, City of Morris Planning Commission, Morris, Minnesota. Letter received November 29, 2004. 6. Keith Brugger, Morris, Minnesota. Letter received November 29, 2004. LIST OF LETTERS RECEIVED AT THE PUBLIC INFORMATION MEETING IN MORRIS, MINNESOTA ON JANUARY 25, 2005 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24.

Paul Stark, Stevens County Farm Bureau, Morris, Minnesota. John Moser, Morris, Minnesota. Vicki Graham, Morris, Minnesota. Aldean Luth, Hancock, Minnesota. Sid Messner, Hancock, Minnesota. Sheldon Giese, Morris, Minnesota. Kurtis Wolf, Hancock, Minnesota. Scott Wulf, Hancock, Minnesota. Roger Wareham, Morris, Minnesota. Margaret Kuchenreuther, Morris, Minnesota. Jean McDermott and Peh Ng, Morris, Minnesota. Tracey Anderson, Morris, Minnesota. Douglas Storck, Fire Chief, Morris, Minnesota. Keith Gades, Cyrus, Minnesota. Lee Groff, Morris, Minnesota. Nancy Carpenter, Morris, Minnesota. Katherine Benson, Morris, Minnesota. Kevin Flicker, Morris, Minnesota (also submitted comments received November 19, 2004).

APPENDIX B Minnesota Pollution Control Agency Diversified Energy Company (DENCO) Ethanol Plant Expansion Environmental Assessment Worksheet (EAW) ERRATA Item 8. Permits and approvals required: Unit of Government [MPCA]

Type of Application Above-ground Liquid Storage Tank Permit modification

Status To be submitted

SUMMARY OF COMMENTS AND RESPONSES TO COMMENTS ON THE EAW 1. Richard Heyman, Morris, Minnesota. Letter received November 22, 2004. Comment 1-1. The commenter requests an Environmental Impact Statement (EIS). Response 1-1. The decision on the need for an EIS will be made by the Minnesota Pollution Control Agency’s (MPCA) Citizens’ Board, most likely at its February 15, 2005, meeting. Comment 1-2. The description of the location of the plant is inaccurate. The facility is within city of Morris (City) limits. The majority of the central business district and residential areas are within one mile of the facility. Response 1-2. The MPCA agrees that the facility is within the City limits. The commenter is correct that the facility is less than one mile from the central business district and residential areas. Item 5 of the EAW correctly gives the location of the facility as the City. The discussion in Item 9 was intended to convey that that facility is not located in the central business district, but rather is located at a slight remove from the center of town. Figures 2 and 5 of the EAW illustrate the site location relative to other parts of the City, Crystal Lake and the fairground. The MPCA regrets if the wording of Item 9 was not clear on this matter. The environmental review process is informational, not regulatory. One purpose of the comment period is to identify information that may have been inaccurate or missing from the data used to prepare the EAW. Other analyses discussed in the EAW are not based on the text description in either Items 6 or 9, but on individual reviews of applications and data submitted by the proposer. For example, the Air Emissions Risk Analysis process considers emission concentrations based on receptor locations surrounding the plant regardless of political boundaries. Additionally, the non-degradation review is also based on the specific discharge proposal and routing. The descriptive error in Item 9, therefore, would not change the information presented in other items of the EAW.

Diversified Energy Company Ethanol Plant Expansion Morris, Minnesota

Responses to Comments on the Environmental Assessment Worksheet

Comment 1-3. The statement that no recreation areas are in proximity to the site is incorrect. The county fair grounds and Lee Community Center and skating rink are adjacent to the site. Response 1-3. Item 9 of the EAW correctly notes that these recreational resources are within one kilometer of the site. The commenter is correct that Item 25 should also have listed this information. Comment 1-4. The plant produces significant odor throughout town and is a nuisance. The odor indicates the presence of emissions that may cause health risks. The comment cites Minn. R. 7009.0010 for MPCA authority to regulate odors. Response 1-4. Although odor has been a source of community complaint, bad odor itself is not a violation of any state or federal air quality standard. Much of the objectionable odor at ethanol plants comes from drying the leftover corn mash after the ethanol has been separated. The drying process releases volatile organic compounds (VOCs), some of which are malodorous. The MPCA’s air emission permit regulates emissions of VOCs. The facility has installed a Regenerative Thermal Oxidizer (RTO) to control VOC emissions from the dryers. This was required by the 2002 Consent Decree entered into with the company, the MPCA and the U.S. Environmental Protection Agency (U.S. EPA). The RTO reduces VOCs through high-temperature thermal oxidation, which converts the VOCs to carbon dioxide and water vapor. The RTO reduces the dryer’s VOC emissions by at least 95 percent. By reducing VOCs from the dryer, odors can also be reduced. If the RTO breaks down, the proposed air emission permit requires the dryer to be shut down, which will also help minimize odors. Other VOC controls include the following: A process scrubber controls VOCs from fermentation and distillation. Leak Detection and Repair required by federal New Source Performance Standards Subp. VV will help identify any leaking components such as valves or pipelines, thereby minimizing emissions and odors from leaks. An enclosed flare was recently added to collect and control emissions from the ethanol truck loading rack. The MPCA used to have an odor rule and it was repealed. Excessive or abnormal unpermitted emissions are regulated under Minn. Stat. 116.061 Air pollution emissions and abatement: Subd. 1. Emission notification required. (a) a person who controls the source of an emission must notify the Agency immediately of excessive or abnormal unpermitted emissions that: ***** (3) cause obnoxious odors constituting a public nuisance. ***** Subd. 2. Abatement required. A person who is required to notify the Agency under subd. 1 must take immediate and reasonable steps to minimize the emissions or abate the air pollution and obnoxious odors caused by the emissions. See Response 4-3 regarding health risks. Comment 1-5. Noise from the plant already negatively impacted those living nearby. The writer questions the statement that a second hammermill will not increase plant noise.

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Diversified Energy Company Ethanol Plant Expansion Morris, Minnesota

Responses to Comments on the Environmental Assessment Worksheet

Response 1-5. Minnesota has a receiver-based standard intended to limit noise levels and protect the health and welfare of the general public. To meet state noise standards, the following noise levels may not be exceeded at the nearest receiver: “L50” means the sound level that may not be exceeded 50 percent of the time in a one-hour survey. “L10” means the sound level that may not be exceeded 10 percent of the time in a one-hour survey. A survey by MPCA staff indicated the standards were being met. Noise Area Classification 1 (Residential, etc.) 2 (Retail, etc.) 3 (Manufacturing, etc.)

Daytime L50 L10 (dBA) (dBA) 60 65 65 70 75 80

Nighttime L50 L10 (dBA) (dBA) 50 55 65 70 75 80

* Decibels, as a time weighted average (dBA)

Adding a second noise source does not make the sound seem twice as loud. According to A Guide to Noise Control in Minnesota (March 1999), a doubling of the sound energy (such as by adding a second process unit like the hammermill) increases the noise level by three decibels (see the attached Figure B-1), a level of change the human ear is just able to perceive. In other words, the noise level is expected to remain very similar to the current situation. However, the company has indicated in a letter to the City its willingness to install acoustical dampening if needed to meet state and local noise standards. Comment 1-6. Odor from the plant is an obstacle to attracting students and staff to the University of Minnesota. The plant therefore threatens the economic health of the community. Response 1-6. Socio-economic analyses are beyond the scope of the EAW. If an EIS is ordered by the MPCA’s Citizens’ Board, then economic, employment and sociological impacts would be discussed as required by Minn. R. 4410.2300, subp. H. Comment 1-7. The EAW is inaccurate in indicating that the project is not subject to a comprehensive plan. The proposed project is not compatible with this plan. Response 1-7. The data the MPCA received to complete the EAW was incorrect regarding the comprehensive plan. The MPCA regrets the error in this information. The City developed a comprehensive plan in 1999. The City’s Comprehensive Plan includes goals and policies for both development and livability. The MPCA does not interpret, administer or enforce comprehensive plans or zoning compliance. It is the City’s responsibility to interpret and manage its Comprehensive Plan and zoning. The City has not indicated to the MPCA that the project is incompatible with its Comprehensive Plan or zoning. Comment 1-8. The company’s purchase of 60 acres indicates future expansion or development. Response 1-8. The project proposer has not identified any future planned projects. The 60-acre parcel of property on the other side of County Road 22 from the plant that the company owns includes land within the City’s Municipal Conservancy District. No industrial uses are allowed in this District. It is the City’s responsibility to ensure that its requirements for the District are met.

3

Diversified Energy Company Ethanol Plant Expansion Morris, Minnesota

Responses to Comments on the Environmental Assessment Worksheet

2. Patricia C. Wright, U.S. Army Corps of Engineers, St. Paul, Minnesota. Letter received by e-mail November 23, 2004. Comment 2-1. A Department of Army permit would be required for an outlet structure in the Pomme de Terre River and/or any ditches constructed or improved through wetlands. Response 2-1. This comment was conveyed to the proposer. DENCO has stated that new structures or ditches are not required for the project. Comment 2-2. The applicant should be aware that other wetlands may be present in addition to those identified by the National Wetland Inventory. A wetland delineation could be necessary. Response 2-2. Comment noted. 3.

Jody Martinson, Minnesota Department of Transportation (MnDOT), Detroit Lakes, Minnesota. Letter received December 6, 2004.

Comment 3-1. Figures 1 and 2 should be updated to show the realignment of Trunk Highway 59. Response 3-1. The MPCA appreciates the clarification. MnDOT’s map is attached as Figure B-2. Comment 3-2. It does not appear that the expansion will significantly impact the intersections of County Road 22 and Trunk Highway 59. Response 3-2. Comment noted. 4.

Kevin Flicker, Morris, Minnesota. Letter received November 19, 2004.

Comment 4-1. The EAW incorrectly gives the plant location and description of the surrounding area. Response 4-1. See Responses 1-2 and 1-3. Comment 4-2. The proposed 40 percent increase in ethanol production is a concern as the odor from ethanol is very offensive. Response 4-2. See Response 1-4. Comment 4-3. The commenter is concerned about the health impacts of long-term exposure to inhaled ethanol particulates. Response 4-3. Carbon Monoxide, Particulate Matter/Particulate Matter less than 10 micrometers in size (PM10), Sulfur Oxides, Nitric Oxides were compared to the applicable National Ambient Air Quality Standards. The modeled concentrations of criteria pollutants were within the standards. For example, PM10 concentrations were 33.5 percent of the hourly standard and approximately 17 percent of the annual standard.

4

Diversified Energy Company Ethanol Plant Expansion Morris, Minnesota

Responses to Comments on the Environmental Assessment Worksheet

Chemicals from DENCO, for which there is reliable emissions and health benchmark information, were evaluated using the MPCA’s Air Emissions Risk Assessment (AERA) Risk Assessment Screening Spreadsheet. The AERA evaluation uses the concentration of pollutants projected to be present in the air, weather data, and health benchmarks to produce a hazard index for hourly and annual exposures as well as a cancer risk estimate. The AERA process indicated that for the chemicals that were evaluated, hazard indices and carcinogenic risks are within the recommended state and federal thresholds under routine operating conditions at the plant. Comment 4-4. The commenter is concerned that owning a home in proximity to the facility will negatively affect property values. Response 4-4. See Response 1-6. Comment 4-5. The additional noise from another hammermill is a concern. Response 4-5. See Response 1-5. 5. Tom Hoffman, City of Morris Planning Commission, Morris, Minnesota. Letter received November 29, 2004. Comment 5-1. We [the City of Morris Planning Commission] request an EIS be prepared to investigate and explain in more detail the potential for significant environmental effects. Response 5-1. See Response 1-1. Comment 5-2. The EAW incorrectly gives the plant location as one mile south of the City. Response 5-2. See Response 1-2. Comment 5-3. The description of adjacent areas is incorrect. There are residences to the north, south and east; our county fairgrounds and community area to the north; wetlands, a State Wildlife Refuge, and a recreational lake to the west; wetlands and commercial businesses to the east; industrial uses to the north and south; and agricultural land southwest, south, and southeast. It is important to revise this section to include the variety of land uses near the facility and the susceptibility of these areas to potential significant effects. Response 5-3. See Responses 1-2 and 5-4. The MPCA appreciates the clarification of a detailed listing of surrounding land uses.

5

Diversified Energy Company Ethanol Plant Expansion Morris, Minnesota

Responses to Comments on the Environmental Assessment Worksheet

Comment 5-4. The land adjacent to the west of the plant is within the City’s Municipal Conservancy zoning district. The 60 acres recently purchased by DENCO are within this district. Industrial uses are prohibited in the district. The southern shore of Crystal Lake is 1,760 feet from the plant. There is a wetland between the plant and the lake. This area is within a State Wildlife refuge. Response 5-4. This project will occur within the existing plant footprint and not on land in the District. It is the City’s responsibility to interpret, manage and enforce its zoning requirements. According to the Minnesota Department of Natural Resource’s (DNR) PRIM map for the Alexandria area (2004), the land around a portion of Crystal Lake is the Crystal Lake State Game Refuge. In addition to City requirements, DNR rules would apply to land within the game refuge (e.g. Minn. R. 6230 and/or 6240). Figures 2 and 5 of the EAW show the plant’s location relative to the lake and wetlands. The condition of the wetland across County Road 22 will be monitored by DENCO as a reference wetland as part of the National Pollutant Discharge Elimination System (NPDES) State Disposal System (SDS) Permit requirements. Comment 5-5. There are about 300 residences within one kilometer of the plant. Within a 2-kilometer radius of the plant are located nearly all but 150 of the homes in the City. The plant changes could potentially affect a large part of residential Morris. Response 5-5. The MPCA appreciates the clarification. See also Response 1-2. Comment 5-6. The EAW is incorrect in indicating that the project is not subject to a comprehensive plan. It should be revised to reflect information about the City’s Comprehensive plan, state wildlife refuge, and the Stevens County Comprehensive Local Water Plan Update 1996-2001 (see letter for details). Response 5-6. The MPCA appreciates the clarification. See Responses 1-7 and 5-4. Comment 5-7. Is this a subsequent stage of the 1998 and/or 2000 expansion? What were the results of the 1998 and/or 2000 environmental review and monitoring? Response 5-7. It is a normal business occurrence that a company will, over time, have process and equipment changes. These changes are not necessarily considered “stages” for environmental review purposes. Changes which are not part of a larger project and do not trigger environmental review individually accumulate over a three-year period to determine if an EAW is needed (Minn. R. 4410.4300, subp. 1). Projects which received prior environmental review do not count in the total. The 1998 expansion by Morris Ag Energy had an EAW. That project was to expand production to 17 million gallons per year. The Findings of Fact were signed on June 30, 1998, indicating that no EIS was needed. The expansion in 2000 did not exceed the threshold for an EAW. The facility is required in its air emission permit and water discharge permit to monitor and report on a number of parameters. These include gallons of ethanol produced, pollution control equipment operating parameters, wastewater composition, annual air emissions, and parameters relating to wetlands function. Periodic air emission testing is required and was most recently conducted in January 2004. The MPCA reviews these reports for compliance with the permits and regulations.

6

Diversified Energy Company Ethanol Plant Expansion Morris, Minnesota

Responses to Comments on the Environmental Assessment Worksheet

Comment 5-8. The Pomme de Terre River is a tributary to the Minnesota River, which was categorized by the MPCA as moderately to severely polluted. Response 5-8. Proposed effluent limitations and monitoring criteria are intended to protect the quality of the receiving water and to avoid downstream impacts. A portion of the Pomme de Terre River, extending from the confluence of Muddy Creek (located about five river miles south of Morris) downstream to its mouth at the Minnesota River, is on the MPCA 2004 Section 303(d) list of impaired waters. The identified impairments are levels of fecal coliform, dissolved oxygen, and turbidity not consistently meeting water quality standards. A TMDL study, targeted to be completed by 2010, will identify causes of these impairments and include an implementation plan to bring the Pomme de Terre River back into compliance. The proposed expansion of the DENCO discharge is not expected to have any measurable effect on the impairment parameters in this downstream reach. For the Minnesota River basin, which includes the Pomme de Terre River, point sources (industries and municipalities) contribute a smaller percentage of pollutants compared to the nonpoint sources (septic systems, agricultural fields, urban runoff, construction sites, and feedlots). The MPCA has a basin planning process for management of the watershed. Several steps have been taken to implement major watershed management in the Minnesota River Basin. The MPCA is working with local organizations in several watersheds to conduct water quality assessments and to implement water quality improvement strategies under the Clean Water Partnership. Comment 5-9. We note that DENCO plans to increase the discharge from SD002 from 130,000 gallons per day (GPD) to 250,000 GPD. This constitutes a 92.3 percent increase in discharge of water with a potentially high BOD (biological oxygen demand) and contaminated with salts and other potential damaging chemicals (the amounts of which are unspecified in the EAW). In light of the proposed increase to potentially high BOD and contaminated water, the critical role wetlands play in improving water quality, recharging ground water, and providing food and habitat for fish and wildlife, and the goals of our county Water Plan, we feel that a more detailed analysis of the potential threats to water quality by this project is warranted. For example, we expect that the projected concentrations of pollutants such as phosphorus (a chemical well known to significantly increase eutrophication of freshwater systems), sulfate, chloride and sodium will be quantified before plant expansion is permitted rather than simply being monitored afterward. We would like to understand what actions will be taken in the event that wetland monitoring reveals a significant negative effect from the increased discharge and/or nutrient loading on the wetland. Response 5-9. The MPCA reviewed the expanded discharge request in accordance with Minn. R. 7050.0185, “Nondegradation to All Waters.” This detailed review is consistent with the MPCA’s practice for similarly-sized expansions of industrial or municipal wastewater discharges. As part of the nondegradation review, estimates were made for future loading, as follows: Parameter Five-Day Carbonaceous Biochemical Oxygen Demand Total Suspended Solids Total phosphorus

Existing 3.9 mg/L

Projected for expansion 3.9 mg/L

Proposed Limit 25 mg/L

7.1 mg/l 0.46 mg/L

9.3 mg/L 0.51 mg/L

30 mg/L Monitor

* Milligrams per Liter (mg/L)

7

Diversified Energy Company Ethanol Plant Expansion Morris, Minnesota

Responses to Comments on the Environmental Assessment Worksheet

It should be noted that concurrent with the expansion in volume at SD 002 is the elimination of the 113,000 GPD average discharge from SD 001. As such, the overall increase to the Pomme de Terre watershed from the DENCO facility will be 30 percent. The MPCA has information about flow, pH, CBOD5, Temperature Sulfates, Total Suspended Solids, and Zinc levels in the existing discharge. There is no reason to suspect that the discharge will have significant high BOD levels as actual monitoring data shows CBOD5 levels at Station SD 002 for the past two years averaged less than 9 mg/L. The only known phosphorus source associated with this discharge is found in the water treatment additives used to control scale and corrosion. This information is not typically included in the EAW, however, as the EAW focuses on the proposed expansion and not past operations. Having reviewed all additives to determine their impact on the receiving stream, we are aware that at the maximum discharge volume rate of 250,000, DENCO’s discharge would contain less than a pound/day of Total Phosphorus. A reasonable potential review was performed to address pollutants of concern from chemicals being used. To that end, the permit limits residual oxidant levels in the cooling tower blowdown waste stream prior to combining with the RO reject waste stream and Zinc monitoring will be discontinued. As the waste stream types will not change, there is no reason to expect that pollutant levels will significantly change due to plant expansion. Monitoring for additional pollutants of concern such as Chloride, Total Phosphorus, Specific Conductance, Total Dissolved Solids, along with wetland monitoring, will be expected to begin once the permit gets reissued, even prior to plant expansion. Pollutant levels end-of-pipe and in the wetlands will be compared to water quality standards in accordance with the following table: DENCO: Applicable Water Quality Standards

Parameter pH

Unlisted Wetlands (multiple use classifications) Class 2D Class 3D Class Class 5 4C ● ● ● ●

Class 6 na

Dissolved Oxygen

●

na

na

na

na

Temperature

●

na

na

na

na

Chloride

230 mg/L

●

na

na

na

Turbidity

25 NTU

na

na

na

na

Hardness

na

●

na

na

na

Specific Conductance

na

na

1000 µmhos/cm

na

na

Total Dissolved Salts

na

na

700 mg/L

na

na

Sodium

na

na

60% of total cations

na

na

Sulfate

na

na

na

na

na

Total Salinity

na

na

1000 mg/L

na

na

Hydrogen Sulfide

na

na

na

●

na

8

Diversified Energy Company Ethanol Plant Expansion Morris, Minnesota

Responses to Comments on the Environmental Assessment Worksheet

na - Not Applicable ● - Maintain Background: "the concentration of the water quality substance or characteristic shall not deviate from the range of natural background concentrations or conditions such that there is a potential significant adverse impact to the designated use." The reverse osmosis (RO) process is a water-purification process that removes naturally-occurring minerals and other impurities from the incoming water. The RO reject water therefore contains a higher concentration of the minerals than incoming water to the plant. In this situation, the draft permit not only requires continued monitoring for sulfates and chlorides in the SD 002 waste stream, but includes new monitoring for total dissolved solids, specific conductance, and sodium. Additionally, in order to verify that pollutant levels in the discharge are not having an adverse impact on receiving water quality, DENCO will be required to monitor chemical and biological parameters in the receiving wetland and a control wetland. The proposed permit contains a re-opener clause that will allow MPCA staff to modify or, alternately, revoke and reissue the permit to incorporate appropriate effluent limitations to protect receiving water quality or require wetland mitigation in accordance with MPCA rules. DENCO will not be able to use the permit as a shield to avoid responsibility for mitigative measures. The specific chemicals used in the reverse osmosis system and cooling tower were listed in the draft NPDES/SDS permit, and attached as Figure B-3. Comment 5-10. Citizens have expressed concerns about possible health impacts of air emissions and the lack of health benchmarks. Response 5-10. See Response 4-3. Comment 5-11. Despite the addition of the thermal oxidizer, odor continues to be a concern. The EAW does not explain why odors are not likely to increase with increased production. If odors increase, what is the process through which odors will be investigated and mitigated? Response 5-11. The ethanol production process results in odors from even relatively few gallons per year. MPCA recognizes that the presence of odor can be an annoyance and also may produce health symptoms in certain individuals. The MPCA regulates compounds that may be odorous (e.g. VOCs) through its air emission permit process and reviews potentially hazardous compounds through the AERA process (see Response 1-4). DENCO operates 24 hours per day and will continue to do so after the proposed expansion. The air emission permit and AERA reviews for the proposed expansion used the maximum air emissions, called potential to emit. After the expansion, DENCO is expected to meet its air emission permit requirements and the AERA guidelines. As noted above, DENCO will continue to control VOCs from the dryer using the thermal oxidizer and also will implement Leak Detection and Repair as required by federal New Source Performance Standards Subp. VV, which will help identify any leaking components, thereby minimizing emissions and odors from leaks. Outside of the requirements noted in the above paragraph, emissions of odorous compounds are managed as a nuisance. An MPCA fact sheet, Facts about Odors, Noise and Dust for Local Governments is attached as Figure B-4.

9

Diversified Energy Company Ethanol Plant Expansion Morris, Minnesota

Responses to Comments on the Environmental Assessment Worksheet

Comment 5-12. There continue to be public concerns about existing noise. Citizens are concerned about potential increase in noise. The current hammermill is unenclosed as will be the new hammermill. If noise does increase, what is the process through which the effect will be investigated and mitigated? Response 5-12. See Response 1-5. In the event of increased noise, the City could request that DENCO conduct a noise study. If state noise standards were exceeded, DENCO would have to install noise mitigation to meet the standards. Comment 5-13. The EAW does not indicate if lighting will increase when the new equipment is added. If more lights are added, will they be “dark sky” compliant lighting? Response 5-13. DENCO has indicated in a letter to the City that no new exterior lights are planned. 6. Keith Brugger, Morris, Minnesota. Letter received November 29, 2004. Comment 6-1. The ethanol plant has been a consistent and objectionable source of odor. DENCO’s efforts have been inadequate. Response 6-1. See Response 1-4. Comment 6-2. The noise of the hammermill and glare of lights negatively impact nearby residents. The expansion will include another hammermill and additional lighting. Response 6-2. See Responses 1-5 and 5-13. Comment 6-3. The commenter has serious concerns regarding health impacts from ethanol emissions, including carcinogens. Response 6-3. See Response 4-3. Comment 6-4. The commenter is concerned about potential impacts to surface and ground water and objects to DENCO being responsible for the monitoring program. The EAW lacks data about increases in contaminants. Response 6-4. See Response 5-8. The MPCA staff understand concerns raised about self-monitoring. It is, however, standard practice for the permit holder to be responsible for monitoring and recordkeeping. This is based on the federal Code of Regulations that the MPCA has adopted as state rule and that the U.S. EPA has delegated to the state. That the responsibility for monitoring, recordkeeping and reporting falls on the permittee is true not only for the NPDES/SDS Permit program, but also for other programs such as air emission permits. The NPDES/SDS permit contains detailed monitoring protocol including the requirement that a laboratory certified in wastewater analyses be used. The MPCA reviews the submittals and conducts compliance inspections.

10

Diversified Energy Company Ethanol Plant Expansion Morris, Minnesota

Responses to Comments on the Environmental Assessment Worksheet

Responses to written comments received at the public information meeting on January 25, 2005. Similar comments have been grouped together. Comment M-1. The commenters support the proposed expansion at the DENCO Ethanol facility and/or urge approval of the permits (Stevens County Farm Bureau, Moser, Luth, Messner, K. Wulf, S. Wulf, Gades, Groff). Response M-1. The comment is noted. Comment M-2. The commenter has concerns about impacts to air quality from the facility and/or expansion. One commenter asks if the MPCA can ensure there will be no negative impacts (Graham, Wareham). Response M-2. The environmental review process and associated Findings of Fact document considers impacts reasonably expected to occur, given proposed mitigation and ongoing regulatory authority. DENCO has installed required control equipment, had emission testing, and conducted an Air Emission Risk Analysis (see Response 4-3), among other air quality related requirements. The MPCA has reason to believe, based on past experience with this and other air emissions sources, that the facility as expanded will be able to meet all applicable air quality requirements. While the MPCA cannot guarantee outcomes, no significant impacts to air quality are expected from the proposed expansion. Comment M-3. The commenter is concerned about the existing noise and the addition of another hammermill (Graham, Benson, Flicker). Response M-3. See Response 1-5. Comment M-4. The commenter has concerns about wetlands and/or river impacts from the facility and/or expansion (Graham, McDermott, Ng, Flicker). Response M-4. See Responses 5-8 and 5-9. Comment M-5. The commenter is concerned about the number of expansion permits DENCO has received over time (Graham). Response M-5. The number of permits DENCO has received is not atypical. Many facilities make modifications more frequently than DENCO has. DENCO’s past and current expansions are not “phases” under the environmental rules because they occurred more than three years apart. A series of expansions can be a violation of specific air quality permitting rules. MPCA staff has reviewed DENCO’s history of expansions and has concluded that the DENCO expansions do not violate the air permitting rules because of the time between the two projects. As long as the facility meets its regulatory obligations, the MPCA has no cause to deny an application. Also see Response 5-7. Comment M-6. Corrections are needed to the EAW regarding the plant’s location and comprehensive plan and the commenter raises concerns about the accuracy of other items of the EAW (Giese, Anderson).

11

Diversified Energy Company Ethanol Plant Expansion Morris, Minnesota

Responses to Comments on the Environmental Assessment Worksheet

Response M-6. See Responses 1-2 and 1-7. Comment M-7. An EIS should be required (Giese, Anderson). Response M-7. See Response 1-1. Comment M-8. The commenter from the planning commission did not find DENCO’s letter in response to the commission’s comments on the EAW to be helpful (Kuchenreuther). Response M-8. It is DENCO’s prerogative to respond directly to comment letters if it so chooses. The MPCA’s responses to the Planning Commission’s comments are Responses 5-1 through 5-11. Comment M-9. The commenter is concerned about the facility’s odor and if it will increase from the expansion. Other odor concerns are the change in the odor from “beer like” to “burnt” which is more irritating to the writer. Odor limits the enjoyment of the outdoors and garden (McDermott, Ng, Benson, Flicker). Response M-9. See Responses 1-4 and 5-11. Comment M-10. Might DENCO’s discharge contribute to the poor [ground] water quality in Morris (McDermott, Ng)? Response M-10. Hard ground water in western and south western Minnesota is a well-known, longstanding occurrence. There is no evidence that DENCO’s surface-water discharge exacerbates the existing ground-water conditions. Comment M-12. A more thorough evaluation of water quality impacts is required than was presented in the EAW (Anderson). Response M-12. See Response 5-9. Comment M-13. There are no comments from the fire department regarding plant safety (Storck). Response M-13. The comment is noted. (see also comment letter 19) Comment M-14. The meeting purpose should be made clear prior to the meeting (Carpenter). Response M-14. The meeting announcement in the Morris Sun Tribune and the MPCA’s letter announcing the meeting both stated the intended purpose of the meeting, which was to answer questions and provide information about the environmental review and pending permit modifications for the facility. The MPCA regrets if the commenter did not receive that information or found it unclear. Comment M-15. The commenter has a question about air emission increases relative to the control level attained by the TO. When is an increase too much? Are limits always stated as a percentage (Carpenter)?

12

Diversified Energy Company Ethanol Plant Expansion Morris, Minnesota

Responses to Comments on the Environmental Assessment Worksheet

Response M-15. It is common for a permit limit for a piece of pollution control equipment to be a percentage reduction (or control efficiency). The tested, uncontrolled emission rate of VOC from the dryer was approximately 100 pounds per hour (lb/hr). At the minimum acceptable 95 percent efficiency of the TO, the emission rate would be 5 lb/hr. At the tested 98 percent control efficiency, the emission rate is 2 lb/hr. DENCO’s proposed permit also includes mass limits, for example in tons per year, that affect the dryer and its TO. The dryer is limited to less than or equal to 11 pounds per hour of particulate emissions. The total facility is limited to 6 lb/hr of VOCs and less than or equal to 95 tons per year each of VOCs and particulate matter. Additional air emission permit requirements are triggered at higher emission levels. DENCO has applied for a state permit, meaning emissions of any criteria pollutant will be less than 100 tons per year. If the facility were to increase emissions, then federal permitting requirements (Title V and New Source Review) would apply when emissions of any criteria pollutant exceed 100 tons per year, or if total hazardous pollutants exceed 25 tons per year. Facilities with federal permits have more monitoring and recordkeeping, for example. Comment M-16. Black soot from the facility may be a serious health concern (Benson). Response M-16. See Response 4-3.

13