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Final MPCA hearing denies Excel Dairy's permit effort

The long saga of Excel Dairy is over.

The Minnesota Pollution Control Agency's Citizens Advisory Board has unanimously denied an appeal of its earlier decision not to reissue a permit to the rural Thief River Falls dairy, which was declared a public health hazard in 2008.

"The applicant has a history of non-compliance with Minnesota rules, statutes and permit conditions," the MPCA said in its Findings of Fact presented at an MPCA hearing Tuesday.

"It's done. This was the final hearing," said Howard Person, Marshall County environmental officer. "People here are relieved."

However, some questions remain about clean-up at the dairy, which has been shut down since early 2009, when Excel removed the cows from the facility after repeated violations of state pollution control and air quality standards.

Excel Dairy opened in a rural area of Marshall County, just a few miles outside of Thief River Falls, in 2007, at about the same time that the county was drafting a confined animal feedlot ordinance. So, the dairy, which was operated by a company called The Dairy Dozen, based in Veblen, S.D., was grandfathered in and not subject to the local ordinance.

Shortly after it opened, people who live near the dairy began complaining about odors from its manure pits, saying it made them sick and forced them to leave their homes for prolonged periods many times.

In 2008 and 2009, the dairy violated Minnesota's air quality standards for hydrogen sulfide "hundreds of time," according to the Findings of Fact.

In April 2009, the MPCA revoked Excel's operating permit and re-issued a one-year permit along with orders to clean up the dairy's three outdoor manure holding basins by mid-June of that year.

In April 2010, it again decided not to reissue the permit, citing the company's failure to comply with its orders. The company appealed, but then filed Chapter 11 bankruptcy.

In June, a U.S. Bankruptcy Court judge converted the case to Chapter 7, which calls for liquidation of assets.

The MPCA listed a pattern of violations at seven dairy feedlot facilities in Minnesota and North and South Dakota managed or operated by Rick Millner and/or The Dairy Dozen. One of those dairies, which closed several years ago, was located in Roseau County, Minn.

"The common thread here is the manure discharge, or freeboard violations, not managing the manure the waste," George Schwint, feedlot engineer for MPCA, testified.

The Thief River Falls dairy originally was built in 1996 and operated until 2004. Millner's group bought the facility in 2005, and an initial permit was issued by the MPCA in June 2006.

Excel officials have blamed the previous owner of the farm for bad design and condition of the manure pits and unusually wet weather that slowed down improvements, including emptying the pits and renovating them with covers.

Excel also has blamed the MPCA for unfairly setting conditions and deadlines that could not reasonably be met, through no fault of the dairy, because of weather and the effects of the MPCA's own orders that stirred up manure odors, making them worse.

"This management has done a terrible job," Assistant Attorney General Robert Roche said. "It has not responded to the environmental issues in a timely or responsible manner. Therefore, it is entirely appropriate for this board to deny this permit."

No officials from Excel Dairy or Dairy Dozen attended the MPCA hearing this week in St. Paul. Calls to the Dairy Dozen's headquarters in South Dakota went unanswered Thursday.

MPCA staff testified this week that while two of the basins have been emptied and cleaned, Basin No. 1 still contained 7 to 8 feet of manure, which was covered with straw.

What clean-up has been completed has been done by AgStar Financial Services, a Minnesota-based lending institution that is the primary lien holder. Roche said AgStar placed the straw on the basin that still contains manure.

"AgStar didn't just walk away and forget it," he said. "They've been in communication and in cooperation with us."

AgStar has told state officials it will resume the clean-up in the spring, in preparation for selling the property.

Still, the future of the rural Thief River Falls complex is uncertain, at best. Any new feedlot would have to apply for both state and county permits.

"I don't know if it'll be a dairy again, after all that's happened," Person said. "But if it is, at least we'll have some local regulations in there that we can use to control the odor."