St. Paul I Brainerd I Detroit Lakes I Duluth I Mankato I Marshall I Rochester I Willmar I Printed on 100% post-consumer recycled paper

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1 Minnesota Pollution Control Agency 520 Lafayette Road North I St. Paul, MN I I I TTY I April 29, 2010 Mr. Richard Millner The Dairy Dozen - Thief River Falls, LLP d/b/a Excel Dairy P.O. Box 157 Veblen, SD RE: April 27, 2010, MPCA Citizens' Board Meeting Dear Mr. Millner: At the April 27, 2010, Minnesota Pollution Control Agency (MPCA) Citizens' Board (Board) meeting, the Board heard testimony pertaining to your request for reconsideration, or alternatively for a contested case hearing or a stay, of the MPCA Commissioner's March 12,2010, Administrative Order which prohibited Excel Dairy from continuing operation under its now expired National Pollutant Discharge Elimination System (NPDES)/State Disposal System (SDS) Permit Number MN After considering the testimony from your legal representation, as well as the MPCA' s legal representation, the Board voted to affirm the MPCA Commissioner's March 12,2010, Administrative Order. Enclosed are the final Findings of Fact, Conclusions of Law, and Order affirming the Commissioner's March 12,2010, Administrative Order and denying the request for a stay and/or contested case hearing. Excel Dairy is now prohibited ITomoperating under its expirednpdes/sds Permit Number MN However, this prohibition does not prevent Excel Dairy ITomcomplying with the Marshall County District Court's January 20,2010, order. Furthermore, this prohibition does not excuse Excel Dairy ITom complying with the Court's order Sincerely,?~Z;~ PaulEger Commissioner GFRlPE: bt cc: Robert Roche, Minnesota Attorney General's Office George Schwint, MPCA, Willmar Office Interested Parties St. Paul I Brainerd I Detroit Lakes I Duluth I Mankato I Marshall I Rochester I Willmar I Printed on 100% post-consumer recycled paper "An equal opportunity employer"

2 ATTACHMENT 1 STATE OF MINNESOTA MINNESOTA POLLUTION CONTROL AGENCY In the matter of Excel Dairy's -Request for Reconsideration, A Contested Case Hearing, Or A Stay of Denial of Authorization To Operate Under Expired Permit. FINDINGS OF FACT CONCLUSIONS OF LAW AND ORDER FINDINGS OF FACT The above-entitled matter came before the Minnesota Pollution Control Agency (MPCA) Citizens' Board at a regular meeting held in St. Paul, Minnesota on April 27, 20 Io. Based on the arguments and evidence in the record of the MPCA, the MPCA hereby makes the following Findings of Fact, Conclusions of Law, and Order: INTRODUCTION I. On March 12, 20 I0, the Commissioner of the MPCA issued an Order denying Excel Dairy authorization to operate under an expired permit pursuant to Minn. R (A). On March 22, 20I 0, Excel Dairy submitted a request for reconsideration or alternatively for a contested case hearing or a stay of the Commissioner's March 12,2010 order. 2. Although reconsideration by the full MPCA Board is not required, the Commissioner elected to allow Excel Dairy to present its request to the full MPCA Board at the regularly-scheduled April 27, 2010 MPCA Board meeting. FINDINGS OF FACT Permitting and Compliance History At Excel Dairv 3. On April 28, 2009, the MPCA Citizens' Board revoked and reissued Excel Dairy's feedlot permit. 4. The purpose of the revocation and reissuance was to address a number of environmental violations at the facility. The violations included hundreds of air quality violations that resulted in a formallydeclared public health threat. 5. Although Excel Dairy appealed the reissued permit, the company neither sought nor obtained a stay ofthe permit's requirements. As a result, the company is legally required to comply with the permit's requirements while the appeal is pending. 6. The reissued permit required Excel Dairy to implement a number of specific measures to bring the facility into compliance with environmental requirements. The reissued permit also specified the dates by which the corrective measures were required to be completed. As set forth in more detail below, Excel Dairy failed to comply with the requirements of the reissued permit. TDD (for hearing and speech impaired only): (651) Printed on recycled paper containing at least 30%fibers from paper recycled by consumers

3 7. Excel Dairy's reissued permit required Excel Dairy to completely empty the manure from its three manure basins by not later than June 12,2009. That deadline had already been extended by approximately two weeks in response to concerns that Excel Dairy had raised about wet field conditions. Despite having received an extension of the deadline for removing the manure from the basins, Excel Dairy did not attempt to remove the manure from the three basins by the June 12,2009deadline. 8. Excel Dairy's refusal to empty the manure from its basins as required by the new permit resulted in a violation of freeboard requirements in the basins and a threat of overflow and impact to local water supplies. Excel Dairy's refusal to empty the basins also resulted in continuing air quality standard violations and threat to public health. 9. On July 2,2009, the MPCA therefore issued an administrative order to Excel Dairy requiring Excel Dairy to completely empty the manure from basins two and three by July 16,2009. Although Excel Dairy appealed the July 2, 2009, administrative order, the company neither sought nor obtained a stay of the order's requirements. As a result, the company was legally required to comply with the order's requirements while the appeal is pending. Excel Dairy only partially complied with that administrative order. Excel Dairy left approximately one foot of manure in basin two and three. 10. On October 1,2009, the MPCA issued a second administrative order to Excel Dairy. The second. administrativeorderrequiredexceldairyto completethe removalof the manurefrombasinstwo' and three. The second administrative order also required Excel Dairy to empty the manure from basin one to a depth not to exceed two feet and to maintain a straw crust on any remaining manure. Both of these items were ordered to be accomplished by October 31, Although Excel Dairy had the opportunity to review and comment on the second administrative order before it was finalized, the company elected not to do so. The company also elected not to appeal the second administrative order after it was finalized. As a result the company was legally required to comply with the second administrative order's requirements. 12. Excel Dairy did not complete the removal of manure from basins two and three until late November of 2009; approximately five months after the permit deadline. 13. Excel Dairy temporarily lowered the manure level in basin one to less than two feet. However, when Excel Dairy finished removing the manure from basins two and three, it transferred that manure into basin one. This caused the manure in basin one to rise to a level of approximately seven feet Despite admonitions from MPCA staff to remove the Excess manure from basin one in November of 2009ExcelDairyrefusedto do so. The groundin the areaaroundexceldairythen frozewhich precluded the removal and land application of the manure. The MPCA subsequently obtained a court order requiring Excel Dairy to empty the excess manure from basin one as soon as field conditions allow in the spring of20io. Assuming that Excel Dairy complies with the court order, the manure will not be emptied from basin one until approximately one year after the permit deadline. 15. The reissued permit required the company to install a new manure transfer pipe between basin one and the barns by August 26, The company has failed to do so. In fact, the company cannot do 2

4 so until it completes the required removal of manure from basin one. Because of the company's failure to remove the manure from basin one as required by the permit, the installation of a new manure transfer pipe cannot happen until approximately ten months after the permit deadline. 16. The reissued permit required the company to install perimeter tiles around the two feed storage runoff basins by July 1,2009. The company did not begin working to install a perimeter tile around one of the feed storage runoff basins until November 23,2009. The company has not completed that work yet. The company has not begun to install a perimeter tile around the second feed storage runoff basin. 17. Before the MPCA revoked and reissued Excel Dairy's permit, the company had removed all the cows from the facility. The company left behind a substantial quantity of feedstocks which attracts rodents and other pests. Additionally, leachate from the feedstock piles had previously resulted in the discharge of contaminated wastewater into waters of the State. The reissued permit required the company to remove the remaining feedstocks by June 1,2009. The company has refused to do so. 18. Excel Dairy's reissued permit required the company to submit approvable plans and specifications for synthetic covers for basins two and three by not later than May 28, The reissued permit further required the company to install synthetic covers on basins two and three within 120 days of receiving MPCA' s approval for the cover system. 19. Excel Dairy failed to submit approvable plans and specification for synthetic covers for basins two and three as required by the permit. The MPCA feedlot engineer assigned to this file contacted the company's design engineer and informed the design engineer that the plans and specifications were inadequate. Despite this, the company has failed to submit acceptable plans and specifications for a cover system for basins two and three. As a result, basins two and three are still uncovered and there is no schedule for installing covers on those basins. Consideration Of Issues Raised In Excel Dairy's Reauest For Reconsideration. Contested Case Hearing. Or Stay. 20. Excel Dairy contends that the MPCA's order denying the company authorization to operate under its expired permit is irreconcilable with the MPCA's order granting Excel Dairy's request for a contested case hearing under Minn. Stat ("Bad Actor Statute"). 21. Excel Dairy's contention is based on a fundamental misunderstanding of the relevant law. Under Minn. Stat , subd. 5, a permit applicant is entitled to a contested case hearing upon request when the MPCA proposes to deny a permit under the bad actor statute. The statute provides no criteria under which the MPCA could have denied the request. ld. Thus, the Bad Actor hearing was mandatory. 22. There is no similar automatic right to a contested case hearing upon request when the MPCA decides to deny a permittee authorization to operate under an expired permit. Minn. R There is nothing inconsistent in MPCA granting Excel Dairy a statutorily-required hearing under the Bad Actor statute and also determining that Excel Dairy is not in substantial compliance with its current permit. As a result, Excel Dairy's contention that the MPCA's two March 2, 2010 orders are irreconcilable with each other is without merit. 3

5 Failure To Timely Remove Manure From Basins Two And Three. 24. Excel Dairy does not dispute that its current permit required the company to completely remove the manure from all three of its manure storage basins by not later than June 12, Excel Dairy does not dispute that that deadline was extended to address concerns that Excel Dairy had raised regarding wet field conditions in late May and early June. 25. Excel Dairy does not dispute that it failed to completely remove the manure from basins two and three until late November of 2009; approximately five and a half months after the permit deadline. Excel Dairy also does not dispute that it was only after the MPCA issued two separate administrative orders that Excel Dairy finally completed the removal of manure from basins two andthree Excel Dairy nevertheless contends that it is in substantial compliance with this requirement. The MPCA cannot agree. As Excel Dairy is aware, the company's air quality violations have been formally declared a public health threat. The permit required timely removal of the manure from the basins so that the company's neighbors would not be forced to endure another summer of air quality violations. By failing to comply with the permit deadlines, Excel Dairy subjected its neighbors to an additional summer and fall of air quality violations and perpetuated the public health threat that the permit was issued to abate. 27. The MPCA finds that emptying manure basins two and three nearly six months after the permit deadline and only after having received two separate administrative orders does not qualifyas substantialcompliancewith the permit.. Failure To Timely Remove Manure From Basin One. 28. There is no dispute that Excel Dairy's current permit required the company to completely empty the manure from basin number one by not later than June 12,2009. There is also no dispute that Excel Dairy failed to attempt to empty the manure from basin one by that deadline. 29. As a result, on October 1,2009, the MPCA issued the above-referenced second administrative order to Excel Dairy. The second administrative order required Excel Dairy to complete the removal of the manure from basins two and three. The second administrative order further required Excel Dairy to empty the manure from basin one to a depth not to exceed two feet and to maintain a straw crust on any remaining manure. Both of these items were ordered to be accomplished by October 31, As noted above, Excel Dairy chose not to comment on the second administrative order before it was finalized. Excel Dairy also chose not to appeal the second administrative order. 31. Excel Dairy argues that its non-compliance with the requirement to empty basin one should be excused because in the fall of2009, MPCA staff agreed that the dairy could temporarily move manure from basins two and three into basin one. Excel Dairy's argument on this point must fail for the following reasons. 4

6 32. First, by the fall of2009, Excel Dairy was already in substantial non-compliance with the pennit's requirement to empty basin number one. As noted above, the penn it deadline for emptying basin number one was June 12,2009. When Excel Dairy moved the manure from basins two and three into basin one in late October or early November of 2009, the company was already four and a half to five months behind the pennitted deadline. The subsequent administrative order and conversations with MPCA staff in no way altered the pennit's requirements or excused the company's non-compliance. In fact, as the company was aware, the MPCA Board reserved to itself the authority to make any modifications to Excel Dairy's penn it. As a result, the company was aware that the MPCA staff lacked the authority to modify the pennit's requirements. 33. Second, when MPCA staff agreed that Excel Dairy could pump manure from basins two and three into basin one, MPCA staff made it clear that it was supposed to be a temporary situation to facilitate the manure removal process. Put simply the company stated that it wanted to pump manure from basins two and three into basin one and then draw manure out of basin one instead of having to remove manure from three separate basins. Instead, the company pumped the manure from basins two and three into basin one and then refused to remove the manure from basin one despite written admonitions from the MPCA to do so. 34. Despite not having challenged the second administrative order, Excel Dairy failed to comply with the order's requirements. The company temporarily reduced the manure in basin one to a depth less than two feet, but then transferred approximately five feet of manure from basins two and three into basin one. Despite written admonitions from the MPCA to remove the excess manure from basin one before frozen ground conditions precluded manure application, the company refused to remove the excess manure in a timely fashion. As a result, the ground froze and the MPCA was forced to obtain a court order compelling the company to remove the manure from basin one as soon as ground conditions allow in the spring or summer of Excel Dairy's penn it required basin one to be completely emptied by June 12,2009. Presuming that Excel Dairy complies with the court's order, the basin will be emptied approximately one year after the legal deadline. The MPCA finds that Excel Dairy is not in substantial compliance with the requirement to completely empty the manure from basin one by June 12,2009. Failure To Install Manure Transfer Pipe As Required 36. Excel Dairy concedes that its current pennit required the company install a new manure transfer pipe between basin one and the barns by August 26, Excel Dairy concedes that it has failed to do so. Excel Dairy further concedes that it cannot install a new manure transfer pipe until it completes the required removal of manure from basin one. Excel Dairy also concedes that because of the company's failure to remove the manure from basin one as required by the pennit, the installation of a new manure transfer pipe cannot happen until at least approximately ten months after the pennit deadline. 37. Despite these concessions, Excel Dairy claims that its failure to comply with the requirement to install a new manure transfer pipe is "immaterial" and therefore not a substantial compliance issue because of the absence of cows at the facility. 38. The MPCA cannot agree. The environmental upgrades that Excel Dairy's penn it required are not, as the company claims, "immaterial." Those required upgrades were included in the pennit to 5

7 address the company's ongoing environmental violations; violations which resulted in a formallydeclared public health threat. The company was not free to disregard the permit deadlines based on the absence of cows at the facility. At the earliest, the installation of the new manure transfer pipe will happen at least ten months past the permit deadline. In reality, the delay will likely be much longer. Excel Dairy's request for reconsideration suggests that the compariy will not make any necessary improvements to the facility in light of the MPCA's preliminary decision to deny reissuance of the company's permit. 39. The MPCA finds that Excel Dairy is not in substantial compliance with the requirement to install a new manure transfer pipe by August 26, Failure To Remove Feedstocks As Permit Required 40. Excel Dairy concedes that its current permit required the company to remove the feedstocks trom its facility by June 1,2009. Excel Dairy further concedes that it has failed to comply with this requirement. Nevertheless, Excel Dairy claims that it is in substantial compliance with this requirement because Excel Dairy has covered the feedstocks to control vermin. 41. Excel Dairy's claim that it is in substantial compliance with the requirement to remove the feedstock is without merit. The plain and unambiguous requirement of the permit was for Excel Dairy to remove the feedstocks; not to cover them. Excel Dairy does not have the right to sua sponte alter its permit requirements. As a result, covering the feedstocks does not qualify as substantial compliance with the requirement to remove the feedstocks. 42. Additionally, Excel Dairy mistakenly asserts that the sole concern regarding the feedstocks is the control of vermin. This is not accurate. As noted above, leachate trom the feedstock piles has previously resulted in the discharge of contaminated wastewater into waters of the State. Covering the feedstocks has not prevented leachate trom running off trom the feedpads. 43. As discussed below, the company has also failed to install perimeter tiles around the feedpad runoff basins. The refusal to install the perimeter tiles, coupled with the refusal to remove the feedstocks has resulted in a continuing threat of release of contaminated leachate. Failure To Install Perimeter Tiles Around Feedpads. 44. Excel Dairy concedes that its current reissued permit required the company to install perimeter tiles around the two feed storage runoff basins by July 1,2009. Excel Dairy concedes that the company did not begin working to install a perimeter tile around one of the feed storage runoff basins until November 23,2009 and that the company has not completed that work yet. Excel Dairy further concedes that the company has not begun to install a perimeter tile around the second feed storage runoff basin. 45. Here again, Excel Dairy claims that its failure to comply with the permit is "immaterial" because there are currently no cows on the site. Excel Dairy's argument on this point is without merit for several reasons. 46. First, as discussed above, the environmental upgrades that Excel Dairy's permit required are not, as the company claims, "immaterial." Those required upgrades were included in the permit to address 6

8 the company's ongoing environmental violations. The company was not free to disregard the permit deadlines based on the absence of cows at the facility. At the earliest, the installation of the new manure transfer pipe will happen at least a year past the permit deadline. In reality, the delay will likely be much longer. Excel Dairy's request for reconsideration suggests that the company will not make any necessary improvements to the facility in light of the MPCA's preliminary decision to deny reissuance of the company's permit. 47. Second, the absence of cows does not eliminate the threat of contaminated runoff from the feedpad runoff basins. As noted above, the company has refused to comply with the requirement to remove the unused feedstocks from the facility. Contaminated leachate from the feedpads drains to the feedpad runoff basins. In the past, those basins have illegally discharged contaminated water to waters of the state. 48. Third, the company's own engineering plans called for perimeter tiles around the feedpad runoff basins in order to protect underlying groundwater. This is a standard requirement for basins of this type. The purpose of the perimeter tiles is to prevent groundwater around the basins from exerting pressure on the basins' liners and causing damage to the liners that would allow the contents ofthe basins to leak into the groundwater. The company's continuing refusal to install the perimeter tiles around the feedpad runoff basins, coupled with the company's refusal to remove the feedstocks, has therefore perpetuated the threat of release of contaminated leachate from the site. 49. The MPCA finds that the company is not in substantial compliance with the requirement to install perimeter tiles around the feedpad runoff basins by July 1,2009. Failure To Cover Basins Two And Three As Required. 50. Excel Dairy concedes that the reissued permit required the company to submit approvable plans and specifications for synthetic covers for basins two and three by not later than May 28, Excel Dairy also concedes that the reissued permit further required the company to install synthetic covers on basins two and three within 120 days of receiving MPCA's approval for the cover system. 51. Excel Dairy concedes that it failed to submit approvable plans and specification for synthetic covers for basins two and three as required by the permit. Excel Dairy also concedes that the MPCA feedlot engineer assigned to this file contacted the company's design engineer and informed the design engineer that the plans and specifications were inadequate. Despite the passage of almost a year since the original deadline, the company has still failed to submit acceptable plans and specifications for a cover system for basins two and three. As a result, basins two and three are still uncovered and there is no schedule for installing covers on those basins. 52. Excel Dairy contends that its failure to submit approvable plans and specifications for covers and its failure to install covers on basins two and three is "immaterial" because of the absence of cows at the facility. Excel Dairy's argument on this point is without merit for the following reasons. 53. First, as discussed above, the environmental upgrades that Excel Dairy's permit required are not, as the company claims, "immaterial." Those required upgrades were included in the permit to address the company's ongoing environmental violations. The company was not free to disregard the permit deadlines based on the absence of cows at the facility. 7

9 54. Second, as previously noted, the air quality violations at the facility have been so severe that the Minnesota Department of Health and the federal Agency for Toxic Substances and Disease Registry took the unprecedented step of formally declaring the facility a public health threat. The covers that the company has failed to install are necessary to eliminate that public health threat. 55. Third, the facility continued to violate air quality standards and threaten the public health throughout2009despitethe absenceof cows at the facilityduringthat timeframe.the company's suggestion that its permit violations are "immaterial" because ofthe absence of cows at the facility is therefore without merit. 56. The MPCA finds that Excel Dairy is not in substantial compliance with the requirement to submit approvable plans and specifications for synthetic covers for basins two and three by May 28,2009. The MPCA further finds that Excel Dairy is not in substantial compliance with the requirement to install covers on basins two and three. 57. As set forth above, Excel Dairy's suggestion that it is in substantial compliance with its current permit is without merit. This is not a situation where the permittee failed to implement one or two permit requirements. Instead, the company has failed to comply with virtually all of the provisions of its new permit. Most notably, the company failed and or refused to timely implement measures that were designed to alleviate a formally-declared public health threat. Under the circumstances, the MPCA finds that the company is not in substantial compliance with its permit. Argument That Commissioner Lacked Authority To Issue Denial Of Authorization To Operate Under Expired Permit. 58. Excel Dairy asserts that Minn. Stat , subd. 6 required the MPCA Citizens Board and not the Commissioner to make a determination regarding whether the company should be authorized to operate under its new permit once that permit expires. Excel Dairy's argument on this point is without merit for two reasons. 59. First, Excel Dairy mischaracterizes the statute upon which it relies. Excel Dairy claims that Minn. Stat , subd. 6 provides that only the MPCA Board can act to terminate a permitted operation during the pendency of a contested case hearing. This is not an accurate summary of the statute. 60. Minn. Stat , subd. 6 (4) requires the MPCA Board to make a final decision regarding issuance, reissuance, modification, or revocation of a permit if a contested case hearing request is pending. The Commissioner's decision was not a final decision to issue, reissue, modify, or revoke permit while a contested case hearing request was pending. As a result, the statute the company cites does not apply in this situation. 61. Second, the ~ompany's argument on this point is moot. Although it is not legally necessary, the Commissioner elected to present Excel Dairy's request for reconsideration, stay, or contested case hearing to the MPCA Board. As a result, the MPCA Board will decide the issue and Excel Dairy's assertion that the Commissioner lacks authority to do so is moot. 8

10 Request For Stay. 62. As an alternative to reversal of the determination that Excel Dairy is not in substantial compliance with its permit, Excel Dairy requests a stay of any order denying it authorization to operate under its expired permit. Excel Dairy requests a stay until both the statutorily-required Bad Actor contested case hearing has been concluded and the MPCA has taken final action on the reissuance of the current permit. 63. Excel Dairy cites three provisions in support of its request for a stay. They are Minn. Stat , Minn. R and Minn. R MPCA's findings regarding these provisions are as follows. 64. Minn. R does not exist. Minn. R has been renumbered as Minn. R Minn. R governs the issuance of variances by the MPCA Board. Excel Dairy has not requested a variance in this case. As a result, this rule is not applicable to the instant case. 65. Minn. R , subp. 1 provides that: At any time up to ten days after the board's or commissioner's final decision, any party to a contested case hearing may petition in writing the board or commissioner for an order that the board's or commissioner's final decision be stayed and that the matter be reopened and, if necessary, remanded to the administrative law judge. The petition must be served upon all board members, including the commissioner, and parties. Any response to the petition by other parties must be served any time up to seven days after receipt of the petition on all the board members, the commissioner, and parties to the matter. 66. There was no contested case hearing before an administrative law judge in this matter. Moreover, as discussed below, Excel Dairy is not entitled to a contested case hearing before an administrative law judge in this matter. As a result, Minn. R does not provide a basis for granting a stay in this matter. 67. Moreover, even assuming arguendo that Minn. R did apply to this matter, a stay would not be appropriate. Minn. R , subp. 3, which establishes the grounds for granting or denying a stay provides that: [A] petition [for a stay] shall be granted upon a showing that there are irregularities in the hearing, errors of law, or newly discovered material issues of fact that could not have been discovered prior to the board's or commissioner's final decision and of such importance as are likely to have altered the outcome of the decision. 68. Excel Dairy has not established that there were procedural irregularities, errors of law, or that there are newly discovered material issues of fact of such importance as are likely to have altered the outcome of the decision. Instead, Excel Dairy's bases its request for a stay on the fact that Excel Dairy disagrees with the order. The mere fact that a party disagrees with an order is not sufficient to justify a stay under Minn. R

11 69. Minn. Stat provides that: The filing of the writ of certiorari shall not stay the enforcement of the agency decision; but the agency may do so, or the court of appeals may order a stay upon such terms as it deems proper. When review of or an appeal IToma final decision is commenced under sections to in the court of appeals, any other later appeal under sections to from the final decision involving the same subject matter shall be stayed until final decision of the first appeal. 70. Pursuant to this statute, the agency may stay enforcement of its decision, but it is not required to do so. The MPCA finds that a stay is not appropriate in this case for the following reasons. 71. First, it is worth noting that in this case, a stay ofthe agency's decision would constitute an outright reversal of the decision. The issue in the instant matter is whether Excel Dairy should be authorized to operate under its expired permit until the MPCA takes final action on feissuance of the expired permit. The stay that Excel Dairy is requesting would authorize the company to operate under the expired permit until the MPCA makes a final decision on reissuance ofthe expired permit. As a result, the stay Excel Dairy is requesting is would constitute a reversal of the MPCA's decision. 72. Second, a stay would not be in the public interest. Under Minnesota statute, any violation of an MPCA-issued permit is a public nuisance as a matter oflaw. Minn. Stat , subd. 4. Allowing Excel Dairy to continue to operate under its expired permit despite the company's substantial noncompliance with the permit would therefore result in the perpetuation of a series of public nuisances. This is especially true in this case because the facility has been formally declared to be a public health threat. 73. Third, granting the stay that Excel Dairy requests would undermine the MPCA's ability to regulate animal feedlots as required by the Legislature. In simple terms, Excel Dairy is demanding that it retain the benefit of holding a feedlot permit despite the company's failure and or refusal to comply with the environmental requirements that accompany that benefit. Allowing a permittee to retain the benefit of holding a feedlot permit while ignoring that permit's requirements is contrary to the public interest because it would undermine the MPCA's authority to regulate animal feedlots. 74. Fourth, Excel Dairy has failed to demonstrate that it is likely to prevail in a challenge to MPCA's decision. Overwhelming evidence in the record shows that Excel Dairy is not in substantial compliance with its permit. Under Minnesota law, a permittee who is not in substantial compliance with its permit is not authorized to operate under the permit once it expires. There are no exceptional circumstances that exist that would justify an exception to that rule in this case. Request For Contested Case Hearing. 75. Relying on its February 19,2010 contested case request, Excel Dairy demands a contested case hearing on the question of operating under its current permit once that permit expires. The MPCA's findings regarding Excel Dairy's contested case request are as follows. 76. Under Minnesota law, a contested case hearing is not required unless some specific provision of law creates a right to a contested case hearing. Minn. Stat (a). A decision regarding operation under an expired permit is temporary and interlocutory in nature. There is no statute or 10

12 regulation that gives a pennittee a right to a contested case hearing before the MPCA can deny authorization to operate under an expired penn it pursuant to Minn. R As a result, Excel Dairy does not have a right to request a contested case hearing on the issue of operation under an expired penn it. 77. Moreover, even assuming arguendo that Excel Dairy does have a right to request a contested case hearing regarding operation under the expired pennit (which the company does not), the company's request fails to satisfy the criteria for ordering a hearing under Minn. R Minn. R , subp. I, states: Subpart I. Board or commissioner decision to hold Contested Case Hearing. The board or commissioner must grant the petition to hold a Contested Case Hearing or order upon its own motion that a Contested Case Hearing be held if it finds that: A. there is a material issue of fact in dispute concerning the matter pending before the board or commissioner; B. the board or commissioner has the jurisdiction to make a detennination on the disputed material issue of fact; and C. there is a reasonable basis underlying the disputed material issue of fact or facts such that the holding of a Contested Case Hearing would allow the introduction of infonnation that would aid the board or commissioner in resolving the disputed facts in making a final decision on the matter. 79. In order to satisfy the first requirement, Minn. R , subp. I(A), the hearing requester must show there is a material issue of fact in dispute as opposed to a disputed issue of law or policy. A fact is material if its resolution will affect the outcome of a case. 0 'Malley v. Ulland Brothers, 540 N.W.2d 889, 892 (Minn. 1996) 80. In order to satisfy the second requirement, Minn. R , subp. I(B), the requester must show that the MPCA has jurisdiction or authority to make a detennination on the disputed issues of material fact. "Agencies are not pennitted to act outside the jurisdictional boundaries of their enabling act." Cable Communications Boardv. Nor-West Cable, 356 N.W.2d 658, 668 (Minn. 1984). Therefore, each issue in the contested case request has to be such that it is within the MPCA's authority to resolve. 81. Finally, under Minn. R , subp. I(C), the requester has the burden of demonstrating there is a reasonable basis underlying the disputed material issue of fact or facts such that the holding of a contested case hearing would allow the introduction of infonnation that would aid the MPCA in making a final decision on the matter. In the Matter of Solid Waste Permit for the NSP Red Wing Ash Disposal Facility, 421 N.W.2d 398, 404 (Minn. Ct. App. 1988). To do so, the requester must demonstrate that a hearing would allow for the introduction of new infonnation that would be helpful to the MPCA in reaching a final decision. Excel Dairv Issue 1: Whether the compan Minn. Stat entitled to a contested case hearing: Dursuant to 11

13 82. Excel Dairy asserts the Bad Actor statute, Minn. Stat , entitles the company to a contested case hearing upon request before the MPCA can deny reissuance of the company's permit under the Bad Actor statute. As discussed above, the MPCA has already granted the company's request for a contested case hearing under the Bad Actor Statute regarding reissuance of the current permit. 83. Excel Dairy cannot and does not claim that the Bad Actor statute requires a contested case hearing upon request when the MPCA intends to deny authorization to operate under an expired permit. The Bad Actor statute is simply inapplicable to the question of operation under an expired permit. Similarly, Excel Dairy cannot and does not claim that the rule governing operation under an expired permit, Minn. R , requires a contested case hearing upon request. Excel Dairv Issue 2: Whether the comoanv is constitutionallv entitled to a contested case hearin 84. Excel Dairy claims that the "Due Process" clause of the United States and Minnesota Constitutions entitles the company to a contested case hearing before the MPCA can decide not to renew the company's permit. This proposed issue fails to satisfy the requirements of Minn. R Q, subp. I, for the following reasons. 85. First, the question of whether the due process clause entitles the company to a contested case hearing is a question of law, not a question of fact. As a result, this is not an issue that is appropriate for resolution through a contested case hearing. 86. Second, the issue before the MPCA is not whether to renew the company's permit. As noted above, the company has already been granted a contested case hearing on the question of renewal of the permit. The issue before the MPCA is whether or not the company is in substantial compliance with its current permit. Excel Dairy makes no argument and cites no authority for the proposition that a contested case hearing is constitutionally required before the MPCA can determine whether a permittee is in substantial compliance with its permit. This is especially true in light of the fact that the denial of authorization to operate under the expired permit is only temporary. Excel Dai Issue 3: Whether the A ril MPCA Citizen's Board decision to revoke and reissue the company's permit precludes the Agency from denying reissuance of the permit. 87. Excel Dairy argues that the MPCA's April 28, 2009, decision to revoke and reissue the company's permit prohibits the MPCA from denying reissuance of the permit at this time. This proposed issue fails to satisfy the requirements of Minn. R , subp. I, for the following reasons. 88. First, Excel Dairy's third issue is a legal argument and not a disputed issue of material fact. As a result, this is not an issue that is appropriate for resolution through a contested case hearing. 89. Second, although the MPCA does not accept Excel Dairy's legal argument on this point, the argument is irrelevant to the issue before the MPCA. The issue before the MPCA is not whether to renew the company's permit. As noted above, the company has already been granted a contested case hearing on the question of renewal of the permit. The issue before the MPCA is whether or not the company is in substantial compliance with its current permit. As a result, Excel Dairy's argument on this issue is not applicable to the issue before the MPCA. 12

14 Excel Dairy Issue 4: Whether the MPCA can consider Excel Dairy's environmental noncompliance prior to April in applving Minnesota's Bad Actor statute. 90. Excel Dairy argues that the MPCA is precluded from considering the company's environmental noncompliance before April 28, 2009 in deciding whether to reissue the company's permit under the Bad Actor statute. This proposed issue fails to satisfy the requirements of Minn. R , subp. I, for the following reasons. 91. First, Excel Dairy's fourth issue is a legal argument and not a disputed issue of material fact. As a result, this is not an issue that is appropriate for resolution through a contested case hearing. 92. Second, although the MPCA does not accept Excel Dairy's legal argument on this point, the argument is irrelevant to the issue before the MPCA. The issue before the MPCA is not whether to reissue the company's permit under the Bad Actor statute. As noted above, the company has already been granted a contested case hearing on the question of reissuance of the permit. The issue before the MPCA is whether or not the company is in substantial compliance with its current permit. As a result, Excel Dairy's argument on this issue is not applicable to the issue before the MPCA. 93. Third, because the company's current permit was issued on April 28, 2009, the MPCA is not considering noncompliance that occurred before that date in applying Minn. R (A). Excel Dairy Issue 5: Whether Excel Dairy' permit must be reissued because permit terms and or a schedule could be developed to return the facility to compliance. 94. Excel Dairy argues that its permit must be reissued pursuant to Minn. R because the company claims that a permit terms and or a schedule could be developed to return the facility to compliance. This proposed issue fails to satisfy the requirements of Minn. R , subp. 1, for the following reasons. 95. First, Excel Dairy's fifth issue is a legal argument and not a disputed issue of material fact. As a result, this is not an issue that is appropriate for resolution through a contested case hearing. 96. Second, although the MPCA does not accept Excel Dairy's legal argument on this point, the argument is irrelevant to the issue before the MPCA. The issue before the MPCA is not whether to reissue the company's permit. As noted above, the company has already been granted a contested case hearing on the question of reissuance of the permit. The issue before the MPCA is whether or not the company is in substantial compliance with its current permit. As a result, Excel Dairy's argument on this issue is not applicable to the issue before the MPCA. Excel Dairy Issue 6: Whether the conduct of other facilities operated by Mr. Millner iustifies the denial of reissuance of the Permit. 97. Excel Dairy argues that Minnesota Law prohibits the MPCA from considering the environmental noncompliance of other facilities operated by Excel Dairy's managing partner, Rick Millner, in applying Minnesota's Bad Actor statute. This proposed issue fails to satisfy the requirements of Minn. R , subp. 1, for the following reasons. 13

15 98. First, Excel Dairy's sixth issue is a legal argument and not a disputed issue of material fact. As a result, this is not an issue that is appropriate for resolution through a contested case hearing. 99. Second, although the MPCA does not accept Excel Dairy's legal argument on this point, the argument is irrelevant to the issue before the MPCA. The issue before the MPCA is not whether to reissue the company's permit under the Bad Actor statute. As noted above, the company has already been granted a contested case hearing on the question of reissuance of the permit. The issue before the MPCA is whether or not the company is in substantial compliance with its current permit. As a result, Excel Dairy's argument on this issue is not applicable to the issue before the MPCA Third, because the sole issue before the MPCA in this matter is whether Excel Dairy is in substantial compliance with its current permit, the MPCA is not considering noncompliance at Mr. Millner's other facilities in applying Minn. R (A) As di~cussed above, each of Excel Dairy's proposed issues for a contested case hearing consists of a legal argument regarding whether the company's permit should be reissued. Because the company has raised legal arguments and not disputed issues of material fact, a contested case hearing is not appropriate. Additionally, Excel Dairy has failed to demonstrate that a hearing would allow for the introduction of new information that would be helpful to the MPCA in reaching a decision in this matter. Excel Dairy has not submitted any new evidence or information that the MPCA does not already have. As a result, a contested case hearing would not be required, because Excel Dairy has failed to demonstrate that a hearing would allow for the introduction of new information that would be helpful to the MPCA in reaching a decision in this matter. 1. Minn. R provides' in relevant part: CONCLUSIONS OF LAW A person who holds an expired permit, other than a permit described in part , item B, and who has submitted a timely application for reissuance of the permit may continue to conduct the permitted activity in accordance with the terms and conditions of the expired permit until the agency takes final action on the application unless the commissioner determines that any of the following are ~e:. A. the permittee is not in substantial compliance with the terms and conditions ofthe expired permit or with a stipulation agreement or compliance schedule designed to bring the permittee in compliance with the permit; 2. For the reasons set forth above, the MPCA Citizens' Board affirms the Commissioner's March 12,2010 determination that Excel Dairy is not in substantial compliance with the terms and conditions of its permit which shall expire on April 28, Excel Dairy is therefore prohibited from operating once its permit expires. This prohibition does not prevent Excel Dairy from complying with the Marshall County District Court's January 20, 2010 order. Furthermore, this prohibition does not excuse Excel Dairy from complying with the court's order. 14

16 4. Excel Dairy is not entitled to a stay of the MPCA's decision in this matter. 5. Excel Dairy has failed to establish that it is entitled to a contested case hearing on the issue of operating under its permit once the permit expires. ORDER 6. Pursuant to Minn. R (A), Excel Dairy is prohibited from operating under NPDES/SDS Permit No. MN once the permit expires. This prohibition does not prevent Excel Dairy from complying with the Marshall County District Court's January 20,2010 order. Furthermore, this prohibition does not excuse Excel Dairy from complying with the court's order. 7. Excel Dairy's request for a stay of the MPCA's decision is hereby denied. 8. Excel Dairy's request for a contested case hearing is hereby denied. IT IS SO ORDERED Commissioner Paul Eg1~t Chair, Citizens' Board Minnesota Pollution Control Agency YI;).", 10 Date 15