Dairy operation to reopen

The Minnesota Pollution Control Agency Citizen's Board today in St. Paul will hear the case to allow Excel Dairy, a rural Thief River Falls mega-dairy, to once again fill its barns and produce milk.

The dairy has been closed and empty of cows since January 2009, when the state filed air quality regulation violations against the dairy and its parent company, the Dairy Dozen. Earlier this month, Excel filed for Chapter 11 bankruptcy protection, but plans to re-open as soon as possible, said company owner/manager Rick Milner.

Two dozen neighbors of the dairy have spent two years complaining that odors from the farm have ruined their lives, forcing them several times to evacuate their homes.

Last summer, state officials ruled the farm a public health hazard.

Millner said Monday, while driving to St. Paul for the hearing, that the odor problems mostly were the fault of the MPCA's requirements to renovate and use the manure pits that had been built by previous owners of the farm.

The MPCA has said in its findings that Excel officials caused the problems by delaying or ignoring compliance with MPCA regulations on manure handling.

As recently as last fall, residents living near the farm said the odor problems remained, bad enough at times again to drive them from their homes.

Millner said that now there is no manure in the pits and no odor problem.

If he can get MPCA to permit the farm, he could have 1,600 cows back in the barns within a year and the odor problem controlled according to MPCA regulation, Millner said.

The dairy is requesting the MPCA's reconsideration or, alternatively, a stay of denial of authorization to operate under its expired permit.

Millner is one of several investors of a dairy farm conglomerate based in Veblen, S.D., that has had six dairy operations in recent years in South Dakota, North Dakota and Minnesota. Environmental violations connected to manure pits have occurred at the two farms near Veblen in recent years, as well as the Five-Star Dairy near Milnor, N.D.

Five-Star also filed for Chapter 11 protection in federal bankruptcy court earlier this month, but remains in operation.

One of the Veblen dairy farms also filed Chapter 11 this month, Millner said.

The company's other dairy farm near Veblen was placed into receivership earlier this year in the hands of a Minnesota agricultural lender, according to news reports.

The environmental problems at the various farms were real but related largely to unusually wet weather the past two years, Millner said Monday.

Combined with the long legal fight over the Excel farm, and "the worst year on record in the dairy industry," has put his company into financial stress, Millner said. "It was too much."

He's had trouble paying local farmers for the feed and last fall, several near Milnor took him to court to get the money. He still owes some other farmers, but is making payments, Millner said.

"We will pay everyone in full," he said.

The bankruptcy actions are legal business strategy to keep the farms going, Millner said.

"Don't demonize us for filing for bankruptcy," he said. "All we are trying to do is hold off the bank from foreclosing and put together a plan where everybody gets paid."

Millner said his company is struggling to make things work.

"We could quit and walk away from it and nobody would be getting paid," he said. "Or we can reorganize and get our plans put together with everyone getting paid in full. As long as we are in the fight, we can pay people. As soon as we get knocked out, people are going to go unpaid."

The Excel situation has been a huge drag on his entire company, Millner said. So today's hearing is crucial.

The MPCA Citizen's Board will determine whether it should affirm or reverse MPCA Commissioner Paul Eger's March 12 order that prohibits Excel Dairy from operating under its current National Pollutant Discharge Elimination System and State Disposal System permit, which expires Wednesday.

The March 12 order states that Excel Dairy is not in substantial compliance with the terms and conditions of its permit.

Excel Dairy representatives will have 10 minutes at the MPCA meeting, which begins at 9 a.m. in St. Paul, to present its argument and five minutes to answer questions before the MPCA Citizen's Board. MPCA representatives will then be given an equal amount of time to respond to Excel Dairy's presentation to the Citizen's Board. No public testimony will be taken.

Excel Dairy has been shut down since it voluntarily removed its cows during the last week of January and first week of February 2009. Its original NPDES/SDS permit was revoked on April 28, 2009 and a one-year permit, with specific requirements, was issued that same day.

In addition to identifying permit requirements that were not met, the MPCA notice from January states that Excel Dairy appears to have mislead the MPCA with regard to the number of animal units (AU) housed at the facility. The dairy was permitted to stock 1,545 animal units. Under Minnesota law, a mature dairy cow weighing more than 1,000 pounds is equal to 1.4 AU. A mature dairy cow weighing less than 1,000 pounds is equal to 1 AU.

The MPCA alleges that Excel Dairy housed 1,545 cows weighing over 1,000 pounds each equals 2,163 AU. According to the notice, overstocking the facility could result in significant alteration in the nature or quantity of manure stored and processed by the facility, and the nature or quantity of emissions from the facility's manure basins.

Millner said Monday that the MPCA hasn't treated his company fairly.

"We are financially strapped right now. We had some environmental issues in Veblen and Milnor, that were weather-related. . . that gave us violations. But we honestly don't believe the violations in Thief River Falls are warranted."

Reach Bonham is a reporter for the Grand Forks (N.D.) Herald which is owned by Forum Communications Co.