A CD Corporation request for a amendment to a city permit that governs its frac sand shipping operation has sparked a legal debate that could catapult the issue into the hands of state regulators in St. Paul. The debate hinges on whether the request would merely allow greater flexibility in CD Corporation's current sand shipping operations, or whether it would constitute an expansion of that shipping.
CD Corporation, the truck-to-barge transloading company that leases the city of Winona's docks, wants to change the terms of its frac sand shipping conditional use permit (CUP) to replace monthly caps on the number of sand barges it may load with a yearly limit.
CD Corporation owner Dan Nisbit said he wants the flexibility to load more sand barges during months when the river is passable to make up for lost time during shipping season months when the river is closed. "The way our permit reads, we can do up to 48 barges per month, and then we have to stop and go to the next month," Nisbit told the BOA in July, referring to his current frac sand shipping permit. The latest version of Nisbit's request would replace the 48-barges-per-month limit with an annual limit of 384 barges, the equivalent of 48 barges per month for eight months.
During the last two years, the shipping season has come to a standstill several times due to low water levels, flooding, and late thaws. The combination of the unpredictable river and the monthly caps have made it hard for CD Corporation to meet its contracts with customers, Nisbit explained. "All businesses should be allowed flexibility, which is basically what I'm asking for," Nisbit said. He added, "We don't really want to increase the number of barges, we're just asking for flexibility."
"I think the end result of the flexibility would be more barges," responded BOA member Laura Priem. BOA members Marsha Neff and David Kouba agreed.
The BOA tabled CD Corporation's request after a motion to require the company to complete an Environmental Assessment Worksheet (EAW) failed in a 2-3 vote at the BOA's July meeting. Now, concerned citizens are forcing the issue. This week, they filed a petition with the Minnesota Environmental Quality Board (EQB) to require CD Corporation to complete an Environmental Assessment Worksheet (EAW) on the proposal. The BOA is slated to hold a public hearing and vote on CD Corporation's request on Wednesday, but if the EQB honors the EAW petition, the city will have to put the permit application on hold while a decision is made on whether or not the project needs an EAW.
Whenever citizens petition for an EAW, the EQB decides which government agency — known as the responsible government unit (RGU) — should make the decision on whether an EAW is needed. Normally, that decision-making role would be the city's. However, in their petition, concerned citizens asked the EQB to make the Minnesota Pollution Control Agency (MPCA) the RGU in order to remove the potential conflict of interest posed by the fact that the city generates revenue on frac sand shipped at the dock. The city charges a 28 cent tonnage fee and collected nearly $65,000 on frac sand shipments last year.
EQB officials were not immediately available for comment. They are expected to make a decision on how to handle the EAW later this month.
Adding another layer of complexity, citizens argue that an EAW for this project is not optional. Normally, citizen petitions for EAWs on the grounds that they feel a project should have more environmental scrutiny. The citizens in this case argue that state law requires an EAW.
The law in question is a new one, passed in 2013, and is specific to silica sand operations. Under the law, EAWs are automatically required for new frac sand facilities or expansions that would handle more than 200,000 tons of sand in a year. CD Corporation handled 232,000 tons last year and is on track to ship as much this year. In addition to the normal requirements of an EAW, which can take months to complete, frac sand facilities subject to the 2013 law would need to conduct evaluations of traffic, air quality, and water quality impacts.
Normally, a facility that existed prior to the law would be "grandfathered in" and not subject to the requirement. However, an expansion of the facility might be subject to the law.
In a memo to the BOA last week, Assistant City Planner Carlos Espinosa asserted that the proposal would not trigger such an automatic EAW because the request for month-to-month flexibility did not constitute an expansion or a substantive change to the operations already permitted.
CD Corporation and city staff have twice changed the company's proposal shortly before public meetings; the effect of both changes made the proposal less likely to be considered an expansion. The original legal notice for the July public hearing described a proposal seeking permission to ship 48 barges per month, as is currently permitted, plus 60 additional barges over the course of the year. That proposal also asked that requirements that sand stockpiles be kept wet be struck on the condition that the company build an enclosed loading facility. Leading up to the July hearing city staff consulted with the company and announced a change to the proposal at the hearing. The request to handle dry sand was removed entirely, and instead of seeking an additional 60 barges annually, CD Corporation asked the city to replace the monthly limits with an annual limit. Instead of 48 barges per month, CD Corporation wanted permission to ship 432 barges each year, the equivalent of 48 barges per month over a longer-than-normal nine-month shipping season. Typical shipping seasons last eight months, staff said. It was that figure, 432, that Priem, Neff, and Kouba called an increase in barge loading at the July meeting.
Now, CD Corporation has changed its request again, asking for an annual limit of 384 sand barges, the equivalent of 48 barges per month over a normal eight-month shipping season. "We're just honing in because the applicant doesn't want to increase the number of barges [permitted]," Espinosa explained in an interview last week.
In a memo to the BOA last week, city staff stated that the most recent proposal is not an expansion and said that, in fact, it reduced the number of potential barges that could be shipped when compared to 432 barges that could be shipped under CD Corporation's current permit, if the company were able to load its maximum allowance of barges each month of a nine-month shipping season.
Winonan Steve Schild, who spoke at July's public hearing and helped organize the petition for an EAW, criticized the city for changing the proposal without notifying the public. "How in the world are we supposed to be prepared to speak intelligently about a matter [at a public hearing] if we don't know from one meeting to the next what the petitioner is asking for," he said in an interview.
When asked why he was opposed to Nisbit's proposal, Schild said, "Silica is a carcinogen. There is nothing in place right now to tell us what air quality [exists at the city dock] and there is no air monitoring going on at the sites in the city that handle silica sand." He noted that the state has recommended fence-line air quality monitoring at silica sand facilities. He added that truck traffic is a concern as well.
Neff and fellow BOA member David Kouba expressed similar concerns at the group's last meeting. "We don't have any idea what kind of air quality is out there now," he said of the dock. "I would like to know just how safe that air is. What is in that air? We should know."
Neff questioned whether CD Corporation was following requirements in its permit and in city code, including a requirement that no operation in the city may emit "any dangerous, injurious, noxious, or otherwise objectionable … dust, odor, or other form of air pollution." The zoning ordinance bans dust that would endanger people, but if there is no air monitoring being done at the site, how does the city know that standard is being met? she asked.
Nisbit and Assistant City Planner Carlos Espinosa noted that air quality monitoring is being conducted at the Winona YMCA. There are not any results on the amount of sand dust in the air at that site. Neff said that what mattered was the air quality at the city dock, not at the YMCA. She observed that the state has recommended air quality monitoring to be done at the fence line of frac sand sites and said, "The reason that you're going through this is because silica sand is a dangerous substance."
Nisbit noted that the sand being handled at the city dock has been processed and that grains small enough to enter human lungs have been removed. The sand grains at the dock are many times larger than the microscopic grains that are the subject of health concerns, Nisbit observed. "Do I think there is an issue with silica dust? I can tell you that I don't think there is an issue with silica dust," he said.