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New frac rules tested (08/06/2014)
By Chris Rogers
It has been a month of firsts for frac sand regulation in Minnesota. Within days of each other, two state laws regulating silica sand have come into play for the first time ever. In the last two weeks, laws passed in 2013 but never before implemented froze CD Corporation's frac sand barge loading proposal at the city of Winona dock and Tracie Erickson's proposal to continue operation of a construction sand pit in Houston County.

Across the state, there have been few new silica sand projects or expansions since the laws were passed last summer, so the laws have not been implemented yet, explained Minnesota Environmental Quality Board (EQB) Executive Director Will Seuffert. "We have obviously been looking at that statute before, but this would be the first project for which we've had to make a formal determination," said Minnesota Pollution Control Agency (MPCA) Environmental Review Supervisor Craig Affeldt of one of the laws affecting CD Corp's proposal, which involves the MPCA. He added this will be the first time the agency has to go "on the record' about how the new law applies.

CD Corp. may need EAW under new law

Because of the 2013 statute 116C.911, the city of Winona will not get to decide whether CD Corporation needs to conduct an Environmental Assessment Worksheet (EAW) on its proposal to change its frac sand barge loading operation, and according to one state agency, the bulk of the facility's frac sand operations should come under environmental scrutiny. The EQB ruled late last week that the MPCA, not the city, will be responsible for determining whether an EAW is needed for the site. The law requires an automatic EAW for facilities that handle more than 200,000 tons of sand in a year, and designates the MPCA as the responsible government unit (RGU) for overseeing the environmental review. CD Corporation handled 232,000 tons last year and is on track to haul as much this year.

It is the EQB's job to decide which government the city or the MPCA should be the RGU. It is up to the RGU to decide whether an EAW is needed. The MPCA has not made an official determination yet, but Affeldt said that both he and MPCA officials agreed that the MPCA should be RGU because of the new law.

For his part, Seuffert said his agency believes that under the new state law, CD Corporation is automatically required to complete an EAW, not only on its new proposal to replace monthly caps on sand barges with a single annual cap, but on its sand hauling operation in general.

When asked if CD Corporation's operation was "grandfathered in" because it predates the 2013 law, Seuffert and Affeldt both noted that state agencies generally conduct three-year "look backs," including any expansions within the last three years in any environmental review. Affeldt said the purpose of the three-year window is to prevent operators from using incremental increases to avoid environmental review triggers. In the case of CD Corporation, a three-year "look back" would encompass the bulk of its frac sand shipping operation, which began in earnest in 2012 and was expanded last year. Affeldt said that in this particular case, the MPCA had not yet made a determination as to whether CD Corporation would be exempt from 116C.991 because of a "grandfathered" status. CD Corporation is a somewhat unique position in that the sand shipping that would trigger an EAW under 116C.991 partly predates the law and the three-year "look back" window would reach two and half years before the law was passed. Seuffert said that his agency believes that it should not matter. The MPCA must make a final decision by August 22.

DNR: Erickson mine needs trout permit

The Minnesota Department of Natural Resources (DNR) and Houston County are in the middle of a legal disagreement over a sand mine. At issue is the permit Houston County issued to Tracie Erickson earlier this summer to restart mining at his construction sand pit. The Erickson mine had been one of several longstanding sand pits which frac sand developer Minnesota Sands hoped to convert into large-scale frac sand mines. State officials demanded an intensive environmental study known as an Environmental Impact Statement (EIS), for the mines. After years in regulatory limbo Minnesota Sands has still neither conducted an EIS nor withdrawn its proposals Erickson decided he wanted out of his agreement with Minnesota Sands and simply wanted to reopen his small-scale construction sand pit. He applied for a renewal of his existing mining permit last year, but the permit expired before the mine was released from the EQB's EIS requirement. In a split vote, Houston County voted to retroactively renew Erickson's permit, although it had expired. Concerned citizens argued that a expired permit cannot be renewed; county officials argued that Erickson's permit should have been renewed before its expiration, but that legal complications prevented the county from doing so.

The DNR sided with concerned citizens, declaring the permit a new permit, not a retroactive renewal. The fact that Erickson applied for a renewal prior to the permit's expiration does not matter; all that matters is that the permit was expired and the county issued a new one, said Section Manager Julie Ekman of the DNR's Ecological and Water Resources Division.

Because it is a new permit in the DNR's eyes, it is subject to the 2013 statute 103G.217, which requires that any silica sand mine within a mile of a trout stream whether for frac sand or construction sand in the Driftless region of Southeast Minnesota must obtain a trout stream setback permit from the DNR. Under that law the Erickson mine would have to conduct a hydrological evaluation of the site and the DNR would consider restrictions to protect trout.

Both Houston County zoning officials and Erickson have disagreed with the DNR, arguing that the permit never expired and the Erickson mine does not need a setback permit, because the law only applies to new mines.

Ekman said that Houston County and Erickson still may not see eye-to-eye with the DNR, but Erickson has suspended his mining operation.

The MPCA, DNR, and EQB are all in process of forming new rules to regulate silica sand.

The full text of Minnesota Statutes 116C.991 and 103G.217 are available at www.revisor.leg.state.mn.us. 


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