Minnesota ethanol maker Corn Plus pleaded guilty Wednesday to a federal felony charge of falsifying air pollution monitoring data and must pay $760,000 in fines and penalties.
Corn Plus paid a $450,000 criminal fine levied by a federal judge and has 30 days to pay a separate $310,000 civil penalty imposed by the Minnesota Pollution Control Agency, whose investigation helped uncover the violations.
The farmer-owned cooperative, based in Winnebago, Minn., will remain on probation in the criminal case for three years. Two managers and a plant worker have been fired over the falsification but have not been charged.
Deliberate faking of monitoring records is extremely rare, state officials said. "I have never heard of something like that," said Jennifer Lovett, a state pollution control specialist who first spotted the discrepancies.
U.S. District Judge John Tunheim, who sentenced Corn Plus in Minneapolis, also found that its latest offense violated the terms of probation for a misdemeanor conviction two years ago for a water quality violation.
"If this happens again, there will be stiffer sanctions," the judge warned Bill Drager, president of the Corn Plus board of directors, who appeared on behalf of the cooperative.
Under a plea bargain with the U.S. attorney's office, current Corn Plus employees and board members will not face prosecution. The deal leaves open the possibility of charges against fired employees, including the former general manager and former environmental compliance manger.
Tunheim's sentence requires all current employees and directors not only to be trained annually on complying with pollution rules, but also to pass written tests.
Lovett, who works for the state Pollution Control Agency, spotted the fake monitoring data about dust-removal equipment last year while following up on an earlier inspection. For example, monitoring logs for January, April and June of 2009 had exactly the same entries for each day.
"It's impossible for them to be the same from month to month," said Lovett, whose findings were passed on to the U.S. Environmental Protection Agency, which joined the investigation and helped spot more false records.
"Environmental compliance in our country depends on trust," Assistant U.S. Attorney David Genrich said. "The EPA and the MPCA simply can't be in all places at all times."
As the government confronted Corn Plus about the fake data, the cooperative launched an internal investigation, found additional false records and voluntarily turned over the findings to federal officials, Genrich said.
In its plea, Corn Plus admitted that its employees filed false reports in 2009 and 2010 indicating that its control equipment, known as bag houses, was working properly. Lovett said false monitoring logs also were created for the plant's scrubbers, which remove volatile organic compounds.
Drager, the board president, said the cooperative has tried to "change the culture of the organization."
Corn Plus wasn't accused of polluting the air, and its attorney, Dustan Cross, said there is no evidence that particulate matter, mainly corn dust, was released into the environment.
He said such a release, had it occurred, would have been seen from the smokestack, which is monitored visually. However, dust emissions are not measured directly, Genrich said.
Some particles in the air can harm the lungs, and the EPA says studies have linked such pollution to asthma, chronic bronchitis and other illness. No cases of illness have surfaced in this case.
The latest fines come on top of an $891,00 civil penalty and a $150,000 criminal fine for a 2009 federal misdemeanor conviction over Corn Plus' failure to prevent a wastewater discharge that had a high biological oxygen demand -- a measure of its nutrient richness -- into a drain that emptied into Rice Lake.
Corn Plus said it has hired a new environmental, health and safety manager, as well as a consultant to assist on environmental compliance. Despite its environmental record, the cooperative has a history of supporting alternative energy, including two wind power turbines on site and technology to burn a distilling byproduct in place of fossil fuel.
As one of Minnesota's oldest ethanol plants, built in 1993, Corn Plus has struggled with aging, less-efficient technology at a time when high corn prices have reduced ethanol refining margins, according to a recent regulatory filing by the cooperative.
In September, the cooperative's new general manager, Mark Drake, wrote to its more than 700 shareholders that without $12 million in federal tax credits this year for using an alternate-fuel boiler, the board "would have had to consider ceasing operations." Corn Plus recently said it would invest $20 million to make the plant more efficient.
David Shaffer • 612-673-7090
