SOUTH SIOUX CITY -- Before announcing a week ago that it was temporarily suspending its biogas production operations in order to make equipment repairs, Big Ox Energy's immediate future already was clouded with rumors of financial difficulties.
The Wisconsin-based company owes more than $3 million to the city of Sioux City alone, and the South Sioux City biofuels plant's manager has referred to financial troubles in conversations with Nebraska regulators. The Journal has learned that Big Ox also has reached out to vendors and suppliers to set up payment plans for outstanding bills.
Perhaps the most pressing issue is the status of Big Ox's permit to send pretreated wastewater across the Missouri River to Sioux City's regional wastewater treatment plant. The permit expires Tuesday, and the city has yet to make a decision on the company's renewal request.
Sioux City officials can't recall the city ever denying a permit renewal, but Big Ox's debt, coupled with discharge issues in past months, raises concerns.
"We would need to have a lot of assurances for a lot of things, including payment of what they owe" before granting the renewal, city utilities director Mark Simms said.
Kevin Bradley, Big Ox director of business and economic development, said the company would continue discussing its permit renewal with the city. Even though the plant for the time being will no longer be accepting organic waste from local food and beverage manufacturers and converting it to methane, Bradley said it will continue to receive and treat wastewater from other South Sioux City industries and discharge it to Sioux City, though at a lower volume.
If the city were to deny its permit renewal or make a decision days or weeks after Tuesday, Big Ox would not be able to legally discharge wastewater to Sioux City.
"They'd have to go someplace else with their wastewater," assistant city attorney Justin Vondrak said.
The discharge of higher volumes of wastewater with high concentrations of pollutants and suspended solid waste late last year and early this year led to huge bills for Big Ox, leading to Sioux City's hesitancy to renew the company's wastewater permit.
Billing records show that the city has billed Big Ox more than $3.5 million in wastewater fees, fines and late fees since June, when Big Ox stopped making monthly payments. The company has made three payments -- two in November, one in December -- totaling $478,501 since then, leaving a balance due of a little more than $3 million. Vondrak said Big Ox officials have given the city no explanation for the nonpayment, despite committing last fall to making payments on past due amounts and staying current.
"We have had a lot of dialogue with Big Ox concerning this matter. Big Ox has failed to follow through on several commitments they have made," Vondrak said.
Simms said Big Ox racked up higher costs for a period of time when it was discharging high volumes of highly concentrated wastewater to Sioux City. That increased volume pushed Big Ox into a higher billing rate charged to industrial users that discharge strong waste or high volumes that can take a toll on the wastewater treatment plant's equipment.
The city has fined Big Ox a total of $95,500 for several violations, most of them for discharging excessive amounts of suspended solid waste, from June until February, when, Simms said, Big Ox seemed to stabilize its operations and began operating within the parameters of its permit, dropping out of the higher rate tier. The fines have yet to be paid, however.
Simms said Big Ox claims the city has not incurred the costs it has charged the company to treat its wastewater.
"They don't believe that we've justified the fees that we've charged, but the fees are ones they would have known about when they hooked up," Simms said. "We aren't in the business to make money, but obviously every user has to pay for services."
Vondrak said litigation is a possible step toward collecting the money Big Ox owes. Terminating service is another option, which also could involve litigation.
Opting not to renew Big Ox's permit, however, would effectively terminate the company's service, which would affect South Sioux City's ability to discharge wastewater from other industries and residences to Sioux City. South Sioux City Mayor Rod Koch said the city has a contingency plan in place if that were to happen.
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"We've already made plans no matter what happens to Big Ox," Koch said. "The city and Big Ox and businesses, we all have to work together and be in partnership to make this successful."
Big Ox also owes South Sioux City for sewer, electric and water use.
"No, they're not current," city manager Lance Hedquist said, declining to say how much Big Ox owes the city and how long it's been since the city was last paid.
It appears that Big Ox also has failed to pay other area vendors.
On April 19, the day Big Ox announced it would temporarily cease biogas production, the company sent letters to vendors, suppliers and contractors, asking them to send current billing statements.
"It is our intention to develop a payment plan on all outstanding balances," Big Ox general manager Rob Ernest said in the letter.
Since the plant began operations in September 2016, it had hauled solid waste, averaging up to five to seven side-dump truckloads of a semisolid sludge byproduct daily, to a Jackson, Nebraska, landfill operated by Gill Hauling.
"We did take considerable material from them, but haven't for the past couple months," said Leonard Gill, president and owner of Gill Hauling. Gill said things with Big Ox are "in a state of flux" and declined to comment on whether Big Ox owes him money. He also declined to comment on any possible legal action.
Bradley, Big Ox's spokesman, declined to comment on the company's financial matters.
The millions in unpaid bills adds to the mystery surrounding Big Ox's financial stability. Plant manager Jody Anderson twice in the past month has referred to possible financial troubles in communications with the Nebraska Department of Environmental Quality.
In a March 29 email to the NDEQ concerning removal of solid waste being stockpiled on site, Anderson said, "We started hauling off site using two trucks from local contractor due to financial difficulties those only two trucks could get to haul. ... If had ability to hire more trucks to haul away to fields this project of removal would be much faster to remove solids. We will have to look for financial support to remove newly generated solids each day ..."
In an April 2 memorandum summarizing a March 28 visit to the plant, an NDEQ inspector referred to a discussion with Anderson about the department's concern about plant safety and uncontrolled emissions. The inspector wrote, "Mr. Anderson agreed that emission controls and safety measures are needed, but explained BOE's current financial outlook forced him to prioritize needed projects."
Nearly three weeks later, Big Ox announced its plan to temporarily suspend its biogas production operations in order to make repairs that the company hopes will solve ongoing emissions and odor issues that have led to more than a dozen lawsuits from homeowners in the plant's vicinity who claim its odors are a nuisance and, in some cases, have caused health issues and made their homes uninhabitable.
Those emissions have led to past citations from regulators, the most recent, an April 2 NDEQ citation for failing to control emissions after inspectors noticed gases leaking from a damaged anaerobic digester structure. Big Ox has had problems with repeated venting of hydrogen sulfide gas into the atmosphere and solid waste spills. The company also has been cited for storing solid waste on its grounds outside the plant. The plant has been cited for various violations nine times by the NDEQ and U.S. Environmental Protection Agency.
The NDEQ has called Big Ox to appear in Lincoln next month to justify why its storm water and air quality permits shouldn't be revoked, a move that would effectively shut down the plant.
Bradley said on April 19 it's not yet known how long it will take to fix the damaged digesters or when the plant will be able to resume its methane production.
Prior to the shutdown, Bradley said, Big Ox was producing enough gas to supply more than 4,000 homes daily and injecting it into an interstate pipeline and selling it to an unnamed private customer. With production ceased, a main source of revenue is now gone.