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SOUTH SIOUX CITY -- South Sioux City officials have had preliminary talks about acquiring the idled Big Ox Energy biofuels plant, which has long been subject to odor complaints and environmental permit violations.
No financial offers have been made, Mayor Rod Koch said.
"We're just doing our due diligence to see if it's economically feasible," he said. "At this point, it's just discussions."
The City Council on Tuesday unanimously passed, without discussion, an amendment to its contract with HDR Engineering in which the Omaha-based firm will perform an on-site assessment of the Big Ox plant to determine needs for repairs and improvements and develop cash flow projections to restart the plant and ramp up gas production, which has been halted since mid-April.
HDR is adding the $184,500 cost to an ongoing study in which the city is determining the feasibility of building a wastewater treatment plant. South Sioux City, which currently sends its wastewater to Sioux City's regional treatment plant, authorized the study after Sioux City sent word it intended to cancel their contracts. The move would allow Sioux City to renegotiate deals South Sioux City, North Sioux City and Sergeant Bluff signed decades ago.
Prior to its shutdown, Big Ox accepted organic waste from local food and beverage manufacturers and converted it to methane. Big Ox also received wastewater from other South Sioux City industries, pretreated it and discharged it to Sioux City's treatment plant.
Big Ox announced on April 19 that it was temporarily suspending its biogas production operations to repair problem digesters that had leaked solid waste. On April 30, the plant's wastewater treatment operations were shut down after its wastewater discharge permit was not renewed by the city of Sioux City, in part because the Wisconsin-based company owes Sioux City more than $3 million in wastewater treatment fees, late charges and fines, a total the company is disputing.
The plant has stopped accepting biological materials for its anaerobic digesters, and South Sioux City is now routing wastewater past the plant to Sioux City, and wastewater will not flow through Big Ox until a new permit is issued.
Koch said businesses in the Roth Industrial Park that had supplied Big Ox with raw materials and had sent wastewater to the plant for pretreatment are interested in seeing the biogas plant become operational again. The city is exploring what it would cost to take ownership of the plant, which would be operated by a third party, the mayor said.
"If we ever get to the point where we make an offer, we want to know what we're getting," Koch said. "It's got to make sense economically, for the taxpayers, for the industries and for the ratepayers."
The Big Ox plant was constructed at a cost of about $30 million.
Kevin Bradley, Big Ox director of business and economic development, did not immediately return a message left Tuesday afternoon. He has said in the past that the company's goal is to find a long-term solution to make the facility successful.
Under HDR's contract amendment, the firm also would assist in the transfer of state and local permits from Big Ox to South Sioux City, though the future status of the plant's state permits is uncertain.
After a series of citations from state and federal regulators for environmental violations, the Nebraska Department of Environmental Quality in March ordered Big Ox to appear for a show cause hearing to justify why it should be allowed to keep its permits. The plant has had problems with repeated venting of hydrogen sulfide gas into the atmosphere and solid waste spills. A hearing is scheduled for July 8 in Lincoln.
Big Ox has agreed not to resume operations until all equipment and building repairs have been completed and approved by the NDEQ. The company also continues to clean up solid waste that had been stockpiled on site in violation of its permits.
DEQ spokesman Brian McManus said Tuesday that department officials would have no comment on South Sioux City's potential acquisition of the plant.
Shortly after Big Ox began operations in September 2016, a neighborhood near the plant experienced sewer backups, and residents complained of noxious fumes being emitted from the plant. Those emissions and odor issues have led to more than a dozen lawsuits filed against Big Ox and the city by 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.