Exol is one of 12 Minnesota ethanol plants facing fines from the Minnesota Pollution Control Agency over newly discovered emissions, but the plant’s manager says the cooperative that owns the plant has purchased $2 million in new equipment that will eliminate the potentially harmful byproducts.

The cooperative’s board of directors voted to buy a thermal oxidizer, which will slash emissions and eliminate odors from the plant, nearly a year ago, said General Manager Rick Mummert. Exol has not installed the device yet because it is waiting for regulatory agencies to approve permits, but the new equipment could be in place by the end of October, he said.

&uot;Exol is committed to doing the right thing,&uot; Mummert said.

A dozen ethanol plants in the state are negotiating with pollution control regulators to settle alleged violations of the Clean Air Act, according to regulators and industry officials. Mummert said Exol expects fines from the MPCA, but the agency hasn’t reached a dollar amount yet.

People living near some of the plants have complained about odors, headaches and nausea, as well as irritated eyes, throats and skin. Ethanol, which is added to gasoline to increase oxygen in the fuel and make it burn cleaner, is made by cooking corn and sometimes other plant materials.

Mummert said the plant has had two complaints since January, when he took over as general manager. Both people complained about the smell from the plant. Once the new equipment is in place, the odor will be virtually eliminated, Mummert said.

Recent tests have revealed that ethanol plants emit more pollutants than earlier believed, including carbon monoxide and volatile organic compounds thought to cause cancer and other illnesses.

After testing at the Gopher State ethanol plant in St. Paul found some of those chemicals, Exol decided to order the new pollution-control equipment, Mummert said.

The MPCA, however, expected the state’s ethanol plants to know about the pollutants sooner, Mummert said.

&uot;They felt like we should have known, and we felt like we get our information from them,&uot; he said. &uot;We really feel like this is something we did not know, and we’re certainly not experts in the field. We looked to them for advice.&uot;

Jim Warner, quality director at the Minnesota Pollution Control Agency, would not give details about the discussions between the plants and regulators. But he added, &uot;Any time we’re talking enforcement, we’re potentially talking about penalties.&uot;

Neither Warner nor ethanol industry officials would discuss individual plants, or whether some of them emit more pollutants than others. Warner said MPCA files on the plants are temporarily closed pending enforcement actions.

Minnesota Corn Processing in Marshall and Melrose Dairy Protein LLCs in Melrose &045; which use a different process, called a &uot;wet mill&uot; process, to make ethanol &045; are not included in the negotiations.

Warner said the MPCA has estimated that each of the 12 plants produces more than 100 tons per year of volatile organic compounds such as formaldehyde. That would subject the plants to stricter air pollution regulations than they had faced.

In the past, companies tested only for ethanol and methanol emissions. Under stricter regulation, plant operators would need to install better pollution-control technology in existing and future plants.

Rita Messing, environmental toxicologist for the Minnesota Health Department, said officials began taking a closer look at ethanol emissions after hearing complaints from residents living near the Gopher State plant, which began operating in April 2000.

After conducting more elaborate tests at Gopher in 2000, state health officials identified several other pollutants: acetaldehyde and formaldehyde, potential carcinogens, and acrolein, which is toxic to the upper respiratory system in animal studies.

Messing said the levels of these chemicals have been lower since Gopher installed $1.2 million of pollution control equipment last year. Although people living near the plant are not thought to be at higher risk for cancer, there is uncertainty about long-term health effects because scientists do not know how combinations of the chemicals affect humans, Messing said.

Another uncertainty is whether other ethanol-plant emissions such as lactic acid and furfural pose long-term health risks, she added. For many chemicals, &uot;we don’t have the criteria where we can say there’s a safe level,&uot; she said.

After receiving the Minnesota results, EPA spokesman Bill Omohundro said, federal officials tested four other ethanol plants in the Upper Midwest and found similar emissions.

In April, the EPA’s Chicago office sent a letter to state regulators and ethanol producers &045; including Minnesota plants &045; about the tests. The letter reported emissions &uot;many times greater&uot; than companies had indicated and declared that most if not all ethanol facilities &uot;were not properly permitted and controlled with respect to a number of pollutants.&uot; It summoned plant managers to a Chicago meeting, which took place June 3.

At that meeting, EPA officials made it clear that companies would need to install better pollution-control technology, Omohundro said.

&uot;We told them it was not a voluntary initiative,&uot; he said.

Federal officials have been tightlipped about those talks.

&uot;We’re in settlement negotiations so I can’t comment on anything,&uot; said Cynthia King, an attorney in the EPA office in Chicago.

Ralph Groschen, an ethanol specialist at the Minnesota Agriculture Department, said some ethanol producers are frustrated that they may be forced to pay penalties for violations that they knew nothing about until the new testing took place.

&uot;If you were in violation and if you and the government didn’t know about it, the law says you still could be penalized,&uot; he said.

Requiring expensive pollution-control equipment will be a hardship for some of the companies, he said, but the future of the ethanol industry still looks &uot;pretty darned good&uot; because of demand.