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Court ruling goes in favor of Glacial Plains co-op

BENSON -- The Minnesota Court of Appeals has decided in favor of the Glacial Plains Cooperative in its dispute with the Chippewa Valley Ethanol Company LLC over grain storage obligations at the Glacial Plains handling facility in Benson.

In a decision issued Tuesday, the Court of Ap-peals reversed an earlier district court ruling that had favored the ethanol company.

The Court of Appeals sided with Glacial Pl-ains in its claim that Chippewa Valley Ethanol must pay storage costs for grain held in excess of 180,000 bushels.

The court sent the matter back to district court to determine the compensation.

Glacial Plains was seeking approximately $206,000 for corn stored over that 180,000-bushel amount through the period ending Dec. 31, 2010, according to attorney Michael Fluegel of Morris, who represented Glacial Plains. It may be seeking an additional amount for any subsequent storage.

Fluegel said the bigger issue at the heart of the lawsuit is control over the grain storage capacity at the Glacial Plains facility serving the ethanol plant. Glacial Plains gains greater authority over it as a result of the decision.

There have been long lines of corn-filled trucks at the facility's loading site during the harvest season. The farmers delivering the corn can be members of either cooperative, and often, are members of both, Fluegel noted.

The lawsuit focused on a 1994 contract drafted when Chippewa Valley Ethanol Company was developing its ethanol plant, and a modification to the contract made in 2003. The addendum stated that Glacial Plains would provide Chippewa Valley Ethanol Company with 180,000 bushels of storage, and that any volumes over that amount would be "invoiced out at prevailing market rates."

Glacial Plains built its handling facility next to the ethanol plant and handled all of the grain destined for the ethanol plant under the contract.

Both the ethanol and grain handling facilities have been expanded since 1994, and the original contract modified. The ethanol plant has expanded its grain needs from 5.77 million bushels per year to 17.24 million bushels per year.

Despite changes, the court found that "the evidence unequivocally shows that the parties performed consistently with an interpretation of the contract that entitled Glacial Plains to payment of storage costs for any bushels stored over the 180,000-bushels free-storage limit.''

The lawsuit had been filed in August 2009 and had been heard in trial in November 2009.

Chippewa Valley Ethanol Company could request that the Minnesota Supreme Court hear an appeal in the matter. The ethanol company was represented by attorney Jon Saunders of Willmar. He did not return calls seeking comment on Tuesday.

Tom Cherveny

Tom Cherveny is a regional and outdoor reporter with the West Central Tribune in Willmar, MN.

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