10-Q

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

/x/ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the period ended May 31, 2000

Commission file number: 33-83868

AMERICAN CRYSTAL SUGAR COMPANY
(Exact name of registrant as specified in its charter)

Minnesota	84-0004720
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
101 North Third Street Moorhead, Minnesota 56560 (Address of principal executive offices)
Telephone Number (218) 236-4400 (Registrant's telephone number, including area code)

    Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes  X  No    

    Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class of Common Stock	Outstanding at July 5, 2000
$10 Par Value	3,004

AMERICAN CRYSTAL SUGAR COMPANY
FORM 10-Q
INDEX

			Page No.
PART I		FINANCIAL INFORMATION
	ITEM 1.	FINANCIAL STATEMENTS
		BALANCE SHEETS	1
		STATEMENTS OF OPERATIONS	3
		STATEMENTS OF CASH FLOWS	4
		NOTES TO THE FINANCIAL STATEMENTS	5
	ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION	7
PART II		OTHER INFORMATION
	ITEM 1.	LEGAL PROCEEDINGS	11
	ITEM 6.	EXHIBITS AND REPORTS ON FORM 8-K	11
SIGNATURES			16

AMERICAN CRYSTAL SUGAR COMPANY
Balance Sheets
(Unaudited)
(Dollars in Thousands)

ASSETS

			May 31
									August 31, 1999*
			2000			1999
Current Assets:
	Cash and Cash Equivalents		$	3,231		$	29		$	2,156
	Accounts Receivable:
		Trade		50,760			73,792			71,654
		Members		1,045			1,719			1,595
		Other		2,938			65			2,642
	Advances to Related Parties			4,314			13,269			22,419
	Inventories			276,806			300,400			111,958
	Prepaid Expenses			3,506			2,415			2,944
Total Current Assets				342,600			391,689			215,368
Property and Equipment:
	Land			26,267			14,671			24,456
	Buildings and Equipment			797,047			678,174			804,607
	Construction-in-Progress			18,771			134,721			6,648
	Less: Accumulated Depreciation			(474,938	)		(461,076	)		(459,096	)
Net Property and Equipment				367,147			366,490			376,615
Other Assets:
	Investments in CoBank			15,135			13,970			15,427
	Investments in Marketing Cooperatives			3,219			2,896			3,112
	Investments in ProGold Limited Liability Company			36,542			35,541			35,629
	Investments in Crystech, LLC			1,494			1,574			1,688
	Notes Receivable—Crystech, LLC			13,905			9,862			11,883
	Other Assets			4,143			3,881			6,170
Total Other Assets				74,438			67,724			73,909
Total Assets			$	784,185		$	825,903		$	665,892

*

Derived from audited financial statements.

1

AMERICAN CRYSTAL SUGAR COMPANY
Balance Sheets
(Unaudited)
(Dollars in Thousands)

LIABILITIES AND MEMBERS' INVESTMENTS

			May 31
									August 31, 1999*
			2000			1999
Current Liabilities:
	Short-Term Debt		$	127,452		$	177,433		$	60,844
	Current Maturities of Long-Term Debt			18,925			18,800			18,915
	Accounts Payable:
		Trade		5,853			7,573			24,239
		Other		3,556			5,170			2,019
	Advances due to Related Parties			6,656			—			—
	Accrued Continuing Costs			58,791			58,211			—
	Other Current Liabilities			18,935			16,799			16,920
	Amounts Due Members			51,635			56,799			35,698
Total Current Liabilities				291,803			340,785			158,635
Long-Term Debt, Excluding Current Maturities				231,210			232,895			233,135
Deferred Income Taxes				1,900			1,753			1,838
Other Liabilities				31,592			26,488			30,998
Total Liabilities				556,505			601,921			424,606
Members' Investments:
	Preferred Stock			38,275			38,275			38,275
	Common Stock			30			29			30
	Additional Paid-in Capital			130,969			123,737			123,948
	Unit Retains			97,054			95,562			116,849
	Accumulated Other Comprehensive Income/(Loss)			(4,088	)		(2,259	)		(4,088	)
	Retained Earnings/(Deficit)			(34,560	)		(31,362	)		(33,728	)
Total Members' Investments				227,680			223,982			241,286
Total Liabilities and Members' Investments			$	784,185		$	825,903		$	665,892

*

Derived from audited financial statements.

2

AMERICAN CRYSTAL SUGAR COMPANY
Statements of Operations
(Unaudited)
(Dollars in Thousands)

			For the Nine Months Ended May 31						For the Three Months Ended May 31
			2000			1999			2000			1999
Net Revenue			$	564,774		$	603,533		$	178,967		$	227,558
Cost of Product Sold				31,131			33,751			51,997			45,789
Gross Proceeds				533,643			569,782			126,970			181,769
Selling, General & Administrative Expenses				118,928			133,893			36,625			48,186
Accrued Continuing Costs				58,791			58,211			(16,886	)		12,426
Operating Proceeds				355,924			377,678			107,231			121,157
Other Income (Expenses)
	Interest Income			2,036			787			904			349
	Interest Expense			(17,018	)		(16,925	)		(6,841	)		(5,984	)
	Other Income			1,489			5,111			584			498
	Other Expenses			(862	)		(3,410	)		(247	)		(2,184	)
Other Income (Expense)				(14,355	)		(14,437	)		(5,600	)		(7,321	)
Proceeds before Income Taxes				341,569			363,241			101,631			113,836
Income Taxes (Provision)/Benefit				(78	)		—			(26	)		—
Net Proceeds Resulting from Member and Non-Member Business			$	341,491		$	363,241		$	101,605		$	113,836
Distribution of Net Proceeds:
	Credited/(Charged) to Members' Investments:
		Non-Member Business Income/(Loss)	$	(832	)	$	1,872		$	92		$	(1,392	)
		Unit Retains Declared to Members		—			—			—			—
Net Credit/(Charge) to Members' Investments				(832	)		1,872			92			(1,392	)
Payments to/due Members for Sugarbeets, Net of Unit Retains Declared				342,323			361,369			101,513			115,228
Total			$	341,491		$	363,241		$	101,605		$	113,836

3

AMERICAN CRYSTAL SUGAR COMPANY
Statements of Cash Flows
(Unaudited)
(In Thousands)

			For the Nine Months Ended May 31
			2000			1999
Cash Provided By (Used In) Operations:
	Net Proceeds Resulting from Member and Non-Member Business		$	341,491		$	363,241
	Payments to Members for Sugarbeets, Net of Unit Retains Declared			(342,323	)		(361,369	)
	Add (Deduct) Non-Cash Items:
		Depreciation and Amortization		33,536			22,506
		(Income) Loss from Equity Method Investees		(819	)		(488	)
		(Gain) Loss on the Disposition of Property and Equipment		565			(69	)
		Non-Cash Portion of Patronage Dividend from Banks for Cooperatives		292			(80	)
		Deferred Gain Recognition		(148	)		(151	)
	Changes in Assets and Liabilities:
		Receivables		21,148			(16,343	)
		Advances to Related Parties		24,761			13,133
		Inventories		(164,848	)		(158,018	)
		Prepaid Expenses		(562	)		664
		Accounts Payable		(16,849	)		(23,389	)
		Accrued Continuing Costs		58,791			58,211
		Other Liabilities		2,670			2,784
		Amounts Due Members		15,937			42,384
	Net Cash (Used In) Operations			(26,358	)		(56,984	)
Cash Provided By (Used In) Investing Activities:
	Purchases of Property and Equipment			(24,980	)		(36,881	)
	Proceeds from the Sale of Property and Equipment			590			125
	Investments in Banks for Cooperatives			—			2,000
	Investments in Marketing Cooperatives			—			(609	)
	Investments in Crystech LLC			(47	)		—
	Notes Receivable—Crystech LLC			(2,022	)		(6,144	)
	Changes in Other Assets			1,972			903
Net Cash (Used In) Investing Activities				(24,487	)		(40,606	)
Cash Provided By (Used In) Financing Activities:
	Net Proceeds (Payments) on Short-Term Debt			66,608			61,111
	Proceeds from Long-Term Debt			17,000			57,100
	Long-Term Debt Repayment			(18,915	)		(17,900	)
	Proceeds from Sale of Stock			7,021			7,555
	Payment of Unit Retains			(19,795	)		(10,288	)
Net Cash Provided by Financing Activities				51,919			97,578
Increase (Decrease) In Cash and Cash Equivalents				1,075			(12	)
Cash and Cash Equivalents, Beginning of Year				2,156			41
Cash and Cash Equivalents, End of Period			$	3,231		$	29

4

AMERICAN CRYSTAL SUGAR COMPANY
NOTES TO THE FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED MAY 31, 2000 AND 1999

Note 1: Basis of Presentation

    The unaudited financial statements contained herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles. However, in the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation have been included.

    The operating results for the nine month period ended May 31, 2000 are not necessarily indicative of the results that may be expected for the year ended August 31, 2000.

    The amount paid to growers for sugarbeets (beet payment) depends on the future selling prices of sugar and agri-products as well as processing and other costs to be incurred during the remainder of the fiscal year. For the purposes of this report, the amount of the beet payment, future revenues and costs have been estimated. Therefore, adjustments with respect to these estimates may be necessary in the future as additional information becomes available.

    These financial statements should be read in conjunction with the financial statements and notes included in the Company's annual report for the year ended August 31, 1999.

    Certain reclassifications have been made to the 1999 financial statements to conform with the 2000 presentation.

Note 2: Inventories

    The major components of inventories are as follows (In Thousands):

	05/31/00		05/31/99		8/31/99
Refined Sugar, Pulp, Molasses, CSB and Beet Seed	$	258,062	$	268,885	$	88,466
Unprocessed Sugarbeets		—		12,394		3,817
Maintenance Parts & Supplies		18,744		19,121		19,675
Total Inventories	$	276,806	$	300,400	$	111,958

    Sugar, pulp, molasses and CSB inventories are valued at estimated net realizable value. Unprocessed sugarbeets are valued at the estimated net beet payment plus estimated unit retains to be withheld. Maintenance parts & supplies and beet seed inventories are valued at the lower of average cost or market.

Note 3: Accrued Continuing Costs

    For interim reporting, the Net Proceeds from Member Business is based on the forecasted beet payment and the percentage of the tons of sugarbeets processed to the total estimated tons of sugarbeets to process for a given crop year. Accrued continuing costs represents the difference between the Net Proceeds from Member Business as determined above and actual member business crop year revenues realized and expenses incurred through the end of the reporting period. Accrued continuing costs are reflected in the Financial Statements as a cost on the Statements of Operations and as a current liability on the Balance Sheets.

5

Note 4: Members' Investments

		Par Value		Shares Authorized	Shares Issued & Outstanding
Preferred Stock:
	July 5, 2000	$	76.77	600,000	498,570
	May 31, 2000	$	76.77	600,000	498,570
	August 31, 1999	$	76.77	600,000	498,570
	May 31, 1999	$	76.77	600,000	498,570
Common Stock:
	July 5, 2000	$	10.00	4,000	3,004
	May 31, 2000	$	10.00	4,000	2,955
	August 31, 1999	$	10.00	4,000	2,950
	May 31, 1999	$	10.00	4,000	2,913

6

Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition
For the Three Months and Nine Months Ended May 31, 2000 and 1999

    This report contains forward-looking statements that involve risks and uncertainties. Such forward-looking statements include, among others, those statements including the words "expect", "anticipate", "believe", "may" and similar expressions. The Company's actual results could differ materially from those indicated. Important factors that could cause or contribute to such differences include, without limitation, market factors, weather and general economic conditions, farm and trade policy, and available quantity and quality of sugarbeets. For a more complete discussion of "Important Factors", please refer to the Company's 1999 Form 10-K.

Comparison of the Nine Months Ended May 31, 2000 and 1999

    Revenue for the nine months ended May 31, 2000, was $564.8 million, a decrease of $38.8 million from 1999. Revenue from total sugar sales decreased 3.2 percent reflecting a 1.3 percent decrease in hundredweight sold and a 1.9 percent decrease in the average selling price per hundredweight. Revenue from pulp sales decreased 24.9 percent due to a 36.3 percent decrease in the volume of pulp sold partially offset by an 18.0 percent increase in the average selling price per ton. Revenue from molasses sales decreased 45.9 percent due to a 46.1 percent decrease in the volume of molasses sold partially offset by a .4 percent increase in the average selling price per ton. Revenue from the sales of Concentrated Separated By-Product (CSB), a by-product of the molasses desugarization process, increased 31.2 percent due to a 92.2 percent increase in sales volume partially offset by a 31.7 percent decrease in the average selling price per ton. The decrease in sales volume of molasses and the increase in sales volume of CSB are primarily the result of the Crystech, LLC molasses desugarization facility at Hillsboro, North Dakota, which became operational on February 1, 2000.

    Cost of product sold for the nine months ended May 31, 2000, exclusive of payments for sugarbeets, decreased $2.6 million as compared to the same period in 1999. Direct processing costs for sugar and pulp increased 4.7 percent primarily due to the commencement of tolling charges from Crystech, LLC, partially offset by reduced costs of harvesting fewer tons. Fixed and committed expenses increased 13.4 percent reflecting higher depreciation and maintenance costs. The cost associated with sugar purchased to meet customer needs was up $5.0 million due to the increase in purchased sugar activity in distant geographic markets. The change in inventories impacted the cost of product sold favorably by $24.6 million in the first nine months of fiscal 2000 as compared to the same period in fiscal 1999.

    Selling, General and Administrative expenses for the nine months ended May 31, 2000, decreased $15.0 million from 1999. Selling expenses decreased $13.6 million due to lower agri-product freight costs and the suspension of the Commodity Credit Corporation marketing assessment fee as of September 1, 1999. General and Administrative expenses decreased $1.4 million from 1999, primarily due to lower personnel costs and general cost reductions.

    The increase in accrued continuing costs was due primarily to changes in the volume of sugar sales and production, differences in the timing of incurring processing costs and the amount of unsold inventory on hand.

    Interest income increased $1.2 million in fiscal 2000 primarily due to interest on the Crystech, LLC notes receivable.

    Interest expense was relatively unchanged between the two years.

    Other income decreased $3.6 million from last year primarily due to the gain in fiscal 1999 from the sale of certain beet seed assets to Betaseed Inc. (BETA), a wholly owned subsidiary of Kleinwanzlebener Saatzucht, Ag.

7

    Other expenses decreased $2.5 million between years, with decreased supplemental retiree benefits and decreased expense from anticipated write-offs by CoBank being partially offset by a loss on the disposition of assets and a loss from the four months of Crystech, LLC operations. Crystech was formed in 1998 to acquire, construct, finance, operate and maintain a molasses desugarization facility at the Company's Hillsboro, North Dakota sugar factory together with certain sugar processing equipment located at the Hillsboro, North Dakota and Moorhead, Minnesota sugar factories. The Company acquired an initial 50% ownership interest in Crystech through a $1.5 million cash contribution. The Company accounts for its investment in the joint venture using the equity method. Crystech became operational on February 1, 2000.

    Non-member activities resulted in a loss of $.8 million for the nine months ended May 31, 2000 as compared to a gain of $1.9 million for the same period last year. The majority of the fiscal 1999 gain is related to the sale of beet seed assets to BETA partially offset with non-member interest expense related to borrowings for ProGold Limited Liability Company (ProGold). The loss in fiscal 2000 is primarily comprised of activities related to ProGold, LLC.

Comparison of the Three Months Ended May 31, 2000 and 1999

    Revenue for the three months ended May 31, 2000, was $179.0 million, a decrease of $48.6 million from 1999. Revenue from total sugar sales decreased 19.2 percent reflecting a 15.5 percent decrease in hundredweights sold and a 4.4 percent decrease in the average selling price per hundredweight. Revenue from pulp sales decreased 44.5 percent due to a 53.3 percent decrease in volume of pulp sold partially offset by an 18.8 percent increase in the average selling price per ton. Revenue from molasses sales decreased 62.6 percent due to a 69.7 percent decrease in the volume of molasses sold partially offset by a 23.5 percent increase in the average selling price per ton. Revenue from the sales of Concentrated Separated By-Product (CSB), a by-product of the molasses desugarization process, increased 74.4 percent due to a 113.2 percent increase in sales volume partially offset by a 18.2 percent decrease in average selling price per ton. The decrease in sales volume of molasses and the increase in sales volume of CSB are primarily the result of the Crystech, LLC molasses desugarization facility at Hillsboro, North Dakota, which became operational on February 1, 2000.

    Cost of product sold for the three months ended May 31, 2000, exclusive of payments for sugarbeets, increased $6.2 million as compared to the same period in 1999. Direct processing costs for sugar and pulp increased 8.1 percent primarily due to the commencement of the tolling charges from Crystech, LLC. Fixed and committed expenses increased 5.3 percent this year due to higher depreciation and maintenance. The cost associated with sugar purchased to meet customer needs was down $1.6 million due to the decrease in purchased sugar activity in distant geographic markets during this quarter. Changes in inventory levels between 2000 and 1999 impacted the cost of product sold unfavorably by $3.4 million.

    Selling, General and Administrative expenses for the three months ended May 31, 2000, decreased $11.6 million from the same period in 1999. Selling expenses decreased $11.2 million due to lower agri-product freight costs and the suspension of the Commodity Credit Corporation marketing assessment fee. General and Administrative expenses were $.4 million lower in 2000 primarily due to lower personnel costs and general cost reductions.

    The decrease in accrued continuing costs was due primarily to changes in the volume of sugar sales and production, differences in the timing of incurring processing costs and the amount of unsold inventory on hand.

    Interest income increased $.6 million in fiscal 2000 primarily due to interest on the Crystech, LLC notes receivable.

    Interest expense increased $.9 million in fiscal 2000 primarily due to slightly higher interest rates.

    Other income for the quarter increased slightly from $.5 million in 1999 to $.6 million in 2000.

8

    Other expenses decreased by $2.0 million between years, with decreased expense from the anticipated write-off by CoBank in 1999, being partially offset by a loss on the disposition of assets and a loss from the four months of Crystech, LLC operations.

    Non-member activities for the three months ended May 31, 2000 and 1999, resulted in a fiscal 2000 non-member income of $.1 million. Fiscal 1999 had a $1.4 million loss. The loss during fiscal 1999 was due primarily to non-member beet seed activities.

Current Market Trends

    The domestic sugar market is currently experiencing an oversupply of refined sugar. This oversupply is the result of several factors. First, the World Trade Organization (WTO) requires imports of sugar, regardless of the domestic supply situation, from approximately 40 foreign nations that produce and export sugar. Second, sugar is currently entering the United States from Canada each year, over and above the WTO minimum, in the form of "stuffed molasses." "Stuffed molasses" is molasses that contains an extremely high percentage of sugar. Once the "stuffed molasses" reaches the United States, it is run through a desugarization process that separates the liquid sugar from the molasses. The liquid sugar is then sold in the domestic market. Third, in addition to the sugar currently being imported into the domestic market this year, Mexico, under the North American Free Trade Agreement (NAFTA), will be allowed, in October, 2000, to export an additional 5 million hundredweight of sugar, tariff free, into the United States. Fourth, both the sugarbeet crop and sugar cane crop for this year were the largest in history. The increased size of these crops resulted from an expansion in the acreage planted, the development of higher yielding cane varieties and generally good growing conditions across the country.

    Due to these factors, the supply of refined sugar currently exceeds the domestic demand for refined sugar in the United States. This excess supply has resulted in a decline in domestic sugar prices. Lower sugar prices adversely impact the profitability of selling refined sugar in the United States, resulting in a direct negative impact on the gross beet payment.

    In June 2000, the U.S. Department of Agriculture's Commodity Credit Corporation ("CCC") purchased 132,000 tons of sugar from some U.S. sugar producers in an effort to reduce the cost of expected sugar program loan forfeitures, support sugar growers, and help stabilize low market prices. The CCC did not purchase any sugar from the Company. The CCC has no immediate plans to dispose of the purchased sugar. According to the CCC, additional purchases may occur in the future, depending on price and market conditions.

    Although the Company views the CCC's purchase of sugar as a positive step by the U.S. Government to address the current market situation, there is no assurance that this purchase will have a material impact on domestic sugar prices.

    The Company has a significant amount of sugar pledged as collateral for non-recourse loans through the CCC. The domestic sugar price may decrease to a level below the forfeiture price for these non-recourse loans. The Company is currently contemplating the forfeiture of sugar.

Environmental Matters

    In June 1998, a dike failure occurred near the East Grand Forks, Minnesota factory. The Minnesota Pollution Control Agency (MPCA) commenced enforcement action related to this incident. On April 4, 2000, the Company and the MPCA entered into a stipulation agreement settling this matter. This agreement requires the Company, among other conditions, to pay penalties in the amount of $127,000.

Liquidity and Capital Resources

    Under the Company's Bylaws and Grower Contracts, payments for member delivered sugarbeets, the Company's principal raw material, are subordinated to all member business expenses. Cash payments to

9

members are spread over a period of approximately one-year following delivery of their sugarbeet crops to the Company. All unpaid portions remain available to meet the Company's capital requirements. This member financing arrangement may result in an additional source of liquidity and reduced outside financing requirements in comparison to a similar business operated on a non-cooperative basis. Because sugar is sold throughout the year (while sugarbeets are processed primarily in the fall, winter and spring) and because substantial amounts of equipment are required for its operations, the Company has utilized substantial outside financing on both a seasonal and long-term basis to fund such operations. The majority of such financing has been provided by CoBank, ACB. The Company has a long-term debt commitment with CoBank during 2000 of $180.5 million. In addition, the Company has long-term debt outstanding of $50 million from a private placement of Senior Notes that occurred in September of 1998, a term loan with US Bank of $3.0 million, a term loan with Bank of North Dakota of $7.2 million, and $44.0 million from nine separate issuances of Pollution Control and Industrial Development Revenue Bonds. The most recent bond issuance, $5.75 million of Solid Waste Disposal Revenue Bonds of the City of East Grand Forks, Minnesota, occurred in April 2000. These bonds are due in 2015 and have variable interest rates. The Company also has a seasonal line of credit with CoBank, ACB of $210 million that includes a line of credit with Norwest Bank for $3 million and any amounts obtained through issuance of instruments in its commercial paper program. The Company's commercial paper program provides short-term borrowings of up to $150 million.

    On March 31, 2000, the Company entered into new Term and Seasonal loan agreements with CoBank, ACB. These new loans replace the loans with the St. Paul Bank for Cooperatives that have expired. CoBank, ACB and the St. Paul Bank for Cooperatives merged in 1999. The various loan agreements between CoBank, ACB and the Company obligate the Company to maintain or achieve certain amounts of working capital and certain financial ratios and impose restrictions on the Company. As of May 31, 2000, the Company was in compliance with its loan agreements.

    The change in the Company's financial condition from August 31, 1999 to May 31, 2000 is primarily due to normal business seasonality. The first nine months of the Company's fiscal year includes the completion of the sugarbeet harvest, start of the processing campaign, and the initial payments to members for delivered sugarbeets. The cash used in operations of $26.4 million and investing activities of $24.5 million was funded through the cash provided by financing activities. The net cash provided by financing activities was primarily comprised of the net proceeds from short-term debt of $66.7 million, and proceeds from the installment sale of stock of $7.0 million, partially offset by the payment of the unit retains of $19.8 million.

    Working capital has decreased $5.9 million from $56.7 million at the beginning of the year to $50.8 million as of May 31, 2000 primarily due to additional short-term debt and the amounts due growers partially offset by increased inventories. Working capital as of May 31, 2000 was $50.8 million, a decrease of $.1 million when compared to $50.9 million of working capital as of May 31, 1999.

    Capital expenditures for the nine months ended May 31, 2000 were $24.9 million as compared to $36.9 million for the same period in 1999. The Company had outstanding commitments totaling $14.0 million as of May 31, 2000, for equipment and construction contracts related to various capital projects.

    The Company anticipates that the funds necessary for working capital requirements and future capital expenditures will be derived from operations, short-term borrowings, depreciation, unit retains and long-term borrowings.

10

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

    From time to time and in the ordinary course of its business, the Company is named as a defendant in legal proceedings related to various issues, including worker's compensation claims, tort claims and contractual disputes. The Company is currently involved in certain legal proceedings, which have arisen in the ordinary course of the Company's business. The Company is also aware of certain other potential claims, which could result in the commencement of legal proceedings. The Company carries insurance, which provides protection against certain types of claims. With respect to current litigation and potential claims of which the Company is aware, the Company's management believes that (i) the Company has insurance protection to cover all or a portion of any judgments which may be rendered against the Company with respect to certain claims or actions and (ii) any judgments which may be entered against the Company and which may exceed such insurance coverage or which may arise in actions involving potential liabilities not covered by insurance policies are not likely to have a material adverse effect upon the Company, or its assets or operations.

Item 6. Exhibits and reports on Form 8-K

(a)

Exhibits

Item No.		Method of Filing
3.1	Restated Articles of Incorporation of American Crystal Sugar Company	Incorporated by reference to Exhibit 3(i) from the Company's Registration Statement on Form S-1 (File No. 33-83868), declared effective November 23, 1994.
3.2	Restated By-laws of American Crystal Sugar Company	Incorporated by reference to Exhibit 3(ii) from the Company's Registration Statement on Form S-1 (File No. 333-11693), declared effective November 13, 1996.
4.1	Restated Articles of Incorporation of American Crystal Sugar Company	See Exhibit 3.1
4.2	Restated By-laws of American Crystal Sugar Company	See Exhibit 3.2
10.1	Growers' Contract (5-year Agreement)	Incorporated by reference to Exhibit 10(f) from the Company's Registration Statement on Form S-1 (File No. 333-11693), declared effective November 13, 1996.
10.2	Growers' Contract (Annual Contract)	Incorporated by reference to Exhibit 10(g) from the Company's Registration Statement on Form S-1 (File No. 33-83868), declared effective November 23, 1994.

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10.3	Trademark License Agreement between Registrant and United Sugars Corporation, dated November 1, 1993	Incorporated by reference to Exhibit 10(l) from the Company's Registration Statement on Form S-1 (File No. 33-83868), declared effective November 23, 1994.
10.4	Uniform Member Marketing Agreement, Pool Basis between Registrant and Midwest Agri-Commodities Company, dated April 14, 1992	Incorporated by reference to Exhibit 10(m) from the Company's Registration Statement on Form S-1 (File No. 33-83868), declared effective November 23, 1994.
10.5	Stipulation Agreement between Registrant and State of Minnesota Pollution Control Agency	Incorporated by reference to Exhibit 10(n) from the Company's Registration Statement on Form S-1 (File No. 33-83868), declared effective November 23, 1994.
10.6	Amended and Restated Loan Agreement between Registrant and First Bank National Association, dated November 22, 1993	Incorporated by reference to Exhibit 10(q) from the Company's Registration Statement on Form S-1 (File No. 33-83868), declared effective November 23, 1994.
10.7	Pension Contract and Amendments	Incorporated by reference to Exhibit 10(r) from the Company's Registration Statement on Form S-1 (File No. 33-83868), declared effective November 23, 1994.
10.8	Form of Operating Agreement between Registrant and ProGold Limited Liability Company	Incorporated by reference to Exhibit 10(u) from the Company's Registration Statement on Form S-1 (File No. 33-83868), declared effective November 23, 1994.
10.9	Form of Member Control Agreement between Registrant and ProGold Limited Liability Company	Incorporated by reference to Exhibit 10(v) from the Company's Registration Statement on Form S-1 (File No. 33-83868), declared effective November 23, 1994.

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10.10	Administrative Services Agreement between Registrant and ProGold Limited Liability Company	Incorporated by reference to Exhibit 10(w) from the Company's Registration Statement on Form S-1 (File No. 33-83868), declared effective November 23, 1994.
10.11	Uniform Member Marketing Agreement	Incorporated by reference to Exhibit 10(x) from the Company's Registration Statement on Form S-1 (File No. 33-83868), declared effective November 23, 1994.
†10.12	Coal Supply Agreement between Registrant and Spring Creek Coal Company, dated August 25, 1995	Incorporated by reference to Exhibit 10(y) from the Company's Registration Statement on Form S-1 (File No. 333-11693), declared effective November 13, 1996.
†10.13	Coal Transportation Agreement between Registrant and Northern Coal Transportation Company, dated August 25, 1995	Incorporated by reference to Exhibit 10(z) from the Company's Registration Statement on Form S-1 (File No. 333-11693), declared effective November 13, 1996.
†10.14	Gas Sales Contract between Registrant and Coastal Gas Marketing Company, dated as of March 20, 1996	Incorporated by reference to Exhibit 10(aa) from the Company's Registration Statement on Form S-1 (File No. 333-11693), declared effective November 13, 1996.
†10.15	Trademark License Agreement between Registrant and The Pillsbury Company, dated as of April 9, 1997	Incorporated by reference to Exhibit 10(dd) from the Company's Registration Statement on Form S-1 (File No. 333-32251), declared effective October 24, 1997.
10.16	Pledge Agreement between Registrant and First Union Trust Company, NA	Incorporated by reference to Exhibit 10(ee) from the Company's Annual Report on Form 10-K for the year ended August 31, 1998.
10.17	Indemnity Agreement between Registrant, Newcourt Capital USA Inc., Crystech, LLC and Crystech Senior Lender Trust	Incorporated by reference to Exhibit 10(ff) from the Company's Annual Report on Form 10-K for the year ended August 31, 1998.

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10.18	Tolling Services Agreement between Crystech, LLC and Registrant	Incorporated by reference to Exhibit 10(gg) from the Company's Annual Report on Form 10-K for the year ended August 31, 1998.
10.19	Operations and Maintenance Agreement between Crystech, LLC and Registrant	Incorporated by reference to Exhibit 10(hh) from the Company's Annual Report on Form 10-K for the year ended August 31, 1998.
††10.20	Limited Liability Company Agreement of Crystech, LLC	Incorporated by reference to Exhibit 10(ii) from the Company's Annual Report on Form 10-K for the year ended August 31, 1998.
10.21	Master Agreement between the Registrant and Bakery, Confectionery, Tobacco Workers & Grain Millers AFL-CIO, CLC	Incorporated by reference to Exhibit 10(ii) from the Company's Annual Report on Form 10-K for the year ended August 31, 1999.
10.22	Uniform Member Beet Sugar Marketing Agreement	Incorporated by reference to Exhibit 10.23 from the Company's Annual Report on Form 10-K for the year ended August 31, 1999.
10.23	Registrant's Senior Note Purchase Agreement	Incorporated by reference to Exhibit 10.24 from the Company's Annual Report on Form 10-K for the year ended August 31, 1999.
10.24	Registrant's Senior Note Intercreditor and Collateral Agency Agreement	Incorporated by reference to Exhibit 10.25 from the Company's Annual Report on Form 10-K for the year ended August 31, 1999.
10.25	Registrant's Senior Note Restated Mortgage and Security Agreement	Incorporated by reference to Exhibit 10.26 from the Company's Annual Report on Form 10-K for the year ended August 31, 1999.
10.26	Employment Agreement between the Registrant and James J. Horvath	Incorporated by reference to Exhibit 10.28 from the Company's Annual Report on Form 10-K for the year ended August 31, 1999.

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10.27	Term and Seasonal Loan Agreements between the Registrant and CoBank, ACB dated March 31, 2000	Filed herewith electronically.
10.28	Stipulation Agreement between Registrant and State of Minnesota Pollution Control Agency, dated April 4, 2000	Filed herewith electronically.
28	Financial Data Schedule	Filed herewith electronically.

†

Portions of the Exhibit have been granted confidential treatment by the Commission. The omitted portions have been filed separately with the Commission.

††

Portions of the Exhibit have been deleted from the publicly filed document and have been filed separately with the Commission pursuant to a request for confidential treatment.

(b)

No reports were filed on Form 8-K during this quarter.

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SIGNATURES

    Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	AMERICAN CRYSTAL SUGAR COMPANY (Registrant)
Date: July 7, 2000		/s/ THOMAS S. ASTRUP Thomas S. Astrup Corporate Controller Duly Authorized Officer

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INDEX
AMERICAN CRYSTAL SUGAR COMPANY Balance Sheets (Unaudited) (Dollars in Thousands)
AMERICAN CRYSTAL SUGAR COMPANY Balance Sheets (Unaudited) (Dollars in Thousands)
AMERICAN CRYSTAL SUGAR COMPANY Statements of Operations (Unaudited) (Dollars in Thousands)
AMERICAN CRYSTAL SUGAR COMPANY Statements of Cash Flows (Unaudited) (In Thousands)
AMERICAN CRYSTAL SUGAR COMPANY NOTES TO THE FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED MAY 31, 2000 AND 1999

Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition For the Three Months and Nine Months Ended May 31, 2000 and 1999

PART II. OTHER INFORMATION

Item 1. Legal Proceedings
Item 6. Exhibits and reports on Form 8-K

SIGNATURES

EX-10.27

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MLA No. Z269

MASTER LOAN AGREEMENT

THIS MASTER LOAN AGREEMENT is entered into as of March 31, 2000, between CoBANK, ACB ("CoBank", successor by merger to the St. Paul Bank for Cooperatives) and AMERICAN CRYSTAL SUGAR COMPANY, Moorhead, Minnesota (the "Company").

BACKGROUND

    On March 5, 1999, the St. Paul Bank for Cooperatives ("SPB") entered into a Seasonal Loan Agreement (the "Seasonal Loan Agreement") and a Term Loan Agreement (the "Term Loan Agreement") (collectively, the "Existing Loan Agreements") with the Company. Under the Seasonal Loan Agreement, SPB made various seasonal loans to the Company, each of which was evidenced by a promissory note. Under the Term Loan Agreement, SPB made various term loans, each of which was also evidenced by a promissory note. Subsequently, SPB merged with and into CoBank. CoBank and the Company now desire to amend and restate the Existing Loan Agreements and consolidate the Existing Loan Agreements into this Master Loan Agreement. CoBank and the Company also desire to amend and restate the promissory notes evidencing the seasonal loans and term loans made pursuant to the Existing Loan Agreements by entering into various Supplements in place of the promissory notes. Each Supplement will set forth the amount of the loan, the purpose of the loan, the interest rate or rate options applicable to that loan, the repayment terms of the loan, and any other terms and conditions applicable to that particular loan. Each loan will be governed by the terms and conditions contained in this Master Loan Agreement and in the Supplement relating to the loan. Collateral securing loans made pursuant to the Existing Loan Agreements shall continue to secure those same loans, all as now evidenced by various Supplements, to the same extent as provided for in the Existing Loan Agreements and any security agreements (including, without limitation, mortgages and deeds of trust) entered into in connection therewith.

    SECTION 1.  Supplements.  In addition to those Supplements entered into to amend and restate the promissory notes executed in connection with the Existing Loan Agreements, the parties may enter into other Supplements in order to evidence new loans that CoBank may make to the Company. Each Supplement will set forth the amount of the loan, the purpose of the loan, the interest rate or rate options applicable to that loan, the repayment terms of the loan, and any other terms and conditions applicable to that particular loan. Each loan will be governed by the terms and conditions contained in this Master Loan Agreement and in the Supplement relating to the loan.

    SECTION 2.  Availability.  Loans will be made available on any day on which CoBank and the Federal Reserve Banks are open for business upon the telephonic or written request of the Company. Requests for loans must be received no later than 12:00 noon Company's local time on the date the loan is desired. Loans will be made available by wire transfer of immediately available funds to such account or accounts as may be authorized by the Company. The Company shall furnish to CoBank a duly completed and executed copy of a CoBank Delegation and Wire and Electronic Transfer Authorization Form, and CoBank shall be entitled to rely on (and shall incur no liability to the Company in acting on) any request or direction furnished in accordance with the terms thereof.

    SECTION 3.  Repayment.  The Company's obligation to repay each loan shall be evidenced by the promissory note set forth in the Supplement relating to that loan or by such replacement note as CoBank shall require. CoBank shall maintain a record of all loans, the interest accrued thereon, and all payments made with respect thereto, and such record shall, absent proof of manifest error, be conclusive evidence of the outstanding principal and interest on the loans. All payments shall be made by wire transfer of immediately available funds or by check. Wire transfers shall be made to ABA No. 307088754 for advice to and credit of CoBANK (or to such other account as CoBank may direct by notice). The Company shall

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give CoBank telephonic notice no later than 12:00 noon Company's local time of its intent to pay by wire and funds received after 3:00 p.m. Company's local time shall be credited on the next business day. Checks shall be mailed to CoBank, Department 167, Denver, Colorado, 80291-0167 (or to such other place as CoBank may direct by notice). Credit for payment by check will not be given until the latter of: (a) the day on which CoBank receives immediately available funds; or (b) the next business day after receipt of the check.

    SECTION 4.  Capitalization.  The Company agrees to purchase such equity in CoBank as CoBank may from time to time require in accordance with its Bylaws. However, the maximum amount of equity which the Company shall be obligated to purchase in connection with any loan may not exceed the maximum amount permitted by the Bylaws at the time the Supplement relating to that loan is entered into or such loan is renewed or refinanced by CoBank.

    SECTION 5.  Security.  The Company's obligations under this agreement, all Supplements (whenever executed), and all instruments and documents contemplated hereby or thereby, shall be secured by a statutory first lien on all equity which the Company may now own or hereafter acquire in CoBank. This security shall be in addition to any other security that may otherwise be required or provided.

    SECTION 6.  Conditions Precedent.

(A) Conditions to Initial Supplement.  CoBank's obligation to extend credit under the initial Supplement hereto is subject to the conditions precedent that CoBank receive, in form and substance satisfactory to CoBank, each of the following:

(i) This Agreement, Etc.  A duly executed copy of this agreement and all instruments and documents contemplated hereby.

(ii) Opinion of Counsel.  A favorable opinion from the Company's counsel addressed to CoBank covering each matter as CoBank may reasonably require.

(iii) Evidence of Authority.  Such certified board resolutions, evidence of incumbency, and other evidence that CoBank may require that the Supplement, all instruments and documents executed in connection therewith, and, in the case of initial Supplement hereto, this agreement and all instruments and documents executed in connection herewith, have been duly authorized and executed.

(B) Conditions to Each Supplement.  CoBank's obligation to extend credit under each Supplement, including the initial Supplement, is subject to the conditions precedent that CoBank receive, in form and content satisfactory to CoBank, each of the following:

(i) Supplement.  A duly executed copy of the Supplement and all instruments and documents contemplated thereby.

(ii) Fees and Other Charges.  All fees and other charges specifically permitted by this Master Loan Agreement or the Supplements, as well as reasonable expenses for outside counsel.

(iii) Evidence of Perfection, Etc.  Such evidence as CoBank may require that CoBank has a duly perfected first priority lien on all security for the Company's obligations, and that the Company is in compliance with Section 8(D) hereof.

(C) Conditions to Each Loan.  CoBank's obligation under each Supplement to make any loan to the Company thereunder is subject to the condition that no "Event of Default" (as defined in Section 11 hereof) or event which with the giving of notice and/or the passage of time would become an Event of Default hereunder (a "Potential Default"), shall have occurred and be continuing.

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    SECTION 7.  Representations and Warranties.

(A) This Agreement.  The Company represents and warrants to CoBank that as of the date of this Agreement:

(i) Compliance.  The Company is in compliance with all of the terms of this agreement, and no Event of Default or Potential Default exists hereunder.

(B) Each Supplement.  The execution by the Company of each Supplement hereto shall constitute a representation and warranty to CoBank that:

(i) Applications.  Each representation and warranty and all information set forth in any application or other documents submitted in connection with, or to induce CoBank to enter into, such Supplement, is correct in all material respects as of the date of the Supplement.

(ii) Conflicting Agreements, Etc.  This agreement, the Supplements, and all security and other instruments and documents relating hereto and thereto (collectively, at any time, the "Loan Documents"), do not conflict with, or require the consent of any party to, any other agreement to which the Company is a party or by which it or its property may be bound or affected, and do not conflict with any provision of the Company's bylaws, articles of incorporation, or other organizational documents.

(iii) Compliance.  The Company is in compliance with all of the terms of the Loan Documents (including, without limitation, Section 8(A) of this agreement on eligibility to borrow from CoBank).

(iv) Binding Agreement.  The Loan Documents create legal, valid, and binding obligations of the Company which are enforceable in accordance with their terms, except to the extent that enforcement may be limited by applicable bankruptcy, insolvency, or similar laws affecting creditors' rights generally.

    SECTION 8.  Affirmative Covenants.  Unless otherwise agreed to in writing by CoBank, while this agreement is in effect, the Company agrees to:

(A) Eligibility.  Maintain its status as an entity eligible to borrow from CoBank.

(B) Corporate Existence, Licenses. Etc.  (i) Preserve and keep in full force and effect its existence and good standing in the jurisdiction of its incorporation or formation; (ii) qualify and remain qualified to transact business in all jurisdictions where such qualification is required; and (iii) obtain and maintain all licenses, certificates, permits, authorizations, approvals, and the like which are material to the conduct of its business or required by law, rule, regulation, ordinance, code, order, and the like (collectively, "Laws").

(C) Compliance with Laws.  Comply in all material respects with all applicable Laws, including, without limitation, all Laws relating to environmental protection and any patron or member investment program that it may have. In addition, the Company agrees to cause all persons occupying or present on any of its properties to comply in all material respects with all environmental protection Laws.

(D) Insurance.  Maintain insurance with insurance companies or associations acceptable to CoBank in such amounts and covering such risks as are usually carried by companies engaged in the same or similar business and similarly situated, and make such increases in the type or amount of coverage as CoBank may request. All such policies insuring any collateral for the Company's obligations to CoBank shall have mortgagee or lender loss payable clauses or endorsements in form and content acceptable to CoBank. At CoBank's request, all policies (or such other proof of compliance with this Subsection as may be satisfactory to CoBank) shall be delivered to CoBank.

(E) Property Maintenance.  Maintain all of its property that is necessary to or useful in the proper conduct of its business in good working condition, ordinary wear and tear excepted.

(F) Books and Records.  Keep adequate records and books of account in which complete entries will be made in accordance with generally accepted accounting principles ("GAAP") consistently applied.

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(G) Inspection.  Permit CoBank or its agents, upon reasonable notice and during normal business hours or at such other times as the parties may agree, to examine its properties, books, and records, and to discuss its affairs, finances, and accounts, with its respective officers, directors, employees, and independent certified public accountants.

(H) Reports and Notices.  Furnish to CoBank:

(i) Annual Financial Statements.  As soon as available, but in no event more than 120 days after the end of each fiscal year of the Company occurring during the term hereof, annual financial statements of the Company prepared in accordance with GAAP consistently applied. Such financial statements shall: (a) be audited by independent certified public accountants selected by the Company and acceptable to CoBank; (b) be accompanied by a report of such accountants containing an opinion thereon acceptable to CoBank; (c) be prepared in reasonable detail and in comparative form; and (d) include a balance sheet, a statement of income, a statement of retained earnings, a statement of cash flows, and all notes and schedules relating thereto.

(ii) Interim Financial Statements.  As soon as available, but in no event more than 5 days after the filing with the Securities Exchange Commission, after the end of each quarter, a balance sheet of the Company as of the end of such fiscal quarter, a statement of income for the Company for such period and for the period year to date, and such other interim statements as CoBank may specifically request, all prepared in reasonable detail and in comparative form in accordance with GAAP consistently applied.

(iii) Annual Budgets.  As soon as available, but in no event more than 60 days after the end of any fiscal year of the Company occurring during the term hereof, copies of the Company's annual budgets and forecasts of operations.

(iv) Capital Expenditures Budget:  The Company will furnish an annual capital expenditure budget, within 60 days after the end of each fiscal year. The Company will also furnish a revised budget if increases over the original capital expenditure budget are approved by the board of directors.

(v) Notice of Default.  Promptly after becoming aware thereof, notice of the occurrence of an Event of Default or a Potential Default.

(vi) Notice of Non-Environmental Litigation.  Promptly after the commencement thereof, notice of the commencement of all actions, suits, or proceedings before any court, arbitrator, or governmental department, commission, board, bureau, agency, or instrumentality affecting the Company which, if determined adversely to the Company, could have a material adverse effect on the financial condition, properties, profits, or operations of the Company.

(vii) Notice of Environmental Litigation, Etc.  Promptly after receipt thereof, notice of the receipt of all pleadings, orders, complaints, indictments, or any other communication alleging a condition that may require the Company to undertake or to contribute to a cleanup or other response under environmental Laws, or which seek penalties, damages, injunctive relief, or criminal sanctions related to alleged violations of such Laws, or which claim personal injury or property damage to any person as a result of environmental factors or conditions.

(viii) Bylaws and Articles.  Promptly after any change in the Company's bylaws or articles of incorporation (or like documents), copies of all such changes, certified by the Company's Secretary.

(ix) Other Information.  Such other information regarding the condition or operations, financial or otherwise, of the Company as CoBank may from time to time reasonably request, including but not limited to copies of all pleadings, notices, and communications referred to in Subsections 8(H)(vi) and (vii) above.

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(x) Officer Certificate.  A quarterly officers certificate within 45 days of each fiscal quarter end, in a form acceptable to CoBank, certified by an officer of the Company, that measures compliance with Minimum Net Working Capital; Long Term Debt Coverage and Long Term Debt to Capitalization. (Section 10 (A) & (B) & (C)).

(I) Grower Agreements.  The Company shall abide by the terms and conditions of its member grower agreements; make no material amendments or changes to the agreements without the written consent of the Bank; and extend the agreements for an additional five years when the current contracts expire.

(J) Crystech, L.L.C. ("Crystech").  Cause to be furnished to CoBank:

(i) Annual Financial Statements.  As soon as available, but in no event more than 120 days after the end of each fiscal year of Crystech occurring during the term hereof, annual financial statements of Crystech prepared in accordance with GAAP consistently applied. Such financial statements shall: (a) be audited by independent certified public accountants selected by Crystech and acceptable to CoBank; (b) be accompanied by a report of such accountants containing an opinion thereon acceptable to CoBank; (c) be prepared in reasonable detail and in comparative form; and (d) include a balance sheet, a statement of income, a statement of retained earnings, a statement of cash flows, and all notes and schedules relating thereto.

(ii) Interim Financial Statements.  As soon as available, but in no event more than 60 days after the end of each quarter, a balance sheet of Crystech as of the end of such fiscal quarter, a statement of income for Crystech for such period and for the period year to date, and such other interim statements as CoBank may specifically request, all prepared in reasonable detail and in comparative form in accordance with GAAP consistently applied.

(iii) Examinations.  Such examination of Crystech's books and records as CoBank may reasonably request.

(K) Annual Paydown.  The Company will paydown all short term loans to $80,000,000 or less for a period of 30 consecutive days during the calendar year. Total short term loans includes the seasonal loans, Commodity Credit Corporation loans, commercial paper, overdraft loans with original maturity dates of one year or less. Total short term loans excludes current maturities of long term debt.

    SECTION 9.  Negative Covenants.  Unless otherwise agreed to in writing by CoBank, while this agreement is in effect the Company will not:

(A) Borrowings.  Create, incur, assume, or allow to exist, directly or indirectly, any indebtedness or liability for borrowed money (including trade or bankers' acceptances), letters of credit, or the deferred purchase price of property or services (including capitalized leases), except for: (i) debt to CoBank; (ii) accounts payable to trade creditors incurred in the ordinary course of business; (iii) current operating liabilities (other than for borrowed money) incurred in the ordinary course of business; and (iv) permitted borrowings identified on Attachment A.

(B) Liens.  Create, incur, assume, or allow to exist any mortgage, deed of trust, pledge, lien (including the lien of an attachment, judgment, or execution), security interest, or other encumbrance of any kind upon any of its property, real or personal (collectively, "Liens"). The foregoing restrictions shall not apply to: (i) Liens in favor of CoBank; (ii) Liens for taxes, assessments, or governmental charges that are not past due; (iii) Liens and deposits under workers' compensation, unemployment insurance, and social security Laws; (iv) Liens and deposits to secure the performance of bids, tenders, contracts (other than contracts for the payment of money), and like obligations arising in the ordinary course of business as conducted on the date hereof; (v) Liens imposed by Law in favor of mechanics, materialmen, warehousemen, and like persons that secure obligations that are not past due or that are being contested in good faith by the Company; and (vi) easements, rights-of-way, restrictions, and other similar encumbrances which, in the aggregate, do not materially interfere with the occupation, use, and enjoyment of the property or assets

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encumbered thereby in the normal course of its business or materially impair the value of the property subject thereto except for the permitted liens identified on Attachment B, without the prior written consent of the Bank. In addition, the Company agrees that it will not agree to a negative pledge with any other lender or third party.

(C) Mergers, Acquisitions, Etc.  Merge or consolidate with any other entity or acquire all or a material part of the assets of any person or entity, or form or create any new subsidiary or affiliate, or commence operations under any other name, organization, or entity, including any joint venture.

(D) Transfer of Assets.  Sell, transfer, lease, or otherwise dispose of any of its assets, except in the ordinary course of business.

(E) Loans.  Lend or advance money, credit, or property to any person or entity, except for trade credit extended in the ordinary course of business and certain inter-company loans made pursuant to Intercompany Loan/Security Agreement dated August 31, 1997 and successor agreements.

(F) Contingent Liabilities.  Assume, guarantee, become liable as a surety, endorse, contingently agree to purchase, or otherwise be or become liable, directly or indirectly (including, but not limited to, by means of a maintenance agreement, an asset or stock purchase agreement, or any other agreement designed to ensure any creditor against loss), for or on account of the obligation of any person or entity, except by the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of the Company's business and except for any liability on account of a guaranty of indebtedness of Midwest Agri Commodities.

(G) Change in Business.  Engage in any business activities or operations substantially different from or unrelated to the Company's present business activities or operations.

    SECTION 10.  Financial Covenants.  Unless otherwise agreed to in writing, while this agreement is in effect:

(A) Minimum Net Working Capital. The Company shall maintain minimum at all times and measured as of the end of each Fiscal Quarter a ratio of Current Assets less Current Liabilities of not less than $35,000,000.

(B) Long Term Debt to Capitalization.  The Company shall maintain at all times and measured as of the end of each Fiscal Quarter a ratio of Long Term Debt divided by the sum of Long Term Debt plus Equity of no greater than fifty-five percent (55%).

(C) Long Term Debt Coverage.  The Company shall maintain at all times and measured as of the end of each Fiscal Quarter a ratio of Long Term Debt to Average Net Funds Generated during the most recent three Fiscal Years of not greater than six (6) times.

(D) Definitions.  For purposes of this Section 10 and this Master Loan Agreement, the following terms shall be defined as follows:

(i) Average Net Funds Generated.  Average Net Funds Generated is the sum of the following for the most recent three fiscal years divided by three (3).

Add:  Unit Retains; Depreciation and amortization; Net income from non-member business and member business tax timing differences; Decrease in investments in other cooperatives (excluding subsidiaries); and Net revenue from sale of stock.

Minus:  Increase in investments in other cooperatives (excluding subsidiaries); Net loss from non-member business and member business tax timing differences; Provision for income tax; and Members' investment retirements.

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(ii) Borrowing Base.  A maximum dollar amount available to the Borrower under the terms of the Commitment (as set forth in a Supplement) as determined on the basis of the most recent Borrowing Base Certificate.

(iii) Borrowing Base Certificate.  A certification of the value of specified assets of the Borrower used in computing the Borrowing Base.

(iv) Capitalization.  The sum of long term debt plus equity as determined in accordance with GAAP.

(v) Current Assets.  The current assets of the Borrower as measured in accordance with GAAP.

(vi) Current Liability.  The current liabilities of the Borrower as measured in accordance with GAAP.

(vii) Depreciation.  Total depreciation of the Borrower as measured in accordance with GAAP.

(viii) Debt.  Debt means as to any Person: (a) indebtedness or liability of such Person for borrowed money, or for the deferred purchase price of property or services; (b) obligations of such Person as lessee under capital leases; (c) obligations of such Person arising under bankers' or trade acceptance facilities; (d) all guarantees, endorsements (other than for collection or deposit in the ordinary course of business), and other contingent obligations of such Person to purchase any of the items included in this definition, to provide funds for payment, to supply funds to invest in any other Person, or otherwise to assure a creditor of another Person against loss; (e) all obligations secured by a lien on property owned by such Person, whether or not the obligations have been assumed; and (f) all obligations of such Person under any agreement providing for an interest rate swap, cap, cap and floor, contingent participation or other hedging mechanisms with respect to interest payable on any of the items described in this definition.

(ix) Equity.  Total equity of the Borrower as measured in accordance with GAAP.

(x) Fiscal Quarter.  Each three (3) month period beginning on the first day of each of the following months: September, December, March and June.

(xi) Fiscal Year.  A year commencing on September 1 and ending on August 31.

(xii) GAAP.  Generally accepted accounting principles in effect from time to time.

(xiii) Interest Expense.  Current cost of borrowing funds that is shown as a financial expense in the income statement and as measured in accordance with GAAP.

(xiv) Long Term Debt.  The long term debt (excluding current maturities) as determined in accordance with GAAP.

(xv) Net Realizable Value.  The expected selling price of an inventory item less expected costs to complete and dispose, as determined in accordance with GAAP.

(xvi) Net Working Capital.  Shall mean the Total Current Assets minus the Total Current Liabilities of the Borrower as determined in accordance with GAAP accounting principles, consistently applied.

(xvii) Person.  Person shall mean any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, limited liability company, cooperative association, institution, entity, party or government (whether national, federal, state, provincial, country, city, municipal or otherwise, including without limitation, and instrumentality, division, agency, body or department thereof).

(xviii) Subsidiary.  Subsidiary shall mean with respect to any Person: (a) any corporation in which such Person, directly or indirectly, (i) owns more than fifty percent (50%) of the outstanding stock

7

thereof, or (ii) has the power under ordinary circumstances to elect at least a majority of the directors thereof, or (b) any partnership, association, joint venture, limited liability company, or other unincorporated organization or entity with respect to which such Person, directly or indirectly, owns an equity interest in an amount sufficient to control the management thereof.

    SECTION 11.  Events of Default.  Each of the following shall constitute an "Event of Default" under this agreement:

(A) Payment Default.  The Company should fail to make any payment to, or to purchase any equity in, CoBank when due. Any payment received by CoBank after its due date shall not be subject to an increase in the interest rate, as provided for in Section 12 below, if the Company is not responsible for the payment delay.

(B) Representations and Warranties.  Any representation or warranty made or deemed made by the Company herein or in any Supplement, application, agreement, certificate, or other document related to or furnished in connection with this agreement or any Supplement, shall prove to have been false or misleading in any material respect on or as of the date made or deemed made.

(C) Certain Affirmative Covenants.  The Company should fail to perform or comply with Sections 8(A) through 8(H)(ii), 8(H)(viii), or any reporting covenant set forth in any Supplement hereto, and such failure continues for 15 days after written notice thereof shall have been delivered by CoBank to the Company.

(D) Other Covenants and Agreements.  The Company should fail to perform or comply with any other covenant or agreement contained herein or in any other Loan Document or shall use the proceeds of any loan for an unauthorized purpose.

(E) Cross-Default.  The Company should, after any applicable grace period, breach or be in default under the terms of any other agreement between the Company and CoBank.

(F) Other Indebtedness.  The Company should fail to pay when due any indebtedness to any other person or entity for borrowed money or any long-term obligation for the deferred purchase price of property (including any capitalized lease), or any other event occurs which, under any agreement or instrument relating to such indebtedness or obligation, has the effect of accelerating or permitting the acceleration of such indebtedness or obligation, whether or not such indebtedness or obligation is actually accelerated or the right to accelerate is conditioned on the giving of notice, the passage of time, or otherwise.

(G) Judgments.  A judgment, decree, or order for the payment of money shall be rendered against the Company in an amount which, if enforced, would have a material adverse effect on the financial condition, profits or operations of the Compay, or a Lien prohibited under Section 9(B) hereof shall have been obtained and shall continue in effect for a period of 20 consecutive days without being discharged, satisfied, or stayed pending appeal.

(H) Insolvency, Etc.  The Company shall: (i) become insolvent or shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they come due; or (ii) suspend its business operations or a material part thereof or make an assignment for the benefit of creditors; or (iii) apply for, consent to, or acquiesce in the appointment of a trustee, receiver, or other custodian for it or any of its property or, in the absence of such application, consent, or acquiescence, a trustee, receiver, or other custodian is so appointed; or (iv) commence or have commenced against it any proceeding under any bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, or liquidation Law of any jurisdiction.

(I) Material Adverse Change.  Any material adverse change occurs, as reasonably determined by CoBank, in the Company's financial condition, results of operation, or ability to perform its obligations hereunder or under any instrument or document contemplated hereby.

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(J) Guaranties.  The Company's agreement to guaranty, assume, or provide surety of other entities' financial obligations shall not exceed an aggregate amount greater than 10% of the Company's net worth, without the Bank's prior written consent.

    SECTION 12.  Remedies.  Upon the occurrence and during the continuance of an Event of Default or any Potential Default, CoBank shall have no obligation to continue to extend credit to the Company and may discontinue doing so at any time without prior notice. CoBank shall promptly notify the Company subsequent to any action to discontinue extending credit to the Company. In addition, upon the occurrence and during the continuance of any Event of Default, CoBank may, upon notice to the Company, terminate any commitment and declare the entire unpaid principal balance of the loans, all accrued interest thereon, and all other amounts payable under this agreement, all Supplements, and the other Loan Documents to be immediately due and payable. Upon such a declaration, the unpaid principal balance of the loans and all such other amounts shall become immediately due and payable, without protest, presentment, demand, or further notice of any kind, all of which are hereby expressly waived by the Company. In addition, upon such an acceleration:

(A) Enforcement.  CoBank may proceed to protect, exercise, and enforce such rights and remedies as may be provided by this agreement, any other Loan Document or under Law. Each and every one of such rights and remedies shall be cumulative and may be exercised from time to time, and no failure on the part of CoBank to exercise, and no delay in exercising, any right or remedy shall operate as a waiver thereof, and no single or partial exercise of any right or remedy shall preclude any other or future exercise thereof, or the exercise of any other right. Without limiting the foregoing, CoBank may hold and/or set off and apply against the Company's obligations to CoBank the proceeds of any equity in CoBank, any cash collateral held by CoBank, or any balances held by CoBank for the Company's account (whether or not such balances are then due).

(B) Application of Funds.  CoBank may apply all payments received by it to the Company's obligations to CoBank in such order and manner as CoBank may elect in its sole discretion.

    In addition to the rights and remedies set forth above: (i) if the Company fails to purchase any equity in CoBank when required or fails to make any payment to CoBank when due, then at CoBank's option in each instance, such payment shall bear interest from the date due to the date paid at 4% per annum in excess of the rate(s) of interest that would otherwise be in effect on that loan; and (ii) after the maturity of any loan (whether as a result of acceleration or otherwise), the unpaid principal balance of such loan (including without limitation, principal, interest, fees and expenses) shall automatically bear interest at 4% per annum in excess of the rate(s) of interest that would otherwise be in effect on that loan. All interest provided for herein shall be payable on demand and shall be calculated on the basis of a year consisting of 360 days.

    SECTION 13.  Broken Funding Surcharge.  Notwithstanding any provision contained in any Supplement giving the Company the right to repay any loan prior to the date it would otherwise be due and payable, the Company agrees that in the event it repays any fixed rate balance prior to its scheduled due date or prior to the last day of the fixed rate period applicable thereto (whether such payment is made voluntarily, as a result of an acceleration, or otherwise), the Company will pay to CoBank a surcharge in an amount which would result in CoBank being made whole (on a present value basis) for the actual or imputed funding losses incurred by CoBank as a result thereof. Notwithstanding the foregoing, in the event any fixed rate balance is repaid as a result of the Company refinancing the loan with another lender or by other means, then in lieu of the foregoing, the Company shall pay to CoBank a surcharge in an amount sufficient (on a present value basis) to enable CoBank to maintain the yield it would have earned during the fixed rate period on the amount repaid. Such surcharges will be calculated in accordance with methodology established by CoBank (a copy of which will be made available to the Company upon request).

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    SECTION 14.  Complete Agreement, Amendments.  This agreement, all Supplements, and all other instruments and documents contemplated hereby and thereby, are intended by the parties to be a complete and final expression of their agreement. No amendment, modification, or waiver of any provision hereof or thereof, and no consent to any departure by the Company herefrom or therefrom, shall be effective unless approved by CoBank and contained in a writing signed by or on behalf of CoBank, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. In the event this agreement is amended or restated, each such amendment or restatement shall be applicable to all Supplements hereto.

    SECTION 15.  Other Types of Credit.  From time to time, CoBank may issue letters of credit or extend other types of credit to or for the account of the Company. In the event the parties desire to do so under the terms of this agreement, such extensions of credit may be set forth in any Supplement hereto and this agreement shall be applicable thereto.

    SECTION 16.  Applicable Law.  Except to the extent governed by applicable federal law, this agreement and each Supplement shall be governed by and construed in accordance with the laws of the State of Colorado, without reference to choice of law doctrine.

    SECTION 17.  Notices.  All notices hereunder shall be in writing and shall be deemed to be duly given upon delivery if personally delivered or sent by telegram or facsimile transmission, or 3 days after mailing if sent by express, certified or registered mail, to the parties at the following addresses (or such other address for a party as shall be specified by like notice):

If to CoBank, as follows:	If to the Company, as follows:
CoBank, ACB Corporate Finance P.O. Box 5110 Denver, Colorado 80217 Fax # (303) 694-5830	American Crystal Sugar Company ATTN: Treasurer 101 North 3rd Street, Moorhead, Minnesota 56560 FAX#: (218) 236-4702

    SECTION 18.  Taxes and Expenses.  To the extent allowed by law, the Company agrees to pay all reasonable out-of-pocket costs and expenses (including the fees and expenses of counsel retained by CoBank) incurred by CoBank in connection with the origination, administration, collection, and enforcement of this agreement and the other Loan Documents, including, without limitation, all costs and expenses incurred in perfecting, maintaining, determining the priority of, and releasing any security for the Company's obligations to CoBank, and any stamp, intangible, transfer, or like tax payable in connection with this agreement or any other Loan Document.

    SECTION 19.  Effectiveness and Severability.  This agreement shall continue in effect until: (i) all indebtedness and obligations of the Company under this agreement, all Supplements, and all other Loan Documents shall have been paid or satisfied; (ii) CoBank has no commitment to extend credit to or for the account of the Company under any Supplement; and (iii) either party sends written notice to the other terminating this agreement. Any provision of this agreement or any other Loan Document which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or thereof.

    SECTION 20.  Successors and Assigns.  This agreement, each Supplement, and the other Loan Documents shall be binding upon and inure to the benefit of the Company and CoBank and their respective successors and assigns, except that the Company may not assign or transfer its rights or obligations under this agreement, any Supplement or any other Loan Document without the prior written consent of CoBank.

    SECTION 21.  Participations.  From time to time, CoBank may sell to one or more banks or other financial institutions a participation in one or more of the loans or other extensions of credit made

10

pursuant to this agreement. However, no such participation shall relieve CoBank of any commitment made to the Company under any Supplement hereto. In connection with the foregoing, CoBank may disclose information concerning the Company to any participant or prospective participant, provided that such participant or prospective participant agrees to keep such information confidential.

IN WITNESS WHEREOF, the parties have caused this agreement to be executed by their duly authorized officers as of the date shown above.

CoBANK, ACB		AMERICAN CRYSTAL SUGAR COMPANY
By	/s/ CASEY GARTEN	By:	/s/ SAMUEL WAI
Title	Vice President	Title:	Treasurer

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Loan No. Z269S01A

STATUSED REVOLVING CREDIT SUPPLEMENT

THIS SUPPLEMENT to the Master Loan Agreement dated March 31, 2000 (the "MLA"), is entered into as of April 21, 2000, between CoBANK, ACB ("CoBank") and AMERICAN CRYSTAL SUGAR COMPANY, Moorhead, Minnesota (the "Company"), and amends and restates the Supplement dated March 31, 2000 and numbered Z269S01.

    SECTION 1.  The Revolving Credit Facility.  On the terms and conditions set forth in the MLA and this Supplement, CoBank agrees to make loans to the Company during the period set forth below in an aggregate principal amount not to exceed, at any one time outstanding, the lesser of the "Borrowing Base" (as calculated pursuant to the Borrowing Base Certificate, the form of which is attached hereto as Exhibit A) or $210,000,000.00 (the "Commitment"). Within the limits of the Commitment, but subject to the Borrowing Base, the Company may borrow, repay and reborrow.

    SECTION 2.  Purpose and Transfer.  The purpose of the Commitment is to finance the Company's general corporate purposes, fund working capital requirements, back the Company's commercial paper program, issue short-term commercial and standby letters of credit, and to renew, extend, and refinance the Company's obligations to CoBank under the Company's existing seasonal loan pursuant to Note No. 29590 (the "Existing Seasonal Loan") and the existing letter of credit commitment pursuant to Note No. 30812 (the Existing LC Commitment") (collectively, the "Notes"), both executed pursuant to the Seasonal Loan Agreement dated March 5, 1999 (the "Existing Agreement"). The Company agrees that on the date when all conditions precedent to CoBank's obligation to extend credit hereunder have been satisfied: (a) the principal balance outstanding under the Existing Seasonal Loan shall be transferred to and charged against the Commitment; (b) all accrued obligations of the Company under the Existing Seasonal Loan and the Existing LC Commitment for the payment of interest or other charges shall be transferred to and become part of the Company's obligations under this Supplement as if fully set forth herein; and, (c) the Notes and the Existing Agreement shall be deemed replaced and superseded.

    SECTION 3.  Term.  The term of the Commitment shall be from the date hereof, up to but not including March 30, 2001, or such later date as CoBank may, in its sole discretion, authorize in writing.

    SECTION 4.  Interest.  The Company agrees to pay interest on the unpaid balance of the loans in accordance with one or more of the following interest rate options, as selected by the Company:

(A) Base Rate Option.  At a rate per annum at all times equal to the Base Rate. For the purposes hereof, Base Rate means that rate in effect from day to day defined as the "prime" rate as published from time to time in the Eastern Edition of The Wall Street Journal as the average prime lending rate for seventy-five percent (75%) of the United States; thirty (30) largest commercial banks, or if The Wall Street Journal shall cease publication or cease publishing the "prime rate" on a regular basis, such other regularly published average prime rate applicable to such commercial banks as is acceptable to the Lender in its reasonable discretion. Loans for which the Base Rate option is selected are referred to herein as "Base Rate Loans".

Base Rate Loans shall be: (a) in minimum amounts of $5,000,000 and incremental multiples of $1,000,000; and (b) made available on any Banking Day. Interest on Base Rate Loans shall be calculated on the actual number of days each loan is outstanding on the basis of a year consisting of 360 days and shall be payable monthly in arrears on the twentieth Banking Day of the following month.

(B) Quoted Rate Option.  At a fixed rate per annum at all times equal to the Quoted Rate. For the purposes hereof, Quoted Rate means a fixed rate of interest to apply to a loan (referred to herein as a "Quoted Rate Loan") for a specified period of time not to exceed thirty (30) days quoted by CoBank in its sole discretion.

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Quoted Rate Loans shall be (i) in minimum amounts of $1,000,000 and incremental multiples of $1,000,000; and (ii) made available on any Banking Day. The Quoted Rate may not necessarily be the lowest rate at which CoBank funds at that time.

Interest on Quoted Rate Loans shall be calculated on the actual number of days each loan is outstanding on the basis of a year consisting of 360 days and shall be payable monthly in arrears on the twentieth Banking Day of the following month.

(C) LIBOR Option.  At a fixed rate equal to LIBOR plus the Applicable Margin (as defined below). For the purposes hereof, LIBOR means the rate for deposits in U.S. Dollars, with maturities comparable to the selected LIBOR Interest Period, that appears on the display designed as page "3750" of the Telerate Service (or such other page as may replace the 3750 page of that service of if the Telerate Service shall cease displaying such rates, such other service or services as may be nominated by the British Bankers' Association for the purpose of displaying London Interbank Offered Rates for U.S. Dollar deposits), determined as of 11:00 a.m. London time two Banking Days prior to the commencement of such LIBOR Interest Period. "LIBOR Interest Period" means a period of one, two, three or six months. LIBOR pricing will be adjusted for Regulation D reserve requirements. The Applicable Margin is 70 basis points. Loans for which the LIBOR option is selected are referred to herein as "LIBOR Loans".

LIBOR Loans shall be: (a) in a minimum amount of $5,000,000 and incremental multiples of $1,000,000; (b) made available on three Banking Days prior notice; and (c) be for periods of one, two, three, or six months. Interest on LIBOR Loans shall be calculated on the actual number of days each loan is outstanding on the basis of a year consisting of 360 days and shall be payable in arrears upon maturity of the applicable LIBOR Interest Period, but no less frequently than quarterly. The LIBOR option shall be subject to the following limitations:

(1)

Notwithstanding anything herein to the contrary, if, on or prior to the determination of the LIBOR rate for any LIBOR Interest Period, CoBank determines (which determination shall be conclusive) that quotations of interest rates in accordance with the definition of LIBOR rate are not being provided in the relevant amounts or for the relevant maturities for purposes of determining rates of interest for LIBOR rate advances as provided in this Supplement, then CoBank shall give the Company prompt notice thereof, and so long as such condition remains in effect, CoBank shall be under no obligation to make LIBOR rate loans, convert Base Rate loans into LIBOR rate loans, or continue LIBOR rate loans, and the Company shall, on the last day(s) of the then current applicable LIBOR Interest Period(s) for the outstanding LIBOR rate loans, either prepay such LIBOR rate loans or such LIBOR rate loans shall automatically be converted into a Base Rate loan in accordance with this Section 4.



(2)

If any law, treaty, rule, regulation or determination of a court or governmental authority or any change therein or in the interpretation or application thereof subsequent to the date hereof (each, a "Change in Law") shall make it unlawful for CoBank to (a) advance any LIBOR rate loan or (b) maintain all or any portion of a LIBOR rate loan, then CoBank shall promptly notify the Company thereof. In the former event, any obligation of CoBank to make available any future LIBOR rate loan shall immediately be canceled (and, in lieu thereof shall be made as a Base Rate loan or Quoted Rate loan at the option of the Company), and in the latter event, any such unlawful LIBOR rate loan or portions thereof then outstanding shall be converted, at the option of the Company, to either a Base Rate loan or a Quoted Rate loan; provided, however, that if any such Change in Law shall permit the LIBOR rate to remain in effect until the expiration of the LIBOR rate period applicable to any such unlawful LIBOR rate loan, then such LIBOR rate loan shall continue in effect until the expiration of such LIBOR rate period. Upon the occurrence of any of the foregoing events on account of any Change in Law, the Company shall pay to CoBank immediately upon demand such amounts as may be necessary to compensate

2

CoBank for any fees, charges, or other costs incurred or payable by CoBank as a result thereof and which are attributable to any LIBOR rate loans made available to the Company hereunder.

(3)

If CoBank shall determine that, after the date hereof, the adoption of any applicable Law, rule or regulation regarding capital adequacy, or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or any request or directive regarding capital adequacy (whether or not having the force of law) of any such governmental authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on capital of CoBank as a consequence of CoBank's obligations hereunder to a level below that which CoBank could have achieved but for such adoption, change, request or directive (taking into consideration its policies with respect to capital adequacy existing on the date of this Supplement) by an amount deemed by CoBank to be material, then from time to time, within fifteen (15) days after demand by CoBank, the Company shall pay to CoBank such additional amount or amounts as will compensate CoBank for such reduction. If CoBank is to require the Company to make payments under this Section then CoBank must make a demand on the Company to make such payment within ninety (90) days of the later of (1) the date on which such capital costs are actually incurred by CoBank, or (2) the date on which CoBank knows, or should have known, that such capital costs have been incurred by CoBank.

The Company shall select the applicable rate option at the time it requests a loan hereunder and may, subject to the limitations set forth above, elect to convert balances bearing interest at the variable rate option to one of the fixed rate options. Upon the expiration of any fixed rate period, interest shall automatically accrue at the Base Rate unless the amount fixed is repaid or fixed for an additional period in accordance with the terms hereof. Notwithstanding the foregoing, unless CoBank otherwise consents in its sole discretion in each instance, rates may not be fixed for periods expiring after the maturity date of the loan. In the event CoBank so consents and the Commitment is not renewed, then each balance so fixed shall be due and payable on the last day of its fixed rate period, and the promissory note set forth below shall be deemed amended accordingly. All elections provided for herein shall be made telephonically or in writing and must be received by 12:00 noon Company's local time. As used in this Section 4, "Banking Day" means a day on which CoBank is open for business, dealings in U.S. dollar deposits are being carried out in the London interbank market, and banks are open for business in New York City and London, England

    SECTION 5.  Promissory Note.  The Company promises to repay the unpaid principal balance of the loans on the first CoBank business day following the last day of the term of the Commitment. In addition to the above, the Company promises to pay interest on the unpaid principal balance of the loans at the times and in accordance with the provisions set forth in Section 4 hereof. This note replaces and supersedes, but does not constitute payment of the indebtedness evidenced by, the promissory note set forth in the Supplement being amended and restated hereby.

    SECTION 6.  Borrowing Base Certificate, Etc.  The Company agrees to furnish a Borrowing Base Certificate to CoBank at such times or intervals as CoBank may from time to time request. Until receipt of such a request, the Company agrees to furnish a Borrowing Base Certificate to CoBank within 30 days after each month end calculating the Borrowing Base as of the last day of the month for which the Certificate is being furnished. However, if no balance is outstanding hereunder on the last day of such period, no Report need be furnished. Regardless of the frequency of the reporting, if at any time the amount outstanding under the Commitment exceeds the Borrowing Base, the Company shall immediately notify CoBank and repay so much of the loans as is necessary to reduce the amount outstanding under the Commitment to the limits of the Borrowing Base.

    SECTION 7.  Commitment Fee.  In consideration of the Commitment, the Company agrees to pay to CoBank a commitment fee on the average daily unused portion of the Commitment at the rate of 12.5

3

basis points per annum (calculated on a 360 day basis), payable quarterly in arrears by the 20^th day following each calendar quarter. The unused amount of the 364-Day facility will be the difference between the 364-Day Commitment and the sum of the outstanding 364-Day Facility Loans and the undrawn face amount of all outstanding Letters of Credit.

    SECTION 8.  Letters of Credit.  In addition to loans, and if agreeable to CoBank in its sole discretion in each instance, the Company may utilize the Commitment to open irrevocable letters of credit for its account. Each letter of credit shall reduce the amount available under the Commitment by the maximum amount capable of being drawn thereunder. The rights and obligations of the parties with respect to each letter of credit will be governed by the Reimbursement Agreement attached hereto as Exhibit A (which rights and obligations shall be in addition to the rights and obligations of the parties hereunder and under the MLA). This Commitment shall expire on December 31, 2001. The fee for issuing each letter of credit shall be 70 basis points of the face amount of each letter of credit, along with an issuance fee to CoBank, for its own account, equal to the greater of (a) ¹/8% of the face amount of the letter of credit, or (b) $2,000. The Company promises to repay the outstanding balance on the Commitment in full on demand, or if no demand is made, then any time on or before the commitment expiration date of December 31, 2001.

IN WITNESS WHEREOF, the parties have caused this Supplement to be executed by their duly authorized officers as of the date shown above.

CoBANK, ACB		AMERICAN CRYSTAL SUGAR COMPANY
By:	/s/ CASEY GARTEN	By:	/s/ SAMUEL WAI
Title:	Vice President	Title:	Treasurer

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[Form of Borrowing Base]

American Crystal Sugar Company
Monthly Borrowing Base
For the month ended                  

Trade Accounts Receivables	$	@ 80%	$	(a)
Trade Accounts Receivables are defined as those of the Borrower and all Guarantors which: (1) arise from the sale and delivery of inventory on ordinary trade terms; (2) are evidenced by an invoice; (3) are net of any credit, trade or other allowance given to the account debtor; (4) are not owing by an account debtor who has become insolvent or is the subject of any bankruptcy, reorganization, liquidation or like proceeding; (5) are not subject to any offset or deduction; (6) are not owing by an affiliate of Borrower; (7) are not owing by an obligor located outside of the U.S. unless the receivable is supported by a letter of credit issued by a bank acceptable to the Lender; and (8) are not government receivables. The above provisions notwithstanding, Trade Receivables shall also exclude (i) any accounts that are past due more than 90 days, and (ii) any contra account regardless of the date;
Inventory	$	(b)
Inventory as determined on the basis of Net Realizable Value, defined as the expected selling price of an inventory item less expected costs to complete and dispose, as determined in accordance with GAAP.
Crop Payments due Non-members and members	$	(c)
Net Inventory Value (b-c)	$	@ 75%	$	(d)
Borrowing Base (a+d)			$
Commercial Paper			$	(e)
Seasonal Loan				(f)
CCC				(g)
Total Short-term Loans (e+f+g)			$

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Exhibit A

LETTER OF CREDIT REIMBURSEMENT AGREEMENT

    In consideration of CoBank issuing one or more letters of credit (each a "Credit") for the Company's account under the Supplement to which this agreement is attached (the "Supplement"), the Company agrees as follows:

    1.  The Company will pay to CoBank in United States currency and in immediately available funds the amount of each draft drawn or instrument paid under a Credit. In addition, the Company agrees to pay to CoBank such fee for issuing each Credit as CoBank shall prescribe, as well as all customary charges associated with the issuance of a Credit. If a Credit is payable in a foreign currency, the Company will pay to CoBank an amount in United States currency equivalent to CoBank's selling rate of exchange for that currency. In addition to the amounts set forth above, the Company shall pay to CoBank such amounts as CoBank shall determine are necessary to compensate CoBank for any cost attributable to CoBank issuing or having outstanding any Credit resulting from the application of any law or regulation concerning any reserve, assessment, capital adequacy or similar requirement relating to letters of credit, reimbursement agreements with respect thereto, or to similar liabilities or assets of banks, whether existing at the time of the issuance of a Credit or adopted thereafter. Each payment hereunder shall be payable on demand at the place and manner set forth in the Master Loan Agreement between the parties (the "MLA") and with interest from the date of demand to the date paid at CoBank's National Variable Rate. The Company hereby authorizes CoBank to create a loan under the Supplement bearing interest at the variable rate set forth therein for any sums owing hereunder.

    2.  Neither CoBank nor any of its correspondents shall in any way be responsible for the performance by any beneficiary of its obligations to the Company nor for the form, sufficiency, correctness, genuineness, authority of the person signing, falsification or legal effect of any documents called for under a Credit if such documents on their face appear to be in order. In addition, CoBank and its correspondents may receive and accept or pay as complying with the terms of a Credit any drafts, documents, or certificates, otherwise in order, signed by any person purporting to be an administrator, executor, trustee in bankruptcy, debtor in possession, assignee for the benefit of creditors, liquidator, receiver, or other legal representative of the party authorized under a Credit to draw or issue such instruments or other documents.

    3.  In the event the Credit is a commercial Credit, then, in addition to the other provisions hereof, the Company: (i) agrees to obtain or cause to be in existence insurance on any merchandise described in the Credit against fire and other usual risks and against any additional risks which CoBank may request; and (ii) authorizes and empowers CoBank to collect the amount due under any such insurance and apply the same against any of the Company's obligations to CoBank arising under the Credit or otherwise. In addition, whether the Credit is a commercial or a standby Credit, the Company represents and warrants that any required import, export or foreign exchange licenses or other governmental approvals relevant to the Credit and the merchandise described therein have been obtained and that the transactions contemplated thereby are not prohibited under any law, rule, regulation, order or the like, including the Foreign Assets Control Regulations of the U.S. Department of Treasury.

    4.  All directions and correspondence relating to a Credit are to be sent at the Company's risk and CoBank does not assume any responsibility for any inaccuracy, interruption, error, or delay in transmission or delivery by post, telegraph, cable or other electronic means, or for any inaccuracy of translation.

    5.  CoBank shall not be responsible for any act, error, neglect, default, omission, insolvency or failure in business of any of its correspondents, and any action taken or omitted by CoBank or its correspondents under or in connection with a Credit shall, if taken or omitted with honesty in fact, be binding on the Company and shall not put CoBank or its correspondents under any resulting liability to the Company. In no event shall CoBank be liable for special, consequential or punitive damages.

1

    6.  The Company will indemnify CoBank against and hold it harmless from all loss, damage, cost and expense (including attorneys' fees and expenses) arising out of (i) its issuance of or any other action taken by CoBank in connection with a Credit, other than loss or damage resulting from its gross negligence or willful misconduct, and (ii) claims or legal proceedings incident to the collection of amounts owed by the Company hereunder, or the enforcement of CoBank's rights or the rights of others under a Credit, including, without limitation, legal proceedings relating to any court order, injunction or other process or decree restraining or seeking to restrain CoBank from paying any amount under a Credit.

    7.  In the event: (i) the Company fails to make any payment owing hereunder when the same shall become due and payable; (ii) any covenant or representation or warranty set forth herein is breached; (iii) the "Commitment" (as defined in the Supplement) expires prior to the expiration date of any Credit; or (iv) an "Event of Default" (as defined in the MLA) occurs under the MLA, then, in any such event, the amount of each Credit, together with any amounts payable by us in connection therewith, shall, at CoBank's option, become immediately due and payable. To the extent that any amount paid by the Company pursuant to this Section 7 shall not then be due under the terms of a Credit, such payment shall serve as security for the Company's obligation to indemnify CoBank for any amounts subsequently disbursed by CoBank pursuant to a Credit. Furthermore, upon the institution of any legal proceeding described in Section 6(ii) hereof, the Company will, on demand, assign and deliver to CoBank, as security for the Company's obligation to indemnify CoBank, cash collateral in an amount satisfactory to CoBank.

    8.  CoBank shall be fully protected in, and shall incur no liability to the Company for acting upon, any oral, telephonic, facsimile, cable or other electronic instructions which CoBank in good faith believes to have been given by any authorized person. CoBank may, at its option, use any means of verifying any instructions received by it and may also, at its option, refuse to act on any oral, telephonic, facsimile, cable or other electronic instructions or any part thereof, without incurring any responsibility for any loss, liability or expenses arising out of such refusal.

    9.  The Uniform Customs and Practice as most recently published by the International Chamber of Commerce (hereafter called the "UCP") shall in all respects be deemed a part hereof as fully as if incorporated herein, and shall apply to the Credits. To the extent the UCP is inconsistent with the governing law set forth in the MLA, the UCP shall control.

2

Loan No. Z269T01

REVOLVING TERM LOAN SUPPLEMENT

THIS SUPPLEMENT to the Master Loan Agreement dated March 31, 2000 (the "MLA"), is entered into as of March 31, 2000, between CoBANK, ACB ("CoBank") and AMERICAN CRYSTAL SUGAR COMPANY, Moorhead, Minnesota (the "Company").

    SECTION 1.  The Revolving Term Loan Commitment.  On the terms and conditions set forth in the MLA and this Supplement, CoBank agrees to make loans to the Company during the period set forth below in an aggregate principal amount not to exceed $88,698,180.00 at any one time outstanding (the "Commitment"). Within the limits of the Commitment, the Company may borrow, repay and reborrow.

    SECTION 2.  Purpose and Transfer.  The purpose of the Commitment is to finance the operating needs of the Company and to renew, extend, and refinance the Company's obligations to CoBank under the Company's existing reinstatable term loan (the "Existing Reinstatable Term Loan") as currently evidenced by Note No. 31143 (the "Note") entered into pursuant to the Term Loan Agreement dated March 5, 1999 (the "Existing Agreement"). The Company agrees that on the date when all conditions precedent to CoBank's obligation to extend credit hereunder have been satisfied: (a) the principal balance outstanding under the Existing Reinstatable Term Loan shall be transferred to and charged against the Commitment; (b) all accrued obligations of the Company under the Existing Reinstatable Term Loan for the payment of interest or other charges shall be transferred to and become part of the Company's obligations under this Supplement as if fully set forth herein; and, (c) the Note and the Existing Agreement (to the extent applicable to the Note) shall be deemed replaced and superseded, but the indebtedness evidenced by such Note shall not be deemed to have been paid off, by this Supplement and the MLA.

    SECTION 3.  Term.  The term of the Commitment shall be from March 31, 2000, up to but not including March 31, 2001, or such later date as CoBank may, in its sole discretion, authorize in writing.

    SECTION 4.  Interest.  The Company agrees to pay interest on the unpaid balance of the loans in accordance with one or more of the following interest rate options, as selected by the Company:

(A) Variable Rate Option.  At a rate per annum equal at all times to the rate of interest established by CoBank from time to time as its National Variable Rate, which Rate is intended by CoBank to be a reference rate and not its lowest rate. The National Variable Rate will change on the date established by CoBank as the effective date of any change therein and CoBank agrees to notify the Company promptly after any such change.

(B) Quoted Rate Option.  At a fixed rate per annum to be quoted by CoBank in its sole discretion in each instance. Under this option, rates may be fixed on such balances and for such periods as may be agreeable to CoBank in its sole discretion in each instance.

(C) LIBOR Option.  At a fixed rate equal to "LIBOR" (as hereinafter defined) plus the Applicable LIBOR Margin per annum (as described in terms of basis points ("bps") in the chart immediately set forth below). Under this option: (a) rates may be fixed for "Interest Periods" (as hereinafter defined) of 1, 2, 3, and 6 months, as selected by the Company; (b) the minimum amount that may be fixed at any one time shall be $2,000,000.00; and (c) rates may only be fixed on a "Banking Day" (as hereinafter defined) or, at the option of the Company, on 2 Banking Days' prior notice. For purposes hereof: (i) "LIBOR" shall mean the rate indicated by Telerate (rounded upward to the nearest thousandth) as having been quoted by the British Bankers Association at 11:00 a.m. London time on the date the Company elects to fix a rate under this option for the offering of U.S. dollar deposits in the London interbank market for the Interest Period designated by the Company; (ii) "Banking Day" shall mean a day on which CoBank is open for business, dealings in U.S. dollar deposits are being carried out in the London interbank market, and banks are open for business in New York City and London, England; and (iii) "Interest Period" shall mean a period commencing on the day the Company elects to fix a rate under this option (or, at the option of the

1

Company, two Banking Days later) and ending on the numerically corresponding day in the next calendar month or the month that is 2, 3 or 6 months thereafter, as the case may be; provided, however, that: (x) in the event such ending day is not a Banking Day, such period shall be extended to the next Banking Day unless such next Banking Day falls in the next calendar month, in which case it shall end on the preceding Banking Day; and (y) if there is no numerically corresponding day in the month, then such period shall end on the last Banking Day in the relevant month.

LIBOR MARGINS

Rate Product	Index	Spread Over Index in Basis Points
One Month	LIBOR	90 bps
Two Months	LIBOR	90 bps
Three Months	LIBOR	90 bps
Six Months	LIBOR	90 bps

(D) Treasury Option.  At a fixed rate equal to Applicable "Treasury" Margin per annum (as described in terms of basis points ("bps") in the chart immediately set forth below) above the "U.S. Treasury Rate" (as hereinafter defined). Under this option, balances of $2,000,000.00 or more may be fixed on or before for periods ranging from one year to the final maturity date of the loan, as selected by the Company. However, rates may not be fixed in such a manner as to require the Company to have to repay any fixed rate balance prior to the last day of its fixed rate period in order to pay any installment of principal. For purposes hereof, the "U.S. Treasury Rate" shall mean the yield to maturity on U.S. Treasury instruments having the same maturity date as the last day of the fixed rate period selected by the Company, as calculated from the bid price indicated by Telerate (page 5) at the time the rate is fixed. If, however, no instrument is indicated for the maturity selected, then the rate shall be interpolated based on the bid prices quoted for the next longest and shortest maturities so indicated. In the event Telerate ceases to provide such quotations or materially changes the form or substance of page 5 (as determined by CoBank), then CoBank will notify the Company and the parties hereto will agree upon a substitute basis for obtaining such quotations

TREASURY MARGINS

One Year	U.S.$ Constant Maturity Treasury ("US$CMT")	125 bps
Two Years	US$CMT	125 bps
Three Years	US$CMT	125 bps
Four Years	US$CMT	125 bps
Five Years	US$CMT	125 bps
Seven Years	US$CMT	140 bps
Ten Years	US$CMT	140 bps
Floor (Minimum) Margin (For One to Ten Year Fixed Rate Products Only)	CoBank's cost of funds (as reasonably determined by CoBank in its sole discretion)	105 bps

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    The spread over all of the above indices, including the Floor Margin, may increase or decrease for future fixed amounts based on the Borrower's previous fiscal quarter's leverage ratio, as follows:

Leverage Ratio (as defined below)		Increase / Decrease to Spread	Change to Libor and Treasury Margins (In Basis Points)
A.	Equal to or greater than 1.35:1.00	Increase	20
B.	Equal to or greater than 1.20:1.00, but less than 1.35:1.00	None	0
C.	Less than 1.20:1.00, but greater than or equal to 1.00:1.00	Decrease	10
D.	Less than 1.00:1.00	Decrease	20

    Leverage Ratio:  The Borrower will maintain a leverage ratio of not more than 1.50:1.0, and attain a leverage ratio of not more than 1.40:1.0 on November 30, 2002. Leverage ratio is long term debt (excluding current maturities) calculated in accordance with GAAP plus or minus the difference between actual working capital and minimum net working capital (as defined in the MLA No. Z269, Section 10), divided by total members investments plus the estimated unit retains.

    The spread shall be adjusted quarterly on the latter of either: (a) five business days after the Bank's receipt of the Borrower's certification of compliance with the leverage ratio, or (b) 30 days after the end of each calendar quarter.

    The Company shall select the applicable rate option at the time it requests a loan hereunder and may, subject to the limitations set forth above, elect to convert balances bearing interest at the variable rate option to one of the fixed rate options. Upon the expiration of any fixed rate period, interest shall automatically accrue at the variable rate option unless the amount fixed is repaid or fixed for an additional period in accordance with the terms hereof. Notwithstanding the foregoing, unless CoBank otherwise consents in its sole discretion in each instance, rates may not be fixed for periods expiring after the maturity date of the loans. In the event CoBank so consents and the Commitment is not renewed, then each balance so fixed shall be due and payable on the last day of its fixed rate period, and the promissory note set forth below shall be deemed amended accordingly. All elections provided for herein shall be made telephonically or in writing and must be received by 12:00 noon Company's local time. Interest shall be calculated on the actual number of days each loan is outstanding on the basis of a year consisting of 360 days and shall be payable quarterly in arrears by the 20th day of the following month.

    SECTION 5.  Promissory Note.  The Company promises to repay the loans that are outstanding in annual principal payments of $9,396,579.17 each due on or before December 31^st of each year through December 31, 2008, and a final principal payment due on or before December 31, 2009. All outstanding balances shall be repaid by December 31, 2009. If any installment due date is not a day on which CoBank is open for business, then such payment shall be made on the next day on which CoBank is open for business. In addition to the above, the Company promises to pay interest on the unpaid principal balance hereof at the times and in accordance with the provisions set forth in Section 4 hereof.

    The Company shall be permitted to make special payments, in a minimum amount of $388,500.00, on the variable rate portion of this loan, when all short term financing, including the Company's seasonal loans, Commodity Credit Corporation loans and other short term loans have been zeroed out. These special payments may be readvanced through the expiration date of the Commitment. Reinstatement may be denied and canceled at any time at the option of CoBank. The reinstatable commitments arising from such special payments shall be subject to the Commitment Fee as described in Section 8 below.

    SECTION 6.  Prepayment.  The loans may be prepaid in whole or in part on one CoBank business day's prior written notice. During the term of the Commitment, prepayments shall be applied to such balances, fixed or variable, as the Company shall specify. After the expiration of the term of the

3

Commitment, prepayments shall, unless CoBank otherwise agrees, be applied to principal installments in the inverse order of their maturity and to such balances, fixed or variable, as CoBank shall specify.

    SECTION 7.  Commitment Fee.  In consideration of the Commitment, the Company agrees to pay to CoBank a commitment fee on the average daily unused portion of the Commitment at the rate of 12.5 basis points per annum (calculated on a 360 day basis), payable quarterly in arrears by the 20th day following each calendar quarter. Such fee shall be payable for each calendar quarter (or portion thereof) occurring during the original or any extended term of the Commitment.

    SECTION 8.  Commitments Arising From Special Payments.  Commitments arising as a result of special payments described in Section 5 above shall be subject to a commitment fee of 25 basis points (0.25%) on an annualized basis, on the average daily commitment. Any such fees incurred shall be payable on the last day of the calendar quarter, in arrears, computed on the basis of a year of 360 days for the actual number of days elapsed in which such reinstatable commitments were outstanding.

    SECTION 9.  Security.  In addition to any other security that may otherwise be required or provided, the Company's obligations under this Supplement are secured by that Restated Mortgage and Security Agreement dated September 15, 1998, from American Crystal Sugar Company to St. Paul Bank for Cooperatives (now known as CoBank as a result of merger), as Collateral Agent.

IN WITNESS WHEREOF, the parties have caused this Supplement to be executed by their duly authorized officers as of the date shown above.

CoBANK, ACB		AMERICAN CRYSTAL SUGAR COMPANY
By:	/s/ CASEY GARTEN	By:	/s/ SAMUEL WAI
Title:	Vice President	Title:	Treasurer

4

Loan No. Z269T01NP

REVOLVING TERM LOAN SUPPLEMENT

THIS SUPPLEMENT to the Master Loan Agreement dated March 31, 2000 (the "MLA"), is entered into as of March 31, 2000, between CoBANK, ACB ("CoBank") and AMERICAN CRYSTAL SUGAR COMPANY, Moorhead, Minnesota (the "Company").

    SECTION 1.  The Revolving Term Loan Commitment.  On the terms and conditions set forth in the MLA and this Supplement, CoBank agrees to make loans to the Company during the period set forth below in an aggregate principal amount not to exceed $71,771,820.00 at any one time outstanding (the "Commitment"). Within the limits of the Commitment, the Company may borrow, repay and reborrow.

    SECTION 2.  Purpose and Transfer.  The purpose of the Commitment is to finance the operating needs of the Company and to renew, extend, and refinance the Company's obligations to CoBank under the Company's existing reinstatable term loan (the "Existing Reinstatable Term Loan") as currently evidenced by Note No. 31143NP (the "Note") entered into pursuant to the Term Loan Agreement dated March 5, 1999 (the "Existing Agreement"). The Company agrees that on the date when all conditions precedent to CoBank's obligation to extend credit hereunder have been satisfied: (a) the principal balance outstanding under the Existing Reinstatable Term Loan shall be transferred to and charged against the Commitment; (b) all accrued obligations of the Company under the Existing Reinstatable Term Loan for the payment of interest or other charges shall be transferred to and become part of the Company's obligations under this Supplement as if fully set forth herein; and, (c) the Note and the Existing Agreement (to the extent applicable to the Note) shall be deemed replaced and superseded, but the indebtedness evidenced by such Notes shall not be deemed to have been paid off, by this Supplement and the MLA.

    SECTION 3.  Term.  The term of the Commitment shall be from March 31, 2000, up to but not including March 31, 2001, or such later date as CoBank may, in its sole discretion, authorize in writing.

    SECTION 4.  Interest.  The Company agrees to pay interest on the unpaid balance of the loans in accordance with one or more of the following interest rate options, as selected by the Company:

(A) Variable Rate Option.  At a rate per annum equal at all times to the rate of interest established by CoBank from time to time as its National Variable Rate, which Rate is intended by CoBank to be a reference rate and not its lowest rate. The National Variable Rate will change on the date established by CoBank as the effective date of any change therein and CoBank agrees to notify the Company promptly after any such change.

(B) Quoted Rate Option.  At a fixed rate per annum to be quoted by CoBank in its sole discretion in each instance. Under this option, rates may be fixed on such balances and for such periods as may be agreeable to CoBank in its sole discretion in each instance.

(C) LIBOR Option.  At a fixed rate equal to "LIBOR" (as hereinafter defined) plus the Applicable LIBOR Margin per annum (as described in terms of basis points ("bps") in the chart immediately set forth below). Under this option: (a) rates may be fixed for "Interest Periods" (as hereinafter defined) of 1, 2, 3, and 6 months, as selected by the Company; (b) the minimum amount that may be fixed at any one time shall be $2,000,000.00; and (c) rates may only be fixed on a "Banking Day" (as hereinafter defined) or, at the option of the Company, on 2 Banking Days' prior notice. For purposes hereof: (i) "LIBOR" shall mean the rate indicated by Telerate (rounded upward to the nearest thousandth) as having been quoted by the British Bankers Association at 11:00 a.m. London time on the date the Company elects to fix a rate under this option for the offering of U.S. dollar deposits in the London interbank market for the Interest Period designated by the Company; (ii) "Banking Day" shall mean a day on which CoBank is open for business, dealings in U.S. dollar deposits are being carried out in the London interbank market, and banks are open for business in New York City and London, England; and (iii) "Interest Period" shall mean a period commencing on the day the Company elects to fix a rate under this option (or, at the option of the

1

Company, two Banking Days later) and ending on the numerically corresponding day in the next calendar month or the month that is 2, 3 or 6 months thereafter, as the case may be; provided, however, that: (x) in the event such ending day is not a Banking Day, such period shall be extended to the next Banking Day unless such next Banking Day falls in the next calendar month, in which case it shall end on the preceding Banking Day; and (y) if there is no numerically corresponding day in the month, then such period shall end on the last Banking Day in the relevant month.

LIBOR MARGINS

Rate Product	Index	Spread Over Index in Basis Points
One Month	LIBOR	90 bps
Two Months	LIBOR	90 bps
Three Months	LIBOR	90 bps
Six Months	LIBOR	90 bps

(D) Treasury Option.  At a fixed rate equal to the Applicable Treasury Margin per annum (as described in terms of basis points ("bps") in the chart immediately set forth below) above the "U.S. Treasury Rate" (as hereinafter defined). Under this option, balances of $2,000,000.00 or more may be fixed on or before for periods ranging from one year to the final maturity date of the loan, as selected by the Company. However, rates may not be fixed in such a manner as to require the Company to have to repay any fixed rate balance prior to the last day of its fixed rate period in order to pay any installment of principal. For purposes hereof, the "U.S. Treasury Rate" shall mean the yield to maturity on U.S. Treasury instruments having the same maturity date as the last day of the fixed rate period selected by the Company, as calculated from the bid price indicated by Telerate (page 5) at the time the rate is fixed. If, however, no instrument is indicated for the maturity selected, then the rate shall be interpolated based on the bid prices quoted for the next longest and shortest maturities so indicated. In the event Telerate ceases to provide such quotations or materially changes the form or substance of page 5 (as determined by CoBank), then CoBank will notify the Company and the parties hereto will agree upon a substitute basis for obtaining such quotations

TREASURY MARGINS

One Year	U.S.$ Constant Maturity Treasury ("US$CMT")	125 bps
Two Years	US$CMT	125 bps
Three Years	US$CMT	125 bps
Four Years	US$CMT	125 bps
Five Years	US$CMT	125 bps
Seven Years	US$CMT	140 bps
Ten Years	US$CMT	140 bps
Floor (Minimum) Margin (For One to Ten Year Fixed Rate Products Only)	CoBank's cost of funds (as reasonably determined by CoBank in its sole discretion)	105 bps

2

    The spread over all of the above indices, including the Floor Margin, may increase or decrease for future fixed amounts based on the Borrower's previous fiscal quarter's leverage ratio, as follows:

Leverage Ratio (as defined below)		Increase / Decrease to Spread	Change to Libor and Treasury Margins (in Basis Points)
A.	Equal to or greater than 1.35:1.00	Increase	20
B.	Equal to or greater than 1.20:1.00, but less than 1.35:1.00	None	0
C.	Less than 1.20:1.00, but greater than or equal to 1.00:1.00	Decrease	10
D.	Less than 1.00:1.00	Decrease	20

    Leverage Ratio:  The Borrower will maintain a leverage ratio of not more than 1.50:1.0, and attain a leverage ratio of not more than 1.40:1.0 on November 30, 2002. Leverage ratio is long term debt (excluding current maturities) calculated in accordance with GAAP plus or minus the difference between actual working capital and minimum net working capital (as defined in the MLA No. Z269, Section 10), divided by total members investments plus the estimated unit retains.

    The spread shall be adjusted quarterly on the latter of either: (a) five business days after the Bank's receipt of the Borrower's certification of compliance with the leverage ratio, or (b) 30 days after the end of each calendar quarter.

    The Company shall select the applicable rate option at the time it requests a loan hereunder and may, subject to the limitations set forth above, elect to convert balances bearing interest at the variable rate option to one of the fixed rate options. Upon the expiration of any fixed rate period, interest shall automatically accrue at the variable rate option unless the amount fixed is repaid or fixed for an additional period in accordance with the terms hereof. Notwithstanding the foregoing, unless CoBank otherwise consents in its sole discretion in each instance, rates may not be fixed for periods expiring after the maturity date of the loans. In the event CoBank so consents and the Commitment is not renewed, then each balance so fixed shall be due and payable on the last day of its fixed rate period, and the promissory note set forth below shall be deemed amended accordingly. All elections provided for herein shall be made telephonically or in writing and must be received by 12:00 noon Company's local time. Interest shall be calculated on the actual number of days each loan is outstanding on the basis of a year consisting of 360 days and shall be payable quarterly in arrears by the 20th day of the following month.

    SECTION 5.  Promissory Note.  The Company promises to repay the loans that are outstanding in annual principal payments of $7,603,420.83 each due on or before December 31^st of each year through December 31, 2008, and a final principal payment due on or before December 31, 2009. All outstanding balances shall be repaid by December 31, 2009. If any installment due date is not a day on which CoBank is open for business, then such payment shall be made on the next day on which CoBank is open for business. In addition to the above, the Company promises to pay interest on the unpaid principal balance hereof at the times and in accordance with the provisions set forth in Section 4 hereof.

    The Company shall be permitted to make special payments, in a minimum amount of $111,500.00, on the variable rate portion of this loan, when all short term financing, including the Company's seasonal loans, Commodity Credit Corporation loans and other short term loans have been zeroed out. These special payments may be readvanced through the expiration date of the Commitment. Reinstatement may be denied and canceled at any time at the option of CoBank. The reinstatable commitments arising from such special payments shall be subject to the Commitment Fee as described in Section 8 below.

    SECTION 6.  Prepayment.  The loans may be prepaid in whole or in part on one CoBank business day's prior written notice. During the term of the Commitment, prepayments shall be applied to such balances, fixed or variable, as the Company shall specify. After the expiration of the term of the

3

Commitment, prepayments shall, unless CoBank otherwise agrees, be applied to principal installments in the inverse order of their maturity and to such balances, fixed or variable, as CoBank shall specify.

    SECTION 7.  Commitment Fee.  In consideration of the Commitment, the Company agrees to pay to CoBank a commitment fee on the average daily unused portion of the Commitment at the rate of 12.5 basis points per annum (calculated on a 360 day basis), payable quarterly in arrears by the 20th day following each calendar quarter. Such fee shall be payable for each calendar quarter (or portion thereof) occurring during the original or any extended term of the Commitment.

    SECTION 8.  Commitments Arising From Special Payments.  Commitments arising as a result of special payments described in Section 5 above shall be subject to a commitment fee of 25 basis points (0.25%) on an annualized basis, on the average daily commitment. Any such fees incurred shall be payable on the last day of the calendar quarter, in arrears, computed on the basis of a year of 360 days for the actual number of days elapsed in which such reinstatable commitments were outstanding.

    SECTION 9.  Security.  In addition to any other security that may otherwise be required or provided, the Company's obligations under this Supplement are secured by that Restated Mortgage and Security Agreement dated September 15, 1998, from American Crystal Sugar Company to St. Paul Bank for Cooperatives (now known as CoBank as a result of merger), as Collateral Agent.

IN WITNESS WHEREOF, the parties have caused this Supplement to be executed by their duly authorized officers as of the date shown above.

CoBANK, ACB		AMERICAN CRYSTAL SUGAR COMPANY
By:	/s/ CASEY GARTEN	By:	/s/ SAMUEL WAI
Title:	Vice President	Title:	Treasurer

4

Loan No. Z269T02NP

REVOLVING TERM LOAN SUPPLEMENT

THIS SUPPLEMENT to the Master Loan Agreement dated March 31, 2000 (the "MLA"), is entered into as of March 31, 2000, between CoBANK, ACB ("CoBank") and AMERICAN CRYSTAL SUGAR COMPANY, Moorhead, Minnesota (the "Company").

    SECTION 1.  The Revolving Term Loan Commitment.  On the terms and conditions set forth in the MLA and this Supplement, CoBank agrees to make loans to the Company during the period set forth below in an aggregate principal amount not to exceed $20,000,000.00 at any one time outstanding (the "Commitment"). Within the limits of the Commitment, the Company may borrow, repay and reborrow, provided, however, no advances shall be made on this Term Loan, until Term Loan No. Z269T01, has been fully advanced.

    SECTION 2.  Purpose and Transfer.  The purpose of the Commitment is to finance the operating needs of the Company and to renew, extend, and refinance the Company's obligations to CoBank under the Company's existing reinstatable term loan (the "Existing Reinstatable Term Loan") as currently evidenced by Note No. 31144NP (the "Note") entered into pursuant to the Term Loan Agreement dated March 5, 1999 (the "Existing Agreement"). The Company agrees that on the date when all conditions precedent to CoBank's obligation to extend credit hereunder have been satisfied: (a) the principal balance outstanding under the Existing Reinstatable Term Loan shall be transferred to and charged against the Commitment; (b) all accrued obligations of the Company under the Existing Reinstatable Term Loan for the payment of interest or other charges shall be transferred to and become part of the Company's obligations under this Supplement as if fully set forth herein; and, (c) the Note and the Existing Agreement (to the extent applicable to the Note) shall be deemed replaced and superseded, but the indebtedness evidenced by such Note shall not be deemed to have been paid off, by this Supplement and the MLA.

    SECTION 3.  Term.  The term of the Commitment shall be from March 31, 2000, up to but not including March 31, 2001, or such later date as CoBank may, in its sole discretion, authorize in writing.

    SECTION 4.  Interest.  The Company agrees to pay interest on the unpaid balance of the loans in accordance with one or more of the following interest rate options, as selected by the Company:

(A) Variable Rate Option.  At a rate per annum equal at all times to the rate of interest established by CoBank from time to time as its National Variable Rate, which Rate is intended by CoBank to be a reference rate and not its lowest rate. The National Variable Rate will change on the date established by CoBank as the effective date of any change therein and CoBank agrees to notify the Company promptly after any such change.

(B) Quoted Rate Option.  At a fixed rate per annum to be quoted by CoBank in its sole discretion in each instance. Under this option, rates may be fixed on such balances and for such periods as may be agreeable to CoBank in its sole discretion in each instance.

(C) LIBOR Option.  At a fixed rate equal to "LIBOR" (as hereinafter defined) plus the Applicable LIBOR Margin per annum (as described in terms of basis points ("bps") in the chart immediately set forth below). Under this option: (a) rates may be fixed for "Interest Periods" (as hereinafter defined) of 1, 2, 3, and 6 months, as selected by the Company; (b) the minimum amount that may be fixed at any one time shall be $2,000,000.00; and (c) rates may only be fixed on a "Banking Day" (as hereinafter defined) or, at the option of the Company, on 2 Banking Days' prior notice. For purposes hereof: (i) "LIBOR" shall mean the rate indicated by Telerate (rounded upward to the nearest thousandth) as having been quoted by the British Bankers Association at 11:00 a.m. London time on the date the Company elects to fix a rate under this option for the offering of U.S. dollar deposits in the London interbank market for the Interest Period designated by the Company; (ii) "Banking Day" shall mean a day on which CoBank is open for business, dealings in U.S. dollar deposits are being carried out in the London interbank market, and banks are open

1

for business in New York City and London, England; and (iii) "Interest Period" shall mean a period commencing on the day the Company elects to fix a rate under this option (or, at the option of the Company, two Banking Days later) and ending on the numerically corresponding day in the next calendar month or the month that is 2, 3 or 6 months thereafter, as the case may be; provided, however, that: (x) in the event such ending day is not a Banking Day, such period shall be extended to the next Banking Day unless such next Banking Day falls in the next calendar month, in which case it shall end on the preceding Banking Day; and (y) if there is no numerically corresponding day in the month, then such period shall end on the last Banking Day in the relevant month.

LIBOR MARGINS

Rate Product	Index	Spread over Index in Basis Points
One Month	LIBOR	90 bps
Two Months	LIBOR	90 bps
Three Months	LIBOR	90 bps
Six Months	LIBOR	90 bps

(D) Treasury Option.  At a fixed rate equal to Applicable "Treasury" Margin per annum (as described in terms of basis points ("bps") in the chart immediately set forth below) above the "U.S. Treasury Rate" (as hereinafter defined). Under this option, balances of $2,000,000.00 or more may be fixed on or before for periods ranging from one year to the final maturity date of the loan, as selected by the Company. However, rates may not be fixed in such a manner as to require the Company to have to repay any fixed rate balance prior to the last day of its fixed rate period in order to pay any installment of principal. For purposes hereof, the "U.S. Treasury Rate" shall mean the yield to maturity on U.S. Treasury instruments having the same maturity date as the last day of the fixed rate period selected by the Company, as calculated from the bid price indicated by Telerate (page 5) at the time the rate is fixed. If, however, no instrument is indicated for the maturity selected, then the rate shall be interpolated based on the bid prices quoted for the next longest and shortest maturities so indicated. In the event Telerate ceases to provide such quotations or materially changes the form or substance of page 5 (as determined by CoBank), then CoBank will notify the Company and the parties hereto will agree upon a substitute basis for obtaining such quotations

TREASURY MARGINS

One Year	U.S.$ Constant Maturity Treasury ("US$CMT")	125 bps
Two Years	US$CMT	125 bps
Three Years	US$CMT	125 bps
Four Years	US$CMT	125 bps
Five Years	US$CMT	125 bps
Seven Years	US$CMT	140 bps
Ten Years	US$CMT	140 bps
Floor (Minimum) Margin (For One to Ten Year Fixed Rate Products Only)	CoBank's cost of funds (as reasonably determined by CoBank in its sole discretion)	105 bps

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    The spread over all of the above indices, including the Floor Margin, may increase or decrease for future fixed amounts based on the Borrower's previous fiscal quarter's leverage ratio, as follows:

Leverage Ratio (as defined below)		Increase/Decrease to Spread	Change to Libor and Treasury Margins (in Basis Points)
A.	Equal to or greater than 1.35:1.00	Increase	20
B.	Equal to or greater than 1.20:1.00, but less than 1.35:1.00	None	0
C.	Less than 1.20:1.00, but greater than or equal to 1.00:1.00	Decrease	10
D.	Less than 1.00:1.00	Decrease	20

    Leverage Ratio:  The Borrower will maintain a leverage ratio of not more than 1.50:1.0, and attain a leverage ratio of not more than 1.40:1.0 on November 30, 2002. Leverage ratio is long term debt (excluding current maturities) calculated in accordance with GAAP plus or minus the difference between actual working capital and minimum net working capital (as defined in the MLA No. Z269, Section 10), divided by total members investments plus the estimated unit retains.

    The spread shall be adjusted quarterly on the latter of either: (a) five business days after the Bank's receipt of the Borrower's certification of compliance with the leverage ratio, or (b) 30 days after the end of each calendar quarter.

    The Company shall select the applicable rate option at the time it requests a loan hereunder and may, subject to the limitations set forth above, elect to convert balances bearing interest at the variable rate option to one of the fixed rate options. Upon the expiration of any fixed rate period, interest shall automatically accrue at the variable rate option unless the amount fixed is repaid or fixed for an additional period in accordance with the terms hereof. Notwithstanding the foregoing, unless CoBank otherwise consents in its sole discretion in each instance, rates may not be fixed for periods expiring after the maturity date of the loans. In the event CoBank so consents and the Commitment is not renewed, then each balance so fixed shall be due and payable on the last day of its fixed rate period, and the promissory note set forth below shall be deemed amended accordingly. All elections provided for herein shall be made telephonically or in writing and must be received by 12:00 noon Company's local time. Interest shall be calculated on the actual number of days each loan is outstanding on the basis of a year consisting of 360 days and shall be payable quarterly in arrears by the 20th day of the following month.

    SECTION 5.  Promissory Note.  The Company promises to repay the loans that are outstanding in annual principal payments of $2,000,000.00 each due on or before December 31^st of each year commencing in 2001. All outstanding balances shall be repaid by December 31, 2009. If any installment due date is not a day on which CoBank is open for business, then such payment shall be made on the next day on which CoBank is open for business. In addition to the above, the Company promises to pay interest on the unpaid principal balance hereof at the times and in accordance with the provisions set forth in Section 4 hereof.

    SECTION 6.  Prepayment.  The loans may be prepaid in whole or in part on one CoBank business day's prior written notice. During the term of the Commitment, prepayments shall be applied to such balances, fixed or variable, as the Company shall specify. After the expiration of the term of the Commitment, prepayments shall, unless CoBank otherwise agrees, be applied to principal installments in the inverse order of their maturity and to such balances, fixed or variable, as CoBank shall specify.

    SECTION 7.  Commitment Fee.  In consideration of the Commitment, the Company agrees to pay to CoBank a commitment fee on the average daily unused portion of the Commitment at the rate of 12.5 basis points per annum (calculated on a 360 day basis), payable quarterly in arrears by the 20th day

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following each calendar quarter. Such fee shall be payable for each calendar quarter (or portion thereof) occurring during the original or any extended term of the Commitment.

    SECTION 8.  Letters of Credit.  In addition to loans, and if agreeable to CoBank in its sole discretion in each instance, the Company may utilize the Commitment to open irrevocable letters of credit for its account. Each letter of credit shall reduce the amount available under the Commitment by the maximum amount capable of being drawn thereunder. The rights and obligations of the parties with respect to each letter of credit will be governed by the Reimbursement Agreement attached hereto as Exhibit A (which rights and obligations shall be in addition to the rights and obligations of the parties hereunder and under the MLA). The fee for issuing each letter of credit shall be determined at the time of application.

    SECTION 9.  Security.  In addition to any other security that may otherwise be required or provided, the Company's obligations under this Supplement are secured by that Restated Mortgage and Security Agreement dated September 15, 1998, from American Crystal Sugar Company to St. Paul Bank for Cooperatives (now known as CoBank as a result of merger), as Collateral Agent.

IN WITNESS WHEREOF, the parties have caused this Supplement to be executed by their duly authorized officers as of the date shown above.

CoBANK, ACB		AMERICAN CRYSTAL SUGAR COMPANY
By:	/s/ CASEY GARTEN	By:	/s/ SAMUEL WAI
Title:	Vice President	Title:	Treasurer

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Loan No. Z269T03A NP

SINGLE ADVANCE TERM LOAN SUPPLEMENT

THIS SUPPLEMENT to the Master Loan Agreement dated as of March 31, 2000 (the "MLA"), is entered into as of April 21, 2000, between CoBANK, ACB ("CoBank") and AMERICAN CRYSTAL SUGAR COMPANY, Moorhead, Minnesota (the "Company"), and amends and restates the Supplement dated March 31, 2000 and numbered Z269T03NP.

    SECTION 1.  The Term Loan.  This Supplement is to evidence a term loan to the Company in the original principal commitment amount of $12,000,000.00 (the "Loan"). The Loan is currently evidenced by Note No. 30800NP (the "Note") and is subject to the terms of that certain Note Agreement dated December 5, 1994 by and among the Company, CoBank's predecessor (the St. Paul Bank for Cooperatives), and Bank of North Dakota (the "Note Agreement"). The outstanding principal balance of the Loan as of the date hereof is $7,200,000.00.

    SECTION 2.  Purpose and Transfer.  The purpose of this Supplement is to replace the Note and transfer the indebtedness evidenced thereby to this Supplement. As of the date of this Supplement, the Note shall be deemed replaced and superseded, but the indebtedness evidenced by such Note shall not be deemed to have been paid off, by this Supplement and the MLA. The Note Agreement shall remain in full force and effect except that any reference to the "Loan" shall be deemed to mean the indebtedness evidenced by this Supplement, and any reference to "Loan Agreement" shall be deemed a reference to the MLA. To the extent that the Note Agreement may be inconsistent with the terms of this Supplement or the MLA, the terms of the Note Agreement shall control. All security given to secure the Note shall secure this Supplement.

    SECTION 3.  Availability.  The date for permitting advances under the Note has expired. There is no further availability.

    SECTION 4.  Interest.  The Company agrees to pay interest on the unpaid balance of the Loan at such rate or rates as determined in accordance with the terms of the Note Agreement. As of the date hereof the interest rate is fixed at 6.34% per annum and shall remain fixed at such rate for the period as provided for in the Note Agreement. All other matters regarding the calculation and payment of interest shall be in accordance with the terms of the Note Agreement (including, without limitation, the terms applicable to prepayment of fixed rate loans prior to pricing maturity dates).

    SECTION 5.  Promissory Note.  The Company promises to repay the Loan in accordance with the repayment terms of the Note Agreement. If any installment due date is not a day on which CoBank is open for business, then such payment shall be made on the next day on which CoBank is open for business. In addition to the above, the Company promises to pay interest on the unpaid principal balance hereof at the times and in accordance with the terms of the Note Agreement. This note replaces and supersedes, but does not constitute payment of the indebtedness evidenced by, the promissory note set forth in the Supplement being amended and restated hereby.

    SECTION 6.  Prepayment.  Subject to the terms of the Note Agreement, the Loan may be prepaid in whole or in part on one CoBank business day's prior written notice.

    SECTION 7.  Security.  In addition to any other security that may otherwise be required or provided, the Company's obligations under this Supplement are secured by that Restated Mortgage and Security Agreement dated September 15, 1998, from American Crystal Sugar Company to St. Paul Bank for Cooperatives (now known as CoBank as a result of merger), as Collateral Agent.

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IN WITNESS WHEREOF, the parties have caused this Supplement to be executed by their duly authorized officers as of the date shown above.

CoBANK, ACB		AMERICAN CRYSTAL SUGAR COMPANY
By:	/s/ CASEY GARTEN	By:	/s/ SAMUEL WAI
Title:	Vice President	Title:	Treasurer

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Loan No. Z269T04

LETTER OF CREDIT COMMITMENT SUPPLEMENT.

THIS SUPPLEMENT to the Master Loan Agreement dated March 31, 2000 (the "MLA"), is entered into as of March 31, 2000, between CoBANK, ACB ("CoBank") and AMERICAN CRYSTAL SUGAR COMPANY, Moorhead, Minnesota (the "Company").

    SECTION 1.  The Letter of Credit.  On the terms and conditions set forth in the MLA, CoBank agrees to establish a loan commitment to the Company in an amount not to exceed $31,000,000.00 (the "Commitment"). The Commitment shall expire at 12:00 noon (Company's local time) on April 30, 2013 or on such later date as CoBank may, in its sole discretion, authorize in writing.

    SECTION 2.  Purpose.  The purpose of the Commitment is to reimburse CoBank in the event of draws on letters of credit issued by CoBank (or its predecessor) for the benefit of the Company, and to renew, extend and refinance the Company's obligations to CoBank under the Company's existing Letter of Credit Commitment ("Existing Letter of Credit Commitment") as currently evidenced by Note No. 30343 (the "Note") and the Loan Agreement dated March 5, 1999. (the "Existing Agreement"). The Company agrees that on the date when all conditions precedent to CoBank's obligation to extend credit hereunder have been satisfied: (a) the principal balance outstanding (or any obligations outstanding as a result of any letters of credit currently in effect) under the Existing Letter of Credit Commitment shall be transferred to and charged against this Commitment; (b) all accrued obligations of the Company under the Existing Letter of Credit Commitment for the payment of interest or other charges shall be transferred to and become part of the Company's obligations under this Supplement as if fully set forth herein; and, (c) the Note and the Existing Agreement (to the extent applicable to the Note) shall be deemed replaced and superseded, but the indebtedness evidenced by such Note shall not be deemed to have been paid off, by this Supplement and the MLA.

    SECTION 3.  Promissory Note.  The Company promises to repay all outstanding balances for advances made in support of outstanding letters of credit, upon demand

    SECTION 4.  Interest.  The Company agrees to pay interest on the unpaid principal balance of each loan, from the date of draw to actual repayment on a daily basis for the actual number of days any portion of the principal is outstanding. The unpaid principal balance shall bear interest at a rate per annum equal at all times to the rate of interest established by CoBank from time to time as its National Variable Rate, which Rate is intended by CoBank to be a reference rate and not its lowest rate. The National Variable Rate will change on the date established by CoBank as the effective date of any change therein and CoBank agrees to notify the Company promptly after any such change. Interest shall be calculated on the actual number of days each loan is outstanding on the basis of a year consisting of 360 days and shall be payable monthly in arrears by the 20th day of the following month.

    SECTION 5.  Issuance of Letters of Credit.  Each letter of credit issued shall reduce the amount available under the Commitment by the maximum amount capable of being drawn thereunder. The rights and obligations of the parties with respect to each letter of credit will be governed by the Reimbursement Agreement attached hereto as Exhibit A (which rights and obligations shall be in addition to the rights and obligations of the parties hereunder and under the MLA). The fee for issuing each letter of credit shall be determined CoBank at the time of issuance. The Company promises to repay the outstanding balance on the Commitment in full on demand, or if no demand is made, then any time on or before the Commitment expiration date.

    SECTION 6.  Security.  In addition to any other security that may otherwise be required or provided, the Company's obligations under this Supplement are secured by that Restated Mortgage and Security Agreement dated September 15, 1998, from American Crystal Sugar Company to St. Paul Bank for Cooperatives (now known as CoBank as a result of merger), as Collateral Agent.

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IN WITNESS WHEREOF, the parties have caused this Supplement to be executed by their duly authorized officers as of the date shown above.

CoBANK, ACB		AMERICAN CRYSTAL SUGAR COMPANY
By:	/s/ CASEY GARTEN	By:	/s/ SAMUEL WAI
Title:	Vice President	Title:	Treasurer

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(to be placed on Company letterhead)

AMERICAN CRYSTAL SUGAR COMPANY
COMPLIANCE CERTIFICATE

    To induce CoBank to make and continue making advances to the Company and to comply with and demonstrate compliance with the terms, covenants, and conditions of the Loan Agreement and all Supplements thereto, this financial statement is furnished to the Bank. The undersigned certifies that, (i) this statement was prepared from the books and records of the Association, is in agreement with them, and is correct to the best of the undersigned's knowledge and belief, and (ii) no event has occurred which, with notice or lapse of time, or both, might become an Event of Default under the Loan Agreement.

AMERICAN CRYSTAL SUGAR
Date	(Name/Title)

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[Form of Compliance Certificate]

American Crystal Sugar Company
Quarterly Compliance Certificate
Term and Seasonal Loans

Net Working Capital:

	a) Current Assets as measured in accordance with GAAP	$
	b) Current Liabilities as measured in accordance with GAAP	$
Net Working Capital (a-b)		$

Long-Term Debt Coverage:

Net Funds			Year 1		Year 2		Year 3
	a)	Unit retains	÷
	b)	Depreciation and amortization	+
	c)	Net income from non-member business and member business tax timing differences	+
	d)	Decrease in investments in other cooperatives (excluding subsidiaries)	+
	e)	Net revenue from the sale of stock	+
	f)	Increase in investments in other cooperatives (excluding subsidiaries)	(	)	(	)		(	)
	g)	Net loss from non-member business and member business tax timing differences	(	)	(	)		(	)
	h)	Provision for income tax	(	)	(	)		(	)
	i)	Members' investment retirements	(	)	(	)		(	)
		Sum (a through i)
			Average Net Funds				$	j
			Long-term Debt				$	k
			Ratio (k / j)					:1

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Long-Term Debt to Capitalization:

)

a)	Long-term debt (excluding current maturities) as determined in accordance with GAAP	$
b)	Total equity as measured in accordance with GAAP	$
c)	Capitalization (a ÷ b)	$
Long-Term Debt to Capitalization (a / c)		:1.0

Leverage Ratio (Term Pricing Only)

)

a)	Long-term Debt	$
b)	Actual Less Minimum Net Working Capital	$
c)	Adjusted Long-term Debt (a - b)	$
d)	Total Member Investment	$
e)	Estimated Unit Retains	$
f)	Adjusted Members Investment (d + e)	$
g)	Adjusted Leverage Ratio (c / f)	:1.0

Pricing Grid (Term Only)

A. › 1.35:1 B. 1.20:1 C. ‹ 1.20:1 D. ‹ 1.0:1

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QuickLinks

MASTER LOAN AGREEMENT
BACKGROUND
STATUSED REVOLVING CREDIT SUPPLEMENT
REVOLVING TERM LOAN SUPPLEMENT
REVOLVING TERM LOAN SUPPLEMENT
LIBOR MARGINS
TREASURY MARGINS
REVOLVING TERM LOAN SUPPLEMENT
LIBOR MARGINS
TREASURY MARGINS
SINGLE ADVANCE TERM LOAN SUPPLEMENT
LETTER OF CREDIT COMMITMENT SUPPLEMENT.
AMERICAN CRYSTAL SUGAR COMPANY COMPLIANCE CERTIFICATE

EX-10.28

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STATE OF MINNESOTA
POLLUTION CONTROL AGENCY
AND
DEPARTMENT OF NATURAL RESOURCES

IN THE MATTER OF THE
AMERICAN CRYSTAL SUGAR COMPANY
EAST GRAND FORKS, MINNESOTA STIPULATION AGREEMENT

I. Recitals

A.  PARTIES.

    The parties to this Stipulation Agreement (hereinafter "Agreement") are:

1.

The Minnesota Pollution Control Agency (hereinafter "MPCA");



2.

The Minnesota Department of Natural Resources (hereinafter "MDNR") and



3.

The American Crystal Sugar Company (hereinafter "ACSC").

B.  MPCA AUTHORITY.

    The MPCA is a statutory agency of the state of Minnesota charged with overall powers and duties to administer and enforce all laws, statutes, standards, rules, permits, and stipulation agreements relating to the prevention, control or abatement of water, air, noise, and land pollution and to the management, collection, treatment, transportation, storage and disposal of solid and hazardous waste in the state. This authority is specifically described in Minn. Stat. chs. 115, 115A, 115B, 115C, and 116 (1998). Unless otherwise specified in this Agreement, where this Agreement requires or allows the MPCA to take action, the Commissioner of the MPCA or her designee shall act on the MPCA's behalf. Where this Agreement refers to "Commissioner" it means the Commissioner of the MPCA, unless the Commissioner of the MDNR is specified.

C.  MDNR AUTHORITY.

    The MDNR is a statutory agency of the state of Minnesota charged with overall powers and duties to manage, protect and conserve all public lands, parks, timber, waters, minerals, wild animals, wild plants and other natural resources of the state, and to administer and enforce all laws, statutes, standards, rules, contracts, agreements and permits relating thereto. This authority is specifically described in Minn. Stat. chs. 83A through 103G (1998). Unless otherwise specified in this Agreement, where this Agreement requires or allows the MDNR to take action, the Commissioner of the MDNR or his designee shall act on the MDNR's behalf.

D.  RULES.

    The MPCA and MDNR, after legal notice and hearing, have adopted, filed in the Office of the Secretary of State, and published in the State Register, rules that have the force and effect of law and general application throughout the state of Minnesota.

E.  STATEMENT OF FACTS.

    The following constitutes a summary of the facts upon which this agreement is based. In executing this Agreement, ACSC is settling a disputed matter with the MPCA and does not admit either the violations alleged or the appropriateness of the penalty assessed by the MPCA. ACSC is committed to environmental protection, to compliance with all environmental laws, and to cooperation with the environmental regulatory agencies. None of the facts alleged in this Agreement shall be construed to constitute an

1

admission by ACSC with respect to any claim made by a person or entity who is not a party to this Agreement.

    1.  ACSC owns and operates a sugar beet processing facility at Highway 2 East, Polk County, East Grand Forks, Minnesota (hereinafter "Facility") which converts sugar beets to sugar and sugar products. The Facility consists of sugar beet collection and stockpiling areas, sugar beet processing and refining operations, an industrial wastewater treatment system, a storm water collection and treatment system, and a permitted industrial solid waste site (SW 434). The ACSC Facility is a hazardous waste generator (MND006174809). It collects hazardous waste on site at various locations and wastes are shipped off site for treatment and/or disposal.

    2.  ACSC generates wastewater and collects storm water that contains pollutants as a result of contact with various sources at its Facility. ACSC is required to manage, provide treatment for and discharge these waste streams in accordance with the terms of Minnesota statutes and rules pertaining to water pollution and, the terms and conditions of National Pollutant Discharge Elimination System/State Disposal System (NPDES/SDS) Permit Number MN0001937 (hereinafter "Permit") effective June 15, 1994 to the present.

    3.  In the spring of 1997, the Red River Valley including the East Grand Forks area, experienced extensive flooding. This flooding, plus above average precipitation during the winter and spring of 1997-98 caused the Facility to have unexpectedly large amounts of waste water in the spring of 1998.

    4.  In early March of 1998, ACSC requested permission to make a direct discharge of excess storm water. The MPCA denied this request. After consideration of other requests, the MPCA allowed the Facility to create a temporary holding pond between two existing lime ponds.

    5.  Due to rainfall in early June 1998, the temporary holding pond reached capacity. At some time before June 24, 1998, the berm of the temporary holding pond broke and waste water escaped from the Facility.

    6.  On June 24, 1998, the MPCA received a citizen report of dead fish and other aquatic species on Grand Marais Creek in Section 32 of Sullivan Township. The MPCA contacted the MDNR office in Bemidji, Minnesota to request an investigation of the reported kill.

    7.  On June 24, 1998, Conservation Officer Greg Spaulding arrived at the reported site, interviewed the resident and observed dead northern pike, sunfish, carp, suckers, crayfish and other aquatic organisms on the banks of the Grand Marais Creek. Officer Spaulding also observed an odor and a sheen on the creek. He then followed the creek upstream until he discovered black liquid flowing in from an east/ west drainage ditch and discharging into Grand Marais Creek in Section 32. Downstream of the point of discharge, Officer Spaulding observed the same black water, dead aquatic organisms and a similar odor. Observations on the Grand Marais Creek upstream of the discharge from the east/west drainage ditch, included clear water and no dead aquatic organisms. Officer Spaulding then traced the black effluent west, under U.S. Highway 2, south and the west again through ditches that led to the facility grounds of American Crystal Sugar Company. He observed the source of the black effluent to be coming from an area near the spent lime ponds at the ACSC Facility.

    8.  On June 24, 1998, Officer Spaulding retained two samples of the effluent, as directed by the MPCA, in the drainage ditch system prior to the Grand Marais Creek. An independent laboratory analyzed those samples and the results are as follows: Carbonaceous Biochemical Oxygen Demand concentrations of 6,957 and 4,800 mg/l, Chemical Oxygen Demand concentrations of 12,247 and 5,911 mg/l, Specific Conductance values of 6,693 and 5,975 umhos/cm, Ammonia concentrations of 22.7 and 37.3 mg/l, Total Phosphorous concentrations of 16.2 and 8.77 mg/l, Total Suspended Solids concentrations of 300 and 58 mg/l and Total Solids concentrations of 12,410 and 8,616 mg/l.

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    9.  At approximately 4:30 P.M. on June 24, 1998, MPCA contacted the Facility by phone and Officer Spaulding met with ACSC company officials, interviewed them, and investigated the area of concern inside of the Facility grounds. Officer Spaulding noted that a pump had recently been pumping water into a containment area between two spent lime ponds and the engine of the pump was hot to the touch. He also observed a breech in the north end of the containment area and effluent discharging from the containment area in the direction of the ditch system from which he earlier took samples of the black effluent. At approximately 6:30 p.m. the investigation was turned over to MPCA personnel.

    10.  MPCA personnel met with ACSC personnel to investigate the site on June 24, 1998. MPCA staff observed the containment area for storm water, the area of the breech, the pump used to pump storm water from a ditch to the containment area, and an agricultural field owned by ACSC directly to the south of the spent lime ponds.

    11. MPCA staff instructed ACSC officials to strategically plug any ditches prior to Grand Marais Creek to stop the flow and begin recovering all storm water from the ditch system between the containment area and the creek. At this time, MPCA staff instructed ACSC officials to report the release to the Minnesota Duty Officer since ACSC officials had not reported the spill.

    12. ACSC began work to plug the discharge from the Facility property to the drainage ditch and began pumping pooled water from the highway ditch back into the field ditch for recovery. Recovery work continued for several days.

    13. MPCA staff then began sampling for dissolved oxygen. Concentrations of dissolved oxygen in the released storm water were 0.78 mg/l, a concentration of 0.50 mg/l was discovered on the Grand Marais Creek downstream of the confluence with the released water, and 7.8 mg/l upstream of the confluence of the released storm water. Storm water from the City of East Grand Forks was also tested for dissolved oxygen which resulted in a reading of 7.68 mg/l.

    14. In accordance with Minn. Stat. §§ 97A.025, 97A.341, and 115.071, subd. 3(b), the MDNR Area Fisheries Manager determined that an estimated 351,640 fish were killed which included northern pike, crappie, brook stickleback, fathead minnow, black bullhead, white sucker and carp during this discharge incident. Based on restitution as determined by Minn. Stat. § 97A.345 and Minn. R. ch. 6133, the restitution values for these fish were determined to be $11,610.36. Numerous dead invertebrates and plants were also observed by MDNR investigators on June 24, 25 and 26, indicating that this was an extensive kill of in stream aquatic biota. The cost of the investigation to the MDNR was determined to be an additional $5,636.84 for a total of $17,247.20

    15. On September 24, 1998, the MPCA issued a Notice of Violation to ACSC to allege violations associated with the aquatic organism kill on June 24.

    16. On October 7, 1998, MPCA staff were notified of strong odors that had been occurring all summer in an agricultural field in Section 15 of Grand Forks Township, directly north of the City of East Grand Forks wastewater treatment ponds. The property consists of 120 acres of land. The site was used as a composting facility by R. J. Zavoral and Sons, a contractor hired by ACSC to do general maintenance work including, but not limited to, excavation work, dirt hauling, cleaning ponds and disposal of pulp and beet tailings. On October 8, 1998, MPCA staff investigated the site and found an area being used for application of waste sugar beet tailings and beet pulp. At the time of the inspection, the beet pulp was spread from one to two feet thick and beet tailings were piled up to five feet thick around a low area on the west side of the field. The area of the waste beet pulp and beet tailings had a very strong odor characteristic of waste sugar beet material. Run-off from the field was moving west into a ravine and was collecting in an oxbow area adjacent to the Red River of the North. The water run off from the field was very black and odiferous. The oxbow area eventually led to the Red River of the North.

    17. On October 18, 1998, MPCA staff obtained a sample from the direct run-off from the field. Results are as follows: the Carbonaceous Biochemical Oxygen Demand concentration was 19,218 mg/l, a

3

Total Suspended Solids concentration of 2,140 mg/l, a Specific Conductance value of 13,087 umhos/cm, a Total Phosphorous concentration of 26.7 mg/l, Ammonia-Nitrogen concentration of 182 mg/l and Total Kjeldahl Nitrogen concentration of 210 mg/l. At 11:30 a.m., MPCA staff took a sample of the pooled water in the oxbow and the results were as follows: a Carbonaceous Biochemical Oxygen Demand concentration of 1,758 mg/l, a Total Suspended Solids concentration of 180 mg/l, Specific Conductivity value of 3,128 umhos/cm, a Total Phosphorous concentration of 5.31 mg/l, Ammonia-Nitrogen concentration of 18.6 mg/l, and a Total Kjeldahl Nitrogen concentration of 36 mg/l.

    18. On October 9, 1998, ACSC officials were contacted regarding the field in Section 15. A discussion of management practices of the waste beet pulp and tailings took place and MPCA staff instructed ACSC officials to block the run-off from the field from entering the oxbow, pump all recoverable high strength water from the oxbow and bring the water to the facility for treatment. MPCA staff also instructed ACSC officials to spread the waste beet tailings and pulp in the field at agronomic rates.

    19. On October 19, 1998, a representative from Wenck and Associates, a consulting firm retained by Zavoral, called and explained the progress of the site in Section 15 and explained that 346,000 gallons of water were pumped from the oxbow into ACSC's wastewater treatment system between October 9, and October 15, 1998. A report from Wenck and Associates dated October 20, 1998, verified this information. ACSC submitted another report on November 9, 1998, that indicated that approximately 225 tons per acre of waste beet tailings were applied to the field in Section 15. At the time of the inspection, MPCA staff calculated an application rate as high as 1,600 tons/acre in some areas of the agricultural field in Section 15.

    20. On December 9, 1998, MPCA staff responded to a citizen complaint alleging that waste beet tailings and beet pulp were transported to a landfill area near the Red River of the North. After investigating the City of East Grand Forks Demolition Landfill, MPCA learned that waste beet tailings were hauled to an area referred to as "the pit" located in the NW1/4 of Section 27 in Grand Forks Township. The area referred to as "the pit" is located south of the East Grand Forks Demo Landfill, due west of the Grand Forks Cable T.V. communications tower and directly adjacent to the Red River of the North. MPCA staff discovered that as many as 11,000 tons of waste beet tailings were hauled in to this area since 1994, and most recently at least 50 tons were pushed towards the river. A characteristic sugar beet odor was present. An area of frozen water was present between the Red River of the North and the tailings. Subsequent phone calls with ACSC personnel revealed that ASCS contracted with R.J. Zavoral and Sons, Inc. of East Grand Forks, to among other things, haul the waste beet tailings to this area since 1994 and during the 1997/1998 sugar beet campaign. The section of land is currently "in care of" by RJ Zavoral and Sons, Inc. according to Polk County records. R.J. Zavoral and Sons, Inc. has a Polk County Conditional Use permit for a clay mining operation and a yard for recycling non-reinforced concrete and soil cement at the site.

    21. On June 21, 1999, MPCA staff inspected the Facility in response to an odor complaint. During the complaint investigation, MPCA staff observed that ACSC was hydraulically dredging a mud pond. The operation consisted of a hydraulic dredge pumping wastewater containing mud solids to an area located between Ponds 12 and 13. ACSC used this area to temporarily hold high strength storm water that discharged to the Grand Marais Creek during June 1998. During the inspection MPCA staff observed that ACSC had created two large berms on the north and south end of the area between Ponds 12 and 13. ASCS had filled the area with approximately 53,000 cubic yards of mud solids and 800,000 to 1,000,000 gallons of high strength wastewater from Mud Pond #2a, close to the capacity created in that area. MPCA staff instructed ACSC officials to discontinue this operation immediately because the area is not constructed in accordance with approved plans and specifications and is not permitted as a waste storage facility.

    22. Also during the investigation on June 21, 1999, MPCA staff observed construction activities related to a new wastewater treatment clarifier. ACSC officials stated that construction of the project

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began as early as March 3, 1999, and the clarifier tank construction was approximately 75 percent complete during the investigation. MPCA staff received the plans and specifications for this project on June 1, 1999, and had not approved the plans and specifications at the time of the investigation.

    23. On July 1, 1999, MPCA staff issued a letter informing ACSC of the alleged violations related to the activities discovered on June 21, 1999.

F.  ALLEGED VIOLATIONS.

    The MPCA and MDNR allege that ACSC violated the following fish and wildlife protection statutes and water quality and solid waste statutes, rules, and permit requirements:

1.  Minn. Stat. § 115.061 [DUTY TO NOTIFY AND AVOID WATER POLLUTION]

States in part "It is the duty of every person to notify the agency immediately of the discharge, accidental or otherwise, of any substance or material under its control which, if not recovered, may cause pollution of waters of the state, and the responsible person shall recover as rapidly and as throughly as possible such substances or material and take immediately such other action as may be reasonably possible to minimize or abate pollution of waters of the state caused thereby."

    ACSC failed to immediately notify the MPCA of a discharge of high strength storm water from a temporary containment area between Ponds 12 and 13 at its East Grand Forks facility. The discharge of high strength storm water began at least as early as Monday afternoon June 22, 1998. ACSC did not report the discharge from the temporary containment area until Wednesday June 24, 1998, after 7:00 p.m. when instructed by MPCA staff. Furthermore, ACSC failed to take immediate action to minimize pollution of waters of the state and failed to recover the high strength storm water as rapidly as possible. ACSC staff either observed and did not act upon or failed to observe that the high strength storm water was overflowing from the temporary containment area for at least 48 hours prior to ACSC recovering the remainder of the storm water after it was discharged from outside the temporary containment area.

2.  Minn. R. 7050.0210, Subp. 2 [GENERAL STANDARDS FOR DISCHARGES TO WATERS OF THE STATE; Nuisance conditions prohibited]

States, "No sewage, industrial waste, or other wastes shall be discharged from either point or nonpoint sources into any waters of the state so as to cause any nuisance conditions, such as the presence of significant amounts of floating solids, scum, visible oil film, excessive suspended solids, material discoloration, obnoxious odors, gas ebullition, deleterious sludge deposits, undesirable slimes or fungus growths, aquatic habitat degradation, excessive growths of aquatic plants, or other offensive or harmful effects."

    ACSC discharged between 1.8 and 2.4 million gallons of high strength storm water to waters of the state when the storm water breached the temporary holding area. The high strength storm water ultimately entered a borrow pit, the drainage ditch and then Grand Marais Creek, all of which are waters of the state. The discharge caused nuisance conditions in the township ditch and in Grand Marais Creek, including obnoxious odors, a visible film, material discoloration and aquatic habitat degradation. In addition, the discharge caused other harmful effects including the suppression of dissolved oxygen levels to a point that caused fish and other aquatic organisms in and around Grand Marais Creek to die.

3.  Minn. R. 7060.0600, Subp. 2 [STANDARDS: Prohibitions against discharge into the unsaturated zone]

States, "No sewage, industrial waste, or other pollutants shall be allowed to be discharged to the unsaturated zone or deposited in such place, manner, or quantity that the effluent or residue therefrom, upon reaching the water table, may actually or potentially preclude or limit the use of the underground waters as a potable water supply, nor shall any such discharge or deposit be allowed which may pollute the underground waters. All such possible sources of pollutants shall be monitored at the discharger's expense as directed by the agency."

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    On June 21, 1999, ACSC disposed of approximately 800,000 to 1,000,000 gallons of wastewater containing approximately 53,000 cubic yards of mud solids into such place, manner and quantity that the effluent or residue may reach the water table. The disposal of the waste may have polluted underground waters and was not approved by the MPCA.

4.  Minn. Rules 7001.1030, Subp. 1 [PERMIT REQUIREMENT AND EXEMPTIONS; Permit Required]

States "except as provided in subpart 2, no person may discharge a pollutant from a point source into the waters of the state without obtaining a National Pollutant Discharge Elimination System permit from the agency."

    ACSC failed to obtain an NPDES permit for the discharge of high strength storm water that caused a fish kill on Grand Marais Creek in Polk County, Minnesota.

    ACSC does have an NPDES/SDS permit (MN0001937) that authorizes the discharge of treated wastewaters to the Red River of the North pursuant to specific requirements. MPCA staff alleges that the discharge of high strength wastewater, which caused a fish kill in the Grand Marais Creek, was not authorized by the existing NPDES/SDS permit.

5.  NPDES/SDS Permit MN 0001937 Part II, A. 4. [MANAGEMENT REQUIREMENTS; Adverse Impact]

States in part "the Permittee shall take all reasonable steps to minimize any adverse impact to waters of the state resulting from effluent limitation violations from an unauthorized discharge."

    ACSC did not take all reasonable steps to minimize the impact of waters of the state from the discharge of high strength storm water, by failing to stop the overflow from the temporary containment area when it was first observed. Also, ACSC failed to stop pumping high strength storm water into the same holding area after the overflow first occurred.

6.  NPDES/SDS Permit MN 001937 Part II, A. 6. d. [Facilities Operation and Quality Control]

States in part "all waste collection, control, treatment, and disposal facilities shall be operated in a manner consistent with the following:

    The Permittee shall at all times maintain in good working order and operate as efficiently as possible all facilities or systems of control installed or used to achieve compliance with the terms and conditions of this permit. Proper operation and maintenance includes effective performance, adequate funding, adequate operator staffing and training, and adequate laboratory and process controls, including appropriate quality assurance procedures.

    ACSC failed to maintain in good working order and operate as efficiently as possible the temporary containment area for high strength storm water by allowing a release form the temporary containment area. ACSC continued to pump high strength storm water into the temporary containment area after an overflow, which ACSC employees observed, occurred from the area. Also, ACSC failed to adequately train its employees to maintain, operate, and inspect the temporary high strength storm water containment area.

7.  NPDES/SDS Permit MN 00-01937 Part II, A. 8. [System Reliability]

States in part "the Permittee is responsible for maintaining adequate safeguards to prevent the discharge of untreated or inadequately treated wastes at all times. The Permittee is responsible for insuring system reliability by means of alternate power sources, back-up systems, storage of inadequately treated effluent, or other appropriate methods of maintaining system reliability."

    By failing to adequately maintain and inspect the temporary high strength storm water containment area, ACSC did not ensure system reliability.

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8.  Minn. R. 7001.3050, Subp. 1 [PERMIT REQUIREMENTS]

States "Permit required. Except as provided in subpart 2, a solid waste management facility permit or permit modification is required to:

    A.  treat, store, process, or dispose of solid waste;

    B.  establish, construct, or operate a solid waste management facility; or

    C.  change, add, or expand a permitted solid waste management facility.

    During June 1999, as identified by an MPCA staff inspection on June 21, 1999, ACSC changed, added and expanded the permitted portion of the solid waste management facility by disposing of an unacceptable waste material in an area between two solid waste areas. The waste consisted of approximately 800,000 to 1,000,000 gallons of wastewater containing approximately 53,000 cubic yards of mud solids and was disposed of in the area between Ponds 12 and 13.

9.  Minn. R. 7035.0800 Subp. 1 [Collection and Transportation of Solid Waste]

States in part "The owner and occupant of any premises, business establishment, or industry and/or the refuse collection service are responsible for the satisfactory collection and transportation of all solid waste accumulated at the premise, business establishment, or industry to a solid waste disposal facility for which a permit has been issued by the agency, unless otherwise provided in these parts."

    ACSC failed to ensure that waste beet tailings and pulp generated at the Facility were adequately collected and transported to an Agency permitted facility.

10.  Minn. Stat. 115.07, Subd. 1 [Obtain Permit]

States in part that "it is unlawful for any person to construct, install or operate a disposal system, or any part thereof, until plans therefor shall have been submitted to the agency unless the agency shall have waived the submission thereof to it and a written permit therefor shall have been granted by the agency."

    ACSC failed to submit plans and specifications prior to the construction of a wastewater clarifier at the Facility. MPCA staff observed that construction of the clarifier was approximately 75% complete during an inspection on June 21, 1999. The construction began on March 3, 1999, however ACSC did not submit plans and June 1, 1999. The MPCA did not approve plans and specification prior to construction.

    Also, in June 1999, ACSC failed to submit plans and specifications of the disposal of wastewater containing mud solids in an area outside the permitted wastewater treatment facility.

11.  NPDES Permit MN0001937, Part II, A, 9. [Construction]

States "This permit only authorizes the construction of treatment works to attain compliance with the limitations and conditions of this permit, after plans and specifications for treatment facilities have been submitted to and approved in writing by the Commissioner prior to the start of any construction."

    ACSC failed to submit plans and specifications prior to the construction of a wastewater clarifier at the Facility. The construction began around March 3, 1999 while ACSC did not submit the plans and specification until June 1, 1999.

12.  NPDES Permit MN0001937 Part II. A. 5, b, and c [Changes in Discharge]

States in part;

    b.  Facility modification, additions, and/or expansions that increase plant capacity shall be reported to the Commissioner (Attn: Industrial Section, Water Quality Division) and this permit may then be modified or reissued to reflect such changes.

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    c.  Any anticipated change in the facility discharge, including any facility expansions, production increase, process modifications, new or modified industrial discharges, or changes in the quality of existing industrial discharges to the treatment system that may result in a new or increased discharge of pollutants shall be reported to the Commissioner (Attn: Industrial Section, Water Quality Division). Modification to the permit may then be made to reflect any necessary change in permit conditions, including any necessary effluent limitations for any pollutant not identified and limited herein.

    ACSC failed to notify the agency of the transport of wastewater containing mud solids from Mud Pond #2a into an area that is not permitted for wastewater storage/treatment or solid waste storage/disposal.

13.  MPCA Solid Waste Permit SW-434, Part I. D. [Waste Characteristics]

States in part "This permit does not authorize the placement of any other waste at the Facility unless permission is requested from and approval is given by the Commissioner. This permit does not authorize the placement of hazardous wastes."

    ACSC failed to notify the agency of the transport of wastewater containing mud solids from Mud Pond #2a into an area that is not permitted for wastewater storage/treatment or solid waste storage/disposal.

14.  Minn. Stat. § 97A.025 [OWNERSHIP OF WILD ANIMALS]

States "The ownership of wild animals of the state is in the state, in its sovereign capacity for the benefit of all the people of the state. A person may not acquire a property right in wild animals or destroy them, unless authorized under the game and fish laws, sections 84.09 to 84.15, or sections 17.47 to 17.498."

    Minn. Stat. § 97A.341, subd. 1 [LIABILITY FOR RESTITUTION] states, in part, "A person who kills, injures, or possesses a wild animal in violation of the game and fish laws is liable to the state for the value of the wild animal as provided in this section."

    Minn. Stat. § 97C.065 [POLLUTANTS IN WATER] states, in part, "A person may not dispose of any substance in state waters, or allow any substance to enter state waters, in quantities that injure or are detrimental to the propagation of wild animals or taint the flesh of wild animals."

    Minn. Stat § 115.071, subd. 3(b) [CIVIL PENALTIES] states, in part, "The defendant may be required to forfeit and pay to the state an additional sum to constitute just compensation for any loss or destruction of wildlife, fish or other aquatic life and for other actual damages to the state caused by an unauthorized discharge of pollutants."

    The discharge of storm waters containing pollutants into the environment destroyed fish and aquatic animals. Wild animals, including fish, belong to the state of Minnesota and persons who destroy wild animals without lawful authority are liable to the state for its value, Minn. R. ch. 6133 [DNR RESTITUTION VALUE FOR FISH AND WILDLIFE], as prescribed in Minn. Stat. § 97A.345 [RESTITUTION VALUE OF WILD ANIMALS], provides the restitution values to the state of the various wild animals (fish species) destroyed by ACSC's unlawful discharge of pollutants. ACSC is responsible to provide restitution to the state in the amount determined in accordance with these rules.

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II. AGREEMENT

    NOW, THEREFORE, the MPCA, MDNR, and ACSC hereby agree and stipulate as follows:

A.  PURPOSE OF AGREEMENT.

    The purpose of this Agreement is to resolve the violations alleged in paragraph I.F. of this Agreement. If there is any conflict between the terms of this Agreement and any permit issued to the ACSC, ACSC shall comply with the most restrictive term. In entering this Agreement, ACSC is settling a disputed matter between itself and the MPCA and MDNR and, except as expressly stated in II.C.2., does not admit that violations alleged in this Agreement occurred.

B.  ACSC REQUIREMENTS.

1.  Civil Penalty  ACSC agrees to pay Twenty-Seven Thousand and Two Hundred Eighty Dollars $27,280 to the MPCA as a civil penalty for the violations alleged in Part F within 30 days after the effective date of this Agreement. Payment of the penalty amount of $27,280 is to be by check or money order payable to the Minnesota Pollution Control Agency. The check should be mailed to: Loren Voigt, Enforcement Supervisor, North District, Minnesota Pollution Control Agency, 520 Lafayette Road, St. Paul, Minnesota 55155-4194.

    If ACSC fails to make timely payment, the MPCA may assess and the ACSC agrees to pay a late payment charge, in addition to the civil penalty, to be assessed as follows. Forty-five (45) days after the effective date of this Agreement, ACSC shall be obligated to pay a late charge in an amount equal to ten percent (10%) of the unpaid civil penalty. Sixty (60) days after the effective date of this Agreement, ACSC shall be obligated to pay an additional late charge in an amount equal to twenty percent (20%) of the unpaid civil penalty.

Supplemental Environmental Project.

a.  ACSC has proposed and the MPCA accepts the proposal to perform a Supplemental Environmental Project (SEP) at a cost to ACSC of One Hundred Thousand Dollars ($100,000). The SEP shall include the following:

    ACSC agrees to pay $100,000 to the West Polk County Soil and Water Conservation District (SWCD). This penalty amount shall be used as part of the Sand Hill River Restoration Project to improve water quality, fish migration and stream bank stabilization in a 10-mile stretch of the Sand Hill River in Polk County.

    ACSC understands that the actual cost to ACSC of the Project will be One Hundred Thousand Dollars ($100,000). ACSC agrees to expend the amount of money as described, and agrees that ACSC shall receive no payment or other compensation for the work performed in completion of the Project. ACSC shall maintain copies of all invoices, contracts, manifests, receipts, and any and all other documentation of the actual costs ACSC incurs in completing the Project.

b.  If the Project is abandoned prior to completion, ACSC shall pay to the MPCA the balance of the unused portion of the SEP as a penalty.

2.Reimbursement  ACSC agrees that within thirty (30) days after the effective date of this Agreement, ACSC shall pay for the reimbursement of the MDNR's costs related to this Agreement and including the restitution values for the fish killed in June of 1998. The payment of this sum shall be made payable to the "State of Minnesota" in the amount of $17,247.20 and tendered to the MDNR Commissioner, 500 Lafayette Road, St. Paul, MN 55155-4037.

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3.Stipulated Civil Penalties for Violations of this Agreement.  In the event that ACSC violates any specified provision or provisions of this Agreement, ACSC shall pay a stipulated civil penalty for each violation specified below in the following amounts.

    A.  $500.00 for each week or portion thereof that ACSC fails to complete an activity in accordance with the conditions, time schedules and deadlines contained in Paragraphs II.B.4., items a, b, c and d. Determinations of failure to complete required activities shall be made separately for each required act listed in Paragraphs II.B.4., items a, b, c and d.

    $5000.00 for each week or portion thereof that ACSC fails to complete an activity in accordance with the conditions, time schedules and deadlines contained in the MPCA staff approved Mud Solids Removal Plan and Mud Solids Management Plan contained in Paragraphs II.B.4, items e. and f. Determinations of failure to complete required activities shall be made separately for each required act listed in Paragraphs II.B.4., items e. and f.

    B.  If the MPCA Commissioner determines that ACSC has failed to comply with the requirements of Paragraph II.B.4, the MPCA Commissioner shall give written notice to ACSC of the failure and specify the provision of this Agreement with which ACSC has not complied. ACSC shall pay the required stipulated civil penalty within thirty (30) days after receipt of notification from the MPCA Commissioner that payment is due. Payment shall be by check made payable to the "State of Minnesota" and tendered to the District Manager, North District, MPCA, 520 Lafayette Road, St. Paul, Minnesota, 55155-4194. ACSC retains the right to dispute the factual basis for the MPCA Commissioner's determination that ACSC has failed to comply with the requirements of this Agreement. However, ACSC waives any rights it may have to challenge, on legal grounds, the requirements that it pay a civil penalty pursuant to Part II.B. of this agreement.

    C.  The payment of stipulated civil penalties pursuant to this paragraph shall not relieve ACSC of its obligation to comply with the terms and conditions of this Agreement and any related NPDES permit, and the MPCA does not waive its rights to enforce this Agreement or to seek redress for other violations of this Agreement.

4.  Requirements.

a.  Waste and By-Products Management Plan  Within thirty (30) days upon receiving comments from MPCA on the draft plan dated February 1999, ACSC shall develop and submit for approval a final Waste and By-Products Management Plan that outlines proper management of industrial solid wastes such as spoiled beets, beet tailings, beet pulp and related beet soils generated at the Facility. This plan has been submitted and this requirement completed.

    Within 30 days after execution of this Agreement, ACSC shall submit the applicable information for application of MPCA permits for regulated waste materials identified in the Waste and By-Products Management Plan.

    Immediately after execution of this Agreement, ACSC shall follow all land application guidelines as outlined in Attachment A of this Agreement until permits are issued for the land application management activities.

b.  Emergency Response and Contingency Plan  Within sixty (60) days after execution of this Agreement, ACSC shall develop a comprehensive Emergency Response and Contingency Plan (ERCP) to train its employees and outline actions that will be taken during a crisis event that occurs at the Facility. The ERCP shall include, but is not limited to, a training program and schedule to ensure that employees are familiar with and can respond to emergency situations at the facility as it pertains to their job responsibility, training to ensure that employees are adequately operating and maintaining waste management systems at the Facility, a list of emergency equipment available at the facility, specific response actions to

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potential emergencies, a list of emergency contacts and a schedule for updating the ERCP to ensure it is maintained and kept up to date.

c.  Wastewater and Storm Water Study  Within ninety (90) days after execution of this Agreement, ACSC shall conduct and submit an evaluation study of the company's wastewater and storm water transport, storage and treatment capabilities for the facility.

d.  Supplemental Environmental Project  Within one hundred eighty (180) days after execution of this Agreement, ACSC shall submit a report detailing the utilization of the $100,000 by the West Polk County SWCD. The report shall detail how the money was spent and when, along with the environmental improvements gained by the use of the penalty dollars.

e.  Mud Solid Removal Plan  Within thirty (30) days after execution of this Agreement, ACSC shall submit a plan for MPCA staff approval that addresses the removal and management of mud solids placed between Pond 12 and Pond 13. This plan shall include a method of removal, locations for proper placement of the mud solids and a schedule for implementation. ACSC shall commence implementation of the Mud Solids Removal Plan within 10 days upon receiving MPCA staff approval for those activities. Upon MPCA staff approval of the Mud Solids Removal Plan, the schedule for implementation shall become an integral and enforceable part of this Agreement and Stipulated Civil Penalties required by Part II.B.3. shall apply to violations of the approved schedule.

f.   Mud Solid Management Plan  Within ninety (90) days after execution of this Agreement, ACSC shall submit to MPCA staff for approval, a plan that addresses how the Company will manage mud solids generated at the East Grand Forks Facility. The plan may include such long-term options as mud presses, centrifuges or other methods of reducing, treating and managing mud solids at this facility. The plan shall include a schedule for implementation that will be completed prior to the 2000-01 sugar beet campaign. Upon MPCA staff approval of the Mud Solids Management Plan, the schedule for implementation shall become an integral and enforceable part of this Agreement and Stipulated Civil Penalties required by Part II.B.3. shall apply to violations of the approved schedule.

C.  GENERAL CONDITIONS.

1. Covenant Not to Sue.  With respect to ACSC, the MPCA and MDNR agrees not to exercise any administrative, legal or equitable remedies available to the MPCA and MDNR to address the violations alleged and described in Part F as long as ACSC performs according to and has complied with the terms, covenants and agreements contained in this Agreement. The MPCA and MDNR reserves the right to enforce this Agreement or take any action authorized by law, if ACSC fails to comply with the terms and conditions of this Agreement. Further, the MPCA and MDNR reserves the right to seek to enjoin violations of this Agreement and to exercise its emergency powers pursuant to Minn. Stat. § 116.11 (1998) in the event conditions or ACSC's conduct warrant such action. Nothing in this Agreement shall prevent the MPCA and MDNR from exercising these rights nor shall anything in this Agreement constitute a waiver of these rights.

    ACSC agrees to waive all claims it may now have, as of the effective date of this Agreement, under Minn. Stat. § 15.472 for fees and expenses arising out of matters leading up to and addressed in this Agreement.

2. Repeat Violations.  Federal and state environmental programs establish harsher penalties for violations of environmental laws or rules that constitute repeat violations. In a proceeding by the MPCA or MDNR to resolve violations, if any, occurring after the date of this Agreement, the MPCA may rely on the violations alleged in Paragraph I.F. for the purpose of (1) characterizing such future violations as repeat violations, and (2) determining appropriate penalties for those future violations. In any proceeding, ACSC may dispute both the MPCA's characterization of any future violations as repeat violations and the appropriateness of any penalty determination by the MPCA, but shall not dispute the existence of the

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violations alleged in this Agreement. The MPCA agrees to identify which violations occurring after the effective date of this Agreement it alleges to be repeat violations and how the repeat nature of the violations affects the penalty amount for such later violations.

3. Hold Harmless.  ACSC agrees to indemnify and save and hold the MPCA and the MDNR, their agents and employees, harmless from any and all claims or causes of action arising from or on account of acts or omissions of ACSC, their officers, employees, agents or contractors in carrying out the activities conducted pursuant to this Agreement; provided, however, ACSC shall not indemnify the MPCA or the MDNR nor save nor hold their employees and agents harmless from any claims or causes of action arising out of the acts or omissions of the MPCA, the MDNR, or their employees and agents. When ACSC is required to hold the MPCA or the MDNR harmless, ACSC shall have the right to participate in the defense against any claim or cause of action.

4. Remedies of the Parties.  The terms of this Agreement shall be legally enforceable by any party in a court of competent jurisdiction and the parties retain the right to assert any legal, equitable, or administrative right of action or defense which may be available by law in any proceeding to implement or enforce the terms of this Agreement.

5. Liability and Obligation.  Except as specifically set forth in paragraph II.C.1. of this Agreement, this Agreement shall not release ACSC from any liability or obligation imposed by Minnesota statutes, rules, permits or local ordinances now in effect or which may be adopted in the future.

6. MPCA Monitoring.  ACSC shall allow the MPCA or any authorized member, employee or agent thereof, upon presentation of credentials, access at reasonable times to ACSC property and facilities to obtain such information and documentation as authorized by Minn. Stat. §§ 116.091 and 115.04 (1998) which are relevant to making a determination that ACSC is in compliance with the terms of this Agreement. MPCA representatives entering upon ACSC properties or into ACSC facilities agree to comply with all company health and safety rules applicable to those properties or facilities, such as the wearing of eyeguards and hardhats.

7. Emergency Powers.  Nothing in this Agreement shall prevent the MPCA from exercising its emergency powers pursuant to Minn. Stat. § 116.11 (1998) in the event conditions warranting such action shall arise.

8. Successors.  This Agreement shall be binding upon ACSC and its successors and assigns, upon the MDNR and its successors and assigns, and upon the MPCA and its successors and assigns.

9. Continuing ACSC Obligation.  Should ACSC sell or otherwise convey or assign any of its rights, title or interest in the facilities or sites described in paragraph I.E.1 of this Agreement, such sale or other conveyance shall not release ACSC from any obligation imposed by this Agreement, unless the party to whom the right, title or interest was transferred or assigned agrees in writing to the terms of this Agreement and to fulfill the obligations of this Agreement and the MPCA approves such transfer or assignment. The MPCA's approval of any such transfer or assignment shall not be unreasonably withheld.

10. Amendments.  This Agreement may be amended at any time by written agreement of the parties.

11. Claims.  Nothing contained in this Agreement shall constitute a waiver by the MPCA or MDNR of any governmental immunity afforded by law, nor shall anything in this Agreement constitute a waiver or release by ACSC of any claims it may have against any party.

12. Duty to Inform.  Upon the discovery of any errors in any statement, representation or certification in any record, report, or other document filed or required to be submitted to the MPCA or made by the MPCA about ACSC and its operations, the parties shall immediately report these errors to the other parties.

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13. Resolution of Disputes.  The parties to this Agreement shall attempt to resolve disputes regarding the meaning of any part of this Agreement through an exchange of correspondence. If a dispute cannot be informally resolved with forty (40) days after one party notifies the other party of a dispute, the MPCA Commissioner shall issue a ruling on the disputed issue. Following issuance of this ruling, ACSC shall have 30 days in which to file a complaint seeking a declaratory judgment resolving the issue in dispute. If ACSC does not file a complaint in 30 days, ACSC agrees to comply with the MPCA Commissioner's interpretation of the disputed portions of this Agreement. Throughout any dispute resolution process, ACSC shall comply with all portions of this Agreement that the MPCA Commissioner determines are not in dispute.

14. Effective Date.  This Agreement shall be effective upon the date it is signed by the MPCA Commissioner.

15. Termination.  This Agreement shall terminate upon receipt by ACSC of written notice from the MPCA Commissioner that the Commissioner has determined that the requirements of this Agreement have been satisfactorily completed. ACSC may request that the Commissioner terminate this Agreement under this paragraph and may challenge, under paragraph 13, any decision of the Commissioner to continue this Agreement in effect.

16. Extension of Schedules.  ACSC may request an extension of time to complete any requirement set forth in Part II.B. by submitting that request in writing before the date on which the applicable requirement must be completed and by specifying the reason(s) why the extension is needed. A requested extension shall not be effective until approved by the MPCA, and the MPCA shall not unreasonably delay the review of or deny requests for extensions. The MPCA shall grant an extension, for such time as reasonable under the circumstances, if the request for the extension is timely and good cause exists for granting the extension. "Good Cause" includes, but is not limited to the following:

a.

Circumstances beyond the reasonable control of ACSC;



b.

Delays caused by the MPCA in reviewing submittals required by this Agreement which make it not feasible for ACSC to meet the required schedule; and



c.

Review resulting from the good faith invocation by ACSC of the resolution of disputes provisions of paragraph 13 of this Agreement, which review results in delays in implementation of this Agreement making it not feasible for ACSC to meet the required schedule.

ACSC may challenge, under paragraph 13 of this Agreement, the reasonableness of a decision by the MPCA to deny a request for an extension.

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    BY THEIR SIGNATURES BELOW, THE UNDERSIGNED REPRESENT THAT THEY HAVE AUTHORITY TO BIND THE PARTIES THEY REPRESENT, THEIR AGENTS AND CONTRACTORS.

AMERICAN CRYSTAL SUGAR COMPANY
East Grant Forks, Minnesota

 
BY:  /s/ James J. Horvath James J. Horvath,
Chief Executive Officer

 
Dated this 17 day of March, 2000

 
MINNESOTA DEPARTMENT OF NATURAL RESOURCES

St. Paul, Minnesota

 
BY:  /s/ Allen Garber Allen Garber,
Commissioner

 
Dated this 27 day of March, 2000

 
MINNESOTA POLLUTION CONTROL AGENCY
St. Paul, Minnesota

 
BY:  /s/ Gordon E. Wegwart Gordon E. Wegwart, P.E.,
Assistant Commissioner

 
Dated this 4th day of April, 2000

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Attachment A

    1.1 Plan for the sampling, analysis, and field equipment calibration. In order to allow more flexibility in how samples will be taken and address storage management and land application schedules, a plan for sampling, analysis, and field equipment calibration must be prepared and submitted for MPCA review and approval within 60 days of attachment issuance. This plan must address the following at a minimum:

a.

A description of how samples will be collected to ensure representative samples of the industrial by-product(s) land applied are obtained, with sampling locations identified, and a sampling schedule that will be followed.



b.

A list of all parameters that will be analyzed, the frequency they will be analyzed, maximum holding times, and preservation methods that will be used.



c.

The laboratory methods used for analysis and reporting limits necessary (supplied by MPCA and/or lab).



d.

A schedule and detailed procedure which will be followed for calibration of field equipment to determine actual application rates of industrial by-products.



e.

Example of record keeping forms that will be used for sampling, analysis, and equipment calibration.



f.

Position of the person(s) responsible for sampling and calibration of field equipment.

2.  Soil Testing Requirements / Limits

    Soil testing must be conducted on each site that an industrial by-product is land applied before the site is used for the first time and each cropping year the site is used. A minimum of one composite sample per site is required. On sites, which are greater than 40 acres in size, a minimum of one composite sample is required per 40 acres of area. Soil samples must be collected and analyzed prior to industrial by-product application for the parameters listed in Table 3. If any limits in Table 3 are exceeded, the site shall not be used for land application.

Table 3. Soil analysis requirements and associated limits.

Parameter	Units	Sample Type	Limit
Soil Texture	USDA	Composite(1)	NA
PH	Standard units	Composite(1)	NA
Organic Matter	Percent	Composite(1)	NA
Exchangeable Phosphorous	ppm	Composite(1)	200(2)
Extractable Potassium	ppm	Composite(1)	NA
Soluble Salts	mmhos/cm	Composite(1)	4

(1)

The composite shall consist of a mixture of 15-20 sub-samples taken in the plow layer.

(2)

The soil test method used for this determination is the Bray P-1 test.

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    3.3. The separation distances in Table 6 shall be maintained on all land application sites.

Table 6. Minimum separation distances from the land application site.

		Separation Distances in Feet
Feature		Surface Applied	Incorporated Within 48 Hours	Injected
Private drinking water supply wells		200	200	200
Public drinking water supply wells		1000	1000	1000
Down gradient lakes, rivers, streams, type 3, 4, and 5 wetlands, intermittent streams, or tile inlets connected to these surface water features(1), and sinkholes	Slope 0% to 6%   Slope 6% to 12%   Winter (0% to 2%)	300   Not Allowed   600	50   100   Not Applicable	50   100   Not Applicable
Grassed Water Ways(2)	Slope 0% to 6% Slope 6% to 12%	100 Not Allowed	33 33	33 33

(1)

Intermittent stream means a drainage channel with definable banks that provides for runoff flow to any of the surface waters listed in the above table during snow melt or rainfall events.

(2)

Grassed waterways are natural or constructed and seeded to grass as protection against erosion. Separation distances are from the centerline of grassed waterways. For a grassed waterway which is wider than the separation distances required, application is allowed to the edge of the grass strip.

    3.4 In addition to the separation distances required by Table 7, the additional separation distances in Table 8 must be maintained from the application site for Type 3 Industrial By-Products.

Table 7.  Additional minimum separation distances from application sites for Type 3 Industrial By-Products.

Feature	Surface Applied	Incorporated Within 48 Hours	Injected
Residences(1)	200 feet	200 feet	100 feet
Residential development(1)	600 feet	600 feet	300 feet
Public contact site	600 feet	600 feet	300 feet

(1)

This distance may be reduced with written permission from all persons responsible for residential developments, places of recreation, and all persons inhabiting residence within the designated separation distance.

6.  End User Information

    For each site used for land application of an industrial by-product the end user must receive at a minimum the information necessary to meet the requirements of this attachment. This includes information such as actual nutrient application rates, any restrictions on the industrial by-product use, crop restrictions, etc. The end user must be provided with this information in writing as soon as possible and in no case more than 6 weeks after application has been completed. End users should take appropriate credits for all plant nutrients supplied by industrial and municipal by-products, manure, and fertilizers so that maximum allowable application rates are not exceeded.

2

7.  Site Management, Limitations, and Restrictions

7.1.  Nitrogen supplying industrial by-products.

    The requirements in 7.1.a through c of this section are only applicable to industrial by-products that supply 25 pounds per acre or more of available nitrogen to any site during a cropping year. This section does not apply to Tare 2 materials.

a.

Total available nitrogen.  The total quantity of nitrogen available for crop uptake during the cropping year will be the sum of available organic nitrogen, ammonia nitrogen, and nitrate nitrogen as determined in items 1), 2), and 3) that follow.

1)

Available organic nitrogen - The available organic nitrogen shall be determined by one of the methods in items a), b), or c) that follow.

a)

The total quantity of organic nitrogen present in the industrial by-product will be considered 100 percent available during the cropping year it is applied (see attachment for calculations).

b)

The total quantity of potentially mineralizeable nitrogen will be considered to be 100 percent available during the cropping year it is applied. The potentially mineralizeable nitrogen is determined by conducting a laboratory incubation study.

c)

The total quantity of organic nitrogen available will be the total quantity of organic nitrogen mineralized in the cropping year it is applied and any organic nitrogen mineralized from previous years' applications (carry over nitrogen) as determined by conducting a field mineralization study. The field mineralization study will determine the rate and quantity of organic nitrogen mineralized during the cropping year it is applied and the

7.2.  Maximum Application Rates for Specific Industrial By-Products.

a.

The maximum application rate allowed for Tare 1, Beet Piling Site Cleanup, Weeds, Spoiled Beets, Off-Specification Beet Pulp, and Stormwater Sediment is 100 tons per acre. This rate cannot cause other application rate limits within this attachment to be exceeded.

b.

The maximum application rate allowed for Tare 2 materials is 6 inches per acre per year. This application rate may be increased with MPCA written approval. In order to obtain this approval, American Crystal Sugar shall submit a plan for evaluating the effects the increased application rates have on the environment and the soils where applied. This plan must be reviewed and approved by the MPCA in writing prior to conducting the evaluation. Once results of the evaluation are completed, American Crystal Sugar shall submit a summary of the evaluation and a request for changing the maximum application rate allowed if justified by the evaluation. Written MPCA approval must be obtained prior to increasing application rates for the Tare 2 materials.

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QuickLinks

I. Recitals
II. AGREEMENT
Attachment A

EX-27

 


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