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Published March 26, 2012, 09:00 AM

Veblen dairy fire cause 'undecided'

FARGO, N.D. — Five months after a fire that gutted the headquarters building of the Shortfoot Calf Ranch near Veblen, S.D., a final South Dakota Fire Marshal’s office report shows a general location for its start but an “undecided” cause.

By: Mikkel Pates, Agweek

FARGO, N.D. — Five months after a fire that gutted the headquarters building of the Shortfoot Calf Ranch near Veblen, S.D., a final South Dakota Fire Marshal’s office report shows a general location for its start but an “undecided” cause.

On March 20, State Fire Marshal Paul Merriman told Agweek that his office had issued a final report on Nov. 18. Steve Harford, a deputy fire marshal based in Clear Lake, S.D., completed the report.

“We were not able to pinpoint a cause for that particular fire,” Merriman tells Agweek. He confirmed that Harford had been aided by Brett Spencer, a special agent with the state Bureau of Criminal Investigation, and by former local fire chief Kerry Anderson, but that he expected there would be no separate BCI report. “I believe Steve prepared the only report,” Merriman says.

Shortfoot is a facility for dairy calves, and is partly owned by Rick Millner of Veblen, who was at the center of a collection of dairy businesses managed by Prairie Ridge Management Co. Several of those businesses, including Veblen East and Veblen West dairies filed for Chapter 11 bankruptcies. Some of the minority shareholders of MCC Dairy, the predecessor to Veblen West, recently appealed a civil case against MCC Dairy, alleging that its officers were engaged in self-dealing and improperly dissolved

Meanwhile, Veblen Fire and Rescue Chief Phillip Mertens and Frank Gustafson, the department’s secretary-treasurer, in a recent interview with Agweek, said they had not received a report on the fire from the state fire marshal’s office. “They said on larger fires it takes awhile to do the assessment,” Gustafson says. “There was a lot of stuff in it.” Typically, the local fire department writes an incident report, but that hasn’t been done because the marshal’s office report wasn’t available.

Anderson, who is a former employee of Millner’s dairy operations, was fire chief of the 12-person Veblen Fire and Rescue department. He was involved in the investigation but resigned as chief on Dec. 12 and did not return several phone messages from Agweek. Mertens says Anderson remains on the fire department, which responds to fires in four townships.

South end of the north

Shortfoot Calf Ranch is located three miles north and three-quarters of a mile east of Veblen. There were about 700 to 800 head of calves on the premises at the time of the fire, Millner estimated. No animals were hurt in the fire. According to the Harford report, the ranch raises calves to about 15 months of age. Heifers are placed with a dairy (formerly Veblen East) and/or sold to any other dairies that may need some production replacements. The steers are sent for slaughter.

According to Harford’s report, the burned building, built in 2008, had served as the main office, equipment storage, milk replacement mixing, employee lounge and calf feed storage. The offices are at the south and the equipment storage area on the north. The office area was 40 by 20 feet. The north garage area was 70 by 40 feet and another north building was 50 by 40 feet, and held calf feed supplement, an electric forklift, pallet movers, a skid loader, hot water heaters, laundry and a lounge. There were two, 1,000-gallon propane tanks on the northeast corner of the building, and two more 500-gallon tanks, as well as a large horizontal diesel fuel tank.

In his report, Harford said he thought the fire originated in the “the south end of the section of the building that housed the feed storage and just to the north of the portion of the building that housed the motorized equipment,” but couldn’t “determine its exact cause at this time.” Merriman redacted, or masked, parts of the report for unspecified reasons, citing a general law that could cover several explanations.

Former chief Anderson at the time, told Harford he thought the fire started in the north central part of the building. He said Juan “Chino” Costa, the last person in the building at 11 to 11:30 p.m. the night before, reported the fire to his boss, Jorden Hill, one of the owners, at 6:15 a.m. when Costa “came to the site to start his work day.”

Anderson called the fire marshal for assistance at 7:30 a.m. on Nov. 3 because neither he nor the owners had any idea what might have happened to cause the fire. Harford arrived at about 9:45 a.m. He met with owners Jorden Hill and Jay Hill, but Millner wasn’t available. Neither Hill brother had any idea as to what may have caused the fire, Harford wrote in the report.

Fire after layoffs

“Neither could think of anyone that would want to see their place ‘burn’ when I inquired of them about that as a potential cause,” Harford says. “They had laid some employees off about a week before, but they thought it was under favorable terms as they didn’t have enough calves to warrant the additional help needed. Most of their employees are Hispanic and don’t speak very good English.”

Investigators found nothing to indicate the fire originated outside the building, which was unlocked for employee access. The structure was not equipped with any fire detection or suppression systems, the report says.

The company had been supplying animals to large dairies at Veblen that had been run by Prairie Ridge, but had lost that business to the new owners, based in Morris, Minn.

In his report, Harford said Jeff Wassom, an adjuster with QBE Farmers Union Insurance told him the company was sending its own private origin and cause investigator to the scene. (QBE originally was Queensland, Bankers & Traders, and Equitable, of Australia, and acquired Farmers Union Insurance in 2005.)

Millner, in an interview with Agweek, says there are “rumors” and speculation about how the fire started, and whether it may have been set intentionally.

He initially estimated the value of the facility and its equipment was $300,000 to $400,000. On March 21, Millner said the calf ranch headquarters would be rebuilt and construction could start in “about a week.”

Millner says the facility currently holds about 1,500 head of animals, including about 500 to 600 wet calves, in Quonsett-style buildings apart from the headquarters.

Prairie Ridge Management, which has been headquartered in a building in Veblen, was in the process of moving its headquarters to the calf ranch, which is a few miles north of town. Millner says no Prairie Ridge records had been moved to the facility. He says Prairie Ridge moved out to a headquarters building that originally was a cheese plant, because they no longer own it as of mid-October. Instead, they temporarily moved into the Veblen American Legion building in January because of the fire. The company lost some computers, but there were duplicate records off-site, so no records were lost, he says.

Millner and his Prairie Ridge Management entities were the subject of an Agweek series in early September, embroiled in regulatory, legal and financial woes. One of those dairies was the former Excel Dairy in Thief River Falls, Minn.

Prairie Ridge still manages the Ramona, S.D., facility (400 head), as well as Five Star Dairy at Milnor, N.D. (1,625 head), and New Horizons Dairy (1,275 head) at Hoffman, Minn., Millner says. They still have 55 employees, including 15 at Veblen, Millner says.

Millner says the Five Star Dairy has been reorganizing successfully, paying back $1 million to secure creditors and making its first $50,000 installment to unsecured creditors in January, even in a time of poor returns for dairies. He maintains that if creditors had “acted in their own best interests” in the other dairies, financial reorganizations would have worked there, too.