A Pacific white-legged shrimp raised at Tru Shrimp's Balaton facility in Balaton, Minn. is seen Monday, Nov. 26, 2018 in Balaton, Minn. To the right, is tru Shrimp president and CEO, Mike Ziebell. Tru Shrimp., the Minnesota company that has pioneered indoor shrimp farming surprised state and local officials by picking South Dakota as the location for its first production facility, citing a Minnesota environmental regulation. (Aaron Lavinsky/Star Tribune via AP)

A Pacific white-legged shrimp raised at Tru Shrimp's Balaton facility in Balaton, Minn. is seen Monday, Nov. 26, 2018 in Balaton, Minn. To the right, is tru Shrimp president and CEO, Mike Ziebell. Tru Shrimp., the Minnesota company that has pioneered indoor shrimp farming surprised state and local officials by picking South Dakota as the location for its first production facility, citing a Minnesota environmental regulation. (Aaron Lavinsky/Star Tribune via AP)

MINNEAPOLIS (AP) — A Minnesota company that has pioneered indoor shrimp farming surprised state and local officials by picking South Dakota as the location for its first production facility, citing a Minnesota environmental regulation.

The mayor of Luverne, the southwestern Minnesota city of about 5,000 that was the $45 million facility’s intended location, calls the decision by Tru Shrimp Co . “a gut shot” that blindsided city officials.

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“I understand it was a business decision and they’ve got to do what they’ve got to do, but we had no previous interaction with Tru Shrimp that suggested the regulatory issue was going to be a real problem,” Mayor Pat Baustian told the Star Tribune .

Groundbreaking was expected this summer at the Luverne site. In November, the board of the Balaton, Minnesota-based company gave final approval for the facility, which Tru Shrimp calls a harbor, on 67 acres (27 hectares) outside Luverne. The state of Minnesota had invested nearly $2 million to build roads and utilities to the site while Luverne invested $600,000.

But Tru Shrimp executives recently discovered a Minnesota environmental rule about water discharge could have delayed construction by one to three years.

“Our timeline is to build a harbor in 2019,” Tru Shrimp chief executive Michael Ziebell said Tuesday. He said the company could not afford to wait for the discharge issue to be resolved.

Tru Shrimp now plans to break ground in Madison, South Dakota, about 74 miles (119 kilometers) northwest of Luverne, in June. Both towns are on the Lewis & Clark Regional Water System , which serves southeastern South Dakota, northwestern Iowa and southwestern Minnesota.

Former South Dakota Gov. Dennis Daugaard attended Tru Shrimp’s announcement Friday, his last day in office. The project got a $6.5 million low-interest loan from the Governor’s Office of Economic Development and the Heartland Consumers Power District , the Argus Leader reported .

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Tru Shrimp has $800,000 invested in the Luverne site, Ziebell said, and will consider the town for one of the two other production sites the company aims to build in the next five years.

“I understand how disappointed they were — and possibly angry. We are not trying to abandon Luverne,” Ziebell said. “I’m hoping we can build the bridges and work together in the near future.”

At issue is an administrative rule designed in the 1960s, before the company’s indoor aquaculture technology existed. Because the facility plans to use reverse osmosis to filter the water, Ziebell said the mineral level in discharged water would be more concentrated and exceed the standards of the Minnesota Pollution Control Agency.

“Our business model is built on sustainability and the irony is this problem has nothing to do with the saltwater” that is typically the environmental concern for indoor shrimp operations, Ziebell said.

New MPCA Commissioner Laura Bishop said Tru Shrimp’s decision surprised and disappointed the agency.

“Our staff communicated clearly with Tru Shrimp for an extended period of time, to help facilitate their development plans,” Bishop said in a statement. “We recognize the value of economic development across Minnesota and we are committed to economic growth while protecting clean water. We look forward to working with future Tru Shrimp projects.”

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Information from: Star Tribune, http://www.startribune.com