Refinery near national park avoids potential big roadblock

BISMARCK, N.D. — North Dakota regulators decided Wednesday that they don't have authority to wade into a dispute over the site of an oil refinery being developed near Theodore Roosevelt National Park, eliminating a potential big roadblock for the $800 million project.

The 3-0 vote by the Public Service Commission was based on a technicality in state law and came after an administrative law judge told the group its hands were tied. It's unlikely to end debate over whether the Davis Refinery site 3 miles (5 kilometers) from the park is too close to the state's top tourist attraction.

"Our decision today is not about whether this is an appropriate location to construct a refinery," Commission Chairman Randy Christmann said.

Meridian Energy Group in June got state Health Department permission to begin construction, and ground work at the site got underway in July . Health Department approval wasn't based on the site but on a determination after a 1 1 ½-year review that the refinery wouldn't be a major source of pollution and wouldn't negatively impact the park.

The National Parks Conservation Association, the Environmental Law and Policy Center and the Dakota Resource Council are challenging that conclusion in court . The ELPC and DRC also filed a complaint with the Public Service Commission , challenging the site and asking the commission to order a work stoppage there.

Under state law, oil refineries with a capacity of 50,000 or more barrels need to obtain a site permit from the PSC, a process that involves public hearings and can take half a year or longer to complete.

Meridian initially told the media, investors and government officials that the refinery would have a capacity of 55,000 barrels, but the company later lowered the figure to 49,500.

Administrative Law Judge Patrick Ward in a nonbinding recommendation urged the PSC to dismiss the complaint, noting that Meridian CEO William Prentice signed an affidavit saying the company has "no current plans" for any expansion beyond 49,500 barrels per day. Ward said that size of a facility is not big enough to warrant PSC review under state law.

"Our decision today is not about whether or not the Davis Refinery is extremely close to the 50,000-barrel-per-day threshold, because the law says nothing about being close," Christmann said. "It either is or it is not over the threshold."

Meridian has denied trying to skirt state law , but Commissioner Julie Fedorchak said "all indications suggest that the company is developing plans to avoid the additional regulatory scrutiny required of a siting permit."

She said she expects the Legislature next year to discuss whether the 50,000-barrel threshold is appropriate, though Christmann noted that lowering it wouldn't necessarily stop future projects from being designed just below the new limit.

Meridian hopes to begin operating the refinery in 2020. It still needs state water and wastewater permits, and it will need to prove once the refinery is built that it meets air quality standards.

Meridian in a statement Wednesday credited the PSC with "careful consideration of this matter" and said the company was "very appreciative" of the decision. The two environmental groups in a joint statement criticized the PSC for trusting the company "at its word" and said it was considering taking the matter to court.

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Follow Blake Nicholson on Twitter at: http://twitter.com/NicholsonBlake

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