High court asked to throw out oil refinery permit

Wednesday - 10/3/2012, 7:39pm EDT

By DIRK LAMMERS
Associated Press

SIOUX FALLS, S.D. (AP) - Opponents of a proposed $10 billion oil refinery in southeastern South Dakota on Wednesday asked the state Supreme Court to strike down a state permit that would let a Texas company to begin construction.

Gabrielle Sigel, an attorney for three groups fighting the Hyperion Energy Center, said the Board of Minerals and Environment erred when it approved an air quality permit last year because its study did not include a full-blown environmental impact statement.

Sigel said the refinery would be the largest industrial project in state history and that the preparation of an impact statement should involve other agencies and evaluate a project's broader effect. State officials abused their discretion by bypassing that process, she said.

Attorneys for Hyperion and the board countered that an environmental impact statement is not required by state law that and board members took into account all relevant environmental issues when issuing the air quality permit.

The state Department of Environment and Natural Resources can require an impact statement but decided it wasn't necessary. "The board agreed," said Rick Addison, a Dallas-based attorney representing Hyperion.

The Supreme Court is expected to issue a written ruling at a later date.

Hyperion's proposed refinery north of Elk Point would process 400,000 barrels of Canadian tar sands crude oil each day into low-sulfur gasoline, diesel, jet fuel and liquid petroleum gas. It would be the first U.S. oil refinery built since 1976.

The project would include a power plant that produces electricity for the refinery. It would convert a byproduct of the refinery process _ solid petroleum coke _ into gas that would be burned to produce electricity.

Dallas-based Hyperion contends that the refinery would be a clean, modern plant that would use the most advanced, commercially feasible emission control technology.

The Sierra Club and two local groups, Save Union County and Citizens Opposed to Oil Pollution, argue the refinery could emit too much pollution and damage the quality of life for nearby residents in the rural area.

Hyperion had thousands of acres of land-purchase options in Union County secured for the refinery, but the company failed to extend them on Sept. 30. Vice President Preston Phillips said the company is still talking to landowners, but is committed to the project and its March construction start deadline.

"We're confident we can reach an agreement with them," he said after the hearing.

Hyperion officials have said that efforts to secure financing are progressing but they have not provided details.

Ed Cable, of Save Union County, said he thinks letting the options slip marks the end of the project, as the company now has no place to build.

"They will not get land control and have to start over," he said.

The Board of Minerals and Environment originally issued an air quality permit in August 2009 that called for construction to begin by Feb. 20, 2011, but company officials said the project was delayed because the recession caused problems in securing financing.

The original permit also was appealed in court, and the board issued a revised permit in September that reflected updated national air quality standards and new pollution-control technology. The revised permit also gives Hyperion until March to start construction.

Robert Graham, an attorney for the opposition groups, argued that the board was wrong to extend the deadline for construction to begin.

But Addison said the company took the right step in seeking revisions to the original permit and an extension of the construction deadline and did it in a timely manner.


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