State board dismisses appeal of Delaware City Refinery's ethanol project
An appeal of DNREC's decision to approve the Delaware City Refinery's planned Ethanol Marketing Project failed Monday before it could begin.
The Coastal Zone Industrial Control Board voted 5-1 to toss the case, ruling the two civic groups that brought the appeal did not show their members would suffer direct harm from the project.
The decision meant the board never got to hear the arguments raised by the Delaware Audubon and the League of Women Voters or the counterclaims offered by DNREC and the refinery.
"We're disappointed in the result," said lawyer Ken Kristl, who represented the civic groups. "I'm just going to say that."
Once the state board issues a written decision, the groups will have 30 days to appeal the ruling to Delaware Superior Court. Kristl, however, was not ready to say Monday whether his clients will pursue the case further.
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"We'll assess what the board says and how they justify their decision to determine whether or not we're going to appeal," he said.
The $7 million Ethanol Marketing Project would allow the Delaware City-area refinery to receive and store 10,000 barrels of ethanol a day before shipping the unblended gasoline additive to other facilities along the East Coast. Currently, the refinery brings in about 2,000 barrels of ethanol by rail, which is then blended with gasoline produced at the facility.
With about 550 direct employees, the Delaware City Refinery is among the state's largest industrial employers and refinery owner PBF Energy has claimed that adding the ability to sell unblended ethanol to other refineries is crucial for the facility to “remain economically viable in the highly competitive refining industry.”
Environmentalists see the project as yet another step in what they say is PBF’s plan to transform the refinery into a hub-and-spoke transportation business – a belief reinforced by the company’s repeated statements to shareholders.
Despite environmentalists objections, DNREC Secretary David Small issued a key permit to the refinery in December that allowed the project to move forward.
A few weeks later, the Delaware Audubon and League of Women Voters filed an appeal to have Small’s decision declared a violation of Delaware’s 45-year-old Coastal Zone Act. Enacted in 1971 under Republican Gov. Russell Peterson, the act sought to protect land bordering the Delaware River, Delaware Bay and the state’s Atlantic Coast from the encroachment of heavy industrial development.
The appeal cited seven reasons why the civic groups believe the permit should be reversed. Chief among them is a claim that the refinery’s ethanol project would amount to precisely the sort of bulk product transfer facility specifically barred by the state's landmark environmental zoning law.
None of those arguments were heard Monday.
Instead, the hearing began with a lawyer for the Delaware City Refinery raising questions about the civic groups' legal standing to bring the appeal. To prove standing, the civic groups had to show their members would be negatively affected by the project – impacts that only could be relieved by a reversal or amendment to the Coastal Zone permit DNREC granted the refinery in December.
Members of the Delaware Audubon blasted Monday's decision, claiming the state board has created an unmeetable standard for who can bring appeals that effectively prevents citizens from challenging state regulators.
"That's a deliberate effort to screw the little guys," said David Carter, who previously led Delaware Audubon after retiring a two-decade career with DNREC. "The Industrial Control Board has repeatedly and cowardly refused to look at the merits of a case. They should all resign in shame. [Gov.] John Carney needs to step up with integrity and clean up this mess."
In an attempt to show a direct impact and prove their legal standing, a trio of Audubon members testified for nearly two hours about the increased train and barge traffic they believe the $7 million project would create, along with the potential for spills and other environmental impacts.
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But refinery attorney Bart Cassidy of the Pennsylvania law firm Manko, Gold, Katcher & Fox noted that the refinery has repeatedly stated the movement of additional ethanol would replace some existing crude oil shipments, resulting in zero net impact to train and barge traffic.
Audubon members said they do not trust refinery officials to keep that promise. They cited a 2013 permit issued by then-DNREC Secretary Colin O'Mara that allowed PBF to ship crude oil by barge from Delaware City to another refinery it owns in Paulsboro, New Jersey.
That permit limited those shipments to Paulsboro alone. Yet late last year, PBF officials said it had made multiple crude shipments to at least one other refinery in 2014. As a result, the company is now facing fines and other sanctions from DNREC.
Cassidy, however, said any activity by the refinery beyond what it has proposed as a part of the Ethanol Marketing Project are hypothetical and conjecture. Without evidence that their members would face direct negative consequences tied to each of the arguments raised in the appeal, the civic groups failed to show they had adequate legal standing to bring an appeal, he argued.
"You heard the witness repeatedly state, 'I don't know if there is going to be an increase [in train and barge traffic],' " he told the board. "The only evidence in this record relating to the amount of train and barge movement specifically supports the conclusion that there will be no increase."
Five of the six board members in attendance agreed with Cassidy's argument, resulting in the case being dismissed. Three members of the nine-member body were not present.
"We are pleased the Coastal Zone Board granted Delaware City Refining Company's motion to dismiss the appeal for lack of standing," said PBF Energy spokeswoman Lisa Lindsey. "This reinforces our previously-stated position that DNREC clearly acted within its legal authority when the agency granted the refinery a permit to ship ethanol across its docks. "
DNREC's lawyers, meanwhile, chose to sit out arguments on the question of whether the civic groups had standing to appeal the decision.
"We were prepared to make our arguments on the merits of the case because we believe we made the right decision," DNREC Secretary David Small said after the hearing.
The result of Monday's hearing mirrors the outcome of an appeal the Delaware Audubon and the local chapter of the Sierra Club filed with the Coastal Zone Industrial Control Board over the 2013 permit DNREC issued to the refinery.
In that case, O'Mara allowed the refinery's crude oil barge shipments to Paulsboro under an air quality permit. The Audubon and the Sierra Club appealed that decision, arguing the refinery should have been required to seek a permit under the Coastal Zone Act.
The board ruled the groups' members lacked standing to challenge DNREC's decision. The state Superior and Supreme courts later upheld that decision.
Cassidy also represented the refinery in that case while Kristl served as attorney for the environmental groups.
Contact business reporter Scott Goss at (302) 324-2281, sgoss@delawareonline.com or on Twitter @ScottGossDel.