We’ll See You in Court

At the end of the meeting between Meridian Energy Group executives and the North Dakota Public Service Commission a couple weeks ago, Commission President Randy Christmann pretty much told William Prentice, Meridian CEO and the man who wants to build an oil refinery next to Theodore Roosevelt National Park, that the next time they meet will probably be in a courtroom.

“I expect when you break ground, somebody’s going to bring a complaint,” Christmann said. “You could be in court a long time.”

And Commission member Julie Fedorchak added “There are a lot of compelling reasons why you should go through our siting process. In the long run it would be much better for you to have completed that process.”

Prentice’s reply: “We’re going to comply with the law.”

And later he told a reporter “In the private sector, we very seldom look for excuses to have another regulatory layer on what we’re trying to do,”

What an asshole.

As you probably know from reading about that refinery, which Meridian plans to put alongside I-94 just east of the Park, the company is doing everything it can to just slide past legal impediments to its plans.

By claiming to be a “minor” source of pollution, Meridian takes a short route past the State Health Department’s Air Quality Permit process. As a result, the Health Department is just one public meeting away from issuing a “Permit to Construct.”

By telling the PSC they are only going to be processing 49,500 barrels of oil per day (bpd), they skirt the Public Service Commission’s 50,000 bpd threshold for undergoing a site review to determine if this is a good place for a refinery. So the PSC has no legal authority to keep the refinery from being built near the national park.

That makes Fedorchak and fellow Commissioners Christmann and Brian Kroshus very unhappy.

“It’s really a mixed message from the company,” Fedorchak says. “They’re telling us one thing directly and telling a whole bunch of other audiences something very different.”

To wit, this statement from Prentice on Meridian’s website early last year:  “We fully expect that the finalized refinery will be well above 55,000 barrels per day in capacity.”

That’s what Prentice and Meridian are telling potential lenders and investors. Maybe it’s time to get the North Dakota Securities Commissioner’s office involved.

So that’s where we are today, as we begin 2018, the year in which Meridian says it will build a refinery just three miles from the national park named for our country’s greatest Conservation President.

Meridian came to North Dakota in 2016 and told us they were going to build an oil refinery in Billings County that will process 55,000 barrels of oil a day. They’re going to build it in two phases, they said, of 27,500 barrels each, in rapid succession. Then they found out they have to go through a site review by the PSC if they’re going to process more than 50,000 bpd. They changed their story, saying they are only going to process 49,500 barrels per day. How blatant is that? I’m surprised they’re not saying 49,999 bpd. Hey, they’d be one barrel within the limits of the law!

The State Water Commission (actually, the State Engineer’s office) received Meridian’s request for a water permit to take enough water out of the ground for the refinery to process 55,000 bpd. After reading Meridian’s website and press releases, they decided to grant a permit for just 90 percent of Merdian’s request, which might keep them from processing more than the 50,000 barrels per day threshold set by the laws governing the PSC’s siting process. So what’s 90 percent of 55,000? 49,500. The Water Commission’s math gives them, in theory, just enough water to process 49,500 barrels of oil per day. Now isn’t that convenient?

According to a Bismarck Tribune story from last summer, “Meridian requested enough water for use in a refinery that can process 55,000 barrels of oil per day. However, the company has told the Public Service Commission it plans to build a facility to process 27,500 barrels of oil per day and has not applied for a siting permit from the agency. A capacity of 50,000 barrels per day triggers a requirement for PSC approval.”

That lit up a light bulb at Meridian. Hey, if we change our story one more time, and tell the PSC we’re going to use 49,500 barrels a day, we’re under their threshold, and we don’t ever have to go through their siting process.

So, thanks, Water Commission staff, for planting that seed.

To be fair, Water Commission staffer Kimberly Fischer expressed some regrets about the permit, telling the Tribune “While there may be an impact to visitors’ experiences due to the construction of a refinery, it is outside of the authority of the state engineer to deny a water permit application due to the visual impact of having an industrial development near a national park.”

Hmmm. I’m trying to decide the difference between granting only part of a request for a water permit and not granting it at all. Both seem pretty arbitrary to me. State law says the state engineer needs to consider the effect of granting a water permit on “public recreational opportunities” (like a nearby national park?) or “harm to other persons resulting from the proposed appropriation” (like ruining the visitor experience at the national park?). I might be able to make a pretty good case that those two things are not “outside the authority” for denying the permit based on those two parts of NDCC 61-04-06.

But right now, the jurisdiction of the other two agencies—the State Department of Health and the Public Service Commission—are foremost in everyone’s minds. PSC Chairman Christmann had some harsh words for Meridian’s CEO, Prentice, and his bevy of lawyers. Not only did he pretty much say “We’ll see you in court,” at the end of the December meeting, but he started the meeting by telling the Meridian team “You’re not under oath today, but we are recording this meeting so it can be used as evidence if we have a case, so tell the truth.”

And Fedorchak actually drew a chuckle from the audience with a comment that was a little bit snarky: “I don’t see what’s special about this that makes it look any different than any refinery I’ve driven by, which I want to get by as soon as possible.”

The Health Department, meanwhile, is in the midst of a public comment period on its decision to issue an Air Quality “Permit to Construct” the refinery. The agency’s scientists and engineers have reviewed the numbers Meridian used in its application for the permit, and they apparently believe that they can run the refinery in that location and not affect Theodore Roosevelt National Park’s Class I Air Status.

If that’s the case, I told the Health Department’s Terry O’Clair, the director of the Department’s Air Quality Division, in a letter this week, he’s probably about the only one on the face of the earth who believes them. Because their record is so riddled with changing numbers and cover-up stories that very few people believe anything they say anymore.

“Listen, Director O’Clair,” I said in my letter (you can read the whole thing below if you want to), “if their record of using any number that is convenient in any given situation to justify their project is not enough to convince you that the numbers they provided you in their application cannot be trusted, then Heaven help North Dakota. Because we certainly can’t count on the North Dakota Department of Health.”

Before the Health Department can issue the final “Permit to Construct,” it is accepting public comments and will have a public meeting to discuss the project. I hope that everyone who reads this will write a letter and attend the meeting. The meeting is in Dickinson State University’s largest auditorium, in May Hall, on Wednesday, January 17, at 5:30 pm MST. The deadline for submitting letters is January 26. The address is at the top of my letter, below. You have until January 26 to send your letter, so you can write it now, or you can wait and attend the public meeting and then react to that in your letter. In any case, send a letter!

All of the documents associated with the permit are on the Health Department’s website. There are hundreds of pages of documents. No one can be expected to read them all before the public meeting. I scanned through them. They are dated November 30, 2017. Just about exactly five weeks ago. This paragraph jumped out at me:

“The facility is planned to be constructed in two phases; however, for air quality permitting purposes the impact of the entire planned project was taken into consideration. Upon completion of Phase 1, the Davis Refinery will have the capacity to process an annual average of approximately 27,500 barrels (bbl) per day of crude oil. Upon completion of Phase 2, the capacity will increase to 55,000 bbl per day of crude oil. The crude oil feedstock is expected to be generated from the North Dakota Bakken formation.”

That paragraph is part of the “Air Quality Effects Analysis for Permit to Construct” written by David Stroh, an environmental engineer with the Health Department’s Division of Air Quality. So what that means is the Health Department’s analysis of the refinery’s impact on our state’s air quality is indeed based on a refinery processing 55,000 barrels of oil per day, not the 49,500 Meridian now claims. A minor point perhaps, but maybe not. Because Meridian can reassure potential investors and lenders they have been approved by the North Dakota Department of Health to process 55,000 barrels of oil per day. That last ten percent might just be important to money people.

Further, the ENTIRE Permit to Construct issued by the Department of Health is based on a refinery capable of processing 55,000 barrels of crude oil per day. Meridian officials are now flashing the permit in front of money people, especially the front page of the massive document, which reads:

3. Source Type: Petroleum Refinery with a rated capacity of up to approximately 55,000 barrels of crude oil per day.

Just click here for a quick look at that front page.

No wonder the Public Service Commission is pissed off. They’re being duped. It would seem to me that a phone call is in order, from Randy Christmann, chairman of the PSC, to Terry O’Clair, director of the Air Quality Division of the Health Department. “Hey, Terry, you’re about to give Meridian an Air Quality Permit to construct a 55,000 bpd refinery, but they were in our office three weeks ago and said it was only 49,500. You should probably change the permit.”

Back last summer I wrote on this blog that Meridian is the sleaziest company to show up in North Dakota since the beginning of the Bakken Boom. They’re proving me right. I’ve said all along that everyone wants an oil refinery in North Dakota, just not there, beside our national park. I’m going to add one more caveat to that statement: Not that company, either. Not Meridian. They’ve proven they have no North Dakota values. They don’t belong here—anywhere—in our state.

Here’s the letter my wife Lillian and I sent to the Health Department.

Terry L. O’Clair, P.E.

Director

Division of Air Quality

North Dakota Department of Health

918 East Divide Ave,

Bismarck, ND 58501-1947

January 2, 2018

Dear Director O’Clair,

We have looked through the Permit To Construct issued by your agency to Meridian Energy Group to build the Davis Oil Refinery three miles from Theodore Roosevelt National Park (or as you describe it, approximately 2 miles west of Belfield) in Billings County, North Dakota.

We are not scientists, so we have no scientific basis from which to challenge your decision to issue the permit. But we are avid readers, and cautious conservationists, so we have followed news reports about this project, and have carefully reviewed Meridian’s website, including all of its news releases and its stock offering documents for prospective investors in the project.

You, on the other hand, are a scientist, so you have some basis for making a decision on whether this project will adequately meet the standards set by the National Environmental Protection Act to protect North Dakota’s environment and Theodore Roosevelt National Park’s Class I Air Quality.

At the end of the draft permit you issued to Meridian, in a section called “General Conditions,” you state: “This permit is issued in reliance upon the accuracy and completeness of the information set forth in the application.”

With those words, your department says that you are relying on them to provide complete and accurate information about what they will do to North Dakota’s air, which you are charged with protecting.

If your agency believes Meridian is providing you with “complete and accurate information,” then you are probably about the only people on the face of the earth who believe them. Because their record is so riddled with changing numbers and cover-up stories that very few people believe anything they say anymore.

We’re not going to go into the long list of discrepancies—27,500, 55,000, 49,500 bpd—and how their story changes depending on which agency of state government they are trying to bamboozle, or which lender or investor they are trying to suck in. You have seen those changing stories. You already know that the numbers in their permit application are pure speculation, untested by science. And you believe them?

Listen, Director O’Clair, if their record of using any number that is convenient, in any given situation, to justify their project, is not enough to convince you that the numbers they provided you in their application cannot be trusted, then Heaven help North Dakota. Because we certainly can’t count on the North Dakota Department of Health.

Meridian is still telling investors that they are building a 55,000 bpd refinery and it will be in operation in early 2018. But now they’re giving North Dakota government agencies different numbers and saying they hope to have the refinery operative sometime in 2019. Perhaps it’s time to be talking to the State Securities Commissioner.

Former Theodore Roosevelt National Park Superintendent Valerie Naylor told a reporter last year that one of the problems with regulation of this refinery is North Dakota state government hasn’t taken a broader look at the project. She’s right. State government agencies need to review the project as a cooperating group, not just as individual agencies charged with examining specific parts of the project, such as water, emissions, and location. Superintendent Naylor said “You have to look at the whole picture. The whole project is more than the sum of its parts.”

What’s most troubling, we think, is Meridian’s obvious consistent pattern of avoiding serious scrutiny of their project by North Dakota government. By applying for a Synthetic Minor Source Air Quality Permit they are avoiding serious scrutiny from you. And by artificially setting their new production projection at 49,500 bpd, they are avoiding serious Public Service Commission scrutiny.

Even North Dakota Public Service Commissioner Julie Fedorchak doesn’t believe them. After being told Meridian was going to process an amount of oil which would keep them under the 50,000 bpd threshold for a full PSC site review, Commissioner Fedorchak told a newspaper reporter “They’ve been clear that they intend up to 55,000 barrels per day capacity, which would put them within our siting jurisdiction.” Fedorchak said “It’s really a mixed message from the company. They’re telling us one thing directly and telling a whole bunch of other audiences something very different.”

Julie Fedorchak’s no dummy. If she doesn’t believe them, or trust them, neither should you. And it’s a clear example of why state agencies need to be talking to each other.

Referring to Meridian’s application for a “minor” source permit, Meridian’s CEO, William Prentice, said in a press release from his own company “it is ‘unheard of’ for a refinery with Davis’ scale and scope to meet such strict emissions criteria.” But even though he admits it is “unheard of,” he’s got a big smirk on his face, because he’s convinced you to let him go ahead and build his refinery right next to a national park anyway.

And then, admitting that he is doing all he can to avoid serious environmental scrutiny, he told a reporter in December “In the private sector, we very seldom look for excuses to have another regulatory layer on what we’re trying to do,”

Good grief! Pure arrogance. And yet you are willing to gamble North Dakota’s future air quality by allowing industrial development by a company run by a man like this, within eyesight and earshot of Theodore Roosevelt National Park?

As we said at the beginning of this letter, you’re the scientist, Mr. O’Clair, not us. But sadly, we have to reject the science in this case. We don’t trust anything William Prentice and Meridian say. Neither should you.

We urge you to, at minimum, require Meridian to submit to examination as a Synthetic Major Source, and at most, we urge you to completely reject the Meridian application for an Air Quality Permit at this proposed location, because we just should not be taking chances with unproven science near Theodore Roosevelt National Park.

We believe you have the authority to tell Meridian to move the refinery away from the park if they want a permit to pollute North Dakota’s air. Your job is to protect our air, and our national park. Please do your job.

Respectfully,

 

Jim Fuglie

Lillian Crook