BISMARCK — The state was right to stay out of the controversial siting of an oil refinery near Theodore Roosevelt National Park, according to a North Dakota Supreme Court ruling.
The supreme court cleared a path for construction of the Davis Refinery three miles from the southern unit of the national park, in Belfield, ruling in a 4-1 decision that the refinery did not fall into the jurisdiction of the North Dakota Public Service Commission, which declined to hold hearings on the project.
The court's decision, announced Tuesday, Sept. 15, marks the second major legal victory this year for the Davis Refinery, which was proposed by Meridian Energy Group several years ago, and a blow to the environmental groups that have challenged the project.
In 2018, the Public Service Commission deemed that the slated refinery's output was too small to qualify for the commission's oversight, opting not to hold a hearing on Meridian Energy's plan to build the new oil refinery near the national park.
North Dakota requires refineries processing 50,000 or more barrels of oil per day to pass through vetting by the Public Service Commission. And while Meridian Energy originally planned its refinery to manage 55,000 barrels per day, the company downgraded that volume to 49,500, skating just beneath the threshold for public hearings and commission oversight. The public service commissioners said the project did not fall into their domain because of the reduced quantity.
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"Put simply, the issue here is whether a project proponent may avoid the time and expense of an additional layer of regulatory review that comes with a larger project by deciding to reduce the scale of a project to a size just below the regulatory threshold," the majority justices wrote, arguing that the decision by Meridian Energy to lower its refinery output "effectively mooted" the case and removed it from the Public Service Commission's purview.
In a statement, Meridian Energy celebrated the court's decision as the "final litigation milestone," and emphasized the employment benefits that the project would bring to the region. "Meridian is grateful for the Court's decision on this matter. North Dakota will benefit immensely from modern downstream facilities like the Davis Refinery," wrote William Prentice, the company CEO. "Supporting value-added industries has always been a key objective for North Dakota. That is more important now than ever as the state looks to recover from the economic impacts of COVID-19."
The Dakota Resource Council and Environmental Law and Policy Center, the two conservation groups that fought the refinery's placement in court, argued that the commission's decision to let the refinery pass without a hearing ignored the intent of the law.
"It's infuriating, this decision," said attorney J.J. England, who represented the environmental groups, arguing that the Public Service Commission and the supreme court let Meridian Energy exploit "a gaping loophole" in the regulatory process. "In my opinion it opens the floodgates for all sorts of shenanigans before the PSC."
Justice Gerald VandeWalle dissented from the majority's decision, writing that the environmental groups and the North Dakota public were denied their right to a hearing on the new refinery's location. "The Commission's position does not inspire confidence and respect in our regulatory system," he wrote.
Environmental groups in the state fear that the court's decision sets a precedent that will allow further encroachment on North Dakota's protected lands. "It's pretty galling that the company was able to get away with that," said Wayde Schafer, the Sierra Club's lone organizer in North Dakota. "Why they chose three miles from a national park makes no sense when they could have certainly put it anywhere out in western North Dakota that wouldn't have impacted the park."
England said the decision leaves the door open for Meridian to construct its refinery at its stated capacity, only to expand later, when regulators have little reason to stop the development of an existing plant. Meridian Energy has said it does not plan to expand output at the Davis Refinery.
This week's decision settles the second of two legal challenges to the Belfield refinery. The National Parks Conservation Alliance sued the state Department of Environmental Quality in 2018 over air quality permits that it issued to the refinery. In June, the North Dakota Supreme Court unanimously upheld a lower court ruling that affirmed the agency's issuing of permits.
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England said he could not comment on whether his side intends to pursue further legal action to stop the Davis Refinery, but Schafer said he expects the Sierra Club and other environmental groups in the state to continue looking for ways to block the project.
"I think the conservation community is definitely going to exercise every option we have," he said.
Meridian Energy began initial groundwork for the Davis Refinery in 2018. The company has said it hopes to have the refinery built within three or four years.
Readers can reach Forum reporter Adam Willis, a Report for America corps member, at awillis@forumcomm.com.
