I wrote here a couple of weeks go about the beginning of Theodore Roosevelt National Park, created by Congress in 1947, and about the proposed oil refinery that threatens it, a refinery that has now been issued a permit by the state of North Dakota to build the dang thing.
It’s been 70 years since Congress declared that this place in the North Dakota Bad Lands should be protected forever as a national park. Now this California company, Meridian Energy Group Inc., a startup company with no experience building or running a refinery, says it’s going to build a refinery just three miles from the park, alongside the road that runs into Medora.
I want to look at this more carefully. I don’t trust them.
On Jan. 27, 2017, Meridian Energy Group Inc. issued what it called a “Confidential Private Placement Offering” which began:
“Meridian Energy Group, Inc. (‘Meridian’or the ‘Company’) is a closely-held South Dakota corporation that will construct and operate the Davis Refinery, a 55,000 barrel per day high conversion crude oil refinery on a 715-acre site in Billings County, near Belfield, North Dakota, in the heart of the Bakken formation.”
Don’t be fooled by the “South Dakota” in there. They might be incorporated there for tax purposes, but these guys are from Texas and California. And pay special attention to the number 55,000. That’s important. I’ll talk about that in a minute.
And don’t be fooled by the words “Confidential Private Placement Offering” label on the prospectus. I went digging around the Internet and found it for myself, although I bet Meridian is not happy about that, and it may disappear pretty soon, unless the word “confidential” is just another sham put out there by this sleazy company — more about shams in a minute, too.
The first thing you notice in the prospectus, right there in the third line, is that Merdian is selling stock in a refinery that is going to process 55,000 barrels of oil per day. Somebody at Meridian didn’t do their homework. When North Dakota Public Service Commissioner Julie Fedorchak and her fellow commissioners heard about this, they said, “Wait a minute. North Dakota state law says if you are going to process more than 50,000 barrels per day, you have to come to us and let us do a comprehensive site review to determine if that is really a good place to put an oil refinery.”
“Oh, dang,” Meridian responded. “That was a mistake. We didn’t mean 55,000. We meant 49,500 barrels per day. That’s our story, and we’re sticking to it.”
Except that the prospectus is still there, online, selling stock in a refinery that Meridian says is going to process 55,000 barrels per day.
So in spite of that, as I pointed out here a week or so ago, there will be no site review (as of now), which if one took place, would probably determine that this is NOT a good place to put a refinery.
Our Health Department has decided that the unproven technology planned for this refinery might — just might because there’s no way to know until it is built and operating — meet federal air quality standards (this is North Dakota, after all, and we’ll plant big wet kisses on the ass of any oil company executive who shows up here with a fat checkbook). So I guess there’s nothing left to do but watch a refinery go up beside Theodore Roosevelt National Park.
Except there is one other possibility. I said earlier I don’t trust Meridian. And I’m not alone. I’ve had more than one person mention in casual conversations, including some people in pretty high positions, that this whole deal sounds suspicious. The project has a price tag of close to a billion dollars, but the stock offering is for only $30 million. Now that Meridian has the permit, it has to find a bank willing to lend it at least three-quarters of a billion dollars. Again, as I mentioned, on unproven technology. Would a bank really do that? What’s the collateral on that if this falls through? A refinery that doesn’t work?
I asked Gov. Doug Burgum if he wouldn’t mind asking his State Securities commissioner, Karen Tyler, to take a look at the prospectus and see if they think this is all on the up and up. I mean, the state does have some responsibility to help protect investors in big deals like this in our state. Apparently he did that. Here’s what his spokesman Mike Nowatzki told me the other day:
“Commissioner Tyler informs me that Meridian is utilizing a federal securities registration exemption under Regulation D Rule 506(c) of the 33 Act. This federal exemption requires that they only accept investments from Accredited Investor — income of $200,000 to $300,000 or net worth of $1 million excluding primary residence. The exemption largely pre-empts state securities regulatory authority. The Securities Department can require that Meridian put the department on notice that it is soliciting and selling in the state (Note: Meridian has done that), and Securities’ anti-fraud authority is preserved, but it does not have the authority to opine upon and set requirements for their offering documents.” (emphasis added)
Well, how convenient. Is there any loophole in the law this sleazy company won’t find?
Would I be surprised if I learned down the road, in a few months, that this company never really intended to build an oil refinery here? No, I would not. In fact, I’d be willing to bet all my shares in the company that there’s at least a 50-50 chance this whole thing is a big stock scam designed to make some quick bucks for a few executives and board members.
On the very first page of the “confidential” prospectus, there’s a line that says the total stock offering is for $30 million, but up to 25 percent — $7.5 million — can be used for “cost of issuance,” including “compensation paid to employees of Meridian.” From what I can tell from its website, that might be about a dozen or so people on the “management team” and a few clerical staff dividing up $7.5 million dollars.
But then it also says, “Management’s Discretionary Control over Proceeds — Although the Company anticipates that it will apply the net proceeds of its financing as described herein, Management will have complete discretionary control over the utilization of the funds and there can be no assurance as to the manner or time in which said funds will be utilized.”
So that management team can pay themselves way more than $7.5 million. It can use it all. Good grief. Who would invest in a company like this? Ummmm, maybe somebody looking for a tax write-off?
Well, if it’s a scam, too bad for the investors, but good for us. Except I’m not willing to take a chance. I’m going to keep talking and writing about it. Because if Meridian is serious, and we fail to stop it, shame on us. It will the most egregious example of failed leadership in the history of our state.
I hope Gov. Burgum doesn’t want that to be his legacy.
P.S. Here’s an “Important Notice” from page 3 of Meridian’s “confidential” offering:
“This memorandum contains certain information of a highly confidential and proprietary nature. The receipt of this memorandum constitutes an agreement on the part of the recipient hereof to maintain the confidentiality of the information contained herein or any additional information subsequently delivered in connection herewith. Prospective investors who accept this memorandum or become aware of the information contained herein must understand and comply with the extensive federal and state securities law restrictions placed upon their ability to disclose information contained herein to others or to participate in or otherwise effect or facilitate any transactions relating to any securities of the company. Prospective investors who cannot comply fully with such restrictions should not review the information contained herein and should immedialtely (sic) return this memorandum to the offeror.”
Yikes! Well, golly, I’m not a prospective investor, so I guess I can share that much with you, but I won’t tell you anything else that’s in it because I don’t want to take a chance on going to the pokey. But if you’re interested, and maybe want to invest a buck or two (and if you make 300 grand a year and have a million bucks in the bank you’d like to gamble), just click here and you can read it yourself. Oh, and if it’s disappeared by the time you read this, don’t worry — I’ve got a PDF. Just send me an e-mail and I’ll send it to you.
This story is an edited version of a story that appears in the July 2018 issue of Dakota Country magazine. It’s a magazine you should be reading. You can subscribe here.
This might be the shortest blog post I’ve ever written. Or will ever write. But it’s an important one, so if you are concerned about the possibility of an oil refinery being built next to Theodore Roosevelt National Park as I am, please take just one minute to read it.
I had a chance encounter with Gov. Doug Burgum this weekend. We had a lengthy, frank and off-the-record discussion about the Davis refinery.
Off-the-record, but I think I can share a few things with you after the conversation without him objecting.
First, I don’t think the governor wants an oil refinery next to our national park any more than you and I do, but I believe he is committed to letting the regulatory process play out, without interfering with his agencies.
Second, I think that he believes, as do many of us, that there will be a legal process before construction begins on the refinery and that he is committed to letting that legal process play out as well.
And third, if the refinery gets its permits and survives a legal challenge, I am starting to get the feeling that we might be able to convince the governor to intervene personally with the company and try to get them to move it away from the park.
To convince him, we need to let the governor know that we will support any efforts he undertakes to get the company to move the refinery away from the national park by sending him an e-mail at firstname.lastname@example.org. We can do that now, or we can do that after the legal process is over. But now might be better.
To quote my new online friend and fellow blogger, Judge Tom Davies: Amen.
The last major threat to the visual integrity of Theodore Roosevelt National Park, at least that I can recall — though there have been many skirmishes with the oil industry — was in 1989, when the Western Area Power Administration came really close to putting a huge transmission line along the east boundary of the South Unit of the Park.
I’m reminded of that in the context of the Meridian Energy Group’s horrible idea to put their proposed Davis Oil Refinery in about the same place, along the east edge of the park.
In the 1960s, WAPA, one of four federal power marketing administrations that serves our part of the United States, determined there was going to be a need for more electricity in part of its region in the future, and Basin Electric, headquartered in Bismarck, had surplus power to sell. All that was needed was a way for Basin to get its power into the WAPA system.
They determined that the best way was to build a transmission line — one with those big metal towers — from Basin’s Charlie Creek substation in McKenzie County, near the junction of state Highway 200 and U.S. Highway 85, to tie into an east-west WAPA power line near Belfield, N.D., about 40 miles south. WAPA commenced a federal Environmental Impact Statement process to find the best location for the line and its towers (unlike Meridian, which refuses to even submit to a state site review process) in 1969, and issued a draft EIS.
Some 20 years later, when demand reached the point that WAPA decided it needed the extra power, it commenced a review process with a public comment period and public hearings on the project. The review process focused on two identified corridors for the power line: a western line, called W1-1, which was four miles shorter and a million dollars cheaper than one farther east, called E-4-1R. WAPA recommended using the shortest, cheapest route, W-1-1.
Unfortunately, that route ran beside the eastern boundary of Theodore Roosevelt National Park and would have been visible from most high places in the park. The eastern route ran alongside Highway 85, five miles or so east of the park, and out of sight from the park.
So in the spring of 1988, WAPA published a notice of its intent to build the line next to the park and opened a public comment period. Tracy Potter and I were running the State Tourism Office at the time, and if WAPA could have picked any two people on the planet it did not want in THAT office at THAT time, it would have been the two of us. Our boss, Gov. George Sinner, turned us loose to organize against building the line next to the park.
In advance of the public hearings, which were to be held in Belfield and Grassy Butte, N.D., on July 26-27, 1988, we got on the phone and began rounding up supporters to send letters to WAPA, asking it to move the line east, to the highway, out of sight of the park. We did a pretty good job.
U.S. Sen. Quentin Burdick wrote:
“In recent days, I have received a number of letters from concerned citizens who believe that the route recommended for the Western Area Power Administration (WAPA) will have long term negative effects on the Theodore Roosevelt National Park. As well, the North Dakota Tourism Office and the State Highway Department have also expressed opposition to the recommended route.
“It seems clear from the concerns raised by the opponents that WAPA should reconsider the options and seek a more acceptable routing for the line. Granted, the additional $1 million in construction costs must be an item of consideration. However, when viewed in the context, it seems the additional $1 million is not too large a price to pay to protect such a national treasure as Theodore Roosevelt Park.”
How about that! Why don’t we have U. S. senators like that anymore?
And Congressman Byron Dorgan wrote:
“The visual impact (on Theodore Roosevelt National Park) is unacceptable. I hope you will hear the concerns of myself and of many others who are committed to protecting the natural, scenic beauty of the Badlands.”
I know that our newest senator at the time, Kent Conrad, weighed in on this as well, but I can’t find his letter.
Even our boss, Gov. Sinner, and his lieutenant governor, Lloyd Omdahl, sent a jointly signed letter (although I think Tracy probably wrote it for them):
“North Dakotans have jealously guarded the Badlands scenic areas from avoidable intrusions. Consequently the Park today still provides awesome views of natural beauty unmarred by artificial structures. Whether or not future generations will be able to share this beauty will be determined by this generation and the decisions it makes about development in the area. We must proceed cautiously in the consideration of proposals to change the landscape.”
Other letters came from concerned citizens, and the usual suspects — the National Parks Conservation Association, the Sierra Club, the Theodore Roosevelt Nature and History Association and others, many of whom are now involved, 30 years later, in the current fight to move the Davis refinery away from the park.
Tracy led the testimony at the public hearing in Belfield, followed by TRNP’s Chief Ranger Bob Powell, Gary Redmann from the State Highway Department representing then-Commissioner Walt Hjelle, Wally Owen from Medora, who ran the horse concession in the park, and finally, batting cleanup, Medora Mayor and President of the Theodore Roosevelt Medora Foundation Rod Tjaden, who I think was also state chairman of the Greater North Dakota Association, the state’s chamber of commerce, at the time. (Humorous aside: Tjaden, not known for hanging out with the environmental crowd, sent me a note a few months later that said “Dammit, Fuglie, I’m getting mail from the Sierra Club, and it’s YOUR FAULT!”)
After the public hearings, WAPA went into hibernation for about six months, and in early 1989 released its final EIS, with its final recommendation on a route for their transmission line, which concluded with this statement:
“Through public comment, it was determined that visibility of the line from residences, local urban areas and TRNP was of significant importance. In particular, a large number of comments expressed concern for the visibility of the proposed line from TRNP. It was determined that the agency-preferred route would be changed from W1-1, as specified in the DEIS, to E4-1R (the environmentally preferred route).”
A loud cheer could be heard throughout western North Dakota. The system worked. The park was protected.
Well, that’s our history lesson for today. Sadly, history doesn’t often repeat itself. A month or so ago, I sent letters to our current governor, Doug Burgum, and to our congressional delegation, asking them to meet with the Meridian people and ask them to move the proposed refinery away from the park. I got a couple of responses.
This in an e-mail from Jodee Hanson in the governor/s office:
“The Governor respects the public comment period, which is still ongoing, and is staying apprised of the Department of Health’s permitting process being conducted within the boundaries of the law.”
To which I responded:
“Thanks for the note Jodee. Relay to everyone there that the ‘boundaries of the law’ are the minimum standard for action by public officials. There is much more that can, and should, be done. Like a one-on-one between Burgum and Prentice, heart to heart, CEO to CEO. I am inspired by Julie Fedorchak and Connie Triplett seeking a PSC review. The governor could make that happen by putting the hammer down on Prentice: “Y’know, Bill, we’re in this together for the long haul. We’re going to be looking at each other and talking to each other for a long time. Let’s be responsible and see what a PSC site review tells us.”
I also got an e-mail from a staffer for Congressman Kevn Cramer:
“Congressman Cramer has been in contact with both the N.D. Department of Health and EPA ensuring the project meets human health and environmental requirements.”
To which I responded:
“Relay to everyone there that meeting the “human health and environmental requirements” is not enough in this case. There is much more that can, and should, be done. As a former State Tourism director, Kevin understands the impact on our National Park. I’d suggest a one-on-one between the congressman and Meridian CEO Bill Prentice, heart to heart. I am inspired by Julie Fedorchak and Connie Triplett seeking a PSC review. The Congressman could help make that happen by meeting with Prentice:”
I’ve not heard anything from our two senators. I’m going to send them, along with Cramer and Burgum, a copy of this blog post to remind them of what can be done if everyone pulls their own weight.
The official comment period has passed on that sleazy company Meridian Energy’s request for an Air Pollution Permit for an oil refinery beside Theodore Roosevelt National Park. I’m guessing the State Health Department got an earful.
Friday, on the last day of comments, my friend,Sarah Vogel, our former state agriculture commissioner and one of the state’s best attorneys, sent me a copy of what she sent to the Health Department. It’s so good, I just have to share it. If the Health Department can issue a permit after reading this, everyone there should be sent packing. And if the governor doesn’t step in after reading this, he should be sent back to Cass County.
Here’s what Sarah wrote:
“The Health Department is well aware of the views of the three statewide-elected officials who serve on the Public Service Commission. They have been clear that they believe that this project should not go forward without a ‘big picture’ overview that would come with a site review by the PSC. See, Bismarck Tribune, ‘Commission urges refinery developers to apply for siting permit,’ December 19, 2017. The majority of the persons testifying at the Health Department’s hearing in mid-January 2018 were opposed to the issuance of the air quality permit by the Health Department, and many urged that the Health Department not grant the permit until such time as a site review by the PSC was completed.
“It appears that the Health Department is evaluating comments on some type of a ‘bright line’ separation between its own concerns, and the concerns by other state agencies such as the PSC, and that it believes it lacks authority to look at any factors other than those strictly dealing with the air quality permit requirements set forth in Health Department regulations.
“Yet, the Department of Health is the lead environmental agency of the State of North Dakota! See N.D.C.C. Section 23-01-01.2 (‘The state department of health is the primary state environmental agency.’) Because of its additional role as the primary environmental agency, the Health Department should take a broader view consistent with the Public Trust Doctrine that underlies the duties and operations of all state agencies, including the Department of Health.
“As explained by the North Dakota Supreme Court, the Public Trust Doctrine is part of the common law of this state and overlays and informs the actions of the state as those actions affect the citizens of North Dakota’s critical reliance on clean water and other resources such as clean air. See, e.g., United Plainsmen Association v. North Dakota Water Conservation Commission, 247 N.W.2d 457, at 460-464 (ND 1976). See, also, State ex rel. Sprynczynatyk v. Mills, 523 NW 2d 537, at 540 ND 1974) (‘North Dakota could not totally abdicate its interest to private parties because it held that interest, by virtue of its sovereignty, in trust for the public.’)
“The Public Trust Doctrine is part of the overarching principles that should govern North Dakota governmental officials and especially those at the Department of Health See N.D.C.C. Section 23-01-01.2, supra.
“I recommend that the Health Department consider the Public Trust Doctrine in determining whether it, as the primary environmental agency, has a duty on behalf of the citizens of North Dakota to coordinate with the PSC to insure that all environmental factors are appropriately considered at the appropriate time and in the appropriate sequence.
“The Legislature’s use of the word ‘primary’ necessarily implies a leadership role with other secondary agencies for environmental issues. Here the PSC is pleading for the opportunity to do its job, and review the site of a project that will have a huge effect on western North Dakota in advance of issuance of a permit. The stakes are even higher since North Dakota’s premier attraction, the Theodore Roosevelt National Park, is extremely close to the site for the proposed refinery. Surely, the Health Department has the discretion to defer its decision on an air quality permit for Meridian’s proposed refinery until the PSC has the opportunity to do a thorough and thoughtful determination of the suitability of the site in keeping with state government’s duty to protect the public’s interest.
“The idea that a Meridian claim of a 500 barrel disparity in anticipated production could prevent this critical and essential review is a weak rationale to avoid PSC review. To illustrate, why should the Department of Health take at face value Meridian’s current assertion that it will produce 500 barrels of oil less than the cutoff for mandatory PSC review? As the Department of Health is well aware, Meridian has a history of changing its numbers based upon the audience it is addressing. One set of numbers is provided on Wall Street for potential investors and stockholders; another set of numbers is provided to officials of the State of North Dakota. The latest illustration of the unreliability of Meridian’s public statements is its recent press release on the Health Department’s January hearing which asserted that most of the people testifying were in favor of the project. In contrast, the Bismarck Tribune’s story by Amy Dalrymple said exactly the opposite.
“In conclusion, the permit should be denied or the application should be held in suspense until a proper site review is conducted by the PSC.”
Well. Thank you, Sarah.
I have no doubt the Public Service Commissioners will read this and agree with Sarah. But as long as the Faustian refinery developers hold to their estimate of 49,500 barrels per day (99 percent of the 50,000 bpd that triggers a site review), the PSC is helpless.
But are you reading this, Doug Burgum? Because, ultimately, you’re the man responsible for upholding the Public Trust Doctrine, on behalf of the citizens of your state. The Health Department works for you. You’re the governor. You asked for the job. Now do your job. The Supreme Court has already upheld the Public Trust Doctrine. Do you really want to be on the same side — the wrong side — of a lawsuit with Meridian Energy, governor, and on the opposite side of your own Public Service Commission, when someone files suit to force you to uphold the Public Trust Doctrine?
A pair of former Democratic-NPL state senators challenged the North Dakota Health Department to demand a site review by the State’s Public Service Commission before issuing an air pollution permit allowing Meridian Energy Group to build a refinery three miles from Theodore Roosevelt National Park at a marathon public hearing by the Department Wednesday night.
Former Sen. Connie Triplett of Grand Forks told Health Department administrators near the end of a four-hour public meeting in Dickinson that they should attach a condition to the permit if they issued it, stating that the permit to build the Davis refinery would only be valid if the company submitted to a full site review by the PSC. And former Sen. Tracy Potter of Bismarck went a step further, saying the Health Department should just put the permit application on hold, and not consider it, until the PSC reviews the site.
Damn, I wish I could get rid of the word “former” in front of those two senators’ names. Out of the 40 or so people testifying on issuing an air pollution permit to the company at Wednesday’s public hearing, their Legislative experience showed their understanding of the government processes that could be brought into play before a refinery is built on the national park’s border.
To review: North Dakota has a law that says any energy conversion facility, such as a refinery, that is going to process more than 50,000 barrels of oil per day (bpd) needs to undergo a site review by the Public Service Commission to “ensure the location, construction, and operation of energy conversion facilities … will produce minimal adverse effects on the environment and the welfare of the citizens of this state …”
Further, it says “The policy of this state is to site energy conversion facilities … in an orderly manner compatible with environmental preservation and the efficient use of resources. Sites and routes must be selected to minimize adverse human and environmental impact …” (emphasis added)
To get around that requirement, Meridian now says it is going to process only 49,500 barrels per day, a sleazy, transparent move to avoid having the PSC tell them it this is a lousy place for a refinery and that Meridian should put it somewhere else where it won’t detract from our national park.
Meridian’s number of 49,500 bpd is 99 percent of the PSC’s jurisdiction limit of 50,000 bpd. Fifty thousand barrels is 2.1 million gallons. 49,500 barrels is 2.079 million, just 21,000 gallons less than the threshold for regulation. So Meridian’s tactic is to stay just 1 percent under the threshold for regulation. It would be a laughable move by the refinery people if it weren’t for the fact that by staying just barely under the threshold, THERE IS NOTHING STOPPING MERIDIAN FROM PUTTING AN OIL REFINERY BESIDE THEODORE ROOSEVELT NATIONAL PARK.
I can’t shout that loud enough. Nothing stopping them except, of course, issuance of an air pollution permit, which was the matter at hand at Wednesday night’s public hearing. And that’s why Triplett and Potter’s requests are so important. Because in its initial review, the Health Department says it thinks that the refinery could come in under the pollution limits allowed by the federal Clean Air Act to protect the Class I Air Quality Status of a nearby national park.
Now whether we believe that — the Meridian people haven’t said much that is believable so far in this process — Triplett and Potter pointed out that this is just one very narrow — albeit very important — look at whether the refinery should be built there. North Dakota state government needs to take a holistic approach to siting something as big as this — and there’s no doubt this is big, the biggest industrial plant to be built in our state since the Great Plains Coal Gasification Plant near Beulah 35 years ago, which at the time, was labeled the largest construction project in North America.
That’s what the PSC siting process brings. A look at the big picture. And then once the PSC has completed its site review, the Health Department, the Water Commission, the Game and Fish Department, the State Parks Department, the Agriculture commissioner, the Tourism director, the Transportation director, maybe some other directors and, most importantly, the governor need to sit down around a table and decide what’s really good for the state, and if this is really the best place to put an oil refinery. That’s how state government should work, whether we trust all those people or not. I guess we have to trust them, since they’re in charge here right now.
I don’t think anybody’s questioning whether we should have an oil refinery in North Dakota. Of course we should. As Triplett has pointed out, it is certainly more environmentally — and economically, I’ll add — desirable to refine oil here and ship a finished product out in a pipeline than it is to ship out raw crude in a pipeline and then ship refined gasoline and diesel fuel back here in trucks or another pipeline.
So the only real question is, where should the refinery be? Public Service Commissioners Julie Fedorchak and Brian Kroshus pushed hard at Meridian officials at a meeting last month to get them to consider other locations away from the park but to no avail. Barring that, they asked politely to be allowed to conduct a formal site review to “ensure the location, construction and operation of the refinery… will produce minimal adverse effects on the environment and the welfare of the citizens of this state …”
Meridian officials told them to stuff it. The 49,500 bpd refinery is under the threshold for a site review, they said, and they are complying with the law. Well, yeah 1 percent under the threshold, and in terms of impact on the environment and the welfare of our citizens, that’s a pretty slim — and sleazy — standard they set for themselves.
In fact, it prompted PSC Chairman Randy Christmann to tell me and a few others after the meeting that he won’t be surprised if some legislator introduces a bill in the next legislative session to get rid of the threshold altogether and make all energy conversion facilities of any size subject to a site review. Good for him. Christmann is not a big government regulation guy, but I think he’d like that. In the case of Meridian, that would be closing the barn door after the cows are out, but it certainly would keep this from happening again in the future.
Shortly after that meeting between Meridian and the PSC, when Meridian snubbed its nose at three elected officials, I sent a letter to Gov. Doug Burgum asking him to call Meridian CEO William Prentice into his office and ask him politely — CEO to CEO — to move the refinery away from the park. I think I’ll just put my letter at the end of this post because it’s been a month now, and I’ve not had a response from the governor.
I’m disappointed in that. It used to be in North Dakota, when you wrote a letter to an elected official, you got a response in a pretty timely manner. I worked for a governor for eight years, and I don’t recall a constituent letter ever going unanswered. Especially on a matter as important as this. I’ll write a little more about that subject in a few days.
Meanwhile, subsequent to Wednesday’s Health Department hearing, a public comment period on this issue remains open until Jan. 26. Then the Health Department will read all the public comments and respond to them, I think. Often the response is just to thank you for commenting and telling you they are taking your comments into consideration, but at least you know your comments have been read by someone. I submitted mine a few weeks ago and shared them with you in this space. You can read them by going to my old blog. I urge you to join me in commenting. I’m putting the address for your comments at the end of this post, too.
I’m adding to mine by strongly urging the Health Department to take the advice of Sens. Potter and Triplett and attach conditions to any permit, requiring Meridian to undergo a site review. Triplett, an environmental attorney, knows North Dakota law, and she says they can attach conditions to a permit. There’s precedent for that, even.
Way back in the 1970s, when a company named Michigan Wisconsin Pipeline Co. asked for a state water permit to construct some coal gasification plants here (one of which ended up being the Great Plains Synfuels Plant I mentioned earlier), the North Dakota Water Commission attached a series of conditions to the permit, which ended up being the beginning of North Dakota’s Mined Land Reclamation Laws, now the strictest reclamation laws in the country.
The Great Plains synfuels plant today. It’s here because North Dakota passed strict regulations and enforced them–which is what we need to do with the Davis refinery today
I think the conditions were challenged in court, and they held up. We’re all winners because of that. Strict regulations were followed, the coal gasification plant got built, and it’s still operating successfully today.
And I’m going to go a step further and ask the governor to strongly advise the Health Department — they work for him, after all — to attach the condition of a site review to the permit, if they issue one. Or to just tell the company they’re holding the permit until a site review is done. If Meridian is confident they’ve got the right project in the right place, they won’t have any problem undergoing a site review.
Let me repeat that.
If Meridian is confident it has got the right project in the right place, it won’t have any problem undergoing a site review.
One more time.
If Meridian is confident it has got the right project in the right place, it won’t have any problem undergoing a site review.
Here’s the address for your comments, to be submitted to the Health Department by Jan. 26. You might want to use the line “If Meridian is confident they’ve got the right project in the right place, they won’t have any problem undergoing a site review.”
Terry O’Clair, P.E., Director
Division of Air Quality
ND Dept. of Health
918 E. Divide Ave.
And here’s my letter to the governor:
December 21, 2017
Dear Gov. Burgum,
Late in the afternoon on this shortest day of the year, my mood is as dark as the 5 p.m. sky. I close my eyes and think back to the meeting between the PSC and William Prentice from Meridian Energy Group the other day, and I see him smirking as he says “We are going to comply with the law.”
So that’s what it’s come to for Meridian. It’s about the law. It’s not at all about anything North Dakotans might feel about having a refinery smack up against their national park. A national park named for our Greatest Conservation President.
“If these stupid North Dakota hicks are willing to put that kind of a loophole in their siting law, I’m going to use it,” the snarky Californian says.
So now, Governor, it’s up to you. You need to get that asshole in your office and tell him he needs to move that refinery. You can do that. He’ll respect you, a fellow businessman and North Dakota’s CEO.
Randy and Julie and Brian did their best, but they carried no authority. They’re not used to dealing with this kind of character. “I don’t see why you don’t just go through the siting process” won’t work with this guy. It’s kind of like the salesman who says “I don’t suppose you’d like to buy some insurance, would you?”
Please, Governor, call this guy up and get him in your office. And tell him to move the damn refinery.
Please let me know if you are willing to do this, so I can stop writing about it (and you) for a while. Even if it does no good, I need to know that at least you were willing to try.
At the end of the meeting between Meridian Energy Group executives and the North Dakota Public Service Commission a couple of 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 it is only going to be processing 49,500 barrels of oil per day (bpd), Meridian skirts 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 it is going to build an oil refinery in Billings County that will process 55,000 barrels of oil a day. It’s going to build it in two phases, it said, of 27,500 barrels each, in rapid succession. Then it found out it has to go through a site review by the PSC if it’s going to process more than 50,000 bpd. Meridian changed its story, saying it is only going to process 49,500 barrels per day. How blatant is that? I’m surprised it’s 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, the commission decided to grant a permit for just 90 percent of Merdian’s request, which might keep it 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, Jan. 17, at 5:30 pm MST. The deadline for submitting letters is Jan. 26. The address is at the top of my letter, below. You have until Jan. 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 Nov. 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 10 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. Meridian is 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.
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.
NDCC 49-22.1-02: “Statement of policy. The legislative assembly finds the construction of energy conversion facilities … affects the environment and the welfare of the citizens of this state. It is necessary to ensure the location, construction and operation of energy conversion facilities … will produce minimal adverse effects on the environment and the welfare of the citizens of this state by prohibiting energy conversion facilities … from being located, constructed, or operated within this state without a certificate of site compatibility … The policy of this state is to site energy conversion facilities … in an orderly manner compatible with environmental preservation and the efficient use of resources. Sites and routes must be selected to minimize adverse human and environmental impact … ” (emphasis added)
That’s the section of North Dakota’s Century Code — our state laws — as it applies to the construction of oil refineries in our state. Unfortunately, the law goes on to say that the only “energy conversion facilities” to which this law applies are those refining more than 50,000 barrels of oil per day. That’s a lot.
And there’s the rub.
The North Dakota Public Service Commission is meeting at 9 a.m. this morning on the 12th floor of the State Capitol Building with the CEO of the company that wants to build a refinery three miles from Theodore Roosevelt National Park, and which now says it plans to refine only 49,500 barrels per day — 500 barrels under the limit which would require them to get a “certificate of site compatibility” from the PSC. Well, as the Church Lady on Saturday Night Live used to say, “How conveeeeeeeenient!”
Our Public Service commissioners don’t like people playing games with our state laws, so they have asked to meet with the company Tuesday morning. To their credit, the company agreed to come in and talk. And answer some questions.
You can be there, too. Thanks to North Dakota’s Open Meetings Law, these kinds of things are open to the public. Not that the PSC gave any consideration to closing them, to my knowledge. You won’t be allowed to participate, though. Just watch and listen. I wish we could participate, because I have a few questions. I have a couple of new friends, named Laura and Pat, who live within a couple of miles of the proposed refinery, and they’ve been sending me information about the project.
For instance, they tell me that Tesoro, which owns the refinery down the railroad by Dickinson, N.D., just bought all the gathering pipelines in the area, and my friends are wondering if that means there won’t be any crude oil delivered to this new refinery by pipeline. They’re thinking, and I think they’re right, that Tesoro is not going to be too eager to share a pipeline with a rival refinery. Tesoro, by the way, has changed the name of its company to Andeavor. I think it’s trying to get us to forget it was a Tesoro pipeline that spilled almost a million gallons of oil up in northwest North Dakota four years ago, oil that is still not completely cleaned up.
If that’s the case, the only way the refinery will get 49,500 barrels (a little more than 2 million gallons) of crude oil to refine every day is by truck. That’s a lot of trucks. A tanker truck can hold up to 9,000 gallons. That would be more than 225 trucks per day. If they won’t have the capacity to unload 10 trucks per hour at the new refinery, imagine how long those lines are going to be idling at the refinery gate. 24/7.
My friends pointed out that the refinery says on its website, “Davis will ship high-value products to local & regional markets — not all products go to the same place. Some markets are close enough for local truck delivery, others will be served by accessing product pipelines.” Well, that’s a few more trucks every day, this time going out, instead of in.
And that brings back the pipeline question — whose pipeline will they be using to ship that refined product out, the stuff that doesn’t go by truck? There’s no mention of shipping by railroad, which would seem to make sense, since the BNSF main line runs right past the refinery. Are there any plans to ship by rail? (My friends out west tell me the latest design plan for the refinery doesn’t show a railroad spur.)
My friends also pointed out that the company’s website says, “Flare stacks will be equipped with air-assisted blowers to help ensure cleaner complete combustion of flare gas and smokeless operation. Flare emissions will be analyzed by monitoring equipment.”
Huh? Flare stacks? Let’s hear a little more about those. How many? How tall? How will they compare with oil well flares we’re all familiar with, which light up the countryside all over western North Dakota? They are really, really noisy, much like the sound of a jet engine. And bright. Candles in the wind.
And then my friends pointed out that the company’s website says it is “negotiating options on additional property that would increase the size of the Site to nearly 2,000 contiguous acres. The refinery will not be the only facility operating on the site.” A little more explanation of that would be welcome, too. What else is planned?
My friends and I are just asking those kinds of questions because it would seem to us that the answers might have some impact on those “adverse human and environmental impacts” that Section 49-22.1-02 of the North Dakota Century Code refers to. Especially for those people that live within a mile or two of the refinery. I guess we hope the Public Service commissioners will ask those kinds of questions at today’s meeting.
There’s one more thing my friends pointed out in the company’s stock offering that bothers me. The stock offering says “the company intends to achieve a liquidity event either by a public listing of the shares, such as through an IPO, or by sale of the company, following the start-up and full production of the refinery, projected to be within three to five years.”
Now I’m an English major and don’t know a lot about the world of high finance, but I read that to mean that the refinery will be built on borrowed funds and that the company might have to sell the refinery to get out of debt. Well, that ought to make lenders a little nervous. I wonder if any North Dakota banks are involved in financing this operation. Our bankers here are pretty shrewd. Want to take bets on that?
Tuesday, December 19, 9 a.m., 12th Floor, North Dakota Capitol Building.
Last week, William Prentice, the slickster CEO of Meridian Energy Group, which wants to build an oil refinery 2½ miles from Theodore Roosevelt National Park, blew a bunch of smoke up the ass of a young reporter for The Dickinson (N.D.) Press, and the kid, who’s actually a pretty good writer, wrote a real puff piece about how great the refinery is going to be for western North Dakota.
Worse, the Bismarck Tribune reprinted most of it this week. Even worse, Forum Communications’ other North Dakota papers — in Fargo, Grand Forks and Jamestown — all printed the story, under the headline “Refinery near national park would bring jobs, revenue to western ND county.” You could read it here if you want to. This kind of positive publicity coup for a controversial project had old Bill Prentice drooling out of both sides of his mouth.
Prentice said taxes collected from the refinery would provide Billings County “funds to improve schools, roads and anything else. The influx of money and workers could even help return a grocery store to the town, as Belfield has lacked one for years now.”
“Everything needs a little bit of tender loving care,” Prentice said.
P.S. Belfield is in Stark County, not Billings.
Now maybe the young reporter is going to do another story sometime talking about the problems a refinery near a national park poses. If so, he might want to talk to some folks from the National Parks Conservation Association, one of the fiercest and most stubborn opponents of the refinery’s proposed location. That’s the nonprofit organization whose only agenda is to support and seek protection for national parks all over the U.S. Because of this severe threat to North Dakota’s national park, NPCA has jumped into this battle with both feet.
To that end, NPCA commissioned an independent analysis of Meridian’s application materials for an air-quality permit from the North Dakota Department of Health. In its application, Meridian claims that the proposed refinery is a “minor” source of pollution. Uh huh.
In her analysis of the application, Dr. Phyllis Fox, an environmental and chemical engineer from Florida who has prepared air permit applications on behalf of refiners and who has reviewed and commented on hundreds of permit applications, says the refinery “is almost certainly a ‘major’ source of pollution that would release substantial amounts of carbon monoxide, volatile organic compounds and hazardous air pollutants — all harmful to human and ecological health.” Uffda.
The designation matters, Dr. Fox says, because unlike major sources of pollution, a minor source permit does not require a rigorous assessment of pollution impacts as well as the best pollution controls. A major source permit requires serious scrutiny, which Meridian wants to avoid.
Her analysis also found that Meridian significantly underestimated or omitted emissions in its application from sources, including flaring events; startup, shutdown and malfunction; and associated equipment, among other sources.
Well. That’s not surprising. As I said in an earlier post here, Meridian is one sleazy company. They’ve told outright lies to the North Dakota Public Service Commission to avoid undergoing an environmental assessment in order to get a site permit. And now, we learn they’ve lied to the State Health Department as well. I asked both those agencies to comment on Dr. Fox’s report.
Craig Thorstenson, the environmental engineer for the Health Department who is responsible for these kinds of things (and who just happens to be the nephew of my Hettinger High School wrestling coach, Chuck Thorstenson, a really good coach who won the state championship and was named North Dakota High School Wrestling Coach of the Year in 1966, the year AFTER I graduated) replied, “We are still reviewing the Meridian application to determine if the application is complete and if emissions from the facility will be expected to remain below the major source thresholds. It will likely be at least two months before we make a determination.”
Craig also told me that when the review is done, there will be a 30-day public comment period, and he said Dr. Fox’s report will be considered if she submits it to the Health Department during that time period. My guess is they will take it seriously. Bill Prentice won’t like that.
Prentice, by the way, was trying to blow smoke up Craig Thorstenson’s ass in the Dickinson Press story, too. Seeking to get out ahead of Dr. Fox’s report, Prentice said, “The North Dakota Department of Health is as knowledgeable, if not more knowledgeable than any other agency we’ve worked with on a complex project, including federal agencies. They are a world-class organization.”
More blowing smoke: As far as I can tell, Meridian Energy is a brand-new company and this is its first project, so I’m not sure what agencies, “including federal agencies,” they’ve “worked with.” Kind of a Trumpian claim, in keeping with the times.
I do think the Health Department is doing a pretty thorough review of the application. I won’t be surprised if they agree with Dr. Fox.
Public Service Commissioner Julie Fedorchak, to whom I have no such close association as I do with Craig Thorstenson and his now deceased Uncle Chuck (although I often sit behind Julie’s brother in church — I sit in the third row on the left side because I am hard of hearing and that’s the spot with the best acoustics, and I don’t want to miss Msgr. Chad Gion’s homilies because they’re very good — and Mike and his family usually sit right in front of me) replied, “Per the law, the PSC can’t require them to site the project. If they begin building without a permit then we could at that point take legal action against them if we believe they are violating the siting law. That’s the legal landscape. Our staff is working on a meeting with the company so we can speak directly with them about their plans, timeline, that site, their technology, etc., rather than through letters.”
I think Julie and her fellow PSC members are serious, too. I don’t think this is a done deal yet with either of those agencies. We’ll see in a few months.
Meanwhile, don’t believe everything you read in the newspapers. If you want something to believe, read the NPCA press release, complete with a link to Dr. Fox’s thorough, 28-page report, here.
Of all the sleazy companies to show up in North Dakota’s oil patch in the nearly 10 years since the Bakken Boom began, the sleaziest of them all has to be Meridian Energy, the company proposing to build an oil refinery called the Davis Refinery just three miles from Theodore Roosevelt National Park. Here’s why I say that.
Normally, when a company wants to build a large energy plant, like a refinery, it applies for a siting permit from the North Dakota Public Service Commission. Most good companies do that. It’s the law. In the case of oil refineries, if the refinery is going to be capable of processing more than 50,000 barrels of oil per day, they have to obtain a site compatibility permit from the PSC.
Here’s Section 49-22 of the North Dakota Century Code:
“The legislative assembly finds that the construction of energy conversion facilities and transmission facilities affects the environment and the welfare of the citizens of this state. Therefore, it is necessary to ensure that the location, construction, and operation of energy conversion facilities and transmission facilities will produce minimal adverse effects on the environment and upon the welfare of the citizens of this state by providing that no energy conversion facility or transmission facility shall be located, constructed, and operated within this state without a certificate of site compatibility or a route permit acquired pursuant to this chapter. The legislative assembly hereby declares it to be the policy of this state to site energy conversion facilities and to route transmission facilities in an orderly manner compatible with environmental preservation and the efficient use of resources. In accordance with this policy, sites and routes shall be chosen which minimize adverse human and environmental impact while ensuring continuing system reliability and integrity and ensuring that energy needs are met and fulfilled in an orderly and timely fashion.” (My emphasis added.)
Well, that’s reasonable enough, I guess. Take care of the people and their environment while providing the energy we need. The two should be compatible. You’d think that it might also keep a refinery away from the boundary of a national park.
The proposed Meridian refinery is a 55,000-bpd facility. The Davis Refinery stock offering from January 2017 says: “Meridian Energy Group Inc. (“Meridian” or the “Company”) is a closely held South Dakota corporation that will construct and operate the Davis Refinery, a 55,000 barrel per day high conversion crude oil refinery on a 715-acre site in Billings County, near Belfield, North Dakota, in the heart of the Bakken formation.”
In its application for a state water permit, Meridian is requesting enough water — 645 acre feet per year — to supply a refinery processing 55,000 barrels of oil per day.
In its application for an air quality permit from the North Dakota Health Department, the company makes its projections on how much pollution they will be producing based on a 55,000 barrel per day refinery.
Well, OK then, it’s going to build a refinery processing more than 50,000 bpd. So the company has to get a siting permit from the PSC, right? Well, not according to the company’s lawyer, Lawrence Bender (I’m going to stop just short of calling him sleazy, too, but I will say the sleazy company found the right lawyer).
Bender wrote a letter to the PSC in which he says, “Please be advised that at this time, Meridian is designing its refinery to be capable of refining twenty seven thousand five hundred (27,500) barrels per day. Further, at this time, there is no design in existence nor plans to propose a design for more than 27,500 barrels.”
Huh? The company had told two other state agencies and all potential investors that the refinery is going to process 55,000 bpd. Oh, he does go on to say, “Though Meridian does not presently have any designs or plans to propose a Refinery with capacity beyond 27,500 barrels of oil per day, Meridian considers it a possibility that such addition could be made at a later date.”
Good grief. A “possibility?” Somebody better tell those investors looking at the stock prospectus for Meridian Energy that the refinery they’re investing in is only a “possibility.”
The PSC members and their staff ain’t stupid. They took note of that and wrote back, “The Commission has received information that Meridian’s application to the State Water Commission for a Water Appropriation Permit is based on a facility capable of refining 55,000 barrels per day. Further, Meridian’s applications to the North Dakota Department of Health for the construction of a new crude oil refinery are based on a facility with a nominal processing capability of fifty five thousand (55,000) barrels per day.”
The letter went on, “Since Meridian is filing applications with other state agencies for permits based on a facility that can refine up to 55,000 barrels per day of oil, and since an oil refinery of that capacity is jurisdictional to the Commission for siting under North Dakota Century Code chapter 49-22, it appears that the proposed refinery is jurisdictional under the siting law. Please let us know whether Meridian agrees, and if so, when we can expect an application.”
Well, good for Patrick Fahn, director of the PSC’s Public Utilities Division, who wrote that letter. He sent it March 1. It took lawyer Bender about three weeks to respond. He said, basically, “Screw you, PSC.”
Explaining the water permit request, Bender reiterated that Meridian only planned to build a 27,500 bpd, but again said again “it is a possibility” that the plan could expand in the future. And in response to the question on the air quality permit, he said basically, “the Health Department made us do it.” Well, of course, they did. They knew what Meridian was up to. They ain’t stupid either.
Bender then went on to say that under an old attorney general’s opinion, issued in 1976 by then-Attorney General Allen Olson, “applications to different state agencies concerning the same energy conversion facility need not be identical.” What? That made no sense to me, so I went and read that opinion, and didn’t quite read it that way, but then I’m not a lawyer. I know former Attorney General (and Governor) Olson reads this blog. Maybe he’ll remember. Attorney General’s Opinion 76-130.
Bender’s conclusion: Meridian doesn’t believe those two applications trigger a site compatibility review by the PSC, and it will not seek a certificate of site compatibility. So it plans to just go ahead and start building a refinery, without PSC permission.
So we’ve got a standoff right now.
I’ve talked to two of the three PSC members about this, and they’re mulling it over. They gave it a run, and the company told them to get lost. So until Meridian puts a shovel in the ground, there’s not much the PSC can do. It’s pretty obvious that the reason Meridian doesn’t want to apply for a site compatibility permit is that it believes the PSC might NOT issue a permit for this location if it applied for one. Well, that seems pretty stupid. Now Meridian has really pissed off the PSC. We’ll see how this plays out.
Meanwhile, Garland Erbele, the state engineer over at the Water Commission, did take some action, announcing he was granting a water permit for only 90 percent of the water Meridian had applied for. His logic: If he only gives Meridian enough water to build a refinery capable of processing 49,999 barrels of oil per day, then Meridian can’t build its 55,000 BPD refinery. There, take that, Meridian!
Cute. Real cute And pure pap. You don’t think Meridian might have a “fudge factor” of 10 percent or so in its request?
And what was Meridian’s reaction to that? Hey, no problem. Here’s a statement from their press release to potential investors: “William Prentice, Meridian CEO, commented on the Allocation Draft Permit, ‘We thank the Water Commission for the thoroughness and fairness of their review. While the recommended allocation is slightly less than we requested, I’m confident that we will employ our resources and determine how to make the Davis Refinery even more efficient, like we’ve done in so many areas thus far.’”
And the company’s engineer, Dan Hedrington, said in the same press release, “The Recommended Decision is the draft permit the Engineer’s Office has been working toward. The document appears very thorough and complete …”
In other words, Thanks, Mr. Erbele. That’ll be just fine.
Really, Erbele’s little stunt is beneath the dignity of a state government agency. That’s playing Meridian’s game. You want to send Meridian a REAL message, Mr. Erbele? Grant them a permit for enough water to process the 27,500 barrels per day.
Meridian says it “might” come back later and decide to expand its refinery capacity to 55,000 bpd, but right now, it’s at 27,500. So give them that much. And tell them if they decide to expand, you “might” give them more water.
There’s precedent for that. Way back in 1974, one of Erbele’s predecessors, Vern Fahy, who worked for Gov. Art Link and Agriculture Commissioner Myron Just (the two elected officials on the State Water Commission), got an application from Michigan Wisconsin Pipeline Co. for water to build a whole bunch of coal gasification plants in western North Dakota. The company requested 68,000 acre feet (Yeah, kind of makes that refinery look like small change, doesn’t it?) and the Water Commission granted them just 17,000 acre feet — a fourth of what they wanted. Wise men, Link and Just. In the end, they didn’t even need that much for the one plant they built — which, by the way, is still in operation today.
Further, they attached a whole list of conditions to the permit. At the time, North Dakota didn’t have much in the way of mined-land reclamation or air pollution laws, so they wrote some, and attached them as conditions to a water permit. Most of those conditions were eventually enacted by the Legislature and became law.
An aside — that water permit and its conditions became the entry point for then Tax Commissioner Byron Dorgan’s involvement in North Dakota environmental matters. Just and Link had Dorgan ask Attorney General Allen Olson if those conditions could stand the test of law. Olson opined that he thought they could, and so they were valid. Credit those four men for leading the way to protecting North Dakota’s environment. We could use four more of them today. Link’s gone, but the other three are still around. Wonder if they’re busy — today’s government leaders could use some advice about what to do with a rogue company like Meridian.
Meanwhile, today’s leaders need to do what those four great leaders did in the 1970s — circle the wagons and sit down and figure out what to do about this sleazy company. Gov. Doug Burgum and Public Service Commission president Julie Fedorchak need to display some leadership here. They need to get all the players in the room — the PSC, the Water Commission, the Health Department, and maybe even the State Securities commissioner (don’t be surprised if THAT office needs to engage at some point) — and figure out how to get this company in line. Surely, Dorgan, Link, Just and Olson would not allow a company such as this to build a refinery three miles from the national park named for our country’s greatest conservation president.
An oil refinery and a national park are not compatible. And we can’t move the national park. we can move the proposed refinery. That’s why we have Section 49-22.1 of the North Dakota Century Code. Let’s enforce it.
Pretty much everybody would agree that building a refinery in North Dakota is a good idea. Pretty much everybody would agree that three miles from a national park is the wrong place to build it (except for three people — the Billings County commissioners, who get to collect massive property taxes from it).
There’s going to be lots more to this story. I’ll try to keep you posted.
Meanwhile, there is now a 30-day comment period for people who commented on the application last year to submit more comments. Seems like a goofy law — anybody should be able to comment on action of a governmental body, any time. But then I was one of those who commented last year, so I get to comment again. Here’s my letter.
Garland Erbele, State Engineer
900 East Boulevard
Bismarck, ND 58505-0850
July 13, 2017
Dear Mr. Erbele,
As a follow-up to my earlier 2016 comments on the application of Meridian Energy for a water permit for 645.2 acre feet of water per year (enough to process 550,000 barrels of oil per day) for its proposed Davis Refinery, I want to tell you what I think of your decision to only grant them a permit for 90 percent of the water they requested.
It is pure pap. That’s what I think of your decision. It’s a cute little gambit that’s just as transparent as their request. Government shouldn’t be cute. Government should just stick to the numbers. Here are the numbers:
Meridian says it is going to build a 27,500 barrel per day refinery. In a letter to the PSC, the firm’s attorney states unequivocally, “Please be advised that at this time, Meridian is designing its refinery to be capable of refining twenty seven thousand five hundred (27,500) barrels per day. Further, at this time, there is no design in existence nor plans to propose a design for more than 27,500 barrels.”
So, Mr. Erbele, if that’s their plan “at the present time,” I suggest you give them enough water “at the present time” to operate a refinery capable of processing 27,500 barrels per day. If, as they also say in their letter, they may “sometime in the future” propose an addition to the refinery to process more than the 50,000 barrels per day which would trigger a site review, then they can come back to you “sometime in the future” and ask for more water.
Do you really believe that cutting their request by 10 percent will keep them from achieving the full potential of their proposed 55,000 barrels per day facility? No responsible engineer on their end would cut an estimate that close on a refinery not even completely designed yet. Surely they have built in a “fudge factor” in case their original water use estimates are too low. Just take a look at the press release they sent out to their investors — 90 percent will be just fine, thank you.
We all know the game Meridian is playing with North Dakota state agencies to avoid having to undergo an environmental assessment and plant siting review by the PSC. For a state agency, the North Dakota Water Commission, to join them in their game is beneath the dignity of government regulators.
Here’s a short follow-up to a story I did a couple of weeks ago about the proposed Davis Refinery, the big industrial plant the California company Meridian Energy wants to build next to Theodore Roosevelt National Park.
You’ll recall the North Dakota Department of Health sent Meridian a letter a month ago questioning some of the emissions projections Meridian used in its application for an air quality permit. NDDOH sad it was stopping its review of the application until Meridian provided more information about that.
Health Department Air Quality Division Director Terry O’Clair listed a number of specific concerns the Department had with the projected emissions numbers, and then concluded his letter with this:
“Given the information provided in the application, more detailed information must be provided prior to the Department continuing its review of the application. For a Facility of this size, in this industry, and at this proposed location, the refinery should be designed according to health, safety, economics, and operability. After a thorough design is completed, emissions should then be estimated based on the actual equipment/operations included in the design. This will provide added assurance regarding projected emissions from the facility. This assurance is vital given the location of the facility …”
“After a thorough design is completed.”Well, that seems to make sense. Design your refinery, and then, based on that design, give us your estimates. Absent that, NDDOH would be approving something based on blue sky, not science.
So this week, Meridian responded to O’ Clair’s concerns in a 13-page, single-spaced letter with 90 pages of attachments, refuting every concern O’Clair listed and accusing the Department of using outdated information as the basis for stopping the review of the application until Meridian provided better information (read: real numbers based on real equipment and an actual design).
And then Tom Williams, vice president of Permitting and Planning at Meridian, concluded his 13-page letter with this:
“In closing, Meridian believes that this letter confirms the emissions estimates submitted in the April PTC Application Amendment. Thus, Meridian believes this submittal fully addresses the items brought up in NDDOH’s letter dated May 15, and does so at a level of detail that is technically and legally justified (Note: there’s that “legally” thing again). Meridian therefore requests that the NDDOH accept and approve our emissions inventory and that NDDOH moves forward in making a full determination of completeness of Meridian’s Davis Refinery PTC application documents.”
The arrogance of these people just takes my breath away. It’s not enough that they want to build an oil refinery next door to a national park, but they want it done RIGHT GODDAM NOW! They don’t seem to understand that for most of us it is not just about how many emissions they make next to the park, it is the fact that they are making ANY emissions next to the park.
They also don’t seem to have read Terry O’Clair’s letter very carefully: “After a thorough design is completed.” Twice in his letter, Meridians Williams confirms that the design is not complete.
Responding to O’Clair’s concern about possible leaks from the facility, Williams writes that such information requires “a level of design that is not available at this stage of the project nor would it typically be available until overall plant design is essentially complete.”
And later he writes, “In summary, based on anticipated actual design and size of facility, Meridian anticipates the final component numbers will be at least 20 percent lower than the ‘model’ counts used in the EPA guidance document which were utilized in the current emissions estimates.”
In other words, North Dakota Department of Health, “Just trust us.”
Well, excuse me, Mr. Williams, but what part of “After a thorough design is completed” don’t you understand?
I asked the folks at the Health Department what happens next. Will they resume the review of the application, based on the 13-page letter and the 90 pages of attachments? Well, no.
First they will review the 13-page letter and the 90 pages of attachments. That’ll take a few weeks. Then they will decide whether they believe Meridian’s numbers, absent a completed design. If so they will begin reviewing the whole application. That’ll take months. If not, they’ll send another letter to Meridian, reminding them that they want the numbers based on a completed design, not speculation.
What about Meridian’s claim that the Health Department used outdated information? The Health Department will take a look at that. A Department spokesman said the scientists there are “pretty up to date on those things.”
But, you know, this whole thing should boil down to more than just numbers. It really shouldn’t matter if particulates in the air are 20 or 30 or 50 parts per million. There shouldn’t be any particulates in the air next to a national park. There should not be a giant plume of steam and gases causing not just chemical pollution, but visual pollution, next to a national park.
There should not be hundreds of oil trucks a day kicking up giant clouds of dust heading into a refinery to dump their loads. What does all that say about a state that would allow that to happen? What kind of message is North Dakota sending, that we care so little about a park named after, and dedicated to, the greatest conservation president ever, that we would allow that to happen?
North Dakotans are vest button-popping proud of their national park and justifiably so. The Bad Lands of the Little Missouri are our most cherished landscape, but if you read your park history, you know that we would not have that national park had not Roosevelt lived and ranched here as a young man. It’s his conservation legacy that got us a national park, and we need to defend and protect that legacy until our dying breaths.
No, it’s about more than the numbers. Our state’s leaders need to sit that California company’s executives down, look them in the eye, and say “Listen, assholes, move that damn refinery somewhere else. You don’t need to put it beside our national park.” Or something like that.
Today’s leaders need to remember the words of Gov. Art Link because right here, right now, they apply as much as they did in the 1970s:
“We do not want to halt progress; we do not plan to be selfish and say North Dakota will not share its energy resources. We simply want to ensure the most efficient and environmentally sound method of utilizing our precious coal and water resources for the benefit of the broadest number of people possible.”
“And when we are through with that and the landscape is quiet again, when the draglines, the blasting rigs, the power shovels and the huge gondolas cease to rip and roar and when the last bulldozer has pushed the spoil pile into place and the last patch of barren earth has been seeded to grass or grain, let those who follow and repopulate the land be able to say, our grandparents did their job well. The land is as good and in some cases, better than before.
“Only if they can say this, will we be worthy of the rich heritage of our land and its resources.”
Our rich heritage. Our national park. Are you listening, Gov. Doug Burgum?