Board to review parts of Hyperion permit

[June 16, 2010]  PIERRE, S.D. (AP) -- A judge on Tuesday granted a request from Hyperion Resources to have a state board reopen the permitting process for a $10 billion oil refinery the company wants to build in southeast South Dakota.

The state Board of Minerals and Environment granted an air quality permit for the project last August. The Sierra Club and two local groups filed a lawsuit seeking to overturn the permit on the grounds that it does not address some environmental issues.

Hyperion said it needs to delay the start of construction while the appeal is pending and wants the state board to consider new rules implemented by the U.S. Environmental Protection Agency since the permit was granted.

Robert Graham, a lawyer for the opponents, asked Circuit Judge Mark Barnett to vacate the entire permit. Graham said the fact Hyperion wants to reopen the process is an acknowledgment that the permit is flawed.

Hyperion attorney Rick Addison said that's not the case and that the company wants to make sure it's meeting all compliance standards with a state-of-the-art refinery.

"We haven't admitted anything is wrong with our permit," Addison said. "We could start construction now with the permit we have."

Barnett refused to set a deadline for the board to complete its review of new evidence and said it has the latitude to hear arguments brought by project opponents. He surmised, though, that the board would not take up issues covered in a previous hearing process spread over several months.

The permit granted to Hyperion requires it to begin construction within 18 months -- by February 2011 -- but the court appeal will delay that.

Because the permit is now in the courts, the state cannot grant an extension on the start of construction, Deputy Attorney General Roxanne Giedd told Barnett.

The state supported Hyperion's request to reopen the process so an 18-month extension could be part of the board's review, she said.

Hyperion executive Preston Phillips said after the hearing that the company plans to begin construction in the second half of 2011.

The refinery would be located on 3,800 acres north of Elk Point. It would process 400,000 barrels of Canadian tar sands crude oil each day into low-sulfur gasoline, diesel, jet fuel and liquid petroleum gas.

Specific items the board is expected to consider in its review are new EPA rules regarding emissions of sulfur dioxide, nitrogen dioxide, and those from a process to turn a refinery byproduct into electricity; proposed new EPA rules on greenhouse gas emissions; so-called Best Available Control Technologies, and a delayed start to construction.

Reopening the permitting process will put the court challenge on hold. A hearing in the case had been scheduled for June 23.

[Associated Press; By WAYNE ORTMAN]

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.