Court rules against Delaware City Refinery in ethanol appeal

A judge has breathed new life into a two-year effort to block a major expansion of the Delaware City Refinery's biofuel operations.

Superior Court Judge Diane Clarke Streett on Friday sided with two civic groups seeking to halt the expansion, ruling that a state board erred when it rejected their appeal of a state permit that allowed the project to go forward.

The Delaware Audubon Society and the Delaware League of Women Voters argue that permit violated the Coastal Zone Act, the state's landmark environmental law. But their case was dismissed after a state board determined the groups' members would not be impacted by the project.  

Streett's ruling means the same state board will have to reconsider whether groups have legal standing to bring the appeal. A new hearing date had not been scheduled as of Monday.

"We continue to believe that Delaware Audubon and League of Women Voters of Delaware have standing to challenge the [Coastal Zone Act] Permit issued to the Refinery for transshipment of ethanol, and look forward to convincing the Board to change its conclusion and then get on to the merits of whether the Permit violates the CZA," said Ken Kristl, the attorney who represented the groups in court.

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Officials with the Delaware City Refinery and its New Jersey-based owner PBF Energy were not immediately available for comment Monday.

The refinery has been trying since mid-2016 to undertake a $7 million project that would allow the facility to receive and store up to 10,000 barrels of ethanol a day before shipping the unblended gasoline additive to other facilities along the East Coast.

The refinery now brings in about 2,000 barrels per day, all of which is currently blended with gasoline produced at the facility.

PBF argues that adding the ability to sell unblended ethanol to other refineries will be crucial for the plant to “remain economically viable in the highly competitive refining industry.”

Environmentalists, meanwhile, see the project as yet another step in what they say is PBF’s plan to transform the refinery into a hub-and-spoke transportation business – a shift they say violates the Delaware Coastal Zone Act, the state's landmark environmental law.

Over their objections, the Delaware Department of Natural Resources and Environmental Control affirmed that the refinery's Ethanol Marketing Project is consistent with the state's Coastal Zone Act, clearing the way for the company to seek other permits needed to undertake the new operation.

The Delaware Audubon and the Delaware League of Women Voters petitioned a state board to overturn DNREC's approval. They argued the project would result in increased train and barge shipments of highly explosive ethanol, which in turn would produce more noise, traffic and the risk of potential accidents.

A lawyer for the Delaware City Refining Co. claimed the concerns raised by the civic groups are related to activities that already exist. He also contended that the notion the project would result in more barge and train traffic is "a mere assumption."

The Coastal Zone Industrial Control Board sided with the refinery and ruled the two civic groups failed to prove their members would suffer any direct harm from the project, or that there would be any increased rail or barge activity.

Its members voted 5-1 to dismiss the case without hearing the civic groups' arguments against the legality of the permit.

But, Streett ruled, the CZICB failed to consider whether an increase in ethanol shipments at the plant "could or would increase the risk (and fear) of explosion ... or whether any increased risk could be redressed."

She remanded the case back to the board and directed its members to weigh whether the increased flow of the flammable biofuel could result in injuries that "would be worse, different or occur more frequently if the permit were granted."

"We are obviously pleased that the Board will now reconsider this standing issue," said Peggy Shultz, a member of the League's board. "Once we get to the case itself, we believe that our position will prevail."

The decision marks a rare victory for environmentalists engaged in a long-running battle with the refinery and DNREC.

The courts, for instance, ruled against Audubon and the Delaware Sierra Club when they challenged a 2013 DNREC permit that allowed PBF Energy to export up to 45,000 barrels of crude oil by barge daily from its docks in Delaware City to another refinery it owns in Paulsboro, New Jersey.

The groups at that time argued that allowing the refinery to ship crude oil to Paulsboro would open the door to a wider array of bulk shipments prohibited by the Coastal Zone Act.

Despite the order by state regulators limiting those shipments to a single destination, the Delaware City refinery admitted in late 2016 that it almost immediately began sending crude to other refineries along the Delaware River.

Those third-party shipments only became known after a whistleblower at a refinery in Philadelphia tipped off the Delaware Department of Justice.

After The News Journal published an article about DNREC's failure to act on that tip, the agency issued a $150,000 fine to the refinery, which is now appealing the penalty.

A hearing on that appeal is now scheduled for Feb. 27.

Contact reporter Scott Goss at (302) 324-2281, sgoss@delawareonline.com or on Twitter @ScottGossDel.