The Associated Press February 9, 2012, 8:18PM ET

APNewsBreak: Judge upholds Hyperion permit in SD

A judge upheld a state permit Thursday that would allow a proposed $10 billion oil refinery to be built in southeastern South Dakota.

The state Board of Minerals and Environment made no mistakes in issuing an air quality permit to Hyperion Resources, Circuit Judge Mark Barnett of Pierre ruled. The company's proposed refinery north of Elk Point would be the first new U.S. oil refinery built since 1976.

Lawyers for three groups opposing the project have argued that the air quality permit approved by the board was flawed because a more thorough environmental study should have been done and the permit does not require sufficiently stringent technology to control pollution.

The judge said the board did not have to conduct a more thorough environmental review, and did not have authority to require a complete environmental impact study. The board argued its consideration of the permit took into account all relevant environmental issues.

Barnett also said the board properly applied the best available control technology to deal with pollution that could be produced by the plant.

"This court is unable to find any error in the findings of fact and conclusions of law of the BME," Barnett wrote.

Barnett also upheld the board's decision to extend the deadline for starting construction on the project until March 2013. When completed, the plant is expected to process 400,000 barrels of Canadian tar sands crude oil each day into low-sulfur gasoline, diesel, jet fuel and liquid petroleum gas.

Ed Cable, a leading opponent of the project, said the groups challenging the permit will review Barnett's decision before deciding whether to appeal the case to the South Dakota Supreme Court.

Eric Williams, a spokesman for Hyperion, said the decision validates the company's belief that the project will be the most environmentally sound refinery in the world.

"While we certainly wish the permitting of the project didn't have delays, we're in this for the long haul and are glad we're one step closer to beginning construction and producing ultra-low-sulfur diesel and gasoline refined here in the U.S.," Williams said in a written statement.

The project would employ 4,500 construction workers for more than four years and 1,800 permanent workers once the plant begins operating, Williams said. The project also would include a power plant that produces electricity for the refinery. It would use a byproduct of the refinery process, solid petroleum coke, which would be turned into gas and burned to produce electrical power.

Hyperion, based in Texas, contends the refinery would be a clean, modern plant that would use the most advanced, commercially feasible emission control technology.

The Sierra Club and two local groups, Save Union County and Citizens Opposed to Oil Pollution, argue the refinery could emit too much pollution and hurt the quality of life in the rural area.

The Board of Minerals and Environment originally issued an air quality permit in August 2009 that called for construction to begin by Feb. 20, 2011. Company officials said the project was delayed because the recession caused problems in securing financing. The original permit also was appealed in court, and Barnett sent the case back to the board for some further proceedings.

The board issued a revised permit in September, approving changes to reflect updated national air quality standards and new pollution-control technology. The revised permit also gave the company additional time to begin construction.

Opponents argued the board was wrong to extend the deadline for construction to begin. The original permit expired last February, and Hyperion should wait to seek a new permit based on the latest standards and technology when it is ready to begin construction, they said.

Barnett ruled that the permit remained valid because Hyperion filed a request to extend the deadline for starting construction. The board was justified in extending the deadline because the project was held up by the recession, the first court appeal and changing environmental standards, he said.


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