(Corrects description of exemption in fourth paragraph of story published July 15.)
July 15 (Bloomberg) -- PBF Energy Inc.’s growing rail operation at its Delaware City refinery will face a challenge from environmentalists at a state regulatory hearing tomorrow.
The Delaware Audubon Society and the state chapter of the Sierra Club say that PBF’s plans to boost capacity to transport 150,000 barrels a day of crude by the end of the year run afoul of limits on industrial-site footprints near the coast. The Coastal Zone Industrial Control Board could veto the expansion.
“Crude by rail is the whole premise of the company,” said Sam Margolin, an analyst who covers PBF for Cowen & Co. in New York. “That’s what supports East Coast refining.”
Tomorrow’s hearing will consider whether Collin O’Mara, secretary of the state’s Natural Resources & Environmental Control Department, erred May 31, when he exempted PBF’s marine dock from the regulation, which prohibits “certain new activities, such as the bulk transfer of raw materials” near the coast.
The environmental groups appealed the decision to the nine-member board, which includes county officials and appointees by the governor. PBF filed its own motion to the board July 5 to dismiss the environmental appeal, citing federal law against state interference with rail transportation.
The decision may ultimately end up in Delaware Superior Court, said Kenneth Kristl, a law professor at Widener University who filed the appeal for the Sierra Club and Audubon Society.
“The board has authority under the act to affirm or reverse a decision of the secretary,” he said. “Whether we win or lose, this case may go to Superior Court for that court to review the board’s decision.”
The hearing comes about a month after environmentalists and company supporters debated the refinery’s track record at another public meeting to consider the renewal of several environmental permits.
Michael Karlovich, a PBF spokesman in Parsippany, New Jersey, declined to comment on the Coastal Zone appeal before the hearing takes place, as did Mark Martell, president of the Delaware Audubon Society.
PBF expects to deliver 100,000 barrels a day of light Bakken crude by rail to the company’s refineries in the region by the third quarter and 40,000 barrels a day of Canadian heavy oil before year’s end, according to a presentation in May at a Morgan Stanley Refining event.
Bakken crude priced in Clearbrook, Minnesota, weakened by $2.25 to a discount of $4 a barrel against U.S. benchmark West Texas Intermediate, according to data compiled by Bloomberg at 2:11 p.m. New York time. It’s the widest discount since June 4.
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