Sunoco has been trying to build a major NGL processing facility in Marcus Hook without the proper environmental permits. Now, thanks to the Clean Air Council, their approach has been rejected and is being given a new, more thorough review by the Department of Environmental Protection (DEP).
One project or many? Sunoco has never applied for the environmental permits needed to build an entire NGL processing facility at Marcus Hook. Instead, the company has tried to portray its Marcus Hook developments as a number of discreet projects and enhancements of the facilities already there, none of which emitted enough pollutants to reach the regulatory limits. The Clean Air Council argued that they were in fact all one big project and needed to be regulated that way.
The Clean Air Council objected specifically to a decision by the DEP to approve an application called “Project E” that allowed Sunoco to repurpose three fractionation towers (two for extracting propane from an NGL mixture and one for extracting butane). It appealed the DEP’s decision to the Environmental Hearing Board (EHB), claiming that Sunoco had structured all its project applications (including the Project E application) to avoid two sets of regulations (called “Nonattainment New Source Review” and “Prevention of Significant Deterioration”). These regulations are meant to ensure that new projects do not exceed regulatory limits on emissions. The permit that Clean Air Council objected to was just the latest in a long series, each of which added new NGL-related equipment to the Marcus Hook facility.
In an opinion published yesterday (January 9, 2019), the EHB agreed with the Clean Air Council and found that Sunoco’s approach was unlawful.
Sorry, Sunoco: it’s all one project. The decision came down to a discussion of what a “project” is. Sunoco claimed that trivial, even silly, differences could constitute “different projects”. For example, they claimed that a project aimed at building tanks to store ethane and propane was different from another project aimed at building tanks for “additional quantities” of ethane and propane.
You can read the entire EHB opinion (78 pages) here. Judge Labuskes, in writing the opinion, says “We are unable to credit the suggestion that Sunoco planned anything less than a facility designed to store, fractionate, and export multiple components of NGLs. Although Sunoco began by permitting two tanks for ethane and propane…, we cannot credit the notion that Sunoco ever thought that would be the end of site development. We do not believe that, when Sunoco decided to install a deethanizer…, its plan was to stop there. The same point maintains through and including the equipment permitted under [Project E]. The fact that the details of the project may have changed over time does not change the reality that it has all been part and parcel of one project from the beginning.”
The Judge found that several reasons the projects (six major and several smaller ones) should have been treated as a single one:
- Physical proximity. The projects are all close together. “The physical proximity is not surprising given the functional interdependence of the various components and the fact that various of the components are literally linked by common infrastructure.”
- Temporal proximity. “In November 2012, Sunoco submitted its application for Project 1, which was granted on February 5, 2013 (storing ethane and propane)…. Only one month later, Sunoco submitted its application for Project A (the deethanizer)…. The Department granted a plan approval for Project A on September 5, 2013. During that same month, September, Sunoco submitted its application for Project B (natural gasoline)…. On January 30, 2014, the Department granted the plan approval for Project B. Less than three months later, Sunoco submitted its application for Project C (the cooling tower).… The Department granted a plan approval for Project C on November 19, 2014. Two months before the Department granted a plan approval for Project C, Sunoco submitted its application for Project D…. On February 26, 2015, the Department granted a plan approval for Project D (increased storage). Less than six months later, Sunoco submitted RFD 5236 (more storage)…. Within one week, the Department approved RFD 5236. About one month later, Sunoco submitted its application for Project E (depropanizers and debutanizer)…. On April 1, 2016, the Department granted the plan approval for Project E. … Clearly there can be no reasonable dispute that the sequenced projects at issue indeed occurred in relatively quick succession. “
- Interdependence of projects. “The fact that nominally separate construction projects are in fact operationally, technically, and economically interdependent strongly supports a finding that the projects should be considered to be one project….”
- Common plan and shared objective. “… the evidence of a common plan and shared objective supports our conclusion that there is actually only one true project. The common objective of [the various projects] is to take the NGLs that are delivered from the Mariner East pipelines and other sources, fractionate those NGLs into individual products, and store and ship those products offsite. The purpose of all of the equipment, working together, is to convert mixed NGLs into their marketable subparts.”
The judge concludes: “it is the combination of factors here that convinces us that [the project Clean Air Council protested] should have been aggregated with the earlier projects. Geographic and temporal proximity, operational interdependence, and the common plan are all compelling evidence of a single project. Sunoco and [the DEP] offer little, and nothing persuasive, to convince us otherwise.”
What happens next? Now the case goes back to the DEP, and the emissions from all of the projects (as well as future related projects, some of which have already been applied for) must be considered together as a single project.
The only disappointing part of this is that Sunoco will be able to carry on with their construction while this re-evaluation is done. Clean Air Council asked for the construction to be stopped pending the review, but the judge turned them down. He writes, “…the Council has not shown us that such a potentially extreme remedy is necessary or appropriate in light of any actual harm to public health or the environment. [The DEP] and Sunoco are convinced that further study will make no practical difference, and the Council has not convinced us that they are wrong.”
Nevertheless, this is a major victory for Clean Air Council and for the environment. Sunoco is now on notice that no more major work at Marcus Hook can be done without close environmental scrutiny—something that has been missing up to now.