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Toledo, Ohio & Lake Erie

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The Ohio Environmental Review Appeals Commission (ERAC) last week granted summary judgment in support of the FDS Coke Plant, LLC, and against the Sierra Club and the Village of Harbor View.

At issue was whether a permit issued to FDS Coke is still valid. The Sierra Club and Harbor View insisted the permit had expired. In order to keep the permit, FDS Coke had to have a contract to construct the facility, with financing and designs in place. FDS Coke asserted the permit did not expire and that it had binding construction contracts.

On June 14, 2004, the director of the Ohio Environmental Protection Agency issued a Permit to Install (PTI) to FDS Coke to construct the coke plant, to be located on 53 acres of property owned by the Toledo-Lucas County Port Authority that straddles the border of Oregon with East Toledo near the Maumee River.

The expiration date of the PTI was December 14, 2005. Prior to the expiration date, the director extended the expiration date of the permit to December 14, 2006. Prior to the December 14, 2006 expiration date of the permit, contracts were executed between FDS and Talon Consulting and FDS and UHDE, states the commission.

At the time the director granted the 12 month extension of the PTI, the Ohio Administrative Code stated that a permit to install terminates within 18 months of the effective date of the permit to install if the owner or operator has not undertaken a continuing program of installation of modification or has not entered into a binding contractual obligation to undertake and complete within a reasonable time a continuing program of installation or modification. It also stated that the director may modify a permit to install to extend these dates of expiration by up to 12 months if the applicant submits, within a reasonable time before the termination date, an application for modification, containing information that justifies the extension.

FDS’ PTI would have expired on Dec. 14, 2006, unless it had satisfied one of two prongs: FDS had undertaken a continuing program of installation; or it had entered into a binding contractual obligation to undertake and complete within a reasonable time a continuing program of installation.

“Continuing program of installation” is defined as “to begin actual construction, erect, locate, or affix any air contaminant source,” states the ruling. “At the time the director issued the underlying permit and permit extension, `begin actual construction” was defined in the Ohio Administrative Code as “the initiation of physical on-site construction activities on an emissions unit that are of a permanent nature.” FDS acknowledged that there was no physical construction at the site, so it had not satisfied the first prong.

FDS did, however, satisfy the second prong.

The Sierra Club and Harbor View contended that FDS did not enter into a binding contractual obligation to undertake and complete within a reasonable time a continuing program of installation prior to December 14, 2006, and that FDS’ PTI expired as of that date. They asserted that the contracts, executed between FDS and Talon Consulting, and FDS and UHDE prior to December 14, 2006, represent a construction management agreement (Talon Consulting) and a design contract (UHDE), which fails to satisfy the requirement of the Ohio Administrative Code for a “binding contractual obligation to undertake and complete within a reasonable time a continuing program of installation.”

The commission ruled that the contracts entered into between FDS and Talon Consulting and FDS and UHDE prior to December 14, 2006, fulfilled the requirement in the Ohio Administrative Code that FDS had “entered into a binding contractual obligation to undertake and complete within a reasonable time a continuing program of installation,” which prevented the expiration of FDS’ PTI.

“The commission finds it notable that the second prong of the Ohio Administrative Code does not require that a construction contract be entered into to avoid expiration of a permit; rather, it requires that a “binding contractual obligation to undertake and complete within a reasonable time a continuing program of installation be entered into,” states the ruling.

A review of the UHDE contract by the commission, which predates the Dec. 14, 2006 expiration date of FDS’ PTI, included an affidavit of the chief engineer of UHDE Corporation that describes the contract as “the binding primary terms of the agreement between UHDE and FDS for the purpose to provide engineering, design and procurement service to FDS.”

The commission reviewed the contract between FDS and Talon Consulting, which showed that Talon “has been retained to oversee all work associated with the construction of the FDS Coke plant, and to advise FDS to accept and pay for the work as it is completed.”

“The commission believes this contract also supports a determination that FDS has “entered into a binding contractual obligation to undertake and complete within a reasonable time a continuing program of installation,” states the ruling.

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