IBJNews

State's top court gives Rockport developer a victory

Back to TopCommentsE-mailPrintBookmark and Share

The developers of a controversial coal-to-gas plant planned for Rockport say the Indiana Supreme Court has handed them a decisive victory in a battle over whether a deal to build it complied with state law.

But a utility company that’s been fighting the project argues the opposite.

The 5-0 ruling appears to eliminate a significant hurdle for Leucadia National, the plant’s developer, which had all but given up the project after legislative action made it likely it would need a new review.

The Supreme Court’s decision essentially makes that need for review moot, said Leucadia project manager Mark Lubbers.

“We won a complete and total victory,” Lubbers said. Still, company officials weren’t ready to talk Tuesday about when or if they’ll move forward with the plant.

Instead, Lubbers pointed to an April 30 statement in which the company said that even if it won in the courts, “only a clear reversal of position by the governor would enable the project to go forward.”

The statement came just after Gov. Mike Pence had said he would sign a bill into law that was meant to provide a new review of the project.

On Tuesday, a spokeswoman for Pence didn’t elaborate on the governor’s position on the plant or the decision. “We are reviewing the case, the contract and the relevant law,” said press secretary Kara Brooks.

The $2.8 billion Indiana Gasification project is the result of a sort of public-private partnership brokered by the company with the administration of former Gov. Mitch Daniels, for whom Lubbers had once been a top adviser.

The state wouldn’t take any ownership in the plant. Instead, under the deal signed by the Indiana Finance Authority, the state would purchase synthetic natural gas produced by the plant for 30 years at a fixed price and then resell it in the marketplace. The state would then pass the savings – or the losses – onto natural gas customers in the state.

Daniels argued that, over time, the cost of the synthetic fuel produced by the plant would be cheaper than natural gas. And meanwhile, the plant would use Indiana coal and provide jobs to Hoosiers.

But opponents – consumer groups and some utilities, including Evansville-based Vectren Energy – argued the state struck the deal before an explosion of shale gas extractions led the price of natural gas to plummet. The opponents say the deal is no longer a good one for Hoosiers.

Vectren Vice President Mike Roeder said the arrangement “is a loser in virtually all scenarios into the future. Given the fundamental changes that have occurred in the natural gas market since this project was proposed and the dated financial information in the contract, the project must be reviewed.”

At issue in the court case, though, was the wording of the state’s contract with Leucadia. The Indiana Utility Regulatory Commission approved the deal in 2011 but the Indiana Court of Appeals reversed that decision the following year, saying the contract included a clause that violated state law.

The Indiana Finance Authority and the Rockport developers agreed to drop that language from the contract, but that raised questions about whether the revised document would need another round of regulatory review.

Then earlier this year, the General Assembly passed a law that required such a review – but only if the Indiana Supreme Court had agreed with the lower court ruling or found the contract invalid.

That seemed so likely that Leucadia pulled the plug on the plant shortly after the legislation passed, despite having invested some $27 million in development. “We have been disappointed by the state’s breaking its commitment to the plant and the project,” Leucadia spokesman Mike Murphy said in April. “They have changed the rules in the middle of the game.”

But on Tuesday, the state’s highest court appeared to uphold the authority of the Indiana Finance Authority and Leucaida to resolve what it called a “definitional issue” in the contract. “Thus the issue is moot,” the court said.

That means the law requiring a second look at the contract won’t kick in, Lubbers said.

But Vectren officials disagreed, saying they believe the court decision means the Indiana Utility Regulatory Commission will need to review the contract, Roeder said.

The law passed earlier this year “now applies and, if the project is pursued by the developer, will govern consumer protection of any new contract.”

Even if that’s not true, Leucadia’s path to building the plant is not totally open. The Indiana Finance Authority still has one final sign off on the project. And it’s not clear how the Pence administration will approach that decision.

Also, Leucadia needs a loan guarantee from the U.S. Department of Energy to move forward.

The Indiana Supreme Court’s decision came just about three months after it heard oral arguments in the case. The review had been controversial because one of the state’s newest justices – Mark Massa – declined to recuse himself even though he had been Daniels’ general counsel when the Rockport deal was under consideration. Massa is also friends with Lubbers.

ADVERTISEMENT

  • This plant still has a long way to go
    Having met with the CEO of the plant's sponsor, Leucadia National Corp. in September, I am confident that the sponsoring company will ultimately abandon this project due to its extreme risk to the company and it desire not to anger millions of Hoosiers by forcing them to pay a high premium just so they can heat their homes with coal gas. The project's Indiana staff has been less than candid with the people of this state from the beginning in 2006 (the plant was to be operating by 2010 by the way) and regardless of the wishes of Mark Lubbers to get really rich from this deal, it makes zero sense economically for any of the parties involved, including its owners and the State of Indiana. Daniels' attempt at real "crony capitalism" is his legacy. I find it odd that such a deal, which places the State in direct competition with the private sector allows our former governor to maintain his supposed "conservative" credentials since this authoritarian deal resembles the communist Chinese model of business more than it does anything called free enterprise. We should all be disgusted and demand corrective action from State officials immediately. John Blair, president of Valley Watch based in Evansville.
  • will be switching to electric or geothermal
    When my gas furnance dies i'm either going electric or geothermal. May not be as efficient as gas, but in the long run will be cost a lot less because of the cost of gas under this deal being artificially high. Funny that a Republican "free hand of business" administration has locked the state into this terrible deal... Ugh...
  • Corporate Giveaway
    'Tis the season to give.
  • s***w the people
    And again WE THE PEOPLE are required to pay and pay (and pay) so the rich get richer and we have NOTHING to say in the matter. Its the hoosier way, apparently.

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. Gay marriage is coming, whether or not these bigots and zealots like it or not. We must work to ensure future generations remember the likes of Greg Zoeller like they do the racists of our past...in shame.

  2. Perhaps a diagram of all the network connections of all politicians to their supporters and those who are elite/wealthy and how they have voted on bills that may have benefited their supporters. The truth may hurt, but there are no non-disclosures in government.

  3. I'm sure these lawyers were having problems coming up with any non-religious reason to ban same-sex marriage. I've asked proponents of this ban the question many times and the only answers I have received were religious reasons. Quite often the reason had to do with marriage to a pet or marriage between a group even though those have nothing at all to do with this. I'm looking forward to less discrimination in our state soon!

  4. They never let go of the "make babies" argument. It fails instantaneously because a considerable percentage of heterosexual marriages don't produce any children either. Although if someone wants to pass a law that any couple, heterosexual or homosexual, cannot be legally married (and therefore not utilize all legal, financial, and tax benefits that come with it) until they have produced a biological child, that would be fun to see as a spectator. "All this is a reflection of biology," Fisher answered. "Men and women make babies, same-sex couples do not... we have to have a mechanism to regulate that, and marriage is that mechanism." The civil contract called marriage does NOTHING to regulate babymaking, whether purposefully or accidental. These conservatives really need to understand that sex education and access to birth control do far more to regulate babymaking in this country. Moreover, last I checked, same-sex couples can make babies in a variety of ways, and none of them are by accident. Same-sex couples often foster and adopt the children produced by the many accidental pregnancies from mixed-sex couples who have failed at self-regulating their babymaking capabilities.

  5. Every parent I know with kids from 6 -12 has 98.3 on its car radio all the time!! Even when my daughter isn't in the car I sometimes forget to change stations. Not everybody wants to pay for satellite radio. This will be a huge disappointment to my 9 year old. And to me - there's so many songs on the radio that I don't want her listening to.

ADVERTISEMENT