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.


  • 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

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

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
Subscribe to IBJ
  1. I had read earlier this spring that Noodles & Co was going to open in the Fishers Marketplace (which is SR 37 and 131st St, not 141st St, just FYI). Any word on that? Also, do you happen to know what is being built in Carmel at Pennsylvania and Old Meridian? May just be an office building but I'm not sure.

  2. I'm sorry, but you are flat out wrong. There are few tracks in the world with the history of IMS and probably NO OTHER as widely known and recognized. I don't care what you think about the stat of Indy Car racing, these are pretty hard things to dispute.

  3. Also wondering if there is an update on the Brockway Pub-Danny Boy restaurant/taproom that was planned for the village as well?

  4. Why does the majority get to trample on the rights of the minority? You do realize that banning gay marriage does not rid the world of gay people, right? They are still going to be around and they are still going to continue to exist. The best way to get it all out of the spotlight? LEGALIZE IT! If gay marriage is legal, they will get to stop trying to push for it and you will get to stop seeing it all over the news. Why do Christians get to decide what is moral?? Why do you get to push your religion on others? How would legalizing gay marriage expose their lifestyle to your children? By the way, their lifestyle is going to continue whether gay marriage is legalized or not. It's been legal in Canada for quite a while now and they seem to be doing just fine. What about actual rules handed down by God? What about not working on Sundays? What about obeying your parents? What about adultery? These are in the 10 Commandments, the most important of God's rules. Yet they are all perfectly legal. What about divorce? Only God is allowed to dissolve a marriage so why don't you work hard to get divorce banned? Why do you get to pick and choose the parts of the Bible you care about?

  5. Look at the bright side. With the new Lowe's call center, that means 1000 jobs at $10 bucks an hour. IMS has to be drooling over all that disposable income. If those employees can save all their extra money after bills, in five years they can go to the race LIVE. Can you say attendance boost?