Thursday, September 05, 2013
Ind. Courts - "Controversial $2.8B Rockport deal argued before Indiana Supreme Court"
John Russell of the IndyStar reports on this morning's oral argument before the Supreme Court in the case of Indiana Gasification Company, Inc. v. Indiana Finance Authority. (For background start with this ILB post from Sept. 3rd, which includes links to the briefs. Here is a link to the now vacated Oct. 30, 2012 COA opinion.)
From the Star story:
A company that wants build a $2.8 billion plant in Rockport that would turn coal into synthetic gas urged the Indiana Supreme Court today to allow the deal to go ahead, saying legal problems with the contract have been fixed.The story continues:
But opponents said the company has no right to amend the 30-year deal, which an appeals court struck down last month, without another review by state regulators.
The Supreme Court heard arguments for 45 minutes this morning in a case that could decide the outcome of the controversial plant. The proposed deal, years in the making, has pitted some of some powerful utilities and citizens groups against in the state against the developer and its supporters.
The Indiana Court of Appeals ruled last fall that the contract improperly would have forced a group of big industries to shoulder a portion of the plant’s costs or share in its benefits. That was not what lawmakers intended in 2009 when they authorized the Indiana Finance Authority to negotiate the deal, the appeals court ruled.
Attorneys for Indiana Gasification [Norman Funk] said the problems identified by the appeals court were small and have been fixed with an amended contract between the company and the Indiana Finance Authority.
The company asked the court to find the amended contract “perfectly fine,” and declare the Indiana law that held it up to be unconstitutional.
“Let the contract go forward with no impairment,” said Karl L. Mulvaney, an attorney for Indiana Gasification.
But Norman Funk, an attorney for Vectren Energy and other opponents of the deal, said the the parties must negotiate an “all-or-nothing contract,” and any changes need to go back to the regulatory commission for review.Justice Massa asked the first question of the day, whether the issues raised had been mooted by the reformation of the contract? From the story:
He said that under the principle of separation of powers, the Supreme Court could not simply approve editing changes to the deal.
“This court cannot blue-line this kind of contract,” Funk said. “We believe that would be a usurpation of the executive branch.”
Funk said it wasn’t, arguing that the law governing such contracts “was no accident, an oversight or a misplaced comma.”ILB: Justice Rucker was the most active questioner, followed by Justice David. Chief Justice Dickson and Justice Rush each asked several questions.
“Either all of it [the contract] was valid or none of it was valid,” Funk said.
Both parties filed additional authority, according to the docket, but Indiana Gasification filed additional authority as recently as yesterday. The document isn't available but from the argument it appears that it cites to the the 1995 decision in Pence v. State, which argued that non-related provisions had been included in a budget bill. Mulvaney began his argument citing that case and the separation of powers. J. Rucker noted there had been no opportunity to brief that argument.
Also argued was the dissenting opinion by Chief Judge Robb in the Court of Appeals opinion, which included:
However, if a contract contains an unauthorized provision that can be eliminated without frustrating the basic purpose of the contract, the remainder of the contract may be enforced. * * * Because the transportation customers are an easily identifiable group, I believe we could merely exclude that part of the Contract which includes transportation customers in the definition of retail end use customers without frustrating the primary purpose of the Contract. Accordingly, I would hold, with the exclusion of that part of the Contract definition of retail end use customers which applies to transportation customers, that the Contract was properly approved by the Commission.Funk argued that the Court could not "blueline" a contract amendment which to be effective had to be approved by the IURC. He said it would be usurpation to tell IURC what it must do. The contract, to be enfoceable, said Funk, must be approved by the IURC -- not just the original version, but the amendments.
[More] A just posted AP story by Charles Wilson includes:
Legislators in April ordered the Indiana Utility Regulatory Commission to consider new ratepayer protections that were not initially in place when regulators first approved the deal if the Indiana Supreme Court voids the contract. Plant developers were appealing a Court of Appeals decision that found that part of the contract violated state law.[Even more] Some may find interesting this post today at How Appealing.
"This is not a run of the mill private contract," said Tom Funk, who represented the plant's critics, including natural gas utility Vectren and consumer and environmental groups.
"Everyone knows that at some point in 30 years the price of synthetic gas will exceed (the price of) natural gas," Funk said. "That cost has to be paid by somebody. And who it's paid for is by the end users of the contract."
Opponents have said the contract would cost Indiana utility customers as much as $1.1 billion in higher rates and tie 17 percent of Hoosier gas users' bills to the Rockport plant's rate.
All five justices took part in the hearing, including Justice Mark Massa, who rejected calls for him to step aside due to his friendship with a top Indiana Gasification official.
Attorney Karl Mulvaney, who argued for Indiana Gasification and the Indiana Finance Authority, questioned the authority of the court and the General Assembly to intervene in a deal involving the state's executive branch, saying that violated the constitutional separation of powers. [ILB: the GA enacted SEA 494 in 2013]
"I have never seen a case where a contract was impaired by legislation after the contract was initiated," Mulvaney said.
Posted by Marcia Oddi on September 5, 2013 02:38 PM
Posted to Indiana Courts