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Wednesday, December 18, 2013

Ind. Decisions - Round-up of stories today on the Supreme Court's Indiana Gasification/Rockport/Leucadia decision

Sadly, one of the best stories I've read on the opinion, and it was very early this morning, was written by the Evansville Courier & Press' new statehouse reporter (replacing Eric Bradner), Chelsea Schneider. The story, headed "Indiana Supreme Court clears way for Rockport plant," is now totally behind a paywall. It has been the C&P continued coverage of this story over that past few years that really brought it to the attention of the rest of the state. That likely won't happen in the future. (Here may be the first ILB report on the proposed plant, quoting a Bryan Corbin story in the Evansville C&P from March 6, 2009).

Lesley Weidenbener, executive editor of TheStatehouseFile, has this story, headed "Indiana Supreme Court hands Leucadia a win." Some quotes:

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

The 5-0 ruling eliminates 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.

But the Supreme Court's decision essentially makes that moot.

"We won a complete and total victory," said Mark Lubbers, project manager for Leucadia. * * *

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.

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 upheld 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.

Still, 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.

It took a while to locate the Indianapolis Star story on the decision ... Headed "Supreme Court decision raises Rockport plant from the dead," the Star story by Tony Cook reports:
Just a few months ago, a planned $2.8 billion coal-gas plant in Rockport seemed all but dead.

But on Tuesday, the Indiana Supreme Court effectively raised it from the grave.

In a 5-0 decision, the state’s high court upheld an amended contract between the state and the plant’s developer, Indiana Gasification. * * *

The governor signed legislation passed earlier this year that would have required a new, more stringent review of the contract between the state and the developer if the Supreme Court had voided the deal. * * *

The legislation was passed during the final moments of the 2013 General Assembly, despite two attempts to water down the bill’s language by lawmakers with connections to the coal industry.

Concerns about possible conflicts of interest also arose when Supreme Court Justice Mark Massa declined to recuse himself from the case despite a close personal friendship with Lubbers and his previous role as chief legal counsel to Gov. Mitch Daniels, whose administration pushed for enabling legislation and signed the deal with Indiana Gasification.

ILB: Here is a very long list of ILB stories referencing Rockport.

The ILB has had several posts on the Justice Massa's refusal to recuse in this case, you can find them listed here.

The Sept. 5th oral argument in the case is available online, you can watch it here. Justice Massa asked only one question during the course of the oral argument. It was also the first question of the day, asked at 5:15 on the video:

Mr. Funk, hasn't that been effectively mooted by the subsequent action taken by the actual parties to the contract?
Mr. [Norman T.] Funk, arguing on behalf of the Appellant, began his response by saying, "if the Justice was referring to the reformation, the answer was no, we do not believe the reformation agreement was valid."

From yesterday 5-0 opinion, written by Chief Justice Dickson:

We hold that the contract, as amended, renders the definitional issue moot... .

Posted by Marcia Oddi on December 18, 2013 09:24 AM
Posted to Ind. Sup.Ct. Decisions